Pizza Hut Malaysia E-Marketing

In 1958 Frank and Dan Karney open the first Pizza Hut in Wichita, Kansas. In 1972 there were 1000 Pizza Hut restaurants throughout the USA. Then in 1973 Pizza Hut went international. Later on, in 1977 PepsiCo buys Pizza Hut, with 3,000 U.S. units. In 1989 the Pizza Hut Jobs Plus program expands Nationwide to employ more than 10,000 individuals with physical and developmental disabilities. The Jobs Plus program is recognized as the largest corporate initiative of its kind in the food service industry. On October 6, 1997, Tricon Global Restaurants, Inc. was formed as a result of a spin-off from PepsiCo Inc. of the three restaurant concepts – Pizza Hut, KFC, and Taco Bell. Pizza Hut launches “Totally New Pizzas”, a quality initiative putting sliced, fresh vegetables and meatier meat toppings on pizzas.

PART I. SITUATION ANALYSIS

4 P’S

PRODUCT

SPECIAL OFFERS SUCH AS HOT CHUNKY LOADED PAIR DEAL, 2 REGULAR PIZZAS FOR RM 35 ONLY (INSTEAD OF RM42), +HOT ADD ON (GARLIC BREAD, OVEN BAKED WINGS, SOUP-OF-THE-DAY), OR PIZZA HUT NEW TAKE AWAY VIVA PIZZA (3 REGULAR PIZZA’S FOR RM33 ONLY)

SEASON’S PROMOTION – GOLDEN FORTUNE CHEESY CROWN (FOR CHINESE NEW YEAR)

Each variety is grouped on different tastes

Delivering from hot oven in boxes to save its freshness

PRICE

Low price for combo meals and expensive for just one

Special offers ( when order online, get some extra free product)

PROMOTION

Special coupon (When customer orders Pizza Hut pizzas or other items for either delivery or for takeout, the restaurant will usually place a sheet of coupons on top of the box or package. They can save these coupons for use with future orders)

Door to door brochures to capture more customers

Marketing techniques

PLACE

More accessible to the customers

Now Pizza Hut restaurants are located in airports, shopping malls, sport arenas and other places, more convenient for the customers

Pizza Hut is extremely increasing its share of the off-premise and fast-food market

WEBSITE USAGE AND NAVIGATION

The navigation of the site is pretty good, except they don’t have a guest book where user and customers can live a opinion about the site, food and the service how they are providing it, so that new coming customers can see the views of different people.

Also they don’t have a search button and their information is not that clear as it should be. Everything is deep inside the site. Homepage layout has attractive red color, and it would be better if they add their promotions and special offers also to front page, as Domino’s Pizza has done. The website is usable for most of browsers, as it is analyzed in browsersshots.org most common browsers can reach the site. The picture for “Dining restaurant” does not look that tasty as it supposes to be. As an example of Electronic CRM we can say that the pizza hut has communication system in their official website, like registering to the site and collecting a data form users, and using them in creating new products. Pizza hut created a application for mobile phones what helps them check website anywhere they want (http://www.mahalo.com/pizza-hut-coupons). Also they create a community on the Facebook, so every Pizza Hut fan can join it.

PART II. ENVIRONMENTAL ANALYSIS

SWOT ANALYSIS

STRENGTH

One of the largest restaurant chain in the world

Over 20,000 franchises (48%) around the world [ www.survey.com ]

Brand leader in the United Kingdom

Innovative range of pizzas under one roof

Famous television advertising

Attracts people of various ranges from young to old.

Good financial situation and international turnover.

Lead on top of global full-service restaurant tree

Has a good customer service (discount coupons in times for holidays, birthdays, etc.)

WEAKNESS:

Satisfaction of the pizzas is declining for loyal customer’s perception.

There are complex computer systems and internal conflicts from franchisees.

There is a lack of an organic pizzas, which will limit the target market

Design of the website is not professional

Website content remain static for several years

Navigation of the website is not comprehensive

OPPURTUNITY:

New Pizzas with different crust sizes and flavours.

Pizza Hut expands Indian market menu and looks to old favourite to bolster sales in the US

Pizza Hut targets upscale products and a downscale consumer base

Online research on Total Quality Management has high demand

Online website builder software are commonly available

THREATS:

Rising competition undermines Pizza Hut as consumers go for greater convenience

Rising cheese costs threaten margins

Threat from Dominos pizza, also from Mc Donald’s who have tried to introduce a new meal that is a Pizza called: McPizza. Marcus Griffiths

Website with fresh contents and blogs have moved up to top Google page

Visitor to this TQM website is very low

Role of SWOT analysis is to take the information from the environmental analysis and separate it into internal issues (strengths and weaknesses) and external issues (opportunities and threats). (MARKETING STRATEGY, 1998).

PEST (POLITICAL, ECONOMICAL, SOCIAL AND TECHNOLOGICAL)

The external environment plays an important role in the sector of business. According to the CHARTERED MANAGEMENT INSTITUTE (2005) the PEST Analysis is a method utilized in order to examine, identify and assess the external forces that have a huge impact in the performance of an organization (BYARS, 1991; COOPER, 2000). In addition, the PEST Analysis is used to aid an organization to obtain a better comprehension of the broader environment in the sector of business and can be used in carrying out the continuous process of environmental analysis (KOTLER AND SCHLESINGER, 1991; JOHNSON AND SCHOLES, 1993).

POLITICAL ISSUES: include regulatory frame work operating and judicial system which may affect in a business in different ways. There are not many political factors affecting Pizza Hut as is lack of competition. Factors such as law on business employment pollution and taxation apply on the organization which it has to follow regarding the rules. Another factor is the regulation of the business and the environment. If the business environment is not friendly with the company, then there is a possibility that Pizza Hut will not open a restaurant and instead move to a more business-friendly government.

ECONOMIC FACTORS: If the country`s economy is better so the gross domestic product (GDP) of the country will be good, it is a green signal for the business as the per capital income of the people will be increased and they will spend more money (THOMPSON, 2002).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. If the overall economy of a country is not favorable, lesser people will franchise Pizza Hut because they will most likely loss a great amount of money instead obtaining profits (ROBINSON AND ET AL., 1978)

SOCIAL FACTORS: Pizza hut is a multinational and it is basically originated from America so it is the most difficult from the four factors because the attitudes and beliefs of people are difficult to quantify. Aside from the attitudes and beliefs, demographic factors such as population and life expectancy are also important aspects in the analysis of the social factors. Every country has cultural norms, values, benefits and religions which can affect the organization. The influence of the values and beliefs affects the business of Pizza Hut, (THOMPSON, 2002; PEARCE AND ROBINSON, 2005) example in Muslim countries such as Egypt and Middle East; the recipes of the Pizza do not include pork. The changing trends in the taste of the consumers also play an important role in the external analysis of the environment, if the current trend in the society is being health conscious, thus consumers will demand that the foods be healthy

TECHNOLOGICAL FACTORS: The fast change in technology nowadays has far-reaching effects in the businesses. The factors that have a huge impact are the research and development, internet and e-commerce, and new technologies contributes to the technological factors because through them customers can give feedback regarding the products of Pizza Hut which can also aid in the research and development, and the service of the company. The research and development has effects on the business of Pizza Hut because through R&D new products are developed for the business. Due to new technology there are new ways of marketing like an Internet; telemarketing and the organization 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. (CAPRON AND GLAZER, 1987; JOHNSON AND SCHOLES, 1993; JAN, 2002)

COMPETITIVE ANALYSIS

COMPETITIVE INFORMATION

PIZZA HUT

PRODUCT OFFERED

Pizza, pasta, desserts

Pizza range:

Supreme

Chicken Supreme

Meat Lovers

Chicken tandoori

Cheese Lovers

Do it yourself pizza

Fajita Sicilian

Chicken Fajita

Super Supreme

BBQ beef

Hot and Spicy

Veggie Lovers

Splitza

The euro

Chicken tikka

PRODUCT STRENGTH

Innovative speciality pizzas; the most crust styles.

Pizza Hut sells pizza in four different size; personal (an individual serving), small, medium, large.

An expanded menu and slightly more upscale options.

Pizza Hut experiments with new product frequently

PRODUCT WEAKNESSES

Criticized for the high salt content of some of their meals.

There is a significant amount of fat.

COMPETITIVE ADVANTAGES

Carry-out

Delivery

Dine-in options

The store front delivery

Carry out locations.

COMPETITIVE DISADVANTAGES

Slow delivery

High prices

COMPETITIVE INFORMATION

DOMINO`S

PRODUCT OFFERED

_Pizza, buffalo wings, hot sandwiches_

Pizza range:

Pepperoni feast

Superb Cheese

Text-mext feast

Vegi feast

Italiano feast

Hawaiian feat

Hot and Spicy

Chicken tandoori feast

Extravaganza

Deluxe feast

Side product:

Sandwiches

Free delivery

PRODUCT STRENGTH

Fast delivery; Good online pizza tracker; many crust options; low price

Domino’s was first national pizza chain to sell chicken wings

Corrugated cardboard delivery boxes

Domino`s guarantees delivery within 30 minutes, or the order is free.

PRODUCT WEAKNESSES

Underwhelming flavour; overly sweet sauce.

COMPETITIVE ADVANTAGES

Domino`s main competitive advantage over Pizza Hut is their price.

Revolutiary heating technology for ensuring pizzas to be delivered almost oven hot

Pizza tracker system

Online ordering process: Simple and intuitive and allows you to add, remove, and edit pizzas easily.

COMPETITIVE INFORMATION

PAPA JOHN`S

PRODUCT OFFERED

Pizza

Pizza range:

Super papa

All the meat

Western BBQ

Cha-cha Chicken

Papa`s tikka

Hawaiian volcano

Mexican ole

Pepperoni pizzazz

Garden special

Chicken Florentine

Say cheese

New Orleans jazz

Little Italy

Deals:

Lunch

Free delivery

PRODUCT STRENGTH

Higher quality toppings; the most specialist pizzas; ample toppings; excellent presentation

Online ordering

First pizza chains to include a dipping sauce

PRODUCT WEAKNESSES

Higher cost

Only three crust styles

Primarily takes carry-out and delivery orders

COMPETITIVE ADVANTAGES

Offering online ordering and automatically assigns all registered customers to the closest location

First pizza chain to make online ordering available to its customers.

COMPETITIVE DISADVANTAGES

Takes carryout and delivery orders

Offer simples menu

PIZZA HUT 5 FORCES

[ADAPTED FROM M.E. PORTER, COMPETITIVE STRATEGY, FREE PRESS, 1980]

THREATS OF NEW ENTRANTS – new entrants in the pizza industry could be a threat in Pizza Hut because it can lessen the market share of the company. Usually new entrants offer cheaper products than the established; (PORTER, 1998) therefore more customers could be attracting in buying their products which eventually would shift from Pizza Hut to these new entrants. (THURLBY, 1998) The new entrants in this field usually offer cheaper prices of products; therefore Pizza Hut should create measures to counter the approaches used by the new entrants.

(Porter, 1980b; Sanderson, 1998)

BARGAINING POWER OF THE BUYERS – KIPPENBERGER (1998) states that the power of the buyer can either be low or high. In low buyer powers the conditions of the market allows the companies or entrepreneurs to enter easily because of the wide markets. On the other side, a high buyer power the entry to the industry could be hard. In Pizza Hut, the buyers have low power because almost all the people love Pizzas and there are only few players in the industry, therefore entering to new markets in different parts of the world is easy for Pizza Hut.

THREATS OF SUBSTITUTION – It exists when the demand for the product decreases because there are substitute products that perform better at a cheaper price (PORTER, 1998). Although the Pizza Industry has low threats of substitutes, still it poses threats such as instant pizzas, and sandwiches that have pizza flavors. Just like, the mobility barriers and the bargaining power, the threat of substitution is also low; therefore Pizza Hut must also be aware with the entry of the substitutes so that they could create measures to counter it.

BARGAINING POWER OF SUPPLIERS – the supplier power is the capability of the supplier to control the cost and supply of the raw materials used in the market (PORTER, 1998). Pizza Hut uses raw materials in creating their products; in order to shift the power from the supplier to the company Pizza Hut can alter it in a number of ways, such as replacing it with substitutes that are cheaper than the prices of the suppliers, Pizza Hut should order in bulk so that the prices will be cheaper, and if Pizza Hut thinks that the suppliers are over-charging then shift to another supplier.

RIVALRY FROM OTHER STRATEGIC GROUPS – the rivalry is stiff in the case of the food industry and in order to come out on top, Pizza Hut must develop attractive menus, as well as, prices so that the company could be one of the top players in the industry.

Gauge the Strength of barriers between groups- gauging the strength of the barriers has five steps in which Pizza Hut must follow:

To determine the factors those prevent companies in a strategic group to compete with companies in another group.

Pizza Hut must identify the strength of bargaining power between the buyers and suppliers and the strategic groups and the industry.

Identify the threats of substitutes between the strategic groups.

To examine the strengths of the rivalry between the strategic groups.

To utilise the Porter’s five-Forces Analysis on strategic groups.

PART III. E-MARKETING PLAN

The Internet seems to have everything in abundance – except accountability and profitability. Despite the great opportunities provided by e-business markets, the e-marketer must give great effort to mine “net” profits and must go to great lengths to be accountable for every dollar spent. That effort begins with solid e-marketing plans and good accountability systems that rely on e-metrics. The term e-metrics refers to measurements and ratios that help marketers forecast, track, and discover trends, monitor, and control the following:

E-customer behavior, cost, value, and acquisition.

Web site traffic, performance, revenue and other significant results

e-promotional and advertising campaign performance including e-mail marketing, traditional direct mail, and internet advertising

Web site success

SITUATION ANALYSIS

SWOT ANALYSIS of Pizza Hut (has already been discussed above)

STRENGTH:

Good quality food

Brand familiarity

ISO certified

Good service

Birthday parties

Full service restaurant and delivery system

WEAKNESSES:

Parking facilities

Advertising are few

Still fewer outlets

No social welfare

Mostly western than eastern

OPPORTUNITIES:

New Pizzas with different crust sizes and flavours.

Pizza Hut expands Indian market menu and looks to old favourite to bolster sales in the US

Pizza Hut targets upscale products and a downscale consumer base

Online research on Total Quality Management has high demand

THREATS:

Rising competition undermines Pizza Hut as consumers go for greater convenience

Rising cheese costs threaten margins

Threat from Domino’s pizza, and also from Mc Donald’s who have tried to introduce a new meal that is a Pizza called: McPizza. Website with fresh contents and blogs have moved up to top Google page

PIZZA HUT E-BUSINESS OBJECTIVES AND STRATEGIES

OBJECTIVES: The goal of Pizza Hut is to reach 85% recognition of the new product in their target market. And of course as with all businesses, the most important goal is to increase revenue, profits and to maintain the number one market position. Also, Pizza Hut is planning to increase the percentage of pizza sales by increasing the number of franchisee delivery units with carryout facilities. Moreover, this company wants to reach customer satisfaction and practice what they preach: integrity, ethics and open communication.

STRATEGIES: Pizza Hut should continue to offer a high quality product. With higher price Pizza Hut could revise all its unnecessary expenses increasing the advertising promotion in local radios and T.V. and more publicity.

E-MARKETING STRATEGIC PLANNING

SEGMENTATION

GEOGRAPHIC

REGION: _Pizza Hut outlets in different countries is a way of segmenting their market according to the region and finding out potential markets

CITY: they also segment the cities as class i, class ii, metros, small towns_

DEMOGRAPHIC

AGE: 10-18 years, 18-30 years

FAMILY INCOME: middle class, upper middle class, high class_

DUAL INCOME EARNER: yes

PSYCHOGRAPHIC

SOCIO-ECONOMIC CLASS: urban

BEHAVIORAL

OCCASIONS: _birthdays, corporate lunches, marriages, parties_

LOYALTY STATUS: _low, medium and high_

USER STATUS: _first time, regular and non-users_

TARGETING

Pizza Hut’s target market is X and Y generation, with a “spend now, pay later” attitude. Also Pizza Hut has targeted the families who like to go out for dinner at least once a week. They also target teenagers at school. Spending habits of college freshmen also indicates a high percentage of money being spent on non-essential items. Pizza Hut has made delivery services for those customers who like to have pizzas at home with their families and friends.

DIFFERENTIATION

PRODUCT: Pizza Hut has many unique features of the product which attracts the customer. There are quite a lot of items of menu to choose: pizzas, pastas and salads, appetizers, desserts and beverages. Pizza Hut’s products have very nigh conformance quality: all products produced are identical and meet the promised specifications.

SERVICE: Once anyone enters the restaurant the service is starting immediately with providing a menu. Also the tables and menus are placed in a good manner. This is on itself is quite impressive. All orders placed in a restaurant are served in 15-20 minutes and take away orders trying to be delivered within 30-40 minutes depends on location, weather condition and traffic jams. Pizzas are delivered in special covers to ensure freshness and that it still remains hot.

PERSONNEL: Employees are well trained in English and can take order from any customer. All employees are properly dressed and managers have their own attire. Proper trainings are given to each employee once in 5 months.

Site environment

Limited

Build trust

Yes

Efficient and timely order processing

Yes

Pricing

Yes

CRM

Limited

Invite user-generated content

Limited

CHANNELS: Pizza Hut uses 3 different of selling its products directly to the market

Pizza Hut has also indirect channels:

POSITIONING

Pizza Hut has made many ways to position their product, such as:

Advertisements in which they have differentiate their pizzas in quality (advertisement through newspaper, television, radio and billboards)

Uniqueness and taste

Varieties

Worldwide and in Malaysia has become synonymous with the “Best pizzas under one roof”

OBJECTIVES

There are 3 changes that will be discussed in this e-Marketing plan:

To develop a powerful and compelling unique selling proposition ( like Dominos’ pizza “Free delivery in 30 minutes or 1 free regular pizza voucher with next order”)

To create a SEARCH button for the website

To add more attractive and useful information about their product.

E-MARKETING STRATEGIES

PRODUCT STRATEGIES

No changes are needed

PRICING STRATEGIES

Use of the high-low pricing strategy has several advantages. First, the pricing strategy will help segment the market. Different groups of customers are willing to pay different prices for the same product. Also this strategy can help to create excitement. Customer will be able to try something new when they purchase. Moreover, this strategy will show the product’s quality. Pizza Hut sets a nigh initial price for the products to show to the customers that its products and service quality are excellent.

About delivery – Pizza Hut charges RM3 for the delivery in Kuala Lumpur. And there is no such thing as late excuse promotion or vouchers. To increase their sales and achieve high customer satisfaction Pizza Hut has to decrease delivery fee to RM1 or make it for FREE as Dominos Pizza has done. Then instead “Delivery in 30 minutes or voucher for 1 free regular pizza with next order”, Pizza Hut can implement strategy “Delivery in 30 minutes or this pizza will be free”. It will make much more sense to the customers as they will see that Pizza Hut is trying to deliver high quality product and service to them more than just gain profit from sales.

PLACE STRATEGIES

No changes are needed

PROMOTION

Pizza Hut has to emphasis more on its “restaurant dining experience”. And it has to continue to localize its menu to capture local Malaysian Market. Also Pizza Hut needs to implement more such promotion as “Buy 1 FREE 1 Online Ordering Deals, Buy 1 FREE 1 when you order and pay online”. It has to pay more attention to its Online Ordering and Promotion.

E-MARKETING TACTICS

ENHANCEMENT OF FEATURES:

After analyzing Pizza Hut’s website it was clear that they need to add Search Button as it is one of the main components on the online page. With it users will feel more comfortable to use the website. To access necessary information users have to come through all the pages. It makes people close the website before they can get any information from it and just call to order by phone.

Besides search button there one more area which need to be changed. Information on the website is not too clear to read and search what it for what. We recommend do not pack information separately on each page, but just show most of it on the front page so the user will clearly see where to go and what to order. Then he/she can browse next page already for making order and following payment. Saving time will be appreciated by all online customers.

Moreover there is one more small tactics is to create either feedback page or box on the website. Thus customers can write their suggestions or feedbacks which might be useful for Pizza Hut’s future improvement.

PART IV. IMPLEMENTATION

The following identifying key activities are important to the e-marketing plan. Each activity is according to the Pizza Hut objectives during the following next working year that should be set up in time and according to the considerable budget of the firm.

Free regular pizza if late

More attractive information

Website search button

Free delivery in 30 minutes

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Pizza Hut provides an attractive website to track and keep its customers to increase its sales. But online marketing has some limitation that Pizza Hut should maintain with enhancing and improving the website. The limitations of online marketing are:

Online marketing needs customer to use newer technologies rather than traditional media, like low-speed Internet connection, if a firm build large or complicated websites, individuals connected to the Internet via dial-up connections or mobile devices may experience significant delays in content delivery and will be difficult for user to download information.

From the buyer’s perspective, the failure of shoppers to touch, smell, taste or “try on” the product before they purchase it online can be followed by feedback comment about whether they received what they have ordered.

Security concerns that many customers have doubts about purchasing products via internet or it might be a fraud web site and to trust that their personal information will remain private and safe.

Offline populations cannot be targeted, some customers or uneducated people who are not able to access to the internet.

PART V. SUMMARY AND 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.

Thus, Pizza 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 one of the best in their industry. The segment of the market in online service and of the website is very large and diverse. This will result in a more expensive advertising campaign than in past campaigns, but the potential for a successful product and with help of website will cover the costs and bring in substantial profit.

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