Pizza Marketing Mix Project

In focus: Domino’s Pizza Australia

Introduction

Pizza is a popular, competitive product and this paper investigates Product, Promotion and Place applications within the industry and between competitors.

As one of Australia’s top five meal solutions, the Pizza segment of the Fast Food industry (known as ‘Quick Service Restaurants’) in Australia is majority represented by three known brands: Eagle Boys, Domino’s Pizza and Pizza Hut.

As the largest quick service pizza restaurant, Domino’s Pizza Enterprises Limited (Domino’s Pizza) is the largest franchise for the Domino’s brand in the world; holding more network stores and sales than any other competitor in Australia. This paper focuses on the Australian operation of Domino’s Pizza.

With humble beginnings in Red Hill, Brisbane, Australia as Silvio’s Pizza in 1978; the company achieved considerable growth and purchased the master franchise of the international Domino’s brand in Australia and New Zealand in 1993. Now, with more than 845 stores across Australia, New Zealand, France, Belgium and The Netherlands, this Domino’s franchise practices a focused vision across all facets of the marketing mix: ‘to be number one in people and number one in pizza’. (The Facts, 2010)

This paper investigates and discusses the application of marketing theories that support current practices of this dynamic, competitive and established company.

Please Note: there are only three members in our group, this paper does not investigate or discuss Domino’s Pizza Pricing strategy as approved in class.

Product Theory

As one of the most recognised food brands in the world, Domino’s Pizza product and branding strategy is imperative to their success. Offering a product (fast food) and service (delivery) the corporate concepts and adopted theories behind the Domino’s product and branding apply equally. The Domino image and highly recognised slogan ‘It’s all good’ are consistent themes of the company’s branding. (The Facts, 2010)

Product and Branding theory are concepts that can be applied to commercial business practice to assist in developing effective strategies that provide direction and support business marketing objectives. (Chitty et al., 2011) Relative theories that relate to Domino’s Pizza are outlined in the following table:

Table 1.0 Product & Brand Theory

Authors Product & Brand Theory AttributesKerin, Hartley, Rudelius

Product Life Cycle Helps a company determine where their product/s sit within a commercial life cycle, relative to competitor’s and revenue.

Armstrong, G, Kotler P

Product Differentiation Strategy (Reference: Chamberlin, E. 1933 and Porter, M.E. 1985)

Company communicates selling points/product benefits that differentiate their product from competitors and their own other brands to their target market.

Porter M.E Value Chain Offer value and additional products/service at each selling point/activity in sales cycle.

Solomon, Hughes, Chitty, Fripp, Marshall, Stuart

Brand Equity A brands value; and their consumer brand resonance. Helps companies identify loyalty.

Products in the fast food industry move quickly through the product life cycle. Domino’s consumers are looking for fresh, convenient and fast food; they are also looking for new menu options to refresh their menu choices. For these reasons, new product development is imperative to the consistency of customer patronage and the on-going success of the Domino’s brand.

An outstanding product, excellent service and a positive image are at the heart and soul of Domino’s Pizza product and brand strategy. Domino’s Pizza offers a convenient, tangible product against a limited product line that can be defined by the following three levels:

Table 2.0 Domino’s Product Definition

Core Product The core product of Domino’s Pizza is fast food.The consumption of their core product fulfills a customer’s primary need, hunger – fast!

Actual Product The actual Domino’s product includes:- Proximity of stores to consumers (including delivery area)- Packaging of the product (delivery bags to keep pizza warm)- Quality of ingredients: fresh, real- The Domino’s Pizza brand: known, established, trusted

Augmented Product

The augmented product is the Domino’s competitive edge. The speed and professionalism of their customer service at each touch point: over the phone, in store, when delivered. Simply; they provide fresh, hot pizza. Timely delivery, better ingredients than competitors, tastier food, nutritionally balanced, healthy options are all augmented product offerings.

Now one of the largest pizza chains globally, Domino’s Pizza’s international presence has helped build a strong brand platform that remains a key differentiating strength in the Australian market place. Adapting the above-mentioned theories into strategic marketing campaigns will help Domino’s maintain a mix of competitive product offerings (product differentiation strategy) against existing products and the introduction of new products (product life cycle) whilst offering added value at each customer touch-point i.e. fresh products, made to order pizza, delivered hot and fresh (value chain). Each of these theories assists Domino’s in maintaining the equity and value of their brand.

Product Practice

Domino’s Pizza offers a number of sub-brands as stand-alone products that can be further explored through the following table:

Table 3.0 Product & Brand Practices

Products Product & Brand Practices

Attributes

Pizza Offer different ranges:- Value- Traditional- Premium - Make your Own

Simple ordering options, delivered fresh and hot, use premium fresh ingredients.

Pizza Subs Offer different range:- Value- Traditional- Premium- Make your Own

Alternative pizza product not offered by competitors. Link as alternative offering to popularity of fast-food sandwich chains (i.e. subway)

Pasta Simple, popular pasta dishes.

All made fresh to order, healthy options available: downloadable menu and nutritional information available on site.

Side Dishes Additional menu options for purchase –

Entrée and desert options – customers have access

opportunity for upsell. Often publicised as an add-on to promotional offers.

to all menu options at one place.

School Pizzas Healthy Pizzas based on menu favourites: reduced fat and sodium; Easy Ordering; specific packaging – one ¼ slice per box.

Have ‘Amber Rating’ from Healthy Kids Association. Partnership with schools and canteens to raise money.

Following a successful yet risky and widely publicised, global marketing campaign; ‘The Pizza Turnaround’ by Domino’s Pizza US, the global Domino’s brand and product quality of each Domino’s sub-brand is now stronger than ever before.

‘The Pizza Turnaround’by Domino’s Pizza USA

www.pizzaturnaround.comThe Process Domino’s hosts focus groups around the US for consumer’s

perception of the quality of their product.Domino’s collates and embraces comments and launches a new internal strategy to listen to and create a new pizza as a result of these comments.Domino’s releases these comments to the public and launches their ‘new pizza’ to the market

The Claims ‘We made mistakes’‘We have changed’‘Please try us again’‘We have learnt from our customers comments and changed our product’‘Far more delicious’

The Results Domino’s Pizza listened to their customer feedback and publicly stated so. Word of Mouth is a great marketing tool: Domino’s embraced this marketing practice to improve their product. Produced a re-vamped ‘New Pizza’Fresh Ingredients

Branding Benefits

Releasing a public campaign with a strong following on Social Media sites has re-introduced the Domino’s brand to consumers; increasing their presence in the fast food industry.

“Our Commitment to lifting the taste and quality of our ingredients couldn’t be stronger than it is right now”. (Annual Report, 2010)

Following the success of the Domino’s USA campaign and to maintain their standing in such a competitive Industry, Domino’s Australia practice a simple corporate strategy: a commitment to the taste and quality of their product. (Annual Report, 2010) Domino’s have listened to changes in the external environment, particularly, the focus on healthy fast food alternatives and reacted with healthier options; by decreasing salt and saturated fat contents on their products. In referencing Porters Differentiation Strategy, Domino’s has launched a new product line that differentiates from their usual pizza product offerings, developing a new brand and product that appeals to health conscious customers, thus expanding their target marketing.

Table 4.0 Competitor Response: Implementation of New Product & Brand Practices

Brand Product & Brand Practices

Attributes

Good Choice Range Part of ‘Ongoing Commitment’

Nutritionally Balanced

Serve great choice and top quality products for customers

Calorie Controlled

Healthy Option Low in salt, low in fatCelebrity Endorsement: Shannan Ponton, The Biggest Loser

Healthy appeal, follow-on success of show

Nutritional Information Provide all nutritional information about their products

Help customers decide option they are comfortable with

Available as downloadable PDF or part of menu when ordering online

Gives perception of being a healthier option as all information is on display – ‘not hiding’ nutritional information

A result of these innovative and competitive product launches, Domino’s CEO Don Meij, has reported strong performance for the first half of the 2011 Financial Year and is looking forward to continued growth. (http://www.skynews.com.au/businessnews/article.aspx?id=578352) One of only three members of the Quick Service Pizza Restaurants, (which also includes Pizza Hut and Eagle Boys), Domino’s product development and strategy is imperative to their success. The table below looks at competitor’s attributes and Domino’s strategy to maintain their market share.

Table 4.1 Competitor Review: Quick Service Pizza Restaurants

Competitor Name

Competitive Product

Product Attributes Domino’s Competitive Strategy

Pizza Hut Stonefired Pizza: “Authentic Italian Style Pizza”

Celebrity Endorsement: Aaron Harvie – Masterchef Winner 2010

Following the success of the 2010 ‘Biggest Loser’ celebrity endorsed campaign; Domino’s has maintained momentum with the ‘Good Choice Range’ – making it a permanent menu item.

Eagle Boys Ready 2 Go™ Specific Pizza’s available in store – Hot and Ready to Go.

Domino’s only makes pizza to order – fresh, in store with fresh ingredients. Delivered hot within 30 minutes.

SummaryDomino’s competitive strategies show they’re products (Good Choice Range and Hot Delivery Bags) sit within the Growth to Maturity stage of the product life cycle for a considerable period of time.

Their marketing tag lines and celebrity endorsements are effective in building brand awareness, leading to product purchase (i.e. largest pizza chain in Australia).

Customer service is a key contributing component to the Domino’s Product. “Our quest to be the customers’ champion is why we are passionate about providing outstanding service at all customer touch points” (The Facts, 2010) Domino’s Pizza aim to provide consistent service adding to the value of their product; when ordering over the phone, internet or in store to delivery or pick up in store. Domino’s Pizza are “confident great customer service partnered with a fantastic product is the key to ensuring customers continue to turn to Domino’s for their next Pizza”. (The Facts)

To maintain their position within the Fast-Food market, it is important for Domino’s Pizza to remain abreast of their competitors by introducing new products and refreshing their brand positioning to maintain their advantage.

Domino’s 413 stores across Australia provide them with large, constant, sweeping access to their target market. In many cases, their product may be displayed alongside competitors (i.e. similar advertising: TV, Radio) so it is important for Domino’s to constantly manage their brand equity through product differentiation of each individual products life cycle.

Promotion Practice

Promotion is a mix of marketing activities including advertising, sales promotion, direct marketing, interactive marketing, personal selling, and public relations. It is a method that is used by a company to communicate with individuals and groups positively, then to build up and maintain good and long-term relationship to persuade and inform customers to use its products. (Koekemoer, L. 1998) You could also say that promotion is a strategy of communication. For most retail companies like Domino’s Pizza one of the most general strategies is sales promotion, built to attract people’s interests and usually specific to a time period, place or customer group. In addition, one of the most familiar strategies of sales promotion to us is price-based sales promotion including price deals, frequency programs, rebates and special/bonus packs. (Blattberg, R. C., & Neslin, S. A. 1990)

One of the four elements of marketing mix; promotional objectives are different for companies with different backgrounds and target items. However, normally, a successful promotional strategy may attribute to eight important aspects of a promotional program. They are respectively creating awareness, stimulating demand, encouraging product trial, identifying prospects, retaining loyal customers, facilitating reseller support, combating competitive promotional efforts and reducing sales fluctuations. In addition promotional activities may help to build image or reputation of a company.

Promotion is an essential part for a company and item towards the market. It is a communication process between organizations and customers for a particular product. Specifically, a promotion strategy can help a company convey positive and important information of new or existing products to the public to keep and attract more customers. It can improve the competitive ability of the company for a time and always bring positive reaction from public. As a result, promotion can help marketers boost sales under the time pressure and generate goodwill. (Drew Barrand. 2004)

Table 5.0 Promotion Theory

Authors Promotion Theory

Attributes

Percy, L., & Rossiter, J. R.

Promotion The main function of promotion is to provide information that will assist them in making a decision to purchase a product or service

Peattie, S. and Peattie, K.J.

Sales promotion A workable definition of sales promotion and reveal the variation of sales promotion.

Voss, G. Price-based sales promotion

Price-based sales promotion is to draw attention of customers on their brand by reducing the price in a short term.

Sales promotion is an important part of promotion strategies especially for retail companies. It is a kind of activity that leads to a direct response from consumers or the public through the offer of additional benefits. (John V Lund. 1951) Promotional gifts and price promotion are two general means of sales promotion strategy.

Promotion Practice Domino’s utilises different channels to promote their product including price discounting; such as the popular buy-one eat-one-free promotion and 'Two for Tuesday' strategy, on- line advertising, etc.

The two-for-Tuesday strategy has become very successful for Domino’s. It has been so effective that Domino’s now sells as much pizza on a Tuesday, which is used to be the quietest night of the week, as it does on a Saturday. Moreover, this promotion helps to smooth the pronounced ups and downs of daily sales during a normal week. (Kate MacArthur. 2006)  Extra revenue and grows volumes are generated in the market which are helpful to franchisees with large fixed overhead costs.

Secondly, Domino’s Pizza utilises a national advertising firm to help local franchise groups effectively market their area. It also provides an opportunity for each local market to pool funds and optimize local marketing opportunities by becoming part of a co-op advertising program. (Renfrow, J. 2009) The company also provides convenient online selling by which people can order and purchase through the Internet. (Anonymous. 2009) People can even make an online order by iPhone app.

At the same time, people can also return feedback to the company on the website because a clear understanding of consumer value can help deciding whether the cost of promotion is worth spending. (Han, J., & Mills, J. (2007) By promoting online selling, Domino’s creates attentions where customers can share ideas and pictures of delivered pizza. Customers can also choose various coupons of different pizzas included in the website. It is fairly convenient to just click to website and order your favourite set of pizza with the cheapest price when you tired of your work in front of the computer.

In an increasingly competitive environment, Domino’s pizza needs to ensure their promotional campaigns are constantly updated to maintain their share of the fast food market.

Table 6.0 Competitor Promotion Practices

Competitor Promotion Practices AttributesMc Donald’s Price promotion: price coupons

normally offering 10% extra freePrice coupons attract the attention of people with low price and show good image of the food to potential customers.

Pizza hut Online advertising: attach their pictures of great pizzas with many websites so that you can easily notice them when surf the internet

Company can more easily get the attention of most internet users and encourage them to do some online purchasing.

A variety of promotion strategies are available for fast food retail companies and have contributed to improve the occupation of the market for the companies applied them such as Mc Donald’s and Pizza hut mentioned above. So in an increasingly competitive environment, Domino’s pizza needs to ensure their promotional campaigns are constantly updated to maintain their share of the fast food market.

When the strategies of price promotion and online advertising are successfully applied by respectively Mc Donald’s and Pizza hut，Domino’s Pizza Limited also displays some obvious promotion strategies which make itself stand out among so many competitors.

There are many promotional strategies for Domino’s Pizza. Price promotion and networking (here we focus on online advertising) are two of the most common promotional practices in retail companies. Lower price than normal of a product can always be more attractive to people while make them think that they have saved a lot of money. (Larson, R. B. 1996) Compared to traditional advertising, online advertising can largely expend the sales market of company and get touch with their customers easily, (Jagpal, S., & Jagpal, S. 2008) because it is one of the best ways to communicate the right message to your consumers and the main target customers.

Place Theory

Place theory refers to the location where the product will be available for the customer to purchase at the desired time. Place is also known as a channel of distribution, which is a way for a producer to distribute a product to a customer (Borden, 1953). Different companies will use a different distribution channel to reach their customers, and it will also depend on their circumstances such as a product itself and where it’s made.  For example, the coal-mining producer will not sell coal buckets directly to the final customer, but the producer will prefer to distribute the product through the wholesaler. In the other hand, Domino’s Pizza distributes their products directly to the final customer through a franchising system, which is one option for the food producers to distribute their products.Place is also defined as channel distribution or intermediary. It is a way for the producer to get products or services to users. There are two ways to distribute the product: direct and indirect way. In direct way means the manufactures will sell their products directly to the final customer. In the other hand, indirect way the producer will distribute their product through wholesaler, not to the final customer. The producer can distribute the product through wholesalers, agents, retailers, Internet and many other ways (Bucklin, 1966).

The place strategy is mainly about how to get a product to a customer and this is required a good managing of the distribution system because the different distribution channels will give an organization opportunity to make a different level of profitability, and place is also one of element to create the price (McCarthy, 1960). For example, if Domino’s Pizza sells their products through Coles or Woolworths, they will make a little profit because they have to sell it cheaper in order for Coles or Woolworth also makes a profit. However, Domino’s Pizza has its own stores, which mean they can control the prices of their products, and this let them make more money than selling their products to Coles or Woolworths.

Table 7.0 Place Theory

Authors Place Theory AttributesNeil N Borden Marketing mix Place is the location where the

product will be available for customers to purchase.

E. Jerome McCarthy Four Ps Place refers to how the product gets to the customer, and it’s also about the channel of distribution which can affect sales.

Louis P Bucklin Distribution channel theory There are two types for the producer to distribute the product: direct and indirect way which means the produce can choose either to sell the product directly to the final customer or indirect to the wholesalers.

Place is one of important element in marketing mix because it’s about how the product gets to the customer. If the producer chooses a wrong channel distribution, it will definitely affect the sales, which will lead them to loss the profit.

Place Practice

Domino’s Pizza is available for the customer to purchase its products in a physical store or a virtual store, which means the customer, can visit any Domino local store to buy the products or the customer can phone or order the products online.

There are many Domino stores in Australia, and customers will find at least one of a Domino store in their local area because Domino is everywhere in all states, especially they will find a Domino store in the shopping center because it is the busiest place where the products will be sold more than other places; therefore Domino store will be likely to locate in the shopping mall. There is one Domino store in Australia Fair that is always busy because many people stop by to buy pizza on the way home after they have done the shopping. Customers also can call a store to order the products to deliver to their home without paying extra charge. Moreover, customers can order the products online. Customers have two options either to pick up the product at the store or the product will be delivered to customers’ houses. (Domino’s Website 2011)

Table 8.0 Place Practices

Company / Brand Place Practices AttributesLocal store Physical store The customer can visit any

local Domino store to buy the product in all states in Australia.

Telephone Visual store The customer can order the product to delivery to home without any additional charge.

The internet Visual store The customer can order the product online and decide to either pick up or let them to delivery to home.

Domino’s Pizza creates much availability of places for the customer to buy the product easily because if the customer can’t access the product, the sales will be decreasing. Nowadays it’s much easier because of the technology is enable people to buy a product at anytime and anywhere.

Conclusion

The preceding paper introduces the product, place and promotion strategies of Australia’s most competitive pizza chain within the fast food industry. The application of the mentioned theories as part of a strategic marketing campaign will assist Domino’s in maintaining their status as an innovative, market leader.

With over 800 stores nationally, Domino’s Pizza provide adequate product distribution and effective placing strategies boosted by their competitive promotions. An Industry once dominated by hamburgers and fries, the fast food industry in Australia has undergone a health kick over the past five years. (Takeaway Food Retailing Industry Research in Australia by IBISWorld) At the 2010 Australian Health Ministers Conference in Adelaide, Queensland Health Minister Paul Lucas announced a national approach to making fast food healthier by demanding a regulation on fat and sugar in fast food. (ABC News 2010) As the largest pizza chain in Australia in both network store numbers and sales, Domino’s responded by decreasing the amount of salt and saturated fat in their pizzas in line with the UK Food Standard authorized levels used by The Australian Division of World Action on Salt and Health. (Domino’s 2010)

To maintain this standing, Domino’s Pizza not only uses their size as their main competitive strength but their adapted product offerings. In response this increasingly health conscious climate, Domino’s Pizza is driving the shift towards healthy options in the pizza industry, through augmented products, particularly the Good Choices Range.

In an increasingly competitive environment, Domino’s pizza needs to ensure their promotional campaigns are constantly updated to maintain their ‘slice’ of the fast food market. Communicating their product offerings through a range of promotional activities, Domino’s increase customer service levels by aiming to make the ordering process easier for customers through online and application ordering. A market leader in responding to the demands of the Australian fast food palate, Domino’s consistently provide information to the public, promoting their healthy product options and product information to assist customers in making informed decisions.

Delivering great results and value to shareholders and delivering piping hot product to customers doors are Domino’s Pizza’s basic strategies to provide quality products and service to continually exceed customer expectations. In continuing to innovate and improve their menu offerings, with effective tactical marketing activities Domino’s Pizza will maintain their determination for leadership within the fast food industry.

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