Docstoc

Marketing Strategy of Pizza Hut

Document Sample
Marketing Strategy of Pizza Hut Powered By Docstoc
					S. NO.            CONTENTS                 PAGE
  1            EXECUTIVE SUMMARY            5

  2      MARKETING STRATEGY OF PIZZA HUT    6

            HISTORICAL HIGHLIGHTS OF
  3                                         7
                    PIZZA HUT

  4              CUSTOMER FOCUS             10

  5          COMPETITORS STRATEGY           14

  6             INDUSTRY ANALYSIS           19

              SCANNING THE INTERNAL
  7                                         22
                  ENVIORNMENT

  8           MARKETING STRATEGY            26

  9             PRODUCT STRATEGY            27

  10            PRICING STRATEGY            32

  11             PLACE STRATEGY             36

  12          PROMOTION STRATEGY            39

  13            GLOBAL STRATEGY             50

  14              BIBLOGRAPHY               54

  15                APPENDIX                55




                                                 2
EXECUTIVE SUMMARY

Pizza Hut, the world‟s largest Pizza chain with over 12000 pizza restaurants
and delivery outlets worldwide has the vision of becoming the best branded
restaurant with the best delivery and franchise network thereby providing the
best food and best value to the families.

Pizza Hut as a company has always tried to target and satisfy various diverse
customer categories in different countries depending upon various factors
and situations.

Pizza Hut in order to fulfill its marketing objective of maximizing customer
satisfaction by providing high quality products, has believed in the following
marketing strategy:

“Think Global, Act Local”

Pizza Hut has tried to target each and every diverse population segment
either on the basis of age (kids, teenage, office goers, senior citizens) or on
basis of lifestyle (singles or couples) or special interest groups (celebrations,
parties, festivals).

As a part of the marketing strategy, Pizza Hut follows total market strategy
along with international market strategy coupled with early entry strategy.




                                                                               3
Marketing Strategy of Pizza Hut

“... Our landlady became concerned about complaints she was getting on
the clientele of the tavern next to our family's grocery store. She wanted a
nice neighborhood business to occupy her building. Having read an article
on the growing popularity of pizza in the Saturday Evening Post, she
approached Dan and me with the idea of opening a pizza place in her
building. Although pizza was relatively unknown in Wichita at the time, we
decided that it just might work." – Frank recalls.

On 19th June, 1958 the first Pizza Hut restaurant was opened by Frank and
Dan Carney, 2 students at Wichita State University, in Wichita, Kansas,
USA. By September Pizza Hut‟s sales was grossing $700 to $800 a week, by
December, over $1,000 a week. At the same time Pizza Hut restaurant
number two and three soon followed.

Market-Geography Strategy of “Franchising” was adopted in 1959, when
Dick Hassur, Manager of Pizza Hut Unit No. 3 signed the first Franchise
Agreement. For a fee, he would have the right to use the Pizza Hut name and
'secret' recipes. He also would receive management assistance from the
Carneys.

Today Pizza Hut is world‟s largest pizza chain in the world with more than
12000 pizza hut restaurants and delivery outlets operating worldwide.




                                                                           4
Historical Highlights of Pizza Hut

The first Pizza Hut restaurant in Wichita, Kansas was opened in 1958 by two
brothers Frank and Dan Carney. The two brothers borrowed a sum of $600
from their mother to open their new dream venture in the form of “Pizza
Hut” Restaurant.

In 1959, the 3rd Pizza Hut unit was set up as a result of Franchise Agreement.
Thus their vision and drive developed a “Franchise System” which later
became a worldwide successful marketing model.

International Pizza Hut Franchise Holders association (IPHFHA) was
organized in 1968 and in the same year, Pizza Hut made its first move
towards international markets and set its first Pizza Hut in Canada.

In 1969, Pizza Hut Restaurant was opened in Mexico followed by
Restaurants in Australia, Japan and England. In 1976, international Pizza
Hut restaurants became 100 in number while the total number of Pizza Huts
reached 2000.

In 1986, Pizza Hut opened its 5000th unit in Dallas, Texas. In 1988, Pizza
Hut celebrated its 30th anniversary with more than 6000 units. And at present
when world‟s largest pizza maker is reaching its 50th anniversary, it has
close to 12000 Pizza Hut restaurants and delivery units. Out of which 7500
are in America while more than 4500 are spread all across 80 countries.

As far as the Food is concerned, Pizza Hut along with its regular “Thin-n-
crispy” pizza, added sandwiches, salads and beer to its menu in 1970. In
1980, all time favorite “Pan Pizza” to its menu and till date it is the most



                                                                            5
favorite pizza of the entire menu at Pizza Hut. Famous Pizza varieties from
Pizza Hut are “Pan Pizza”, “thin-n-crispy” pizza, “hand tossed style pizza”,
“stuffed crust pizza”.

In 1977, Pizza Hut merged with PepsiCo. And $10 million new office was
constructed in Wichita. Pizza Hut also made its entry into the “Home
Delivery” segment which is the most growth oriented segment in the pizza
market. In 1983, Pizza Hut Australia started home delivery of pizzas,
followed by Sydney etc. In 2000

In 1997, YUM restaurants was formed making Pizza Hut a part of world‟s
largest restaurants chain with KFC and TACO BELL spinning from PepsiCo.
At this time, Pizza Hut has the largest number of outlets of any Australian
Convenience food company with a total of 464 outlets in Australia and New
Zealand.




                                                                          6
                Vision of Pizza Hut



    Not just Good….not just great…. But THE BEST.

To be the best hospitality business anywhere in the world….

                The best branded restaurant

                The best delivery business

                The best franchise network

          The best food, service assets and value

                   The best for families




                                                              7
Customer Focus

“Consumption is the sole end and purpose of production; and the interest
of producer ought to be attended to only so far as it may be necessary for
promoting that of the customer”- Adam Smith

Frank and Dan Carey recognized that the concept of Pizza was quite new to
American. Although frozen pizzas and pizza mixes had entered into the
market and started penetrating in non-traditional food market.

Initially Pizza sampling was done to test the product and consumer‟s
preferences about the product. Thus first Pizza Hut was a success. From the
very start, Pizza Hut aimed to get pizza’s to the masses.

Initially, the entire world was a common market for Pizza Hut until it began
segmenting and targeting particular market segments by differentiating and
developing diverse products for them.

Pizza Hut as a company has always tried to target and satisfy various diverse
customer categories in different countries depending upon various factors
and situations.

Pizza Hut in order to fulfill its marketing objective of maximizing customer
satisfaction by providing high quality products, has believed in the following
marketing strategy:

“Think Global, Act Local”




                                                                            8
In Malaysia for instance, Pizza Hut targeting both urban adults as well as
families with pre-teens and teenage children by offering a delicious mix of
nutritious Itlaian-Amercian cuisine which includes world‟s favorite pan
pizza. Pizza Hut Malaysia at the same time offers a cozy, friendly ambience
in which to relax and have a great time with family or friends. Pizza Hut
Malaysia's success has been due to imaginative and innovative thinking in
continuously developing, marketing and promoting new pizza products with
unique and distinctive flavor, taste, style and appeal.

In order to target the entire family experience, Pizza Hut launched a Hand
Tossed Pizza which was pizza hut’s first step in traditional stuffed crust
segment. It offers not-to-thin and not-to-thick crust on which the entire
family agrees.

To tap the market for young single in-hurry office goers looking for “fast
lunch”, Pizza hut came up with “personal pan pizza for one”.

The Personal Pan Pizza® revolutionized lunch and became the perfect
solution to satisfy pizza cravings in a hurry. Pizza Hut introduced America
to the perfect pizza for on-the-go back in 1983. Today, we can find Personal
Pan Pizzas® in airports, college cafeterias and even sports arenas.

To satisfy the New York pizza lovers, Pizza Hut introduced a “The big
New Yorker Pizza”. This pizza was 30% larger than pizza hut‟s largest
pizza. It is New York style pizza at un-New York price introduced in 1999.

In some countries, to capture the interest of “Echo Boomer generation”
which the ultimate cheese loving population, Pizza Hut launched “The
Ultimate Cheese” to give them the ultimate pizza experience.


                                                                             9
As Pizza Hut is the world‟s largest Pizza manufacturing company believing
in strategy of “Think Global, Act Local”, somewhere in USA pizza hut
introduced variants with extra cheese or large in size, at the same time, when
pizza hut to grow in international waters as Asia, it diversified to adapt their
cultures and provide their favorite flavors.

In order to tap huge spices lovers’ population in India, Pizza Hut recently
has launched “The Great Indian Treat” which is rich in Indian spices
and garlic.

In order to tap market segment less than 18 years, pizza hut introduced
“Stuff! Under 18 only” in United Kingdom, to tap the kids segment, various
“Value combos” are introduced comprising of a Pizza, Chicken wedges,
Fruit drink and ice cream.

Whereas to tap the teenage market, Pizza hut introduced different flavors
of pizza along with fruit beer was offered.

At the same time, Teenagers were lured by promotional schemes as “DUBIT
CARD” which will allow them to take discounts at various entertainment
places including pizza hut.

In an attempt to target, the people who are young and romantic at heart,
whether it is an 18 year old boy friend or 50 year husband, on the occasion
of “Valentine‟s Day”, Pizza Hut launched a limited edition “Sweetheart
Pizza” in the shape of heart.




                                                                             10
In nutshell, Pizza Hut tried to target each and every diverse population
segment either on the scale of age (kids, teenage, office goers, senior
citizens) or on basis of lifestyle (singles or couples) or special interest
groups (celebrations, parties, festivals).

Competition at Core

A simple word “Pizza” with a simple meaning “a flat yeasted bread topped
with a variety of toppings commonly including tomato sauce, cheese, meats
and vegetables commands approximately $37 billion worth of world market.

Though this figure of $37 billion includes packaged pizzas, frozen pizzas,
pizza restaurants, dry pizza/pizza mixes etc. However in the segment of
pizza restaurants, there are 4 major international players in addition to
various national players operating in every country.

International Competitors of Pizza Hut

    Papa John‟s

    Domino‟s

    Little Caesar‟s




                                                                        11
                                 Domino’s




                                 Competitor
                                     Of
                                  Pizza Hut



           Little                                          Papa
          Caesars                                          Johns




Domino’s Pizzas

Founded in 1960, Domino‟s pizza is the recognized world leader in pizza
delivery operating a network of company founded and franchise-owned
stores in national and international markets. Domino‟s Pizza‟s vision
illustrates a company of exceptional people on a mission to be the best pizza
delivery company in the world.


                                                                          12
With more than 8000 restaurants and delivery units spread across in 50
countries, Domino‟s holds the 2nd position in international pizza market.

Domino‟s is world‟s fastest pizza maker. It makes 14 pizzas in 2 minutes
and 35 seconds.

In 2004, Super Bowl Sunday was the busiest day of the year when Domino‟s
sold close to 1.2 million pizzas which is approximately 42% more pizzas
compared to a normal Sunday. Super Bowl Sunday ranks among the top five
days for pizza deliveries annually along with Thanks giving, New Year‟s
Day, New Year‟s Eve and Halloween.

Little Caesars


Little Caesars is 4th largest pizza manufacturer in USA. The company claims
to be largest carry-out pizza chain in the world. The company is famous for
its advertisement campaign of “pizza! Pizza!” which was later altered to
“pan! Pan!‟ to promote their pan pizzas.


Little Caesars is famous for selling more pizzas at fewer prices. It has
notable “differentiating Strategy” wherein Little Caesars sells “Hot-N-
Ready” pizza for $5.00 only which means those customers do not have to
call before taking the delivery of their pizza. They can just drop in to a
“Little Caesar” outlet and collect their hot-n-ready pizza instantly.




                                                                            13
Common Marketing strategy followed by 3 international
competitors:
Differentiation
   Three differentiation drives followed by 3 major companies of
     world‟s pizza industry started in 1970‟s.

   Differentiation drives taken up by Pizza Hut is “Pan Pizza”.
   Differentiation strategy adopted by Domino‟s is “Guaranteed 30-
     minutes free delivery”.

   Differentiation drive taken up by Little Caesars was “Buy-One-Get-
     One-Free”.
   Although these 3 differentiation drives ended by 1995, but these made
     dramatic changes in world‟s pizza industry.
   Pizza Hut style pan pizza was seen on numerous menus; every pizza
     company was delivering and offering some variation of “30-minute
     delivery”; almost every company was advertising some variant of
     two-for-one or two pizzas at a discount price.

   Till 1985, all the 3 big players were involved in neutralizing the
     impact of their competitor‟s strategy. For e.g. Little Caesars
     introduced “Panza Pizza” to neutralize pizza hut and Domino‟s pizza
     introduced “Domino‟s Doubles” to neutralize Little Caesars.


   Finally while these 3 giants were thrashing it out an upstart emerged:
     Papa John‟s with a “new” point of difference.




                                                                       14
Papa John
Better ingredients, Better Pizza


As a high school student working at a local pizza pub in Jeffersonville,
Indiana, Papa John's founder John Schnatter realized that there was
something missing from national pizza chains:


“A superior-quality traditional pizza delivered to the customer's door”.


His dream was to one day open a pizza restaurant that would fill that void.


In 1984, "Papa" John Schnatter knocked out a broom closet located in the
back of his father's tavern (Mick's Lounge), sold his prized 1972 Z28
Camaro, purchased $1,600 worth of used restaurant equipment, and began
selling his pizzas to the tavern's customers.


The customers loved the pizza so much that John was able to expand by
moving into adjoining space, eventually leading to the opening of the first
Papa John's restaurant in 1985.


Today, Papa John's boasts nearly 3000 restaurants in 49 states and 20
international markets. Papa John's also owns or franchises 100+ Perfect
Pizza restaurants in the United Kingdom.


More importantly, Papa John's remains committed to its heritage of
making a superior-quality, traditional pizza.



                                                                              15
Papa Johns also used “Differentiation” strategy of Porter‟s Competitive
Game plans. It positioned its pizza on basis of best ingredients which are
used to make its pizza better and rather best for its customers.


Seeking Competitive Advantage


To outperform the competitors and to grow despite them, Pizza Hut must
know why competition prevails, why firms attack and how firms respond.


This is done by undertaking Industry Analysis which assesses the
attractiveness of the market based on its economic structure through:




                                                                         16
PORTER’S FIVE FORCE MODEL




                 POTENTIAL
                 ENTRANTS




                 RIVALRY
   THREAT OF      AMONG        THREAT OF
   SUPPLIER’S    EXISTING       BUYER’S
  BARGAINING     PLAYERS      BARGAINING
     POWER                      POWER




                 THREAT OF
                SUBSTITUTES




                                           17
Rivalry among Existing Players


At present, there are 3 major players in US pizza market namely Pizza Hut,
Domino‟s and Little Caesars and the degree of rivalry among them is very
high. The reason is number of competitors is large, industry growth is high
and the fixed cost involved is also high.


Threat of new entrants

Secondly, since industry growth is high, it attracts new potential firms to
enter into the market. However if the new entrant is experienced then it will
be able to compete with the existing players else, the economies of scale
enjoyed by the existing players will force the new entrants to exit the market.


As pizza industry in US has reached maturity stage, entry of new entrant will
be treated as “Laggard Entry” which in turn can be categorized into
“Imitator” or “Initiator”.

Threat of substitutes


Thirdly, there can be a threat from substitutes which in case of pizza
industry can be other types of junk food as burgers, hot dogs, pastries,
sandwiches or pizza in some other form of pizza as frozen pizza or pizza
mixes.




                                                                            18
Threat of Buyer’s Bargaining Power


Threat can also come from customer or buyers when there are number of
suppliers of buyers concentration is high or large availability of substitute
goods.


Threat of Supplier’s Bargaining Power

Threat can also come from suppliers when there is large number of buyers
from these suppliers, high concentration of suppliers, high switching costs,
and non availability of raw material substitutes.


As the competition among existing players, threat of potential entrants,
threat of suppliers bargaining power is high, the pizza industry is highly
competitive and due to high growth rate, it is highly attractive too.




                                                                          19
Scanning the Environment: S.W.O.T Analysis



Strengths                                    Weakness


   Name Recognition                            High overhead costs due to
   First-Mover              Advantage           large number of restaurants
    (pioneer advantage)                         High price pizza which leads
   Competitive        advantage       as        to loss of customers.
    pizza   hut    has       he    largest      Internal    conflicts   among
    network       of     full      service       franchisees.
    restaurants        and        delivery
    services.
   Broad selection of products to
    target different segments.
   Strong Franchisee network.




                                                                               20
Opportunity                               Threats


   Increase revenue through more            Main       threat     is      from
    and more innovative pizzas.               competitors.    Out      of   these
   Increase     in    brand    loyalty       threat from Domino‟s is main
    through          good      customer       concern.
    service.                                 The    differentiation     strategy
   Pizza      hut    has   tremendous        followed by any pizza chain is
    scope of expansion through its            sooner or later adopted by all
    new online ordering system.               pizza industry players. New
   Pizza      Hut    home     delivery       and newer methods to lure the
    network and entry in to new               customers must be found out.
    markets.                                 Any competitor offering same
                                              quality and diverse flavors
                                              might be a real threat to Pizza
                                              Hut.




                                                                              21
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 1st restaurant 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 in
      USA. 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 “winner”.




                                                                           22
 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 Johns 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.




                                                                    23
Marketing Strategy: McCarthy’s 4 P’s of Marketing




                        Price
                       Strategy




    Product           Marketing            Place
    Strategy           Strategy           Strategy




                      Promotion
                       Strategy




                                                     24
Pizza Hut: An Overview of the “Product Strategy”

“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 “PIZZAS”. For instance, in Canada, its positioning
      statement is “The best tasting pizzas under one roof” which reflects a
      great variety of pizza being served , in China it has positioned on
      “Dine-in restaurants”, in Australia, it is “made fresh, served hot and
      on time” which reflects that best of ingredients are used and pizza is
      delivered on time. Similarly, in India, pizza hut‟s positioning has been
      “Good times, Great pizzas”.




                                                                           25
 Product-Scope strategy:


  Pizza Hut follows a “multiple product strategy” as pizza hut not only
  sells pizzas, but also deals in a variety of other products as




                       Product-Scope Strategy




    Pizzas          Appetizers         Salads & Pastas         Soups and
                                                               Desserts




  Although all the product offerings in pizza hut are not as fast moving
  as its pizza, but they usually complement each other. For instance, a
  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 “Customer’s Mind Share”.




                                                                           26
 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 “Value meal combos” wherein it
  offers a combination of pizzas, appetizers, beverages etc at lower
  prices. For instance, Pizza hut introduced “Meal for 2” which offers a
  medium pan/freshizza pizza, garlic bread sticks with 2 glasses of
  pepsi.


  Similarly pizza hut also offered “Meals for 4” where it offered 2
  medium 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.




                                                                      27
 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 “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 “Sangria”
  and “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.




                                                                      28
        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 by
using 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.




                                                                    29
Pizza Hut: Overview of the “Pricing Strategy”

Pizza Hut ideology of “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 is definitely not at all playing a “Price Game” against
its competitors.


Pizza Hut follows “A High/Low Pricing” strategy as far as its new
products are concerned where it fixes the price higher then its
competitors and then gradually lowers the price below the
competitor‟s prices.


In simple words, it is applying “Price Skimming” strategy for its new
products.
For instance, the price of “the Extreme” was fixed at $9.99 which was
much higher then its competitors. But several sales promotions were
used to reduce the price of the pizza below its competitors.




                                                                  30
      Since both Pizza Hut and Pepsi are partners, “Bundle Pricing” is used
      where 2 litre bottle of Mountain dew was offered free with “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 in
      quality and service offered is excellent.
    Helps in segmenting the market as Pizza Hut can sell “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 “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 “Value for Money” 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.


For instance, in India, when Pizza Hut launched The Great Indian Treat, it
didn’t increase price of existing pizzas, but reduced the quantity of
products in its “Value Meals combos”. This is because consumers at pizza
hut hardly buy single pizza‟s, they are more satisfied with value meal
combos. Therefore by reducing quantity of meal combos, Pizza Hut



                                                                            31
implicitly increased its price thereby encouraging customers to try new
flavors and at the same time, maintaining its market share and sales.


Sometimes in face of competition either from pizza players or from its
substitutes, Pizza Hut has also reduced prices by maintaining the same level
of customer service and quality.


For instance, when McDonalds reduced its prices by introducing Rs.20 value
meal, Pizza hut was forced to reduce its prices and introduced Rs.50 Pan
Pizza.


Pizza Hut also launched what is named as “Pan 4 all” at Rs.200 where pizza
hut offered 4 pizzas of different tastes. This scheme provided value for
money to the customers.


Pizza Hut follows “One-Price” Strategy i.e. it charges the same price to all
its 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.




                                                                         32
Pizza Hut at the same time follows “Price Bundling” Strategy or “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 “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




                                                                           33
Pizza Hut: An Overview of Franchise Model


“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 Fair.


In 1968, Pizza Hut made a global entry by entering in Canada. Then it made
a 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 “Franchising
Route” as the entry strategy.




                                                                         34
Reasons why Pizza Hut adopted “Franchising” as the entry strategy:


   Best method to establish operations without risk of operations in an
     unfamiliar country.


   Franchising route helps in learning the buyer behavior, consumer
     preferences, market realities etc.


   Franchising helped Pizza Hut in building a brand name and creating
     efficient distribution system.


   In certain socialist countries as China, Russia etc, direct foreign
     investment is not allowed, so pertaining to the local legal framework
     of these countries, Franchising is an easier route to enter into these
     countries.


  The critical success factor in the success of the Franchising Model:
  Selecting the right business partner.


  Yum Restaurant which is the parent company of Pizza Hut invites
  applications for franchisees for pizza hut.


  Three attributes which Yum Restaurants look for are:
      Commitment
      Capital
      Capability



                                                                         35
Franchisee must have the following to join the Pizza Hut family:


    Do you capital to grow?


         □ Personal net worth of $1million
         □ Liquidity of $360 million
         □ Endorsed financial plan for future development.


    Do you have a passion for operations?


         □ Quick service restaurants are a „hands-on” business
         □ A passion for customer mania is critical
         □ Food service experience is a must


    Are you committed to building people capability?


         □ A commitment to management and team training
         □ An infrastructure that supports rapid growth




                                                                   36
    Pizza Hut: An overview of “Promotion Strategies”

    Pizza Hut uses a wide assortment of promotion tools to achieve the
    following:


       □ Increase the market share
       □ Increase the sales volume
       □ To increase repeat purchase
       □ To induce the non buyers to buy the product




    The Promotion mix which it uses is as follows:




                                 Promotion Mix




Advertising                      Personal Selling                Sales
                                                               Promotion




                                                                    37
“Advertising”: Maximum used Medium of Pizza Hut
Promotion Strategy


Advertising is “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 an
experience.


For instance, to launch a new flavor in India named “The Great Indian
Treat”, Pizza Hut signed a Javed 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 launched
“Freshizza” ad campaign featuring Malika Arora Khan and counter attacked
Domino‟s campaign showing Anupam Kher and Paresh Raval.




                                                                       38
At the same time, Pizza Hut brings about local flavor in its ad campaigns. In
different 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.


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.

The Flash-based rich media ad shows a pizza-laden pizza peel (the wooden
"paddle" used to lift pizzas in and out of an oven) popping out of the middle
of the Yahoo home page. Pepperonis rain down on the pizza, which then
zooms across the screen to land in an ad unit on the right-hand side of the
page, in Yahoo's Marketplace area.

Clicking on the ad's "Click for recipes" icon sparks a Flash slideshow of
different version of the pizza -- Ultimate Cheese Lover's, Ultimate Meat
Lover's, Ultimate Pepperoni Lover's and Ultimate Veggie Lover's -- and a
special promotional price, $8.99 for a medium pie.




                                                                            39
Clicking again on the ad takes users to a special sub-site, PH899.com, where
they can get more information about the pizzas, find a local Pizza Hut, and
play Pizza Hut-branded games. The PH899.com site also features
downloadable coupons, and a contest to win free pizza for a year (which
requires that users submit their information to the site).

Yahoo also plans to promote Pizza Hut across its network, with ads running
on Yahoo Mail, My Yahoo, Yahoo Calendar, and Yahoo Sports.

The online campaign was conceived and developed by an integrated team
consisting of Yahoo, Pizza Hut, and The Digital Edge, the interactive agency
for Pizza Hut.

According, to chief marketing officer, Pizza Hut, “Pizza eaters are a broad
group and internet advertising helps them in reaching and targeting
each one of them”.




                                                                         40
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.


In order to encourage increased and immediate purchases or to induce non
buyers to make purchases, Pizza Hut prints its “coupons”.


Similarly, Pizza Hut to launch a new concept or to celebrate a particular
theme like Valentine‟s Day or Halloween came up with a print ad.


Pizza Hut also promotes its pizzas via pamphlets or leaflets which are either
hand delivered or sent through mails to its potential and regular customers.


(**specimens shown in Appendix)


Radio Advertising

Pizza Hut in order to introduce cheesy bites pizza, with an objective to
generate awareness and invite customers to sample the new product, briefed
its agency to come up with fun and innovative ad campaign.


The agency along with Clear Channel Katz advantage launched “The Pizza
Hut Free & Cheesy Music hour” which delivered one hour of regularly
scheduled music programming with minimal commercial breaks. During the



                                                                               41
prime afternoon drive time of 5.00 pm to 6.00 pm, hungry consumers got a
chance to taste a free sample of cheesy bites pizza at their local pizza hut.


The DJ banters and encouraged the listeners to visit the local Pizza Hut to
grab a free slice of “Cheesy Bites Pizza”. Listeners were encouraged to stay
tuned throughout the hour with a promise of a toll free number to be
revealed at the end that they could call to win one of the 10 family trips to
Walt Disney.


“The Pizza Hut Free and Cheesy Music Hour” was successful in driving
awareness and trial and for building excitement at the local market level.


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 “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. (**specimen
      shown in appendix).


    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.




                                                                                42
  On such a successful venture, Pizza hut stated that “If space tourism is
  going to be a reality, Pizza Hut pizza will make the trip even better."


 Banner Advertisement:        Styrofirm along with McCann Erickson
  came up with really innovative banner advertisements to advertise its
  new range of “Gourmet Pizzas”.


 Poster Advertisement: Pizza Hut came with a tremendously
  successful Poster advertisement campaign on the occasion of
  “Halloween” when Pizza Hut advertised for “The Ghoulish Tripple
  cheese, the spooky cheese combo, and the Halloween cheese
  supreme”.




                                                                            43
Sales Promotion


“Sales promotion” refers to a variety of short term incentives to
encourage trial or purchase of a product or service.




                                 Coupons
                                   &
                                 Rebates

                                                         Point
        Sweepstakes                                        Of
            &                                           Purchase
          Games                                         Material



                                  Sales
                                Promotion




         Premiums                                       Discount
            &                                              &
           Gifts                                       Allowances




                                Sampling




                                                                    44
 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. For e.g. by entering your area zip code, we get a list of
  coupons of pizza hut offering different pizzas with different toppings.
  Pizza Hut offers large discount on orders made through these coupons.


 Premiums & Gifts: Pizza Hut offers “Gift vouchers” to be presented
  as a gift to someone special on marriages, birthday, 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 with
  a promotion campaign where is offered a free DVD with a large size
  pizza and in a 6 week promotion, Pizza Hut distributed 10 million
  DVDs.


  Pizza Hut collaborated with Sony to launch a promotion campaign
  named “Pizza-Powered PlayStation giveaway” which was huge
  success. During the nest 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 “Cheesy Bites Pizza”
  introduced nation wide online sweepstakes contest to win an
  autographed pair of shoes by Jessica Simpson. Fans will be able to go

                                                                       45
   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.


 Contests: Pizza Hut on various occasions as Mother‟s Day, Father‟s
   day, Valentine‟s Day organizes contests to attract footfalls in the
   restaurants as well as to enhance its brand value. For e.g. on mother‟s
   day, Pizza Hut announced an “Essay competition” on “why Pizza Hut
   should cook for MOM?‟ and the prize was $750 Pizza Hut gift card.
   These contests gave children a wonderful opportunity to be creative
   and show their love and affection for their moms. At the same time,
   Pizza Hut offered an exciting gift for mom as this allowed mom‟s to
   spend some time away from their boring kitchen work with their
   family over a pizza.


 Sampling: Pizza Hut gave “free samples” of the new pizza which it
   launches. For e.g. in case of “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 out
   with 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 “The Great Indian Treat” the entire interiors
   were given a pink color and the menu and danglers were all colored
   pink.



                                                                       46
      On the occasion of “Valentine‟s Day” in Malaysia, Pizza Hut
      launched a limited edition “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. (** specimens of ads shown in appendix).



Personal Selling


“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 “Bhangra” in Chandigarh and Amristsar. Pizza Hut in
      Delhi organized a “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.




                                                                           47
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 “Think Global, Act Local”. For e.g. in
India, the 1st Pizza Hut which was launched in Bangalore served complete
vegetarian meals.


Similarly, in China, along with serving Pizzas, Pizza Hut also serves
“Sangria” and “Escargot”.


Similarly, in India, to match the spicy tastes of Indian consumers, Pizza Hut
launched “Tandoori Treat”, “The Great Indian Treat”.


For the cheese lovers in United States, Pizza Hut launched Cheesy Bites
Pizza and Stuffed Crust Pizza.




                                                                           48
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 “franchising model” is used successfully in all
      the countries by Pizza Hut.




                                                                         49
Recommendations


  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.


  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.


  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.


  “Location, location and location”: the most critical success factor
   for any hospitality business is “Location”. Pizza Hut does not aim to
   be premium brand with selective distribution, instead Pizza Hut is
   brand which must be available anywhere and every where people
   thinks of PIZZA. Thus Pizza Hut must increase it coverage.




                                                                        50
 Emphasis on development of “Home Delivery” Network: Although
  in developing countries like India, Pizza Hut has opened up a “call
  center” to fasten the speed of home delivery. But Pizza Hut must think
  of more innovative ways to reduce the cost and increase the speed.


 More and More innovative promotions: In developing nations as
  India and China, where the pizza market is still in growth stage, Pizza
  Hut must do innovative promotions as done in USA, UK and England
  which will increase its brand awareness and brand equity.




                                                                       51
Bibliography
   www.Pizzahut.com
   Yum France Investor Day Report, 2006
   www.papajohns.com
   www.dominos.com
   www.pizzatoday.com




                                           52
APPENDIX

Figure 1: Specimen of Pizza Hut Coupons printed in magazine and news
paper.




Figure 2: Balloon Advertisement for Pizza Hut




                                                                  53
Figure 3: Specimen showing Pizza Hut‟s Space Advertisement




Figure 4: Specimen of poster ad Pizza Hut launched for “Halloween”




                                                                     54
Figure 5: Pizza Hut‟s Valentine Promotion campaign




                                                     55
56

				
DOCUMENT INFO