Pizza Hut: Market Dominance in the Fast Food Industry

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During the past four decades Pizza Hut has built a reputation for excellence that has earned the respect of consumers and industry experts alike. Building a leading pizza company has required relentless innovation, commitment to quality and dedication to customer service and value. The qualities of entrepreneurship, growth and leadership have characterized Pizza Hut’s business through more than four decades of success. Through the strength of its heritage, its culture and its people and franchisees, Pizza Hut looks forward to more success in future.

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There are different objectives of every organization. In order to achieve these objectives different targets are set. Targets pass down the hierarchy depending on the nature of the business. Therefore, in order to achieve the objectives, management decides on different strategies. These strategies are divided into many sub-parts and are useful for the running of the business. The employees and the management know what they have to achieve through the targets which have been set to them and the strategies they have adopted help them know the way they will achieve the objectives.

Similarly, Pizza Hut has different targets set to them and they have adopted different strategies to successfully achieve the targets set. These targets are set by the RSC i. e. the restaurant support centre in Karachi. These targets are passed on to the RGM (restaurant general manager) and he passes them to the workforce. These targets fall within the organizational structure in which there are many people who have different targets to achieve.

In order to successfully achieve the targets they need to co-operate and work in a friendly environment. Institute of Management Sciences, Peshawar Pakistan

Page 4 Report and Marketing Strategies of Pizza Hut HISTORY OF PIZZA About Pizza, Some will tell you Italy. That's wrong. What you know as pizza came into vogue around the time of Napoleon and the French revolution. Italians, known to be lovers of fine food and wines perfected and imported this terrific dish to America. From here it quickly endeared itself to mass production and re-export to the rest of the world. Bon appetite! INTRODUCTION & HISTORY OF PIZZA HUT In 1958, Frank and Dan Carney had an idea for a great local pizza restaurant in Wichita Kansas.

The small 25 seat restaurant only had room for 9 letters on the sign… the building looked like a hut… so 'Pizza Hut' was born! Fifteen years later, we opened the first UK restaurant and since then we've become the biggest Pizza Company on the planet, Let see listen Pizza Hut Story from them! • • • • • • • • • • • • • • • • • • 1958 Frank and Dan Carney open the first Pizza Hut in Wichita, Kansas. 1972 1000 restaurants are open throughout the USA. 1973 Pizza Hut went international with restaurants in Japan, Canada & England. The first UK Pizza Hut opened in Islington, London.

1977 PepsiCo bought Pizza Hut. 1980 Pan Pizza was introduced. 1982 The UK joint venture started between PepsiCo and Whitbread. 1984 Over 50 restaurants so far in the UK. 1986 By now, there were 100 restaurants in the UK and 5000 worldwide. 1987 An average of one restaurant opened each week in the UK. 1988 The UK's First Delivery Unit was opened in Kingsbury, London. 1992 There were 9,000 restaurants in 84 countries. 1993 There were 300 restaurants and delivery stores in the UK. 1994 10,000 Pizza Huts were open for business. 1997 PepsiCo decided to focus on their drinks business.

As a result, Tricon Global Restaurants was born, creating the largest restaurant brand in the World. Tricon became the partner company with Whitbread. 1999 Pizza Hut had over 400 restaurants, employing 14000 people. 2002 Tricon Global became YUM! Brands Inc. 2006 Whitbread sold their share of the joint venture to Yum! Brands Inc. Pizza Hut UK Ltd was now 100% owned by Yum! 2008 We bought Godfather's Pizza in Ireland with 28 stores. Institute of Management Sciences, Peshawar Pakistan Page 5 Report and Marketing Strategies of Pizza Hut Pizza Hut's 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! " We are the employer of choice offering team members opportunities For Growth, Advancement, And Rewarding Careers in a Fun, Safe Working Environment. • P. E. A. R. L. S ? PASSION for excellence in Doing everything ? EXECUTE with positive energy and urgency. ? ACCOUNTABLE for growth in customer satisfaction and profitability. ? RECOGNIZE the achievement of others and have fun doing it. ? LISTEN and more importantly, respond to the voice of the customer.

Institute of Management Sciences, Peshawar Pakistan Page 6 Report and Marketing Strategies of Pizza Hut COMPARATIVE STRATEGY: This forced competitors to look for new methods of increasing their customer bases. Many pizza chains decided to diversify and offer new nonpizza items such as Buffalo wings, and Italian cheese bread. The current trend in pizza chains today is the same. They all try to come up with some newer, bigger, better, pizza for a low price. Offering special promotions and new pizza variations are popular today as well.

For example, chicken is now a common topping found on pizzas. In the past, Pizza Hut has always had the first mover advantage. Their marketing strategy in the past has always been to be first. One of their main strategies that they still follow today is the diversification of the products they offer. Pizza Hut is always adding something new to their menu, trying to reach new markets. For example, in 1992 the famous buffet was launched in Pizza Hut restaurants worldwide. They were trying to offer many different food items for customers who didn't necessarily want pizza.

Another strategy they used in the past and are still using is the diversification of their pizzas. Pizza Hut is always trying to come up with some innovative way to make a pizza into something slightly different different enough that customers will think it’s a whole new product. For example, let's look at some of the pizzas Pizza Hut has marketed in the past. In 1983, Pizza Hut introduced their Pan Pizza, which had a guarantee of being ready to eat in 5 minutes when dining at Pizza Hut restaurants. In 1993, they introduced the "Bigfoot," which was two square feet of pizza cut into 21 slices.

In 1995, they introduced "Stuffed Crust Pizza," where the crust would be filled with cheese. In 1997, they marketed "The Edge," which had cheese and toppings all the way to the edge of the pizza. Currently, they are marketing "The Big New Yorker," trying to bring the famous New York style pizza to the whole country. Lastly, Pizza Hut has always valued customer service and satisfaction. In 1995, Pizza Hut began two customer satisfaction programs: a UAN (in USA 1-800) number customer hotline and a customer call-back program. These were implemented to make sure their customers were happy, and always wanted to return.

In our plan, we will first give a situation analysis of current and relevant environmental conditions that affect our plan. Next, we will give a brief analysis of the current fast food industry, and any trends or changes that might occur in the future. Institute of Management Sciences, Peshawar Pakistan Page 7 Report and Marketing Strategies of Pizza Hut Institute of Management Sciences, Peshawar Pakistan Page 8 Report and Marketing Strategies of Pizza Hut ENVIRONMENTAL AND INTERNAL ANALYSIS OF PIZZA HUT In our visit to Pizza Hut we conducted research on PEST (Political, Economic, Social and Technological) Analysis.

In the internal analysis of Pizza Hut we have considered SWOT of the Company. PEST (Political, Economic, Social & Technological) i. POLITICAL ISSUES: Political issues include regulatory frame work operating in judicial system which may affect the business in different ways. There are not many political factors in Peshawar affecting Pizza Hut as is lack of competition. Factors such as laws on business employment, pollution and taxation apply on the organization which it has to follow regarding the rules. ii. ECNOMIC FACTORS:

If the county’s economy is better so the GDP of the country will be good, this is a green signal for the business as the per capita income of the people will be increased and they will spend more money. In our survey we came to know that most of the people in the beginning of the months spend more and they visit pizza hut very often. When the inflation rate increases the cost of raw material also increases and this leads towards high prices of the products and vice versa. iii. SOCIAL FACTORS: Pizza hut is a multinational and it is basically originated from America so the organization is overwhelmed by western culture.

There are social forms of society which consist of Upper class, middle class, middle upper class, lower class and lower class. Every country has cultural norms, values, beliefs and religion which can affect the organization. iv. TECHNOLOGICAL FACTORS: Now a day’s technology is improving so as baking and heating ovens will be of new and efficient technology and will provide efficient service. Due to new technology there are new ways of marketing like internet; telemarketing and the organization can advertise their products with much more faster pace.

Computer based customer data that is MIS (managing information system) helps in collecting customer data, daily transactions, future forecasting and decision making. New vehicles will make their service more efficient. Institute of Management Sciences, Peshawar Pakistan Page 9 Report and Marketing Strategies of Pizza Hut SWOT ANALYSIS: Every organization has its strengths, weakness, opportunity and threats. So, the SWOT analysis for pizza hut is as under: Strengths: Pizza Hut is the market leader in providing different products of pizzas as there are no competitors in this sector.

There good image makes the organization more strong. Pizza Hut is providing good taste, quality products with qualified staff, good atmosphere and hygienic environment. They are specialized in pizzas. Motivation level of staff is very high which make the organization more prosperous. They are ISO (International Standard Organization) certified. They have enough resources for operating different activities of the organization. They are providing free home delivery service. They have created monopoly in this sector.

Another big Strength and even a Competitive Advantageis the fact that they have a full service restaurant as well as delivery services. Most of Pizza Hut's competitors do not have restaurants. Because of the restaurant, Pizza Hut can market too many different segments that other pizza chains cannot. For example, Pizza Hut can market to families much easier than Domino's or Little Caesar's. Weaknesses: However, the fact that Pizza Hut does have a restaurant to run is also a weakness. Pizza Hut has higher overhead costs, due to the restaurant that other competitors don't have to deal with.

Another result of higher overhead costs is higher prices Pizza Hut must charge. Obviously, Pizza Hut is not the low cost producer. They rely on their quality pizza and good service to account for their higher prices. They are providing less range of products comparatively with high prices. They are more focused on Western taste instead of Eastern. Opportunities: New markets can be explored and new opportunities they can gain. Pizza Hut can come up with the new products considering the Eastern taste of the people as like McDonalds. Diversification of new products can increase their market share.

They can reduce their prices because of more resources. Threats: Pizza Hut's number one threats are from their competitors. Currently, Their closest competitor is Domino's Pizza who is working to open their Branch at Karachi. Domino's main competitive advantage over Pizza Hut is their Lower price. ii. Little Caesar's who is establishing their self in India and might move to i. Institute of Management Sciences, Peshawar Pakistan Page 10 Report and Marketing Strategies of Pizza Hut Pakistan is another one of Pizza Hut's competitors, right behind Domino's in market share.

Little Caesar's is famous for offering large quantities of pizza for less money. iii. New entrance like Dominos pizza in Pakistan market can affect their market share. iv. Other local restaurants can affect their market share by providing pizzas with lower price. v. Social factors can affect their image as a Western organization. SEGMENTATION: Main segments which Pizza hut has captured are the combination of higher incomes and dual career families , due to higher income consumer have more disposable income , allowing them to eat out more often.

Pizza Hut holds the most market share in the Pizza industry, the perceived quality and service of the company will help to ensure a better the average chance at a successful introduction of a new product. The introduction of a product that keeps with today trends is also important to reduce the risk of failure. Pizza Hut maximum market segment is younger generations. These generation ranges from 12 to 30, the overall spending of these generations is mostly on non essential items, the higher amount of spending has been done on eating out.

POSITIONING Pizza Hut was among the first multinational brands to enter the food retail sector in Pakistan. When the first Pizza Hut restaurant opened in Karachi the quick service industry was at a nascent stage and the pizza category was dominated by a sole regional player who had a marginal presence. Pizza Hut went on to play a significant role in pioneering and developing this category in Pakistan. Worldwide and in Pakistan, Pizza Hut has come to become synonymous with the 'best pizzas under one roof'.

This is because at Pizza Hut the belief is that every pizza has its own magic, thus making it a destination product – which everyone seeks. It is this belief that has ignited the passion to create, innovate and serve the finest product the industry has to offer, while setting standards for others to strive to replicate. Pizza Hut is committed to providing uncompromising product quality, offering customers the highest value for money and giving service that is warm, friendly and personal. Institute of Management Sciences, Peshawar Pakistan Page 11 Report and Marketing Strategies of Pizza Hut.

A critical factor in Pizza Hut's success has been its unique dining experience. Crew members at Pizza Hut strive each day to provide 'CUSTOMER MANIA' - the kind of service that ensures that every visit of the customer is a memorable one. Pizza Hut's constant endeavor to provide extra value – whether it is pizzas which are available to suit every price range, new promotions or the introduction of innovative product ranges - that puts a 'Yum' on every customer's face - has allowed it to increase its presence in Pakistan to the current 38 restaurants across 9 cities.

Institute of Management Sciences, Peshawar Pakistan Page 12 Report and Marketing Strategies of Pizza Hut Market Targeting: Pizza hut targeted market defines them as a family product. This is because they don’t really directly market their customers. They are target everyone whereas their competitors target a certain gender or age. But pizza hut targets a wide range of customers. This is because they want to make the most money and who blames them. They have many competitors and they are bound to try everything to cope up tops. Their competitors are everywhere.

There are just a few that are main competitors and pizza hut will always try to be the best and get the most money by making their products better quality but also cheaper. They try to offer something different with their product as well. They offer a range of stuffed crusts to try and attract customers. They also do vegetarian options with meet free pizzas and a salad and pasta bar. Not a lot of restaurants offer a salad and a pasta bar. This is another competitive idea to attract or customers. STRATEGIES ADOPTED BY PIZZA HUT:

A business's strategy is the pattern of decisions and actions that are taken by the business to achieve its goals. A business has a variety of goals and objectives. All businesses need to organize their business activities in order to achieve their business objectives. Running a business involves planning the current as well as future activities. Hence, in order to achieve the business objectives, all business organizations adopt different strategies. Similarly, Pizza Hut has adopted many strategies which help achieve the targets set by the main office to the local store opened at Peshawar.

Changes are the external as well as internal environment has led Pizza Hut rethink their past strategies and has therefore designed new strategies after noticing the changes in the environment. These environmental changes are seen through the PEST and SWOT analysis. After considering all the factors Pizza Hut has decided upon the strategies and their current strategies are divided into five main categories and further have sub-parts. These strategies are: - Functional Strategies: These are strategies designed to improve the efficiency of a business's operations.

They often focus on an area, such as marketing, human resource etc. All business organizations adopt strategies at functional level as once the functional objectives are achieved, corporate objectives become easy. In order to make the functional strategy efficient, Pizza Hut has made all the functional departments co-operate with each other. Institute of Management Sciences, Peshawar Pakistan Page 13 Report and Marketing Strategies of Pizza Hut Total Quality Management (TQM): This is the most important for a food chain like Pizza Hut. All the employees’ backof-the-house i. e. the kitchen assistants are trained accordingly.

They are given extra classes in order to meet the quality standards set by Pizza Hut around the world. This strategy is important in order to satisfy the CHAMPS. This strategy is strictly implemented in Pizza Hut in order to fulfill the quality standards. Different quality management staff is also there at Pizza Hut. The shift managers have the task to observe whether the quality standards are met or not, whereas there are a total quality management department at the main office in Karachi. This department has the task to implement quality standards and know whether they are achieved or not.

Business Level Strategy: Business level strategies are plans made to gain a competitive advantage over its rivals in a market. Hence, all the businesses need to adopt business level strategies in order to compete in a competitive environment. If we take a look at the Pakistani market, there are no large competitors of Pizza Hut but unlimited small competitors exist in the market. The threat of competitors is very low as there is no international food chain offering pizza in Pakistan at present. Therefore, present strategies adopted by Pizza Hut are keeping in consideration the present competition.

Whereas, in future this competition will increase and Pizza Hut will have to change all its business level strategies in order to compete with its rivals. In very near future Dominos is opening its first branch in Karachi. This would be a threat for Pizza Hut and hence, the strategies would be changed. Pricing Strategy: The level of competition a business faces determines its pricing strategy. Sometimes a business has the scope to set its price and sometimes a business cannot. When a business has the scope to set its price there is a number of pricing strategies or policies it might choose.

As there are no such competitors of Pizza Hut which could compete with the quality of pizza produced at Pizza Hut, therefore, the pricing strategy adopted by Pizza Hut is 'market skimming'. Pizza Hut has adopted this pricing strategy as they want to hold maximum share of the market by maximum profit. This is a golden era for Pizza Hut, as there are no competitors and hence, Pizza Hut is free to charge any price they want. They are charging higher prices due to the uniqueness of the product. They satisfy the target market as the food quality is worth the price paid.

The pricing strategy is not just to get the worth Institute of Management Sciences, Peshawar Pakistan Page 14 Report and Marketing Strategies of Pizza Hut of quality but also to gain maximum profits before any competitor enters because then Pizza Hut will have to change its pricing strategy. Although the prices would be lowered with the new entrants in the market but not to a greater extent as the quality food products are not home-produced. They are imported from different countries keeping in view the best quality. Institute of Management Sciences, Peshawar Pakistan Page 15 Report and Marketing Strategies of Pizza Hut

Market Share: As there are Dozens of Pizza Suppliers Globally Providing Services in different part of the World, but Pizza Hut is the One who got the Bigger Market Share Globally. This is the Survey taken by www. survey. com that Pizza Hut is having 48% of Overall Pizza Market in the World. After that Dominos is leading with a percentage of 20% while the rest 32% is divided in the Remaining Pizza Providers Globally. MARKET SHARE OTHERS 32% PIZZA HUT PIZZA HUT 48% DOMINO'S OTHERS DOMINO'S 20% Institute of Management Sciences, Peshawar Pakistan Page 16 Report and Marketing Strategies of Pizza Hut FOUR P’S OF MARKETING.

PRODUCT: Product refers to the actual program you are planning. The goal of pizza hut is to develop the best product with the resources available. Pizza Hut sells pizzas in four different sizes: personal (an individual serving), small, medium and large, though most stores have done away from with the small size. A variety of toppings are available, plus "specialty" styles, including Meat Lovers, Pepperoni Lovers, Cheese Lovers, Veggie Lovers, Double Cheeseburger, Supreme, Super Supreme and the newly introduced Pizza Mia.

The pan pizza has a thicker crust than most other commercially available pizzas .so their products have help them to retain their customers and to increase them . they provide their customers with complete nutrition plan and healthy food is guaranteed. The nutrition plan also clearly tells diabetes patients can use what range of food at pizza hut. Over weight patients are also satisfied and the pizza with less cholesterol can be ordered.

This encourages the customers to visit pizza hut rather than going elsewhere. As pizza hut has to boost its sales in the existing markets, so they the new food products are introduced in all branches line-by–line because all branches are operated in co-operation with one another.

Different products for different regions are also developed as there are choice differences. Pizza hut offers a long list of products and never afraid to offer new products like in Peshawar according to market they introduce the very first "Chapli Kabab Pizza" which was very healthy product by Pizza hut in this region. There are a lot many products according to different geographical places. Like in India they have got there vegetable pizzas, which has a large market there BUT not the Cow Meat Pizza. Institute of Management Sciences, Peshawar Pakistan Page 17 Report and Marketing Strategies of Pizza Hut.

PRICE: . As there are no such competitors of Pizza Hut which could compete with the quality of pizza produced at Pizza Hut, therefore, the pricing strategy adopted by Pizza Hut is 'market skimming'. Pizza Hut has adopted this pricing strategy as they want to hold maximum share of the market by maximum profit. This is a golden era for Pizza Hut, as there are no competitors and hence, Pizza Hut is free to charge any price they want. They are charging higher prices due to the uniqueness of the product. They satisfy the target market as the food quality is worth the price paid.

The pricing strategy is not just to get the worth of quality but also to gain maximum profits before any competitor enters because then Pizza Hut will have to change its pricing strategy. Although the prices would be lowered with the new entrants in the market but not to a greater extent as the quality food products are not home-produced. They are imported from different countries keeping in view the best quality. First, this pricing strategy will help segment the market. Different groups of customers are willing to pay different prices for the same product.

The high/low pricing strategy will also create excitement. The pricing strategy adopted by Pizza Hut is 'market skimming'. Pizza Hut has adopted this pricing strategy as they want to hold maximum share of the market by maximum profit. This product will emphasize product and service quality PLACE/DISTRIBUTION: It refers to the best place to offer program. That is the place where it is located and through what channels are we distributing programs and the competitive advantage lies in distribution. The pizza hut Peshawar is situated out of the market area near Army Stadium and Shami road.

This site has been chosen keeping in view the following factors. It is in an out of centre location on retail or Leisure Park with good parking accessibility. Secondly the catchment area is of a specified minimum size and within a given drive time to the site. Distribution The type of distribution channel used by Pizza Hut is the direct channel. The direct channel is successful when there is an extremely large market that is geographically dispersed. The direct channel is also useful when there are a large number of buyers, but a small amount purchased by each.

Pizza Hut uses three different methods of selling its products directly to the market. Institute of Management Sciences, Peshawar Pakistan Page 18 Report and Marketing Strategies of Pizza Hut i. The first method of distribution used by Pizza Hut is Home. Office delivery. Customers can call Pizza Hut ahead of time, place an order, and the order is delivered to the customer's home. can go to the nearest Pizza Hut, place an order and either leave with the order or eat at the restaurant. One of Pizza Hut's largest competitive advantages is its restaurant style facility.

Pizza Hut offers a clean place to sit down and enjoy the variety of pizzas, salads, and sandwiches in a fun, family atmosphere. ii. Another method of distribution is for customers to dine-in. Customers iii. The third method of distribution is to order Online. Selective County Customers can now go on the Internet and place an order for Pizza. This method is useful because it allows customers to view the entire menu, download any special coupons, and order without having to disclose any credit card numbers. Institute of Management Sciences, Peshawar Pakistan Page 19 Report and Marketing Strategies of Pizza Hut PROMOTION:

The objectives of promotion are to introduce a new product, stimulate demand, change the short-term behavior of the customers, and encourage repeat or greater usage by current customers. Pizza hut uses many promotional strategies. The main promotion is a coupon to purchase. This promotion is also distributed mainly by mail, but also by fliers on college campuses around the country in order to reach the target market. They are using billboards on main stream places to get there customer. They are also distributing door to door brochures to capture more and more customers. Pizza huts also using marketing techniques.

These are the strategies Pizza hut is using for its marketing. Pizza huts try's to attract the younger generation as their main market segment. Apart from this Pizza Hut is using intense marketing strategies they are also giving ads in magazines. Advertising camping will creates awareness of the products in our target markets. Institute of Management Sciences, Peshawar Pakistan Page 20 Report and Marketing Strategies of Pizza Hut CONCLUSION Pizza Hut has many targets which it has achieve in a given period of time. The time-period is mostly a year. Therefore, in order to fulfill the targets different strategies are adopted by Pizza Hut.

It can be concluded that these strategies have been successful and there is flexibility in the strategies, as they can be changed with the changes in the market conditions as well as the targets. Institute of Management Sciences, Peshawar Pakistan Page 21 Report and Marketing Strategies of Pizza Hut

REFERENCES Mr. Amir Zeb, Shift Manager, Pizza Hut, Peshawar Mr. Hamad Zeb, Shift Manger, Pizza Hut, Peshawar Lower staff of Pizza Hut, Peshawar Google Search Engine www. definitions. com www. answers. com www. about. com www. wikipedia. org www. pizzahut. com Institute of Management Sciences, Peshawar Pakistan .