Marketing Strategies of Dominos Pizza and Pizza Hut - Essay Example

Marketing Strategies of Dominos Pizza and Pizza Hut Introduction The fast food industry has experienced a considerable growth over the past 2 decades. This has been accredited to the increase in rival companies. However, survival of companies within this industry has not been that easy as they all have to strive to win the customers within the market. This makes the different companies within the industry to employ distinct marketing strategies to appeal to the customers. The UK fast food industry is worth £40 billion and is anticipated to increase by 19% by 2018. The primary companies in the industry include KFC, McDonalds, Wendy’s, Taco hill, Burger King, Sonic, Dunkin Donuts, Café Coffee day, Subway, Barista, Dominos and Pizza hut. McDonalds is the biggest player in the industry that controls 18% of the market (King, 2013). For the previous two decades, Dominos and Pizza hut have created a reputation for excellence that has yielded respect from the customers and other industry experts. Over the past five years, Dominos and Pizza hut have obtained profits due to their marketing efforts. For the period between 2010 and 2014 Dominos profits were £251M, £280M, £305M, £399M and £405M respectively (Market Watch, 2015). On the other hand, Pizza hut’s profits were £400M, £450M, £600M, £700M and £760M (Novak & Creed, 2015). Notably, marketing itself is a strategy that organizations employ to communicate with the consumers to make them knowledgeable of the services and products offered (Kotler & Armstrong, 2014). Marketing is particularly essential as it gives the company an edge against the rival firms (Boone & Kurtz, 2015). A marketing strategy engrosses the products offered, the pricing of such products, the promotion of the products and their distribution. This report will give the marketing milestones that Pizza hut and Dominos have achieved and the differences in their marketing strategies within the United Kingdom. Marketing strategies Since its incorporation in 1995, Dominos has endeavored to be the world’s best pizza delivery company. The company strives to bring accessibility, pleasure and happiness to its consumers through delivering pizza at their door steps (Farrell, 2014). The company also strives to introduce products that best satisfy the needs of its customers. Though it’s an international company, the company acts locally within the UK by offering delicious local tastes. The company’s slogan such as “fun meal” has been famous among the customers. Consequently, Dominos delights in a high market share of 9% in the UK market (King, 2013). On the other hand, Pizza hut has developed from a small franchise in Kansas to the world’s largest pizza chain. It has more than 650 restaurants across the United Kingdom and continues to grow (Statista, 2015). Pizza hut has for the years emphasized on product quality through offering its consumers value for their money. This has made Pizza hut enjoy a high market share of 11% in the UK fast food market. Though these companies are giants in the fast food industry, they unceasingly differ in their marketing strategies. a. The marketing mix i. Product The basic product offered by Pizza hut is the fulfillment of basic need of satisfaction and pleasure (Bhasin, 2014a). Pizza hut obligates itself to providing unaltered product quality and giving the customers value for money. Another acute aspect in Pizza hut’s achievement has been its exceptional dining experience (Halzack, 2014). Every employee at the Pizza hut’s restaurant strives to offer “customer mania”, a service that guarantees that the customer’s experience is memorable. This has given it an edge to attract more customers. Pizza hut attracts customers with its exceptional features in its offering. Pizza hut differentiates itself from Dominos and the rest of the competitors through its diverse products that include pizza, cakes, pasta and desserts. Pizza hut offers customized pizzas by allowing the customers to select the bread crust and the toppings to be included. This allows the customers to custom make their own pizza according to their wishes (Bhasin, 2014a). Another distinguishing factor is how Pizza hut handles customer orders. When a customer gets into a Pizza hut restaurant, attendants always rush to the customer and provide them with menus and wait for the customer’s order (Halzack, 2014). This is intended to increase the customer base by attracting new customers that value customer service. Pizza hut only provides pizza packing for the take away orders. In in-house dining, Pizza hut serves pizza on hot pans and plates. On the other hand, Dominos offers similar products to those of Pizza hut. Dominos has food as the primary product as opposed to Pizza hut that offers experience and satisfaction. This makes it a place of just an individual who wants to satisfy their basic need of a pizza (Halzack, 2014). Dominos has constantly differentiated its products in order to attract customers. Unlike Pizza hut that differentiates its products through exceptional features of its pizzas, Dominos differentiates its products through offering a wide range of products (Bhasin, 2014b) Dominos also packages its pizzas in stylish paper boxes and dresses its toppings in an outstanding fashion. Nevertheless, one of the things that Dominos has been criticized for being the not-so-good ambience in their restaurants. When a person enters the restaurant, the menus are positioned on the counters as opposed to Pizza hut where attendants hand menus to the customers. This has been attributed by the fact that Dominos concentrates on delivering pizzas and does not give much attention to the dinners (Yohn, 2014). Therefore, a customer gets served pizza on paper boxes with the chili flakes and oregano mix served in pouches. This may, however, have an impact on the customer size, as they may shy away from such a bad experience. ii. Place After a product has been determined and the market segmented and positioned, it is essential for a marketer to determine where and how to deliver the product to the consumer (Kotler & Armstrong, 2014). This is accomplished through the marketing channels that avail the product to the consumer. There are two types of strategies that marketers use to deliver products to customers. These are push and pull strategies. According to Boone and Kurtz (2015) the marketer employs advertising and other types of communication to convince the customer have the product through intermediaries in pull strategy. On the other hand, the push strategy entails the marketer using the sales force to convince intermediaries to offer and sell its products to the patrons (Boone & Kurtz, 2015). Pizza hut uses the pull strategy where it advertises and promotes its products and outlets through media. On the other hand, Dominos pursues the push strategy where it introduces sell-in plans with minimal advertising. Notably, Dominos has almost 811 outlets within the UK while Pizza hut has 656 outlets across all cities within the UK (Statista, 2015). iii. Pricing The people in the UK are both price and value sensitive. As a result, in order to offer high quality products, the companies have incurred high costs that have pushed the prices up. However, because of the extreme rivalry in the market, the company has introduced discounts and price cuts. Dominos offers its products at a discount such as the offer where customers can get four pizzas at £20 (Bhasin, 2014b). This allows the company to target the middle income earners and increase its customer base. On the other end, Pizza hut focuses on offering its products to the premium customers by setting high prices for its products. This is because it offers high quality pizzas and ambience compared to its competitors in the market (Bhasin, 2014a) Additionally, even though its prices are higher than those of competitors, it also offers discounts that push its prices below those of the competitors (Young, 2010). This high/low strategy allows the company to segment its market efficiently and stresses on product quality. iv. Promotion According to Kotler and Armstrong (2014), promotion refers to the communication that a market employs to inform and persuade the consumers to purchase a product. As a result, promotion is a vital aspect of any product or service. In the present-day business setting, marketing is more treasured than just providing a decent product (Boone & Kurtz, 2015). The fast food market in UK has been promotion driven. Both Dominos and Pizza hut have been actively promoting their products through discounts and coupons given at all pizza delivery stores across UK. Dominos has over the years targeted customers between the age of 14 and 35 from the low, middle and high income groups. The firm targets this cluster of patrons because they would not mind paying for the accessibility (Young, 2010). Furthermore, Dominos targets the group because it is the most active group that purchases pizzas. Conversely, Pizza hut employs a wide variety of promotional approaches (Halzack, 2014). However, its primary promotion is the use of coupons distributed through mail and flyers that are distributed to institutions and colleges. b. Communications Mix The dominos communication mix is comprised of “advertising, public relations, sponsorships, personal selling, word of mouth, and sales promotion” (Kotler & Armstrong, 2014). Domino’s advertising vision is centered on the slogan “Exceptional people on a mission to be the best pizza delivery company in the world” (Yohn, 2014). Its ads are grounded on the ultimate capabilities of the company such as the 30 minutes delivery advert. Dominos is also involved in sponsoring college festivals and cultural programs across UK. Dominos also uses personal selling through its involvement with the customers at an emotional level. Additionally, Dominos has capitalized on word of mouth by offering low prices and good quality. Pizza hut’s Communication mix consists of “advertising, public relations, sponsorships, and direct marketing, personal selling and word of mouth” (Boone & Kurtz, 2015). Pizza Hut uses these adverts to sensitize people on its products and woo them to buy them. Television ads account for 94% of Pizza Hut’s paid advertising media as opposed to 92% of Dominos (Young, 2010). Pizza hut’s adverts have included the young and the old. This shows that Pizza hut not only targets the young, but also the old. Pizza Hut has also gained an edge against Dominos through the use of the internet. Pizza hut uses direct and collaborative promotion through the internet (Young, 2010). Pizza hut offers occasion services such as birthday reminders and online booking of the discounted E-coupon. Pizza hut also has implemented a social media strategy that includes an extensive program across Twitter, Google Plus, Facebook, You Tube and LinkedIn. c. Market Segmentation and Targeting Both Pizza Hut and Dominos segment their market “geographically, demographically, behaviorally and through psychographic” (Kotler & Armstrong, 2014). Geographically, Dominos and Pizza hut have segmented their markets according to city classes such as small towns and metros (Yohn, 2014). Demographically, Dominos has segmented its market according to age by targeting customers between the age of 15 and 35 and family income (Farrell, 2014). Pizza hut has also segmented its market according to age by targeting all ages and family income. Pizza hut employs behavioral segmentation by targeting occasions such as birthday parties, and user status while Dominos segments such a market through targeting the customers according to their user status and loyalty status (Halzack, 2014). Conclusion Pizza hut and Dominos are both aggressive rivals in the present pizza market in the United Kingdom (Halzack, 2014). These companies have been competing on the same market niche with similar demographic attributes that has made the comparison be grounded on a flattened ground. Generally, the two pizza giants have attained what they aspire (Young, 2010). Dominos has positioned itself as a quick serving pizza outlet while Pizza hut has positioned itself as the pizza outlet with the best quality products and exceptional dining experience (Bhasin, 2014a; Bhasin, 2014b). Pizza hut is also devoted to giving its customers unaltered product quality that gives the customers value for their money. This has allowed Pizza hut to position itself through its premium prices. Alternatively, Dominos has dedicated itself to offering products that suit the distinct tastes of the customers. From this review, it is apparent that the two companies offer good tasting pizzas in their own sense. However, Pizza hut has a holistic marketing strategy that not only focuses on the product, but also on customer experiences. Recommendations Dominos has to change the dining conditions in order to target premium customers and improve on customer experience. Additionally, they can bring in TVs and music at their restaurants. On the other hand, Pizza hut should also target the middle income earners, which is a huge consumer group in the UK. In addition, there are few Pizza hut outlets within UK compared to Dominos making them inaccessible to some people. Therefore, Pizza hut should increase its presence across the nation. References Bhasin, H. (2014, October). Marketing mix of Pizza hut - 7 P of Pizza hut. Retrieved April 23, 2015, from http://www.marketing91.com/marketing-mix-pizza-hut/ Bhasin, H. (2014). Marketing mix of Dominos - Dominos marketing mix. Retrieved April 23, 2015, from http://www.marketing91.com/marketing-mix-dominos/ Boone, L., & Kurtz, D. (2015). Contemporary Marketing. Cengage Learning. Farrell, S. (2014, January 9). The rise and rise of Dominos Pizza | Business | The Guardian. Retrieved April 23, 2015, from http://www.theguardian.com/business/2014/jan/08/dominos-pizza-sales-up Halzack, S. (2014, October 16). Domino’s vs. Pizza Hut: One is piping hot and one needs reheating - The Washington Post. Retrieved April 23, 2015, from http://www.washingtonpost.com/news/business/wp/2014/10/16/dominos-vs-pizza-hut-one-is-piping-hot-and-one-needs-reheating/ King, M. (2013, November 28). UK fast food market led by McDonalds with over one-third of value sales in 2012. Retrieved April 23, 2015, from https://uk.finance.yahoo.com/news/uk-fast-food-market-led-000000574.html Kotler, P., & Armstrong, G. (2014). Principles of marketing. Harlow [etc.: Pearson. Market Watch. (2015). DPZ Annual Income Statement - Dominos Pizza Inc. Annual Financials. Retrieved April 23, 2015, from http://www.marketwatch.com/investing/stock/dpz/financials Novak, D. C., & Creed, G. (2015, January). 2014 Yum! Brands Annual Report. Retrieved April 23, 2015, from http://www.yum.com/annualreport/ Statista. (2015, January). Pizza Hut: restaurants by region 2014 | Statistics. Retrieved April 23, 2015, from http://www.statista.com/statistics/256828/pizza-hut-restaurants-worldwide/ Yohn, D. (2014, November 25). A Tale Of 2 Pizza Turnarounds - Pizza Hut Vs. Dominos - YUM! Brands, Inc. (NYSE:YUM). Retrieved April 23, 2015, from http://seekingalpha.com/article/2709255-a-tale-of-2-pizza-turnarounds-pizza-hut-vs-dominos Young, A. (2010, September). Pizza Hut vs. Dominos: Who Had the Best Media Strategy? | Media - Advertising Age. Retrieved April 23, 2015, from http://adage.com/article/media/pizza-hut-domino-s-media-strategy/139027/ Read More