Marketing Strategy by Pizza Hut Essay

Various tools and methods like, secondary sources were adopted to collect information to critically analyze the marketing strategies adopted by pizza hut, analyze the probable market for the product, study its competitors and substitute products, to estimate future sales and expected share of the market, analyze the effectiveness of advertisement, its target market and finally why people prefer pizza hut. RESULTS AND DISCUSSIONS MARKETING STRATEGY Pizza Hut follows the following strategy: Total market strategy—-Pizza Hut started with a single product i. e. Pizza but with different segments emerging and the degree of competition increasing, it diversified into several products to serve different segments. It came up with chicken nuggets, wedges, garlic bread, smiley etc. International marketing strategy: Pizza Hut started with local market strategy in Kansas, USA then moved on to regional markets in and across USA. In 1968, Pizza Hut started its international movement by opening its 1strestaurant in Canada. And today Pizza Hut is world’s largest pizza chain with its presence in more than 100 countries. Early Entry Strategy: Though Pizza Hut was not the first entrants in the pizza market infuse. But Pizza Hut followed an early entrant strategy. Customers knew what a pizza is but still there was huge potential to tap. In order to become a leader, pizza hut continued to refine their product &develop new product to suit their customer’s changing tastes. Ultimately Pizza Hut with its superior promotion, manufacturing and distribution activities has turned out to be the â€Å"winner†. Strong Commitment Strategy: Pizza Hut has been operating in the pizza market by realizing all economies of scale in promotion, distribution and manufacturing facilities. If Papa John’s or Little Caesars come out with a new competitive pricing strategy or innovative product, then Pizza Hut quite aggressively fights back by bringing more competitive prices or better innovations in product category. In simple words, Pizza Hut takes all possible measures to defend its leadership position in the market. Pizza Hut: An Overview of the â€Å"Product Strategy† â€Å"Product Strategies specify a market needs that may be served by different products offerings†. Product Positioning Strategy-Pizza Hut has always followed Single brand positioning strategy wherein it has positioned only its pizzas. Although the positioning statement has been different in different countries but it has always hovered around its â€Å"PIZZAS†. For instance, in Canada, its positioning statement is â€Å"The best tasting pizzas under one roof † which reflects great variety of pizza being served , in China it has positioned on â€Å"Dine-in restaurants†, in Australia, it is â€Å"made fresh, served hot and on time† which reflects that best of ingredients are used and pizza is delivered on time. Product-Scope strategy: Pizza Hut follows a â€Å"multiple product strategy† as pizza hut not only sells pizzas, but also deals in a variety of other products as although all the product offerings in pizza hut are not as fast moving as its pizza, but they usually complement each other. For instance, family coming for a dinner usually starts with some soup and garlic breads and then moves on to pizzas along with some diet salads. In this way, pizza hut caters to different people with different needs and tastes and preferences. This helps in increasing sales, profitability, market share and above all â€Å"Customer’s Mind Share† Product-Scope Strategy Salads & Pastas, Appetizers Pizzas, Soups and Desserts Product-Design Strategy:Pizza Hut follows the strategy of selling Standardized Products with modifications. Pizza Hut mainly sells 4 types of pizzas: Pan Pizza, hand-tossed pizza, stuffed crust pizza and Thin N Crispy pizza. Pizza Hut serves these standard style pizzas everywhere in the world but at the same time, it offers its customers to choose different toppings as extra mushrooms or extra capsicum and onions with extra cheese or chicken toppings like toppings of meat, bacon, fish, ham, beef topping, pork toppings etc. Secondly it offers what is known as â€Å"Value meal combos† wherein it offers a combination of pizzas, appetizers, beverages etc at lower prices. For instance, Pizza hut introduced â€Å"Meal for 2† which offers medium pan/ fresh pizza, garlic bread sticks with 2 glasses of Pepsi. Similarly pizza hut also offered â€Å"Meals for 4† where it offered 2medium pan pizzas, with one plate of garlic bread and one portion of wedges with 4 glasses of Pepsi/Soup. Pizza Hut by offering standard products seeks economies of scale and by offering modification options enhances customer satisfaction which adds to brand equity of Pizza Hut Product innovation strategy: Pizza Hut has been constantly involved in innovating new products. It started as Pizza chain in 1958. On one hand, it offers traditional Italian pizzas while on other hand, it innovated several new varieties as pan pizza, thin n crispy, stuffed crust, the big New Yorker pizza, hand tossed pizza, the edge pizza along with the Sicilian Pizza. Pizza Hut spends extensively on research and development of its innovative products. At the same time, customer’s feedback also plays an important role in preparing new pizzas. For example, The Big New Yorker Pizza. Pizza Hut continued to make innovations as it followed â€Å"International marketing strategy†. In India, Pizza Hut launched international style pizza in localized Indian flavors like Tandori pizza range with Punjabi flavors, vegetarian tama-tam, Murgh Mazedar Pizza etc. Similarly, in China along with traditional pizzas, it served â€Å"Sangria â€Å"and â€Å"Escargot†. Along with pizzas, Pizza Hut also innovated beverages and drinks to satisfy the tastes of consumers. For e. g. Pizza Hut in Oman has added a refreshing splash of tropics to their menu with the launch of Monin, a new line of flavored drinks. Value Marketing Strategy: Pizza Hut as far as value marketing is concerned follows Quality strategy, Customer- service strategy. Time-based strategy Pizza Hut promises its customers to give them best quality product busing best quality ingredients. Time and again it re-emphasizes on this fact through its advertisement campaigns. Pizza Hut main motive is to enhance its customer’s satisfaction by providing them best quality products at affordable prices. At the same time, pizza hut always tries to deliver on time. Although Pizza Hut’s competitor Domino’s differentiates on basis of timely delivery in 30 minutes, however, Pizza Hut through its innovative technology is also trying to reduce its delivery time to 30 minutes and fight back Domino’s. Pizza Hut: Overview of the â€Å"Pricing Strategy† Pizza Hut ideology of â€Å"Customers† behind its pricing strategy: Willing to pay for relevance Willing to pay for excitement Willing to pay for quality Willing to pay for simplifying life Willing to pay for forward movement But Selective and defiant Pizza Hut follows â€Å" A High/Low Pricing† strategy as far as its new products is concerned where it fixes the price higher than its competitors and then gradually lowers the price below the competitor’s prices. In simple words, it is applying â€Å"Price Skimming† strategy for its new products. For instance, the price of â€Å"the Extreme† was fixed at $9. 99 which was much higher than its competitors. But several sales promotions were used to reduce the price of the pizza below its competitors since both Pizza Hut and Pepsi are partners; â€Å"Bundle Pricing† is used where 2 liter bottle of Mountain dew was offered free with â€Å"The Extreme pizza†. The high/low pricing strategy has several advantages for Pizza Hut Used to create excitement. Set high prices initially to send a signal that its products are best inequality and service offered is excellent. Helps in segmenting the market as Pizza Hut can sell â€Å"the extreme pizza† to the customers who wish to pay higher price as well as to the bargain hunters too. Pizza Hut in formulating the complete pricing strategy focuses on â€Å"Value which it is providing to the customers at a particular price†. As far as the pricing of established products is concerned, Pizza hut believes to give â€Å"Value for Money â€Å"to its customers. Thus in order to provide maximum value to the customers and enhance the brand value, it sometimes maintains the same prices while sometimes reduces the prices, while sometimes increase prices also. â€Å"One-Price† Strategize. It charges the same price to allot customers under similar conditions and for the same quantities. This helps in establishing a favorable and fair image among its customers as well as having a stable market. Pizza Hut at the same time follows â€Å"Price Bundling† Strategy or â€Å"Value Pricing†wherein it combines the items of its menu and offers at a lesser price then what a customer would have to pay if he bought these items individually . For Example, in India, Pizza Hut offered for Rs. 75 a deal of â€Å"a plate of garlic bread sticks, 1 personal pan pizza, a glass of Pepsi and one scoop of ice cream†. Similarly Pizza Hut offered meal combos serving 2 people or 4 people. These bundling schemes attracted large number of customers who are not only interested in pizzas but in tasting other things as well. In offering such schemes, although Pizza Hut costs less but at the same time, this increases the customer inflow and sales revenue of PH tremendously. Thus Pizza Hut’s pricing strategy revolves around providing maximum value to the customer at an affordable price. Pizza hut never plays the price game as it has positioned its brand on high quality and excellent customer service. And even Pizza hut customers don’t mind paying a little more than its competitors because of the service it renders and quality it promises. Pizza Hut: An Overview of Franchise Model â€Å"Franchising† involves a contractual arrangement between a franchisor (a manufacturer, a wholesaler, or a service sponsor) and a retail franchisee, which allows the franchisee to conduct a given form of business under an established name and according to a given pattern of business. Pizza Hut after its incorporation in 1958 opened its first franchise unit in Topeka, Kansas. Followed by a Pizza Hut restaurant built in just 5 days by franchisees in Oklahoma State Fairing 1968, Pizza Hut made a global entry by entering in Canada. Then it made strong foot holding in Australia, Japan, England, Kuwait, and Abu Dhabi. By 1989, Pizza Hut was already serving 54 countries. In 1996, Pizza Hut entered India with the first dine-in restaurant in Bangalore. While entering in the international arena, Pizza Hut used the â€Å"Franchising Route† as the entry strategy. (Scribd, 2010). FINDINGS Promotion mix 1. Advertising 2. Personal selling 3. Sales promotion A) Advertising Advertising is â€Å"non personal communication transmitted through mass media as radio, television, print, internet and outdoor media†. The main objective behind every campaign is either to increase sales by encouraging potential purchasers or inducing repeat purchases or prompting immediate purchase by offering special schemes or to create awareness about a new product offering by highlighting a new flavor or announcing price changes or demonstrating the product in use by depicting inexperience. Advertising Sales Promotion For instance, to launch a new flavor in India named â€Å"The Great Indian Treat†, Pizza Hut signed a Jived Jaffrey for its new TV commercial. Similarly to inform the customers about Rs. 50 pan pizza, Pizza hut showed Zayed Khan as a young teenager boy friend who has to treat his large number of girl friends with something trendy and affordable. Pizza Hut also launched certain ad campaigns to counter attack its competitors promotions. For instance, in 2005 Pizza Hut launchedâ€Å"Freshizza† ad campaign featuring Malia Aurora Khan and counter attacked Domino’s campaign showing Anuran Khmer and Parish Revaluate the same time, Pizza Hut brings about local flavor in its ad campaigns. Indifferent countries, it uses models, situations, positioning clearly related to that particular country. For instance, in India, Pizza Hut focused on occasions such as marriage and used Indian models that represent and relate to their target audience. Similarly, in USA, Jessica Simpson sells chicken nuggets and pizzas for Pizza hut. (Scribd, 2010) Internet Advertising Not only Television advertisement, Pizza Hut along with Pizza innovations, also innovates new ways of promoting its products. Recently Pizza Hut signed a deal with Yahoo internet portal to advertise its products. Print Media (newspapers, magazines, pamphlets, posters) Although Pizza Hut advertises mainly via television, but print ads also constitutes a major portion of its promotion mix. Outdoor Advertisements Pizza Hut adopted a variety of innovative types of outdoor advertisement. Balloon Advertising: Pizza Hut indulged in an extremely innovative form of advertising named â€Å"Balloon Advertisements† where in cold air balloons in the shape of Pepsi can, pizza slices and garlic bread are placed either in front of the hut or placed at its roof top. Space Marketing: Pizza hut came up with a very innovative method of advertising when Pizza Hut paid huge sums (approx $1 million) to put a 30 ft large logo on Russian Proton Rocket. Not only had the logo, Pizza Hut also made its pizza available to the astronauts in the space. On such a successful venture, Pizza hut stated that â€Å"If space tourism is going to be a reality, Pizza Hut pizza will make the trip even better. † Banner Advertisement: Styrofoam along with McCann Erickson came up with really innovative banner advertisements to advertise its new range of â€Å"Gourmet Pizzas†. Poster Advertisement: Pizza Hut came with a tremendously successful Poster advertisement campaign on the occasion of â€Å"Halloween† when Pizza Hut advertised for â€Å"The Ghoulish Tripplecheese, the spooky cheese combo, and the Halloween cheese supreme† B) Sales Promotion. â€Å"Sales promotion† refers to a variety of short term incentives to encourage trial or purchase of a product or service. Coupons and Rebates: Pizza Hut offers discount coupons in physical form with every purchase we make. However in USA, UK, Canada where online ordering contributes a major percentage to total sales, Pizza Hut offers online coupons for different regions of varying denominations Premiums & Gifts: Pizza Hut offers â€Å" Gift vouchers† to be presented as a gift to someone special on marriages, birthday, and anniversary etc. these gift vouchers are available in denomination of Rs. 500, rs. 1000, rs. 2000 etc. Pizza Hut offers CDs and DVD along with their pizzas as gifts to act as an additional incentive for customers to make the purchase. For e. g. Unique DVD Promotion: Pizza Hut came up withal promotion campaign where is offered a free DVD with a large size pizza and in a 6 week promotion, Pizza Hut distributed 10 millionDVDs. Pizza Hut collaborated with Sony to launch a promotion campaignnamedâ€Å"Pizza-Powered PlayStation giveaway â€Å"which was huge success. During the next year, Pizza Hut again came up with a promotion where along with stuffed crust pizza, kids will get PlayStation demo disc free. Sweepstakes: Pizza Hut during the launch of â€Å"Cheesy Bites Pizza â€Å"introduced nationwide online sweepstakes contest to win an autographed pair of shoes by Jessica Simpson. Fans will be able to go online to www. pizzahut. com/cheesybites to enter the sweepstakes. Customers will also have an opportunity to win an autographed pair of Miss Piggy boots. Sampling: Pizza Hut gave â€Å"free samples† of the new pizza which it launches. For e. g. in case of â€Å"Cheesy Bites Pizza†, Pizza Hut offered free slices of it to the customers for sampling and testing it amongst the consumer group. Point of Purchase Material: Pizza Hut restaurants interiors are done in a uniform format for all the restaurants. Pizza Hut also comes outwit several innovative POP materials to attract the attention of its customers. For e. g. spin The Wheel games, danglers and posters. During the launch the â€Å"The Great Indian Treat† the entire interiors were given a pink color and the menu and danglers were all colored pink. On the occasion of â€Å"Valentine’s Day† in Malaysia, Pizza Hut launched a limited edition â€Å"Heart Shaped Pizza† with danglers, greetings cards all over. This limited edition Heart shaped pizza not only created an excitement among the customers, it also increased its brand value. C) Personal Selling â€Å"Personal Selling refers to face to face interaction with the customer†. Entertaining the customers in the restaurant: Crew members at Pizza Hut broke in to a boogie at metros like Delhi and Mumbai and performed â€Å"Hangar† in Chandigarh and Amritsar. Pizza Hut in Delhi organized a â€Å"JIG N JEETO† contest with super star Faradeen Khan judging the show. The show received tremendous response from the customers. Etiquettes of the crew members: The politeness of their speech and the mannerism which Pizza Hut crew members serve their customers is absolutely outstanding which enhances the brand value of Pizza hut in customer’s mind. Pizza Hut: An Overview of the Global Strategy— Pizza Hut before entering into any new country conducts a comprehensive market survey of that country to learn about the culture that prevails in that country, the state of government and politics, the legal framework (product quality laws, packaging laws) , commercial practices (business structure, patterns of competition). Strategy Adopted by Pizza Hut for Global marketing programs Localized strategy: Pizza Hut follows the strategy of â€Å"Think Global, Act Local†. For e. g. in India, the 1stPizza Hut which was launched in Bangalore served complete vegetarian meals. Similarly, in China, along with serving Pizzas, Pizza Hut also serves â€Å"Sangria† and â€Å"Escargot†. Similarly, in India, to match the spicy tastes of Indian consumers, Pizza Hut launched â€Å"Pandora Treat†, â€Å"The Great Indian Treat†. For the cheese lovers in United States, Pizza Hut launched Cheesy Bites Pizza and Stuffed Crust Pizza. International Marketing Coordination: Pizza Hut’s international marketing activities though dispersed in different countries are properly coordinated to gain competitive advantage as all marketing activities as market research, advertisements, and restaurant interiors are done using a similar method. Marketing know-how and skills are transferred from one country to another. For e. g. the â€Å"franchising model† is used successfully in althea countries by Pizza Hut. (AssignmentPoint,2012) SWOT ANALYSIS OF PIZZA HUT The swot analysis provides all the important aspects of the product and the company in brief. Swot stands for S-strength W-weakness O-opportunities T-threats S-strength -best quality of food -quality of services -varieties in toppings -different promotional schemes -consistency -strong brand name W-weaknesses -high price -advertisement shows pizza not salads, sandwiches etc O-opportunities -needs to open more outlets -offer diet food and low calorie food -explore untouched market T-threats—competition (wikiwealth, 2012) RECOMMENDATIONS/SUGGESTIONS 1)High Quality Personnel: In order to maintain the no. 1 position in Pizza market, Pizza Hut must obtain total cooperation of its employee’s thereby increasing productivity, beating competition and enhancing customer satisfaction. For this, proper training program with high incentive schemes must be established. 2) Pay more attention to untapped segment of Senior Citizens: Pizza Hut must innovate and launch some product for Senior Citizens. It could establish Pizza Hut senior club which will organize activities for oldies. 3) Maintain the product quality by continuous innovations thereby giving surprises to the customer off and on. Innovations can be based on consumer’s reviews and feedbacks as to what changes are they looking for in their pizzas. 4) â€Å"Location, location and location†: the most critical success factor for any hospitality business is â€Å"Location†. Pizza Hut does not aim to be premium brand with selective distribution; instead Pizza Hut is brand which must be available anywhere and everywhere people thinks of PIZZA. Thus Pizza Hut must increase it coverage. 5) Emphasis on development of â€Å"Home Delivery† Network: Although in developing countries like India, Pizza Hut has opened up a â€Å"call center† to fasten the speed of home delivery. CONCLUSIONS This project helped in following areas Critical analysis of marketing strategies adopted by pizza hut Knowing the product offered by pizza hut Identify the alternatives available in the market Analyze the target market Know about the existing competition in the market To understand the distribution system in the product Reasons why people prefer pizza hut products Methods to increase sales with maximum customer satisfaction Role of advertisements in the promotion of the product To estimate its future growth and market share. REFERENCES Pizza Hut and Dominos marketing strategy Scribd (2010). Pizza Hut and Dominos marketing strategy. [online] Retrieved from: http://www. scribd. com/doc/25371457/Pizza-Hut-and-Dominos-marketing-strategy [Accessed: 24 Nov 2012]. About Us – Pizza Hut Pizzahut. Co. Uk (2012). About Us – Pizza Hut. [online] Retrieved from: http://www. pizzahut. co. uk/restaurants/about-us. aspx [Accessed: 24 Nov 2012]. Assignment Point – marketing plan on pizza hut Assignment Point (2012). Assignment Point – marketing plan on pizza hut. [online] Retrieved from: http://www.assignmentpoint. com/business/marketing-business/marketing-plan-on-pizza-hut. html [Accessed: 24 Nov 2012]. Pizza Hut Franchise Pizzahutfranchise. Co. Uk (n. d. ). Pizza Hut Franchise. [online] Retrieved from: http://www. pizzahutfranchise. co. uk/html/history. html [Accessed: 24 Nov 2012]. Pizza Today Magazine Pizzatoday. Com (n. d. ). Pizza Today Magazine. [online] Retrieved from: http://pizzatoday. com [Accessed: 24 Nov 2012]. Pizza Hut SWOT Analysis – WikiWealth Wikiwealth (2012). Pizza Hut SWOT Analysis – WikiWealth.[online] Retrieved from: http://www. wikiwealth. com/swot-analysis:pizza-hut [Accessed: 24 Nov 2012]. About Us | Papa John’s: Better Ingredients. Better Pizza. Papajohns (2012). About Us | Papa John’s: Better Ingredients. Better Pizza.. [online] Retrieved from: http://www. papajohns. com/about/index. shtm [Accessed: 24 Nov 2012]. APPENDIX/ ANNEXURE Figure 1: specimen of pizza hut coupons printed in newspapers and magazines. Figure 2: specimen showing pizza hut’s space advertisement. Figure 3: specimen of poster ad Pizza Hut launched for Halloween.