Dominios A Case Study

1.Introduction 1.1The Dominos Story –Genesis The story of Dominos started in 1960 when two brothers Tom Monaghan and James Monaghan purchased a local pizza store ‘Domnick’ in Ypsilanti, Michigan. In 1961 James Monaghan sold his share of the business for a Volkswagon beetle car and the business grew in to a multi billion dollar company. In 1965 Tom Monaghan, the sole of owner renames the store as ‘Dominos Pizza Inc’ and by that time through expansion he had opened three stores. The three dots in the Dominos Pizza logo is a reflection of first three stores at the time of incorporation. Dominos Pizza opened its first franchises store in Michigan in 1967 and went global by opening the first international store in Canada by 1983. The world saw the beginning of one of the most successful franchise businesses. In 1998 Tom Monaghan sold his share of the business to a private investment firm called Bain Capital. A significant year was 2004, whereby Dominos Pizza Inc begins trading common stock in New York Stock Exchange under the new symbol of DPZ. At present the company has more than 8000 stores in 50+ international markets. Dominos has based its vision on to be ‘exceptional people on a mission to be the best pizza delivery company in the world’. Dominos Pizza concept is on delivering pizza’s to its customers. Unlike other pizza companies were restaurant dining is the main theme. Dominos pizza believes in the strategy of pizza home dining. In the pizza industry globally Dominos Pizza is the second largest pizza business and has established successful global franchises. Dominos Pizza entered the United Arab Emirates (UAE) Market in 1997 with one store in Abu Dhabi At present it has increased the number of stores to 9 in various emirates. This paper is based on Dominos Pizza launch in UAE. The present pizza market in UAE is competitive and compared to the global success of its franchises, the market share captured needs to be increased. The question and the business strategy of relaunching of Dominos Pizza in UAE is proposed. The paper will bring forward proposal to change and modify the key elements of the marketing mix. As the Marketing Director for middle east, the author is given the task of re-launching Dominos Pizza in UAE to increase the market share.

2.Business Overall and Overall Marketing Plan 2.1Dominos Pizza in UAE

Dominos Pizza entered UAE in 1997. Dominos Pizza is a franchise of Gourmet Gulf Companies. Dominos opened its first store in Abu Dhabi and at present out of seven emirates in UAE, they have restaurants in three emirates. The three emirates in which Dominos Pizza is operating are the capital, Abu Dhabi, the financial hub, Dubai and Sharjah. The company has opened a total of 9 stores in UAE. The Dominos Pizza Inc intents to re-launch Dominos Pizza in UAE to increase the market share. The competitors of Dominos have made inventions and changes in their products and marketing aspects and thereby Dominos by re-launching can strengthen the branch communication. Annexure 1. Key factors that lead Dominos Pizza Inc to review its business in UAE is decline in the market share and decline in the brands strength. This was arrived by conducting a research methodology. The purpose of the re-launch is to make the existing market and targeted market look at the brand name Dominos in a different light. The identified and recognizable reasons for brand re-launch would be; 1. Reposition the brand 2. Any change in market conditions 3. To enter into a new market 2.2The Customers United Arab Emirates is the middle eastern business hub. Expatriate workers from around the world live and work in UAE. The population consist of the Emaraties, majority Asians, Middle Eastern nationals and western expatriates. It’s a cultural mix with different cultural sentiments. Being a middle eastern country religious restrictions are observed. Majority of the Asians are non resident Indians who surpasses the Emaraties and the highest single population in UAE. Dominos Pizza has to keep in mind the restrictions of each cultural market segment. Pizza with ham, bacon, pepperoni made by pork which is a popular and on demand in western countries would be taboo and barred in UAE. In a similar manner the high number of Indian expatriate workers need to be taken into consideration as well. Indian religious restrictions on consumption of beef and pork again would be an important factor to be considered. A key factor affecting a products success is the customer perception of the product. A brand or a product’s success or failure in a given market depends on its ability to build a healthy perception of it in the customers mind. An internationally recognized brand like Dominos Pizza would bring a certain expectation from its customers. In Fast Moving Consumer Goods (FMCG) an important customer is children. Kids play and important role in deciding a family meal option. Culturally apart kids will have the same needs and interests and any FMCG company need to research the interests of kids to make sure that they stay attracted to the product. Kids interest change rapidly and research needs to be up to date.

2.3The Market Companies have realized that in a marketplace all customers cannot be attracted. There are numerous customers with different wants and needs. Rather than compete in the entire market, a company need to identify the market which it can serve best and maximize profitability. The move of strategy from mass marketing to market segmentation was a result of such identifying. By identifying the marketing segment a company can develop products tailored to such identified market. The target market for Dominos Pizza in UAE would be the Asians which would be the majority Indians, Filipinos, Sri Lankans and Pakistani’s and the Middle Eastern nationals. Middle Eastern nationals would consist of Jordanians, Syrians, Iranians, Egyptians and Lebanese. The Western expatriates are already familiar with the brand. 2.4Core Competencies Dominos Pizza is the number one pizza delivery company in the world. While other pizza companies offer dine in facility Dominos Pizza offers to delivery pizza in record time of 30 minutes. Dominos Pizza has an advantage over other pizza companies since the dine in option is not available the cost involved in maintaining restaurants less. 2.5Competitors The biggest competitor for Dominos Pizza is Pizza Hut. Other competitors would include Papa Jones and Round Table Pizza. In any given market both Pizza Hut and Dominos Pizza try to grab the bigger piece of the pizza pie. In UAE at present Pizza is established itself with it’s dine in option as well as delivery. Market penetration by Dominos Pizza was not successful like its competitor Pizza Hut. Pizza Hut in UAE has more out lets and established in key locations. In UAE customers spend their free time in Malls. Malls play an important aspect of day to day life. Malls are located in strategic locations of each area. Pizza Hut has established itself in all the Malls as a Pizza dine in restaurant. Competition reduces a product lifecycle which in turn induces companies to revise their products. Dominos Pizza need to revise their product market to understand the changing needs, the market expectations and perception of the different market segments.

2.6Key Issues and Challenges

A key issue facing Dominos Pizza is the market visibility. Other factors include locations, pricing, advertising, menu options and customer service. Dominos Pizza being a pizza delivery company is focused on the door step delivery of pizza. Other companies offers dine in option as well as delivery. Dominos Pizza only delivers pizza. The customer perception is based on this. And it is important for the customers to be satisfied during the short contact time a customer has with the Pizza delivery person. Challenges would consist of changing the existing market perception of Dominos Pizza in UAE. Also to re-launch the brand with changes. Changes would include changes in the menu. Research to be made to study the cultural mix. Dominos at present offer their international standard menu to all customers. Keeping in mind the cultural mix in UAE they would require to diversify the menu and adapt to the customers taste, lifestyle, language, value systems and perception. Dominos Pizza in UAE is required to innovate its products to keep in line with the changing preferences and taste of customers. The present financial crisis plays an important role as well. In times of recession people tend to spend less on going out and eating out. To suit such times Dominos Pizza is required to introduce value addition to their meals by providing value meal concept and prices need to be in line with its competitors.

3.Strategic Marketing Focus 3.1Vision Dominos Pizza vision is to be exceptional people on a mission to be the best pizza delivery company in the world.

3.2Mission Dominos Pizza is dedicated to bring fun and excitement to its customers by delivering pizzas to their door step in 30mins or in less time. Dominos Pizza strives to develop pizza’s to suit the taste of its customers. Strategy is to think local and to act regional. 3,3Objectives •

Dominos Pizza will change the menu by to suit the present market segment by 3rd Quarter 2009.

•

Increase the variety of Pizza by 3rd Quarter 2009.

•

Increase the number of outlets to 20 by end of 2010 and change the location of the present outlets to more strategic locations.

•

Increase the quality of Pizza’s to compete with the competitors by 4th Quarter 2009.

•

Change the present ambiance of the existing out lets and future outlets to with more space and friendly atmosphere by 1st Quarter 2010.

•

Have a toll free number to call on deliveries and advertise the number and make customer awareness by 3rd Quarter 2009.

•

To diversify the menu from Pizza’s to other items like Pasta and increase the number of options available for children by 3rd Quarter 2009.

•

Introduce value add meal concept by 3rd Quarter 2009.

•

Introduce gifts and kids items for kids meals as an attraction by 4th Quarter 2009.

3.4Goals To increase; 1. The number of customers by 25% by 2010. 2. The number of locations and outlets to 20 by 2010. 3. The menu items by 2009 end. 4. The locations in other 4 emirates by 2010. 5. The number of deliveries done in a day by 25% by 2010. 3.5Competitive Advantage through Core Competencies Dominos Pizza has an advantage over its competitors due to the fact that they are in the delivery business of pizza. The low cost involved as it need not maintain restaurants can be in favour of introducing low cost pizza’s. Service sector depends on employees and customer service. Competitors like Pizza Hut is under pressure to maintain high standard of customer service at all times due to the dine in options it has. Dominos on the other hand need to concentrate only on the call centre employees to be courteous to the customers. Face to face interactions with the customers are minimised and therefore customer impressions and perceptions of Dominos employees are restricted only to a phone call and the delivery person. 3.6SWOT Analysis 3.6.1Strength Strong brand name and brand strength. Dominos Pizza is a globally known brand and customer awareness is high. 1. Effective delivery system. Existing effective delivery system already in place. 2. Strong existing distribution and delivery channel. Customer awareness of Dominos Pizza as a pizza delivery company. 3. Customer intimacy through door step delivery. By delivering to door step of each customer, familiarization and customer intimacy is developed by staff and customers. 3.6.2Weakness 1. Dine in option not given and families prefer eating out to dining at home. Families with kids prefer dining out option as it would involve the concept of family outing and opportunity for the kids to play in the play area. 2. Low depth and width of the product. Product innovation limited to pizza and related products. 3. High market expectation as an international brand. Customers have already has a perception due to media exposure and prior to experiencing the product.

4. Low life cycle of products. Changes need to be made on regular basis to keep in line with the market conditions. 3.6.3Opportunities 1. New product introductions. Present menu is the standard international menu. Pizza variety can be introduced keeping in mind the cultural mix in the country. 2. Entry into non pizza category meals. Non pizza items such as increase of appetizers, salads and pasta to be made. 3. 4 emirates available for introduction. At present Dominos Pizza is operating only in Abu Dhabi, Dubai and Sharjah. Scope of opening outlets in the remaining 4 emirates of Ajman, Fujeriah, Ras Al Khamimah and Um Al Quwain. 3.6.4.Target 1. Strong competition from the competitors. Pizza Hut is already established in UAE and has an existing customer base. 2. Competition from non pizza FMCG’s like McDonalds, KFC and Burger King with promotions. 3. Constantly changing customer lifestyles and taste. Need to change constantly products to keep up with the changes. 4.The Marketing Plan 4.1Target Market Anthony Young has described optimising target market by ensuring you’re focusing on your target market. One is to avoid the temptation of running with blanket communications that fail to capture anyone’s interest. There are three major steps in target marketing. The first is market segmentation. Market segmentation can be defined as dividing customers in a market in to similar groups with the same distinct needs, characteristics and behaviour. A company would need to profile each market and develop products suitable to the targeted market. Each of these cultures’s represent different taste and liking to Pizza varieties. The second step market targeting plays an important role in evaluating each market segments attractiveness and selection of the market to target. The third step is market positioning. It would be to set up competitive market positioning for the product and to create the marketing mix. 4.2Market Segmentation Adrian Payne has defined market segmentation as dividing a total market up into a series of sub-markets (or market segments) based on customer characteristics. Market segmentation can be divided into geographic, demographic, psychographic and behavioral segmentation. Demographic segmentation divide the target market into groups by their age, gender, income, occupation, religion and nationality. UAE

market can be divided by religion, nationality and region. The three categories would be the Middle Eastern nationals, Asians and Europeans. Through this Dominos Pizza would be able to launch the new menu to reach all three segments. Geographic segmentation divides markets by the region, nations and countries. UAE market can be divided by the region. Middle Eastern nationals share similar interests. Asians on the other hand is majority Indians and other nationalities would be Pakistani’s, Sri Lankans and Filipinos. Asian nationals have diversified interest with common interest of spices. European nationals share similar interest. Psychographic segmentation is based on social class, lifestyle and personality characteristic of the market. UAE market can be divided into blue collar works and white collar workers. Due to high salary jobs in UAE expatriate workers are cash rich and social classes already made. Middle class regular job holders would be the targeted market. Behavioural segmentation is based on the markets knowledge, attitude and response to a product. UAE target market is divided into by the employment sectors for example service sector, real estate and construction. Service sector is the majority of the market and the sector to be focussed on. 4.3Dominos Pizza Marketing Mix (5P’s) Market segmentation helps with target segmentation and market positioning. The marketing mix of 5 P’s used by Dominos Pizza are Product, Place, Price, Promotion and People. In Product the company looks at the question how to make changes in the product to enhance the customer experience. The physical product and services offered to the customer is the product. It involves packaging, presentation and appearance. The product includes tangible and in tangible aspects of the product. Dominos Pizza has kept its product width and depth limited. Dominos Pizza in UAE has kept is menu options to its international offering. Dominos world wide innovates its products to suit the preference and taste of the customers. Dominos in UAE is required to diversity the product range to suit the palate of all cultures. Product variety need to be introduced to suit the customer taste as per the market segmentation. Dominos Pizza a is globally renowned brand with world class quality food and understands customer needs. In Place the company strives to under the question where the product should be available and the delivery channels of the product. The location and outlet choosing plays an important role. The visibility and the limited number of Dominos Pizza outlets is a key issue to be addressed. As Dominos Pizza is based on delivery system the locations play an important role. Mainly locations to be in high residential areas to meet customer expectations for delivery of pizza’s within 30 minutes.

In a competitive market pricing plays an important factor. Revenue and profits are based on the pricing. Pizza Hut pricing is competitive and Dominos Pizza is required keep in line with the pricing its competitors are offering. Not having overhead cost of maintaining restaurants and outlets is not there for Dominos Pizza and therefore the pricing can be competitive and lower than the competitors. Value meals, combo meals and family meals concepts to be introduce to attract customers in times of recession. Annexure 2. The suitable and most effective strategy to promote the product is answered by Promotion. There are various promotion channels being used by Dominos Pizza to effectively communicate product information to customers. Dominos Pizza uses television advertisements and print ads. Employees are in important factor as well as they represent the People factor. Happy employees serve well which in turn result in happy customer. Hiring, training, personal developments and motivating staff is part of internal marketing. The People factor is prioritized by customers, front line employees, middle level managers and front line managers. 4.4Intended Strategies 4.4.1Integrated Marketing Communications Under the concept of integrated marketing communications (IMC) a company is will coordinate all the marketing tools to deliver a clear and consistent message about the organization and its products. The important promotion tools are advertising, sales promotion, public relations, personal selling and direct selling. Annexure 3. A company will achieve a competitive advantage through promotional mix as companies promote their products as significant and superior to its competitors. Dominos through promotional mix can advertise the quality of their products, the price, services offered and the additional features compared to its competitors. Through promotion a company can inform the customers its benefits and advantages to increase its market share. G.A.J Bowdin considers IMC as all sources of contact that a consumer has [with the event] as potential delivery channels for messages and, makes use of all communication methods that are relevant to consumers’ 4.4.2Advertising Advertising has been defined as any paid form of non personal promotion and presentation of ideas by an identified sponsor. Advertising can be done through television advertisements, radio, print media such as newspapers, magazines, booklets and billboard. Internet advertising is considered to be the latest form of advertising. Advantage of advertising is to communicate to a large number of customers at the same time. Through advertising a company can reach the masses or reach selected targeted markets. Dominos Pizza need to advertise in both Arabic and Hindi media. The existing marketing done by Dominos Pizza is in English television channels and newspapers. In order to reach the targeted market Dominos Pizza need to start advertising in Arabic and Hindi television channels at prime time. Another important media is through internet and facebook is the popular form of interaction at present.

Facebook users in UAE has reached a high number and adverting in facebook would give a competitive advantage. 4.4.3Sales Promotion Except for personal selling, public relations and adverting, sales promotion consists of all other aspects. A short term sales increasing gimmick would be achieved through sales promotion. This would include free samples, coupons, contests etc. Dominos Pizza can introduce value menu’s, buy one get on free deals, family menu options to promote the new items in the menu. Customers would be hesitant to try the new products. By giving the new menu items through promotional gimmicks it would reach the customers as free advertising. This would be effective sales promotion and in turn improve the effectiveness of the other aspects of promotional mix. 4.4.4Public Relations Public image about a product is an important aspect for a company. Public perception, attitude and understanding of the company is the marketing function of public relations. Dominos Pizza being an internationally renowned company public expectations are high. It is an advantage for Dominos Pizza UAE the positive image and perception the customers have of it as an international brand. Through the added advantage Dominos Pizza can achieve its goals and objectives by introducing the proposed changes. 4.4.5.Personal Selling Personal selling can be defined as two individuals attempt to communicate and influence each other. The two parties in such scenario would be the buyer and the seller and each of the parties would have their own objective to accomplish. As Dominos Pizza is on to pizza delivery business, this concept can be used between the call center person and customer. By training call center employees to be given training on building a long term relationship with the customers. A customer data base to be maintained their by when a customer calls from a particular identified phone number the greeting to the last order and the preference of the customer should be known by the employee answering the call. The familiarization would make the customer build a customer loyalty and continuation of the relationship with the brand. 4.4.6Direct Marketing Direct marketing involves in direct communication with targeted customers to build long term relationships. Dominos Pizza faces customer service issues in direct marketing. Number of customer complaints as a result of poor customer service has increased. To succeed in direct marketing Dominos Pizza requires to improve the customer service and the employee attitude. The You tube incident can be taken as an example of bad publicity.

By implementing IMC Dominos will send a clear message through all its promotional mix of its products and services. This would limit the ambiguity to the customers. Dominos Pizza would be able to achieve its vision and mission through the IMC proposed. The strategy being to think local and act regional would be achieved by implementation of the IMC in sync.

4.5Market Opportunity Analysis UAE market share of pizza is dominated by Pizza Hut. Dominos Pizza has an advantage over Pizza Hut in terms of pricing and home dining options. UAE fast food market is dominated by Pizza Hut, McDonalds, KFC and Burger King. Each brand is internationally known and has its own market share. McDonalds and KFC market share is based on the children. By hosting kids birthday parties and events McDonalds and KFC has established its market share. Pizza Hut on the other hand has diversified from traditional pizza’s to pasta. Dominos Pizza door step delivery meals in record time is the key factor to its market share. Annexure 4. 4.6Boston Consultancy Group Portfolio Analysis Dominos Pizza has relied in UAE the international brand name to attract the market. Market share is due to the existing brand awareness. By re-launching the same brand with new options market awareness to be broaden. In UAE market awareness of Dominos products are low. By launching the product with changes to suit the target market would give Dominos the opportunity to increase the market share. Annexure 5.

5.Concluding Plan & Marketing Research Dominos Pizza represent a premium brand in pizza industry. By using the marketing mix Dominos Pizza would be able to efficiently increase the market share in UAE. The strategy would be to inform and advertise the market about the 30 minute delivery service undertaken by Dominos to deliver the pizza. By establishing a toll free number as help line, establishing more outlets and price reductions to be more competitive would be other options. Value meals to suit kids and by introducing kids toys with every meal is an option to increase the kids share. The success of Mcdonalds and KFC on the kids market is offer kids with the latest toy as part of the meal. The toys would need to be in line with the changing interests of the kids. For example batman, superman, BenTen or any other character kids currently show interest in. Take away option would be another with record timing. Thereby customers calling in on take away and having a drive through providing pizza in record time would be appealing for the customer to pick up a pizza on the way home. Normally a pizza would take a minimum of 20 minutes after ordering the pizza for it to reach the customer at the table. If a customer calls for an order and picks up the order in less than 10 minutes that would be appealing to customers and cut down the waiting time. A marketing survey was conducted to see the research prior to implementation of marketing plan. The survey was based on customer perception, customer awareness and to get feedback on of the proposed changes. Annexure 6. 6.Evaluations/Recommendations & Way Forward 6.1Evaluations The success of re-launching Dominos Pizza will depend on the marketing research done prior to the launch. The feedback received would indicate the markets perception of the proposed changes. With respect to the new introductions to the menu by offering free samples with regular orders and getting feedback on the same would show the market’s reaction to the product. Have keen awareness of the competitors movements. It is very important to be on the same level or better of the competitors with respect to pricing and offers. The success of the plan can be measured by the increase in the market share and the number of orders during a given period. Re –engineering and re-launching of the product is proposed. Re-engineering of the processes followed to save time and enhance the customer satisfaction. Re-launching to increase the market awareness of the product.

The proposed strategy is based on the assumption the market share in the pizza industry would remain the same. Recommendations were made to re-launch with new products and to increase the variety of existing products. Dominos Pizza would remain as a pizza delivery company. In the event of any failure the option to open Dominos Pizza with dining in option to create more contact with customers are there. 7.Recommendations & Way Forward 7.1Long term •

Source for locations in strategic locations. Check for the locations used by the competitor and choose the locations which would suit the option of delivery. For the option of drive thru’s space would be required and source for locations to open strategic outlets.

•

Source for locations in the remaining 4 emirates to open outlets.

•

Change the ambiance of the existing outlets to compete with the competitors.

7.2Medium Term •

To change the menu in line with the cultural mix of the country and to increase the variety of options given in the present menu.

•

The quality of pizza to increase. Pizza Hut is offering stuff crust pizza, cheese crust pizza and another variety of pizza. Dominos requires to offer innovation product line which they are presently using in western countries to keep in line with the competitors.

•

Introduce a toll free number as help line to call in. This can be a number associated with the Dominos name. For example 800-3664667 (DOMINOS). This number to introduce with the re-launch of the product to increase the market awareness.

7.3Short Term •

Introduce value added meals concept. With the recession and the financial crisis customers look for value additions in FMCG’s. By offering value added meals or coupons, Dominos can increase the market share.

•

Introduce the concept of gifts for kids along with meals would be an option to be launched. Kids play an important role in parents deciding on the FMCG meal they would be ordering. Kids interest would be limited to the gift they would receive rather than the healthy meal they would be eating. By introducing a gift kids are attracted to the product and brand.

8.Implementation Plans •

Conduct market survey to get feedback on the market views on Dominos Pizza in UAE. The survey would include the proposed plans and the feedback of proposal.

•

Introduce new options to menu.

•

Create more outlets and locations.

•

Advertising through newspaper, television and internet of the new options

•

Create new helpline for customers to order the food.

9.Summary The issues facing Dominos Pizza was identified and to overcome the issues recommendations given. In order to succeed with the recommendations re-launch of the product to change the existing brand image was proposed. The challenges ahead would depend on the success of the advertising done and the quality of the products introduced. Customers should be enticed to try the products introduced. 9.1Conclusion The market research survey done clearly indicate that Dominos Pizza visibility in the UAE market is low. To improve the brand image and to increase the market share Dominos Pizza need to re-launch the product to increase its share. More advertising to be made through effective advertisements and sales promotions. To introduce a catchy theme related to Dominos in advertising and commercials to entice customers towards Dominos Pizza. Increase the number of outlets to compete with its competitor Pizza Hut. Improve the ambiance of the existing outlets to make them more attractive. As there is no direct contact with customers therefore to get customer suggestions and complaints is difficult. To introduce customer complaint forms and suggestion with each delivery. This would give insight to changing lifestyle of customers. More coupons to be offered for customers and pricing to be changed according to the market and competitors. Value added meals and family meals to added in the menu. By maintaining the customer database free pizza for regular customers on their birthdays can increase brand loyalty. Price reductions on regular customers if they exceed set number of pizza orders.

Extend the product line of Dominos Pizza to include appetizers, salads and pasta. By introducing variety to keep in line with the marketing segments would increase the brand loyalty.