This paper presents a marketing plan and business assessment for Pizza Hut Australia, focusing on two core objectives: maintaining the number one market position and increasing pizza sales through expanded franchisee delivery units with carryout facilities. The paper outlines specific strategies for achieving these goals, including internal incentive campaigns, corporate partnerships, product development for delivery, senior citizen targeting, staff training, advertising, pricing, and location selection. It also addresses performance measurement through sales analysis and mystery-controller evaluations. The analysis draws on marketing theory and real-world Pizza Hut examples to support each recommendation.
A marketing objective is a statement of what is to be accomplished through marketing activities. The marketing objectives for Pizza Hut Australia are: (1) to maintain the number one market position, and (2) to increase the percentage of pizza sales by growing the number of franchisee delivery units with carryout facilities.
These objectives can be achieved in several ways. One approach is to create internal campaigns or contests with attractive prizes. In July 1997, Pizza Hut organized a "Serving Up a Million" contest — an eight-week competition among all company-owned Pizza Hut stores across the country. The Odessa restaurant outperformed more than 4,000 company-owned Pizza Huts in the USA, and the manager and his staff received a check for US$100,000 (Pizza Hut Website, 1998).
Another approach is to sign agreements with leading corporations or chains operating in the same or complementary markets. An example is the agreement signed on 11 February 1997 between Pizza Hut and Hilton Hotels, with the objective of offering hot, tasty Pizza Hut pizzas at select Hilton Hotels and resorts across the United States. "To provide travelers with the same food and service that they received at their hometown Pizza Hut," said Pat Williams, President of PepsiCo Express Restaurant.
Pizza Hut can also improve its sales percentage and profit by opening more delivery units with carryout facilities in strategically chosen locations. Compared with traditional restaurants, delivery units require an estimated investment of US$128,500 to US$198,500. Franchisees investing in delivery units typically did not purchase vehicles and did not always adopt the company's computer-ordering system. The cost of sales in delivery units would be lower due to a combination of upsizing and higher per-order prices. The carryout segment represents the segment with the greatest percentage of sales, and the number of staff required to operate these units is generally smaller. As one senior Pizza Hut manager noted, "When we introduce delivery to a market, we get the business of customers who probably were ordering a competitor's pizza simply for the convenience of home delivery."
The first objective — maintaining the number one market position — requires Pizza Hut to continue offering a high-quality product at a premium price. The company should review all unnecessary expenses and redirect resources toward advertising on local radio and television, as well as increasing general publicity.
Another marketing strategy involves starting or expanding a direct mail program to targeted homes. The Marketing Department should determine which areas to target and how frequently mailings should be sent. Editing a monthly "Pizza Hut Magazine" could also be valuable; such a publication might include restaurant and delivery unit news, customer letters, games with prizes, and monthly promotions — covering both company-owned and franchisee outlets.
Introducing discount cards for loyal customers is a further strategy. These cards can generate total customer fidelity and encourage free word-of-mouth advertising. Additionally, Pizza Hut should pay greater attention to the senior citizen segment. This demographic is growing steadily and possesses increasing buying power. A dedicated "Pizza Hut Senior Club" could be created, organizing activities, holidays in attractive domestic and international destinations (in collaboration with Hilton Hotels), and monthly meetings. In collaboration with the nutrition department of a leading university, Pizza Hut could also launch special menus for this segment, striking a balance between health (low fat, low cholesterol) and taste. These menus would likely appeal to vegetarian customers as well, and should be advertised on local radio and television.
To sustain market leadership, it is also essential to increase staff training so that all employees are fully aware they work for the top pizza chain. The company needs their professional skills — which they should continually develop — and their friendliness in delivering the best possible customer experience through personal selling.
The second objective — increasing the percentage of pizza sales by expanding franchisee delivery units with carryout facilities — requires careful market analysis. A market study is needed to identify the best areas for installing delivery units, and the Finance Department should assess the investment cost and potential profitability of each location.
The number of franchisees that had introduced delivery was growing rapidly, and many were performing significantly better than company-owned stores. By 1986, eighteen franchisees had opened 65 delivery-only units, bringing the overall total to 96. Adding carryout facilities to these units has the potential to increase business volume considerably.
Pizza Hut must also work to develop new products designed specifically for delivery, as this would involve an entirely different production process from that used in traditional restaurants. The standard pizza served in traditional restaurants should be adapted to suit the delivery environment so that quality does not suffer (Kaufmann, 1994). All products and services should have some point of differentiation — something unique and superior compared to competitors.
To support this expansion, Pizza Hut should focus on the following operational priorities:
Obtain the full cooperation of employees, as they are essential to increasing productivity, delivering customer service, and maintaining a competitive edge. Motivate personnel through a performance plan that is fair, ethical, and well understood. Hire and retain high-quality staff and actively market the organization to them, since it is the people within a service organization who differentiate it from competitors. Establish employee rewards, appropriate compensation, and flexible benefits programs (Simkin & Ferrell, 1994).
Maintain and enhance a high-quality product that delivers value and excellent service. Launch new products and new pizza recipes to continuously surprise customers — much as The Edge Pizza did, which, as Randy Gear, Chief Marketing Officer of Pizza Hut, described, "delivers a phenomenal new taste" and challenges whether "consumers will run out of crust before they run out of toppings."
Launch periodic customer satisfaction campaigns. Stay in close contact with customers and adapt quickly to new preferences. Always provide friendly, helpful service from well-trained staff.
Introduce new improvements to restaurant facilities, such as lunch buffets to display pizzas and salads, and work toward a unified corporate image.
As the phrase "location, location, location" is often used to describe the most important aspect of any hospitality business, so too is the right promotional mix critical for a premier brand. Pizza Hut should strengthen its Advertising Committee and increase its budget through higher assessments on restaurants and franchisees. In 1986, the assessment stood at 2% of the first US$28,000 of monthly sales per restaurant, and 1% of all monthly sales above US$28,000 (Kaufmann, 1993).
Pizza Hut should target the senior citizen segment through advertising on local radio and television. At the same time, the main thrust of its radio and television advertising should maintain its traditional focus on a broad audience — ranging from children to adults — delivered at effective times and in the right media environments.
"Promotional channels, pricing decisions, and cost control"
"Choosing optimal sites for new delivery units"
"Sales analysis and mystery controller evaluation methods"
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