Pizza Hut & its operations in India

Pizza hut was started in 1958, by two brothers Frank and Dan carney in Wichita, Kansas. They had the idea to open a pizza parlour. They borrowed $600 from their mother, and opened the very first pizza hut. In 1959, the first franchise unit opened in Topeka, Kansas. Ten years later, pizza hut was serving one million customers a week in their 310 locations.

Pizza hut is one of the flagship brands of Yum! Brands, INC., which also has KFC, Taco Bell, A&W and long john silver’s under its umbrella. Pizza hut is the world’s largest pizza chain with over 12,500 restaurants across 91 countries.

In India, pizza hut has 137 restaurants across 36 cities, including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Pune, and Chandigarh amongst others & it plans to almost double the number of outlet in India by 2014. Yum! Is in the process of opening pizza hut restaurants at many more locations to service a larger customer base across the country.

Core competencies

Tracing footsteps

Pizza hut is akin to the Indian heart and taste buds. Pizza hut has been able to capture the heart and soul of Indians. This, they achieved through rapid Indianization of pizzas. Chicken tikkas, tandoori range and spicy korma were welcomed by pizza lovers. In addition to this, pizza hut takes pride in having the only 100% vegetarian pizza hut in the world at Ahmadabad, Surat and Mumbai’s Chow patty. It also has a special Jain friendly menu without root based ingredients and even serves salad dressings without eggs.

Through the looking glass

Thinking out of the box was never new at pizza hut. With the “Palat” campaign, they even nudged Indians to eat pizza backwards. The vehicle for this change was the stuffed crust pizza which has become a huge hit. The pizza’s outer crust has a stuffing of mozzarella cheese and one can run into people eating these pizzas backwards in many outlets. Talk about bringing changes!!!

Pizza hut is really going global. Tuscani pastas that is truly Italian is now at every pizza hut outlet. With changing tastes of Indians and greater acceptance of international cuisines, pizza hut has introduced 30 new items on its menu for this festival season. These include beverages, pasta and desserts.

Pizza hut express outlets were launched at malls, airports, department stores and gas stations which offers a reduced version of the menu for globe trotters and busy bees.

Moreover pizza hut is not just a hangout zone for youngsters. It organizes birthday bashes, kitty parties and corporate lunches. Pizza hut express outlets were launched at malls, airports, department stores and gas stations which offers a reduced version of the menu for globe trotters and busy bees.

Swot analysis

Strength

Broad selection of product to target different segments.

First Mover Advantage (pioneer advantage)

Strong Brand Image Excellent service

Weakness

High overhead cost due to large number of Restraunts

High prices of pizza to that of dominos that leads to loss of customer

Least promotions

Opportunity

Increased revenue through more innovative varieties of pizza (Indian flavour)

Increase in brand loyalty through good customer service

Growing fast food market of India.

Threat

Emergence of the papa jones world’s best pizza maker

Low price points of the competitors. No take away counters for the pizza

Marketing Strategy of Pizza Hut

Total Marketing Strategy: Pizza hut started with the single product but with different sectors emerging and the degree of competition, it diversified with the several product to serve different segments. It came with chicken nuggets, garlic bread, pan pizza, Birrizas, etc.

Early entry strategy: Pizza hut was the first entrant in the pizza market of India and followed early entrant strategy in order to be the market leader it continued to refine the product and develop new product to suit the Indian food culture.

Strong commitment strategy: Pizza hut has been operating in Indian market by analysing all the economies of scale in promotion, distribution and manufacturing facilities. If papa jhones or dominos came out with competitive pricing strategy or innovative product then pizza hut quite aggressively fight back by bringing new innovative products and more competitive prices to sustain in market.

Marketing Strategy

Place strategy

Price strategy

Promotion strategy

Product Strategy

1. Product strategy

Customer Value Hierarchy: From the above diagram we can see that pizza hut has enjoyment as a basic product but it provides food for it. Thus a person having a basic need of enjoyment can go to pizza hut and have pizza which is the company’s core product. Hot pizza and good taste are his expectation. Thus the company should ensure this by providing good pizza. The value adds services refer to the overall dining experience, the service quality, ambience etc.

Product differentiation

Worldwide and in India, pizza hut has come to become synonymous with the ‘best pizzas under one roof’. This is because at pizza hut the belief is that every pizza has its own magic, thus making it a destination product – which everyone seeks. It is this belief that has ignited the passion to create, innovate and serve the finest product the industry has to offer, while setting standards for others to strive to replicate. Pizza hut is committed to providing uncompromising product quality, offering customers the highest value for money and giving service that is warm, friendly and personal. A critical factor in pizza hut’s success has been its unique dining experience. Crewmembers at pizza hut strive each day to provide ‘customer mania’ – the kind of service that ensures that every visit of the customer is a memorable one.

Pizza features: Pizza hut has many unique features of their product due to which it attracts the customers. The product is classified into non-durable goods as it is a food item pizza hut differentiates itself with its competitors with respect to their wide range of offerings (menu items) one can find besides pizzas range of, pastas appetizers, cakes, and desserts etc.

Mass customisation: The main advantage of pizza hut is that one can customise his own pizza by selecting the bread and loading it with the toppings which one can select. This creates variety in the customers mind and thus one can enjoy whatever pizza hut can offer.

The most unique feature is that there is ‘pan 4 all’ scheme where one can select 4 different types of vegetarian /non- vegetarian combinations of pizza! This is a unique way of offering as there are many consumers who come in groups where someone in the group may want a non- vegetarian pizza can avail the offer.

Conformance quality: Pizza hut’s products have very high conformance quality i.e. All the products produced are identical and meet the promised specifications

All Offering

inclusiveValue added

Services

Hot pizza good to eat

Pizza

Enjoyment

Potential Product: Pizza hut

experience as a whole.

Value add- Augmented

Product

Good Taste: Expected

product

Food: Basic Product

Basic Requirement: core

benefit.

Style: Pizza is delivered in hot pans and served in style. The toppings in the pizzas are also dressed in a good fashion. Thus having ‘food in style’ defines pizza hut’s experience.

Service differentiation

Ordering ease: Once one enters the restaurant immediately the assistants initiates the ordering process by providing the menu. All associates are well trained in English and can take order from any customer.

Delivery: Pizza hut’s style of delivering the pizza to the customer is quite an experience. The restaurant is aesthetically designed; all the staff members are uniquely dressed. Managers dressed in special uniforms. Also the tables, menu, are all placed in a good manner. This on itself is quite impressive. All orders placed in restaurant is served within 15-20 minutes and the take away orders (ordered on phone) is delivered within 30 minutes. Care also has been taken by the company to pack the pizzas in special covers so that it remains hot till the customer haves the food. Any pizzas delivered outside 30 minutes are given free. Also discount coupons are given to the customer in case one doesn’t want a free pizza.

Packaging & labelling

The packaging of the pizza has been quite extraordinary in the sense that, it serves the basic purpose of ‘serving hot tasty pizza’.

In house dining: In house dining, the pizzas are not packed, instead they are served in hot pans, and plates are provided to the customers. The extra ingredients like oregano mix, chilli flakes etc. Are kept in a bottle having pores. Thus the customer can easily pour the ingredients into the pizza.

Take away orders: They are put in a paper box neatly labelled with pizza hut brand logo. Also there is a plastic support given (it’s in the shape of a tripod) at the bottom of the pizza to prevent it from sticking at the bottom. A pizza hut logo is also given in the tripod. The extra ingredients like oregano mix, chilli flakes etc. Are given in a paper pouch which is also branded with the pizza hut logos.

Home delivery orders: All the pizzas covered in paper boxes described above are packaged into a special delivery bags for retaining the heat. Thus we can observe that from every labelling, packaging the company tries to imbibe the brand of pizza hut in the minds of consumers

2. Place strategy

Once the product has been decided upon and the market segmented, targeted and the product positioned, it is time to decide how and where the marketer can deliver the value (product) to the customer. This is done through marketing channels that make the product available for consumption to the customer.

Push and pull strategies in channel marketing:

In a push strategy, the manufacturer uses his sales force, trade promotion, money or other means to induce intermediaries to carry promote and sell its products to end users.

In a pull strategy, the manufacturer uses advertising, promotion and other forms of communication to persuade the customer to demand the product from intermediaries, thus inducing the intermediaries to order it.

Pizza hut: (masters at pull strategy) Pizza hut follows more or less the opposite strategy. Pizza hut has mastered the art of pull strategy. It pioneered the practice of advertising and promotion in the fast food industry. Pizza hut achieved this remarkable feat by adopting a different marketing strategy that involved increasing ambiences and amusement for the customers.

Direct channels: 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.

It refers to the best place to offer program. That is the place where it is located and through what channels are we distributing programs and the competitive advantage lies in distribution. Pizza Hut uses three different methods of selling its products directly to the market.Consumer The first method of distribution used by Pizza Hut is Home. Office delivery. Customers can

call Pizza Hut ahead of time, place an order, and the order is delivered to the customer's home.

Another method of distribution is for customers to dine-in. Customers can go to the nearest Pizza Hut, place an order and either leave with the order or eat at the restaurant.

The third method of distribution is to order Online.

3. Pricing Strategy

In India Pizza hut is targeting the rich and higher middle class people with a great ambiences of enjoyment and amusement. They are offering an organized restaurant system and demanding the higher price for the pizzas. In the pizza hut different types of foods are available like appetizer, soup & salad, beverages, pasta etc. So for the varieties kind of food the pricing strategy is different in the pizza hut. Their customers are more or less fixed and they are price insensitive.

Pizza Hut follows “A High/Low Pricing”(“Price Skimming”) strategy as far as its new product are concerned where it fixes the price higher than its competitors and then gradually lowers the price below the competitor’s prices.

The high/low pricing strategy has several advantages for Pizza Hut. Used to create excitement Set high price initially to send a signal that its products are best in quality

and service offered in excellent. Helps in segmenting the market as Pizza Hut can sell “the extreme pizza” to

the customers who wish to pay higher price as well as to the bargain hunters too.

Sometimes in face of competition either from pizza players or from its substitutes, Pizza Hut has also reduced price by maintaining the same level of customer service and quality. At 30-35 per cent market share, 'Pizza Hut' is working hard to woo Indians. Their strategy? Localise flavours. And while it's hard to imagine eating a pizza that tastes like sev puri or nimbu mirchi, that's exactly what the global giant has deemed necessary to attract local palettes by launching 15 variants of pan pizzas two months ago based on these flavours. These are priced between Rs 135 to Rs 225. From 200 stores today, Pizza Hut hopes to reach up to 500 stores by 2015 which will be in both the casual dining and delivery formats.

Owning a pizza chain is not the easiest of things to do in India. The country has stringent food regulations and procuring food licenses is tough. The industry is highly fragmented and plagued by poor infrastructure, volatile real estate prices, shortage of skilled and semi-skilled manpower, high attrition rates and no organised supply chain.

4. Promotional Strategy

Communication objective: Worldwide and in India, Pizza Hut has come to become synonymous with the ‘best pizzas under one roof’. This is because at Pizza Hut the belief is that every pizza has its own magic, thus making it a destination product – which everyone seeks. It is this belief that has ignited the passion to create, innovate and serve the finest product the industry has to offer, while setting standards for others to strive to replicate.

Pizza hut uses many promotional strategies. The main promotion is a coupon to purchase. This promotion is also distributed mainly by mail, but also by fliers on college campuses around the country in order to reach the target market

A critical factor in Pizza Hut’s success has been its unique dining experience. Crewmembers at Pizza Hut strive each day to provide ‘customer mania’ - the kind of service that ensures that every visit of the customer is a memorable one.

Communication mix

Advertising: Pizza Hut’s communication has also always struck a chord with the Indian customer.The more recent campaign that was launched with the introduction of the Tandoori pizzas featured a typical Indian wedding procession abandoning the bridegroom when enticed by delicious aromas from a Pizza Hut restaurant. While the famous ‘Good times start with great pizzas’ slogan has been prominent in the communication, the focus has remained on the best and most distinct pizzas.

Sales promotion: Pizza Hut laid more emphasis on its “restaurant dining experience”. Pizza Hut localizes it menu to capture local Indian Market. It positioned itself as family restaurant and also concentrated on wooing kids.

Public relations: In India, eating out is perceived as a form of entertainment. Which is why Pizza Hut servers not only serve our customers great food, they also sing and dance for them. And many of Pizza Hut’s customers would, we are certain, love to participate in this process

Events and experiences: Pizza hut use their events to reach to the customer and often it is used as brand building as well as product selling.

Direct and interactive promotion: Pizza hut provide many services online such as Birthday reminder service- here people can save the birthday date of their friends, relatives , and pizza hut will remind you the birthday date and birthday parties discount. Customer can book online E-coupon and discount offer available to online customers Even customer can do online order of pizzas.

Personal selling: Pizza huts try to attract the younger generation as their main market segment but they mainly target high and higher middle class customer. They actually bother about customer’s enjoyment and food not the price. Thus Pizza Hut’s concentrate more on carrying out above the- line activities in the area it serves.

People

The best part of Pizza hut are the people. Pizza hut introduced a novel way of showing customer appreciation – the bell. Anyone who rings the bell on exiting from Pizza hut is greeted with a loud thank you from all the waiters in Pizza hut. These people also do performances frequently on celebrations and most important of all, the pizza hut chain has the most polite and well-mannered people in the fast food industry.

Process

Pizza hut serves only freshly made Pizza and pastas. The process of Pizza hut involves having the raw materials half prepared in the kitchens of Pizza hut. Once the order is received, the pizza is immediately prepared and served hot. In case of pizza hut delivery, pizza hut has gone a further length and introduced a hot mark on all their packaging for Home delivery. If the mark is not red, than the pizza is not hot and it can be returned to the outlet. Furthermore the outlet also promises 30 minutes delivery for which it has to maintain a slew of drivers who deliver the pizza.

This completes the marketing mix of Pizza hut. The reality of the market is that Pizza hut is a fantastic food chain, but it is slowly being overtaken by Dominos because of the presence of Dominos to deliver pizzas to even B grade towns and cities. Ignoring the B grade towns is a deliberate marketing strategy of Pizza hut. But in the long term, whether this marketing strategy is right or wrong, only time will tell.

Physical evidence in the marketing mix of Pizza hut

The only reason Pizza hut is able to demand premium pricing is because of its physical evidence and the ambiance. The cutlery of Pizza hut is fantastic and it is an enjoyable experience to have the pizza out of the pan right into our plate. The bowls served along with pasta are also good. The glasses are big. And the seats and tables are comfortably spaced giving people the complete experience of luxury dining. Combine that with the excellent people in Pizza hut and you have an excellent afternoon or evening of dining out for Italian cuisine.