retail startegy of domino's

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[Retail Management] Page 0

RETAIL

MANAGEMENT

PROJECT ON

DOMINO’S GROUP 2:

AKSHAY KUMAR 70001)

AMIT KUMAR SINGH

70003)

ANJALI SHARMA 70005)

ASTHA SINGH 60012)




ACKNOWLEDGEMENT

The Project on "DOMINO’S RETAIL STRATEGY " is undertaken at Chandragupt

Institute of Management Patna under the guidance of Prof. G.K.Murthy, Faculty

Marketing, CIMP Patna. The project is an outcome of the consolidated contribution

made by several people whom we owe our work. So we would like to acknowledge one

and all.

Firstly, we would like to thank our Almighty God for his grace, blessings and for

supporting us at each and every step. We would also like to express our deep sense of

gratitude to our respected guide Prof. G.K.Murthy for his guidance in the successful

completion of our report. He always corrected us whenever we went wrong and wasalways there to help us at each step.

A special thanks to the Domino’s Store Manager, Mr. Rakesh Ranjan( Exhibition

Road) for his active cooperation and support.

Lastly, we acknowledge all those who have directly or indirectly motivated us for this

project.




ABSTRACT

Retail management is an area which has attracted immense attention from

academicians as well as the general public with the rapidly changing retail scape. The

evolution of e-tailing has further attracted the attention of a lot of people towards the

exciting world of retailing. Our basic purpose behind undertaking this project was to

find out as to how a service retailer or rather a Quick-Service Restaurant (QSR) to be

more precise, formulates its retail strategy and delivers superior service. It is because

of this reason that we chose Domino’s Pizza for our project, as it has been a flag bearer

of superior service quality and is miles ahead of its competitors with regard to the

service quality. The methodology that we have followed while working on this project

has been to gather primary data by interviewing the store manager of Domino’s Pizza

outlet located in Exhibition Road and also going through various sources of secondary

data for developing a further insight into the functioning of our chosen retailer.

Through the course of this project we intend to highlight various aspects of the retail

sector while also emphasizing on the importance of top notch service quality in

developing a successful business.




Table of Contents

ACKNOWLEDGEMENT ...................................................................................................................... 1

1.0 History of the Company .................................................................................................................. 4

2.0 Retail Strategy ................................................................................................................................. 7

2. 1 Merc hand is e Assortm ent ...................................................................................................... 8

2. 2 Hu man Resou rc es ................................................................................................................... 9

2. 3 Store Loca ti on : ...................................................................................................................... 10

2. 4 Pr ic ing...................................................................................................................................... 11

2. 5 Communicat ion Mi x ............................................................................................................ 12

2. 6 Stor e Layout .......................................................................................................................... 13

2. 7 Cust omer Service .................................................................................................................. 15

3.0 Competitive Advantage ................................................................................................................ 16

4.0 CONCLUSION .............................................................................................................................. 18

5.0 REFERENCES ................................................................................................................................ 19




1.0 History of the Company

Domino's Pizza, Inc.(simply known as Domino's) is an American restaurant chain and

international franchise pizza delivery corporation headquartered at the Domino Farms

Office Park (the campus being owned by Domino's Pizza co-founder Tom Monaghan)

in Ann Arbor Charter Township, Michigan, United States, near Ann Arbor,

Michigan. Founded in 1960, Domino's is the second-largest pizza chain in the United

States (after Pizza Hut) and the largest worldwide, with more than 10,000 corporate

and franchised stores in 70 countries. Domino's Pizza was sold to Bain Capital in 1998

and went public in 2004.

Jubilant FoodWorks Ltd holds the master franchisee for Domino's Pizza in India,

Nepal, Sri Lanka and Bangladesh. The Company was incorporated on 26 March 1995 as

Domino's Pizza India Private Ltd and began operations in 1996. It changed its name to

Jubilant FoodWorks Ltd in 2009. The company opened India's first Domino's Pizza

outlet in New Delhi in 1996.The Company got listed on the Indian bourses in February

2010, Mr, Shyam S, Bhartia, Mr, Hari S, Bhartia and Jubilant Enpro Private Ltd, are the

Promoters of the Company. The Company & its subsidiary operates Domino's Pizza

brand with the exclusive rights for India, Nepal, Bangladesh and Sri Lanka, The

Company is India's largest and fastest growing food service company, with a network

of 500+ Domino's Pizza restaurants. Over the period since 1996, Domino’s Pizza India

has remained focused on delivering great tasting Pizzas and sides, superior quality,

exceptional guest care and value for money offerings. They have established a

reputation for being a home delivery specialist capable of delivering pizzas within 30




minutes or else FREE to a community of loyal consumers from all their restaurants

around the country.

Their business has changed a lot over the years since it started its operations in India

with the changing economic scenario and the changing tastes of the Indian

consumers. They have pioneered a lot of service initiatives that have been a first in the

food service industry and have also come up with a huge range of new flavours of

pizzas.

1996 - First pizza store opened in New Delhi

1998 - Master franchise from Domino’s International extended to whole of India and

Nepal

2001 – Went for co-branding with Hindustan Coca-Cola Beverages Private Limited

2004 - Launch of the ‘30 minutes or free’ campaign

2006 - Total number of stores crossed 100 - Became a profit making company

2008 - Achieved monthly sales of one million pizzas

2009 - Launch of ‘Pizza Mania’ - Total number of stores crossed 200

2011 - Company has changed its name from Domino's Pizza India Ltd. to Jubilant

Foodworks Ltd.

-Jubilant Food - New 3 Cheese Pizza debuts at the Domino's stores!!

2014 - JFL Sweeps The Coca Cola Golden Spoon Awards 2014 - Winning Three Major

Awards.

We interviewed Mr. Rakesh Ranjan, the Store Manager of Domino’s Exhibition Road

outlet. He told us that the Domino’s Pizza store located in Exhibition Road (Patna)




was the first Domino’s store of Bihar and started its operations on 12 October 2010.

This store opened during the election season. This was an indicator of the improved

law and order situation of Bihar as it was the first international QSR to enter the Bihar

market.

The mission statement of Domino’s Pizza highlights its commitment towards its

employees while also shedding light on its target of being the leader in the business of

selling pizzas. The mission statement is “Sell More Pizza, Have More Fun!”

More than 15 million people are consuming Domino’s Pizza in India every year but

half of those consumers are only one time consumers. It is this opportunity which has

prompted Domino’s to expand its reach in the Indian market aggressively despite the

slowdown in the quick service sector with people checking their discretionary

spending. It plans to continue expanding its reach at a fast clip. Domino's is looking to

set up 150 new stores every year and hopes to touch 1,500 to 2,000 stores by 2020. They

believe that people like eating pizza in smaller markets such as Patna, Salem and

Kanpur as much as they do in Delhi or Mumbai. They obviously plan to expand and

penetrate in the Indian market but don’t plan to change their retail format in the near

future.




2.0 Retail Strategy

Target Market:

A retail market is a group of consumers with similar need (a market segment) and a

group of retailers that satisfy those needs using a similar retail format. Dominos have

a well defined target market. Their primary target market is the people aged between

12 to 35 years. Initially they were targeting the people between the ages of 18 to 35. But

realising the changing tastes of the Indian kids, they have started targeting kids as

well. All genders have equal importance for them. With regards to economic

influence, its target market comprises of people ranging from lower middle class of the

society to higher income groups. Educational qualification has no bearing on deciding

the target market. The target market according to the Socio-Economic Classification

(SEC) comprises of SEC classes A & B.

Their major focus is on those who prefer a unique experience of sitting at home and

enjoying a fresh hot pizza. On time delivery is the most quoted example in service

industry today. The motto and the achievement of delivering all the pizzas all across

the world within 30 minutes sets a unique experience for the customer as they get

served a warm and fresh pizza.

Another important part of a retailer’s target market is the Trade Area. The primary

trade area of Domino’s outlets is the point up to which they provide home delivery

service which is generally up to a radius of 1.5-2 km around the store. So the primary

trade area for the Exhibition Road store comprises of areas like Exhibition Road,

Frazer Road, Bhattacharya Road, etc. The secondary trade area for this particular store




will include areas within radius of 2-3 km outside the primary trade area. The primary

trade area for the store that we visited will therefore include areas like Rajendra Nagar,

Boring Road, etc. The tertiary trade area for the store can include any random area

from Patna or Danapur outside the primary or secondary trade area. The customers

who come to Exhibition Road for shopping trips or for other such purposes can be

classified as belonging to the tertiary trade area. This can include areas like Patna City,

Danapur, etc.

2. 1 Merchandise As sortment

Merchandise Assortment: It is the set of SKUs that the retailer will offer in a

merchandise category in each of its store. The assortment plan thus reflects the

breadth and depth of the merchandise that retailers offers to customers. The

merchandise of Domino’s is nothing but the pizzas and the various side dishes like

garlic breadstick, lava cake, beverages etc. The major brands that they carry are Coca-

Cola, Sprite, Maaza (only with Joy Box), etc. The products of Domino’s are currently in

the growth stage of life cycle. These products have been identified to be in the growth

stage because they are relatively new for the Indian market and more so for Patna.

There is huge potential for growth and their sales have shown an uptrend since the

time the store started its operations. It is therefore apt to categorise these products to

be in the growth phase of the category life cycle.




The products of Domino’s can be classified as convenience goods as consumers are

primarily concerned with minimizing their effort to get the product delivered at their

place. Also since prices are fixed the question of comparison does not come into the

picture.

2. 2 Human Resourc es

A primary objective of human resource (HR) management is to build a basis for

sustainable competitive advantage. Employees play a major role in performing its

critical business function. There is no specialised sales team as such. The general store

staffs are the ones who do this work. There are two types of staff in the store, general

duty staff and managerial level staff. The general duty staffs are hired through walk-in

interviews. The interviews for these staff are conducted by the store manager. They

undergo training for a period of 2 to 7 days. This training program focuses on building

the customer handling capabilities of the hired staff. They are trained specifically with

regard to the manner in which they talk to the customer. For example their

introductory line “Hello Sir/Ma’am. Welcome to Domino’s” is fixed for all their stores.

After that the further training is of on the job nature where the staffs learn about the

various intricacies of the job like order punching, till box handling etc.

The managerial staffs are hired through centralised recruitment process and the

interviews for the same are conducted by the HR manager of the company. The entry

level post for a manager is that of the associate manager.




The employees can further be classified into two categories. The first are those who

work in the store and the second are the delivery riders who deliver the pizzas to the

homes of the customers. Further, there are full time employees and part-time

employees. The full time employees get a fixed salary plus monthly incentives

depending on the amount of sales achieved by the store whereas the part-time

employees are paid based on the number of hours that they work. The part-time

employees though have to work for a minimum of three hours daily and can also be

called in case the number of orders shoots up.

2. 3 Stor e Loca tion:

Location is typically one of the most influential considerations in a customer’s store

choice decision. Location decision has strategic importance because they can be used

to develop a sustainable competitive advantage. Location decision is risky. When

retailers select a location, they either must make a substantial investment to buy and

to develop the real estate. The retail store is located in Exhibition Road which is one

among the Central Business Districts of Patna. But Domino’s stores can be found in

different location like Shopping centres, Lifestyle centres, railway station and many

more. This store pioneered the presence of Domino’s in the city therefore they chose

this location as it is a commercial hub and a high level of pedestrian traffic can be

found. Also this location has a large number of residents living in the area. This site is

highly accessible to the primary trade area customers and it is effectively accessible for

the other customers too. This store has successfully managed to attract a lot of




customers outside its primary trade area because of its strategic location and the

particular area being one among the happening areas of Patna.

2. 4 Pr icing

The importance of pricing decisions is growing because today’s customer have more

alternatives to choose from and are better informed about the alternatives available in

the marketplace. Thus, retailer can increase value and stimulate more sales by either

increasing the perceived benefits offered or reducing price.The pricing policy of

Domino’s isn’t store specific as it is owned and managed by a master franchisor. The

price of its products is fixed. There are various other practices like coupons and price

bundling that they use to compete on price. They often provide coupons to their

frequent customers as well as their waning customers. They also practice price

bundling. For example they offer certain combinations of their products as a single

meal at a single price.

Domino’s uses cost-oriented method of pricing as its pricing strategy takes into

account the company’s profit objectives and also covers its cost of production. To

retain its customers, it also has a frequent shopper program. The loyal customers are

often given coupons like Buy One Get One (BOGO) free.




2. 5 Commun ication Mix

Over the years Domino’s has come up with various advertisement campaigns. Earlier

they advertised only through hoardings, banners and distribution of pamphlets. But

later they switched to TV ads and came up with some very good ads which mainly

focussed on new product introductions or the high standards of their service. They

also do local advertising by inserting flyers in the local dailies for which they pay a very

meagre amount to the newspaper vendors; depending on the number of flyers to be

inserted (this amount generally ranges from Rs. 100-150).

The visual media of television has been utilized to the maximum capacity. Many

beautiful ads for domino’s pizza with reputed actors have been aired and they all have

struck a chord with the masses. Most ads of Domino’s are targeted to be product

introduction or ads or the brand’s reminder ads so that people look at the ad and

order a Domino’s Pizza. Domino’s has surely changed the concept of eating amongst

the Indian Household. Ads for Domino’s pizza can also be seen in newspapers and

magazines. Tied-up with Facebook and Twitter to enhance its network and target

audience

The most effective mode of unpaid communication is word of mouth publicity. And

this is something which Domino’s boasts of. The word of mouth publicity that

Domino’s generates is simply unmatched.

Domino’s always keeps coming up with new schemes and offers to promote its food

products. This helps it to maintain its grip on its customers. The home delivery is

always free of charge. The company sometimes offers a 50% discount on the second




pizza while at other times; the company comes up with schemes like one small pizza

free with one medium or large pizza. Sometimes lucky coupons are also awarded to

loyal customers. The most regular and common scheme is of giving a coke free on

every purchase. Thus, the advertising team is actively involved in the marketing and

promotional strategy to boost up the sales.

2. 6 Store Layout

The environment in a store, the design, and the presentation and location of

merchandise in the store has a significant impact on shopping behavior. The layout

and design of a store can attract customers to visit the store, increase the time they

spend in the store and increase the amount of merchandise they purchase. It has also

long term effects on building customer loyalty towards retailer by enhancing the

retailer’s brand image and providing rewarding shopping experiences that encourages

repeat visit. The store layout of Domino’s outlet has two parts. One is the production

area and other the dining area. We would first deal with the layout of the production

area. Dominos stores layout facilitate the movement of products and team members

between stations to manage capacity during peak hours and minimize bottlenecks.

The store layout is designed to cope with the average peak hour movement of goods

and people. The storage area is setup to stock the ingredients for three days. The

layout design enables the optimal use of space and equipment thereby enhancing the

skills and efficiency of the team members. It also allows them to adapt to different




level of production. Domino’s also ensures that the health and safety norms are

adhered to in order to maintain safe working conditions for the staff. A typical

Dominos store layout includes the following: Reception, Assembly Line, Oven,

Packing area, Office, Cold Storage, and Washing Area.

The second part of store layout is the dining area. The dining area of Domino’s is of

free form nature and provides for free flow of customers. The layout is such that

customers can comfortably sit and munch on to their favorite pizzas. The fixture that

decorates their store manages to effectively attract the attention of the customers.

One can find red color dominating the store with walls and furniture all in red. Apart

from the tables and chairs, they have a television set, music system and RO water

purifier.

The store always brims with bright light with music constantly playing in the

background. The music that is generally played is that of a guitar and seems a bit

peppy which helps in lifting the mood of the customers. The store is generally filled

with the scent of freshly baked pizzas. But otherwise also it has a good scent and

makes the customers feel good. It definitely plays a role in attracting the customers

and doesn’t drive them away.




2. 7 Custom er Service

It is the set of activities and programs undertaken by retailers to make the shopping

experience more rewarding for their customers. These activities increases the value

customer receives from merchandise and service they purchase. Some of these services

are provided by store and call centre employees. Domino’s is a company which is

known for the high standards of services that it offers to its customers. The services

don’t vary from store to store and each store tries its best to maintain the high

standards of service. Customers are at the heart of Domino’s retail strategy. They often

customize the pizzas according to the needs of the customers. Customers have the

option of getting the toppings replaced with other toppings without any extra charge.

We managed to get the insights of 3 customers about the service quality of the store

that we visited. They were very effusive in their praise of the service quality being

offered by the store. One common aspect about the service of the store that came out

of our informal conversation was the commitment of Domino’s towards timely

delivery of service. They were also of the view that the store staffs were very

cooperative and also the manager was always willing to help them out in case of any

service related issue.

This store has a very customer friendly grievance redressal system. In case of any

grievance the customers are generally helped by the store staff instantly. Additionally,

the customers are free to directly approach the store manager to get issues queries

resolved. The store guarantees prompt redressal of customer complaints.




This store doesn’t have mystery shoppers who check the quality of service. But there

are regular surprise inspections from the company officials in order to ensure that the

store is maintaining the high standards of service quality.

The decision making power lies in the hands of the management and the salesperson

or in this case the general store staff don’t have the decision making power.

3.0 Competitive Advantage

The store that we visited definitely has a competitive advantage over similar stores.

The biggest competitive advantage that it has is the unmatched service quality. They

not only promise unmatched service quality but they fulfil their promise as well. No

such store in the vicinity offers free home delivery of its products that too within just

half an hour. No QSR other than Domino’s offers this service in Patna. Even outside

Patna (in major cities like Mumbai, Delhi etc.) no other QSR offers such a service.

Some QSRs do offer home delivery in big cities but they charge for it and also there is

no time guarantees as to when they will deliver the product.

Another advantage that this retail outlet has is that of location. It is located in an area

where there are offices of many big companies like Yes Bank, HDFC Bank, SBI etc.

Also there are numerous other big and small offices in the area. Whenever there is any

special event in these offices they place bulk orders with the particular Domino’s

which boosts their business to an all new level.




Furthermore, the employee churn is extremely low. This can be attributed to its

excellent employee related policies. An example in this regard could be a unique

policy that they have named “ROLEX”. If the store manages to exceed monthly targets

by 25% for 3 months on the trot then the store manager is given a “ROLEX” watch or

an amount equal to the price of a Rolex watch (the amount is approximately Rs. 2.5

lacs)

While Domino’s has built a strong brand image in the mind of its customers through

its superior service quality which is yet another source of competitive advantage, but it

is simply not enough. What it actually needs to do is to maintain the competitive edge

over its customers i.e. develop a sustainable competitive advantage. And this shouldn’t

be too hard for Domino’s given the fact that its customers are extremely loyal to the

brand. It just needs to maintain its high standard of service while coming up with

more new and innovative products and services.




4.0 CONCLUSION

When it comes to retail sector, Domino’s has created a name for itself by offering

excellent and unmatched levels of service. No other player in the QSR segment has

even come close to the service level of Domino’s. The store that we visited is no

exception. It has successfully managed to deliver quality products and high service

standard that Domino’s is known for. This project helped us to gain an insight into

one of the pioneers of retail sector and proved to be a great learning curve. This

project also helped us to develop better understanding of various concepts that we

learnt in the class and understand the application of those concepts in real world

scenario.




5.0 REFERENCES

1. LEVY M., WEITZ B. & PANDIT A. 2012. Retailing Management 8th Edition, New

Delhi, India

2. Domino’s Pizza India. About The Company. Retrieved Dec 05, 2015, from

http://www.dominos.co.in/about-us

3. Bhushan, R. (2014, December 1). India emerges as Domino’s biggest market outside

US. The Economic Times. Retrieved on Dec 09, 2015, from

http://articles.economictimes.indiatimes.com/2014-12-01/news/56614530_1_pizza-

india-ajay-kaul-jubilant-foodworks

4. Fast Food Rivals Expand, Hitting Yum Sales in India. (2015, October 08). NDTV

Profit. Retrieved on Dec 12, 2015 from http://profit.ndtv.com/news/corporates/article-

fast-food-rivals-expand-hitting-yum-sales-in-india-1229598

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