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PIZZA HUT

Pizza Hut®, a subsidiary of Yum! Brands, is the world’s largest pizza company, specializing in the pizzas you never
have to settle for – Pan Pizza, Thin ’N Crispy® Pizza, Hand-Tossed Style Pizza and Stuffed Crust Pizza. Pizza Hut
began 58 years ago in Wichita, Kansas, and today is an iconic global brand that delivers more pizza, pasta and wings
than any other restaurant in the world. A true innovator in the pizza category, we were not only the first to provide
America with Pan Pizza, but we were also the first ever online purchase.
Our Pizza Hut division includes more than 14,100 restaurants in over 90 countries, excluding the Yum! China
Division. We are taking the powerful Pizza Hut Red Roof icon and continuing to open new units around the world.
We began building delivery carryout units in 1988 and today it is the fastest growing part of our business. With
Delivery, our strategy is to take advantage of our existing scale and quickly grow the brand in both developed and
emerging markets. Our Express business – found in shopping malls, large retail chains, travel centers and on military
bases – is the clear leader in the U.S. and we are growing it internationally. Dine-In has always been at the heart of
our business. We are building vibrant casual dining Pizza Hut restaurants in many international markets and offer a
“Pizza and More” menu strategy. We have also developed a new sub-brand in the U.S. called WingStreet®, making
Pizza Hut the first big American chain to deliver chicken, sides and complete chicken dinners.

For years now Pizza Hut, Inc. has been the leader of the pizza industry. We have been privileged to have
had the opportunity to perform research on advancements we can make to maintain this reputation.
Based upon our Economic Analysis we have decided to not launch the BIGFOOT pizza. The following
gives a detailed analysis, offers alternatives to improving the Pizza Hut experience, and gives reasons
why we came to this conclusion.
Economic Analysis:
First off, we appreciate the opportunity to have had an important role in Pizza Hut's latest product
development, BIGFOOT. As you know, over the past five years market shares for the industry have
changed much more drastically than in recent years. Our market share has been stagnant, and sales are
down 10% this year in relation to last year's numbers.
During the same period, Little Caesars made a strong push and they have continued to grow. Little
Caesars' "two for one" marketing approach was effective in infiltrating the "mom's night off" segment, and
is seen by customers as a great value. This is adding direct competition into our niche market share. Little
Caesars is surely not making headway with the pizza connoisseurs, but it has effectively targeted a
market in which Pizza Hut does not currently have a strong presence. 50% to55% of this market is made
up of family dining situations. Our marketing team has conducted multiple data analyses on ways in which
we can gain market share from Little Caesars within this market. After much thought and many hours of
research, we have devised a marketing plan that will potentially improve our market share.

This is the primary economic factor because the key to reaching the target market is price. These have been labeled as "Pizza Fanatics. With this valuable knowledge in hand. the anticipated net margin for the BIGFOOT Pizza is $7. To compensate for this difference. It is anticipated with the lower price that it will be easier to sell many more of the BIGFOOT pizzas. This better enabled us to determine who exactly our target markets are and towards who we should be marketing this new product." These responses were inserted into a correlation matrix and two conclusions were drawn (See Exhibit 1): 1.03. the new pizza being introduced to the public is the BIGFOOT. flavor." 2. However.63 BIGFOOT Pizzas to every one "Other Pizza. indicate there are alternative sectors in which a marketing campaign could be launched to improve Pizza Hut's overall sales and profitability. and occasion.As previously presented. The second attitude towards pizza ‘coupon' is highly correlated to the four remaining attitudes: discount. it is necessary to understand that Pizza Hut will need to sell 1." From these two new groups created by our correlation our marketing group then chose to create a scatter plot to get a better understanding of where our customer interests* lie in each segment (See Exhibit 2). and money. We conducted a profile of the different segments of which Pizza Hut currently has customers.99 because we determined from our research that Little Caesars' target market appreciates the fact they can feed the entire family for less than $10. Exhibit G shows that the difference in gross margin of the two products is $2.67.73. leave." History has shown that capturing the hearts of any competitors "love group" is extremely difficulty if not impossible. The BIGFOOT $7. These attitudes have been labeled "Frugal. described in the Pizza Hut marketing research. As shown in Exhibit G of the handout data. Little Caesars has proven that quality is not as much of an importance because they have been able to increase sales despite making a lower quality pizza. serve. specials. One hundred customers where questioned *about their "attitudes towards pizza." and from our regional market testing it seems to have a good chance of succeeding." This is significant because it will be difficult to achieve a large enough sales volume to compensate for the difference in margin as well as the lost sales. BIGFOOT's price point is set at $7. and the net margin of other Pizza Hut's pizzas is $12. we were then able to profile each of the four segments based upon . The first attitude towards pizza ‘taste' is highly correlated to four different attitudes: favorite. it will be necessary to penetrate a significant portion of Little Caesars' "love group.99 price point will appeal to the lower to middle class families and potentially win over many of Little Caesars' swing group customers. with price being set so low. This product was conceived as Pizza Hut's primary rebuttal to Little Caesars' "two for one. Alternative: The family dining situations.

Value Based upon our research and data analyses. They are characterized in the following ways: High/Low ‘ Pizza fanatics ‘ Willing to spend money ‘ Not active in sports ‘ Love to travel o See new places o Taste new food ‘ Politically neutral ‘ Average family size is four ‘ Income between $90. Kid's Treat a. travel. after performing regression analyses (our dependent variables being our customers' responses to "Pizza Hut Purchase Information" and our independent variables being "Attitudes Towards Pizza Hut") we determined the situations owned by Pizza Hut are the following (See Exhibit 5): 1. and income demographics (See Exhibit 3). Loyalty 2.our customers' survey responses of their "general attitudes" towards sports. we have developed several alternatives we feel may be more effective than the BIGFOOT Pizza marketing campaign. based upon the frequency of visits to our stores over the past six months (See Exhibit 4). Mom's Night Out a. Alternatives include: . Satisfaction c. Loyalty b. or target markets. politics. These alternatives have the potential to regain lost sales and grow our stagnant market share.000+ High/High ‘ Pizza fanatics ‘ Extremely frugal ‘ Enjoy participating in sports ‘ Love to travel o See new places o Taste new food ‘ Politically Neutral ‘ Income $70. These groups are the ‘High/Highs and the ‘High/Lows'. While profiling our customers we were also able to determine our *"love groups".000+ ‘ Average family size between 4 and 5 Furthermore.

By not compromising the quality of the pizza.29 respectively (See Exhibit 5) 2. will increase the amount each customer will spend over the next six months by $13. quick. particularly in Mom's Night Out. this will attract those individuals in the High/High swing group segment. Further regression analysis on this subject has shown that by increasing our love groups' survey responses. Parents can count on their kids having great tasting pizza as well as a great time doing so. the total amount they could potentially spend over the next six months will be increased an additional $65. As previously stated in the Economic Analysis. one point.90 (See Exhibit 7). We feel in the long run it will be more beneficial to Pizza Hut to maintain their standard of high-quality pizza at a competitive price. Launch Decision Upon completion of our research and analysis our marketing team has reached a conclusive decision that Pizza Hut should not pursue the proposed BIGFOOT Pizza product launch. By doing so. the coupons will attract these swing group individual and potentially convert them into our love group of the High/Low segment (See Exhibit 2 & 3). We .1. and satisfaction. Their children will develop a loyalty to Pizza Hut because it is the restaurant they have grown up enjoying. Marketing a fun. and easy meal. value. Although the idea behind the BIGFOOT Pizza is very creative and interesting. This will create more loyalty as Pizza Hut makes it easier than competitors that don't offer a similar service. Free Delivery: Mom's Night Out is designed for a no hassle. Coupons: The coupons will place the "Other Pizza" into the under $10 price market. satisfaction. Our love group makes up the most significant part of Pizza Hut's revenue and by further targeting this market we can increase revenue by an additional 16. $22. social atmosphere in Pizza Hut's sit-down restaurants: By marketing this approach to the Kid's Treat segment Pizza Hut can create loyalty form the parents.48 over the next six months (See Exhibit 6).6 percent (See Exhibit 8).57." Our research analyses have shown that it will be much more effective to continue targeting our love group while at the same striving to capture more customers from Little Caesars' swing group. as we stated earlier. Regression analysis has shown that loyalty. and $15. we project that the customer will potentially spend an additional $31. By increasing the loyalty in this group our regression analysis has proven that if we increase the survey response one point. Free delivery would make the meal nearly hassle free. and value are the most important factors in the Kid's Treat dining situation. By paying special attention to the coefficient variables we have determined that by increasing the response from customers one point.09. the BIGFOOT's gross margin is not significant enough to compensate for the required increased volume of sales coupled with the lost sales of "Other Pizzas. If we were to increase sales in this segment it is crucial that we improve the said loyalty. 3. it is almost impossible to try and steal away the love group of a competitor.

Place in the marketing mix of Pizza hut – Pizza hut is present in most of the A grade places across urban areas. Pizza hut knows that it is the first entrant for pizzas in India. During festivals. Due to a higher price. pizza hut has to be present in A grade towns only. breads and pastas. Thus. The ATL promotions mostly concentrate on introduction of new products as well as to build brand equity. is concentrated on delivering the pizzas at home. Another companion of Pizza hut is the Pizza hut delivery. But at the same time. Thus. due to increasing competition from Dominos. McDonalds and KFC. which like Dominos. On the other hand. viz Pizzas. . Pizza hut has gone local as well with its Birizza which is a type of Biryani. Pizza hut is one of the leading pizza fast food chains in India. However. In B grade towns. Pizza hut provides higher quality food as compared to its competitors and at the same time the ambiance of the pizza hut chain is better and richer than most of its competitors who serve Italian products. Product in marketing mix of Pizza hut – Pizza hut is most prominently known for its Italian products. even though Pizza hut has a premium pricing. On top of it. The pizza chain was one of the first entrants in India for pizza and was soon followed by Dominos. However. the pizza hut chain is most known for its tasty variety of Pizzas. people prefer Pizza hut over others. This placement helps Pizza hut maintain its premium positioning in the mind of people. people would more likely prefer the more affordable Dominos. the pizza chain continues to maintain its premium image. because B grade town people will have to go to the A listers area to actually have a pizza hut pizza. people love the rich taste of pizzas and pastas of Pizza hut. This article discusses the marketing mix of Pizza hut which falls in services marketing and hence 7 P’s of Pizza hut are mentioned herewith. and a higher quality of food. A grade towns are more likely to have pizza from pizza hut than from dominos because of the price positioning. Price in the marketing mix of Pizza hut – The pricing of Pizza hut is premium / skimming pricing.also recommend investigating the market response to the alternative solutions listed in the Alternatives section of this document. The product characteristic of Pizza hut pizzas is that the pizzas are high quality and are served in sizeable portions. Promotions in the marketing mix of Pizza hut – Pizza hut is known to be a smart promoter for its own products.

than the pizza is not hot and it can be returned to the outlet. pizza hut has gone a further length and introduced a hot mark on all their packaging for Home delivery. Once the order is received. The glasses are big. the pizza is immediately prepared and served hot.the ads take a different route and promote discounts and offers on products to attract customers. Physical evidence in the marketing mix of Pizza hut – The only reason Pizza hut is able to demand premium pricing is because of its physical evidence and the ambiance. the success of the chain depends on local marketing. Pizza hut introduced a novel way of showing customer appreciation – the bell. The bowls served along with pasta are also good. the pizza hut chain has the most polite and well mannered people in the fast food industry. The reality of the market is that Pizza hut is a fantastic food chain. At the same time. newspaper inserts. Anyone who rings the bell on exiting from Pizza hut is greeted with a loud thank you from all the waiters in Pizza hut. People in marketing mix of Pizza hut – The best part of Pizza hut are the people. Furthermore the outlet also promises 30 minutes delivery for which it has to maintain a slew of drivers who deliver the pizza. This completes the marketing mix of Pizza hut. pizza hut does several enterprise discounts as well and gives discounts to corporate customers. And the seats and tables are comfortably spaced giving people the complete experience of luxury dining. Finally. If the mark is not red. In case of pizza hut delivery. Combine that with the excellent people in Pizza hut and you have an excellent afternoon or evening of dining out for Italian cuisine. but it is slowly being overtaken by Dominos . Process in the marketing mix of Pizza hut – Pizza hut serves only freshly made Pizza and pastas. guiding customers to the outlet and lollipops. And local marketing depends on the local pizza hut outlet which may use BTL activities like hoardings. The process of Pizza hut involves having the raw materials half prepared in the kitchens of Pizza hut. The cutlery of Pizza hut is fantastic and it is an enjoyable experience to have the pizza out of the pan right into our plate. These people also do performances frequently on celebrations and most important of all.

Yum! Brands also owns and operates KFC and Taco Bell and reported a 3. Creed said Yum Brands! is also making the "needed investments" in digital across all Pizza Hut markets." he said. crusts and flavours. "We have a firm grasp on what needs to improve and are taking the necessary actions globally to drive better performance. "Our results have admittedly been soft and worse yet we’re being outperformed by the competition. Sales grew 4 per cent. Speaking on a call with investors chief executive of Yum! Brands Greg Creed admitted that marketing for Pizza Hut hadn't been effective enough. . Pizza Hut parent company Yum! Brands will tweak its marketing strategy for the brand in the US to strike a balance between appealing to millennials and mainstream consumers as it reported flat sales in the first quarter." Despite a disappointing performance.7 per cent dip in revenue to $362m compared to $399m in the same quarter last year.because of the presence of Dominos to deliver pizzas to even B grade towns and cities. Pizza Hut is expanding fairly rapidly having opened 35 new international restaurants in 20 countries in the first quarter. Ignoring the B grade towns is a deliberate marketing strategy of Pizza hut. "Unfortunately we haven’t been as effective as we’ve liked with our marketing and need to balance its appeal to millennials with mainstream pizza customers. But in the long term. This new platform gives our customers unparalleled variety with exciting new toppings. only time will tell. This included 16 units in emerging markets. with almost all (94 per cent) opened by franchisees. "As you know we recently launched a new pizza platform in the US where over half the division’s profits are generated." he said. and that the fast-food brand has struggled to balance its efforts to target different age groups. We intend to do this going forward while working with our franchisees to bring more competitive value to the market. whether this marketing strategy is right or wrong.