Dominoes vs. Pizza Hut Essay

The Indian domestic pizza market is growing rapidly with number of foreign brands entering into the sector to seek business opportunities. In the current scenario, Indian consumers are increasingly shifting towards varieties of Pizza offered by the well-known brands. Further, huge untapped potential in rural and semi-urban areas, quick investment recovery, simple equipment and small investment to open a pizza outlet also contributes to the development of domestic pizza industry in India. Thus, the domestic pizza market in India is estimated to grow with a CAGR of around 26% during 2011-2014. The two main contenders in this highly competitive market segment is Domino’s and Pizza Hut. Until 1996, Pizza in India was synonymous only a bready dough base slathered with some ketchup. Since 1996, there was a proliferation of ‘high-priced branded’ pizzas in the market, with the entry of international pizza chains. Domino’s and Pizza Hut, the two big US fast food chains entered India in 1996. Each claimed it had the original recipe as the Italians first wrote it and was trying desperately to create brand loyalty. Domino’s and Pizza Hut – tried to grab as large a slice of the pizza pie as possible. Domino’s and Pizza Hut expanded their market ever since they entered India. Domino’s had grown from one outlet in 1996, to over 500 outlets in April 2012. Pizza Hut too, which began with just a single outlet in 1996 has over 200 outlets in 2012. Domino’s entered India in 1996 through a franchise agreement with Vam Bhartia Corp. 3 The first outlet was opened in Delhi. With the overwhelming success of the first outlet, the company opened another outlet in Delhi. By 2000, Domino’s had a presence in all the major cities and towns in India. Pizza Hut entered India in June 1996 with its first outlet in Delhi. Positioning to customer needs. When Domino’s entered the Indian market, the concept of home delivery was still in its nascent stages. It existed only in some major cities and was restricted to delivery by the friendly neighbourhood fast food outlets. Eating out at ‘branded’ restaurants was more prevalent. To penetrate the Indian market, Domino’s introduced an integrated home delivery system from a network of company outlets within 30 minutes of the order being placed. However, Domino’s was not the trendsetter so far as home delivery was concerned. Delhi based fast food chain; Nirula’s was the first to start free home delivery in 1994. But where Domino’s stole the market was its efficient delivery record. GouthamAdvani, Chief of Marketing, Domino’s Pizza India, said, â€Å"What really worked its way into the Indian mind set was the promised thirty minute delivery. † Domino’s also offered compensation: Rs. 30/- off the price tag, if there was a delay in delivery. For the first 4 years in India, Domino’s concentrated on its ‘Delivery’ act. For its delivery promise to work, Domino’s followed an 11-minute schedule: one minute for taking down the order, one minute for Pizza-making, six minutes oven-time, and three minutes for packing, sealing and exit. Pizza Hut, on the other hand, laid more emphasis on its â€Å"restaurant dining experience. † It positioned itself as a family restaurant and also concentrated on wooing kids. Its delivery service was not time-bound. A company official said, â€Å"The Pizza making process takes about 20 minutes and since we don’t usually deliver to places which are beyond the reachable-in-half-an-hour distance, customers can expect home delivery within 45 minutes. † Moreover, analysts felt that Pizza was something that just was not meant to be delivered. Said Vivek Sure, Projects Manager, Pizza Express, â€Å"If you don’t eat pizza fresh, it turns cold and soggy. † However, Domino’s seemed to have overcome this problem through its delivery pack called ‘Domino’s Heatwave. Localizing the Menu Since its entry into India, Domino’s introduced nine new toppings for Pizzas to cater to the local tastes. Different flavours were introduced in different parts of India. Advani said, â€Å"The Indian palate is very definitive – people are extremely finicky and choosy, not too willing to experiment. Food tastes vary from region to region. To capture the market, we had to localize flavours. † Thus, Deluxe Chicken with Mustard Sauce’ and Sardines were confined to the East, Mutton Ghongura and Chicken Chettinad to the South and Chicken Pudina to Mumbai. Butter chicken, MakhaniPaneer and the ChatpataChana Masala were confined to the North. Very soon, Pizza Hut followed Domino’s and offered customized Spicy Paneer and Chicken Tikka toppings. Apart from this, it also opened a 100% vegetarian restaurant at Ahmedabad, a one-of-its-kind worldwide. The restaurant also offered a special Jain menu, which did not have a single root-based ingredient to fit in with the food habits of Jains. Another city-specific adaptation of its menu by Pizza Hut was the restaurant in Hyderabad, (Andhra Pradesh) which offered Halal meat and chicken only with no beef and pork products in the menu. MARKETING MIX 1. PRODUCTS PIZZA HUT a. Product differentiation: Worldwide and in India pizza hut has come to become synonymous with the â€Å"best pizza’s under one roof†. this is because at pizza hut the belief is that 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 setting standards for others to strive to replicate. Pizza hut is committed to providing uncompromising product quality, offering customers the highest value for money and giving service that is warm, friendly and personal. A critical factor in pizza hut’s success has been its unique dining experience. Crew members at pizza hut strive each day to provide ‘customer mania’ the kind of service that ensures that every visit of the customer is a memorable one. b. Pizza Features: Pizza hut has many unique features of their product due to which it attracts the customers. The product is classified into non-durable goods as it is a food item. Pizza hut differentiates itself with its competitors with respect to their wide range of offerings (menu items) one can find besides pizzas, range of pasta’s appetizers, cakes deserts etc. There are a large number of items to choose from. Some of the items are: * Pizza’s * Pasta and salads * Appetizers * Deserts * Beverages c. Mass Customisation: The main advantage of customisation is that one can customize his/her own pizza by selecting the bread and loading it with his/her choice of toppings. This creates variety in the customers mind and thus one can enjoy whatever he/she can imagine pizza hut can offer. The most unique feature is that there is ‘pan 4 all’ scheme where one can select 4 different types of vegetarian/no-vegetarian combination of pizza. This is a unique way of offering as there are many customers who come in groups where someone in the group may have different preferences. d. Conformance quality Pizza Hut products have high conformance quality all the products produced are identical and meet the promised specifications. e. Style Pizza is delivered in hot pans and served in style. The toppings are also dressed in a good fashion thus having ‘food in style ‘defines pizza hut experience. f. Service Differentiation * Dining: Once one enters a restaurant immediately the attendants initiates the ordering process by providing the menu. All associates are well trained in English and can take order from any type of customer. Pizza hut’s style of delivering the pizza is quite an experience. The restaurant is aesthetically designed. All the staff members are uniquely dressed, managers dressed specially. Also the tables and menus are all placed in a good manner. All orders placed are served within 15-20 minutes. * Delivery and takeaway:They have the concept of hot-dot in case of delivery, which means that the package is guaranteed to be delivered hot. There is a dot on the cardboard box that serves as a checking point as to whether the hot-dot status has been met or not. Also they place a tripod on top of the pizza at the centre so that the ceiling does not touch the toppings. DOMINOS a. Product Differentiation Domino’s pizza India has maintained its position in the market 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 it’s pizza’s within 30 minutes to its community of loyal customers from its entire chain of stores around the country. As the name suggests ‘the pizza delivery experts’ customers can order their pizza’s by calling their hotline. Domino’s believes strongly in the strategy of ‘ think local and act regional’ . Thus time and again Domino’s has been innovating toppings suitable to the taste buds of the local population and these have been very well accepted by the Indian market. Also they have their promotional campaign ‘ hungry kya ? ’ which means call up Domino’s at any time of the day 24/7 whenever you are hungry and have the food in 30 minutes. b. Pizza Features. Dominos has many unique features of its product due to which it attracts its customers. The product is classified into non-durable goods as it is a food item pizza hut differentiates itself with its competitors with respect to their wide range of offerings (menu items) one can find besides pizzas , range of pasta’s appetizers, cakes deserts etc. There are a large number of items to choose from. The ‘chicken wings’ item has specially struck a chord with a lot of customers as such a kind of item is not available at any other pizza outlet. * Veg pizza * Non Veg pizza * Veg II pizza. * Non Veg II * Garlic breadsticks * Soft drinks (600 ml) * Chicken Wings * Choco Lava Cake * Butterscotch Mousse Cake c. Mass customisation The main advantage of customisation is that one can customize his/her own pizza by selecting the bread and loading it with his/her choice of toppings. This creates variety in the customers mind and thus one can enjoy whatever he/she can imagine domino’s can offer. The most unique feature is that ‘single slice pizza’ scheme where one can select any veg/non-veg pizza at a lower cost. This is a unique way of offering as there are many consumers e.g. Student segment who cannot always afford the premium price. d. Conformance quality Domino’s products have high conformance quality all the products produced are identical and meet the promised specifications. e. Style Pizza is delivered in paper boxes and served in style. The toppings are also dressed in a good fashion thus having quick service justifies the domino’s tagline. f. Service Differentiation * Dining: Though domino’s is mainly concerned with takeaway and home-delivery, to suit the Indian market it allows dine-in facilities as well. One can enter the restaurant and immediately place their order at the service kiosk and they would be provided with a token number and there is a led screen with indicated which order is ready for service. It’s mainly a self-help facility. Also pizzas are delivered in same cardboard boxes as in case of delivery, no such differentiation is there which is in stark contrast to that of the dine-in experience that customers enjoy at the more expensive pizza hut restaurants. * Home Delivery: Home delivery facilities in Domino’s are world renowned and super-efficient. The persons attending the customer calls are helpful in selecting the best economical orders as well. Also the delivery system is very efficient and very rarely has anyone complained about quality of delivery times. Also it is open 24/7 and this standard is maintained throughout India regardless of the livings standards of that place. 2. PLACE It is very important to decide where the marketer can deliver the value to the customer. This is done through effective marketing channels that make the product available to the consumer. India in 1996, with its first outlet in Delhi, has grown into over 101 outlets spread across 24 cities. In India, the majority of Domino’s outlets are delivery-based with only about 25% of the outlets being both delivery and â€Å"sit-down†. This is quite different from other retail food chains. Pizza Hut made its foray in India with a dine-in restaurant in Bangalore in June 1996. Starting with six restaurants in its first year, Pizza Hut has expanded to 73 restaurants in 19 cities and plans to scale up to 100 restaurants by end-2004 * At presentDomino’s has149 locations across India and (8,500). Worldwide * Dominos projection call for 500 stores by 2010 * The company has tied up with the Indian Oil Corporation (IOC) to set up pizza outlets in the latter’s petrol bunks and in the process save on real estate costs * The pizza chain will open such drive-in-drive-out outlets in around 100 IOC petrol stations in 16 different cities. It intends to invest around Rs. 40 crore to expand its network. Pizza Hut has 134 locations across India (and 13,000 worldwide); * Pizza hut projections call for 300 stores by 2012. † 3. PRICE. In India dominos is trying to attract not only the upper but also the lower and middle class people. So, it has a more widespread network of outlets even in suburban areas, whereas pizza hut is only present in major cities. These targeted customers are interested to spend on pizza but at a low price. They are eager to go for outing in any festival and as a cheap family restaurant dominoes will be most preferable. They do not need high class ambience or amusement in the restaurant So the establishment cost is low for the dealers and the price of the pizza is very reasonable for the customer. Company Price Range (Rs) Domino’s 39-265 Pizza Hut 75-350 Some of Dominos’ very successful pricing campaigns are * Fun meals for 4 @ 180 * Pizza mania @ 39 * Non-veg singles/doubles at 69/120 However pizza hut is not too far behind in targeting the lower income groups. The weekday meal @99 has been a major hit all over India attracting office goers and teenage students alike. However the main target segment for pizza hut is the rich and higher middle class people. They are offering an organised restaurant system with great ambience and for these demanding a higher price for pizzas. 4. PROMOTION DOMINO’S * Dominospizzas have decided to focus on the take-away market. * To give value to the customer Dominos came up with Rs 50 pizza * Dominos gave away a lot of free pizzas. Even today they give close to 1000 pizzas free during a week. * Dominos kept their promise of free pizza if it was late beyond 30 minutes. The company bore the cost * In November 2006 Dominos came up with double cheese crunch pizza. And it increased sales by 45 per cent * Besides that Dominos did a lot of ground activities in terms of alliances, radio advertising, etc. Dominos also have this program called the Rolex challenge. It’s a program run by Domino’s international where store managers are awarded a Rolex watch if the achieve a certain sales level in specified time. PIZZA HUT The advertising strategy for Pizza Hut is two-fold. Firstly, laying emphasis on it being an international brand with an Indian heart, Pizza Hut’s communication is reflective of family values, family bonding, etc. * Pizza Hut’s arranged marriage commercial in Indian settings, and the Palat pizza commercial in Hinglish. * Secondly, highlighting the premise that the pizza is a catalyst that brings people together ensures that this is a brand that connects with the Indian consumer. * The ‘Palat’ concept was launched in 2002, with the launch of Pizza Hut’s innovative range of ‘Stuffed Crust’ pizzas * An unconventional and fun product, the ‘Stuffed Crust’ pizza has a crust that is filled with a ring of mozzarella cheese that magically transforms the crust edge, compelling one to eat the pizza backwards – i. e. , crust first or ‘Palatke’. * Pizza Hut claims as much as 50% of sales from delivery in some stores, and ten of its outlets are takeout only. SEGMENTATION PIZZA HUT 1. Geographic Region: Pizza hut outlets in different parts of Indiaare a way of segmenting their markets according to region and finding out potential markets. City: They also segmented the cities as class I, classII, metros and small towns 2. Demographic Age: Under 10, 10-18, 18-25, 25-40, 40+ Family income: Middle class, upper middle class, high class Dual income earners: Yes/No 3. Psychographic Socio economic class: Urban 4. Behavioural Occasions: Birthdays, corporate lunches, parties, receptions Loyalty status: Low, medium, high User status: First time, regular, non-user DOMINO’S 1. Geographic Region:Domino’soutlets in different part of India are a way of segmenting their market according to region and finding out potential markets. City:They also segmented the cities as class I, class II, metros and small towns 2. Demographic Age:Under 13, 13-21, 21-35,35-50, 50+ Family income: Lower middle class, middle class, upper middle class, high class 3. Psychographic Socio economic class: Urban 4. Behavioural Occasions: Birthdays,parties,receptions,festivals, small office parties Loyalty status:Low,medium, high. User status:First time,regular,non-user TARGETING PIZZA HUT * In geographic segment they targeted countries where there were no pizza hut outlets. Initially opened in class 1 cities and then have now moved to sub-urban. * In demographic segment main target is young adults ranging from 25-40 and also dual-income earners. They basically aim the upper middle class and high class income segment. * In psychographic segment they targeted urban socio-economic classes. * In behavioural segment they targeted occasions such as birthday bashes and corporate lunches. They also targeted the first time users as they felt that the quality and taste would automatically make them a loyal customer. DOMINO’S * In geographic segment they targeted countries where there were no domino’soutlets. Initially opened in class II cities and then have now moved to class I, metros and smaller towns. * In demographic segment main targets are teenagers and college students ranging from 13-21yrs and young adults ranging from 21-35 yrs. They basically aim the upper middle class and middle class income segment. * In psychographic segment they targeted urban socio-economic classes. * In behavioural segment they targeted occasions such as festivals, hostel parties. They also targeted the first time users and also the regular users. SWOT ANALYSIS PIZZA HUT Strengths:1. Strong Universal image that customers easily recognise. 2. Successful customization3. Low competition in eastern part of the world4. Strong network with its franchisees| Weaknesses:1. Lack innovation2. High competition in western world3. Fixed overhead cost| Opportunities:1. Pizza as family dining option2. Pizza is a fast growing niche market3. Services on mobile and other electronic devices| Threats:1. Socio Demographic changes2. Consumers being price sensitive3. Competition from other brands| DOMINO’S Strengths:1. Worldwide Presence2. Leader in pizza delivery industry3. Strong brand image4. Strong network with its franchisees| Weaknesses:1. Declining in-store sales | Opportunities:1. Growth opportunities in developing economies2. Services on mobile and other electronic devices| Threats:1. Competition in the pizza delivery industry2. Increase in health awareness3. Increase in labour and food prices| CONSUMER PREFERENCES Primary Research Results RECOMMENDATIONS PIZZA HUT: 1. High quality personnel: Total cooperation of its employee’s thereby increasing productivity, beating competition and enhancing consumer satisfaction. 2. Pay more attention to untapped segment of Senior citizens. 3. Maintain the product quality by continuous innovations. 4. Emphasis on development of â€Å"Home Delivery† Network. DOMINOS: 1. Make more coupons available to customers: Offer specials for certain times or seasons 2. Improving online ordering procedures. 3. New products specific to location. 4. Customized pizza.