Pizza Hut, Inc.

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Pizza Hut, Inc.

14841 Dallas Pkwy.
Dallas, Texas 75254
USA
Telephone: (972) 338-7700
Fax: (972) 338-6869
Web site: www.pizzahut.com

BIG NEW YORKER PIZZA CAMPAIGN

OVERVIEW

Pizza Hut distinguished itself from its competitors in part because of its proactive approach to product development and marketing. Beginning with the original thin-crust pizza first served in 1958, Pizza Hut made continuing efforts to refine its products and to develop new products suited to every consumer's taste. In January 1999 the Dallas-based chain introduced the Big New Yorker Pizza. The new pizza was hand-stretched to 16 inches and featured a more savory, sweeter sauce and toppings baked on top of 100 percent real cheese. The Big New Yorker was cut into eight foldable slices and was priced starting at $9.99 for one topping.

The Big New Yorker Pizza was the largest new product introduction in Pizza Hut history and was backed by an $80 million advertising and marketing campaign created by BBDO Worldwide. The campaign included television, radio and print ads as well as in-store promotional materials such as counter cards, window clings, banners, and pennants. The Big New Yorker was also featured on the newly designed Pizza Hut website. Ads for the Big New Yorker debuted on January 28, 1999, during NBC's Thursday "Must See TV" lineup, and they continued on ABC's "T.G.I.F." lineup. Celebrity ads featuring New Yorkers Spike Lee, Fran Drescher, and Donald Trump debuted on the Fox network on January 31 during the Super Bowl telecast.

HISTORICAL CONTEXT

Pizza was introduced to Americans on a wide scale in the 1940s, when returning World War II servicemen who had served in Italy began opening pizzerias serving the traditional tomato pie. Pizza Hut began in 1958 when two college students from Wichita, Frank and Dan Carney, were approached by a family friend with the idea of opening a pizza parlor. The brothers quickly saw the potential of such an enterprise, and after borrowing $600 from their mother, they purchased secondhand equipment and rented a small building at a busy intersection in their hometown. The results of their entrepreneurial efforts were the first Pizza Hut restaurant and the foundation for what would become the largest and most successful pizza chain in the world.

In 1965 Pizza Hut unveiled its first television commercial, with the musical jingle "Putt-Putt to Pizza Hut." Three years later the chain entered the international market by opening its first restaurant in Canada. In 1969 the first Pizza Hut restaurant was opened in Mexico, and construction also began on outlets in Germany and in Australia. In that same year the distinctive red roof was adopted for all of its restaurants.

By 1971 Pizza Hut had become the number one pizza chain in the world in both sales and number of restaurants, and expansion continued throughout the decade. Within two years the company had opened units in Costa Rica, Japan, and England. Product innovation proceeded apace, and in 1975 a new variety, Thick 'N Chewy, was introduced. A Super Supreme pizza was introduced in the United States in 1977. In the same year Pizza Hut stockholders overwhelmingly approved a merger with PepsiCo, Inc., for an undisclosed sum.

The Sicilian Pan Pizza was introduced in 1979, and it proved so popular that by 1983 the Personal Pan Pizza, guaranteed to be ready in five minutes, was introduced throughout the system. Two less successful menu items, Priazza and Calizza, were rolled out in 1985. Perhaps reflecting the end of consumers' fascination with pan pizza, the Hand-Tossed Traditional Pizza was introduced throughout the system in time e for Pizza Hut's 30th anniversary in 1988.

By the beginning of the 1990s Pizza Hut sales had reached $4 billion, and the chain continued to develop new products. A lunch buffet was introduced in 1,800 units in 1992, and the next year the chain rolled out its Bigfoot Pizza—two square feet of pizza cut into 21 slices—as well as the Chunky Style Pizza. By the end of the year Pizza Hut was leading the entire restaurant industry in growth and was setting new company records for sales and profits. Continued robust growth attracted celebrity endorsers to the brand, with soccer legend Pelé becoming one of the first when he kicked a ball through the door of Pizza Hut restaurant number 10,000, in Sao Paulo on April 13, 1994.

In 1995 Pizza Hut launched a new ad campaign featuring the tag line "You'll Love the Stuff We're Made Of." That same year, Buffalo Wings—spicy chicken wings served with dipping sauce—were added to the menu. And in one of the most successful product introductions in the chain's history, Pizzeria Stuffed Crust Pizza immediately set company sales records. The following January, Pizza Hut aired its first-ever ad during the Super Bowl. In May 1996 the chain introduced two varieties of chicken-topped pizza, Italian Chicken and Chicken Supreme.

In 1997 Pizza Hut unveiled "Totally New Pizzas," a quality initiative that put fresh sliced vegetables and meatier meats on its pizzas. Later that year The Edge, a specialty pizza without a crust, was crafted to appeal to what were called "extreme" tastes among consumers. There were more product introductions in 1998 to mark Pizza Hut's 40th anniversary year. The Sicilian Pizza, which had garlic, basil, and oregano baked into the crust, was a precursor of the back-to-basics approach later embodied by the Big New Yorker. The new pizza was accompanied by an ad campaign that used the tag line "The Best Pizzas under One Roof." As of 1999, Pizza Hut offered its customers five major products: Pan, Thin 'N Crispy, Hand-Tossed, Stuffed Crust, and Big New Yorker.

TARGET MARKET

"We are targeting this toward the heavy pizza user," explained Mike Rawlings, chief concept officer of Pizza Hut, of the Big New Yorker Pizza. "That may be a large family that is looking for a great value, or it may be teen-agers or young adults who need money to spend on other things."

In fact, the term "heavy pizza user" could be applied to many Americans. According to a survey conducted by the National Association of Pizza Operators, Americans ate 100 acres of the food every day. The appetite for pizza made it a $30 billion industry. As of 1999, about 17 percent of all restaurants were pizzerias, and the industry was continuing to grow. Pizza was especially popular with young consumers, and a Gallup poll conducted in 1996 discovered that among children aged 8 to 11 pizza was the most popular thing to eat.

COMPETITION

Pizza Hut, a division of the multinational PepsiCo, Inc., was the dominant player among pizza chains. As of 1999, Pizza Hut, with 7,132 stores, controlled 22 percent of the market, while its main competitor, Papa John's, had only one-fourth as many stores and controlled less than 5 percent of the market. Nonetheless, competition between the two chains remained fierce, largely because, between 1993 and 1999, for every point Pizza Hut lost in market share Papa John's gained a point. The battle was especially pitched since, during the same period, pizza sales rose just 3.6 percent a year. Analysts did not forecast that sales would grow much faster in the future, and thus Pizza Hut and Papa John's had no choice but to try to win over each other's customers.

During the 1990's Pizza Hut tried numerous strategies to slow Papa John's growth. It revamped its pizzas by using better ingredients. It increased its advertising budget to an estimated $150 million. And it rolled out a veritable arsenal of designer pizzas: the Triple Deckeroni Pizza, with 90 pieces of pepperoni and a six-cheese blend; the Bigfoot, with two square feet of pizza; the chicken-topped line, which promised to deliver "the uniqueness and unexpectedly great taste of chicken-topped pizza to Americans everywhere;" and the Fiesta Taco Pizza, with a bean sauce and chopped lettuce toppings. Papa John's, by contrast, maintained just two items in its arsenal: a thin-crust pizza and a regular-crust pizza. Its ad slogan was commensurately simple: "Better ingredients. Better pizza."

Complicating the marketplace battle was the presence of a third major pizza delivery chain, Domino's, which, in the words of Pizza Hut's Rawlings, "has more tenure and saliency in the consumer's minds than any of the rest of our competition." Nevertheless, since 1993, while Papa John's was steadily growing, Domino's could not manage to grab even one additional point of market share. In 1998, however, Domino's did make a dent in consumer consciousness with the introduction of heat-retaining delivery bags known as HeatWave pouches, which allowed pizzas to be delivered with the cheese still hot and the crust still crisp. Sparked by the success of the pouches, Domino's in 1999 revamped the recipe for its hand-tossed pizza. For the first time in nearly a decade, taste rather than delivery was made the central theme of the chain's advertising.

Prompted in part by this initiative and by the inroads made by Papa John's, Pizza Hut responded with the introduction of the Big New Yorker in 1999. The competitors reacted with predictable aplomb to the rollout. "We view this as another phase of Pizza Hut's constant new-product strategy—pizza of the month if you will," observed Papa John's vice president of communications Chris Sternberg. "Their strategy is to do new product rollouts that are supported by heavy marketing spending with the goal of creating trial. Certainly, when you spend $70 [million] to $80 million on a new product rollout, you will get the phone to ring. But while they will probably have some trial in the short term, we don't expect it to have a long-term impact on our sales."

YO SOY BIG NEW YORKER!

In February 1999, shortly after the national rollout of the Big New Yorker Pizza, Pizza Hut announced plans to expand the campaign into Latin America as well as to target the large and growing Latino community in the United States. To help in this effort, the Dallas-based pizza giant joined forces with the recently crowned Miss Venezuela, Carolina Indriago. The curvaceous Indriago was tapped to star in Spanish-language television spots to be aired throughout the United States and Latin America. The spots, which costarred actor David Norono, were designed to give millions of Spanish-speaking Americans their first opportunity to see and hear the beauty pageant winner and to learn about Pizza Hut's New York-style pizza.

"This is a tremendous honor to be a part of Pizza Hut's largest ever new product introduction effort," said Indriago. "I enjoyed the opportunity to be a part of the campaign, [and] as a Latina I am pleased to see such a large company address the Hispanic community as a consumer and a viable resource."

MARKETING STRATEGY

The marketing campaign introducing the Big New Yorker Pizza was designed to build on Pizza Hut's competitive strategy of providing "variety, value and quality for consumers." The product itself was crafted to attract consumers seeking a traditional-style pizza similar to those found in local mom-and-pop pizzerias. Market research conducted by the chain indicated a desire on the part of consumers for a bigger, more savory pizza. "America associates great pizza with New York-style pizza, in fact, they crave it," said Pizza Hut's Rawlings. "However, until [the] introduction of The Big New Yorker Pizza, only one-third of the population actually ever tried a true New York-style pizza. The Big New Yorker Pizza gives consumers a slice of New York right in their own home."

In order to illustrate the fact that its new product was an authentic New York-style pizza, Pizza Hut enlisted three archetypal New York celebrities to appear in its television commercials. Filmmaker Lee, actress Drescher, and real estate developer Trump were defined in company press releases as "big New Yorkers." Each of the 30-second commercials highlighted one of the celebrities in an environment that fit the person's personality. The commercials were the celebrities' tongue-in-cheek presentation of their personalities and of the grand personality of New York. The spots debuted during the pregame segment of the most-watched television event of the year, the Super Bowl, a placement designed to influence the halftime meal decisions of the sports fans assembled.

The first commercial, directed by Lee and produced by his company, 40 Acres and a Mule, starred the filmmaker and other New York residents, including an artist, street performers, basketball players, and a police officer, in real-life roles. The Drescher spot put the whining comedienne in a variety of New York locations, including Fifth Avenue and the skating rink in Central Park and atop a skyscraper. The Trump ad highlighted his role as a business tycoon by showing footage of the developer in Times Square, riding in a limousine, and meeting with an architect on a new building project.

The rollout of the Big New Yorker Pizza was supported by a national marketing campaign designed to promote the city of New York. Mayor Rudolph Giuliani attended the press conference launching the new pizza. "We needed to introduce this New York-style pizza in a big way," quipped Pizza Hut's Rawlings. "What is bigger and better than having the mayor of New York City help us launch the pizza?" Rawlings added that, while New York made no financial contributions to the campaign, the city allowed the chain to put its apple logo on the pizza boxes. The new boxes also included New York's official website address, and Pizza Hut agreed to link its website, which received at least 30,000 visits per month, to the New York City site. The cross-promotional campaign helped to generate 100 million website impressions for New York tourism per month.

OUTCOME

Critical response to the Big New Yorker Pizza television ad campaign was largely favorable. When the Los Angeles Times asked three advertising employees to critique commercials shown during the Super Bowl telecast, the Big New Yorker spots were singled out for high praise. "Not only are these spots funny and beautifully produced," the panelists concluded, "they wisely take advantage of what only a Super Bowl telecast can do—make 200 million customers instantly aware of your product."

Despite generating high interest in a new product, the Big New Yorker campaign seemed to be doing little to help Pizza Hut in its battle against Papa John's. Comparable store sales for the challenger continued in the high single-digit range in the first quarter of 1999 despite bad weather and the fact that Pizza Hut was spending $80 million on its Big New Yorker.