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What works better-tons of advertising or excellent product

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Hi Pizza People,
I have a question. I have been in business for about 14 months now and my revenue is just about where I expected it to be after this amount of time. However, I am not growing as fast as I would like to even though I think, and many of my clients agree, we truly have the best tasting pizza (and calzone, salads, and more) in our area. We are competing with a handful of small independent pizzerias that are focused on price only, and the chains, which are also primarily focused on price and volume. We have grown by word of mouth and some couponing but we do not have an advertising budget like the chains who plaster as much advertising as they can wherever they can (buses, billboards, walls, etc.). I thought that having the best product would bring clients who have been eating mediocre pizza running to our door but now I am thinking that quality does not replace constant advertising. Is it true that if you advertise the hell out of a product that quality simply does not matter? Hypothetically speaking, if I have the best pizza, does repeated advertising from the competetition somehow erase the memories of my clients tastebuds and in effect brainwash them to call the other phone number to order?
What do you all think?
 
Re: What works better-tons of advertising or excellent produ

While quality is still important for customer retention, advertising is crucial for growing the customer base. Word of mouth will only get you so far, so fast. Advertising will kick start the word of mouth. A reasonable advertising budget will be in the 5% range and if allocated effectively, will produce larger returns than expenses.
 
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Re: What works better-tons of advertising or excellent produ

Thanks Paul. I have budgeted just 5% for my advertising, about a third of that goes to my yellow page ad and the rest for coupons, banners and box top menus. But my question is aimed more at the concept of whether advertising alone can make up for mediocre product. If 100 people have tried my product, I would assume that 80%+ would come back because they know that my product is superior: hand made, better crust, better ingredients, broader menu, etc. The next time they think of pizza, pasta, etc., I assume that they (like I do) would naturally think of the best recent eating experience they have had. But, if they are overwhelmed with advertising from pizza joints with mediocre pizza, does that advertising alone sway their decision, in spite of the fact that they KNOW that they are buying a lesser product, price aside? This is in the marketing psychology department I guess. I guess the question is:
Does repeated advertising alone shape peoples preferences?
 
Re: What works better-tons of advertising or excellent produ

Well look at the company you used for an example, Papa Johns. Look at how big they are while offering a lesser product. Heres a theory I have on this. Me and You eat at Papa Johns and we pick up on its flavor defeciencys because thats all we do all the time with pizza. I dont think a normal persons palate is attuned as ours. I believe most people eat pizza and taste pizza. There are some who definately wont eat garage chain pizzas but most eat it up.
 
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Re: What works better-tons of advertising or excellent produ

I think that is the sad truth. My decision to get into the biz was to sell pizza, make a profit and make people with developed tastes happy. But as you say, most people will eat industrial pizza and the chains know that, and that is why they are successful. So there is no easy answer except that for restaurants that make good food, don’t expect everybody to flock to your restaurant due to the quality of your food, most people don’ t really care! But on the otherhand, those that do come appreciate the quality and THOSE clients must be cultivated.
 
Advertising and Consistency

Have you ever eaten at McDonald’s? You and everyone else in America has eaten there many, many times. It’s because of their advertising. They definately don’t have the best hamburgers. So the reason why everyone is eating there isn’t because of quality. It’s because of their advertising and also because they have a consistent product. You can go to any McDonald’s in the United States and their food will taste the same every time no matter where you go. So my answer would be that most people are driven to these places because of the aggressive advertising and consistency.
 
Re: Advertising and Consistency

McDonalds has proven that Americans will choke down ANYTHING if the price is right. Little Ceasers has done the same with $5 pizza. It doenst have to be good, just has to be cheap and convenient.
 
Re: Advertising and Consistency

I’ve done a lot (and I mean A LOT) of study on the affects of advertising, which advertising to use, and how it works. I’ve also been a part of the big chains (Domino’s and Papa John’s) for over a dozen years. I’ll break it down for you as simply as possible: If you want to be a big dog, act like a big dog.

Those guys pour out thousands of dollars locally in print, radio, and television. Of course, if you’re an independent like most of us are, you want to get as many “pieces” out there as cheaply as possible to give the customers the “perception” that you’re a major player in the market. The solution is to take advantage of direct mail companies in your area and try to have at least one marketing piece per week hit your potential customers. If you can do this with price points of around $10 (but also with room to upsell, goaling yourself for an average ticket of around $15) you’ll hit paydirt. It is a very tough thing to juggle budgetwise, but if you can succeed in the budget battle while accomplishing this objective, you’ll also see yourself succeeding in the customer building side.

I know there are some out there who believe that heavy discounting is not the way to go. Some don’t discount at all because they want customers to perceive their product as something that shouldn’t be discounted. Some actually succeed in this philosophy. However, that is not the norm.

In my experience, it’s not the heavy discounting that works but more of the “perceived” heavy discounting. In other words, shoot for a price point (like I said earlier, usually around $10) that will still net you around a 30% - 32% food cost, leaving room to upsell items that are much lower costs so that you’ll net an average of 26% - 28% per order. Track all coupons redeemed to see which work for you and which don’t. If you find some that don’t work as well, change them because all markets are different. Tracking coupons will also tell you which mediums work and which don’t. If you have the luxury of dozens of different advertising companies you can switch out until you find what works for your store.

Don’t sign long term contracts with these advertisers, either. They’ll give you some song and dance about it taking 3 - 6 months before you can see the full affect of their advertising and I’ll tell you bulls**t. You can see it on the first run. It doesn’t change too much from month to month. If you can average around a 1% - 2% return for each direct mail piece you’re dead on. Anything below, dump 'em. Anything above, let me know about 'em. Hope this helps. -J_r0kk
 
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Re: Advertising and Consistency

I am also new to the world of ownership. I’ve been doing flyers, box tops menus, and local newspapers. I started out with a base clientele, but when we started flyering, our sales jumped up $400-$500 per week. Then we put our ad in the local free newspaper and our sales jumped about $800. Then we didn’t advertise except for flyering and our sales maintained and dropped just a little. Then we advertised in the city newspaper and our sales jumped up another $700. So we’ve decided what works best for us is the newspaper with some local flyering right around the store.

That’s what’s working for us.
 
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Re: Advertising and Consistency
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j_r0kk:
I’ve done a lot (and I mean A LOT) of study on the affects of advertising, which advertising to use, and how it works. I’ve also been a part of the big chains (Domino’s and Papa John’s) for over a dozen years. I’ll break it down for you as simply as possible: If you want to be a big dog, act like a big dog.

Those guys pour out thousands of dollars locally in print, radio, and television. Of course, if you’re an independent like most of us are, you want to get as many “pieces” out there as cheaply as possible to give the customers the “perception” that you’re a major player in the market. The solution is to take advantage of direct mail companies in your area and try to have at least one marketing piece per week hit your potential customers. If you can do this with price points of around $10 (but also with room to upsell, goaling yourself for an average ticket of around $15) you’ll hit paydirt. It is a very tough thing to juggle budgetwise, but if you can succeed in the budget battle while accomplishing this objective, you’ll also see yourself succeeding in the customer building side.

I know there are some out there who believe that heavy discounting is not the way to go. Some don’t discount at all because they want customers to perceive their product as something that shouldn’t be discounted. Some actually succeed in this philosophy. However, that is not the norm.

In my experience, it’s not the heavy discounting that works but more of the “perceived” heavy discounting. In other words, shoot for a price point (like I said earlier, usually around $10) that will still net you around a 30% - 32% food cost, leaving room to upsell items that are much lower costs so that you’ll net an average of 26% - 28% per order. Track all coupons redeemed to see which work for you and which don’t. If you find some that don’t work as well, change them because all markets are different. Tracking coupons will also tell you which mediums work and which don’t. If you have the luxury of dozens of different advertising companies you can switch out until you find what works for your store.

Don’t sign long term contracts with these advertisers, either. They’ll give you some song and dance about it taking 3 - 6 months before you can see the full affect of their advertising and I’ll tell you bulls**t. You can see it on the first run. It doesn’t change too much from month to month. If you can average around a 1% - 2% return for each direct mail piece you’re dead on. Anything below, dump 'em. Anything above, let me know about 'em. Hope this helps. -J_r0kk
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I added this quote because it’s a response that can make you rich. You need to read this and understand it in order to make it past the entry level pizzeria.

My take- perception is everything. Make your product stand out and they will come.
 
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Re: Advertising and Consistency

Thanks a lot for the information. I looks very useful, the question is just how to finance all the advertising!! Great comments.
 
Re: Advertising and Consistency

I love how everyone call the chains “industrial pizza” or worse. Keep in mind, Domino’s, Pizza Hut, Papa John’s and even Mc Donald’s were once just one store. It wasn’t a crappy product, or a million $$$ ad budget that made them grow. Be realistic.

Think of wine. I got priced out of Napa, $100 a bottle just doesn’t do it for me. So I go to Lodi, the Sierra foothills, and find $10-20 bottles with great character. My dad? He likes it out of the box! Each one is different, each has it’s plus and minus, the key is striking a balance between price, quality, and what the market will bare.
 
Re: Advertising and Consistency
gjuliani:
Thanks a lot for the information. I looks very useful, the question is just how to finance all the advertising!! Great comments.
Click to expand...
You might be thinking about this the opposite way. Effective marketing drives sales. The more money you spend on advertising, the more money you should be making, and if you are not then you are doing something wrong.

Look at your marketing. What % focuses on repeat busines? It takes a lot less to keep an existing customer than to generate a new one.

You also mentioned that the customers who came back liked your food. Of course they liked your food, that is why they came back. It is the ones who didn’t come back are the ones you need to be worried about.

Look for the thread about why cheep pizza sells. It will give you a lot if insight into why people go for the big dogs.
 
Re: Advertising and Consistency

“driverx” said:
I love how everyone call the chains “industrial pizza” or worse. Keep in mind, Domino’s, Pizza Hut, Papa John’s and even Mc Donald’s were once just one store. It wasn’t a crappy product, or a million $$$ ad budget that made them grow. Be realistic.quote]

I grew up almost literally next door to the first McDonald’s. The food changed greatly (and not for the better) as they expanded.
Click to expand...
 
Re: What works better-tons of advertising or excellent produ

One prime example of a highly successful chain NOT advertising and still growing beyond belief is Starbucks.

They don’t have television ads, they do some billboards, some newspaper here and there… The company spends their advertising money on training and development and design.

There are lots of great pizza chains that don’t advertise in Ontario and do really well because of word of mouth. For instance: Amore pizza & Pizzaiolo, Pete’s Pizza.

It’s a balance you’ll have to figure out soon. 5% is about right for your advertising budget. Some of the big boys do 6%, but they have lots of restaurants pooling money together.

Do you have a strategy worked out?
 
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Re: What works better-tons of advertising or excellent produ

Thanks for comments. Striking a reasonable balance sounds like the way to go. I think the periodicity of our advertising is not aggressive enough, that will increase, and we need to refocus our price points a bit. Being new to the business, I assumed that quality product (service plus product) was the driving force but I am realizing that this is so only for a portion of the consumer population. The rest has to come from persuasive advertising. I am doing various things: 1. yellow page ad; printing 1000 coupons per week and distributing door to door; focusing on current clients in POS database with direct mail campaign to thank them for their patronage and provide them with a special; select color ads in local free papers and magazines.
Thanks
 
Re: Advertising and Consistency

I looked for a link to the string on why cheap pizza sells but I did not find it. Can you help me with more info, like around when it posted?
Thanks,
 
Re: Advertising and Consistency

Thank you, very extensive discussion and good opinions. What is a bump? I noticed it at the end of the discussion you referred me to.
 
Re: Advertising and Consistency

Bring
Up
My
Post

Used to bump a post to the top of a BBS.
 
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