Creating a New Subcategory: A Story of Two Pizza Brands
I have long argued in the book “Brand Relevance” and elsewhere that the only way to grow, with rare exceptions, is to develop customer “must haves” that define a new brand subcategory and then manage that subcategory to success. Marketing and branding then become one of subcategory competition instead of “my brand is better than your brand” competition, and the winning brand will be the one that is most relevant. The pizza world provides two examples.
Kraft’s DiGiorno introduced in 1995 its “rising crust” pizza, the first pizza with a fresh-frozen, no precooked crust. Rather than competing in the frozen pizza section, DiGiorno chose to create a new subcategory, frozen pizza brand that could deliver the same quality as delivered pizza, the only relevant brand being DiGiorno. The result was not only a strong growth in sales but a 50 percent repurchase rate and a substantial price premium.
The DiGiorno positioning was developed with a series of stories delivered in a long-term advertising campaign all around the tagline of “It’s not delivery, it’s DiGiorno.” The rising crust was usually connected to the story. In one story, a person was recruited to be the DiGiorno deliveryman, a position that requires no work. In another, four people are watching a football game enjoying a DiGiorno pizza and comparing it to a delivery pizza that has soggy crust. In still another, a couple enjoying a pizza observes that they do not have to tip the delivery boy. Over two decades the stories keep coming, all making the point that people experience as good or even better pizza than delivered pizza if they use DiGiorno and they don’t have the inconvenience nor the higher price point. The new brand subcategory thus appears differentiating with a compelling value proposition.
Domino’s Pizza went from a 9 percent share (and falling) of the pizza restaurant business in 2009 to 15 percent in 2016 by first reframing its brand to be relevant and then reframing the category using a host of stories along the way.[i] Its stock went up 700 percent during that time.
The story started with the “cardboard crusts” comments from customers, taste tests in which the brand finished last, and the use of frozen or canned ingredients. In response, the company decided to completely reinvent their pizza from the crust up. The effort culminated in a product that won taste tests, a PizzaTurnaround.com website that documented customers’ responses to the new pizzas, a 2009 “Oh yes we did” video, and an ad that showed Domino’s chef personally delivering the completely reformulated pizza to some of their biggest critics.
During that time, Domino’s created a new brand subcategory defined by “must haves” around the ordering and delivery of pizza created by a new 30-person technology team hired in 2009. Domino’s provided a dozen ordering options involving “Easy order” apps, Facebook, Twitter, Apple Watch, voice-activated, “zero click”, and more. Several provided contents for user stories. Its online Pizza Tracker service allowed customers to track the status of their pizza in real-time. In 2016, half the orders were placed online, up from 20 percent in 2009. Delivering innovations include a modified car that holds 80 pizzas in a warming oven and keeps beverages cold as well as experiments with drones and robots made for interesting stories. The story of a drone delivering a pizza in the UK got nearly 2 million views.
It is remarkable that growth surges in any product category are almost always explained by the creation of a brand subcategory. The lesson is to devote some resources to “must have” innovations to take some risks when the opportunity to create and leverage a new subcategory emerges, and to think subcategory instead of “my brand is better than your brand” competition.
i Susan Berfield, “Delivering a $9 Billion Empire,” Bloomberg Businessweek, March 20-29, 2017, pp. 42-47.