Marketing Strategies in the Pizza Hut Company - Case Study Example

Marketing in the Fast Food Industry: Pizza Hut Company Student’s Name: Name of Institution: Instructor’s Name: Course Code: Date of Submission: Introduction Lavoine (2008) says that this is the era of fast foods and fast food chains. This is in reference to the fact that fast food chains are everywhere across the world, in all the major towns, at almost all the strategic positions along city streets and corners. This increasing prominence of fast food chains obviously depends on a growing consumer base, i.e. more people are developing affinities towards fast foods. This consumer preference, Lavoine (2008) argues, coincides with an increasing pace of life in the world, in which convenience is highly cherished, e.g. service over the counter, not having to cook at home, etc. Convenience and taste are therefore the key factors that define marketing in the fast food industry. Ironically, this prominence of fast foods equally becomes its key liability as it attracts competition. To gain the competitive advantage in this market therefore requires effective marketing strategies. Different companies, e.g. McDonald’s, KFC, etc, use different marketing strategies. This paper will focus on Pizza Hut, seeking to evaluate its marketing circumstances, e.g. marketing performance, challenges (e.g. from health conscious groups), risk management, etc. Pizza Hut Company Pizza Hut is considered the largest Pizza Chain in the world. It has more than 12000 pizza delivery outlets and restaurants across the globe (Novak, 2012). The company’s main business approach is the satisfaction of customers needs. This is expressed its mission statement and vision. Mission Statement: We take pride in making a perfect pizza and providing courteous and helpful service on time all the time. Every customer says, "I'll be back!" (Pizza Huts, n.d.). In line with this mission statement, Pizza Hut has always targeted and tried to satisfy a diverse customer base domestically (i.e. in the US) and globally. This mission is not short-term. It is a long-term strategy that is also expressed in the company’s vision, which is to become the world’s best branded fast pizza restaurant characterised by franchise network and best delivery. In other words, the company’s mission statement and vision express the need to provide not only the best food, but also value to families. To realize this dream, the company targets customers of various kinds based on age, occupation, etc. The company’s marketing strategy thus combines local and international marketing strategies and early market entry. Part of this includes the company’s acquisition of KFC franchise and Little Sheep in South Africa and China respectively. Positioning Since its inception, Pizza Hut has adopted different strategies to position itself in the market: Product Positioning Strategy: The company has mainly adopted a Single Brand positioning strategy, i.e. mainly focusing on its pizzas. It is important to note that the company normally uses different positioning statement in different countries, e.g. “Dine-in restaurants” (China), “made fresh, served hot and on time” (Australia), etc. Customer Focus: Pizza Hut conducts market segmentation based on various factors, e.g. age, occupation, etc. With the knowledge on the characters of the segments, the company’s targeting strategy involves differentiation and the development of diverse products. For instance, in Malaysia, the company has targeted urban adults and families with pan pizza, which is a nutritious Italian-American cuisine mix. Also, the company’s Hand Tossed Pizza, made with a layer of crust, is mainly meant for families. And the Personal Pan Pizza is an example of the company targeting young and single working class group, who are in need of ‘fast lunch’. The big New Yorker Pizza is for pizza lovers in New York. The Great Indian Treat, made with Indian spices and garlic is for the Indian market. Stuff! Under 18 0nly, which is a mix of pizza with fruit cake, chicken wedges and ice cream targeted UK pizza lovers below 18 years of age. Product-Scope Positioning: This relates to the fact that the company also deals in other products besides pizzas, including salads & pastas, appetizers, soups & deserts, etc. (Pizza Hut, 2012). Naturally, these other products do not do/sell as well as the pizzas. Still, they complement each other. This enhances market share, sales and profitability. Product-Design Positioning: Pizza Hut has always modified standardized products, e.g. chicken toppings and extra cheese on its standard pizzas. Also, the company offers “value meal combos”, which are pizzas made with beverages, appetizers, etc. Value-Marketing Positioning: This relates to three key factors: quality, customer service and time-based services. Ultimately, all these positioning strategies aim at fulfilling the company’s promises as expressed in its mission statement and long-term visions. The consideration of local market in formulation positioning statement shows the commitment of the company to its customers (on the basis of demographics, amongst others). SWOT Analysis SWOT stands for strength, weaknesses, opportunities and threats. These are the factors that make up a company’s environment (CIRI, n.d.). Table 1 below is an outline of the company’s SWOT analysis. Strength Weaknesses a) Brand Name, i.e. the name ‘Pizza Hut’ is internationally recognized. The name is therefore an important selling factor. b) The company has also been known as a pioneer in new products, e.g. its assortment of pizzas. c) The company also owns the largest network of delivery and full-service restaurants. This gives it a competitive edge over other companies. d) A large selection of products that target A broad customer base, i.e. different customer segments. e) A stable franchise network a) Owing to the many restaurants that it runs, the company has high overhead costs. b) The company also does face inter-franchisee conflicts c) The company also runs the risk of losing its customers due to its relatively high prices Opportunities Threats a) The company having portrayed itself as a product pioneer, can further the advantages of this opportunity by introducing new innovative pizzas. b) The company can also further its competitive advantage by retaining its customer loyalty through the provision of good services. c) With its new online system through which customers can make orders, the company owns a key tool for expansion. d) The company’s home-delivery network is a significant platform through which to enter new markets. a) Competition from other pizza companies, e.g. Domino’s. The ability of the competitors to offer same or higher quality pizzas of different flavors could easily threaten the company. b) Although the company has creative methods for customer differentiation, these methods are mostly taken up by other companies. The threat here the potential inability to come up with new and innovative methods for attracting customers. The Challenge of a Health Conscious Community Even as the number of fast food consumers grows, there is also an increasingly growing health consciousness. This has especially been in response to the problem of obesity among children in America, for instance. Already, Walt Disney has announced its plans to ban fast food- what it refers to as ‘junk’ food- ads on its radio, TV and online programs. ‘Junk food’ here refers to what contains 10 grams or more of sugar or/and 600 calories (BBC, 2012). But despite these efforts, fast food companies cannot stop their operations both for their own sake and consumers who love their products. Infact, so as to maximize their own sales, Pizza Hut for instance, should try to win the health conscious crowd to its side. This requires new marketing objectives: 1. To shift attention from what may be considered as unhealthy and emphasize the ‘healthy’/good aspects. 2. To capture and retain health conscious consumers. Pizza Hut has the capacity to achieve these goals. It can take advantage of the opportunities that it has already created for itself. One, the company can decide to focus on the ‘positive’ sides of their products, e.g. prices, convenience, tastes, etc. This would be in line with the company’s recognition of the fact that it is its ‘less healthy’ products that bring the biggest profits and can therefore not stop selling them. In other words, the company’s marketing strategy would need to avoid drawing attention from the ‘unhealthy’ side of their products and bring out only the best side. The second objective should focus on portraying a healthy side of the company. The company has in recent years added ‘healthy’ products, e.g. tomato, wheat and cheese, veggie lover’s hand-tossed pizza, etc. Infact, according to Lavoine (2008), Pizza Huts is the most health conscious fast food company. The company’s marketing needs to promote these products so as to emphasize the company’s solidarity with the health conscious community. In the end, these two still enhance the company’s long-term to be a leading pizza company that serves a diverse population (health conscious or not). The company can keep track of these objectives by evaluating certain key performance indicators. For the first objective, the company can track the sales of its ‘unhealthy’ products. For the second objective, the company can measure the response rates of its marketing, i.e. the company can measure the amount used in advertising ‘healthy’ products against sale increase. To further this focus on health conscious consumers, the company should establish strategic objectives: 1. Play a role in nutrition and healthy eating, e.g. through forums on its website. 2. Continue to come up with new and innovative healthy products. The company can measure how successful its objectives are being by measuring how many health conscious consumers are taking part in its forums. Also, the company can track the success of its new ‘healthy’ products through sales. Risk Management in a Health Conscious Environment As already mentioned above, the so-called ‘junk food’ are the biggest earners for fast food companies. Pizza Hut is no exception. The company can therefore not abandon the production of these products. But it is also important to recognize the business risks that this growing health consciousness will present. For example, some of Pizza Hut’s products are likely to be ‘hurt’ more than others. The products of Pizza Hut that are likely to face the biggest risk in this environment are the “value meal combos”. These refer to the company’s standard pizzas made with many other additives, e.g. appetizers and beverages, amongst others. This is because these products have a lot of sugar and calories. As such, these products are likely to be the biggest victims of, for instance, the Walt Disney ad bans. One of the risk management strategies that the company can adopt now is to take advantage of its diversity of products. For instance, the company can choose to improve the sales of those products that do not fall within the levels of sugar and calories whose ads are to be banned, including the healthy products. Besides, the overall goal is to retain and increase company profits. Thus, the goal here is to balance risks, so that while one product suffers, others may be lifted to account for profits lost in another. This situation expresses the advantage of having a diversity of products, as they complement each other. But this is not necessarily to say that the “value meal combos” will die or even lose favor. They may not appear in ads as much as they used to, but they can still be promoted by other means. For example, the company could conduct sampling with the help of customers. Alternatively, the company could use other organizations that have not banned ads on fast foods. Conclusion This paper, focusing on Pizza Hut company, has examined and evaluated the aspects of marketing in the fast food industry. It has shown the marketing factors upon which fast food industry thrives. Also, the paper has recognized the danger that a growing health consciousness presents to the industry. For this, the fast food industry must now shift its hitherto exclusive focus on taste to also include promoting health. Lavoine (2008) argues that talking about fast food and nutrition in the same sentence is oxymoronic. However, Pizza Hut’s key strategy, which emphasizes the need to satisfy consumers seems to be relevant in both cases, i.e. giving the health conscious group what they need and those who do not mind can have their favorite tastes. In deed, Pizza Hut’s mission and visions places it at strategic position to satisfy all kinds of consumers. This becomes its key marketing strategy. Reference BBC (2012). Media Giant Walt Disney to Ban Junk Food Ads. Retrieved 07 June, 2012, http://www.bbc.co.uk/news/world-us-canada-18336478 Creative Industry Research Institute (CIRI) (n.d.). SWOT Analysis. Retrieved 07 June, 2012, http://www.ciri.org.nz/downloads/SWOT%20Analysis.pdf Lavoine, F. (2008). Nutritional Value of Pizza Hut Foods. Helium. Retrieved 07 June, 2012, http://www.helium.com/items/870595-nutritional-value-of-pizza-hut-foods Marketing Strategy of Pizza Hut. Retrieved 07 June, 2012, http://www.docstoc.com/docs/79346939/Marketing-Strategy-of-Pizza-Hut Novak, D.C. (2012), Letter from Yum Chairman: Dear Partners. Retrieved 07 June, 2012, http://www.yum.com/annualreport/ Pizza Hut's Mission Statement, Retrieved 08 June, 2012, http://www.pizzahuthawaii.com/about/mission.html Pizza Hut. (2012). Retrieved 08 June, 2012, http://www.pizzahut.com/pasta.html Read More