The history of pizza hut and existing marketing mix Essay Example

focus on constant innovation by offering newer and better pizzas at affordable prices. Special promotions and variations of pizza have also gained popularity with toppings like chicken becoming common.

As an industry leader, Pizza Hut has always been a pioneer by continuously adding new products to their menu to reach new markets. For instance, they introduced the renowned buffet concept worldwide in 1992. Moreover, Pizza Hut strives to offer a range of food choices for customers who may not prefer pizza by diversifying their offerings and slightly transforming their brand for novelty appeal. Their dedication to innovation is evident through past introductions like the Pan Pizza in 1983 that allowed customers to enjoy their meal within five minutes at the outlets.

In 1993, Pizza Hut unveiled the "Bigot," an enormous pizza divided into 21 slices displaying continued innovation with their Stuffed Crust Pizza featuring cheese-filled crusts launched in 1995. The release of The Edge pizza in 1997 delighted customers as it extended cheese and toppings right up to the edge.Pizza Hut is currently promoting "The Big Mineworkers" campaign to make New York-style pizza available nationwide. Throughout its history, Pizza Hut has always prioritized customer service. In 1995, they introduced two programs aimed at ensuring customer satisfaction and encouraging repeat business: a hotline accessible through a 1-800 number and a call-back initiative. Our plan will start by assessing the current environmental conditions that impact our strategy. We will also analyze the current state of the fast food industry and discuss any future trends or changes that may arise. This analysis will include a SWOT analysis of Pizza Hut as well as identifying both current and potential competitors. Furthermore,

we will outline our marketing objectives for this plan and provide explanations for our choices. The situational analysis reveals an increasing demand for food prepared outside the home due to factors such as high divorce rates, people marrying later in life, and the rise of single-person households in the US. Additionally, since the 1980s, there has been a shift towards dining out instead of eating at home influenced largely by more women working outside the home. Dual-career families and higher household incomes have led to less time for cooking at home, resulting in individuals choosing to eat out for convenience. Moreover, with increased incomes, consumers now have more disposable income to spend on dining out.
The growth of traditional fast food restaurants in the early sass's slowed down due to market saturation, leading many chains to acquire existing companies instead of building new units. These mergers and acquisitions greatly impacted the industry, with the top ten fast food restaurant chains holding over 60% of sales in the U.S. In 1997, total food service sales reached $320 billion for the 500,000 restaurants nationwide, resulting in a growth rate of 5.2%. Within the fast food segment, there are six major segments including sandwich chains like McDonald's and Wendy's on top, followed by dinner houses such as Applebee's and Red Lobster. Pizza chains rank third, with Pizza Hut leading at a market share of 46%, followed by Domino's at 21.7%. The fast-food industry has increasingly relied on international sales for growth. In 1998, Pizza Hut emerged as the number one global chain operating in 88 different countries. Its expansion into Moscow in 1990 was particularly successful with a weekly

customer base equivalent to that of ten American Pizza Huts combined (approximately 20,000 customers). Despite challenges related to providing healthy options and increased awareness about health among America's aging population, Pizza Hut distinguishes itself from competitors within the fast food industry.Despite the introduction of "low calorie" and "low fat" items by many fast food chains, the perception of fast food as having low nutritional value persists. Critics and consumers believe that these efforts are inadequate in providing truly healthy meals. However, Pizza Hut stands out due to its well-known brand and diverse offerings. Unlike its competitors, Pizza Hut has both a full-service restaurant and delivery services, giving it a significant advantage in the market. The restaurant allows Pizza Hut to target different market segments by offering sit-down experiences and hosting children's birthday parties. Moreover, Pizza Hut's wide range of products enables them to successfully cater to various market segments. Nonetheless, running a restaurant results in higher overhead costs for Pizza Hut compared to their competitors, resulting in higher prices. Despite not being considered the low-cost producer, Pizza Hut justifies these higher prices through their quality pizza and good service. Despite facing intense competition leading to customer loss and decreased market share, Pizza Hut still has opportunities for growth. These opportunities include introducing innovative pizzas to increase revenue and fostering brand loyalty through excellent customer service. Additionally, Pizza Hut recently launched an online ordering system that allows customers to place orders without needing verbal communication.
Although the success of this program is uncertain as it is still in its early stages, it presents a promising opportunity for the company. However, Pizza Hut faces significant threats from competitors,

particularly Domino's Pizza. Domino's has a competitive advantage over Pizza Hut by offering lower prices. Additionally, Domino's once had high profitability when they introduced a promotional deal of delivering pizzas within 30 minutes. Nevertheless, due to previous lawsuits regarding reckless driving by their drivers, Domino's decided to discontinue this promotion.

Another close competitor of Pizza Hut is Little Career's, which competes with Domino's in terms of market share. Little Career's has gained popularity among customers by providing generous portions of pizza at affordable prices. Papa John's, Isobar,and Pizza Inn are also competitors in the pizza industry. One common challenge faced by all these chains is that their individual competitive advantages are essentially similar to one another. Most major pizza chains, including the aforementioned competitors, provide free delivery and frequently run promotions with discounted prices on large pizzas.

It is also important to consider alternative options such as frozen or DIY pizzas available in grocery stores. Examples of these alternatives include Tombstone Pizzas, Boils,and Disgorging Pizzas.Quality and service are crucial marketing objectives for ensuring a successful launch of new products in the market.Pizza Hut has been successful in the pizza industry by constantly introducing new products to boost sales. Staying current with trends is important when launching a new product to minimize failure. Mountain Dew, under PepsiCo, successfully repositioned itself by marketing unique and extreme products. Pizza Hut's parent company has inspired many other companies to follow suit and achieve success. With its research and implementation resources, Pizza Hut has the capability to develop a successful new product. Given their history of innovation, it is likely that their proposed new product, Extreme Pizza, will be well-received. Introducing new

offerings is crucial for staying ahead in a competitive market. Extreme Pizza stands out as it is larger in size (twenty inches) and has double the toppings compared to competitors. To capture the attention of this emerging market segment, Pizza Hut plans to market it alongside other extreme products like Mountain Dew. The company's reputation for high quality and innovation sets them apart from less creative options offered by competitors; thus paving the way for success with this new product launch. The primary objective behind launching Extreme Pizza is establishing brand recognition within our target market with an aim for an 85% recognition rate among customers.
Ultimately, the key objectives for a company are to increase revenue and profits. By introducing a new product offering, our plan is to boost overall sales by 7%. If effective promotions achieve the goal of 85% recognition, acquiring an increase in sales should be relatively easy. The Extreme Pizza from Pizza Hut explicitly targets adrenaline junkies and extreme sports enthusiasts in today's society. This product's association with the extreme has captured the attention of younger generations, specifically those aged 12 to 30 (commonly referred to as the Y and X generations). In previous years, marketers unfairly labeled this segment as slackers or losers; however, this perception has recently changed. In the early 2000s, extreme sports became popular in pop culture, leading companies to recognize the importance of targeting generations X and Y. Currently, there are approximately 71 million Americans aged 12 to 30, making these two generations the fastest-growing segments in society. They have a significant spending power of $300 billion per year, with a large portion spent on non-essential

purchases. Their high spending habits can be attributed to their upbringing as they did not experience economic downturn or severe risks like baby boomers did. As a result, this generation adopts a "spend now, pay later" mentality resulting in high per person spending averages.In 1997, a study revealed that children receive an average of $50 per week from their parents for discretionary spending. Pizza Hut aims to tap into this market by introducing their Extreme Pizza. However, college freshmen also spend a significant amount on non-essential items, with an average monthly expenditure of $56 on dining out. This presents an opportunity for Pizza Hut to attract customers who have the means and willingness to purchase pizza. Historically, Pizza Hut has used a generic marketing plan targeting a diverse range of customers. To ensure success, they must concentrate on the specific market segment and tailor the advertising and promotion strategy to meet its unique requirements. Many products have failed within this segment by treating it as one homogenous group when in reality it is composed of multiple groups and individuals. This has led to members of Generation X and Y being labeled as losers and slackers by society. Therefore, our advertising campaign should acknowledge the existence of various subsegments within this larger segment. One crucial characteristic shared by these two generations that makes them ideal targets for our new Extreme pizza is their tendency to spend considerable time with friends in groups.Pizza Hut recognizes the opportunity to cater specifically to teenagers and college students, who often choose pizza as a convenient dinner option when hanging out with friends. While historically marketed towards families, pizza also appeals

to the younger generation, who spend a significant amount of time with friends in dorm rooms or at parties. Pizza Hut sees this as an opportunity considering the high number of Generation X and Y members who spend on non-essential items. Targeting this diverse market with advertising that appeals to all segments is challenging, but they all share a common interest: their love for pizza. To ensure success, it is crucial for Pizza Hut to create advertising that appeals to all segments of these generations. One potential product that can be offered is "The Extreme" pizza - a twenty-inch pizza with double the amount of cheese and toppings compared to other pizzas from Pizza Hut. This offering has several competitive advantages such as being the largest pizza available in the market and having a higher quantity of cheese and toppings than any other pizza. Additionally, the Pizza Hut brand name itself holds a competitive advantage as it signifies quality products and services. Introducing "The Extreme" will automatically create a strong association between Pizza Hut and high-quality products in the minds of customers.In addition, Pizza Hut plans to launch a unique pizza targeting the younger generations of America, specifically Generation X and Generation Y (ages 12-30). Despite the fact that these age groups consume a significant amount of pizza annually, only a few pizza restaurants cater explicitly to them. The introduction of "The Extreme" is scheduled for Super Bowl Sunday in 2001 with the objective of creating a market for the product and persuading early adopters to make a purchase. As the product enters its growth stage, Pizza Hut will concentrate on increasing sales and establishing

consumer preference. Once it reaches maturity, attention will shift towards differentiation. It is anticipated that after one year on the market, "The Extreme" will start declining. In the past, Pizza Hut has successfully implemented a high/low pricing strategy for its products which allows them to charge higher prices than competitors but also offer frequent sales to undercut other brands' prices. For "The Extreme," it is recommended that the retail price be set at $9.99 - above competitors' prices. To counterbalance this higher price point, sales promotions and coupons will be utilized to bring down the price below rivals'.Bundle pricing strategies will be implemented by Pizza Hut and Mountain Dew, both subsidiaries of PepsiCo., to offer customers the opportunity to purchase "The Extreme" for $9.99 and receive a complimentary two-liter bottle of Mountain Dew. This approach combines both products at one price, suggesting good value and catering to different customer groups with varying willingness to pay. It targets early adopters and bargain hunters by offering a higher price option as well. By adopting this strategy, Pizza Hut aims to create excitement among customers, encouraging them to try something new and potentially leading them to make additional purchases in the future. Additionally, setting an initially high price emphasizes the superior quality of Pizza Hut's product and service. The promotional theme for "The Extreme" primarily focuses on young people and incorporates elements of fun, excitement, danger, emphasizing its "extreme" nature in order to appeal to the target market. Promotions for "The Extreme" include a coupon that offers it at $9.99 along with a free two-liter bottle of Mountain Dew. The objectives behind this promotion include introducing a new

product, stimulating demand, influencing short-term customer behavior, and encouraging repeat or increased usage among current customersPizza Hut's primary distribution strategy for this promotion involves using mail and fliers on college campuses nationwide to effectively target the desired market. Additionally, despite the expensive nature of Super Bowl ads, Pizza Hut plans to launch "The Extreme" through a television commercial on Super Bowl Sunday 2001. Luckily, Pizza Hut has enough financial resources to afford this costly advertising opportunity.

The commercial itself will resemble Mountain Dew's ongoing advertising campaign and will feature young individuals participating in thrilling activities like snowboarding, rock climbing, and bungee jumping while enjoying "The Extreme" pizza and Mountain Dew. To further raise awareness of the new product, Pizza Hut will also place similar advertisements in popular magazines such as Surfer, Snowboarding, YAM, and Maxim.

When it comes to distribution methods, Pizza Hut effectively uses a direct channel for its products when dealing with a large and geographically dispersed market or many buyers making small purchases. They employ three distinct methods for direct sales: delivery, dine-in, and online ordering.

With delivery option customers can contact Pizza Hut in advance and have their order delivered straight to their homes. The dine-in option allows customers to either take away their order or enjoy it at a Pizza Hut location. This method offers a clean and enjoyable environment where customers can sit down with family or friends and enjoy their meals in a fun atmosphere that is suitable for all ages.Online ordering allows customers to conveniently place orders on the Internet without providing credit card information. They can view the entire menu, download special coupons, and easily place an order. For

nationwide coverage of "The Extreme" pizza, Pizza Hut will utilize all three distribution methods. Customers across the country will have the opportunity to order "The Extreme" through dine-in service, online ordering, or by visiting one of our locations.

To ensure effective control measures, multiple parties will have responsibility. This includes the Marketing Vice President at Corporate Headquarters, as well as local/regional Marketing Vice Presidents and Pizza Hut restaurant managers. These individuals will oversee the implementation of these control measures. The success or failure of these measures will be evaluated by comparing results to our objectives. If our objectives are not met, appropriate actions will be taken in the future.

Additionally, an analysis of profits, sales revenue, and unit volume for the "Extreme Pizza" promotions will be conducted. If our budget allows, we may conduct a customer survey to gather feedback. It is crucial that we evaluate and control our progress every 3 months since our plan spans one year.

Furthermore, during the maturity stage of the product life cycle, we will focus on enhancing quality and differentiating ourselves from competitors.Ideally,this monitoring process should occur monthly.
Pizza Hut has a successful history of introducing new products to increase sales and attract new customers, making it an industry leader. The success of the "Extreme Pizza" depends on finding the right mix of promotions. Since the target market for this pizza is diverse, we need to use a varied approach in promoting it. This means that our advertising campaign will be more expensive compared to campaigns targeting specific groups. However, planning advertising campaigns that target diverse groups can generate substantial profits that outweigh these costs.

To finance these efforts, we will allocate 8%

of projected sales towards our advertising campaign. Based on past introductions and their impact on revenues for Pizza Hut's products, the introduction of Extreme Pizza is expected to boost sales by 7%. This would result in projected revenue of $547 million for Pizza Hut, allowing us to have an advertising budget of $43.76 million.

This budget will be used to support mass media promotions for our new "Extreme Pizza", as our target market spends significant time watching TV and using computers. Continuous advertising is crucial for creating strong product awareness among this audience.

While advertising plays a vital role in this endeavor, partnering with Mountain Dew will help position our product within a specific category.Mountain Dew has been a successful leader in our market for many years. It is crucial for the success of "Extreme Pizza" to collaborate with Mountain Dew. In this highly competitive industry, there will inevitably be imitation products. However, Pizza Hut has an advantage as the first mover with this product. To stay ahead, we may need to adjust our strategies as these imitation products enter the market. This could involve surpassing competitor promotions or making slight modifications to give our product an edge over rivals. Pizza Hut can strengthen its competitive advantage by implementing techniques such as incorporating cheese into the crust or offering complimentary toppings with every order.