The Classic Mistake
Hut is now selling chicken wings and pasta as well as pizza.
Chicken was once focused on rotisserie chicken, but then they wanted to expand, so
they added turkey, meatloaf and ham to the menu. Then to explain the expanded menu
to consumers, they changed the name of their restaurants to “Boston Market.”
promptly went bankrupt.
logical, isn’t it? If you want to grow your business then you need to expand your product line to sell
more things to more people. And if your existing category is declining, then it
would be criminal not to expand, right?
Of course, to
left-brain, logical management people, expansion makes a lot of sense. That’s
why Pizza Hut is not only adding pasta and wings it is also now using a more general name, “The Hut” in its marketing.
That's right, they are taking the "Pizza" off the "Hut" on signs and marketing materials. Why? Because management looks at reality and sees the chain as a massive delivery infrastructure machine not a pizza place. Big mistake.
Marketing is concerned,
not with reality, but with perception. So right-brain marketing people understand that the place is perceived as pizza. After all Pizza Hut is the leading pizza chain with 18% of the $29 billion category, nearly double the share of the number two brand Domino's. While having more items to sell at Pizza Hut might be
logical, but it undermines the perception of the brand.
knows what Pizza Hut sells, but what would happen if they changed their name to
the short run, nothing. But in the long run, some people are going to forget
exactly what a chain like The Hut sells. And then there are the younger people
coming into the market who have never heard of Pizza Hut. “The Hut” would be a
strange name to them.
it make sense for Taco Bell to start selling hamburgers? And then change its
name to “The Bell?”
perhaps Burger King should change its name to “The King,” now that they sell
chicken, fish, breakfast and a host of other non-burger items.
Then there is Dunkin' Donuts? Surely they should drop the "donuts" and go by Dunkin' since they are more about bagels, muffins and coffee these days.
management mantra at most companies is “more.” How do we dream up more items to
sell to more customers? And especially how can we take advantage of our
powerful brand name to sell those new items to those new customers.
extension is the most over-utilized strategy in business today. That’s true in
spite of the fact that 90 percent or so of line extensions fail in the market
extension is a much-loved strategy because it’s logical. The more you have to
sell, the more you sell. So almost every company is busy trying to figure out
what new products to slap its brand name on.
should study history. When
Domino’s Pizza first got started, it sold pizza and submarine sandwiches. When
Little Caesars first got started, it sold pizza, fried shrimp, fish and chips
and roaster chicken. When Papa John’s first got started, it sold pizza,
cheesesteak sandwiches, submarine sandwiches, fried mushrooms, fried zucchini,
salads and onion rings.
do you suppose you would ever have heard of Domino’s Pizza, Little Caesars and
Papa John’s Pizza if they kept expanding their menus? I think not.
they all did the same thing. They all narrowed their focus to pizza only.
things happen when you narrow your focus. You should try it too, I think you will like it.