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MARKETING: Successful product launches require testing and planning

As marketing pros at Pizza Hut and Domino's Pizza will tell you, new product rollouts don't come easily or quickly. Extensive testing and measurement of results increases the chance a new offer will fly.

September 5, 2005

* While doing interviews for a recent story on limited-time offers, I accumulated a lot of extra information on how the world's top two pizza companies test their products in the "lab" and in the market. Though that information wasn't useful in the original article, I knew it shouldn't be overlooked.

Following are tips for testing from Domino's Pizza chief marketing officer Ken Calwell, and Pizza Hut vice president of brand marketing Linda VanGosen.

Many single-store operators enjoy the freedom of developing new pizzas, rolling them out quickly and immediately gauging customer response. If the creation sells, they'll offer it a little longer, and if it maintains sales momentum, it may wind up on the menu. Shops like Flying Pie Pizzaria (Boise, Idaho) and Caioti Pizza Café (Studio City, Calif.) even develop a "pizza of the day" to keep fresh ideas flowing from the kitchen.

In companies with multiple units, however, extending such off-the-cuff creativity system-wide is a challenge — if not impossible — if every unit is supposed to have uniform offerings. Conducting new product trials for a network of thousands of stores, therefore, requires a strong, methodical and meticulous development strategy.

A good example is Pizza Hut's Chicago Dish pizza, introduced in 2002. According to the chain, the pie took 10 years to develop. Granted, that's an extreme case owing much to the challenge of producing a deep-dish product in Pizza Hut's conveyor-oven-centered kitchens. By comparison, Pizza Hut's highly successful 4forALL took about one-fifth the time.

But operational challenges are only one piece of the overall puzzle. To better assure a new product will sell, testing must occur to see if customers like it, the pizza must be profitable and marketing must be developed to spread the word about it.

Testing, testing ... and more testing

Before Nintendo pinned America's youth to the couch, Red light, Green light was a popular game. At Domino's Pizza, however, the name does not apply to an amusement. It's the final measuring rod determining whether a product will be launched or ditched.

The

There's a bit of science and art blended as we think about our calendar of new launches. We look for launch platforms throughout the year, such as Super Bowl. Those are great ways to kick off a promotion because groups are watching those events together. — Linda VanGosen, vice president of brand marketing, Pizza Hut

company tests every new product idea extensively, said Calwell. "We have a very disciplined test protocol we put in place four years ago. When we measure the potential success of a new product, we decide whether it's a 'green light,' a 'yellow light' or a 'red light.' If it's green, it's a go because it hit all our criteria for testing. If it's a yellow, it hit just some of our criteria, but not all of it. We'll probably retest it. But if it's a red, it's a dead idea."

Calwell said one of the biggest challenges in new product development is to avoid becoming personally attached to one's own ideas.

"It's like presenting a new baby: There are no ugly babies when they're yours, right?" he said. "So when it's yours, you can get emotional when it's criticized. You've got to be fact-based, not emotional."

Saying a test went "pretty well or not so well" is not concrete enough to make a rational decision about a product's true business potential. Saying a product ranks green, yellow or red "makes things clearer, more action oriented and takes the emotion out," he said.

Greens are rolled out for limited market tests, where customer interest and the staff's ability to produce it smoothly are measured. Should both go well, the market test is broadened.

Believe it or not, there remains yet another level of evaluation, Calwell said, before a full-out launch.

"The next thing we ask is whether those ideas are a 'single,' a 'double,' a 'triple' or a 'home run,'" he said. "The Philly Cheesesteak and the 5-5-5 were home runs, and we knew those would get large overall launch packages with a lot of support."

That doesn't mean "singles" won't be launched nationally, he said, but it's likely a single's availability period will be shorter than a home run's, and it won't get as

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much marketing support.

The point of putting less-than-home-run products into the market, he added, is to generate continued interest.

"We know that different consumer groups want different things, so we don't want to try to appeal to any one group for too long," Calwell said. "New product news appeals to one segment, value appeals to another and promotional partnerships appeal to others."

Just say when

Pizza Hut's VanGosen said thorough testing also reveals clues about when the product should launch.

"There's a bit of science and art blended as we think about our calendar of new launches," she said. "We look for launch platforms throughout the year, such as Super Bowl. Those are great ways to kick off a promotion because groups are watching those events together. And, pizza, of course, is the perfect food for groups."

Deciding when to end a promotion is often just as difficult as deciding when to roll it out. While limited-time offers are designed to leave customers wanting more, customers can become frustrated with an offer's unexpected termination. Plus, if sales of the product start sliding, execution can suffer. Simply put, when employees make higher numbers of certain pizzas more often, their skills are sharper and the product is closer to spec. Reduce that number, and quality can decline.

Pulling a product then becomes more of a strategic decision than a blanket, system-wide mandate. Both Domino's and Pizza Hut have extended offers — such as the Philly Cheesesteak and the 4forALL — when results exceeded expectations. But when sales declined in some markets, those operators were allowed to end the promotion.

Since the pizza business is strongest from Labor Day through Easter, when people spend more time indoors, Calwell said most promotions come to life during that time. But overall, he said, no period of the year is neglected.

"We've had good results with the 5-5-5 this summer and the (2 x Tuesday) deal," he said. "We're very careful to plan out our calendar so people are thinking about us all year long."