Sales Promotion Portfolio - Pizza Hut - Research Paper Example

? Sales Promotion Portfolio – Pizza Hut [Supervisor Sales Promotion Portfolio – Pizza Hut Introduction: “Frank and Dan Carney” made Pizza Hut with a thought to construct a pizza bistro in their home city but in few years the business became one of the largest pizza chains worldwide with operating in more than 100 countries. In the year 1973, Pizza Hut was launched in UK having started a restaurant in the city of London. In some years, Pepsi Co. became the owner of Pizza Hut and started a combined project with Whitbread in UK. In 2006, Yum Inc. bought shares from Whitbread. Now this company owns all the business of Pizza Hut in UK. Currently there are around 700 restaurants of Pizza Hut in UK with more than 154 stores of Pizza Hut owned by the franchisees (PizzaHut, 2011). The sales promotion helps the organization to change the perception of the customers towards their buying decision by offering them different incentives, which they are able to get eventually. This is the reason why Pizza Hut uses different sales promotion techniques because the company understands the significance of sampling and making a product trial during the marketing campaigns. The sales promotion strategies help Pizza Hut to increase its market share because these promotions entice the customers to switch their brand loyalty towards Pizza Hut. Another advantage that Pizza Hut gets with these promotional tools is the immediate result, which other IMC tools are not able to produce for the company (Pride et al., 2006). Sales Promotion Sales promotion can be defined as the activities which are planned by the organizations in order to improve the quality of the products or services and build a positive attitude of the customers towards their products or services (Bose, 2004). The organizations perform sales promotion for three purposes; first purpose is to make communication with the customers, second is to grab the customer’s attention and third purpose for performing sales promotion is to give relevant information to the customer regarding the product, which positively influences the customers towards the product. The sales promotion can be linked with the theory of planned behavior because this theory explains the certain behavior of the customers towards using any product or service. Since sales promotion influence the behavior of the customers, therefore Pizza Hut can analyze this theory in order to understand and change the behavior of the customers towards the deals and offers it is offering to the customers (Bose, 2004). Tools of Sales Promotion In order to understand the dynamics of sales promotional tools, it is important for the organizations to understand that these tools are different from other marketing and promotional methods, because these tools provide precise advantages for encouraging the customers to buy the product or services (Sagar, 1998). As compared to the sales promotions tools, other promotional techniques are used to attract the customers with help of an event or a program and they are not always designed for the direct purchase. Some of the most commonly used sales promotion tools are: Discounts and Coupons Free Samples Direct Mail Rebates Demonstrations Exhibits Point of Purchase Display Money Back Offers Mystery Rewards Branded Magnets and Pen Contests Gifts (Sagar, 1998) Promotional Strategies Used by Pizza Hut UK Pizza Hut uses different promotional tools for the increase share in the market, increase frequent buying, increase volume of sales and convince the customers for buying the product. The promotional mix of Pizza Hut consists of “Personal Selling, Advertising and Sales Promotion”. Since Pizza Hut uses Pull Strategy to fulfill its global objective, therefore many promotional tools are needed to implement this strategy successfully. The ‘Healthy Eating’ campaign is used to increase the awareness level of the customers, change their attitude towards pizza, motivate them to get involved in the product, and reduce risk for the product. It is the expectation of the customers to get their desired product at the time when they want to experiment or make a repeat purchase. The pull strategy of Pizza Hut requires large allocation of funds for the advertisement of new campaigns therefore; sales promotion is regularly used by the company to decrease the expenses of mass media advertising. For attaining desired results for the Pull Strategy, the company uses television advertising as it is considered the most successful method of advertising for penetrating the mass target audience (Rogers, 2001). After this above the line communication method, Pizza Hut uses sales promotion which is another element of the company’s strategy. The sales promotional tools used by Pizza Hut aims to influence the mind of the customers, creating demand for the product and ultimately influencing them for purchasing the product. Following are the sales promotional tools that Pizza Hut uses in UK: Premium and Gifts Different organizations give various kinds of promotional gift to the customers and business clients in order to make their goodwill and build good business relationships. However, it is a fact that some organizations are hesitant of using these promotional gifts because of the cost associated with them. Whenever the organizations aims to celebrate events such as anniversaries, achievements, religious event etc., the premium and gifts are often use to utilize these celebrations for promoting the products or services (Rogers, 2001). Pizza Hut presents different gift vouchers to the special customers celebrating their special events in Pizza Hut such as anniversaries, birthdays, marriages and other functions. Collaboration was made with Sony for launching a promotional campaign in which play station discs was given to the kids for buying their crust pizza. Pizza Hut UK initiates large campaign in Christmas season where thousands of gifts are given to the customers who have visited Pizza Hut in December. This campaign is known as ‘Don’t Open Me’ campaign in which envelop is given to the customers, which they have to open on their next visit to Pizza hut on January. These gifts include family holidays to US, European breaks for family, gift cards and goodies (PizzaHut UK, 2012). This promotional strategy of Pizza is successful for the UK because people are influenced towards Pizza Hut after analyzing the quality of gifts that Pizza Hut offers to them, and this will help the company to make brand loyalty of their product. Discount Coupons Discounted coupon is a promotional technique used by almost all the big companies to make an impact on the customers. Recently, online coupon is getting importance because of the increase usage of the internet. The online coupons have more advantages as compared to other coupons because customers are able to utilize these coupons several times until the offer is valid. A major weakness of physical coupon is that people are able to use this coupon only for one time and they have to take another coupon for using the offer again (Rogers, 2001). The people of UK are offered discount coupons with every purchase of pizza because it is important for the company to motivate their customers towards their product. Since online ordering is common in UK and major sales of Pizza Hut UK is dependent on the online ordering system, therefore the company offers online coupons for the people living in different regions of UK. The customers are required to enter their zip code to get different discount coupons according to their region and the discounts offered to these online customers of UK is larger as compared to people visiting the restaurants (Voucher Codes, 2012). The discount coupons are advantageous for the customers of UK, because they do not have to rely on one offer and they can find different discount coupons on the internet according to their preferences. Contests and Sweepstakes The difference between contest and sweepstake is that contest requires the participant to become winner after judging his skills, whereas no judging process is required in sweepstake. The use of sweepstakes have become popular in recent time, because it has been legally separated from the lottery therefore, people have positive behavior towards sweepstakes. Similarly, contest is also used as a promotional tool by the advertisers for influencing the customer’s behavior for their products. Unfortunately, it has been noted that less than 20% of the families have ever entered in sweepstakes or contests (Burnett, 2012). Pizza Hut offers a daily sweepstake for the customer satisfaction survey in which individuals are required to fill the form for the quality of service Pizza Hut is offering to the customers. The winner of the sweepstake is awarded ?1000 based on the quality of the form filled by the customers. A contest held on every Christmas in which customers are required to upload a picture of Christmas that is unique and attracted in the eyes of the judges, as the winner of these contests gets an opportunity to visit Australia for four days. Pizza Hut organizes various contests on Valentine’s Day, Mother’s Day, Father’s Day and other occasions that help the company to increase its brand value. On Mother’s Day, a grand contest is organized where children are required to write an essay for their mothers and the winner of the contest is awarded a gift card of worth $750. On Valentine’s Day, the company offers a proposal box to the winning couples in which they are provided an opportunity to make their proposal perfect for each other (Hoperd, 2012). However a major weakness in sweepstakes and contests is that most of the customers who are not able to win the contest do not accept the fairness of the contest, and they believe that discrimination is made by the company. Point of Purchase The point of purchase is an important promotion tools for the customers who are willing to buy the product or service. This sales promotion method is useful for the customers who are loyal with the brand name and the goal is to make an impact on the buying decision of the customers. Creativity is the main essence of point of purchase promotion as it maintains the purchasing activity of the regular customers. It also helps the organizations to maintain their image of the brand that is created on the mind of the customers by advertisement and promotions (Burnett, 2012). Pizza Hut has been able to implement point of purchase promotion in the restaurants of UK, which helps the company to control its operations more effectively and reduce the overhead expenses. The DNA report helps Pizza Hut to perform personalize marketing operations for different restaurants and manage all the resources of online marketing. The interior of all the Pizza Hut restaurants are made in such a way that customers are able to get similar environment, because innovation is made on POP materials for grabbing the customer’s attention. Many posters, danglers and other entertaining games help Pizza Hut to attract different customers for visiting Pizza Hut again (Pride, et al., 2006). This promotional technique is vital for Pizza Hut, because there are many other options for the UK customers to visit therefore capturing their attention will help Pizza Hut to retain their market share. Competitors and their Promotional Strategies The two main competitors of Pizza Hut in UK are Domino Pizzas and Papa John’s Pizza, and these competitors’ uses different sales promotional techniques to compete Pizza Hut in UK. Domino Pizza It is the second largest pizza maker company around the world with operating in more than 50 countries. The company has an advantage to make the fastest pizza in less than 3 minutes. Domino uses different promotional strategies to sell their pizzas such as coupons, discount pricing, contests, and gifts etc., but its social media marketing is better than the competitors, because more discounts is given to the online customers. On the 51st birthday of the company, Domino offered half price pizza to the Face book users of 19 countries, which attracted more than 54,000 users to order the pizza (Nguyen, 2012). However, the point of purchase attraction of Pizza Hut is more as compared to Domino because of the attractive environment it offers to the customers. Papa John’s Pizza Papa John’s is amongst the most well known pizza chains in the UK because of its quality and taste. The company has focused on differentiation strategy based on the finest ingredients making the pizza different from others. Different sales promotional tools such as discounted coupons, gifts, contests and point of purchase is performed for capturing the market share of Pizza Hut, but promotional tools used by Papa John’s are not effective comparing to Pizza Hut because the company is not able to attract customers as Pizza Hut has attracted with its promotional tools (Belch, 2003). Moreover, the gift packages of Papa John’s are not attracted as compared to the gifts offered by Pizza Hut. Budgeting for Sales Promotion Similar to other companies, Pizza hut has also increased its budget for their sales promotional activities in UK, because promotion has become a vital step in the success of the organizations. The sales promotion and marketing budget for Pizza Hut was $557 million and $548 million for previous two years and this marketing budget of Pizza Hut is expected to increase in the coming years. The ROI on the marketing activities of Yum Inc was 48.10% and 41.54% for the year 2010 and 2011 (The information for the sales promotion budgeting and ROI for Pizza Hut UK is not disclosed). This direct marketing cost includes different marketing activities of Pizza Hut that includes promotional activities, advertising, production and prepaid costs (Yum, 2011). Conclusion The most important tools for the marketing of Pizza Hut are promotional tools, because the company is able to attract and retain millions of customers worldwide with the help of its sales promotional tools. There are different methods that Pizza Hut uses for increasing its market share and overall sales. These tools include coupons, discounts, premium and gifts, point of purchase, contest and sweepstakes. The most important promotional tools of Pizza Hut is considered to be gifts and premiums, because the company has tried its best to outclass its competitors by offering superior and expensive gifts to the customers. These gifts are worth thousands of pounds in the Christmas season and people are attracted towards the gifts offered by Pizza Hut. Another important sales promotional tool of Pizza Hut in UK is the discounted coupons offered to online users of the company. Different people belonging to various regions of UK are offered discounted coupons so that they can avail pizza on low prices and because of these discounted coupons, the sales of Pizza Hut has increased a lot in the past few years. Pizza Hut also uses the contests and sweepstakes as a promotional tool, but they are not as effective as the previous two tools because there is an element of negativity in this sales promotional tool. The company has also focused on point of purchase material for giving a healthy and entertaining environment to the customers that will help to retain them. Pizza Hut has accomplished its marketing objective with help of these sales promotional tools and all these promotional tools of Pizza Hut have contributed in the worldwide success of the company. It is because of these promotional tools that millions of customers throughout the world are the loyal customers of Pizza Hut. List of References Belch, G., 2003. Advertising And Promotion, 6/E. New Delhi: Tata McGraw-Hill Education. Bose, C., 2004. Principles Of Management And Administration. New Delhi: PHI Learning Pvt. Ltd. Burnett, J., 2012. Sales Promotion. [Online] Available at: [Accessed 4 September 2012]. Hoperd, 2012. Pizza Hut Offers $10,000 “Proposal And Dinner Box” Valentine’s Day Special. [Online] Available at: [Accessed 4 September 2012]. Nguyen, A., 2012. Domino's Pizza deliver strong sales from online and social media. [Online] Available at: [Accessed 5 September 2012]. PizzaHut UK, 2012. Pizza Hut "Don't Open Me" Promotional Terms and Conditions. [Online] Available at: [Accessed 4 September 2012]. PizzaHut, 2011. Our History. [Online] Available at: [Accessed 3 September 2012]. Pride, W., Hughes, R. & Kapoor, J., 2006. Business. Mason: Cengage Learning. Rogers, C., 2001. Marketing Strategies, Tactics, and Techniques: A Handbook for Practitioners. New York: Greenwood Publishing Group. Sagar, R., 1998. Together with Business Studies. New Delhi: Rachna Sagar Pvt. Ltd. VoucherCodes, 2012. Pizza Hut Restaurants Discount Codes. [Online] Available at: [Accessed 4 September 2012]. Yum, 2011. Serving the World - Annual Customer Mania Report, London: Yum! Brand. Read More