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    Categories: BrandingLaura

The Classic Mistake

Pizza
Hut is now selling chicken wings and pasta as well as pizza.



Kentucky
Fried Chicken is now selling grilled chicken as well as fried chicken.


Boston
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.”

And
promptly went bankrupt.

It’s
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?

Wrong.

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.

Everybody
knows what Pizza Hut sells, but what would happen if they changed their name to
The Hut?

In
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.

Would
it make sense for Taco Bell to start selling hamburgers? And then change its
name to “The Bell?”

And
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.

The
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.

Line
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
place.

Line
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.

They
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.

Now
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.

Rather
they all did the same thing. They all narrowed their focus to pizza only.

Good
things happen when you narrow your focus. You should try it too, I think you will like it.

Laura Ries :

View Comments (19)

  •  Over 80 per cent of marketing directors in a recent brandgym survey said that brand extension would be the main way of launching new innovation in the next two to three years. (Taylor 2004).
     Following are three main advantages Taylor describes in his famous book:
     Consumer knowledge
     Consumer trust
     Lower cost
     Launching new products can be an attractive growth strategy; however this is not without risks. Some estimate that 30-35% of all new products fail (Montoya-Weiss & Calantone1994; Booz, et’ al 1982, cited in Hem et’al, 2001) whereas some researches cites that only two out of ten new launches succeed.
     High advertising costs and the increasing competition for shelf space, it has become more difficult to succeed with new products (Aaker 1991; 1996, cited in Hem et’al, 2001).
     An increasingly popular approach to reducing risk when launching new products is to follow a brand extension strategy. This is followed in as many as eight out of ten new product launches (Ourusoff, Ozanian, Brown, & Starr 1992, cited in Hem et’al, 2001).
     Virgin moving into radio stations, airline, financial services, and bridal services (Keller 1998, cited in Hem et’al, 2001).
     Researchers (e.g. Aaker and Keller 1991, cited in Hem et’al, 2001) have argued that greater similarity between the parent and extension category should encourage successful brand extensions. Further it is found that: Perceived Similarity and the Reputation of the parent brand are crucial factor influencing the likelihood of a successful brand extension.
     Because brands that are already known and recognized require lower new product introduction expenses, such as advertising, trade deals, or price promotions (Collins-Dodd & Louviere 1999, cited in Völckner & Sattler, 2004a, 2006b).
     “A richer brand identity is a more accurate reflection of the brand. Just as a person cannot be described in one or two words, neither can a brand. Three word taglines or an identity limited to attributes will simply not be accurate” (Aaker, 2000, p. 54).
    What do you want to say about each topic? Any comment?

  • The HUT? Say I'm from outerspace and land on Earth today. I know a little bit about Earthling food and want to try it. I see The Hut. How am I supposed to know what they serve??

  • Very right, if Pizza Hut is changing over to 'The Hut', it is losing its basic foundation brand identity. Pizza Hut people seem to be very desperate for sales. Economic recession = corporate desperation?

  • Stand for something or you stand for nothing. Line extensions that help advance the core equity of a brand work well. Line extensions that confuse or detract from the core equity of a brand result in failure. The question is - Has Pizza Hut stretched their brand too far?

  • Okay, I understand that unadulterated brand extensions are the mother of all brand mistakes. But can someone please explain Nike to me? Is apparel all the same thing? Nike has gone into countless sports. It also doesn't just make sports wear, but casual, and even dressier styles.
    So if Nike can turn all of apparel into the same category, why can't Pizza Hut (without the name change) turn all of food into the same category?

  • To Cynthia: It's very easy, if you're from outer space. "The Hut" serves... Jabba the Hut, prepared 15 different ways. Hut and sour soup, Prime Rib of Jabba, Louisiana hut sauce, Chicken fried hut, Hut and kidney pie, hut sausage pizza, spit-roasted hut rubbed with garlic, lemon and rosemary, hut cutlets... all manner of things. Of course the connoisseur's choice is the Hut sashimi-- this week only, half-price for the day old portions.
    I think "Hut" is too generic and they should go ahead and rename themselves "Yurt."

  • I agree that the line extension idea is a bad move. However, the name change from Pizza Hut to The Hut is not necessarily a bad thing. All brands, if they continue to improve their brand image to the point of becoming “cult brands” want people to start calling them by some sort of nickname. Hence, we have FedEx, KFC, CNN etc. To the person who wrote “Say I'm from outerspace and land on Earth today.” The fact of the matter is you’re not from outer space. Pizza Hut has a place in every Americans mind and that is a solid foundation for launching into nickname status. However in order to maintain The Hut as a nickname, they need to still use the complete name, every now and then.

  • They're not changing the name to The Hut fully. Only select stores where, I'm gathering, the market they feel can handle a "shorter, hipper" name. Nickname is what it sounds like they're going for. So The Hut stores will sell the wide menu, and, I'm guessing, Pizza Huts (or Pizza Hat as my daughter calls it, because of the logo) will sell a more pizza-related menu. Having said that, it's a stupid strategy. Another sign that agencies and companies have come to a wall.