3.0 DOMINO’S PIZZA

3.1 History

Domino’s Pizza (DPZ) is an international fast food pizza delivery corporation

headquartered just outside Ann Arbor, Michigan, United Stated. It was founded

by Tom Monaghan. There are currently about 8,500 corporate and franchised

stores in all 50 states and 55 countries. It was the second-largest pizza chain

behind Pizza Hut in the United States when it went public in 2004 for just under

$15 a share.

Domino’s Pizza began in 1960 when Tom Monaghan and his brother James

bought "Dominick's Pizza", a small pizzeria in Ypsilanti, Michigan. The deal was

secured by a $75 down payment and the brothers borrowed $500 to pay for the

store. Eight months later, James quit the partnership and traded his half of the

business to Tom for a used Volkswagen Beetle. With Tom as the sole owner of

the company, Dominick's Pizza became Domino's Pizza. In 1968, a fire destroyed

the company headquarters and commissary. Although Domino's faced numerous

other obstacles in the following years, including a 1975 trademark-infringement

lawsuit by Amstar, maker of Domino sugar, the company expanded, and in 1978,

the 200th Domino’s franchise opened.

At the prospect of potentially losing the right to use the Domino's Pizza brand

name, Tom Monaghan hired Group 243 to create an alternative identity. Later

they became agency of record for the company and remained so for over a

decade. During that time, the agency, led by President Janet Muhleman and her

then husband Robert Cotman designed the store interiors, the pizza box, and the

Indy race car, created and produced all of the advertising, and managed

recruitment for the franchise. When Group 243 was hired, Domino's had fewer

than 100 units. They marketed the brand until it reached over 5,000. In the 1980s,

Domino’s decentralized its operations by opening the first international Domino’s

in Winnipeg, Manitoba, Canada. In the following years the company expanded

even more, and as of September 2006, it has 8,238 stores which totaled US$1.4

billion in gross income. Monaghan retired in 1998 and sold Domino's Pizza for

nearly 1 billion dollars, but retained a 27% non-controlling stake in the company.

Over 37,000 stores worldwide now operate under the Domino’s brand, with the

opening of a store in Huntley, Illinois as the 8,000th store. All international stores

are franchised. The Domino’s Pizza store in Tallaght, Dublin, Ireland, became the

first in Domino's history to hit a turnover of $3 million (€2.35 million) a year.

Although the franchise is typically delivery and carry-out only, there is one dine-

in Domino's with a full buffet in Clovis, NM.

3.2 Domino’s Menu

Domino’s menu has a two category that is Domino’s delivery and take-out menu

and dine in menu. In Domino’s delivery and take-out menu it has Domino’s Pizza

sauce that it has Aloha Chicken, Beef/Chicken Pepperoni, Vegie Galore,

Extravaganza, Classic Chicken, Seafood Delight and BBQ Chicken. In Top Secret

sauce it has new menu that’s Tuna Temptation, Vegie Festa and Classified

Chicken and in Spicy sambal sauce it has Flaming Tuna, Spicy Sambal and new

menu is Spicy Sausage. The last menu of category is Side Orders, that it has

Chicken Wings BBQ/Hot and Spicy, Chicken Lasagna, Garlic Twisty Bread,

BreadStix, Banana Kaya Dessert, CinnaStix and Icing, Nestle Drumstick Kit Kat,

Coca-Cola and the new menu is Spaghette Bolognese and Nestle Milo.

While, in dine in menu category it also has a same category with Domino’s

delivery and take-out menu but it different is, it has desserts, beverages, set deals

and combo meals add-on offers.

3.3 Domino’s

Pizza Strategies

3.3.1 Advertising

Strategy

Domino’s use a

media strategy

such as

televisyen,

social media,

online

advertising,

mobile,

outdoor and

promotions. To

stay

competitive,

Pizza Hut

looked to

appeal to a

wider base,

launching new

marketing

vehicles and products that adhere to the sensibilities of both younger and older

consumers. This past year Pizza Hut has experimented with its brand by replacing

“Pizza Hut” on take-out boxes with “The Hut,” and by pushing the quality of its

product and natural ingredients and adding more pasta options to the menu as

meal-replacement solutions at home. The marketer has also introduced an

extensive series of social media and nontraditional media programs.

Domino’s caused a stir late last year by taking jabs at Subway with TV spots

touting national taste tests proving Domino’s sandwiches were preferred 2 to 1

over Subway’s. The ads resulted in a cease-and-desist letter from Subway.

Domino’s eventually removed the comparison ads but continued to take shots at

Subway, featuring Domino’s CEO Dave Brandon “oven baking” the cease and

desist in a follow-up spot. Domino’s also produced ads directly addressing the

recession through “The Big Taste Bailout” and “Taste Stimulus Package”

promotions. In August, Domino’s began a spot called “Chefs vs. Accountants”

starring six team members from the corporation’s research and development

departments.

Televisyen (TV)

With the televisyen, it remains a firm battleground, accounting for about 92% and

94% of Pizza Hut’s and Domino’s paid media, respectively, according to TNS

Media Intelligence. Domino’s TV spots appeared to be more tactical and

responsive in the market place, with ads discussing the recession and the value it

delivers. Pizza Hut, by comparison, promoted more of its quality and menu range.

Their TV strategies differed significantly. Pizza Hut bought a broader and slightly

older demographic. For example, 38% of its network buy was on the 25- to 54-

year-old skewed CBS, with 19% spent on the younger-leaning Fox. That

contrasted with Domino’s, which bought only 11% of its airtime on CBS, but

49% on Fox. In order to drive efficiencies, Domino’s shifted dollars out of

network into cable with 37% of its TV budget, up from 30% the year prior.

In terms of programming, both had heavy buys in reality shows, with Pizza Hut

placing slightly more of its schedule in football programming than Domino’s did.

Domino’s targeted Hispanic media with specific creative and spent 13% of its TV

dollars on Univision and Telemundo. This was much higher than Pizza Hut,

which placed just 5% of its TV plan on Spanish-language networks. Pizza Hut

was a large spender in local, placing nearly three times more than Domino’s in

local spot TV.

Social Media

Domino’s Facebook page, while not enjoying as many fans (370,610 at last

count), appeared to have more interaction from the fans itself. It also built an

excellent feature - the “Domino’s Pizza Tracker”- an application that can be

added to your newsfeed and essentially informs your friends on exactly what type

of pizza you ordered and what stage that the pizza is in the delivery process. It

really integrates the brand masterfully into Facebook’s functionality.

In case you didn’t pick it up, Domino’s was the victim of two renegade

employees who uploaded a prank video allegedly showing them doing all sorts of

nasty and gross things in the kitchen of a store. Within just a few days, the video

went viral and was viewed over a million times - a nightmare scenario for any

marketer. Many other companies would have been paralyzed or would have tried

to fight through the traditional media route. Kudos to Domino’s, who responded

quickly to the incident by posting its own video on YouTube. President-U.S.

Operations Patrick Doyle gave a very sincere and apologetic message that went a

long way to limiting the damage and trying to undo the issue through social

media. The company also set up a Twitter account, “@dpzinfo,” to refute the

prank video and posting.

Mobile Ordering

Domino's Pizza, the world leader in pizza delivery today announced the launch of

a new version of its mobile ordering Web site. The enhanced version is optimized

for the Apple iPhone, Palm Pre and phones that support the Google Android

operating system. "Domino's Pizza was the first pizza company to launch web-

based mobile ordering more than two years ago," said Rob Weisberg, Domino's

Vice President Multi-Media. "Since that time, we've been regularly enhancing our

site to allow an even better user experience and decreased ordering time."

The Domino’s mobile-ordering application is an iPhone optimized web app,

which means there’s no need to install it. By visiting Dominos.com on the Safari

browser, users are served an ordering system designed specifically for iPhones or

an iPod Touch. They can then create an order by tapping “Express Ordering” or

“Create Your Own Pizza.” Other notable features of this web app include its pizza

tracker.

3.3.2 New Pricing Strategy

According to pizza delivery chain’s chief executive, Domino's Pizza Inc. is

looking to entice more value-focused customers to order its pies through a new

pricing strategy. In a webcast of the 7th Annual Cowen & Co. Consumer

Conference, David Brandon said in recent years the company lost a number of its

"single pizza customers" - those who place an order for just one pie and are

looking for a cheaper dinner alternative by increasing its prices.

Brandon said to bring those customers back to Domino's, the chain is now

implementing a "barbell" pricing strategy. In that model, some products are priced

lower to appeal to customers searching for a good deal while other more premium

products cost more for those customers who are less price-sensitive. The company

did not offer any specifics on whether it has lowered its prices on some of its

menu items, but Brandon did say the chain's new hot sandwiches, which are

priced at $4.99, are an example of the chain's new strategy.

According Brandon, "The burger guys have their 99 cent offering," and "We feel

like we have to be in that space and in that game" by offering some lower-priced

alternatives like the hot sandwiches. Brandon also said the chain is moving away

from offering limited-time-only deals and will instead add items to its menu that

will become lasting products.

3.3.3 Delivery in 30 Minutes Strategy

Pizzerias will often incorporate a time guarantee or a promise delivery within a

predetermined period of time, perhaps specifying that late deliveries will be free

of charge. For example, Domino's Pizza had a commercial campaign in the 1980s

and early 1990s promising, "30 minutes or it's free." This practice was

discontinued in 1993 due to a number of lawsuits arising from accidents caused

by hurried delivery drivers. Now, pizzerias will commonly state to the customer

an approximate time frame for a delivery, without making any guarantees as to

the actual delivery time. In early 2008, Domino's introduced the "You Got 30

Minutes," which is not a promise or guarantee, but a goal that Domino's claims to

strive for.

4.0 COMPARISON ANALYSIS

4.1 Industry Food Effect to Domino’s Pizza

Domino’s faces several headwinds moving forward. Rising food and energy

prices, the housing slump and a weakening job market are taking a toll on

restaurant spending in its core domestic market; the company saw a 1.7%

decrease in comparable sales in the U.S. in 2007 after a 4.1% decrease in 2006 as

consumers reduced their spending on pizza. Rising food costs, especially the cost

of wheat and cheese, have also cut into operating margins. Domino's margins are

dependent on food prices. In particular, the company is dependent on the price

wheat (used to make dough) and cheese, two key ingredients of any pizza. Over

the past few quarters the prices of these key inputs have risen significantly; in

February 2008 a bushel of wheat cost $11.21 compared to $4.35 a year earlier.

The company is also impacted by the price of corn, beef, poultry and other

important ingredients for much of its menu.

While, Domino's is also affected by the price of oil which has risen four-fold

since 2001 with the price of gas rising more than two-thirds since last year alone.

Oil is used to produce food, as well as to transport it all over the world. More

importantly, the company covers over 10 million miles per week in pizza

deliveries, making it a large consumer of gas. Furthermore, Domino's relies on

diesel to fuel the delivery fleet of its domestic supply chain. Intense competition

in the pizza delivery category limits the company's ability to pass rising food and

energy costs onto customers; because of this, increased costs shrink margins and

hurt profitability.

Although, in order to meet these challenges and revive sales growth the company

is launching a new marketing campaign under the slogan “You Got 30 Minutes"

with the hope that this national advertising effort will help take market share from

smaller, local pizzerias. The company is also trying to offset a weak U.S. market

by focusing on expanding its international operations which continued to produce

positive sales growth throughout 2007.

4.2 Domino’s Pizza SWOT Analysis

Strengths

The strengths of Domino’s it has in their product. Domino’s strengths are it has

fast delivery that it is cool online Pizza Tracker. The Pizza Tracker function was a

featured during the launch of the optimized versions of Domino’s mobile sites.

“You can track the order using the Pizza Tracker, which gives you updates in real

time as to what stage of the process your pizza is in, from making to baking and

delivering,” Mr. Weisberg said. Domino’s Pizza Tracker technology lets

customers follow the progress of their order online or via their handset from the

time they click the “Place Order” button or hang up the telephone until the

Domino’s delivery employee is knocking on their door.

The other strengths are it has also offer a best topping. Some of its toppings cater

to the people that love to eat meat, like the MeatZZa feast. Then there's the

Hawaiian feast for the people who love to have a sweet tasting pizza. There's no

doubt that Dominoes have some of the best toppings in America, but if we were to

nominate Dominoes for best toppings, then it's only fair that we list the Dominoes

branch that's located in Australia.

The strengths of Domino’s also are Domino’s guarantees delivery within 30

minutes or the order is free. Domino's commits to deliver hot, fresh, great-tasting

pizzas to their customer's doorstep within 30 minutes, or get a free regular pizza

voucher on them. Example, Domino's Pizza is the first in Malaysia to extend this

kind of service commitment to customers. Thanks to the effort put in by all their

team members whose objective is to impress and exceed their customers'

expectations, they endeavor to ensure our order arrives hot and fresh and

delivered safely within 30 minutes. This effort involves intensive training from

pizza-making skills to product quality inspection to safe driving skills and

courtesy of their team members.

Weaknesses

The weakness of Domino’s is slow growing and declining same-store sales. The

company operates in three segments: domestic stores, domestic supply chain and

international. In domestic stores, the company has a slow growing because

according to percentage same store sales growth, Domino’s domestic same store

sales have lagged while international stores continue to outperform. Domino's

operating income is dependent in part on royalty fees paid by franchisees.

Because these royalties are a percentage of total revenues, same store sales are an

important metric of Domino's performance. Increases in same-store sales translate

to increased royalties which go right to the company's bottom line.

The other weakness of Domino’s is underwhelming flavor that it has overly sweet

sauce. Its okay if the customers like to eat a sweet sauce but if the customers don’t

like to eat a sweet sauce, they will eat at Pizza Hut and this problem can be a

weakness to Domino’s Pizza.

Opportunities

Domino’s has opportunity to strong International Growth that is because

Domino's has a sizable international presence; 41% of retail revenues occur

outside of the United States. In addition to developed markets like the U.K.,

Canada, South Korea and Australia, Domino's operates in fast growing emerging

markets like India and Turkey. The company's international operation give it

access to a rapidly growing global middle class and has consistently posted strong

same-store sales growth.

Beside that, Domino’s also has an opportunity to leverage supply chain and

distribution system to introduce new products such as two new products were

added to the menu: cheesy bread and Cinna Stix, the latter cinnamon breadsticks

being the first dessert item to be offered by the chain. The 7,000th Domino's

opened its doors. In addition, a new advertising campaign was launched featuring

the tag line, "Get the Door. It's Domino's." The corporation ended 2001 with net

income of $36.8 million on revenue of $1.26 billion, while system wide sales

totaled $3.78 billion, an increase of 6.8 percent over the preceding year.

Threats

Domino’s threats are it needs to compete with intensive competition from a

fragmented number of small competitors such as Pizza Hut, McDonalds, Papa

John’s International and Kfc. Domino’s is the second largest pizza chain behind

Pizza Hut with a clear distinction of providing fast delivery. Although, Domino’s

has their own strategies to compete with other competitor such as it has

advertising strategy like online ordering that a customers can easy to order the

pizza. It also launches a new marketing strategy such as consumers can now track

orders from their iPhones with recent addition of popular Pizza Tracker and also

implemented a new pricing. But it’s still has a threats from their competitor

especially Pizza Hut because it’s very familiar than Domino’s Pizza.

The other threats is pizza delivery, by its nature, can pose risks for those engaged

in it, as they are required to go to the homes of strangers, in unfamiliar

neighborhoods. In the U.S., pizza delivery persons have been subjected to assault,

robbery, and sometimes raped or killed on the job. The United States Bureau of

Labor Statistics, which categorizes pizza delivery drivers and taxicab drivers as

"drivers-sales workers," ranked it the fifth most dangerous job category. All of

that can be threaten a company and the employee also.