Comprehensive Analysis of Dominos Incorporation - Essay Example

Comprehensive Analysis of Domino’s Incorporation In today’s competitive market of commerce, Domino’s pizza is a company that carries its operations internationally. Domino’s Pizza is one of the most famous pizza delivering companies that has been functioning for almost 50 years as it operates as the number #2 pizza chain globally. During the 1980’s, Domino’s pizza dominated the food industry along with super-fast delivery. The company’s main branch is located in Ann Arbor, Michigan and has 10,200 employees that operate the facilities. The company continues to expand exponentially as it added 600 stores from 2000 to 2003 worldwide. The company finally went public in 2004, and was able to reduce its $908 million debt. This paper will thoroughly discuss the SWOT analysis of a company along with other factors that vitally impact the organization’s quest to become a leader in its market. A comprehensive study of the company through the SWOT analysis indicates several things about the corporation. The company has a solid brand reputation, which enables it to have some advantage over its competitors. In addition, the company has an excellent marketing strategy that often displays the organization’s desire to improve in every aspect. Furthermore, the company has excellent operations management chain solutions, which allows it to allocate its resources effectively (“The pizza wars”). Moreover, with the advent of the technology, 21.8% of the pizzas in UK are delivered via the internet. Arjun Sen, manager of the Restaurant Marketing group stated some few harsh words of Domino’s stating, “Domino’s needs to define what it clearly stands in the minds of the pizza consumers.” (“The pizza wars”). Although it has met with recent criticism, the employees are motivated to work harder with the chefs to protect the company’s brand. With that in mind, Domino’s decided to try cheddar bacon pizza melt to appeal to its burger lover customers. The company is able to serve decent-quality food at an affordable price with sanitary conditions, which gives it somewhat edge over its competitors(“The pizza wars”) Overall, the company is adapting well to the changes made by the head executives. The renovation of the recipe of the pizzas was a very successful approach towards bringing back customers. The company continues to adapt to new technology to serve its customers in a highly fashionable manner. Although the company does seem to have strengths, it also has certain weaknesses. The company constantly struggles to tackle the problem of diminishing sales, which has hurt its profits. Moreover, the company has faced several criticisms about the quality of the food, which is a vital factor that can explain the diminishing sales (Kenneth). Domino’s pizza company in its quest to excel in its market segment realized a major flaw that plagued its reputation. The company conducted a survey, which asked the customers about the quality of their pizzas(Kenneth). The result was shocking as many disgruntled customers reported saying statements such as: “the cheese is processed.” Other stated, “Most boring pizza ever… the crust is like a cardboard.” This alarmed the president of the company, Patrick Doyle, who stated “There comes a time when you know you got to make a change…you can’t lead a company like this.” (“LESSONS FROM THE Dominos Turnaround”). An amazing marketing strategy that was used by Domino’s pizza at this point was to actually put this criticism in their advertising videos, a bold move no doubt. Yet, it showed the validity of the company’s weakness and at the same time displayed the motivation of the corporation (York). Thus, the reform for better a pizza began. It was a tough stuff for a company that is used to success and was not hit with so much criticism. In essence, the company went “back to basics” and added new ingredients. Thus, the company’s hefty move to invest more than $12 million dollars in marketing along with 40% cheese enabled the company to improve its products (Lockyear). Moreover, the company really had to face the challenge of unstable prices, which continue to rise due to inflation. These prices can have a dramatic impact upon contribution margins, which can affect the net worth of the company(Kenneth). Moreover, the fear of rising overhead costs can hurt the company in the long-term. Since the company invested so much in their quality of the food, they must depend on their pizzas and service to earn the money of the consumers. Another marketing strategy that the company implemented was to invest heavily in their campaigns. In 2010 alone, the company spent around £40million on marketing. How did they achieve this? The company marketed themselves by getting a sponsor and associated themselves with hit TV shows such as Britain’s Got Talent and the X-factor. One of the chief executives, Chris Moore states, “It is easy to try and attribute our success to one thing – be it the weather, or Britains Got Talent.” (Reynolds) This strategy for the company no doubt paid off as sales increased by 4%. The key for the marketing campaign is to keep targeting customers that watch daily hours of television since a solid presence in public relations builds brand equity. Without a doubt, the company’s pursuit to target television is a very wise and a profitable move. Due to this, the company is reporting profit of £17.5m due to e-commerce sales (Reynolds). Although the fast food industry is a vast market, the marketers at Domino’s pizza had to make a distinct decision. Their main strategy was to target a certain demographic group after carefully analyzing the market(Riley). Since elderly consumers don’t often eat as much fast food, the company’s marketing strategy was to target younger generations in UK. Since most young generations are also avid users of the internet, Domino’s made a fantastic move to implement databases in internet that “data mine.” “Data mining” enables the company to gather valuable information about the young generations and also enables the company to solidify their brand equity (Riley). This marketing strategy without a doubt paid off as the company as it added 3 million more customers. Interestingly enough, this strategy was so successful that every UK citizen manages to order a Domino’s pizza every month. Yet, the company is not complacent and will continue to target these demographics group. Clearly, not marketing around elderly customers was an innovative idea. Instead of wasting money in that group, Domino’s was able to reap more profits by targeting the young customers (Riley). The online orders put in by customers now account for 32% of the company’s total orders, which is a huge increase in sales thanks to the marketing team (Riley). Since the company is so much into marketing, it decided to implement another strategy. This strategy was known as a “foursquare promotion.” This promotion was to reward mayors and local officials with free pizza once a week. This pilot program of the company was a very unique idea and nonetheless was a successful one too. Although it is very strange to reward officials, but the move is strictly to promote the brand (Heine). It enables the company to increase orders while lowering the overhead costs of delivery. The result of this approach is that it might boost sales. This promotion will enable users to receive notifications of sales, which will encourage them to order more (Heine). Again, this is a great approach to promote the brand targeting local officials as they will speak to their friends and family. This will promote and strengthen their position in the market. The marketing strategy for Domino’s pizza company has been supreme undoubtedly. The company’s strong belief to tackle the issue headfirst by filming the criticism in their advertisements was a great move since it displayed the company’s desire to improve as an organization. In addition, the company set out to change the critic’s negative opinions by going door-to-door and asking them to try the reformulated recipe. . A new innovative feature that the company introduced is ordering through DVR, a feature perfect for those “weekend warriors,” who can watch a soccer game, eat, and socialize with friends(“TiVo Inc”). Rob Wiesberg, the Vice President of the company insists this idea as he states, “Interactive TV, in general, is the future… In the past, he said, the pizza chain had to depend on a customer not only seeing a commercial, but then finding the number of a local Dominos outlet in order to facilitate delivery. This is a “hindrance,” not an opportunity.” (“TiVo Inc”). The organization believes that it is essential that they should market their advertisements in national and cable television’s in order to appeal to customers (“TiVo Inc”). Furthermore, the marketing team is also pushing their advertisements on the web, in order to receive feedback about their products. Overall, the company spent $169 million in its marketing budget. After carefully analyzing all the marketing schemes of the company, it is clear that Domino’s pizza has been adapting to its all needs. First, the IT department is well ahead of the curve by marketing through online and then advertising in television. Hence, it is been staying well ahead of the curve. Second, it continues to push its promotions through innovative ideas, which attracts and keeps it customers loyal. Third, it makes smart decisions to enter the right demographics group, which is critical for the company’s success. Fourth, it continues to expand to new horizons not only domestically by opening 392 stores, but also going international. Hence, the company is taking the appropriate steps to position itself in the right direction. Nonetheless, Domino’s Pizza in UK does have many opportunities to expand in its market. Food industry will continue to be a focal point of commerce for many years to come in UK. Introducing new items such as thick butter curst pizza, Philly cheese steak pizza, and different other pasta varieties (York). The organization already has extended beyond pizza and is now currently serving pastas and sandwiches, a no small feat for a fast food company. The company should further expand into serving breakfast and coffee. In addition, the company does not have a dining section, which does not suit some its customers (Lockyear). The stores should have some ample space with comfortable furniture to allow its customers to dine. Lastly, the allocation of network resources should be solidified in order to ensure some market niche. As society progresses to 21st century, people have been becoming extremely health conscious. Although it seems hypocritical that obesity still plagues society, consumers are aware of the choices that are healthy or unhealthy. Thus, that’s a major threat to a food industry company such as Domino’s Pizza is the fact that most pizzas and pastas are loaded with fats, oils, sugars and carbohydrates(“LESSONS FROM THE Dominos Turnaround”). Researchers continue to inform the public about artificial flavors that are contained in the fast food industry. This is detrimental to the company as people might alternate food choices. The challenge for a company such as Domino’s pizza is to create a variety of pizza dishes that do not reduce the taste and at the same time are healthy (“Dominos Pizza”). Another threat that could harm the company such as Domino’s Pizza Company is the outbreak of diseases associated with food poisoning. For instance, a butcher in South Wales sold rotten meat that not only caused E.coli outbreak but claimed a child’s life. The company must exercise extreme caution when buying dairy products from vendors, who sometimes become careless in food processing. Technology continues to advance and conventional baking ovens are becoming more efficient on a daily basis. In addition, the new online ordering system that the company has enabled it to flourish(“Dominos Pizza”). As the company expands, a larger database associated with information decision systems will be needed to obtain data of customers to determine the needs and desires of the consumers. Business software such as Microsoft QuickBooks and SAP software should allow the company to excel in the technological fields. Thus, this will allow the company to be efficient, forecast sales and demands, and invest in its products (Ross). Another fascinating technological element that Domino’s implemented was allowing customers to order via text message (Ross). This new idea enables customers to place an order via a text message, which has boosted sales for the company to 5%. Clearly, the young generation of society is indulged in texting and gives Domino’s Pizza Company a great opportunity to use it to facilitate the customer’s process of ordering pizzas. Since the recession has hit globally, the company had to adapt to many political changes. Government regulations in England are pretty stern(Stanley). For instance, a company cannot escape regulations by having a pilot franchise in another location. The regulations take place where the company is located, not where the equipment is place (Stanley). In addition, the raise of the minimum wage via the government can affect the human resources department into hiring new employees. Economic conditions in United Kingdom also certainly affect government decisions. If the pound continues to have more value than the dollar, the company will have to decide whether to import or export their ingredients. Still, the company has observed sales increase by 0.5% and an operating profit of $195 million(Stanley). In addition, its net profits drastically rose to 42.5%, which is not a small feat at all in this economy. Since Domino’s is in the food industry, the health industry is constantly enforcing regulations. Domino’s currently is collaborating with the federal government in order to meet the guidelines set by the health care reform bill. The health care bill would require the company to put their menus in every store location (Dumanovsky). In addition, the company faced another major obstacle from the Food and Drug Administration, which was to put all the calories for every item in their menu (Dumanovsky). This could be detrimental to the company considering the fact that it sells a hearty 580 calories pizza known as the MeatZZa Fast Brooklyn Crust pizza (Dumanovsky). Yet, health lobbyists are enforcing this policy to ensure that consumers will make smarter choices. Domino’s corporation is a well-known firm that operates internationally and originates from a Western point of view tradition. However, the company does have a challenge to attract customers from other backgrounds in UK. Undoubtedly, UK is home to many Muslims, Hindus, and Sikhs who have different values and traditions. Furthermore, these groups have strict dietary guidelines. For example, Hindus are strictly vegetarian and using any animal products in the cheese or the crust can become a barrier for the company itself. The company must find a way to keep its basic ingredients not animal derived and at the same time have choices that allow consumers from different backgrounds. The fast food industry is no doubt a very competitive market that is dominated by franchises such as: McDonalds, Burger King, Pizza Hut, Papa John’s, KFC, Subway, etc. The key element to succeed in this market is to excel in customer service(“The pizza Wars”). Surprisingly, Domino’s Pizza company beat its rival pizza companies such as Pizza Hut, Little Caesars, and Papa Johns in sales by earning around $1401 million. In United Kingdom alone, the pizza delivery system guarantees sales for companies as consumers at times prefer to stay at home during harsh weather. In order to have some leverage against its competitors, the company decided to open 10 new stores in England as profits soared to €26.5m(“The pizza Wars”). Any good company in today’s commerce world should be able to take criticism, and turn into something positive. Domino’s Incorporation was able to take the criticism of its customers and renovated their pizzas to ensure quality to their customers. The key element is to reduce the travel time in any case (Lockyear). Much like its competitor Jimmy John’s, Domino’s pizza company should try to promise its customers a certain time for their pizzas. Moreover, Domino’s pizza has a very competitive pricing strategy offering 2 free desserts for buying a large pizza. Another good deal that the company introduced was a family feast for £15.99 with potato wedges and garlic bread (“Domino’s Pizza”). In addition, the company has introduced customization in their pizzas, which allows consumers to pick their own ingredients. Another element that is critical in a market element is protecting the brand’s reputation. Undoubtedly, Domino’s has been one of the most prestigious pizza companies until two years ago when it faced harsh criticism. Nonetheless, Domino’s pizza was named “Chain of the year” in the pizza industry. In order to preserve the equity of the brand, Doyle believes in strong collaboration from the administration to make the franchise more customer-centric. It achieved that by propagating its new recipe to its customers and continues to make strong effort to improve its products. The hardest challenge was to constantly protect the company’s reputation as competitors such as Tombstone Pizza, Pizza Hut, and Digiorno’s directly attacked Domino’s in their advertisements. Any company that is in the food industry and is in the quest to gain any advantage over its competitors must have a pricing strategy that can be under budget but at the same time does not diminish taste. Davind Brandon, one of the main executives, reported that the company lost a lot of “single pizza customers” over the recent years. Hence, he developed a new strategy which called for a “barbell” pricing strategy (“STRATEGIC PLAY - DOMINOS PIZZA”). This new strategy allows the franchise to intentionally lower the prices of some products while increasing the cost of popular products that are in high demand. Although Brandon did not specify which of the prices he will modify, he did state that the hot sandwiches are a prime example of this strategy(“STRATEGIC PLAY - DOMINOS PIZZA”). Lastly, the company will not go for short-term deals and instead will focus in promoting items in the menu that will be permanent for long-time. Without a doubt, Domino’s Pizza Corporation will continue to have many challenges as it tries to dominate its market segment. The food industry will continue to be a major competitive market and will be affected with political, societal, and technological factors. The company must remain customer centric and must continue to make invest in its ingredients to make better products. In addition, the company’s advertisements have been phenomenal as they approach the negative feedback with renovation and style. Although the company does have solid sales, it can not become complacent at this stage of the growth. Many improvements still need to be made and keeping overhead costs low in the United Kingdom will no doubt be a challenge. It will be interesting to see how the company moves forward with its strengths and weakness and whether it can solidify itself as a leader in the food industry. Works Cited Dominos Pizza; Dominos Pizza Turns 50, Celebrates its Global Success at the New York Stock Exchange. 2010. Investment Business Weekly, December 26, 601.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 29, 2010). Dumanovsky, T., C. Huang, M. Bassett, and L. Silver. 2010. Consumer Awareness of Fast-Food Calorie Information in New York City After Implementation of a Menu Labeling Regulation. American Journal of Public Health 100, no. 12, (December 1): 2520-2525.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 30, 2010). Heine, David. 2010. “Dominos U.K. Uses Facebook, Foursquare to Drive Web Orders. < http://www.clickz.com/clickz/news/1725326/dominos-uk-uses-facebook-foursquare-drive-web-orders > (accessed January 5, 2010. LESSONS FROM THE Dominos Turnaround. 2010. Restaurant Hospitality, June 1, 30-33.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 30, 2010). Kenneth Hein.  2007. Struggling Dominos Tries The Customization Route. Brandweek, June 4, 8.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 29, 2010). Reynolds, Johns. 2010. “Dominos credits social media for sales growth.” (Accessed January 5, 2010). Riley, Geoff. 2010. “Growth and Strategy at Domino’s Pizza.” < http://www.tutor2u.net/blog/index.php/economics/print/growth-and-strategy-at- dominos-pizza/> (Accessed January 5, 2010.) Ross, J.. 2007. Dominos, Papa Johns look to build clientele via text message ordering. Nations Restaurant News, December 10, 4,97.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 29, 2010) “STRATEGIC PLAY - DOMINOS PIZZA”: Made to order. 2006. New Media Age, September 28, 23-25.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 30, 2010). Sarah E Lockyer.  2004. Dominos promos help reverse year-ago financial loss, increase sales by 12%. Nations Restaurant News, November 1, 4,11,97.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 30, 2010). Stanley, T.. 2010. EASY AS PIE. Adweek, September 13, 40-41.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 30, 2010). The pizza wars. 1993. Scholastic Update, May 7, 10.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 30, 2010). TiVo Inc.; TiVo Adds Dominos Pizza to Its Menu. 2008. Entertainment Business Newsweekly, December 7, 47.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 30, 2010). UK Government: Food Standards Agency reveals December single most common month for poultry food poisoning outbreaks. 2002. M2 Presswire December 18   1.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 30, 2010). York, E.. 2010. Dominos claims victory with new strategy: Pizza wasnt good, we fixed it. Advertising Age, May 10, 4.  http://www.proquest.com.ezproxy1.lib.depaul.edu/ (accessed December 29, 2010). Read More