EXECUTIVE SUMMARY

S. NO. CONTENTS PAGE

1 EXECUTIVE SUMMARY 5

2 MARKETING STRATEGY OF PIZZA HUT 6

HISTORICAL HIGHLIGHTS OF
3 7
PIZZA HUT
4 CUSTOMER FOCUS 10

5 COMPETITORS STRATEGY 14

6 INDUSTRY ANALYSIS 19

SCANNING THE INTERNAL

7 22
ENVIORNMENT
8 MARKETING STRATEGY 26

9 PRODUCT STRATEGY 27

10 PRICING STRATEGY 32

11 PLACE STRATEGY 36

12 PROMOTION STRATEGY 39

13 GLOBAL STRATEGY 50

14 BIBLOGRAPHY 54

15 APPENDIX 55

2
Pizza Hut, the world’s largest Pizza chain with over 12000 pizza restaurants
and delivery outlets worldwide has the vision of becoming the best branded
restaurant with the best delivery and franchise network thereby providing
the best food and best value to the families.

Pizza Hut as a company has always tried to target and satisfy various diverse
customer categories in different countries depending upon various factors
and situations.

Pizza Hut in order to fulfill its marketing objective of maximizing customer

satisfaction by providing high quality products, has believed in the
following marketing strategy:

“Think Global, Act Local”

Pizza Hut has tried to target each and every diverse population segment
either on the basis of age (kids, teenage, office goers, senior citizens) or on
basis of lifestyle (singles or couples) or special interest groups (celebrations,
parties, festivals).

As a part of the marketing strategy, Pizza Hut follows total market strategy
along with international market strategy coupled with early entry strategy.

Marketing Strategy of Pizza Hut

3
“... Our landlady became concerned about complaints she was getting on
the clientele of the tavern next to our family's grocery store. She wanted a
nice neighborhood business to occupy her building. Having read an article
on the growing popularity of pizza in the Saturday Evening Post, she
approached Dan and me with the idea of opening a pizza place in her
building. Although pizza was relatively unknown in Wichita at the time, we
decided that it just might work." – Frank recalls.

On 19th June, 1958 the first Pizza Hut restaurant was opened by Frank and
Dan Carney, 2 students at Wichita State University, in Wichita, Kansas,
USA. By September Pizza Hut’s sales was grossing $700 to $800 a week,
by December, over $1,000 a week. At the same time Pizza Hut restaurant
number two and three soon followed.

Market-Geography Strategy of “Franchising” was adopted in 1959,

when Dick Hassur, Manager of Pizza Hut Unit No. 3 signed the first
Franchise Agreement. For a fee, he would have the right to use the Pizza
Hut name and 'secret' recipes. He also would receive management assistance
from the Carneys.

Today Pizza Hut is world’s largest pizza chain in the world with more than
12000 pizza hut restaurants and delivery outlets operating worldwide.

Historical Highlights of Pizza Hut

4
The first Pizza Hut restaurant in Wichita, Kansas was opened in 1958 by
two brothers Frank and Dan Carney. The two brothers borrowed a sum of
$600 from their mother to open their new dream venture in the form of
“Pizza Hut” Restaurant.

In 1959, the 3rd Pizza Hut unit was set up as a result of Franchise
Agreement. Thus their vision and drive developed a “Franchise System”
which later became a worldwide successful marketing model.

International Pizza Hut Franchise Holders association (IPHFHA) was

organized in 1968 and in the same year, Pizza Hut made its first move
towards international markets and set its first Pizza Hut in Canada.

In 1969, Pizza Hut Restaurant was opened in Mexico followed by

Restaurants in Australia, Japan and England. In 1976, international Pizza
Hut restaurants became 100 in number while the total number of Pizza Huts
reached 2000.

In 1986, Pizza Hut opened its 5000th unit in Dallas, Texas. In 1988, Pizza
Hut celebrated its 30th anniversary with more than 6000 units. And at present
when world’s largest pizza maker is reaching its 50th anniversary, it has
close to 12000 Pizza Hut restaurants and delivery units. Out of which 7500
are in America while more than 4500 are spread all across 80 countries.

As far as the Food is concerned, Pizza Hut along with its regular “Thin-n-
crispy” pizza, added sandwiches, salads and beer to its menu in 1970. In
1980, all time favorite “Pan Pizza” to its menu and till date it is the most
favorite pizza of the entire menu at Pizza Hut. Famous Pizza varieties from

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Pizza Hut are “Pan Pizza”, “thin-n-crispy” pizza, “hand tossed style pizza”,
“stuffed crust pizza”.

In 1977, Pizza Hut merged with PepsiCo. And $10 million new office was
constructed in Wichita. Pizza Hut also made its entry into the “Home
Delivery” segment which is the most growth oriented segment in the pizza
market. In 1983, Pizza Hut Australia started home delivery of pizzas,
followed by Sydney etc. In 2000

In 1997, YUM restaurants was formed making Pizza Hut a part of world’s
largest restaurants chain with KFC and TACO BELL spinning from
PepsiCo. At this time, Pizza Hut has the largest number of outlets of any
Australian Convenience food company with a total of 464 outlets in
Australia and New Zealand.

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 Vision of Pizza Hut

Not just Good….not just great…. But THE BEST.

To be the best hospitality business anywhere in the world….

The best branded restaurant

The best delivery business

The best franchise network

The best food, service assets and value

The best for families

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Customer Focus

“Consumption is the sole end and purpose of production; and the interest
of producer ought to be attended to only so far as it may be necessary for
promoting that of the customer”- Adam Smith

Frank and Dan Carey recognized that the concept of Pizza was quite new to
American. Although frozen pizzas and pizza mixes had entered into the
market and started penetrating in non-traditional food market.

Initially Pizza sampling was done to test the product and consumer’s
preferences about the product. Thus first Pizza Hut was a success. From the
very start, Pizza Hut aimed to get pizza’s to the masses.

Initially, the entire world was a common market for Pizza Hut until it began
segmenting and targeting particular market segments by differentiating and
developing diverse products for them.

Pizza Hut as a company has always tried to target and satisfy various diverse
customer categories in different countries depending upon various factors
and situations.

Pizza Hut in order to fulfill its marketing objective of maximizing customer

satisfaction by providing high quality products, has believed in the
following marketing strategy:

“Think Global, Act Local”

8
In Malaysia for instance, Pizza Hut targeting both urban adults as well as
families with pre-teens and teenage children by offering a delicious mix of
nutritious Itlaian-Amercian cuisine which includes world’s favorite pan
pizza. Pizza Hut Malaysia at the same time offers a cozy, friendly ambience
in which to relax and have a great time with family or friends. Pizza Hut
Malaysia's success has been due to imaginative and innovative thinking in
continuously developing, marketing and promoting new pizza products with
unique and distinctive flavor, taste, style and appeal.

In order to target the entire family experience, Pizza Hut launched a Hand
Tossed Pizza which was pizza hut’s first step in traditional stuffed crust
segment. It offers not-to-thin and not-to-thick crust on which the entire
family agrees.

To tap the market for young single in-hurry office goers looking for “fast
lunch”, Pizza hut came up with “personal pan pizza for one”.

The Personal Pan Pizza® revolutionized lunch and became the perfect
solution to satisfy pizza cravings in a hurry. Pizza Hut introduced America
to the perfect pizza for on-the-go back in 1983. Today, we can find Personal
Pan Pizzas® in airports, college cafeterias and even sports arenas.

To satisfy the New York pizza lovers, Pizza Hut introduced a “The big
New Yorker Pizza”. This pizza was 30% larger than pizza hut’s largest
pizza. It is New York style pizza at un-New York price introduced in 1999.

In some countries, to capture the interest of “Echo Boomer generation”

which the ultimate cheese loving population, Pizza Hut launched “The
Ultimate Cheese” to give them the ultimate pizza experience.

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As Pizza Hut is the world’s largest Pizza manufacturing company believing
in strategy of “Think Global, Act Local”, somewhere in USA pizza hut
introduced variants with extra cheese or large in size, at the same time, when
pizza hut to grow in international waters as Asia, it diversified to adapt their
cultures and provide their favorite flavors.

In order to tap huge spices lovers’ population in India, Pizza Hut recently
has launched “The Great Indian Treat” which is rich in Indian spices
and garlic.

In order to tap market segment less than 18 years, pizza hut introduced
“Stuff! Under 18 only” in United Kingdom, to tap the kids segment, various
“Value combos” are introduced comprising of a Pizza, Chicken wedges,
Fruit drink and ice cream.

Whereas to tap the teenage market, Pizza hut introduced different

flavors of pizza along with fruit beer was offered.

At the same time, Teenagers were lured by promotional schemes as “DUBIT

CARD” which will allow them to take discounts at various entertainment
places including pizza hut.

In an attempt to target, the people who are young and romantic at heart,
whether it is an 18 year old boy friend or 50 year husband, on the occasion
of “Valentine’s Day”, Pizza Hut launched a limited edition “Sweetheart
Pizza” in the shape of heart.

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In nutshell, Pizza Hut tried to target each and every diverse population
segment either on the scale of age (kids, teenage, office goers, senior
citizens) or on basis of lifestyle (singles or couples) or special interest
groups (celebrations, parties, festivals).

Competition at Core

A simple word “Pizza” with a simple meaning “a flat yeasted bread topped
with a variety of toppings commonly including tomato sauce, cheese, meats
and vegetables commands approximately $37 billion worth of world market.

Though this figure of $37 billion includes packaged pizzas, frozen pizzas,
pizza restaurants, dry pizza/pizza mixes etc. However in the segment of
pizza restaurants, there are 4 major international players in addition to
various national players operating in every country.

International Competitors of Pizza Hut

 Papa John’s

 Domino’s

 Little Caesar’s

11
 Domino’s

Competito
r
Of
Pizza Hut

Little Papa
Caesars Johns

Domino’s Pizzas

Founded in 1960, Domino’s pizza is the recognized world leader in pizza

delivery operating a network of company founded and franchise-owned
stores in national and international markets. Domino’s Pizza’s vision
illustrates a company of exceptional people on a mission to be the best pizza
delivery company in the world.

12
With more than 8000 restaurants and delivery units spread across in 50
countries, Domino’s holds the 2nd position in international pizza market.

Domino’s is world’s fastest pizza maker. It makes 14 pizzas in 2 minutes

and 35 seconds.

In 2004, Super Bowl Sunday was the busiest day of the year when Domino’s
sold close to 1.2 million pizzas which is approximately 42% more pizzas
compared to a normal Sunday. Super Bowl Sunday ranks among the top five
days for pizza deliveries annually along with Thanks giving, New Year’s
Day, New Year’s Eve and Halloween.

Little Caesars

Little Caesars is 4th largest pizza manufacturer in USA. The company claims
to be largest carry-out pizza chain in the world. The company is famous for
its advertisement campaign of “pizza! Pizza!” which was later altered to
“pan! Pan!’ to promote their pan pizzas.

Little Caesars is famous for selling more pizzas at fewer prices. It has
notable “differentiating Strategy” wherein Little Caesars sells “Hot-N-
Ready” pizza for $5.00 only which means those customers do not have to
call before taking the delivery of their pizza. They can just drop in to a
“Little Caesar” outlet and collect their hot-n-ready pizza instantly.

13
Common Marketing strategy followed by 3 international
competitors:
Differentiation
 Three differentiation drives followed by 3 major companies of
world’s pizza industry started in 1970’s.

 Differentiation drives taken up by Pizza Hut is “Pan Pizza”.

 Differentiation strategy adopted by Domino’s is “Guaranteed 30-

minutes free delivery”.

 Differentiation drive taken up by Little Caesars was “Buy-One-Get-

One-Free”.
 Although these 3 differentiation drives ended by 1995, but these made
dramatic changes in world’s pizza industry.
 Pizza Hut style pan pizza was seen on numerous menus; every pizza

company was delivering and offering some variation of “30-minute

delivery”; almost every company was advertising some variant of
two-for-one or two pizzas at a discount price.

 Till 1985, all the 3 big players were involved in neutralizing the

impact of their competitor’s strategy. For e.g. Little Caesars

introduced “Panza Pizza” to neutralize pizza hut and Domino’s pizza
introduced “Domino’s Doubles” to neutralize Little Caesars.

 Finally while these 3 giants were thrashing it out an upstart emerged:

Papa John’s with a “new” point of difference.

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Papa John
Better ingredients, Better Pizza

As a high school student working at a local pizza pub in Jeffersonville,

Indiana, Papa John's founder John Schnatter realized that there was
something missing from national pizza chains:

“A superior-quality traditional pizza delivered to the customer's door”.

His dream was to one day open a pizza restaurant that would fill that void.

In 1984, "Papa" John Schnatter knocked out a broom closet located in the
back of his father's tavern (Mick's Lounge), sold his prized 1972 Z28
Camaro, purchased $1,600 worth of used restaurant equipment, and began
selling his pizzas to the tavern's customers.

The customers loved the pizza so much that John was able to expand by
moving into adjoining space, eventually leading to the opening of the first
Papa John's restaurant in 1985.

Today, Papa John's boasts nearly 3000 restaurants in 49 states and 20

international markets. Papa John's also owns or franchises 100+ Perfect
Pizza restaurants in the United Kingdom.

More importantly, Papa John's remains committed to its heritage of

making a superior-quality, traditional pizza.

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Papa Johns also used “Differentiation” strategy of Porter’s Competitive
Game plans. It positioned its pizza on basis of best ingredients which are
used to make its pizza better and rather best for its customers.

Seeking Competitive Advantage

To outperform the competitors and to grow despite them, Pizza Hut must
know why competition prevails, why firms attack and how firms respond.

This is done by undertaking Industry Analysis which assesses the

attractiveness of the market based on its economic structure through:

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PORTER’S FIVE FORCE MODEL

POTENTIAL
ENTRANTS

RIVALRY
THREAT OF AMONG THREAT OF
SUPPLIER’S EXISTING BUYER’S
BARGAINING PLAYERS BARGAINING
POWER POWER

THREAT OF
SUBSTITUTES

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Rivalry among Existing Players

At present, there are 3 major players in US pizza market namely Pizza Hut,
Domino’s and Little Caesars and the degree of rivalry among them is very
high. The reason is number of competitors is large, industry growth is high
and the fixed cost involved is also high.

Threat of new entrants

Secondly, since industry growth is high, it attracts new potential firms to

enter into the market. However if the new entrant is experienced then it will
be able to compete with the existing players else, the economies of scale
enjoyed by the existing players will force the new entrants to exit the
market.

As pizza industry in US has reached maturity stage, entry of new entrant

will be treated as “Laggard Entry” which in turn can be categorized into
“Imitator” or “Initiator”.

Threat of substitutes

Thirdly, there can be a threat from substitutes which in case of pizza

industry can be other types of junk food as burgers, hot dogs, pastries,
sandwiches or pizza in some other form of pizza as frozen pizza or pizza
mixes.

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Threat of Buyer’s Bargaining Power

Threat can also come from customer or buyers when there are number of
suppliers of buyers concentration is high or large availability of substitute
goods.

Threat of Supplier’s Bargaining Power

Threat can also come from suppliers when there is large number of buyers
from these suppliers, high concentration of suppliers, high switching costs,
and non availability of raw material substitutes.

As the competition among existing players, threat of potential entrants,

threat of suppliers bargaining power is high, the pizza industry is highly
competitive and due to high growth rate, it is highly attractive too.

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Scanning the Environment: S.W.O.T Analysis

Strengths Weakness

 Name Recognition  High overhead costs due to

 First-Mover Advantage large number of restaurants

(pioneer advantage)  High price pizza which leads

 Competitive advantage as to loss of customers.

pizza hut has he largest  Internal conflicts among

network of full service franchisees.

restaurants and delivery

services.
 Broad selection of products to
target different segments.
 Strong Franchisee network.

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Opportunity Threats

 Increase revenue through more  Main threat is from

and more innovative pizzas. competitors. Out of these

 Increase in brand loyalty threat from Domino’s is main

through good customer concern.

service.  The differentiation strategy

 Pizza hut has tremendous followed by any pizza chain is

scope of expansion through its sooner or later adopted by all

new online ordering system. pizza industry players. New

 Pizza Hut home delivery and newer methods to lure the

network and entry in to new customers must be found out.

markets.  Any competitor offering same

quality and diverse flavors
might be a real threat to Pizza
Hut.

21
Marketing Strategy

Pizza Hut follows the following strategy:

 Total market strategy:

Pizza Hut started with a single product i.e. Pizza but with different
segments emerging and the degree of competition increasing, it
diversified into several products to serve different segments. It came
up with chicken nuggets, wedges, garlic bread, smiley etc.

 International marketing strategy:

Pizza Hut started with local market strategy in Kansas, USA then
moved on to regional markets in and across USA. In 1968, Pizza Hut
started its international movement by opening its 1st restaurant in
Canada. And today Pizza Hut is world’s largest pizza chain with its
presence in more than 100 countries.

 Early Entry Strategy:

Though Pizza Hut was not the first entrants in the pizza market in
USA. But Pizza Hut followed an early entrant strategy. Customers
knew what a pizza is but still there was huge potential to tap. In order
to become a leader, pizza hut continued to refine their product &
develop new product to suit their customer’s changing tastes.
Ultimately Pizza Hut with its superior promotion, manufacturing and
distribution activities has turned out to be the “winner”.

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 Strong Commitment Strategy:
Pizza Hut has been operating in the pizza market by realizing all
economies of scale in promotion, distribution and manufacturing
facilities. If Papa Johns or Little Caesars come out with a new
competitive pricing strategy or innovative product, then Pizza Hut
quite aggressively fights back by bringing more competitive prices or
better innovations in product category. In simple words, Pizza Hut
takes all possible measures to defend its leadership position in the
market.

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Marketing Strategy: McCarthy’s 4 P’s of Marketing

Price
Strategy

Marketin
Product g Place
Strategy Strategy Strategy

Promotio
n
Strategy

24
Pizza Hut: An Overview of the “Product Strategy”

“Product Strategies specify a market needs that may be served by different

products offerings”.

 Product Positioning Strategy:

Pizza Hut has always followed “Single brand positioning” strategy

wherein it has positioned only its pizzas. Although the positioning
statement has been different in different countries but it has always
hovered around its “PIZZAS”. For instance, in Canada, its positioning
statement is “The best tasting pizzas under one roof” which reflects a
great variety of pizza being served , in China it has positioned on
“Dine-in restaurants”, in Australia, it is “made fresh, served hot and
on time” which reflects that best of ingredients are used and pizza is
delivered on time. Similarly, in India, pizza hut’s positioning has been
“Good times, Great pizzas”.

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 Product-Scope strategy:

Pizza Hut follows a “multiple product strategy” as pizza hut not only
sells pizzas, but also deals in a variety of other products as

Product-Scope Strategy

Pizzas Appetizers Salads & Pastas Soups and

Desserts

Although all the product offerings in pizza hut are not as fast moving
as its pizza, but they usually complement each other. For instance, a
family coming for a dinner usually starts with some soup and garlic
breads and then moves on to pizzas along with some diet salads.
In this way, pizza hut caters to different people with different needs
and tastes and preferences. This helps in increasing sales,
profitability, market share and above all “Customer’s Mind Share”.

26
 Product-Design Strategy:

Pizza Hut follows the strategy of selling Standardized Products with

modifications. Pizza Hut mainly sells 4 types of pizzas: Pan Pizza,
hand-tossed pizza, stuffed crust pizza and Thin N Crispy pizza. Pizza
Hut serves these standard style pizzas everywhere in the world but at
the same time, it offers its customers to choose different toppings as
extra mushrooms or extra capsicum and onions with extra cheese or
chicken toppings like toppings of meat, bacon, fish, ham, beef
topping, pork toppings etc.

Secondly it offers what is known as “Value meal combos” wherein it

offers a combination of pizzas, appetizers, beverages etc at lower
prices. For instance, Pizza hut introduced “Meal for 2” which offers a
medium pan/freshizza pizza, garlic bread sticks with 2 glasses of
pepsi.

Similarly pizza hut also offered “Meals for 4” where it offered 2

medium pan pizzas, with one plate of garlic bread and one portion of
wedges with 4 glasses of Pepsi/Soup.

Pizza Hut by offering standard products seeks economies of scale

and by offering modification options enhances customer
satisfaction which adds to brand equity of Pizza Hut.

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 Product innovation strategy:

Pizza Hut has been constantly involved in innovating new products. It

started as Pizza chain in 1958. On one hand, it offers traditional
Italian pizzas while on other hand, it innovated several new
varieties as pan pizza, thin n crispy, stuffed crust, the big New
Yorker pizza, hand tossed pizza, the edge pizza along with the
Sicilian Pizza.

Pizza Hut spends extensively on research and development of its

innovative products. At the same time, customer’s feedback also plays
an important role in preparing new pizzas. For example, The Big New
Yorker Pizza.

Pizza Hut continued to make innovations as it followed “International

marketing strategy”. In India, Pizza Hut launched international style
pizza in localized Indian flavors like Tandori pizza range with Punjabi
flavors, vegetarian tama-tam, Murgh Mazedar Pizza etc.

Similarly, in China along with traditional pizzas, it served “Sangria”

and “Escargot”.

Along with pizzas, Pizza Hut also innovated beverages and drinks to
satisfy the tastes of consumers. For e.g. Pizza Hut in Oman has added
a refreshing splash of tropics to their menu with the launch of Monin,
a new line of flavored drinks.

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 Value Marketing Strategy:

Pizza Hut as far as value marketing is concerned follows

• Quality strategy
• Customer- service strategy
• Time-based strategy

Pizza Hut promises its customers to give them best quality product by
using best quality ingredients. Time and again it re-emphasizes on this
fact through its advertisement campaigns.

Pizza Hut main motive is to enhance its customer’s satisfaction by

providing them best quality products at affordable prices.

At the same time, pizza hut always tries to deliver on time. Although
Pizza Hut’s competitor Domino’s differentiates on basis of timely
delivery in 30 minutes, however, Pizza Hut through its innovative
technology is also trying to reduce its delivery time to 30 minutes and
fight back Domino’s.

29
Pizza Hut: Overview of the “Pricing Strategy”

Pizza Hut ideology of “Customers” behind its pricing strategy:

Willing to pay for relevance

Willing to pay for excitement
Willing to pay for quality
Willing to pay for simplifying life
Willing to pay for forward movement

But Selective and defiant……

Pizza Hut is definitely not at all playing a “Price Game” against

its competitors.

Pizza Hut follows “A High/Low Pricing” strategy as far as its new

products are concerned where it fixes the price higher then its
competitors and then gradually lowers the price below the
competitor’s prices.

In simple words, it is applying “Price Skimming” strategy for its new

products.
For instance, the price of “the Extreme” was fixed at $9.99 which was
much higher then its competitors. But several sales promotions were
used to reduce the price of the pizza below its competitors.

30
 Since both Pizza Hut and Pepsi are partners, “Bundle Pricing” is used
where 2 litre bottle of Mountain dew was offered free with “The
Extreme pizza”.

The high/low pricing strategy has several advantages for Pizza Hut:

 Used to create excitement

 Set high prices initially to send a signal that its products are best in
quality and service offered is 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.
Pizza Hut in formulating the complete pricing strategy focuses on “Value
which it is providing to the customers at a particular price”.

As far as the pricing of established products is concerned, Pizza hut believes

to give “Value for Money” to its customers. Thus in order to provide
maximum value to the customers and enhance the brand value, it sometimes
maintains the same prices while sometimes reduces the prices, while
sometimes increase prices also.

For instance, in India, when Pizza Hut launched The Great Indian Treat, it
didn’t increase price of existing pizzas, but reduced the quantity of
products in its “Value Meals combos”. This is because consumers at pizza
hut hardly buy single pizza’s, they are more satisfied with value meal

31
combos. Therefore by reducing quantity of meal combos, Pizza Hut
implicitly increased its price thereby encouraging customers to try new
flavors and at the same time, maintaining its market share and sales.

Sometimes in face of competition either from pizza players or from its

substitutes, Pizza Hut has also reduced prices by maintaining the same level
of customer service and quality.

For instance, when McDonalds reduced its prices by introducing Rs.20

value meal, Pizza hut was forced to reduce its prices and introduced Rs.50
Pan Pizza.

Pizza Hut also launched what is named as “Pan 4 all” at Rs.200 where pizza
hut offered 4 pizzas of different tastes. This scheme provided value for
money to the customers.

Pizza Hut follows “One-Price” Strategy i.e. it charges the same price to all
its customers under similar conditions and for the same quantities.

This helps in establishing a favorable and fair image among its customers as
well as having a stable market.

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Pizza Hut at the same time follows “Price Bundling” Strategy or “Value
Pricing” wherein it combines the items of its menu and offers at a lesser
price then what a customer would have to pay if he bought these items
individually.
For Example, in India, Pizza Hut offered for Rs.75 a deal of “a plate of
garlic bread sticks, 1 personal pan pizza, a glass of Pepsi and one scoop of
ice cream”.

Similarly Pizza Hut offered meal combos serving 2 people or 4 people.

These bundling schemes attracted large number of customers who are not
only interested in pizzas but in tasting other things as well.

In offering such schemes, although Pizza Hut costs less but at the same time,
this increases the customer inflow and sales revenue of PH tremendously.

Thus Pizza Hut’s pricing strategy revolves around providing maximum

value to the customer at an affordable price.

Pizza hut never plays the price game as it has positioned its brand on high
quality and excellent customer service. And even Pizza hut customers don’t
mind paying a little more than its competitors because of the service it
renders and quality it promises

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Pizza Hut: An Overview of Franchise Model

“Franchising” involves a contractual arrangement between a franchisor

(a manufacturer, a wholesaler, or a service sponsor) and a retail
franchisee, which allows the franchisee to conduct a given form of
business under an established name and according to a given pattern of
business.

Pizza Hut after its incorporation in 1958 opened its first franchise unit in
Topeka, Kansas. Followed by a Pizza Hut restaurant built in just 5 days by
franchisees in Oklahoma State Fair.

In 1968, Pizza Hut made a global entry by entering in Canada. Then it made
a strong foot holding in Australia, Japan, England, Kuwait, and Abu Dhabi.
By 1989, Pizza Hut was already serving 54 countries.

In 1996, Pizza Hut entered India with the first dine-in restaurant in
Bangalore.

While entering in the international arena, Pizza Hut used the “Franchising
Route” as the entry strategy.

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Reasons why Pizza Hut adopted “Franchising” as the entry strategy:

 Best method to establish operations without risk of operations in an

unfamiliar country.

 Franchising route helps in learning the buyer behavior, consumer

preferences, market realities etc.

 Franchising helped Pizza Hut in building a brand name and creating

efficient distribution system.

 In certain socialist countries as China, Russia etc, direct foreign

investment is not allowed, so pertaining to the local legal framework
of these countries, Franchising is an easier route to enter into these
countries.

The critical success factor in the success of the Franchising Model:

Selecting the right business partner.

Yum Restaurant which is the parent company of Pizza Hut invites

applications for franchisees for pizza hut.

Three attributes which Yum Restaurants look for are:

≅ Commitment
≅ Capital

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 ≅ Capability

Franchisee must have the following to join the Pizza Hut family:

≅ Do you capital to grow?

□ Personal net worth of $1million

□ Liquidity of $360 million
□ Endorsed financial plan for future development.

≅ Do you have a passion for operations?

□ Quick service restaurants are a ‘hands-on” business

□ A passion for customer mania is critical
□ Food service experience is a must

≅ Are you committed to building people capability?

□ A commitment to management and team training

□ An infrastructure that supports rapid growth

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Pizza Hut: An overview of “Promotion Strategies”

Pizza Hut uses a wide assortment of promotion tools to achieve the

following:

□ Increase the market share

□ Increase the sales volume
□ To increase repeat purchase
□ To induce the non buyers to buy the product

The Promotion mix which it uses is as follows:

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 Promotion Mix

Advertising Personal Selling Sales Promotion

“Advertising”: Maximum used Medium of Pizza Hut

Promotion Strategy

Advertising is “non personal communication transmitted through mass

media as radio, television, print, internet and outdoor media”.

The main objective behind every campaign is either to increase sales by

encouraging potential purchasers or inducing repeat purchases or prompting
immediate purchase by offering special schemes or to create awareness
about a new product offering by highlighting a new flavor or announcing
price changes or demonstrating the product in use by depicting an
experience.

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For instance, to launch a new flavor in India named “The Great Indian
Treat”, Pizza Hut signed a Javed Jaffrey for its new TV commercial.
Similarly to inform the customers about Rs.50 pan pizza, Pizza hut showed
Zayed Khan as a young teenager boy friend who has to treat his large
number of girl friends with something trendy and affordable.

Pizza Hut also launched certain ad campaigns to counter attack its

competitors promotions. For instance, in 2005 Pizza Hut launched
“Freshizza” ad campaign featuring Malika Arora Khan and counter attacked
Domino’s campaign showing Anupam Kher and Paresh Raval.

At the same time, Pizza Hut brings about local flavor in its ad campaigns. In
different countries, it uses models, situations, positioning clearly related to
that particular country.

For instance, in India, Pizza Hut focused on occasions such as marriage and
used Indian models that represent and relate to their target audience.

Similarly, in USA, Jessica Simpson sells chicken nuggets and pizzas for
Pizza hut.

Internet Advertising

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Not only Television advertisement, Pizza Hut along with Pizza innovations,
also innovates new ways of promoting its products. Recently Pizza Hut
signed a deal with Yahoo internet portal to advertise its products.

The Flash-based rich media ad shows a pizza-laden pizza peel (the wooden
"paddle" used to lift pizzas in and out of an oven) popping out of the middle
of the Yahoo home page. Pepperonis rain down on the pizza, which then
zooms across the screen to land in an ad unit on the right-hand side of the
page, in Yahoo's Marketplace area.

Clicking on the ad's "Click for recipes" icon sparks a Flash slideshow of
different version of the pizza -- Ultimate Cheese Lover's, Ultimate Meat
Lover's, Ultimate Pepperoni Lover's and Ultimate Veggie Lover's -- and a
special promotional price, $8.99 for a medium pie.

Clicking again on the ad takes users to a special sub-site, PH899.com, where

they can get more information about the pizzas, find a local Pizza Hut, and
play Pizza Hut-branded games. The PH899.com site also features
downloadable coupons, and a contest to win free pizza for a year (which
requires that users submit their information to the site).

Yahoo also plans to promote Pizza Hut across its network, with ads running
on Yahoo Mail, My Yahoo, Yahoo Calendar, and Yahoo Sports.

The online campaign was conceived and developed by an integrated team

consisting of Yahoo, Pizza Hut, and The Digital Edge, the interactive
agency for Pizza Hut.

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According, to chief marketing officer, Pizza Hut, “Pizza eaters are a broad
group and internet advertising helps them in reaching and targeting
each one of them”.

Print Media (newspapers, magazines, pamphlets, posters)

Although Pizza Hut advertises mainly via television, but print ads also
constitutes a major portion of its promotion mix.

In order to encourage increased and immediate purchases or to induce non

buyers to make purchases, Pizza Hut prints its “coupons”.

Similarly, Pizza Hut to launch a new concept or to celebrate a particular

theme like Valentine’s Day or Halloween came up with a print ad.

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Pizza Hut also promotes its pizzas via pamphlets or leaflets which are either
hand delivered or sent through mails to its potential and regular customers.

(**specimens shown in Appendix)

Radio Advertising

Pizza Hut in order to introduce cheesy bites pizza, with an objective to

generate awareness and invite customers to sample the new product, briefed
its agency to come up with fun and innovative ad campaign.

The agency along with Clear Channel Katz advantage launched “The Pizza
Hut Free & Cheesy Music hour” which delivered one hour of regularly
scheduled music programming with minimal commercial breaks. During the
prime afternoon drive time of 5.00 pm to 6.00 pm, hungry consumers got a
chance to taste a free sample of cheesy bites pizza at their local pizza hut.

The DJ banters and encouraged the listeners to visit the local Pizza Hut to
grab a free slice of “Cheesy Bites Pizza”. Listeners were encouraged to stay
tuned throughout the hour with a promise of a toll free number to be
revealed at the end that they could call to win one of the 10 family trips to
Walt Disney.

“The Pizza Hut Free and Cheesy Music Hour” was successful in driving
awareness and trial and for building excitement at the local market level.

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Outdoor Advertisements
Pizza Hut adopted a variety of innovative types of outdoor advertisement.

≅ Balloon Advertising: Pizza Hut indulged in an extremely innovative

form of advertising named “Balloon Advertisements” where in cold

air balloons in the shape of Pepsi can, pizza slices and garlic bread are
placed either in front of the hut or placed at its roof top. (**specimen
shown in appendix).

≅ Space Marketing: Pizza hut came up with a very innovative method

of advertising when Pizza Hut paid huge sums (approx $1 million) to

put a 30 ft large logo on Russian Proton Rocket. Not only had the
logo, Pizza Hut also made its pizza available to the astronauts in the
space. On such a successful venture, Pizza hut stated that “If space
tourism is going to be a reality, Pizza Hut pizza will make the trip
even better."

≅ Banner Advertisement: Styrofirm along with McCann Erickson

came up with really innovative banner advertisements to advertise its
new range of “Gourmet Pizzas”.

≅ Poster Advertisement: Pizza Hut came with a tremendously

successful Poster advertisement campaign on the occasion of

“Halloween” when Pizza Hut advertised for “The Ghoulish Tripple
cheese, the spooky cheese combo, and the Halloween cheese
supreme”.

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Sales Promotion

“Sales promotion” refers to a variety of short term incentives to

encourage trial or purchase of a product or service.

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 Coupons
&
Rebates

Point
Sweepstake
Of
s
Purchase
&
Material
Games

Sales
Promotion

Premiums
Discount
&
&
Gifts
Allowances

Sampling

≅ Coupons and Rebates: Pizza Hut offers discount coupons in physical

form with every purchase we make. However in USA, UK, Canada

where online ordering contributes a major percentage to total sales,
Pizza Hut offers online coupons for different regions of varying
denominations. For e.g. by entering your area zip code, we get a list
of coupons of pizza hut offering different pizzas with different

45
 toppings. Pizza Hut offers large discount on orders made through
these coupons.

≅ Premiums & Gifts: Pizza Hut offers “Gift vouchers” to be presented

as a gift to someone special on marriages, birthday, anniversary etc.

these gift vouchers are available in denomination of Rs. 500, rs.1000,
rs.2000 etc. Pizza Hut offers CDs and DVD along with their pizzas as
gifts to act as an additional incentive for customers to make the
purchase. For e.g. Unique DVD Promotion: Pizza Hut came up with
a promotion campaign where is offered a free DVD with a large size
pizza and in a 6 week promotion, Pizza Hut distributed 10 million
DVDs.

Pizza Hut collaborated with Sony to launch a promotion campaign

named “Pizza-Powered PlayStation giveaway” which was huge
success. During the nest year, Pizza Hut again came up with a
promotion where along with stuffed crust pizza, kids will get
PlayStation demo disc free.

≅ Sweepstakes: Pizza Hut during the launch of “Cheesy Bites Pizza”

introduced nation wide online sweepstakes contest to win an

autographed pair of shoes by Jessica Simpson. Fans will be able to go
online to www.pizzahut.com/cheesybites to enter the sweepstakes.
Customers will also have an opportunity to win an autographed pair
of Miss Piggy boots.

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≅ Contests: Pizza Hut on various occasions as Mother’s Day, Father’s

day, Valentine’s Day organizes contests to attract footfalls in the

restaurants as well as to enhance its brand value. For e.g. on mother’s
day, Pizza Hut announced an “Essay competition” on “why Pizza Hut
should cook for MOM?’ and the prize was $750 Pizza Hut gift card.
These contests gave children a wonderful opportunity to be creative
and show their love and affection for their moms. At the same time,
Pizza Hut offered an exciting gift for mom as this allowed mom’s to
spend some time away from their boring kitchen work with their
family over a pizza.

≅ Sampling: Pizza Hut gave “free samples” of the new pizza which it

launches. For e.g. in case of “Cheesy Bites Pizza”, Pizza Hut offered
free slices of it to the customers for sampling and testing it amongst
the consumer group.
≅ Point of Purchase Material: Pizza Hut restaurants interiors are done

in a uniform format for all the restaurants. Pizza Hut also comes out
with several innovative POP materials to attract the attention of its
customers. For e.g. Spin The Wheel games, danglers and posters.
During the launch the “The Great Indian Treat” the entire interiors
were given a pink color and the menu and danglers were all colored
pink.

On the occasion of “Valentine’s Day” in Malaysia, Pizza Hut

launched a limited edition “Heart Shaped Pizza” with danglers,
greetings cards all over. This limited edition Heart shaped pizza not

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 only created an excitement among the customers, it also increased its
brand value. (** specimens of ads shown in appendix).

Personal Selling

“Personal Selling refers to face to face interaction with the customer”.

≅ Entertaining the customers in the restaurant: Crew members at

Pizza Hut broke in to a boogie at metros like Delhi and Mumbai and
performed “Bhangra” in Chandigarh and Amristsar. Pizza Hut in
Delhi organized a “JIG N JEETO” contest with super star Faradeen
Khan judging the show. The show received tremendous response
from the customers.

≅ Etiquettes of the crew members: The politeness of their speech and

the mannerism which Pizza Hut crew members serve their customers
is absolutely outstanding which enhances the brand value of Pizza hut
in customer’s mind.

Pizza Hut: An Overview of the Global Strategy

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Pizza Hut before entering into any new country conducts a comprehensive
market survey of that country to learn about the culture that prevails in that
country, the state of government and politics, the legal framework (product
quality laws, packaging laws) , commercial practices (business structure,
patterns of competition).

Strategy Adopted by Pizza Hut for Global marketing programs:

Localized strategy:

Pizza Hut follows the strategy of “Think Global, Act Local”. For e.g. in
India, the 1st Pizza Hut which was launched in Bangalore served complete
vegetarian meals.

Similarly, in China, along with serving Pizzas, Pizza Hut also serves
“Sangria” and “Escargot”.

Similarly, in India, to match the spicy tastes of Indian consumers, Pizza Hut
launched “Tandoori Treat”, “The Great Indian Treat”.

For the cheese lovers in United States, Pizza Hut launched Cheesy Bites
Pizza and Stuffed Crust Pizza.

International Marketing Coordination:

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Pizza Hut’s international marketing activities though dispersed in different
countries are properly coordinated to gain competitive advantage as

≅ All marketing activities as market research, advertisements, and

restaurant interiors are done using a similar method.
≅ Marketing know-how and skills are transferred from one country to
another. For e.g. the “franchising model” is used successfully in all
the countries by Pizza Hut.

Recommendations

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≅ High Quality Personnel: In order to maintain the no.1 position in

Pizza market, Pizza Hut must obtain total cooperation of its

employee’s thereby increasing productivity, beating competition and
enhancing customer satisfaction. For this, proper training program
with high incentive schemes must be established.

≅ Pay more attention to untapped segment of Senior Citizens: Pizza

Hut must innovate and launch some product for Senior Citizens. It
could establish Pizza Hut senior club which will organize activities
for oldies.

≅ Maintain the product quality by continuous innovations thereby

giving surprises to the customer off and on. Innovations can be based
on consumer’s reviews and feedbacks as to what changes are they
looking for in their pizzas.

≅ “Location, location and location”: the most critical success factor

for any hospitality business is “Location”. Pizza Hut does not aim to
be premium brand with selective distribution, instead Pizza Hut is
brand which must be available anywhere and every where people
thinks of PIZZA. Thus Pizza Hut must increase it coverage.

≅ Emphasis on development of “Home Delivery” Network: Although

in developing countries like India, Pizza Hut has opened up a “call

center” to fasten the speed of home delivery. But Pizza Hut must

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 think of more innovative ways to reduce the cost and increase the
speed.

≅ More and More innovative promotions: In developing nations as

India and China, where the pizza market is still in growth stage, Pizza
Hut must do innovative promotions as done in USA, UK and England
which will increase its brand awareness and brand equity.

Bibliography
≅ www.Pizzahut.com

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 ≅ Yum France Investor Day Report, 2006
≅ www.papajohns.com

≅ www.dominos.com

≅ www.pizzatoday.com

APPENDIX

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Figure 1: Specimen of Pizza Hut Coupons printed in magazine and news
paper.

Figure 2: Balloon Advertisement for Pizza Hut

Figure 3: Specimen showing Pizza Hut’s Space Advertisement

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Figure 4: Specimen of poster ad Pizza Hut launched for “Halloween”

Figure 5: Pizza Hut’s Valentine Promotion campaign

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56