Pizza Hut Marketing PLan PDF

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BSB 126 MARKETING PLAN

NAME: Matthew Fagg

STUDENT NUMBER: N9447334

TOTAL WORD COUNT 2194

I. SITUATION ANALYSIS Pizza Hut is an American pizza restaurant chain established in 1958 by Frank and Dan Carney, currently with 12000 restaurants and delivery units worldwide, including approximately 270 stores across Australia (Pizza Hut, 2018). Pizza Hut’s first Australian restaurant opened in 1970, offering customers to dine-in with all-you-can-eat buffets, making it a unique family setting. Pizza Hut became the leading pizza brand in Australia with their famous dine-in restaurants, however Domino’s arrival in 1983 challenged Pizza Hut with home delivery. In 2014, Pizza Hut dropped prices to $4.95 to appeal to the consumer trend, which was value and convenience, and to increase the competitiveness with Domino’s. Domino’s followed suit with price reductions, winning the price war. Sparked by the lowered cost of pizza, franchisee operators filed a lawsuit against the parent company at the time (Yum! Brands) for the lowered prices which made the stores no longer viable, however Yum! Brands was found in favour (Murphy, 2018). After the lawsuit, Yum! Brands sold the company to Out of the Box Group, a subsidiary of Allegro Funds, in September 2016.

Fast forward to 2018, Pizza Hut is lagging behind Domino’s with a 7.2% market share compared to 29.8% for Domino’s which can be attributed to Domino’s early adoption of technology in online ordering and delivery while offering lower prices (The New Daily, 2018). Domino’s rapid expansion of stores has increased the market share concentration, however with the acquisition of Eagle Boys in 2016, Pizza Hut has still outperformed the industry. Due to Domino’s advantage in the market in recent years, Pizza Hut is forced to find other alternatives for continual growth to become the pizza retailer of choice (See Appendix 1 for SWOT analysis). For Pizza Hut, social trends and demographics are the maximum influential macroenvironmental forces from the CDSTEP analysis. Social trends are significant to Pizza Hut as

it is important for the encouragement of its customer to purchase their products. The latest industry report on pizza restaurants and takeaway by IBISWorld, says consumer preferences and trends has change over recent years toward eating healthier options such as premium or gourmet pizzas (IBISWorld, 2018). However, Domino’s went against this trend by not competing the fast food industry with incorporating premium and healthy option into their menu, but by expending their current store network, focusing on technology and added convenience (IBISWorld, 2016). In the past year, Domino’s tried to change the image of the brand from cheap to emphasizing quality and freshness with a new look menu, smaller pizzas and increased prices (Christodoulou, 2017).

Consumer demographics is another macro-environmental factor of great importance to Pizza Hut because they need to market to the right audience. Pizza Hut’s target consumers are university students who value convenience and value for money over anything else. Instead of going with the current trend of promoting premium and healthier pizza, Pizza Hut should follow Domino’s method by promoting price cuts and deals with the same quality, same size with added convenience.

II. MARKETING GOAL To increase Pizza Hut’s market share by 10% by the end of 2020, by appealing to a different market segment through a branding change (penetration) by changing prices, the slogan, and activity on social media.

III. MARKETING STRATEGY Table 1 – Segment 1: University students between 18 – 25 years old Demographic

• Age: 18 – 25 years old

Factors

• Gender: Both • Job: Casual/Part-time -> lower income (appeals to value range pizza’s) • Income: Nil - $20000

Geographic Factors

• Metropolitan and suburban areas • Universities

Behavioral Factors

• Price sensitivity is high due to low income –> seeks to find discount-based advertising -> loyalty

• Easily influenced (social media, friends) • Convenience Psychographic Factors

• Time pressure related to stress/anxiety of university and exams (stress eating)

Table 2 – Segment 2: Working adults between 20 – 35 years old Demographic Factors

• Age: 20 – 35 years old • Gender: Both • Job: Full time -> higher income (appeals to premium/healthier pizza’s) • Income: $45000 and higher

Geographic Factors

• Metropolitan and suburban areas -> close to home

Behavioral Factors

• Price sensitivity is low • Convenience • More likely to shop around (finding better tasting pizza, possibly from restaurants/non-take-away stores)

Psychographic Factors

• Healthier lifestyle • Own a vehicle • Time pressure related to family and working long hours

Target Market: University Students The largest market for the pizza restaurant and takeaway industry is consumers aged 15 to 34 (IBISWorld, 2018). Both market segments above fit well into this range, however, young Australian’s tend to eat out or eat fast food (Holroyd, 2014) and a study conducted in America concluded that college students are the top of the pizza consumption list, being “quick and convenient” (Elliott, 2014). Changing the brand to be more value for money with added convenience indicates that university students are a great group for Pizza hut’s market to reacquire market share from their competition.

Value Proposition The selected target market of students between 18 and 25 will hold great interest in purchasing pizza from Pizza Hut as a quick and cheap meal. Ordering Pizza Hut through the online app is convenient, with the option of delivering to your door for slightly extra increasing the benefits. University students actively look for coupons, and with Pizza Huts’ larger pizzas, students will be getting more value for their money. Promoting the brand changes through social media will greatly influence the target market as there are 3.5 million

users on Facebook and 15 million monthly active users on YouTube between 18 - 25 (SocialMediaNews, 2019).

Positioning Statement Pizza Hut’s pizzas are the best for people between the ages 18 and 25, who want convenience at a low price. Through promotions and social media advertisement, Pizza Hut will offer university students larger pizzas and lower prices.

Positioning map The positioning map demonstrates the current situation and gaps in the marketplace for Pizza Hut to access by targeting university students who value convenience and value for money through a brand change with additional marketing through social media to achieve the positioning goal (see appendix 3).

IV. MARKETING TACTICS PRODUCT Pizza Hut offers 21 individual 11-inch pizzas across their menu, from classics such as cheese lovers & Hawaiian, to premium pizzas such as BBQ meatlovers & chicken supreme. Customers can choose which base they would like, including Deep pan, thin ‘N’ crispy, traditional, stuffed crust and gluten free along with a sauce (tomato and BBQ). Customers can also add extras onto their pizzas for $1 or $2, such as meats, veggies and sauce drizzles (Pizza Hut, 2018).

Pizza Hut launched a co-brand in 2018 called WingStreet, offering 3 types of chicken wings across 8 sauces, (QSRMedia, 2018) (Pizza Hut, 2018). They also offer sides, desserts, and drinks, for customers, either alone or with pizzas as a deal. Some favourites include garlic bread and ice blocks. Pizza Hut is under license by Schweppes Australia, providing Pepsi Max, 7UP, Solo, Mountain Dew and Sunkist (Pizza Hut, 2018). Pizza Hut already has a great range of pizzas. The focus is on changing the brand identity more towards cheap and convenient with price changes, promotions and new slogan. The brand identity of Pizza Hut is lacking due to the small market share compared to their main competitor, however, Pizza Hut is known globally with 50 years of experience. Changing the brand identity to be cheap and convenient could lead consumers to believe that the product is

bad quality. Pizza Hut would need to promote the brand change in a way that it doesn’t change customers thoughts about the quality of their pizza going down, however, promote it in a way that makes it better than the competition.

Once Pizza Hut has gained back some of the market share they deserve, product development would be needed to enhance their target market and grow financially.

PRICE

Table 3 – The five C’s Company Objectives

“committed to ensuring every customer has a Hot, Fast and Reliable experience around the world.” (YUM! Brands, 2017) This is from the American Pizza Hut; no information could be found on the Australian Pizza Hut.

Customers

Metropolitan and suburban areas, also universities. University students aging from 18 – 25, price sensitive, easily influenced, wants convenience, with an income from $0 - $20000. Pizza Hut’s price will be inelastic

Costs

Fixed costs such as wages, machines and equipment, utilities and rent. Variable costs are the fresh ingredients to make the pizza. Franchisees would also have to pay the head company for operating under the Pizza Hut name.

Competition

Domino’s Pizza (major competitor), McDonald’s, KFC, Hungry Jack’s are currently the competitors.

Channel Members

Pizza Hut (pickup and delivery) and suppliers/wholesalers

The five C’s; company objective, customers, cost, competitors and channel members, is conducted to determine the price of the product. The pricing strategy for Pizza Hut will be based upon their competition. Pizza Hut’s main competitor is Domino’s, however in a broader context McDonald’s, KFC and Hungry Jack’s are also competitors. The prices of Pizza Hut’s pizza range from $7.95 to $19.95, with the cheaper pizzas in the classics menu and the more expensive pizzas in the premium menu (Pizza Hut, 2018). Pizza Hut’s main competitor, Domino’s, price their pizzas slightly cheaper, from $5 for the value range to

$17.40 for the premium range (Domino's Pizza, 2018). Prices from both Pizza Hut and Domino’s vary depending on which store the customer goes to.

The current prices of Pizza Hut’s pizza reflect the current market share and trends of consumers. Having higher prices compared to Domino’s has decreased the consumers and market share, especially those that prefer cheap and fast, who are moving their patronage towards Domino’s. This can be seen with the increase of Domino’s market share. For Pizza Hut to claw back some of the market share, their pricing strategy will need to be more aggressive and reflect that of their competition with a decrease in price across the whole range of pizzas. With a class action lawsuit following a price decrease in 2014/2015, the prices will only decrease to $6.50 for classic range and for the premium pizza’s up to $17.95. For delivery, pizza prices go up $3 per pizza, with a $3 delivery fee when finalising payment. To follow with the price changes above, the delivery prices will stay the same at $3 above pick up prices, as well as keeping $3 flat rate for delivery. With a decrease in price, consumers will still perceive Pizza Hut will be better value for them, as it is a higher price than the competition, as well as being bigger. (Grewal & Levy, 2017)

PLACE (DISTRIBUTION) The current channels of distribution of Pizza Hut are either dine in, pickup or delivery through the Pizza Hut chain of stores across Australia.

For the target market, pick up or delivery is the most appealing due to ordering online and should be kept as a distribution method. Ordering online allows the customers to view the whole menu, and to apply coupons or a deal, and order in the comfort of their home, which increases convenience. These methods of distribution should be kept as ordering online, through the website or app, would be the best way to penetrate the target market and advertise the brand change, price changes and coupons/vouchers/deals.

PROMOTION For Pizza Hut to reach their objective, the branding change will have to be advertised in such a way to their target market and any other new potential pizza consumers. The $50000 budget will be applied in two ways.

Table 4 – Ways pizza hut will promote Objectives

Task

Media Cost

To create awareness of

Flyers/coupons/vouchers:

Coupon deals: $5 classic pizza

the branding change and

Hand out coupons at local

every Monday, Friday and

new specials/deals.

universities to the target

Saturday, 2 for 1 deals, 2 sides

market.

for $8.

A study has found that 30%

Handing out coupons at local

of consumers would try a

universities: 10 cents per

new restaurant/fast-food with

coupon to reach 200000

a coupon (Valassis, 2018).

students: $20000

To influence the target

Social Media and Twitter

Facebook advertising: $10000

audience where they

marketing:

1000 days of advertising at $10

would be the most

1. Create advertisements for

per day reaching 2000 – 12000

affected through social

Facebook and YouTube

people daily (Facebook, 2017).

media.

2. Twitter activity YouTube advertising: Average 3.5 million Facebook users

cost-per-view is between $0.10

between 18-25 years old.

- $0.30 (Alleger, 2012). Have

YouTube and Twitter have

the advertisement appear 15

15 million and 4.7 million

times per hour for 6 months.

monthly active users

Cost for 6 months is between:

(SocialMediaNews, 2019).

0.10×15×24×182 = $6552 0.30×15×24×182 = $19656 Twitter account: free, however, Pizza Hut would need a social media employee to be active on twitter each day.

Pizza Hut should use Twitter to communicate to their consumers rather than posting promotions, to personally respond to customer complaints or even compliments. Twitter should also be used to influence the target audience with the use of pop culture references, memes, and witty comments, and could be used to ‘troll’ their competitors. However, to do this Pizza Hut needs to hire the right people and set the right tone of voice, and obviously be prepared if something goes wrong. In 2017, Wendy’s engagement with customers through Twitter saw a 49.7% growth in profit for year (Eriksen, 2018), indicating that if Pizza Hut follows suit, it could pay dividends for the company.

V. REFERENCES Alleger, J. (2012). How Much Do Ads on YouTube Cost? Retrieved from Penna Powers: http://www.pennapowers.com/how-much-do-ads-on-youtube-cost/ Christodoulou, M. (2017, August 1). Domino's pizzas to get smaller, more expensive in bid to shake-up its image. Retrieved from The Sydney Morning Herald: https://www.smh.com.au/business/companies/dominos-pizzas-to-get-smaller-moreexpensive-in-bid-to-shakeup-its-image-20170801-gxn025.html Domino's Pizza. (2018). Retrieved from Domino's: https://www.dominos.com.au/ Elliott, J. (2014, March 25). Study finds college students eat the most pizza. Retrieved from BGFalconMedia: https://www.bgfalconmedia.com/study-finds-college-students-eatthe-most-pizza/article_b35332b6-b548-11e3-9a80-001a4bcf887a.html Eriksen, K. (2018, April 26). How Wendy’ ’s Used Social Media to Profit $64M in a Year. Retrieved from Deputy: https://www.deputy.com/blog/how-wendys-used-social-toprofit-64m-in-a-year Facebook. (2017). How much do Facebook ads cost? Retrieved from Facebook: https://www.facebook.com/business/ads/pricing Grewal, D., & Levy, M. (2017). Marketing (4th ed.). McGrawHill. Holroyd, J. (2014, March 12). Average Australian eats fast food nearly every week. Retrieved from Goodfood: https://www.goodfood.com.au/eat-out/news/average-australian-eatsfast-food-nearly-every-week-20140311-34k15 IBISWorld. (2016, July 19). Consumer trends cause fast food outlets to change tactics. Retrieved from IBISWorld: https://www.ibisworld.com/industry-insider/analystinsights/consumer-trends-cause-fast-food-outlets-to-change-tactics IBISWorld. (2018). Fast Food and Takeaway Food Services in Australia. IBISWorld. Retrieved from http://clients1.ibisworld.com.au.ezp01.library.qut.edu.au/reports/au/industry/default.a spx?entid=2005 IBISWorld. (2018). Pizza Restaurants and Takeaway in Australia. IBISWorld. Murphy, J. (2018, May 22). The dark truth about your pizza. Retrieved from news.com.au: https://www.news.com.au/finance/small-business/the-dark-truth-about-yourpizza/news-story/102e943c258114f9c361ea604fafb82f Passport. (2012). All Things To All People: The Story Of Pizza. Euromonitor International. Passport. (2018). 100% Home Delivery/Takeaway In Australia . Euromonitor International. Passport. (2018). Consumer Foodservice in Australia . Euromonitor Internation.

Pizza Hut. (2017). About Us. Retrieved from Pizza Hut: http://pizzahuthawaii.com/AboutUs.aspx Pizza Hut. (2018). Retrieved from Pizza Hut: https://www.pizzahut.com.au/ QSRMedia. (2018, November 26). Pizza Hut launches new WingStreet co-brand. Retrieved from QSRMedia: https://qsrmedia.com.au/menu-innovations/news/pizza-hutlaunches-new-wingstreet-co-brand SocialMediaNews. (2019, January 1). Social Media Statistics Australia – December 2018. Retrieved from SocialMediaNews: https://www.socialmedianews.com.au/socialmedia-statistics-australia-december-2018/ The New Daily. (2018, July 20). How Domino’s crushed Pizza Hut to become the king of Aussie takeaway. Retrieved from The New daily: https://thenewdaily.com.au/money/finance-news/2018/07/20/dominos-crushed-pizzahut/ Valassis. (2018). TEMPTING the dynamic restaurant customer. Valassis. YUM! Brands. (2017). YUM! Brands Annual Report. Retrieved from http://investors.yum.com/Cache/1001234984.PDF?O=PDF&T=&Y=&D=&FID=100 1234984&iid=4025819

VI. APPENDICES Appendix 1: SWOT analysis Strengths

Weaknesses

• Well known and established worldwide brand

•

Higher cost compared to competitors

•

Struggled to generate growth and maintain

since 1958 • Opening 100 new stores over the next 12 months

profit margins (IBISWorld, 2018) •

• Acquiring Eagle Boys – expanded network of

claiming low prices made it difficult to remain viable (IBISWorld, 2018)

stores which made Pizza Hut outperform the market in 2017

Lawsuit in 2015 – franchisee operators

•

Lacking market share – customer awareness lacking

Opportunities

Threats

•

Grow a stronger consumer base

•

Expand menu – offer different flavours of

•

McDonalds & KFC • Food delivery apps: UberEats, Deliveroo &

pizza •

• Competitors: Domino’s, Pizza Capers,

Menulog

Expand store network further after 100 new stores have been opened

• Competitors offering lower cost pizzas

Market to different market segments through

• Consumers looking for healthier options

various media types

Appendix 2: CDSTEP Culture

• Pizza Hut is a worldwide product • Fast food – the average Australian eats fast food nearly every week (Holroyd, 2014)

Demographic

• Largest market between ages 15 and 34 (IBISWorld, 2018) • University students aged between 18 and 25 – likely to spend their money on value food since no or little income, also time poor due to...