Dominos Pizza Enterprise - SWOT Analysis - Case Study Example

Domino’s Pizza Enterprise Name Institution Course Date Domino’s Pizza Enterprise Executive Summary Domino’s Pizza is a company that was established in 1960 which specializes in delivery of pizza. The company has enjoyed profits due in part to its worldwide presence. It has strong brand presence and offer quality products to the consumers. Increased health consciousness among the consumers and operation difficulties deter the success of the company. However, the company has an opportunity to introduce new product, ice-cream and expand in other markets. The intense competition from players like McDonald’s and Pizza Hut has affected Domino’s market share. In order to take advantage of the opportunities and enhance the strengths of Domino’s, the company should introduce ice-cream in its product line. This will expand its market and provide value to the consumers. Introduction Domino’s Pizza Enterprise was founded in 1960 (Adami and Janet, 2007). The company so far has approximately 10,500 employees in over 8,700 stores located across the globe. Domino’s Pizza Inc. has a market share of about 19 per cent with a number of competitors such as McDonald’s and Pizza Hut. The company offers various types of pizzas to the consumers together with several styles of crusts (Adami and Janet, 2007). In the recent years, Domino’s has increased the number of products offered by providing better ingredients of pizza and introducing Oven Baked Sandwiches as well as Bread Bowl Pastas. In 2008, the company recorded revenue of $1,425 million and profit amounting to $54 million. The company endeavour to expand the product line in order to expand its market (Adami and Janet, 2007). This paper will highlight the SWOT analysis of Domino’s and one target market served by the company. The report will also describe a new product that has the potential to expand the market and customer value. It will describe the customer value offered by the product and how the new product fit with the company’s SWOT analysis. SWOT Table SWOT Analysis Strengths Domino’s has a worldwide presence and is the leader in the pizza industry. It has a very strong brand image It offers high quality products and services The company has a strong channel network with the franchises. It has a diverse menu with healthier and low cost alternatives. They are located in a strategic and convenient locations Weaknesses Due to the huge number of franchised outlets, Domino’s is faced with operation difficulties. Increasing health consciousness has decreased revenues in mature markets. There is reported low retention rate in the company. Domino’s has few eateries compared to its delivery outlets. Opportunities There is an opportunity to expand as it has only focussed on pizza. There is a chance to offer healthier foods to people The company can strengthen its outlets by further penetrating current markets. Introducing Domino’s restaurant focussing on ice-cream will strengthen the brand recognition. Threats Intense competition from rivals such as Pizza Hut and Papa John and McDonald’s The changing consumer preferences and eating habits can affect the company The costs of its raw materials such as vegetables has increased Increase in labour price and minimum wage affects Domino’s Findings Explanation of the SWOT Table As seen in the table, Domino’s worldwide presence takes the higher rank. The company has its operations in countries such as Mexico, Africa, Canada and other countries (Adami and Janet, 2007). This makes it the most known pizza company. The large market share is partly attributed to the quality of its products and services. In addition, the strong network channel with the franchisees enable Domino’s to increase its market share and revenue. Operation difficulty is the major weakness faced by Dominos due to the large number of franchisees (Adami and Janet, 2007). The large number of franchisees makes it hard for the company to ensure effective quality control. As a result of this, few of Domino’s food outlets compromised the quality of its products which led to their closure which affected the image of the company. In addition, people today prefer healthier options and thus opt to eat in food outlets that offer such menu (Jham and Tandon, 2012). This has decreased the revenue of the company and has prompted the company to start offering healthier alternatives. Domino’s has an advantage over its competitors in that it has its focus on delivering pizza. This has increased its effectiveness and offers an opportunity for it to expand its product line (Adami and Janet, 2007). In addition, with increase health awareness, Domino’s can increase its sales and revenues by adding healthier menus. Not all potential markets for pizza have been occupied; therefore, the company can increase their market presence by penetrating other countries. They can also add new products such as ice-cream to its menu. Competition in the market rank first with regard to the threat facing Domino’s. The direct competitors of the company include Pizza Hut and Papa John while the indirect competitors are McDonald’s, KFC and Subway (Jham and Tandon, 2012). The competitors have reduced the market share of Domino’s and affected its sales and revenues. In addition, another threat is the changing of consumer eating habits. Today, consumers prefer healthier alternatives and avoid junk food offered by companies like Domino’s (Jham and Tandon, 2012). This has reduced the number of customers and has affected its operations. Recommendations Target Market Domino’s has segmented its market. Segmentation refers to splitting of the market into smaller groups with the aim of satisfying the consumers better. Market segmentation will be in terms of age, demographical location and status among others. In term of geographic segmentation, Domino’s has opened its outlets in more than 55 countries (Adami and Janet, 2007). Psychographic segmentation involves lifestyle of individual customers. It also entails the customer’s activities together with their corresponding interests and opinions. People who do not mind taking junk food would choose Domino’s as a place to eat out. Demographic segmentation has been classified according to age, generation as well as occupation. Taking into consideration these segments, Domino’s main target market is middle-class people looking for inexpensive pizza (Adami and Janet, 2007). Middle-class people have the tendency to look for products based on their prices. Since Domino’s pizzas are inexpensive, they go with it. New Product Description In the Unites States, the ice cream market is composed of take home, artisanal as well as impulse ice cream segments. In 2015, the take-home ice cream segment topped the table with a 63.75% share. The introduction of new flavors came about due to the increase in disposable income as well as impulse purchasers. In addition, the consumption of ice cream as a snack drive also increased the consumption of new ice cream products. Ice cream as a product has a huge market share since it targets both the upper market as well as the middle market. Currently, the middle class market is constantly growing significantly and hence the number of people making the jump is remarkable (Clancy, Krieg and Wolf, 2006). This is due to the presence of disposable income millions of people can afford (Clancy, Krieg and Wolf, 2006). Ice cream provides value especially when its price is favourable to both the customer as well as the producer. Customer Value Proposition An effective customer value proposition offers reasons why people should buy and consume a product (Clancy, Krieg and Wolf, 2006). Gaining the attention of the consumers will assist Domino’s build its sales fast and increase market share. Ice-cream will offer value to the consumers in a number of ways. If Domino’s set a win-win price for its ice-cream, it will mean that customers will receive value for their money. As mentioned earlier, ice-cream is the best product that targets the middle class individuals. It can best serve this market due to their lifestyle and therefore will offer value in return. Ice-cream will be a relevant new product for Domino’s since it will improves the customer’s situations by satisfying their unsatisfied needs. To fight the competitors, Domino’s should offer high quality ice-cream. The value of the consumers will be added through the quality of the ice-cream (Clancy, Krieg and Wolf, 2006). Justification for the Choice of New Product Ice cream as a new product in Domino’s can fully benefit with their vast presence of Domino’s all over the world (Hitt and Hoskisson, 2013). Wide presence is one of Domino’s’ strength therefore, introducing ice cream to their portfolio increases chances of reaching vast markets, both middle and upper market. Furthermore, Domino’s has a strong brand image which appeals to most of their markets. Therefore, introducing ice cream to their line of products will instantly appeal to both their loyal and upcoming customers who would like to have a meal that is different to the conventional ones such as pizza (Hitt and Hoskisson, 2013). In addition, the company has an opportunity to venture into products that are healthier to their markets such as ice cream. Due to the popular health concerns that affects today’s world, a huge share of the market would prefer taking ice cream as opposed to other unhealthy dietaries. Additionally, Domino’s has the opportunity to target markets such as the Muslim community since ice cream is considered a Halal product therefore can be consumed by an expansive Muslim market (Hitt and Hoskisson, 2013). Conclusion Since Domino’s was established in 1960, it has grown to be one of the largest pizza restaurants in the world. The company has boosted its competitive advantage by expanding into foreign markets. The major strength for the company is its worldwide presence and strong brand image. However, due to the large number of franchisees, it is faced with operation difficulties. It has the opportunity to expand its market line by offering healthier options and venturing in other countries. For many years, it has been faced with intense competition which is detrimental to its success. Change of consumer preferences to healthier menu have led to losses for the company. In order to enhance its strengths and take advantage of the opportunities presented, Domino’s should introduce ice-cream as its new product in order to expand market and offer value to the consumers. References Adami, J 2007, "Will a Twist on an Old Vow Deliver for Domino's Pizza?". Wall Street Journal. Retrieved July 29th 2016 from http://www.wsj.com/articles/SB119784843600332539 Clancy, K., Krieg, P & Wolf, M 2006, Market new products successfully, Lanham, Lexington Books. Hitt, M., Hoskisson, R. & Ireland, R 2013, Strategic management: competitiveness & globalization: cases, Mason, OH: South-Western, Cengage Learning. Jham, V and Tandon, S 2012, Domino's Pizza India Ltd.: Driving Business Growth through Consumer Engagement, Asian Case Research Journal, 16(01), pp.39-63. Read More