Pizza Hut Company Analysis - Essay Example

Pizza Hut Company STP & Market research Market research Qatari market is one of the wealthiest countries in the world and is the wealthiest among GCC countries. Its GDP per capita is one of the highest in the world and its GDP growth rate was the highest in 2011 amounting to 18.7%. On top of that Qatar has seen huge influx of foreign workers and currently about 80% of its population are of expatriate community. The relaxation of trade barriers and other entry barriers to the Qatari market is also a plus point. So the market potential in Qatar for the new product offering by Pizza hut seems to be huge. However to correctly access its acceptability and people’s perception regarding the new product, market research was conducted. The market research involved both primary and secondary research. Sources of Primary Data The primary data was sourced through focus group surveys and in-depth interviews. Since the sale revolves around selling of Pizza vending machine, target customers would be business ventures, offices, colleges and schools etc. The customers would in general be business customers. To fetch primary data in-depth interviews and focus group surveys were used. The questions prepared for the target group were: Would you like to go in for a new machine that automatically prepares pizza for your food store? Are you satisfied with your current retail outlets? What are the annual costs that you have to incur annually? What is the point of dissatisfaction or satisfaction regarding your current retail chains? The answers by most of the people interviewed emphasized on the facts and figures that they would like try the new machine. The main reason for which they wanted to try the new vending machine was due to its lower purchase cost and lower costs incurred in operational expenses. The fact that the automatic vending machine did not require human intervention excited them a lot. Sources of Secondary Data To understand business prospects in Qatari market and to understand the prospect of a first food chain and the prospect of a new pizza vending in Qatari market, secondary research data was also used. The secondary data used were from books and several prominent websites. The general view that was supported by most of the books was that the Qatari market seems to be a very promising market for a fast food chain. However the best way to do business in Qatar would be through the help of a local investor or franchisee (International business Publication, 2012). According to other creditable sources Qatar is one of the wealthiest markets and certainly the wealthiest economy of GCC (Food export Association of the Middle West USA, 2011). So it is found that Qatar promises to be good market for the introduction of the new vending machine. Applying STP process to the product Qatari market is a huge market in terms of potential and scope. To effectively capitalize on the market it needs to segment well in the first place. The segmentation may be on the basis of geographic, demographic, Psychographic or behavioral lines. Over here the segmentation should be done on the basis of demographic because mostly the customers interested in buying the product would be younger or middle aged generation. The older generation is less likely to respond positively. Additionally psychographic segmentation should be used because those customers who are adaptive and progressive in their thought process would be the likely customers. Behavioral segmentation can also be used because normally those colleges or schools are likely to install the vending machine where children of the affluent class study. Identifying Broad market The market to which the vending machine by pizza hut will belong is the fast food market. The scope of the fast food market in Qatar is huge specially keeping in mind that 80% of its population consists of foreigners. The people in Qatar lead a very active life. So a pizza vending machine which delivers them freshly made pizzas within 5 minutes will be highly accepted and appreciated by the customers. The product will likely be accepted and adored by the younger generation, business class, office goers and the foreign population. Identifying market Segments using segmentation basis Demographic segmentation will segment the market into middle aged persons and old aged persons. The demographic segmentation can also be used to segment the population based on whether they originate in Qatar or belong to a different country. It is most likely that the vendors who are of the middle age group will likely buy the product. It is also likely that those belonging to different countries will understand the value proposition more quickly. The market can also be segmented on psychographic lines. It is most likely that customers who are progressive in their thoughts are more likely to accept and understand the future business prospects of this business venture earlier. The market can also be divided on behavioral lines and those customers should be targeted who belong to the affluent segment. For example those schools and colleges may be targeted where children of the affluent class studies. Develop each segment’s profile The customers in each of the segments can be profiled as follows. Middle aged people- The middle aged people are characterized by progressive mind set, rationality in thoughts, and eagerness to try newer things. These customers value time as an asset and are technology friendly generation. Affluent people are characterized by their seeking of comfort and high discretionary spending. They are likely to spend on anything that projects themselves as different from their competitors and can protect themselves as different and attractive for their clients. Evaluation of the attractiveness of each segment The segments which appear attractive for PIZZA hut and their new vending machine are the affluent class and the middle aged segment. Both these segments are huge with respect to Qatar. As Qatar is a wealthy country and its per capita GDP is one of the highest in the world so there is bound to be a rise of the no. and size of the affluent class. Secondly Qatar is hugely developing itself as a knowledge economy. So the size of the middle aged working class will also increase. Both these classes are likely to accept the new product very fast because of their progressive mindset and conscious recognition of self image. Writing the positioning statement For the sellers of the fast food and the people who enjoy fast food, the pizza vending machine provides opportunity to sell and earn more among all the retail pizza outlets because it enables them earn more profit for their business and increase sell as well as reduce operational costs at the same time. Marketing Mix Product The product chosen is Pizza hut vending machine. The product is likely to provide the much needed strategic advantage and serve as a key differentiator for the company with respect to other manufacturers and sellers of Pizza. The product would be convenient in the respect that the customers will have freedom in choosing their own pizza and get it delivered to them through the machine counter within 5 minutes. The product will have additional benefit in respect of size and thus will be able to fit anywhere. Through this product the customers will be able to eat their favorite Pizzas whenever and wherever they want. The vending machine to be designed by the Pizza hut would be of the dimension h: 10ft *w: 4 ft *d: 5 ft. The front of the machine should include a touch panel for selection of the pizza type. The touch panel should include option for selection regarding extra cheese on top, addition of spices, and selection of extra crust. Then there would be a slot where payment can be made either through card swipe and then entering the pin on an attached key pad. Or the payment can be made through cash which can be fed into the machine through a particular slot. The machine can also feature a screen which shows the process of Pizza making or can be used to show ads. Last of all it will feature a slot through which readymade Pizza will come out in less than 5 minutes. Like any other product this product will go through four phases, i.e., Introduction, growth, maturity and decline. Introduction phase will come first when the new vending machine will be introduced in the Qatari market. Most of the consumers will be unaware of the new product. So this phase will feature lot of advertising telling the consumers about the advantage of the product and differentiating it from other similar or existing products. The next phase will be the growth phase featuring high growth. This phase may see the entry of new players. The company must ensure that it is able to maintain its competitive advantage and develop high brand recognition among customers. The company may achieve this though high levels of advertising. The maturity phase will feature the products prominent presence in the market. The market will gradually begin to slow down and the company would be able to generate maximum profit through reduction in advertisement and other costs. The next phase will feature decline and the market for the vending machine will come down. The company can either generate maximum profit till it can, introduce new features or exit the market. Customers are likely to accept this product pretty fast as this product will be convenient to use. The most early adapters to the machine will be generation x, y and Z. This machine will be highly appreciated by the school and college goers and the middle aged who are into job. However it is like to face a skeptical response and reaction from the older generation. Price The particular product that is Pizza vending machine is new to the Qatari market. Pizza hut in this particular case cannot determine the price of the product based on the existing prices of similar products by other competitors. The best way to set price is to use value in use pricing by showing customers why they are charged a particular price. The pricing objectives to be followed here are monetary sales, sales volume and differentiate the product in the minds of customer. The pricing strategy to be selected for the Pizza vending machine should be penetration pricing. Initially the profit margins of the product should be kept low so as to keep the final prices on the lower side and increase market share. The product is a new entrant in the Qatari market and the price should be kept as such that it seems attractive to the customers in terms of value proposition. The price to be charged should be around 15,000$. The price has been arrived at by taking the prices of other pizza vending machines on the offer in the online market and comparing with the cost to open a retail outlet for Pizza. The price of a Pizza vending machine varies widely ranging from the offer by Let’s Pizza which is offering it at $32,000 to Chinese companies who are offering the same at $11-12000/ set. Place Distribution channels (Government of Western Australia, 2014) As pizza hut is a multinational company so to introduce their new pizza vending machine in the Qatari market the best strategy to follow would be to use Franchise model to distribute their product. The franchise model if used efficiently and if the franchisee is chosen correctly, then the company will be able to cater to a large no. of small business owners. The company can also use agent model to sell their product in the Qatari market. Distribution outlets and their location The Distribution network would be spread all over Qatar. But preliminary the company would like to have the distributors in major business locations and near commercial complexes. Another place for opening placing distributor would be near a residential complex. A distributor may also be placed near the offices of multinationals. The company may also use trade fares and open some sales counters and customer service counters and make effective use of them as distribution channels. Promotion The product that Pizza hut is making i.e. Pizza vending machine is a relatively new product for the Qatari market and a new product for the company itself. So the company would need to effectively use promotion in order to create awareness about the product in the customer’s mind. Among the promotional mix and choosing the particular channel for promotional activity Pizza hut should go in for advertising, Personal selling and direct marketing. Before launching the product the company may give banner ads about the products in important places. The company may also go in for T.V. advertisements which tells the features of the product and tells its advantages against traditional products. The advertisement or other promotional channels should be able to drive to the customers their accrued benefits in the form of cost savings etc. as they go in for purchasing this new vending machine. Pizza hut may additionally participate in trade fares where it will be able to directly meet with retailers and distributors and highlight the benefits of their products. The main obstacles likely to be faced in establishing this new product is to overcome the mental blockage of customers and their inherent tendency of resistance to change. This problem is likely to be compounded and aggravated for the customers belonging to older generation. References Food export Association of the Middle West USA. (2011). Middle east market profile. Retrieved from: https://www.foodexport.org/Resources/CountryProfileDetail.cfm?ItemNumber=1019. Government of Western Australia. (2014). Channels of distribution. Retrieved from: http://www.smallbusiness.wa.gov.au/marketing-place-distribution-strategy/. International business Publication. (2012). Qatar business law handbook . Washington: International Business Publication. Read More