Pizza Hut strategic plan Essay

Executive SummaryThis proposal describes pizza pie pie pie pie pie pie chanty and the submission of a forward- fronting ingathering c solelyed The constitutional. A brief history of pizza hutch is provided at the bug outning of this proposal on with an abbreviation of the immobile intellectual nourishment constancy. Current trends in demographics and play appearing ha berths atomic number 18 include.A swot analysis has been d ace to identify pizza field huts strengths, weaknesses, opport unities, and thr play outs so that these po razzionors contri providede be taken into removeation in deciding whether or non to launch the new utmost(a) pizza. Some of the key elements of our merchandising throw initial describe the thorough pizza pie. It in tout ensembleow for be the widest pizza on the mart, with double the cheese and double the stand outs. We give seat the X and Y genesiss, which is the riotousest emergence fraction in America. This atom has been winningly physical objected before victimization the total angle. This divide is has been a segment that hasnt been targeted to the level that they should in this industry and we plan on changing that. We switch used prehistoric pecuniary data to establish reason adapted goals for the harvesting and construct congeal limits on promotional expense. We go forward be using a proudschool school/ deplorable determine system, determine this new pizza at $9.99.Our main gross gross sales promotions provide be offering the essential pizza bundled with Mountain Dew to target Generation X and Generation Y. We impart be using draw channel diffusion as well. This pizza volition be available through dine-in, carry-out, deli very, and sound outing on the Internet.1)Introductionpizza chantey was started in 1958, by two br opposites in Wichita, Kansas. Frank and Dan Carney had the belief to open a pizza parlor. They borrowed $600 from their m another(prenominal ), and opened the very beginning(a) pizza pie army hut. In 1959, the first franchise unit opened in Topeka, Kansas. more or slight ten years posterior, pizza pie field hut would be divine service whiz gazillion clients a week in their 310 locations. In 1970, pizza hutch was put on the vernal York Stock Exchange under the pith symbol PIZ.In 1986, pizza army hut introduced delivery service, something no other eating place was doing. By the 1990s pizza army hut sales had happen uponed $4 gazillion worldwide. In 1998, pizza sea chantey celebrated their 40th anniversary, and launched their noned campaign The Best pizza pies Under One Roof. In 1996, pizza shack sales in the United States were oer $5 million. Out of all the existing pizza irons, pizza pie hutch had the largest securities industry grapple, 46.4%. However, pizza hovels mart handle has slowly eroded because of intense tilt from their rivals eye masks, small(a) Caesars and newcomer Papa Johns. station delivery was a driving force for success, e spargonly for pizza pie shack and Dominos.However, this forced competitors to look for new method actings of increasing their customer bases. m each an(prenominal) pizza chains decided to diversify and offer new non-pizza 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, larger, better, pizza for a low legal injury. Offering special promotions, and new pizza variations are popular today as well. For example, chicken is at once a common topping found on pizzas.In the past, Pizza shanty has incessantly had the first mover returns. Their market ramble placeing outline in the past has everlastingly been to be first. One of their main strategies, that they still surveil today is the diversification of the overlaps they offer. Pizza Hut is always adding something new to their menu, essay to reach new markets. For example , in 1992 the notable buffet was launched in Pizza Hut restaurants worldwide. They were trying to offer many another(prenominal) diametrical food items for customers who didnt necessarily want pizza.Another system 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 advance(a) way to switch a pizza into something slightly different different enough that customers bequeath envisage its a whole new ingathering. For example, lets 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 organism ready to eat in 5 minutes when dining at Pizza Hut restaurants. In 1993, they introduced the BigFoot, which was two square feet of into 21 slices. In 1995, they introduced Stuffed Crust Pizza, where the impudence would be filled with cheese. In 1997, they marketed The Edge, which had cheese and toppings all the way to the acuity of the pizza. Currently, they are merchandise The Big NewYorker, trying to bring the famous New York style pizza to the whole commonwealth.Lastly, Pizza Hut has always cute customer service and satisfaction. In 1995, Pizza Hut began two customer satisfaction programs a 1-800 go customer hotline, and a customer swallow program. These were implemented to make sure their customers were happy, and always wanted to return. In our plan, we leave first give a situation analysis of current and relevant environmental conditions that affect our plan. Next, we allow for give a brief analysis of the current fast food industry, and any trends or changes that might proceed in the future.Also, a SWOT analysis of Pizza Hut exit be included. Identification of current and potential competitors impart be discussed in the SWOT analysis as well. Next, we forget list our marketing objectives for this plan and our rationale for the natural selection of these objectives.2) Situational compendium A number of demographic and social trends in the United States contributed to make upd demand for food prepared international the foot. The divorce rate is almost 50%, and in that respect is a growing trend showing that people are choosing to get married later in life. Because of these factors and many others, the single-person business firm represented to the highest degree 25% of all U.S. households in 1998, up from 16% in the 1970s. There has also been a trend in the 1990s showing that individuals are choosing to eat out more often than eat at home. Another factor to consider is the increased number of women working outside the home. In 1998, 59% of all married women had careers. As a result of more women in the workforce, household incomes are now combined and are much higher(prenominal)(prenominal) than previously. tally to Restaurants and Institutions magazine, more than ace-third of all households had incomes of over $50,000 in 1996.The combination of higher incomes and dual-career families result in less(prenominal) time in the home, at that placefore less time to cook food at home. Also due to higher incomes, consumers sacrifice more disposable income, allowing them to eat out more often. However, in the early 1990s, the growth of traditional fast food restaurants slowed down because the U.S. market had become saturated. The slowdown in growth intensified competition for market share and lead to consolidation. Many chains found that their market share could be increased by buying an existing company alternatively than forming new units. Mergers and acquisitions had a powerful effect on the fast food industry. The top ten fast food restaurant chains controlled over 60% of fast food sales in the U.S.3)Industry AnalysisAccording to the National Restaurant Association, food service sales were $320 million for the 500,000 restaurants in the U.S. in 1997. The U.S. restaurant industry grew 5.2 percent in 1997. vi major segments make up the fast food segment of the food service industry. Sandwich chains, like McDonalds and Wendys are the number one segment, followed by dinner houses, such as Applebees and ruddy Lobster. Pizza chains are ranked third. Out of all the pizza chains, Pizza Hut has the largest market share, 46%, followed by Dominos with 21.7%. International sales stand become more and more all important(predicate) to the fast food industry. In 1998, Pizza Hut was the number one global chain with units in 88 different countries.In 1990, Pizza Hut opened two restaurants in Moscow where 20,000 customers were served a week, about the amount serviced by 10 Ameri digest Pizza Huts. As remunerative as the fast food industry is, there has always been one task that many fast food companies evictnot seem to overcome. Because of Americas large aging population, great(p)er awareness and interest in health issues assume resulted. Nutritional value of fast food is a large bother. For many people, fast food aut omatically means low nutritionary value. As a result of this, many chains have introduced items that are low calorie and low fat. Despite their efforts, many critics and consumers feel that their efforts were not satisfactory in providing a healthy meal.4)SWOT AnalysisPizza Hut has many different strengths. Name recognition is an obvious strength for Pizza Hut. Pizza Hut has been around for a long time, and consumers know the build well. Another big strength and even a private-enterprise(a) advant date is the fact that they have a full service restaurant as well as delivery services. Most of Pizza Huts competitors do not have restaurants. Because of the restaurant, Pizza Hut can market to many different segments that other pizza chains cannot. For example, Pizza Hut can market to families much easier than Dominos or Little Caesars. Pizza Hut offers a sit-down, conversational type restaurant where families can take their children for birthday differentiateies for example. Pizza H uts broad selection of crops also makes it easier for them to market to different market segments.However, the fact that Pizza Hut does have a restaurant to run is also a weakness. Pizza Hut has higher viewgraph be, due to the restaurant that other competitors fag outt have to deal with. Another result of higher overhead costs is higher legal injurys Pizza Hut moldiness charge. Obviously, Pizza Hut is not the low cost producer. They rely on their character reference pizza and good service to account for their higher scathes.An indirect weakness that Pizza Hut has is that they have lost a lot of their customers and market share due to such intense competition with competitors. Pizza Huts opportunities are almost endless. They can increase revenue with their new innovative pizzas, and increase brand loyalty with good customer service.Another opportunity that Pizza Hut has is their new ordering online system. Anyone with Internet access can order whatever they wish and get it d elivered to their house without even langu be on to someone. This program has just been started, so we do not have any numbers to support whether or not it will be a success.Pizza Huts number one threats are from their competitors. Currently, their impending competitor is Dominos Pizza. Dominos main private-enterprise(a) advantage over Pizza Hut is their price. It is generally lower than Pizza Hut. Also, Dominos was very profitable when they ran the promotional deal of delivering a pizza within 30 minutes. However, many lawsuits have been filed against Dominos in the past for reckless driving by their drivers, so Dominos withdrew the promotion. Little Caesars is another one of Pizza Huts competitors, right behind Dominos in market share. Little Caesars is famous for offering large quantities of pizza for less capital. Other competitors include Papa Johns, Sbarro, and Pizza Inn.A problem facing all of the pizza chains is that each of their individual competitory advantages a re pretty much everyones competitive advantages. Most if not all the top pizza chains offer free delivery, and always have some sort of promotional deal offering large pizzas at reduced prices. Other competitors to take into consideration are gelid pizzas and make-it-yourself pizzas that are purchased in grocery stores. Some examples of these are Tombstone Pizzas, Boboli, and DiGornio pizzas.5)Marketing Objectivesorganism that Pizza Hut holds the most market share in the pizza industry, the perceived pure tone and service of the company will help to figure a better than average chance at a booming inlet of a new harvesting. The pizza industry firms are famous for introducing new products to spark short-term sales. Pizza Hut as give tongue to earlier has been very favored at accomplishing this. The trigger of a product that keeps with todays trends is also important to reduce the risk of failure. In recent years there has been an increase in the marketing of products with a n extreme twist to them. Mountain Dew, which is a brand name owned by Pizza Huts parent company, Pepsico, has been very successful at repositioning itself to this segment of the market, which has sparked new interest in the soft drink. Many other imitators have followed in there foot notes and have been successful as well. Pizza Hut has the resources available to research and implement a new product with great success.Pizza Hut is the leader in innovative products and this new product that we are proposing will surely be a success, granted Pizza Huts track record. With high competition from the other top firms in the industry, the initiation of a new product is necessary to keep one step ahead of the competition. We propose that Pizza Hut introduce the uttermost(prenominal) Pizza. This pizza will be larger than the competitors at twenty-inches and have in two ways the toppings that the competitors have. Pizza Hut will market this product along side other extreme products suc h as Mountain Dew, to help Pizza Hut capture part of this new segment of the market.The selection of pizzas offered by the competition have been significantly less creative than that of Pizza Hut in the past and Pizza Huts reputation of offering high flavor, new products will allow this new product to move into the market as other new offerings have in the past. With the introduction of a new product, one of our main objectives is to clear recognition for our product. Our goal is to reach 85% recognition of the new product in our target market.As with all businesses, the most important goal of a company is to increase revenue and profits. With the introduction of this new product we hope to increase the boilers suit sales of the company by 7%. If we can in fact reach our goal of 85% recognition of the product, through a successful promotions mix, then the increase in sales should be easily acquired.6)Target MarketsWith the introduction of the Extreme Pizza from Pizza Hut, the nam e itself is an indication of the target market sought. In todays world of adrenaline junkies and extreme sports, a products affiliation with the world of the extreme has grabbed the attention of the younger contemporariess. These generations range from the age of 12 to 30. These generations are affectionately referred to as the Y and X generations. For many years marketers ignored this segment and simply stereotyped them as slackers or failures. However, this has not been the case in recent years. With extreme sports making an witch into pop culture in the early 90s, many companies have realized the potential for high returns by targeting this highly diverse segment of the market. In America today, there are 71 million Americans that ignite between the ages of 12 and 30, making generations X and Y the two double-quick growing segments of society.The overall disbursement power of this segment is 300 billion dollars a year, with a large percentage of that money spent on non- essential items. The reason for the high amount of transcending in this segment has been associated to the multiplication that they have grown up in. Unlike the baby-boomers, there has been no quantify of risk or economic depression in their lives. This is a generation with a spend now, pay later attitude, which has made for high spending averages on a per person basis. In 1997, The National Longitudinal sketch of Youth, found that the median amount of cash that children receive from their parents for auxiliary spending is $50 dollars a week. This kind of spending money that children are given is what Pizza Hut wants to target with the Extreme Pizza. However, children living at home are not the only o nes to have extra money to burn.A study on the spending habits of college freshmen also indicates a high percentage of money being spent on non-essential items. The results showed that an average of $56 is spent monthly on eating out. This information on this segment of the market, gives Pizza Hut a window to offer a product that will overstretch these customers who not only have the money to spend on such things as pizza, but who have make so in the past. In the past Pizza Hut has not specifically targeted the younger generations with products. They have created a more generic marketing plan, to draw a wide variety of customers. In order for this marketing strategy to work, Pizza Hut needs to target this one segment of the market. The advertizement and promotion needs to be very specific to their needs, in order for the money spent on publicise to be worthwhile. Many products have failed in this segment because they have tried to treat the segment as one group.This segment is made up of many groups and many individuals. This is part of the reason for society labeling generation X and Y members as losers and slackers. So with this in mind our ad campaign must follow the same ideas by realizing that even within this segment there are many other segments. One characteristic of these two generations, that makes them a prime target for our new Extreme pizza, is the amount of time that these age groups spend with friends in groups. With the lack of responsibilities that teenagers have, and the lack of home cooked meals while away at college, pizza is a quick alternative for dinner, and a play way for friends to eat together. Pizza has long been targeted to families, because of the convenience that is present when serving pizza to a group.Teenagers and young adults spend quite a bit of time with friends in groups, whether it be in a dorm get on or at parties. This gives Pizza Hut an outlet to sell a pizza that will fulfill the needs of this younger generation with a product that is designed just for them. With the total number of Generation X and Y members being so high and the money they spend on non-essential items being as much as it is, this segment could make this product a huge success. However, this is a hard market to targe t since everyone is so different, but they all have one thing in common, there love for pizza. The most important factor in making this a success will be to design advertising that is able to attract all of the individual segments of these generations.7)Marketing MixA)Product Pizza Hut should offer a new product called The Extreme pizza. The Extreme is a twenty-inch pizza with twice as much cheese and toppings as Pizza Huts other pizzas. This new pizza will have many different competitive advantages. The first competitive advantage of The Extreme is that it is the largest pizza on the market. No other pizza restaurant offers a twenty-inch pizza. The second competitive advantage is that it has more cheese and toppings than any other pizza on the market. Another competitive advantage is the Pizza Hut brand name. Pizza Hut has built a brand name that means quality products and services. Since Pizza Hut will be introducing The Extreme, customers will automatically think this is a high q uality product. The final competitive advantage is that this product will be the first pizza to target Americas youth.The Extreme pizza will target Generation X and Generation Y or people between the ages of 12 and 30. This market purchases a lot of pizza each year, but very few pizza restaurants actually target them. The Extreme will be introduced on A-one Bowl Sunday, 2001. During the introduction stage of the product life cycle, Pizza Hut will try to establish a market for the product and yield early adopters to buy. During the growth stage, Pizza Hut will try to build sales and develop a preference for the product. Pizza Hut will try to seek differentiation during the maturity stage. The Extreme is expected to begin to decline after one year on the market.B)Price In the past, Pizza Hut has successfully used the high/low pricing strategy when setting the retail price of its products. The high/low retail pricing strategy allows Pizza Hut to charge a price that is above the competition, but also leaven frequent sales to lower the price below them. The retail price of The Extreme pizza should be set at $9.99, which is higher than Pizza Huts competitors. Several sales promotions and coupons will be used to lower the price below those competitors. Since some(prenominal) Pizza Hut and the beverage Mountain Dew are Pepsi subsidiaries, bundle pricing will be used. Customers can purchase The Extreme for $9.99 and receive a two-liter bottleful of Mountain Dew for free. Pizza Hut will be able to sell two products together at a single price to suggest a good value.The high/low pricing strategy has several(prenominal) advantages. First, this pricing strategy will help segment the market. several(predicate) groups of customers are willing to pay different prices for the same product. Pizza Hut can sell The Extreme to the customers who will pay the higher price to be the first to buy and also to the bargain hunters. The high/low pricing strategy will also create excitement. Customers will be able to try something new when they purchase The Extreme and this exciting pick up may bring those customers back to purchase other products. Finally, this strategy will emphasize product and service quality. Pizza Hut sets a high initial price for its products to send a signal to customers that its products are quality and the service is excellent.C)Promotion The main theme that will be used to promote The Extreme is youth. Fun, excitement, danger, and even the term extreme all appeal to our target market. Mountain Dew, which has already successfully appealed to this target market, will be included in The Extreme promotions. The main promotion will be a coupon to purchase The Extreme for $9.99 and receive a free two-liter bottle of Mountain Dew. The objectives of this promotion are to introduce a new product, pretend demand, change the short-term behavior of the customers, and encourage repeat or great usage by current customers. This promotion wil l be distributed chiefly by mail, but also by fliers on college campuses around the country in order to reach the target market. The Extreme will be introduced on ace Bowl Sunday, 2001, in a television commercial.Although Super Bowl television ads are expensive, Pizza Hut has enough financial resources for one. This commercial will be similar to the current Mountain Dew advertising campaign. Several young people will be performing exciting, unsound activities such as snowboarding, rock climbing, and bungee jumping. The young people will then eat The Extreme and drink Mountain Dew. There will also be similar ads in magazines that are popular with the target market such as Surfer, Snowboarding, YM, and Maxim. This advertising campaign will create awareness of the new product in our target markets.D)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 terzetto different methods of selling its products directly to the market. The first method of distribution used by Pizza Hut is delivery. Customers can call Pizza Hut ahead of time, place an order, and the order is delivered to the customers home. Another method of distribution is for customers to dine-in. Customers can go to the nearby Pizza Hut, place an order, and either leave with the order or eat at the restaurant. One of Pizza Huts 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. The third method of distribution is online ordering. Customers can now go on the Internet and place an order. 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. The market reportage for The Extreme will be nationwide. Customers all over the country will be able to order The Extreme by one of the three distribution methods.8)Control StageFirst, we will address who will be amenable for the control measures we plan to take. The Marketing Vice President in the integrated Headquarters, the local/regional Marketing Vice Presidents and the Pizza Hut restaurant managers will all play a role in being responsible for the control. Our success or failure will be unflinching in a couple of ways. One main way is to contrast results to our objectives. If our objectives are not met, steps to meet them will be taken in the future. We will also look at profits, sales revenue, unit volume of the Extreme Pizza promotions used. If our budget allows, perhaps we could give a survey to our customers and get some direct feedback about our new pizza. current research is essential for our success. Since o ur plan is for one year, we feel that every 3 months we should do some type of evaluation and control to see how we are doing. Also, during the maturity state of the product life cycle, we will improve the quality and distinguish ourselves well from competitors. Hopefully, this process of control will be monitored on a monthly basis.9)Summary and ConclusionPizza Hut has a successful history of introducing new products to increase sales and reach new customers. This introduction of new products to the market on a regular basis is what makes Pizza Hut the leader in their industry. The level of success that the Extreme Pizza will bring Pizza Hut depends heavily on the ameliorate promotions mix. As we had stated earlier, the segment of the market that we have targeted is a very diverse group. This means that the promotion of the product must be done in a diverse fashion. This will result in a more expensive advertising campaign than in past campaigns, but the potential for a successful product will cover the costs and bring in substantial profit.The advertising campaign is going to be budgeted to use 8% of projected sales. We are pictureing that the introduction of the Extreme Pizza will increase sales by 7%. This forecast is based upon other new products that Pizza Hut has introduced and the impact that they have had on Pizza Huts revenues. A 7% increase in sales for Pizza Hut will bring a total of $547 million dollars in revenue, making the advertising budget $43.76 million. This kind of advertising budget will allow for a mass media blitz of promotions featuring our new Extreme Pizza. Our target market spends many hours a day in front of the TV and computer, so the constant messages being played will allow our product to generate a high level of awareness.The advertising of the product is very important but the promotion of this product along side Mountain Dew will help to put our product in a more specific category. Mountain Dew has targeted our target m arket for several years and is by far one of the leaders in this market. With this in mind promotions with Mountain Dew will be crucial to the success of the Extreme Pizza. With competition being so strong in this industry the threat of imitation products will surely be a problem to be dealt with. Pizza Hut will however have the first mover advantage with this product. With the entry of imitation products into the market, Pizza Hut will have to adjust its mixes to accommodate change. The promotions may have to be bigger and better than the competition, or the product may need to be altered to give it that little bit of an edge over the competition.For example fecundation the crust with cheese or giving a free topping with the purchase would help give Pizza Hut an edge over the competition. Basically, Pizza Hut will need to remain flexible in the maturity stages of the product life cycle in an attempt to observe to be the market leader. Overall, this is a product that is not much hostile any of the other new pizzas that Pizza Hut has introduced. What makes this new product so exciting is the marketing plan that is directional the product at a new segment. We are taking a large pizza with a lot of toppings and marketing it as an Extreme Pizza to a generation of younger adults that are consumed by this marketing tool. This is what will make this a success. The mix of promotion and advertising we will be using will target a very profitable, sometimes overlooked market segment known as generations X and Y.