Amid Declining Sales, CEO Calls Chain's Ads 'Confusing'

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CHICAGO ( -- Pizza Hut's chief marketing officer since 2002, Tom James, has left the restaurant chain, and Bill Ogle, most recently the marketer’s U.K.-based marketing director, has replaced him.

Mr. James resigned from the Dallas-based Yum Brands chain last week to return to New York, a company spokeswoman said. “There was no business reason,” she said. “He’s a New Yorker. This was definitely his decision.”

Mr. James didn’t return repeated calls for comment.

Targeting a new demo
He started three years ago on a high note after he was recruited during a management shakeup to revitalize flagging sales in the competitive pizza segment. With a nearly $100 million boost to the advertising budget (to more than $400 million), Mr. James decided to go after busy moms instead of young adults with advertising from Omnicom Group’s BBDO Worldwide, New York, calling them to “gather ‘round the good stuff.” The campaign, which kicked off May 2003, helped drive 21 consecutive periods of same-store sales gains.

That streak ended in the second half of 2005 as rivals drew customers hungry for pricing deals with $5 and $7 pies while Pizza Hut continued with new product innovations.

Delivering value
Following a flat 2005 and a 4% drop in same-store sales in January, Yum Brands Chairman-CEO David Novak said he was confident of the long-term strategy built on new products, but at the same time the strategy wasn’t delivering enough value the way sibling brands KFC and Taco Bell were.

“We believe we must win on both fronts to consistently drive same-store sales growth, so improving our value offering will be our No. 1 focus while we continue to be the best pizza innovator,” he said during a Feb. 7 earnings call. He said that while rival Domino's was launching $5 pizzas, Pizza Hut was "too focused ... single-mindedly on the product innovation.”

Blaming the advertising
Mr. Novak, known for his public performance assessments, vowed that the chain would push coupons and price promotions like the Pizza Hut Pairs to balance out its offering. He also blamed the company's advertising.

“We had an advertising campaign or execution that was very confusing,” Mr. Novak said. “You know we didn't really articulate what the view, what the deal was. We clearly can do better. I can tell you the Pizza Hut team definitely feels the pressure to improve their execution. But I'm very confident at the same time that we got the team that can get that done.”

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