8566588 Pizza Hut Project in Retail

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RETAIL PROJECT

ON

PIZZA HUT

GROUP MEMBERS:-

CONTENTS


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1) INTRODUCTION..1

2) RETAIL ENVIRONMENT.2

3) POSITIONING...3

4) MARKETING STRATEGY.4

5) PRODUCT ASSORTMENT.5

6) PRICE POSITIONING.6

7) CUSTOMER PROFILE7

8) CONSUMER PULL FACTORS...8

9) COMPARISON..9

10) LONG TERM PROGNOSIS..10

1

INTRODUCTION


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Pizza Hut is one of the flagship brands of Yum! Restaurant Int. whichalso has KFC, Taco Bell, A&W and Long John Silvers under itsumbrella. It is the worlds largest pizza chain with over 12,500restaurants across 91 countries.

Pizza Hut was started in 1958, by two brothers Frank and Dan Carneyin 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 tenyears 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 OneRoof." In 1996, Pizza Hut sales in the United States were over $5million.

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 votedthe best family restaurant for the second year running at the 2007Tommys Parent Friendly Awards. "Pizza Hut is known for quality,innovation and category leadership.

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RETAIL ENVIRONMENT


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Out of all the existing pizza chains such as Domino's, Smokin Joes, PapaJohns, 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 upwith some newer, bigger, better pizza for a low price. But Pizza Hut hasalways 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 stillfollow today is the diversification of the products they offer.

The market has become greatly competitive and the customer has becomemore discerning and adventurous. This however has not affected Pizza Hut'scomfortable reign over the Indian pizza industry and the ever increasingnumber of loyal customers who have made it possible for Pizza Hut toaggressively extend its presence.

Pizza Hut is always adding something new to their menu, trying to reachnew markets. For example, in 1992 the famous buffet was launched in PizzaHut restaurants worldwide. They were trying to offer many different fooditems for customers who didn't necessarily want pizza. Another strategy theyused in the past and are still using is the diversification of their pizzas. PizzaHut is always trying to make a pizza into something slightly different so thatcustomers will think its a whole new product. E.g., in 1983, Pizza Hut

introduced Pan Pizza, which had a guarantee of being ready to eat in 5minutes 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 withcheese. Currently, they are marketing "The Big New Yorker," trying to bringthe famous New York style pizza to the whole country.

3

POSITIONING


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Pizza Hut was among the first multinational brands to enter the food retailsector in India. When the first Pizza Hut restaurant opened in Bangalore thequick service industry was at a nascent stage and the pizza category wasdominated by a sole regional player who had a marginal presence. Pizza Hutwent on to play a significant role in pioneering and developing this categoryin India. Worldwide and in India, Pizza Hut has come to become synonymous withthe 'best pizzas under one roof'. This is because at Pizza Hut the belief isthat 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 settingstandards for others to strive to replicate. Pizza Hut is committed to

providing uncompromising product quality, offering customers the highestvalue for money and giving service that is warm, friendly and personal. A critical factor in Pizza Hut's success has been its unique diningexperience. Crewmembers at Pizza Hut strive each day to provide 'customer mania' - the kind of service that ensures that every visit of the customer is amemorable one.

Pizza Hut's constant endeavor to provide extra value whether it is pizzaswhich are available to suit every price range, new promotions or theintroduction of innovative product ranges - that puts a 'Yum' on everycustomer's face - has allowed it to increase its presence in India to thecurrent 139 restaurants across 36 cities.

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MARKETING STRATEGY


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Pizza Huts marketing strategy is very simple: we want to satisfy our customer by offering them the best. Pizza Hut has always valuedcustomer service and satisfaction. In 1995, Pizza Hut began twocustomer satisfaction programs: a 1-800 number customer hotline,and a customer call-back program. These were implemented to makesure their customers were happy, and always wanted to return.Another big strength and even a competitive advantage is the fact thatthey have a full service restaurant as well as delivery services. Mostof Pizza Hut's competitors do not have restaurants. Because of therestaurant, Pizza Hut can market to different segments that other

pizza chains cannot. For example, Pizza Hut can market to familiesmuch easier than Domino's or Little Caesar's. Pizza Hut offers a sit-

down, conversational type restaurant where families can take their children for birthday parties for example. Pizza Hut's broad selectionof products also makes it easier for them to market to differentmarket segments.The other two strategies followed by Pizza Hut is C.H.A.M.P.S(Cleanliness, Hospitality, Accuracy, Maintenance, Product qualityand Speed) and 3Fs (Fun, Friendly and Familiar). These twostrategies have really helped Pizza hut to evolve out as a marketleader with a competitive advantage.

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PRODUCT ASSORTMENT

Pizza Hut will offer a new product called "The Extreme" pizza. "The Extreme" isa twenty-inch pizza with twice as much cheese and toppings as Pizza Hut's other

pizzas. This new pizza will have many different competitive advantages. Thefirst competitive advantage of "The Extreme" is that it is the largest pizza on themarket. No other pizza restaurant offers a twenty-inch pizza.The second competitive advantage is that it has more cheese and toppings thanany other pizza on the market.Another competitive advantage is the Pizza Hut brand name. Pizza Hut has builta brand name that means quality products and services. Since Pizza Hut will beintroducing "The Extreme," customers will automatically think this is a highquality product.The final competitive advantage is that this product will be the first pizza totarget America's youth. "The Extreme" pizza will target Generation X and

Generation Y or people between the ages of 12 and 30. This market purchases alot of pizza each year, but very few pizza restaurants actually target them. "TheExtreme" will be introduced on Super Bowl Sunday, 2001.During the introduction stage of the product life cycle, Pizza Hut will try toestablish a market for the product and persuade early adopters to buy. During thegrowth stage, Pizza Hut will try to build sales and develop a preference for the

product. Pizza Hut will try to seek differentiation during the maturity stage. "TheExtreme" is expected to begin to decline after one year on the market.


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6

PRICE POSITIONING

In the past, Pizza Hut has successfully used the high/low pricingstrategy when setting the retail price of its products. The high/low retail

pricing strategy allows Pizza Hut to charge a price that is above thecompetition, but also promote frequent sales to lower the price belowthem. The retail price of "The Extreme" pizza should be set at $9.99,which is higher than Pizza Hut's competitors. Several sales promotionsand coupons will be used to lower the price below those competitors.

Since both Pizza Hut and the beverage Mountain Dew are Pepsisubsidiaries, bundle pricing will be used. Customers can purchase "TheExtreme" for $9.99 and receive a two-liter bottle of Mountain Dew for free. Pizza Hut will be able to sell two products together at a single

price to suggest a good value. The high/low pricing strategy has severaladvantages. First, this pricing strategy will help segment the market.Different groups of customers are willing to pay different prices for thesame product. Pizza Hut can sell "The Extreme" to the customers whowill pay the higher price to be the first to buy and also to the bargainhunters. The high/low pricing strategy will also create excitement.Customers will be able to try something new when they purchase "TheExtreme" and this exciting experience may bring those customers back to purchase other products. Finally, this strategy will emphasize productand service quality. Pizza Hut sets a high initial price for its products tosend a signal to customers that its products are quality and the service is


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excellent.

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CUSTOMER PROFILE

This target profile provides a comparison of Pizza Huts customerscompared to:

a) Total Population 14+ b) Total Purchased from Fast Food Places/Restaurants in the Last 4Weeks.

This target profile provides you with instant access to some of the

world's most insightful, robust consumer research, with unmatchedaccuracy, integrity and sheer power.

Armed with a complete picture of your customers or your competitorscustomers, you are in the best position to fine tune you product strategy,focus your communication, and thereby optimize your marketing

budget.

Dont rely on unconfirmed reports; buy this target profile to get all thatdata, over 400 variables, everything from attitudes and activities tomedia consumption.


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8

CONSUMER PULL FACTORS

A critical factor in Pizza Hut's success has been a menu that hasconstantly evolved and expanded to cater to the changing needsand specific preferences of customers in different parts of theworld. In having understood the pulse of the customers in India,Pizza Hut has clearly established itself as a brand with an Indianheart.

Besides offering an extensive range of vegetarian pizzas, it was thefirst pizza chain to open a 100% vegetarian restaurant in India inSurat and later in Ahmedabad and Chowpatty, where it offers aJain menu sans all root-based ingredients.

Over the years Pizza Hut has also developed and successfullyintroduced a range of products especially suited to the Indian

palate. These products like Chicken Tikka, Spicy Korma, SpicyPaneer and the Masala and Tandoori pizzas have been atremendous success. What has also given Pizza Hut a competitiveedge is that in addition to an extensive range of internationallyrenowned pizzas like The Italian, the proprietary Pan Pizza andStuffed Crust, in India the menu offers the option of a completemeal. It includes appetizers, a Salad Bar - where the customers canmake their own fresh salads, a range of soups, pastas and desserts.


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Pizza Hut has a unique tradition. A bell hangs at each Pizza Hutrestaurant, which is rung by customers who as they leave wishto thank the servers for yet another memorable visit.

9

COMPARISION

MARKET SHARE

PIZZA HUT 48%

DOMINO'S 20%

OTHERS 32%

PIZZA HUT

DOMINO'SOTHERS


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10

LONG TERM PROGNOSISWith competition being so strong in this industry the threat of imitation

products will surely be a problem to be dealt with. Pizza Hut willhowever have the first mover advantage with this product. With theentry of imitation products into the market, Pizza Hut will have toadjust its mixes to accommodate change. The promotions may have to

be bigger and better than the competition, or the product may need to bealtered 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 presencein the metropolitans, this aggressive expansion will involve Pizza Hutentering smaller cities like Cochi, Nasik, Bhubaneswar, Lucknow andMadurai . It is strengthening its roots in the Indian market by tying upwith local and popular brands such as Reliance Communication. Apartfrom this it is also developing local supply chain.

Basically, Pizza Hut will need to remain flexible in the maturity stagesof the product life cycle in an attempt to continue to be the marketleader. 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 productso exciting is the marketing plan that is directing the product at a newsegment. We are taking a large pizza with a lot of toppings and


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marketing it as an "Extreme Pizza" to a generation of younger adultsthat are consumed by this marketing tool. This is what will make this asuccess. The mix of promotion and advertising we will be using willtarget a very profitable

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8566588 Pizza Hut Project in Retail

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