Pizza Hut Restaurants Chain within the UK Analysed with Marketing Mix Elements - Assignment Example

? xxxxxx No. 123456 Pizza Hut Restaurants Chain within the UK Analysed with Marketing Mix Elements ABC of XYZ Department of xxxxx xxxxx 20 May, 2013 (Total words: 2492) Table of Contents Contents Page No 1. Introduction 03 2. Pizza Hut Marketing Mix 04 2.1 Product 04 2.2 Price 05 2.3 Place 06 2.4 Promotion 06 2.5 People 07 2.6 Process 08 2.7 Physical evidence 08 3. Target Markets 08 4. Conclusion 10 Appendices 12 Appendix-I: Pizza Eating Trends in UK Population 12 Appendix-II: PESTEL Analysis 13 Appendix-III: SWOT Analysis 15 Bibliography 16 1. Introduction Marketing is a full time dedicated task which involves complicated processes depending upon the nature of business. Along with dedication, it requires preparation, money and time to execute. An effective marketing plan enables the company to use its assets in productive way. This paper deals with the marketing mix of Pizza Hut. It was 1958, when two brothers Dan and Frank Camey established the Pizza Hut in Kansas. After passing several phases, today the chain is one of the well-established pizza chains of the world. Pizza Hut is the world’s leading pizza chain presently operating approximately at 13,000 locations in more than 90 countries. The chain, started by only two brothers, today has links in more than 90 countries across the world with more than 30,000 employees are working day and night (Yahoo Finance). Today it is entertaining more than 171,000 customers by serving 97,000 pizzas per day in the United Kingdom alone. Financially, Pizza Hut is one of the largest pizza chains as in 2007; it sold 35.4 million pizzas in the UK. During 2010, among other companies of Yum, Pizza Hut went from worst to first in its value ratings (Yum Annual Report, 2010). Pizza Hut provides a huge variety of pizza items in different tastes and flavours which is comprised of its flagship Pan Pizza, stuffed crust pizza, Sicilian Pizza, pasta, snacks, and diversified nature of soft, hot and cold beverages. Beside these items, the chain also offers salads, pasta, and sandwiches. The new Pizza Hut branch will operate at Cambridge, therefore, in order to attract the young generation and student of Cambridge University, Pizza Hut is going to introduce ‘Youth Pizza’, one of the most appealing pizza of the company’s history. The main objectives of new Pizza Hut Restaurant are listed below. To attract the target market by producing innovative products of extra-large size of pizza and other items and make them to remain loyal with the Cambridge restaurant To collect a fairly healthy amount of revenue so that restaurant remain in competition To catch a preferable double figure profit margin To create an innovative, peaceful, respectful, and enthusiastic working environment To make and maintain strong customer relationships with local community to gain their loyalty on permanent basis 2. Pizza Hut Marketing Mix Pizza Hut will carry out its operations by introducing and developing innovative products in rapidly changing local fast food industry. The new restaurant will invest heavily in research to discover the innovative trends and demands through public surveys and questionnaire. By compiling a substantial database, necessary improvements will be done and therefore Pizza Hut will ensure that it will pay attention to its customers’ need and their demand regularly. A trend of UK customers to eat the pizza food is presented in the chart as Appendix-I while the external and internal factors which may affect the performance of Pizza Hut are discussed in Appendix-II and Appendix-III as PESTEL analysis and SWOT analysis respectively. 2.1 Product Pizza Hut Restaurant has a well sorted plan to launch exclusive products to remain prominent from the style of other competitors of UK fast food industry especially in Cambridge. The menu of Pizza Hut will be centered on a variety of dishes that will include a variety of burgers and pizzas, Cheesy Bites, Stuffed Crust, French fries, chips, snacks, and a variety of sauces and salads. The most attractive items of the menu will be its tasty and diversified pizzas especially a new large size Youth Pizza. This pizza will be larger than the competitors as it would be of twenty inch pizza and in order to attract the youth customers, it will have twice the toppings that the competitors don’t have. One of the main objectives behind the introduction of Youth Pizza is to create recognition for new products. Pizza Hut has the target to gain 85% recognition of this product in the primary market. This recognition will lead the restaurant to achieve its strategic objectives i.e. to increase the revenue and profit. The new restaurant has made the assumption that the marketing of Youth Pizza and other products will support it to increase the overall sales by 20% in next two to three years. Pizza Hut will offer excellent services as well. The leading service and goal of each staff member will be the customer satisfaction. Youth Pizza will provide a competitive advantage to Pizza Hut because this will be the first pizza of the company to attract the local youth. The restaurant will have a distinct and eye catching slogan as ‘fresh and full of life fast food’. Since the restaurant will also operate on take-away strategy, therefore, the packing of food will have attractive slogan especially to the primary target market i.e. young generation. 2.2 Price Traditionally Pizza Hut applied high/low pricing strategy to compete its competitors in terms of price war. It’s really a unique way of pricing the products i.e. for a product which is above the competition; Pizza Hut will set a competitive price in Cambridge but by promoting the product for extra sale, it will also reduce its price less than the competitors. Pizza Hut will set a little high price for its new large size Youth Pizza. The main reason of setting high price is to create curiosity among the young generation to have an experience of such an extra-large pizza. Special discount and concession will be offered for orders of more than ten pizzas because discounts and lower prices significantly contribute to create loyalty among the customers (Borg, 2009). Along with pizza items of different sizes and flavours, the barbecue, salmon, grilled chicken breasts, and related products will have a significant impact on the general deliciousness of its distinguished products. Extra sauces will be individually available with price of 50% of food cost. Students will enjoy a special discount of 10% of all food items except the soft drinks and wines. Similarly the restaurant will provide a special 05% discount rate for foreign tourists and advance orders worth more than $500. 2.3 Place Pizza Hut will be established close to University of Cambridge, therefore, the restaurant will arrange the traditional direct channel distribution strategy for its products especially the Youth Pizza i.e. either home delivery, or dining in at the restaurant or ordering online. Within the value factor, teamwork is the core and the value and belief system will be carried out daily within HR practices. The overall structure of Pizza Hut will rest on its traditional value and belief system, which comprise of serving customers, respecting individuals, aiming and striving to achieve excellence. Therefore, Pizza Hut will establish certain small outlets along the grounds and parks to offer the sportsmen and body builders with high quality of healthy food. It also has the plan to provide home delivery service at reasonable rates. The main restaurant will offer breakfast early in the morning and will remain open till 2400 hours at night. However, its temporary outlets will operate according to nature of environment. 2.4 Promotion Although formulating of marketing strategy is tough, however the successful execution of this strategy is even more difficult task (Hrebiniak, 2006). Promotion is another essential part of marketing strategy. Over the years, Pizza Hut used number of ways to make the people more aware about its products and services. Basically Pizza Hut will use Hierarchy-of-Effect Model for its continuous advertising campaign. The Hierarchy-of-Effect Model is considered as the predominant model of advertising because it elaborates the goals of advertising without any ambiguity. This model presents six steps which marketers do to facilitate the consumers for the purchase of a product or service. These steps include awareness, knowledge, liking, preference, conviction, and purchase (Clow & Baack, 2007). In order to execute the promotional campaign, Pizza Hut will consult the media including television, radio, billboards, and internet. It is quite possible that consumers might have good awareness of the product, but have no good idea about the brand. Therefore, Pizza Hut will use numbers of slogans to put and leave a durable impression on people’s mind and make them to move and visit its Cambridge branch. The website of Cambridge restaurant will offer separate links to its consumers to enhance their knowledge, awareness and conviction about the taste and quality of its products. Additionally it will also apply some other techniques to promote its products like red painted roof, billboards, songs, and seminars as well. 2.5 People Since well-trained and professional employees are obligatory for the success of a company, therefore, Pizza Hut arranges a proper training program for each and every employee so that he or she may be able to handle the customers effectively through efficient communication and inter-personal skills. The staff of Pizza Hut at Cambridge branch will consist of restaurant managers, delivery crew members, and other related staff. Since a lot of students belong to India, China, and other Asian countries study in Cambridge, therefore, Pizza Hut will offer part-time jobs to the foreign students as delivery crew members while full time vacancies will be offered through newspapers and online advertisement. Therefore, Pizza Hut will apply polycentric staffing policy because by this strategy, host country citizens are deployed as subsidiaries while key staff is appointed from parent-country (Hamblin, 1974). 2.6 Process The operational activity of Pizza Hut will start just after the placing of order by customer. The kitchen will be ready to take the first step by cooking the frozen food material. Then the frozen food will be processed through oven and grills. In the next step the cooked food will be supplied to counter from where either it will be served to the customers on their table or will be delivered to them to take it away. 2.7 Physical Evidence Pizza Hut is an international company which has a worldwide restaurant chain throughout the world. Neat and clean interior, peaceful environment, quality of pizza items and other products, and speedy execution of customer dealing process are the hallmark of Pizza Hut and the company will put a special emphasis to maintain the same standards in Cambridge branch as well. According to its standard environment, Pizza Hut will also arrange background music in its dining halls and amusement areas for children. 3. Target Markets United Kingdom is the leading country in terms of consuming the fast food items including pizza. According to a report of Datamonitor, the UK fast food industry generated revenue of $2.2 billion in 2008 with growth of 5.2% (Datamonitor, Aug 2009). The leading companies of fast food industry are McDonalds, Domino, KFC, Burger King, and Pizza Hut which offer variety of products to the customers like burgers, pizza items, shawarmas, French fries, snacks, pasta, coffee and tea, soft drinks, and other beverages. The diversified cultures of UK along with various cultural tastes as well as different age groups have put a significant impact on pizza industry. The UK whole population consists of 19% of age less than 16 years, 65% between 17 to 65 years and 16% of over 65%. Cambridge total population is 122,700, which is currently ranked as 64th in UK. The 16.4% of its population consists of under 18, 69.7% belong to age group between 19 to 60 years, while rest of 13.9% are over 60 (Statistical Profile, 2011). The racial makeup of Cambridge consists of 73.5% of White British, 1.1% of White Irish, 7.1% of white others, 2.4% of Mixed Race, 8.4% of British Asian, 4.3% of Chinese and others and 3.1% of Black British (Wikipedia). The strength of college and graduate students is 22,580 while per capita income in Cambridge is $67,297 (Statistical Profile, 2011). The University of Cambridge established in 1209, is the 2nd oldest university in UK and 4th oldest in the Europe. The university consists of 18,448 students (undergraduate 12,077 and postgraduate 6,371) and 9,141 employees. The student strength of Cambridge University is about 14.75% of the total population of the city. By 2016, the population of the county is expected to increase by 12.5% while the UK population is expected to increase by 12% in 2031. The city of Cambridge is one of the most attractive places for tourists. Almost 4.58 million tourists visit this city annually out of which 29.5% are foreigners (Cambridge City Council). In terms of target market, Pizza Hut stands for anyone who wants to eat healthy food. UK public has more appeal toward fast food on weekends because most of the leisure and mall activities are planned on these days as shown in Appendix-I as well. The target market of Pizza Hut Restaurant will consist of customers of different categories. Pizza Hut will focus on young generation as the primary target market especially the students of Cambridge University and other colleges. More than 18,000 students of Cambridge University and Anglia Ruskin University will be the main target market for Pizza Hut Restaurant because most of the students are habitual of eating their lunch inside the shopping malls or on fast food points. Residential population and working class of Cambridge along with its neighbouring areas would be the second potential target market. Cambridge is full of shopping malls and super-markets and about 35,000 people work in these markets and malls. Majority of these people take their lunch from fast food restaurants or points. On weekends the residential population spends its leisure time by enjoying fast food from these restaurants. Lastly, the old City of Cambridge is a special attraction for tourists throughout the world. Almost 4.58 million tourists from all over the world are some sort of special target market for Pizza Hut. 4. Conclusion Pizza Hut is a well-established fast food chain and globally recognized for its brands. In order to make improve its market share in UK and especially in Cambridge, the following points are recommended to be followed. Pizza Hut should spread its chains beyond the big cities of UK. Along with serving of international brands, Pizza Hut must incorporate the local and popular brands in its menu. In order to be less dependent on suppliers or other external agencies, Pizza Hut must establish a vertically integrated structure in the organization. The development of strong supply chain will produce considerable results. Special social evenings and packages must be arranged for young generation especially for the students of Cambridge University. It will enhance the traffic and publicity of the products including the Youth Pizza. Appendices Appendix-I Pizza Eating Trends in UK Population Appendix-II PESTEL Analysis The PESTEL analysis is a tool that is used to identify the key drivers of change in the strategic environment (Johnson et al., 2008). These factors include political, economic, social, technological, legal, and environmental factors. UK government has enforced the new rules related to GM (Genetically Modified) labelling since April, 2004. The main reason behind the GM labelling is to update the customers regarding the ingredients of food either genetically modified or not. The government has also announced its nutritional regulations for school children as “new standards for school food” in 2006. The fast food industry is highly affected by the implementation of Goods & Service Tax (GST). As a result, prices have been increased in fast food market. This is the reason that industry focuses more on service than product stating that the customer will not get such type of services in their homes to differentiate them. Like many business fields, pizza hut industry is also directly proportional to stable economy of the country. During last few years, the fuel cost has risen tremendously throughout the world due to recent global recession as well as war in Iraq and Afghanistan (http://www.whatmattersweblog.com). Further the decline of GDP might be a serious concern Pizza Hut as GDP dropped significantly from 3.9% in 2000 to -4.9% in 2009 (CIA, The World Factbook: United Kingdom, 2010). Pizza restaurants correspond significantly to the busy lifestyle of UK public because they provide quick services in convenient environment. One significant change is that people are becoming more health conscious and preferring healthy food as obesity is widely recognized issue in UK. Technological factors really boost up the production, preparation and sales in fast food industry. These advancements include the online booking of orders, seat reservations in restaurants, and cost synergies from the industry consolidation. For example McDonalds has introduced Electronic Funds Transfer at Point of Sale (EFTPOS) which accepts debit or credit cards from customers at the time of their purchase. Similarly some other examples include induction of computerised system of placing order, billing, and online promotion of products etc. Pizza restaurants have a great deal with meat of animals. Therefore, mistreatment of animals in slaughter houses is a serious concern in fast food industry. These restaurants are also sources of emission of greenhouse gases to the atmosphere; therefore, European Union and UK governments as well as Environmental Protection Agencies (EPAs) have strict rulings. It is very important for pizza industry to follow the Health and Safety guidelines associated with food. In the interest of general public, Food Standard Agency (FSA) imposes the regulations in UK. Appendix-III SWOT Analysis Strengths Trademark leader in the UK and part of world’s largest pizza restaurant chain More than 20,000 franchises across the globe Variety of innovative pizzas Source of attraction for each age group of customers especially the youth Food attracts people of various ranges from young to old Strong strategic resources and sound international turnover Weaknesses Development of negative feelings among loyal customers that standards of Pizza Hut are declining Complex computer systems and internal conflicts between franchisees Lack of organic pizzas may limit the target market Higher prices of products because of higher overhead costs Opportunities New products and brands with different flavors and crust sizes Venturing into new markets Pizza Hut targets upscale products and a downscale consumer base Introducing menu of UK market plus bolstering the sales by launching the old favorite menu Threats Rising prices of cheese threaten the net profit Traditional rivalry from Domino Pizza Competition with McDonald’s that has introduced a new pizza named McPizza Rising competition undermines Pizza Hut as consumers go for more options Bibliography Borg, E. (2009). The marketing of innovations in high-technology companies: a network approach. European Journal of Marketing. 43(3-4), pp. 364-370. Cambridge City Council. Retrieved on 12th May 2013, available at < http://www.cambridge.gov.uk> CIA, The World Factbook: United Kingdom, (2010) . Retrieved 21 May, 2010 Clow, K. E. & Baack, D. (2007). Integrated advertising, promotion, and marketing communications 3rd Edition, Pearson Education. pp. 165-171 Datamonitor (August, 2009). Available on < http://www.datamonitor.com/store/News/pizza_hut_delivering_reduced_fat?productid=72B551D7-A55A-449A-935F-90E7E56EC111> Hamblin, A. C. (1974). Evaluation and control of training. Maidenhead: McGraw-Hill Book Company Hrebiniak, L.G. (2006). Obstacles to effective strategy implementation, Organizational Dynamics, 35, 12-31 Johnson, G., Scholes, K., and Whittington R. (2008). Exploring corporate strategy text cases, 8th Ed, Prentice Hall, London. Statistical Profile (2011). Demographic, Socioeconomic, Land Use, Education, and Cambridge Community Development Department: 2011 Wikipedia. Retrieved on 17 May 2013 available on Yahoo Finance. Retrieved on 12th May, 2013 available at Yum Annual Report, 2010. Retrieved on 13th May, 2013 available at < www.yumindonesia.org/content/pdf/Annual_Report_2010> Read More