Sunday, November 21, 2010

Pizza Pizza? or Stupid Stupid?

Between 1986 and 1994, I lived in Metro Detroit.

We had two of the leading Pizza Chains in our backyard, Dominos and Little Caesars.

Tom Monaghan, owner of Dominos also owned the Detroit Tigers baseball team.

Mike Ilitich, owner of Little Caesars also owned the Detroit Red Wings hockey team.

Now that I'm back in Indiana, I've noticed that my home town has no Dominos, but in the past few years Little Caesars has been opening stores.

Al Ries wrote about the Little Caesars branding adventure over the past several years in AdAge.com:

Marketing Sense Isn't the Same as Common Sense

Whatever Happened to Little Caesars?

By Al Ries

Published: November 02, 2010


Al Ries

Each year, hundreds of graduate schools of business turn out thousands of marketing people. When they arrive on the scene, these newly minted marketers want to make their mark.

So they dismiss their advertising agencies and hire new ones. They revamp the marketing plans, even including new systems of compensation for the sales force. They change names, logos, slogans and strategy statements.

Welcome to the world of marketing. This happens every year, usually around budget time.

Actually I didn't write these paragraphs this year. I wrote them 16 years ago in an article published in the June 19, 1994, issue of The New York Times. Headline: "Marketers, Stop Your Tinkering."

That was also the year a USA Today panel of top ad agency creative directors named Little Caesars as the "best ad campaign of 1994." Maybe you remember the Cliff Freeman & Partners campaign.

"Pizza. Pizza."
"Two great pizzas for one low price." Thanks in part to its brilliant marketing program, Little Caesars that year was the second-largest pizza chain in America. Here are 1994 U.S. sales of the four major pizza chains.

Pizza Hut: $5.4 billion
Little Caesars: $2.1 billion
Domino's: $1.9 billion
Papa John's: $450 million

The following year, the tinkering began, starting with a major tinker. The company converted 30 takeout units in the Detroit area to "Little Caesars Italian Kitchens." Besides pizza, the new menu included lasagna, chicken, Greek salads, dessert pies and three kinds of pasta (tortellini, penne and farfalle). By the end of 1995, Little Caesars expected to operate 100 Italian Kitchens. Needless to say, that never happened.

In 1996, Little Caesars rolled out "Delivery. Delivery." The takeout-only chain was now going to compete head-to-head with Domino's, the home-delivery leader. That same year, Little Caesars also introduced "Pizza by the Foot." Nearly four feet of food. (The creative twist to Pizza by the Foot was a "safety video" that customers had to watch before leaving the restaurant. Of course, they never watched the video.)

In 1997, Little Caesars introduced "Big! Big! Pizzas." How big were the pizzas? As the advertising said, "Bigger than the sun!"

Little Caesars' large pizza was 65% bigger than Pizza Hut's and Domino's. Little Caesars' medium pizza was 77% bigger. Little Caesars' small pizza was the same size as the other guys' large pizzas.

Somewhere along the way, the brilliant "Pizza. Pizza" concept disappeared in a cloud of creative confusion.

In the midst of all these changes, you seldom heard a word of caution from industry pundits. Quite the opposite. "Industry analysts say that by adding home delivery," according to USA Today, "Little Caesars can boost its business without purchasing a lot of costly equipment."

"You're at a competitive disadvantage," said one market research expert at the time, "if you're in the pizza business and not delivering."

That's common sense, of course, which is not the same as marketing sense.

Common sense says a second slogan is additive. "Little Caesars is known for takeout, so we'll launch a delivery program. That way we'll be known for two ideas instead of one."

Marketing sense is subtractive. A second slogan seldom gets accepted because it conflicts with an established slogan in consumers' minds. Even worse, a second slogan often undermines the existing one. More is less.

Now buried in fourth place
So where is Little Caesars today? The once No. 2 chain is now buried in fourth place. Here are 2009 U.S. sales.

Pizza Hut: $5.0 billion
Domino's: $3.1 billion
Papa John's: $2.1 billion
Little Caesars: $1.2 billion

In 15 years of tinkering, U.S. sales of Little Caesars declined 42%.

What is Little Caesars' current slogan? Who knows? Many consumers still have that "Pizza. Pizza" refrain bouncing around in their minds.

What is Pizza Hut's current advertising slogan? Who knows? The chain has never hammered an idea into consumers' minds, although it continues to benefit from its overall leadership position in the category.

What is Domino's current advertising slogan? Domino's once had one of the most powerful slogans in the pizza business. "Home delivery in 30 minutes or it's free." But safety issues forced the chain to withdraw the offer. So Domino's wisely introduced an idea that plays off its original guarantee. "You got 30 minutes."

Consider the quandary Domino's faced. For insurance reasons, it couldn't continue to use the 30-minute idea. So what should it do next?

Common sense says it's better to develop a brand-new slogan than it is to use a watered-down version of an existing slogan.

But marketing sense is just the opposite. You'll never erase the 30-minute idea in consumers' minds so it's better to develop something that relates to that concept.

The urge to tinker never dies. Even with Domino's long-term success, the chain recently ran a "mea culpa" campaign talking about the poor quality of its pizza and promising to do better. Sales shot up immediately, but I have my doubts about the long-term wisdom of moving away from the 30-minute idea.

What is Papa John's current advertising slogan? Most people probably know. "Better ingredients. Better pizza. Papa John's."

Financial matches marketing
In 15 years, Papa John's U.S. sales are up 365%, thanks to its consistent advertising message: "Better ingredients. Better pizza," an idea that positions the brand as a cut above the others.

Furthermore in the U.S., Papa John's has the highest annual per-unit sales of any chain in the pizza category.

Papa John's: $750,000
Pizza Hut: $661,000
Domino's: $621,000
Little Caesars: $472,000

In the same 15-year time period, Domino's sales are up 57%, thanks to the 30-minute idea and its existing position as the "delivery" leader.

On the other hand, Pizza Hut is down 7%. Although it is the market leader, thanks to the fact that it was the first pizza brand in the mind, Pizza Hut has never had a memorable advertising slogan, including its latest "Your favorite. Your Pizza Hut."

And Little Caesars is down 42%.

Change with the times?
Common sense says that marketing messages have to constantly change in order to stay in tune with the times.

Marketing sense says that's nonsense. The way to build a brand is with a consistent message over an extended period of time.

Little Caesars didn't fall down the pizza ladder for a lack of creative ideas. In its 10-year history with Cliff Freeman & Partners, Little Caesars won 310 advertising industry awards, including the 4A's John O'Toole award for advertising excellence.

Furthermore, times don't change as much as many people think. Even today, some 80% of all pizza is sold on some kind of deal. So what was wrong with "Pizza. Pizza. Two great pizzas for one low price?"

Nothing.

What was wrong at Little Caesars in the 1990s is what's wrong with too many companies today.

They tinker with new ideas when they should be hammering the ideas that already exist in consumers' minds. Once a brand is established with a clearly defined marketing position, the brand's owner should ask a fundamental question before making any significant changes.

Why tinker with success?