The purpose of this case study is to exam how Domino’s pizza uses Information Systems to regain their share of the Home Delivery pizza market. I’ll discuss how Domino’s overcome a bad reputation and improved their product and services. I will also discuss the changes and process systems implemented along with where they currently stand in the market and with their customers. I will finish with the technology Domino’s plans to use in the future.
Domino’s Pizza Sizzles with Pizza Tracker
This case study discusses the impact that information systems and global e-business has had on Domino’s Pizzas’ reemergence as an industry leader in the home-delivery pizza market. It looks into what kind of systems are used, how the systems improve business performance, how their online pizza ordering system has improved the ordering process and how the systems are giving Domino’s a competitive edge.
Domino’s opened in 1960 and grew to 200 stores in 1978 and currently operates almost 9000 stores worldwide and has the largest share of the approximate $15 Billion/year pizza market. They compete with Pizza Hut, Papa John’s and Little Caesar’s along with local pizza shops. Despite being one of the most well-known brands in the United States, between 2006 and 2008 Domino’s Pizza was in crisis. After leaving Pepsi, Chief Marketing Office Russell Weiner joined Domino’s and inherited a brand with plummeting sales and a bad image due to their lackluster product. A month after he joined the company, sales hit a record low of $2.83 a share in November 2008 and today, it’s up around $72 a share. (Jeff Beer, 2014). Trying to overcome the reputation of having the worst pizza, in 2009, Domino’s CEO acknowledged in a commercial that Domino’s pizza doesn’t taste good. He apologized for its poor ingredients and promised to improve the recipe. After that statement was made, store sales grew 14.3% the following quarter. (Forbes Magazine, 2013). Domino’s had $1.5 Billion in sales and earned $80 million in profit that year.
Domino’s made their customers a promise to provide better ingredients which they did, but the most important ingredient has been the technology and investment in digital and mobile where they’ve made it faster and easier for customers to place and track orders. In 2003, Domino’s implemented a Transaction Processing System (TPS) called “Pulse” as a point-of-sale system. Pulse helps Domino’s maintain consistent and efficient management functions in each of their stores. The Data from purchases and payments from orders are captured by this computerized system and recorded. Pulse captures the information from the customer’s order such as type of crust, toppings, side dishes and delivery locations. Once the data is collected, pulse will calculate the number of pizzas and side orders sold, cost of ingredients along with delivery and customer information.
The stores in which Pulse was installed reported improved customer services, reduced mistakes and shorter training times. Domino’s most recently updated to “Pulse Evolution” which is faster, less expensive and easier to maintain. From an operational standpoint, you can use Information Systems to gain a cost advantage over competitors or to differentiate yourself by offering better customer service. (Bert Markgraf, 2015). Since January 2010, shares of Domino’s have significantly surpassed the competition rising 750% while Papa John’s grew 193% and Pizza Hut grew 93%. The Story was the same in 2013 with Domino’s shares increasing 51% while Papa John’s shares increased 30% and Pizza Hut shares were flat for the year. (Forbes, 2013).
The latest innovation from Domino’s (Pizza Tracker) allows a customer to watch a simulated version of their pizza being made all the way through to the finished product. This is another way that Domino’s has used Information Systems and E-Business to reach their customers. The Journal of General Management several success factors for e-commerce. Support self-service in which a web user should be enabled to complete transactions with ease. Nurture customer relationships where up front efforts should focus on increasing customer loyalty, not necessarily maximizing sales.
Target a market of one where each customer should be treated as an individual market. Build communities of interest. A company should make its web site a destination that customers look forward to visiting, not simply a resource people use because they have to conduct a transaction. Online ordering has become the cornerstone of Domino’s business with IPad apps such as pizza tracker, pizza hero, customer pizza profiles and the newest featuring a 3-D pizza builder.
Domino’s research shows customers by pizza 21 times each year; it gets six or seven of those orders and a similar amount might go to Pizza Hut which showed them that loyalty was not strong. (Forbes, 2013). Along with Pizza Tracker, Domino’s Pizza Profiles have helped retain customers and generate more loyalty from customers. Pizza Profiles allow customers who order online to save their information and reorder their favorite order in as little as five clicks, or about 30 seconds. The company now has mobile apps to cover about 95% of smartphones and says it generates $2 billion in global digital sales per year of which 35% is driven by mobile. (Forbes, 2013).
Domino’s locations are opening faster than Starbucks, Dunkin Donuts, Pizza Hut and McDonalds since 2008 and have used Business Systems to its fullest to rise to the top. The biggest single department at Domino’s headquarters is now IT and they’re starting to also be known as a Tech company. (Jeff Beer, 2014) Coming soon is the “DomiCopter” which is a remote controlled drone that delivers their product. Domino’s has run several tests and may soon introduce the delivery service to the market.
1. Touryalai, H. “Technology, not pizza, helps Domino’s crush competitors and grow faster than McDonald’s overseas.” Forbes 15 Oct 2013; web 2. Beer, J (2014, May 22). “How Domino’s became a tech company.” Retrieved from http://www.fastcocreate.com/3030869/behind-the-brand/how-dominos-became-a-tech-company. 3. Markgraf, B (2015, January 14). “Importance of information systems in an organization.” Retrieved from http://www.smallbusiness.chron.com 4. Barnatt, C. “Embracing E-Business.” Journal of General Management, 2004; 89 – 97.