Friday, 18 of April of 2014

Advertising 101 – Mea Culpa

Domino’s new mea culpa ad campaign: a bold move, will it work? For those living on another planet, mea culpa ads have the company – usually someone senior, admitting a serious problem with their product, showing remorse and assuring the public that they are fixing the problem. Food and auto recalls are often accompanied by mea culpa ads. Consensus appears to be in favor. And the company certainly wants to avoid the questions “what did they know and when?” And then there is Domino’s.

Domino’s ad campaign is unusual. The company has been airing ads with scenes from focus groups where respondents describe how much they dislike Domino’s pizza (http://www.pizzaturnaround.com). One woman says, “Domino’s pizza crust, to me, is like cardboard.” In another scene, a marketing executive reads customer comments about Domino’s including an assertion that the pizza is “totally devoid of flavor.”  The product bashing is extreme.

The point of these ads, of course, is not for Domino’s to disparage its own brand. Instead, company executives and chefs use the rest of the commercial to explain that they recognize customers felt their pizza was low quality. These executives say they understand customer frustrations and have changed their entire product based on customer feedback. The company now uses different cheese, sauce, and other ingredients. Executives explain they hope customers will give them and their pizza another chance.

Why is this unusual? There was no product recall. No one died or as far as reported, was infected with e.-coli, listeria or salmonella. Their market share was holding, there was no apparent public groundswell of complaints. But they trashed their product  (ha on you who used to like Domino’s pizza) and said they are improving the product. All trumpeted in a commercial.

Will it work?

This type of ad campaign is always risky. The biggest danger is that loyal customers will be offended. They may believe the ad is an admission that executives themselves knew the pizza was bad but marketed it anyway. The ad tries to avoid this by showing customers, not executives, describing the pizza’s poor quality. It also suggests executives were surprised to learn about these reactions. This is probably a good move, but people still may not believe them.

On the other hand, customers don’t generally hear companies describe how terrible people thought their product was. It’s a good way to attract attention and get their message across. In addition, people may respond positively to Domino’s honesty, and new customers may try the pizza.

What do the numbers say?

A successful ad campaign of this type would be expected to have both immediate and long term effects. In the short term, the company hopes people will see the ad and try the new pizza. This should produce a short term sales increase. If the campaign succeeds in the long run, these new customers should become regulars, while most loyal customers should continue to purchase the product.

So far, the numbers suggest modest short term success. Domino’s domestic franchise same-store sales have increased by 0.3% in the third quarter. By comparison, Papa John’s sales increased by 0.2% while Pizza Hut’s fell by 13%. Too soon to say.

The key question is whether Domino’s new customers like the improved pizza enough to keep ordering and whether loyal customers are comfortable with the new taste. Investors are betting in Domino’s favor as the stock price has increased significantly recently; but a rise in stock price is never a guarantee a company will succeed, so it’s worth keeping an eye on the company’s long term sales.

By the way, what ever happened to “never complain, never explain.” What do you think?


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