HOTEL Industry

Subject: Service Sector Management

Prof: Hasan

Academic Year: 2009-2010

Sydenham College of Commerce and Economics

Brains Behind

Zeenia Dumasia 457

Fathima Habeeb 459

Nikita Kothari 473

Rupali More 479

Padmini Patil 484

Madhuri Rasal 487

Saloni Raul 488

Slesha Redij 489

Acknowledgement

This project is the culmination of a study into the

gamut of various Service carried on by Pizza Hut and

Dominos This project would just not have been

complete without the valuable contributions from

various people whom we have interacted within the

course of its completion.

We present our heartfelt gratitude towards

respected Prof. Hasan for giving us an opportunity

to explore a new aspect of the industry.

We would like to thank the management and non-

management staff of Pizza Hut and Dominos without

whose cooperation wouldn’t have taken form

We wish to thank all those people who have lent us a

helping hand in finishing this project.

Competitors

Organized Unorganized

Direct Indirect

Indian Pizza Market

Pizzas account for 5% of the quick service sector, but the market is projected to grow to 40% over the next five years.

Branded pizza market stands at about Rs. 275 to 325 crore. The delivery segment is pegged at Rs. 180 crore which is growing at 15-20% annually.

1. Direct Competitors include Domino’s, Smokin’ Joes, Pizza Corner, etc.

2. Indirect Competitors include Mc Donald’s, Subways, coffee chains, etc.

Pizza Hut is one of the flagship brands of Yum! Brands, Inc. Pizza Hut is the world’s largest pizza chain with over 12,500 restaurants across 91 countries.

Yum! Brands Inc., based in Louisville-Kentucky, is the world’s largest restaurant company in with nearly 34,000 restaurants in more than 100 countries. Four of the company's restaurant brands – KFC, Pizza Hut, Taco Bell and Long John Silver’s are the global leaders of the chicken, pizza, Mexican-style food & quick-service seafood categories respectively.

An International Brand with an Indian Heart, Pizza Hut made its foray into India with a dine-in restaurant in Bangalore in June 1996. The company found the going tough initially. However, things eased out when Pizza Hut, similar to other global fast food restaurants started Indianising the menu. Tricon provides the marketing support & supply chain management.

Outlets

In India, Pizza Hut has 137 outlets across 36 cities in India, including Delhi, Mumbai, Bangalore, Chennai, Ahmedabad, Hyderabad, Pune, Chandigarh, Agra, Surat, Baroda, Jaipur, Kolkata, Mathura, Amritsar, Cochin, Ludhiana, Jalandhar, Coimbatore, Meerut, Lucknow, Pondicherry, Bhubaneshwar, Vishakapatnam and Dehradun.

Market Scenario

1. They have a 45% market share in the total market, i.e. delivery plus dining plus takeaway.

2. They have been seeing over 40% growth year-on-year.

3. They have 26% of its restaurants & over 30% of the Pan-India sales in South India.

4. Number of customers on an average on weekdays is 300, whereas it’s about 400 on weekends.

Description Of The Brand

Service-Product Continuum

Pizza Hut is classified as a ‘Goods + Service’ offering to the consumers. The core product is food, which is tangible. However there are a lot of services attached to this product, which is why it falls in this particular category. The consumer looks for ‘Experience Qualities’. The marketing implication for Pizza Hut therefore is that in addition to taking care of the ‘dinning qualities’ in the core product, they also need to make the ‘experience’ as good as possible.

Meeting Customer requirement1. Variety in Menu: Pizza Hut offers more than just pizzas to

its consumers. It offers soups, beverages, appetizers, salads, pastas & desserts both in the veg. and non-veg. category.

2. Pizza Hut Outlets: Pizza Hut has three types of outlets to serve its consumers viz. dine-in, carryout and delivery outlets spread across the country. Thus it has a number of pizza restaurant chains in India that offers "The Best Pizzas under One Roof" to its consumers.

3. Local Specialty Food: Pizza Hut in India integrates pizzas into local contexts and palates while maintaining its international standards of quality and innovation. E.g. Masala Pizza and Tandoori pizza with Indian toppings and special Jain menu.

4. Personalized Toppings: Pizza Hut offers choices to its consumers to select their own toppings that suit their tastes from wide range of toppings in veg. & non-veg. category.

5.

6. The third level is the Augmented Product. With further high expectations of the consumers & intense competition, the marketer starts offering more & more intangible features to the consumer. Thus, service will become the final differentiator with increased competition

7. Pizza Hut adds the following services in the augmented product for its consumers:

8. Home Delivery: Pizza Hut is just a phone call away. A consumer has the choice of ordering & enjoying the delicious pizza cuisine at home.

9. Pooch Zone: Pizza Hut’s website has a link which is called the ‘Pooch Zone’ that has a variety of games, movies, and other exciting links especially for kids.

10. Special Birthday Party Arrangements: Pizza Hut arranges birthday bashes for kids with beautifully decorated venue, specially trained host/hostess, food packages, games, etc.

11. Good Ambience: Pizza Hut offers more than any fast food restaurant by providing a lovely ambience to dine with your near and dear ones.

12. Pizza Hut Locater: A consumer can locate any Pizza Hut restaurant by visiting their website. The locater provides information on the various types of cuisine (veg./non-veg.) available at the particular outlet. It also mentions the address and the phone number of the particular outlet.

Service Marketing Mix

Physical Evidence

Pizza Hut uses various elements to communicate and support the role of its service to the consumers. Customers rate the service based on the following factors:

The Logo of pizza Hut is ranked no.2 in the most recognized brand. The roof of Pizza Hut talks about providing a “Great Dining Experience”.

Personnel wearing Pizza Hut uniforms in the restaurant.

All delivery boys wear exciting new rider uniforms with the Freshizza logo to create visibility on roads and on ground awareness.

The menu card, ambience, signboards & billboards and delivery scooters of Pizza Hut also make the brand familiar.

Process

The pizza-making process takes about 20 minutes and customers can expect home delivery within 45 minutes of placing the order.

Pizza Hut pizzas are delivered in special heated pouches to retain temperature and freshness.

In cases where the traffic situation is bad or unprecedented, customers are informed over the phone that the delivery could be delayed.

In the restaurant, the customer rings the bell to signify that they are satisfied with the pizzas and the service.

The staff members also sing and dance for customers. They dance to disco in Mumbai and ‘bhangra’ in Amritsar.

People They offer

training programs and emphasize on coaching. One of their initiatives include Quality Control Workshops with expert chefs

Pizza Hut defines the skills, knowledge and training required for each position and this information is communicated to each Team Member through specific and thorough Job Maps.

They provide annual performance appraisals to let Team Members know exactly what the expectations are and what opportunities exist for improving.

It has events like the ‘Employee of the month’ award to reward its internal customers.

Public Relations

Pizza Hut & film star Madhavan reached out to special children in Chennai by announcing a six-month initiative for the deprived children by inviting all its customers to contribute a sum of Rs. 5, which will be added to their bills, for the cause of these children. Similar campaigns were followed in the eastern part of the country with the help of top film stars and models.

An event for housewives who had to send in their recipes for their best pizzas. Based on this pizza Hut could introduce new varieties. The winner received a holiday package along with Pizza Hut discount coupons

Pizza Hut launched its Pizza Pooch Christmas Blast program, a 16-day event aimed at attracting teens and kids.

Perceptual Map

Value Proposition

Pizza hut understands that the Indian consumer is value conscious, and not just price conscious. Pizza hut’s value proposition talks about its international heritage, its pizza expertise and world class standards of quality and taste along with its ambience.

Pricing Strategy

Price

Product

Quality

Premium Strategy

High Value Strategy

Super Value Strategy

H

Over-charging Strategy

Medium Value Strategy

Good Value Strategy

M

Rip-off Strategy False Economy Strategy

Economy Strategy

L

H M L

Pizzas were priced at a premium in the introduction stage. However with competition from Domino’s, Pizza Hut introduced discounts, price cuts and freebies. Pizza Hut launched Pan Pizzas for as low as Rs.65 and also introduced the Rs. 50 menu to benchmark its price against the competitor’s cost.

Thus Pizza Hut is gradually shifting from a premium strategy to a high value strategy offering high product quality within the medium price range.

Customer Relationship Management

1. It optimizes profitability by building long-lasting relationship with customers through CRM

2. The birthday party packages offered by maintaining the database of children visiting the outlet contributes almost around 8 to 10 % to their overall sales turnover. Thus, it has been effective.

3. They have been successful in identifying one of the influencer segments i.e. kids. Thus, they have made best use of the technology by introducing ‘Pooch Zone’ in their website through which they directly reach out to them.

4. It not only cares for its external customers but also looks after its internal customers- employees by running award programs to recognize outstanding employees and celebrating their success. Thus, employees take pride in making and serving perfect pizzas

Pace

Domino’s is the market leader in the delivery market. To match similar competition and to tap its potential in this market, Pizza Hut started focusing on the delivery market.

Pizza Hut introduced a scheme called ‘barah nahin to tera’ (if not served in 12 minutes, it is yours free). The scheme offered a speed lunch in 12 minutes for Rs.89. One second over 12 minutes guaranteed that the customer would get it for free.

This offer is available only in the dine-in outlets. However, in the delivery market, they lose out to Dominos because of their Poor Logistics.

Advertising Strategy

1. In the introduction stage, Pizza Hut used Public relations over advertising. In the first week of its launch and to build credibility, Pizza Hut decided to use the print medium by issuing “free pizza passes” to journalists. Journalists were taken to the kitchen and a lot was written about Pizza Hut’s fresh quality pizzas along with its hygiene.

2. Pizza Hut went about distributing pamphlets, which contained mouth-watering images of pizzas. The pamphlet also contained information relating to the making of a pizza, its ingredients, nutritional value, etc.

3. The promotional campaign focused on creating awareness about the product. The communication was about a girl choosing pizza over other snacks in its first TVC. Thus, initially it followed “Informative Advertising Strategy” to build the primary demand.

4. However, in the growth stage, they seek to establish the superiority of the brand through specific emphasis on one or more attributes in the product class. In this stage, the attributes targeted were price and freshness. This was conveyed through their TVCs featuring Zayed Khan (Rs. 50 menu) and Malaika Arora (Freshizza).

5. Thus they currently follow ‘Persuasive Advertising Strategy’ to differentiate itself in intense competitive environment.

6. But the promotional campaign focusing on the Price aspect has not been effective as customer still perceive Pizza Hut as an elite outlet

Service Life Cycle

The introduction stage focused on concept awareness.

Pizza Hut aimed at providing a great dining experience targeting the high-end consumer following the strategy of premium pricing.

Pizza Hut launched its first outlet in Bangalore in 1996. The success of its Bangalore outlet helped Pizza Hut to focus long term. After a few months, they opened outlets in Delhi, Mumbai, Kolkatta & Chennai.

In the growth stage, it realized the need to include delivery in addition to providing a great dining experience. So it decided to extend its reach in SEC A & B cities.

In 2000, number of outlets increased from 5 to 25 in 13 months. Currently it has 98 outlets in 25 cities.

Realizing the potential of delivery outlets, it increased the no. of delivery outlets. However, it has a long way to go to beat the delivery market leader-Dominos.

It started localizing menus to cater to the Indian palate. To further promote its brand among the Indian consumers

Pizza Hut used celebrities for the first time (Zayed Khan & Malaika Arora). With their target being the youth of the country, Zayed & Malaika were the ideal choice.

As the competition intensified Pizza Hut followed the price cut strategy to increase its target consumers and thus included consumers from the medium-end segment.

OT Analysis

Opportunities

As Pizza Hut consolidates their base by expanding rapidly in new towns, it would provide them with a better bargaining power with the suppliers. This benefit can be passed on to the consumers by further reducing the prices & thus tackle the competition effectively.

Pizzas are still viewed as snacks in India. However changing the existing eating habits is not impossible. With pressure of less time among the people & potential to improve accessibility to Pizza Hut outlets, consumers will be willing to adapt to this new lifestyle. Pizza Hut can thus widen the pie by extending their brand as a meal from being just a snack.

Threats

There has been a shift from joint families to nuclear households. Population of the working women has risen (13% of women population in the urban area) and now with

both parents working, the disposable income has also increased. Also to alleviate the feeling of guilt of not being able to spend more time with their children, weekends have become important. Thus, Pizza Hut still has an opportunity to cash on a huge consumer base.

The accessibility of Pizza Hut is a question mark. It also lacks in effective supply chain management. Pizza Hut is not time-bound in the delivery aspect as compared to its nearest competitor-Domino’s. Domino’s has penetrated the market better due to its efficient logistics. So, Pizza Hut faces the threat of letting off its numero uno status to Domino’s.

Pizza business is projected to grow at the rate of 40% per year. Recognizing India as a lucrative market, many other companies are looking at starting their operations here and all the existing companies are expanding to get a larger market share. Thus, threat of new entrants like US Pizza and the existing competitors can increase the bargaining power of the consumers.

The Indian consumer is getting health conscious. There has been a global outcry against Mc Donald’s linking junk food served by them to the rise of obesity. Pizza Hut may also face these phenomena in India.

In the mid 1990’s a spate of global fast food chain entered hoping to capture a part of Indian fast food segment but they found it difficult to establish themselves. Dominos Pizza Hut Ltd. was incorporated in March 1995 as the master franchisee for India and Nepal, of the dominos Pizza International Inc... Of USA. Moreover, the company holds the master franchisee right for Sri Lanka and Bangladesh through its wholly owned subsidiary. MR. Shyam S. Bhartia and Mr. Hari S. Bhartia of the Jubilant Organosys Group were the promoters of the company. Since inception, Dominos Pizza Hut Ltd. had proceeded to became one of the largest and the fastest growing international food chains in South Africa. The first Dominos Pizza store in India opened in January 1996 at New Delhi. Today, Dominos Pizza India has grown into a country wide network around 220 outlets 42 cities and is the leader in the fast food delivery segment. Ever since it was established, Dominos Pizza India has maintained its position of market leadership with its constant product

innovation and maintenance of stringent service standards. More importantly, it has established a reputation for being a home delivery specialist capable of delivering the pizza within 30 minutes to its community of loyal customers from its entire chain of stores around the country. Customers can order their pizzas by calling a single countrywide Happiness Hotline = 1800-111-123. In fact, Dominos was the first to start this facility to its customers and their slogan is also towards customers loyalty, they respect time responsibility i.e. Dominos delivery in 30 minutes or else pizza is free of cost.

Dominos Pizza SWOT analysisStrength Leading pizza Delivery Company in US with more than 5,000

stores in the US. Global franchisee operations – more than 3500 in over 50

countries. Strong brand equity supported by heavy advertising and

marketing campaign. Supply chain and distribution network

Weaknesses Slow growing and declining same – store sales Weakening bottom line

Opportunities Growing presence in emerging markets, particularly in

India, China Leverages supply chain & distribution system to introduce

new products

Threats Changing consumer habits towards healthier food choice Franchisee operations affected by currency exchange

fluctuations Intensive competition from a fragmented number of small

competitors.

30 minutes guarantee

At one point, Dominos pizza had a guarantee that a customer would receive their pizza in within 30 minutes of ordering, or they would receive their pizza free and Dominos still guarantees delivery within 30 minutes, failing which the customer is given his order free of cost.

They do not take the order if the customers are calling from distance places where it is impossible to deliver the pizza in 30 minutes

If suppose the customer is ordering a pizza cost for Rs. 500/- & if they are unable to deliver the pizza within time, suppose they are late for another 6 to 10 minutes , then they give discount of Rs. 300 and provide pizza for only Rs. 200

They believe in the service called TSG (Total Service Guarantee )

From home delivery of home cooked food in South Delhi. We offer both non- veg and vegetarian home –cooked food for small get together.

Our costs are very reasonable and the food is hygienic and low fat

Bulk Orders

Dominos Pizza also takes bulk orders for its corporate customers as well as for any big gathering. Any order can be placed 2 days in advance to avoid inconvenience. Payment can be made in cash or by Cheques in favour of “Dominos Pizza India ltd”. Dominos involves itself in various community activities like blood donation campaign, clean up drive etc. We arrange for different competition like painting, essay, junior pizza making etc. at our store level for children. We also cater to different college functions/events depending upon its location.

Housekeeping operations inside the restaurant

For house keeping dominos use UT service, they provide proper check on cleanliness of the restaurant, maintain cleanliness for washrooms etc.

They makes sure that all fittings are in good working order They check that all supplies such as toiletries & minibar

stock have been replenished Ensuring that tables & other areas are cleaned & polished Make sure that furnishing & fitting including light fittings are

clean & in good condition. Ensure the windows are cleaned regularly They also told us that in housekeeping is also responsible for

décor, the selection of furnishings & wall covering is very important

Thousands of rupees are spend on décor & these decisions are not taken lightly

In housekeeping operations there is flexibility in there operations

Maintenance housekeeping in the wet areas

Top to bottom, all corners and edging is done on carpeted and on non-carpeted floors. Every thing is moved to the counter, cleaned behind it, items cleaned and move back.Kitchen cabinets are cleaned for fingerprints and food spills that have occurred recently and can be recovered with wiping a wet or damp cloth. On an as need basis, the floor is washed by hand around the edges. We can do the whole package pulling out a fridge or oven or wiping them clean and everything in between.

All of our work is 100% guaranteed. If the customers are not happy with the Dominos cleaning, simply call them within 24 hours.

During summer session their sales increases, Numbers of staff is more as compared to winter seasons, Total number of staff is around 35-40 Income per month s around 35 lakhs.

Comparison of Pizza Hut and Domino’s

PIZZA HUT PARAMETERS DOMINOSNeed Understanding, Customer

SERVICE Friendly, Individual attention

Neatness ,cleanliness, no valet parking

Congenial environment

Open Kitchen, lack of space

Less affordability by the common man

Pricing Given value for money pizzas

Inability to explain the offerings, slow service

Augmented Attending phone calls with patience, taking the order with a smile

Service charge is High

Equipments, Customization

Credit Card, Customization, Services

Model of Service Quality Gaps

There are seven major gaps in the service quality concept, which are shown in Figure:

Gap1: Customers’ expectations versus management perceptions: as a result of the lack of a marketing research orientation, inadequate upward communication and too many layers of management.

Gap2: Management perceptions versus service specifications: as a result of inadequate commitment to service quality, a perception of unfeasibility, inadequate task standardization and an absence of goal setting.

Gap3: Service specifications versus service delivery: as a result of role ambiguity and conflict, Poor employee-job fit and poor technology-job fit, inappropriate supervisory control systems, lack of perceived control and lack of teamwork.

Gap4: Service delivery versus external communication: as a result of inadequate horizontal communications and propensity to over-promise.

Gap5: The discrepancy between customer expectations and their perceptions of the service

Delivered: as a result of the influences exerted from the customer side and the shortfalls (gaps) on the part of the service provider. In this case, customer expectations are influenced by the extent of personal needs, word of mouth recommendation and past service experiences.

Gap6: The discrepancy between customer expectations and employees’ perceptions: as a result of the differences in the

understanding of customer expectations by front-line service providers.

Gap7: The discrepancy between employee’s perceptions and management perceptions: as a result of the differences in the understanding of customer expectations between managers and service product

ConclusionWe can conclude that both Pizza hut and Domino’s are known for their best services and according to GAP model we can summarize the whole that Employees behavior is the major factors which influence the customer perception most about the pizza outlets while they are followed by environment, parking space and external factors.

Recommendations

1. Tie up with Hotel Management InstituteRetail is a booming sector in India. However, looking at the management education scenario in India, retail management has not been given its due. As far as retail professionals are considered, there is a dearth of talent in India. Pizza Hut can have a tie-up with leading hotel management institutes to provide a win-win situation for the company as well as the community. This would be a training ground for all budding managers of Pizza Hut and the operational staff.

2. No Hidden CostIn the Indian context, Pizza Hut is still perceived as an expensive place to dine. This is because of the various ‘hidden costs’ that prevails. When Pizza Hut advertises pizzas for Rs.50 and Rs.65, it is exclusive of taxes which later add on to the actual price which forms a significant part. Pizza Hut should compute and communicate the prices after including taxes and other service charges.

3. Outsource Real Estate Services

While choosing the location outlet, a lot of real estate factors have to be taken into consideration. Some of the factors are real estate prices, electricity, maintenance, water supply, parking space, sewage and waste-disposal facilities, conditions of roads, etc. Therefore, they can outsource real estate services to specialized consultants to increase accessibility of their outlets. This will help Pizza Hut focus on their core competency i.e. to provide a “great dining experience”.

4. MascotThe popularity of the Pooch Zone is increasing. Pizza Hut can cash on this popularity by having one of its Pooch Zone characters as a mascot. The mascot can act as a brand personality to increase brand awareness and recognition.

5. Different Pizza ShapesIn order to attract the kids, Pizza Hut can introduce pizzas in the shape of ‘Pooch Zone’ cartoon characters & other cartoon characters. This concept can also be promoted through kids channel like Cartoon Network and Hungama with communication directed at children – one of their main influencer segment.

6. Game CountersKids act as a major influencer in choosing the location of a family outlet. Pizza Hut can introduce game counters in some selective outlets. Thus, Pizza Hut can combine dining with entertainment.

7. Wi-FiPizza Hut can introduce Wi-Fi technology in selective outlets. This can provide convenience to customers thus increasing customer loyalty and sale. Login/password for a set time can be given to customers. If the person wants more

time, they can place another order and get additional time. Paying customers get XX minutes of Wi-Fi access before the Authentication Server cuts them off.(E.g. Customer placing an order within a range of Rs. 50-Rs.100, can get 30 min. of net access.)

8. Click to orderPizza Hut can focus on selling pizzas via their website. Customers can then select the pizza base & toppings to make it customized. Customers will be only a click away to get their required pizzas.

9. Diet PizzaIndian consumers are becoming health conscious. So Pizza Hut can promote its offerings on a health platform by introducing low fat and low calorie pizzas.

10. Nutrition ChartIt can have helpful communication informing the consumer that certain items on the menu fulfill x% of an adult’s daily requirement of various nutrients. Nutritional information can also be mentioned in their website. The idea that the food at Pizza Hut isn’t complete junk would be really quite comforting.

11. Improve LogisticsWhen you are hungry you cannot wait. If Pizza Hut can peg consumer’s expectations at the right time and beat it, chances are one would be more than happy. Not because the food is tasty but because the expectations have been met. Thus, they should work on the logistics by following the principle of

‘distance orbit from a retail outlet’ i.e. to select the location, decide on the radius within which the outlet will operate

Pizza Hut does not stick to a time-bound delivery. To tackle this, the store personnel can be trained to work within a fixed time-frame to prepare the pizza. Before a shop is set up, the delivery staff can go through a routine ‘test grind’ to be well accustomed with the location.

12. Pizza CardPizza Hut can introduce loyalty programs for its customers in the form of ‘Pizza Card’ where they can avail of discounts, freebies, and prizes etc. Customers will be awarded points based on the frequency of pizzas they order. Once they reach a set number of points, they will be given free prizes and other gift accessories. This can be instrumental in building up ‘Brand Loyalty’.

13. Alliance with AirlinesFor Pizza Hut, sky can be the limit by delivering hot, fresh pizzas everywhere, anytime. They can have a tie-up with major airlines. The deal will help Pizza Hut in its expansion plans by adding to its market penetration.

14. Rent outlets at fuel stationsPizza Hut can rent outlets at fuel stations at selective locations for setting up restaurants across the country in a phased manner. Such drive-in-drive-out outlets can save on real estate costs and at the same time give the brand greater visibility without entailing large investments.

15. Variety in menuVariety in menu by way of fruit juices would be preferred by the customers as now most consumers do not prefer cola drinks. This will also add to the promotion of the brand through the ‘health’ format.

16. Location Based Advertising LBA envisages sending electronic marketing messages to consumers located proximately to an outlet. For example, Pizza Hut can send SMS to all passer-byes in a specific radius. This SMS serves as a marketing message informing the customer about the nearest outlet, its menu, discounts, schemes etc. for any order within limited time. Those who are closer to the point of sale will be more likely to make use of this offer and thus allure new customers to their selling points.

Keeping its ears close to the ground and reinventing and adapting itself with consumers’ needs, Pizza Hut can emerge as a leader in the food retail sector

Bibliography

www.pizzahut.co.in

www.smokinjoespizza.com

www.dominos.com

www.magindia.com

www.businessstandard.com

www.mid-day.com

www.mba.iiita.ac.in

www.domain-b.com

www.agencyfaqs. com

www.primetimeprism.com

Marketing Management – Philip Kotler

WEBSITES

BOOKS

Services Marketing - Woodruffe