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SUBMITTED TO:MRS. NEHA KAPOOR LECT. MGMT DEPTT CT INSTITUTIONS, SHAHPUR JALANDHAR .
SUBMITTED BY:SATISH KARARIA MBA 1ST YEAR GROUP B
2)PIZZA HUT INDIA………………………………………2
RETAIL ENVIRONMENT…………………………….3 POSITIONING…………………………………………..4 MARKETING STRATEGY…………………………....5 CONSUMER PULL FACTORS………………………..6 COMPARISON………………………………………....7 LONG TERM PROGNOSIS…………………………...8
9)FACTORS OF SUCCESS………………………….....9-10 10)FUTURE PLANS……………………………………....11
Pizza Hut is one of the flagship brands of Yum! Restaurant Int. which also has KFC, Taco Bell, A&W and Long John Silver’s under its umbrella. It is the world’s largest pizza chain with over 12,500 restaurants across 91 countries. Pizza Hut was started in 1958, by two brothers Frank and Dan Carney in Wichita, Kansas. They had the idea to open a pizza parlor. They borrowed $600 from their mother, and opened the very first Pizza Hut. In 1959, the first franchise unit opened in Topeka, Kansas. Almost ten years later, Pizza Hut was serving one million customers a week in their 310 locations. In 1970, Pizza Hut was put on the New York Stock Exchange under the ticker symbol PIZ. In 1986, Pizza Hut introduced delivery service, something no other restaurant was doing. By the 1990's Pizza Hut sales had reached $4 billion worldwide. In 1998, Pizza Hut celebrated their 40th anniversary, and launched their famous campaign "The Best Pizzas Under One Roof." In 1996, Pizza Hut sales in the United States were over $5 million. The first Indian outlet was opened in June 1996 in Bangalore. In India, Pizza Hut has 139 restaurants across 36 cities. Pizza Hut has been voted the “best family restaurant” for the second year running at the 2007 Tommy’s Parent Friendly Awards. "Pizza Hut is known for quality, innovation and category leadership.
PIZZA HUT INDIA
Background Pizza Hut entered India in 1996, and opened its first restaurant in Bangalore. Since then it has captured a dominant and significant share of the pizza market and has maintained an impressive growth rate of over 40 per cent per annum. Pizza Hut now has 95 outlets across 24 cities in India; and employed nearly 4,000 people by end of 2004. Yum! has invested about US$ 25 million in India so far; this is over and above investments made by franchisees. Yum! Brands Inc is the owner of the Pizza Hut chain worldwide. A Fortune 300 company, Yum! Brands owns Kentucky Fried Chicken, Pizza Hut, Taco Bell, A&W and Long John Silver’s restaurants worldwide. Yum! generated more than US$ 25.9 billion in worldwide sales in the year 2003, and has more than 33,000 restaurants in over 100 countries. Pizza Hut is believed to have close to 50 per cent market share of the organized pizza-retailing segment in India.According to an article in Financial Express, the market size of the pizza segment is around US$ 87 million and currently growing at the rate of 15 per cent to 17 per cent per annum. According to Pizza Hut sources, most of their outlets are financially successful, encouraging further expansion. In India, the average investment for each outlet is US$ 275,000-335,000 and is borne by the franchisee.
Out of all the existing pizza chains such as Domino's, Smokin Joe’s, Papa John’s, Pizza Corner, U.S Pizza, Pizza Hut has a dominating market share of 48% of the total market share. However, this forced competitors to look for new methods of increasing their customer bases. They all try to come up with some newer, bigger, better pizza for a low price. But Pizza Hut has always had the first mover advantage. Their marketing strategy in the past has always been to be the first. One of their main strategies, that they still follow today is the diversification of the products they offer. The market has become greatly competitive and the customer has become more discerning and adventurous. This however has not affected Pizza Hut's comfortable reign over the Indian pizza industry and the ever increasing number of loyal customers who have made it possible for Pizza Hut to aggressively extend its presence. Pizza Hut is always adding something new to their menu, trying to reach new markets. For example, in 1992 the famous buffet was launched in Pizza Hut restaurants worldwide. They were trying to offer many different food items for customers who didn't necessarily want pizza. Another strategy they used in the past and are still using is the diversification of their pizzas. Pizza Hut is always trying to make a pizza into something slightly different so that customers will think it’s a whole new product. E.g., in 1983, Pizza Hut introduced Pan Pizza, which had a guarantee of being ready to eat in 5 minutes when dining at Pizza Hut restaurants. In 1993, they introduced the "BigFoot," which was two square feet of pizza cut into 21 slices. In 1995, they introduced "Stuffed Crust Pizza," where the crust would be filled with cheese. Currently, they are marketing "The Big New Yorker," trying to bring the famous New York style pizza to the whole country.
Pizza Hut was among the first multinational brands to enter the food retail sector in India. When the first Pizza Hut restaurant opened in Bangalore the quick service industry was at a nascent stage and the pizza category was dominated by a sole regional player who had a marginal presence. Pizza Hut went on to play a significant role in pioneering and developing this category in India. Worldwide and in India, Pizza Hut has come to become synonymous with the 'best pizzas under one roof'. This is because at Pizza Hut the belief is that every pizza has its own magic, thus making it a destination product – which everyone seeks. It is this belief that has ignited the passion to create, innovate and serve the finest product the industry has to offer, while setting standards for others to strive to replicate. Pizza Hut is committed to providing uncompromising product quality, offering customers the highest value for money and giving service that is warm, friendly and personal. A critical factor in Pizza Hut's success has been its unique dining experience. Crewmembers at Pizza Hut strive each day to provide 'customer mania' - the kind of service that ensures that every visit of the customer is a memorable one. Pizza Hut's constant endeavor to provide extra value – whether it is pizzas which are available to suit every price range, new promotions or the introduction of innovative product ranges - that puts a 'Yum' on every customer's face - has allowed it to increase its presence in India to the current 139 restaurants across 36 cities.
Pizza Hut’s marketing strategy is very simple: “we want to satisfy our customer by offering them the best.” Pizza Hut has always valued customer service and satisfaction. In 1995, Pizza Hut began two customer satisfaction programs: a 1-800 number customer hotline, and a customer call-back program. These were implemented to make sure their customers were happy, and always wanted to return. Another big strength and even a competitive advantage is the fact that they have a full service restaurant as well as delivery services. Most of Pizza Hut's competitors do not have restaurants. Because of the restaurant, Pizza Hut can market to different segments that other pizza chains cannot. For example, Pizza Hut can market to families much easier than Domino's or Little Caesar's. Pizza Hut offers a sitdown, conversational type restaurant where families can take their children for birthday parties for example. Pizza Hut's broad selection of products also makes it easier for them to market to different market segments. The other two strategies followed by Pizza Hut is C.H.A.M.P.S (Cleanliness, Hospitality, Accuracy, Maintenance, Product quality and Speed) and 3F’s (Fun, Friendly and Familiar). These two strategies have really helped Pizza hut to evolve out as a market leader with a competitive advantage.
CONSUMER PULL FACTORS
• A critical factor in Pizza Hut's success has been a menu that has constantly evolved and expanded to cater to the changing needs and specific preferences of customers in different parts of the world. In having understood the pulse of the customers in India, Pizza Hut has clearly established itself as a brand with an Indian heart. • Besides offering an extensive range of vegetarian pizzas, it was the first pizza chain to open a 100% vegetarian restaurant in India in Surat and later in Ahmedabad and Chowpatty, where it offers a Jain menu sans all root-based ingredients. • Over the years Pizza Hut has also developed and successfully introduced a range of products especially suited to the Indian palate. These products like Chicken Tikka, Spicy Korma, Spicy Paneer and the Masala and Tandoori pizzas have been a tremendous success. What has also given Pizza Hut a competitive edge is that in addition to an extensive range of internationally renowned pizzas like The Italian, the proprietary Pan Pizza and Stuffed Crust, in India the menu offers the option of a complete meal. It includes appetizers, a Salad Bar - where the customers can make their own fresh salads, a range of soups, pastas and desserts. • Pizza Hut has a unique tradition. A bell hangs at each Pizza Hut restaurant, which is rung by customers who as they leave wish to thank the servers for yet another memorable visit.
OTHERS 32% PIZZA HUT PIZZA HUT 48% DOMINO'S OTHERS DOMINO'S 20%
LONG TERM PROGNOSIS
With competition being so strong in this industry the threat of imitation products will surely be a problem to be dealt with. Pizza Hut will however have the first mover advantage with this product. With the entry of imitation products into the market, Pizza Hut will have to adjust its mixes to accommodate change. The promotions may have to be bigger and better than the competition, or the product may need to be altered to give it that little bit of an edge over the competition. For example stuffing the crust with cheese or giving a free topping with the purchase would help give Pizza Hut an edge over the competition. Pizza Hut is moving beyond big cities. While consolidating its presence in the metropolitans, this aggressive expansion will involve Pizza Hut entering smaller cities like Cochi, Nasik, Bhubaneswar, Lucknow and Madurai . It is strengthening its roots in the Indian market by tying up with local and popular brands such as Reliance Communication. Apart from this it is also developing local supply chain. Basically, Pizza Hut will need to remain flexible in the maturity stages of the product life cycle in an attempt to continue to be the market leader. Overall, this is a product that is not much unlike any of the other new pizza's that Pizza Hut has introduced. What makes this new product so exciting is the marketing plan that is directing the product at a new segment. We are taking a large pizza with a lot of toppings and marketing it as an "Extreme Pizza" to a generation of younger adults that are consumed by this marketing tool. This is what will make this a success. The mix of promotion and advertising we will be using will target a very profitable
Factors for Success
Offering value food Employing economies of scale, Pizza Hut has made its offerings more affordable. Its delivery offer of US$ 4.4 for four personal pan pizzas has been very successful, helping it grow the business by 25 per cent. They have recently introduced a range of vegetarian personal pan pizzas for US$ 1.1. Most Pizza Hut restaurants are located in the metros and smaller metros. In taking long strides across the country, Pizza Hut is consolidating its position by opening more restaurants in the metros where it already has a presence as well as opening outlets in new markets. Aggressive marketing and tie-ups with local and popular brands Pizza Hut has increased its visibility by launching a well-received TV campaign aimed at the young crowd. It has formed partnerships with recognised brands such as Nestle and Pepsi. It also holds regular promotional campaigns targeted at children and uses these alliances to offer packages during these campaigns. Developing the local supply chain The local supply chain for Pizza Hut was developed by Yum! and currently 95 per cent of the ingredients they use are locally produced. They now import very few specialty items like pepperoni.
Leveraging the India Advantage : International brand with an Indian heart Pizza Hut is one of the first international pizza chains with purely vegetarian dine-ins at Chowpatty (Mumbai), Ahmedabad and Surat, which also serve Jain menus. Pizza Hut has even opened two allvegetarian restaurants in the western state of Gujarat to cater to the Jain religious community, whose members prefer not to eat at places where meat is served. Offering more than the international menu International food chains typically offer only a few localized products in other parts of the world. However, Pizza Hut’s local menu is as large as the international one. According to Pizza Hut, the Indian food heritage is very rich, and hence Indians like local flavors. The Tandoori range of pizzas, which was developed locally, has a menu mix of over 20 per cent. Indigenous sourcing of raw materials Pizza Hut has reduced costs through indigenous sourcing of raw material. It has tied up with a local company Dynamix Dairy Industries Ltd (DDIL) for sourcing mozzarella cheese. The landed cost of imported mozzarella comes to US$ 3.3 - 3.5 per kilogram. The domestic price, however, works out to US$ 2.99 - 3.1 per kilogram. Pizza Hut is adding to the bottom line by localizing equipment as well as by paying attention to inventory replenishment, which has been reduced from 60 to 30 days.
According to Yum! Restaurants International, India is amongst the top five growth markets for Pizza Hut. Pizza Hut is also experiencing double-digit growth in India and hence is confident about expanding its operations in India. Pizza Hut hopes to increase the number of Pizza Hut outlets in India to 180 by the end of 2008 from the present figure of 130. The expansion programme will make Pizza Hut the fastest growing western restaurant chain in India. In addition, Yum! plans Pizza Hut to be in 42 cities by end of 2007, and 55 cities by end of 2008.
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