Executive Summary
Pizza Hut is a great multinational restaurant Chain business with subsidiaries worldwide. However, the company has recently faced a challenge in its revenues. While Pizza Hut is recording low sales, its competitors are experiencing huge profits. Recently, the company announced the use of third-party drivers for delivery services. Consequently, unlike other competitors in the market, Pizza Hut home deliveries take much time. Many customers have moved to Pizza Hut competitors, sapping its sales. The company has taken several steps to offset the prevailing challenges. For instance, Pizza Hut has been focused on improving its staffing levels, restoring operating hours, and establishing call centers to handle dial-in orders. However, the company’s efforts are fruitless since the customer satisfaction improvement rate remains insignificant.
This marketing plan aims to offset Pizza Hut its overarching problems. The plan will focus on the firm’s situation by analyzing the available opportunities and potential threats in the fast-food industry affecting Pizza Hut. The plan recommends the company to further diversify its pizza by introducing foreign cuisines to serve the increasing US population. Additionally, the company will adopt value-based and economy pricing strategies. The value-based pricing strategy should be applied to the newly introduced foreign cuisine flavored pizza. Meanwhile, the economy-based price strategy would be applied to the existing menus.
Moreover, the company should shift the locations of its stores to areas with offices and highways. The stores will attract people working in offices and those driving through the highways. Pizza Hut is positioned as a brand that serves the middle class and higher social groups. Therefore, locating its stores near blue-chip companies and highways will attract drive-in customers and those making dial-in orders while in their working offices. Product promotion is significant among businesses. Pizza Hut could introduce a customer referral program for its newly introduced foreign cuisines and social media promotion. The promotional strategies would attract more customers making the company sustainable with increased sales. Introducing new cuisines will require the company to conduct a market survey for the most loved food flavor. Meanwhile, the customer referral program would require the company to introduce discounts on purchased products and branded items. The resources required include flyers, storyboards, and influencers, among others costing $ 653,000 for a period of twelve months.
Marketing Plan for Pizza Hut
Company Introduction Overview
The dynamic social needs have paved the way for fast-food industries across the world. Pizza Hut is one of the multinational fast-food companies and was founded in 1958 in Wichita, Kansas. Of American origin, Pizza hut has about 17, 639 restaurants worldwide, making it the world’s largest fast-food chain by 2020. Although the firm’s primary meal is Pizza, it serves other dishes such as pasta, breadsticks, and desserts. The fast-food chain is split into different restaurant formats: family-style dine-in locations, storefront delivery, and carry-out locations, and hybrids. However, the chain is popularly known for dine-in services but poorly performing compared to its competitors in the industry. For instance, in 2017, Domino’s overtook Pizza Hut as the largest global pizza chain by sales. Furthermore, in 2020 Pizza Hut’s sales fell by 2.2%, while its competitors doubled their sales. Therefore, a marketing plan to offset Pizza Hut from its challenges is crucial.
Situation Analysis
Service/ Product Description
The multinational restaurant chain business is involved in selling various products, including pasta and desserts. Pizza Hut is famous for the dine-in restaurants that offer a great experience to the clients. The company has developed customized menu plans according to the store location. For instance, in Northern America, the firm sells Pan Pizza, “stuffed-crust” pizza, “hand-tossed,” among other traditional pizzas. The “stuffed-crust” pizza is the most popular among Pizza Hut product lines. The firm has made efforts to introduce new pizzas, and in 2008 it created the “natural pizza,” featuring natural ingredients. The “natural pizza” gained popularity in Dallas, Denver, and Seattle. Although Pizza Hut has diversified products and service lines, it is facing marketing challenges in North America.
Overarching Problem
While Pizza Hut is one of the largest fast-food chains in the world, the company is on the verge of declining sales and understaffing. The restaurant has established a diversified food menu, with pizza as its popular meal. Pizza Hut serves the North American community that is interested in pizza, and pasta, among other delicacies. Although the company was traditionally a pizza giant, companies such as Domino’s overtook it. Therefore, Pizza Hut records declining sales while its competitors are doubling their profits. One of the greatest problems facing the company is understaffing and lack of drivers to do deliveries. Consequently, the firm has resorted to third-party drivers who delay customer service. The slow delivery time has caused the reduced number of sales of Pizza Hut compared to its competitors.
Micro-Environment Factors
The micro-environment factors are in direct contact with a company and affect its routine activities. The factors are six-fold: competitors, suppliers, marketing intermediaries, competitors, the general public, and customers (Hudrasyah et al., 2019). Pizza Hut is facing stiff competition from other global fast-food chains in North America, among other areas of its operations. Companies like Domino’s have more effective strategic plans that have given them an upper hand over Pizza Hut. Moreover, the competitors have integrated technology into their delivery services (Liu et al., 2022). Consequently, it takes more time to make a Pizza Hut delivery than its competitors.
Pizza Hut depends on local suppliers for its flour and ingredients used in making its meals. The suppliers receive competitive prices from Pizza Hut’s competitors. The declining Pizza Hut sales have led to a lack of business trust from its suppliers. Marketing intermediaries play a significant role in promoting brands and overall firm profitability. Pizza Hut franchises its services, but the agents lack sufficient marketing skills to attract more customers. Meanwhile, the decline and poor services among Pizza Hut stores have led to a negative public attitude towards the brand. Therefore, many customers have shifted to the company’s competitors who have better services. The micro-environment factors have significantly contributed to Pizza Hut’s dwindling performance.
Macro-Environment Factors
The macro-environment factors involve the uncontrollable and external aspects that influence a firm’s decision-making process. The factors are six-fold: demographic, economic, natural, technological, political, and cultural. However, technological, natural, and demographic factors are the major forces affecting Pizza Hut. Technological advancements have influenced the development of delivery services among fast-food restaurants. Although Pizza Hut adopted the technology to serve its clients, the understaffing led to the use of third-party delivery companies. Meanwhile, the company is one of the businesses that were struck by the COVID-19 pandemic (Dung, 2020). The chain was greatly dependable on the dine-in customers who moved to companies with efficient home delivery services. Furthermore, the firm attracts people of all ages, but its youthful client population has declined due to poor delivery services.
SWOT Analysis
Pizza Hut presents various strengths and weaknesses that have contributed to its opportunities and threats, respectively. Pizza Hut is positioned as an excellent brand with diverse products and services. The firm, unlike its competitors, has unique pizza flavors and types that are attractive to many clients. Moreover, the brand provides other meals apart from pizza and therefore serves the general population. Consequently, Pizza Hut has various opportunities in the North American market: take advantage of the growing diverse population, integrate the advancing technology for home delivery and take-out options, expand menu choice, and develop a promotional slogan that targets a specific demographic population. Meanwhile, the firm’s weaknesses of the dwindling sales present various threats: overhead and costs hikes, increased competition, and ever-rising health consciousness. Therefore, this marketing plan aims to take advantage of the prevailing opportunities to cure the existing challenges and threats.
Marketing Goals and Strategy
Pizza Hut presents various challenges that threaten its operation and success in the fast-food market in North America. The company, unlike competitors, has a poor delivery mechanism that delays customer service. A robust system that effectively executes home delivery options among clients would be beneficial. Additionally, the firm faces stiff competition from other pizza stores. While the competitors have developed effective systems and a broad-consumer base, Pizza Hut needs a more efficient system to attract more clients. The company needs to target consumers who are loyal and who can influence others to make purchases at Pizza Hut. Furthermore, the inefficient management and hiked resources price can be overcome through a proper management system. Therefore, a logical marketing goal and strategy could help Pizza Hut take advantage of the opportunities and eliminate the threats faced in the industry.
Strategic Decisions
Pizza Hut will adopt various marketing strategies to resolve its downward trend in sales and lack of competition. In this case, Pizza Hut will have to focus on the younger and materialistic generation, which forms its major customer segment (Tarmazi et al., 2021). The market segment’s lifestyle and values match the company’s products. For instance, a group of young people often strives to get recognized by friends and family (Ragelienė & Grønhøj, 2021). For this reason, they prioritize materialistic merchandise besides considering money to be the best measure of excellence and recognition. The group abhors making savings; hence management of funds is often challenging to the benefit of companies like Pizza Hut (Raheem et al., 2022). Therefore, the purchase behaviors among the younger and materialistic generation will be a crucial factor when developing a marketing strategy.
Psychological traits among the younger and materialistic generation will be crucial in determining their purchase behaviors. The U.S. Values, Attitudes, and Lifestyles (VALS) will be adopted to determine primary motivation and resources that can be combined to understand the target market psychographic segmentation. The young and materialistic generation is motivated by achievement. Therefore, they look for products and services that demonstrate success to their peers (Strategic Business Insights, 2020). Additionally, the segment will fall into the experiencers type of VALS since they see themselves as very sociable and believe that their friends as extremely important (Strategic Business Insights, 2020). Pizza Hut will, therefore, incorporate a marketing campaign that attracts the younger generation and encourage friendship.
Target Market Profile
Pizza Hut targets consumers who are in the middle and higher classes and who can afford the meal regularly. It is estimated that over a third of the US population visits fast-food restaurants daily (Emond et al., 2020). Therefore, Pizza Hut needs a considerable share of the about 84.8 million Americans who eat fast food daily, including pizza and meals sold at the chain’s stores. The company would need to target consumers who are long-term benefits and who can attract more clients. Furthermore, the targeted consumers should be the ones visiting Pizza Hut’s competitors regularly. The target market exhibits various demographic, geographic, and psychographic behaviors.
Demographic
The demographic features involve characteristics such as age, income, ethnicity, marital status, and educational level, among others. Fast-food products are associated with lifestyle diseases that are detrimental to the health of the aged and those suffering from other diseases. Pizza Hut will target a youth population of ages sixteen to thirty-five years. The chosen age group forms the majority of the US population and the middle and upper classes. The company is aiming to expand its menu through the introduction of healthy and foreign cuisines. The existing pizza flavors can be modified to suit the foreign population. Therefore, the target market would be a multicultural population of local and foreign origin.
Pizza Hut serves clients with the ability to make regular purchases and who can afford the newly introduced foreign cuisines that may be higher than the market price. Consequently, the target market should be those working in offices and blue-chip companies. Furthermore, the market should involve the people who work from home with limited time to prepare their home food. The population should be earning a salary of an average of $31,000 per year, which is above the national average income. Additionally, the target market should be those who drive to allow the drive-thru services. Therefore, the target market is that who are above the middle class and of ages sixteen to thirty-five years with convincing power among their peers.
Geographic
Geographic segmentation involves targeting consumers in a similar geographic location. People who live in the same location have similar needs and can easily influence each other. Pizza Hut will target a population of ages ranging from sixteen to thirty-five years. The majority of the chosen population are in college, and some are working in the corporate world. Therefore, the firm will target areas near colleges and where many companies are located. Establishing stores near colleges and universities will attract students. Meanwhile, the restaurants in the industrial areas will attract fresh graduates who are in the corporate world. Furthermore, the restaurants should be strategically located so that take-out and drive-thru customers spend less time accessing the services.
Psychographic
The psychographic segmentation divides the consumers based on their beliefs, values, lifestyle, social statuses, and activities. Pizza Hut targets the youths of ages sixteen to thirty-five years who are conscious of their health status. The target market is actively involved in physical exercises, and fast-food cause less harm to their body. Since the target markets are college and others are in the corporate world, they regularly conduct group activities. Consequently, the market loves having pizza and other meals as a group. Additionally, the foreign students in the universities and those working have a significant liking for their local cuisines. For instance, Chinese clients prefer their Asian cuisines to the originally made American meals (Lin et al., 2020). Therefore, newly introduced foreign cuisines will attract non-locals in the US.
Brand Positioning Statement
To customers who are attracted to unique foreign cuisines and pizza flavors that suit their tastes, Pizza Hut provides a diversified meal menu. Pizza Hut distinguishes itself from other fast-food chains by meeting specific consumer needs. The competitors serve common pizza styles, making them boring among the population of ages sixteen to thirty-five.
Marketing Tactics
Pizza Hut is on the verge of losing customers, and an appropriate marketing strategy would help save the situation. The company would introduce new products to expand its existing menu. The introduced products would attract foreign consumers who are obsessed with their local cuisines. The company sells its meals at the market price, and a new pricing strategy would suffice. Therefore, the company would adopt an economic and value-based pricing strategy to attract more clients. Moreover, Pizza Hut could integrate its delivery technology to eliminate the existing time delays. Furthermore, a customer referral and social media campaign would help promote the existing and newly introduced food menus.
Marketing Offering
Product
Pizza Hut offers a wide variety of goods, many of which center on Italian food. Italian pizza, several pasta dishes, and bread are all offered. Furthermore, Pizza Hut has always tried to diversify its menu to appeal to a wider spectrum of clients with various food tastes. Because of this, the menu features a section for vegetarians and sweets, broadening the variety of the Pizza Hut experience. The product line at Pizza Hut is extensive, offers flexible delivery options, and embraces modern technology (Shrader, 2005). Customers can alter the ingredients on their pizza to suit their tastes and increase satisfaction. Although Pizza Hut has a diversified menu option, foreign clients still miss their local cuisines in the firm’s stores. Therefore, Pizza Hut can introduce new pizza types, customized pizza flavors, and foreign cuisines to meet the diversified consumer needs.
Focus on the Most Favorite Pizza Topping
Pizza comes in different types that attract various consumers, and restaurants sell common styles. Pizza Hut serves its customers with diverse pizza styles: ultimate cheese lovers, chicken supreme, veggie lovers, pepperoni, and bacon cheeseburger pizzas, among others (Raven, 2020). The restaurants are not known for a specific pizza style. Therefore, the majority of Pizza Hut’s clients choose from the available menu. Specializing in a particular product type boosts brand image and attracts more consumers. Recent US fast-food statistics show that pepperoni is the most popular pizza topping (Bleich et al., 2020). According to the statistics, about 250 pounds of pepperoni is consumed annually. Therefore, Pizza Hut should choose pepperoni topping as its primary pizza type to attract the majority of fast-food eaters.
Customized Pizza Flavors and Toppings
While pizza comes in specific styles and flavors, it can be customized to suit consumers’ tastes. Pizza Hut is popular for its unique pizza styles with genuine tastes that attract customers. However, the firm’s pizzas’ have remained unattractive in various locations in the US Instead of the common pizza toppings, the company can introduce an option that allows the customers to suggest their preferred flavors. For instance, clients of Asian origin prefer hot chili compared to those from other parts of the world. Moreover, some clients prefer specific meat and vegetable types. A few of the pizza stores in the US have adopted customized menu options. Pizza Hut would attract many customers with different multicultural characters. Additionally, customizing pizza toppings and flavors would allow the consumer what suits their health conditions. The customized pizza flavors and toppings would boost consumer loyalty.
New Foreign Cuisines
Pizza Hut serves the American and foreign community with pizza, and pasta, among other delicacies. While pizza is the primary meal sold, the company can introduce foreign cuisines to attract more customers. Pizza and pasta are associated with Italian cuisines, and some clients prefer non-Italian foods (Campanari & Cavicchi, 2021). The company can determine the majority population and develop new cuisines. Asians are the majority of immigrants in the US attracted by education and employment opportunities (Tu & Okazaki, 2021). Pizza Hut should introduce Asian cuisines to its food menu to attract an increasing number of Chinese, Philippines, and Korean clients. Therefore, introducing Asian cuisines to its food menu will help Pizza Hut become a multicultural brand that is ethnically diversified.
Price
Price helps determine the volume of products sold and the number of attracted consumers. Pizza comes with various flavors and toppings, attracting different price tags. Pizza Hut has adopted a competitive pricing strategy to sell its products. The meals at Pizza Hut are sold at prices similar to the competitors. Therefore, many customers see no value in purchasing pizza and other meals at Pizza Hut. Given its declining sales and reduced number of loyal customers, Pizza Hut can adopt an economical pricing strategy that would allow it to sell its products at lower prices. Moreover, the company can adopt a value-based pricing strategy for customized and foreign cuisines. The pricing strategies will help the firm attract more clients while making profits at the same time.
Economic Pricing Strategy
Many customers are attracted to companies that sell quality products at affordable prices. Pizza Hut sells its meals at prices that are similar to its competitors, such as Domino’s. The economical pricing strategy would help the firm lower its prices. The low prices could attract consumers who are interested in saving money during these hard economic times. However, Pizza Hut would have to increase its sales volume to meet the target profits. Moreover, the increased pizza sales would help the corporation raise sufficient money to pay its suppliers and human resource. Consequently, the economical pricing strategy should be adopted alongside active product promotion activities. Although the economical pricing strategy would attract more consumers, an active and productive product promotion should be developed to increase the sales volume.
Value-Based Pricing Strategy
The introduction of foreign cuisines comes with a hefty price tag. Moreover, customizing pizza flavors and toppings for customers would involve the use of many resources. The value-based pricing strategy would allow the company to sell foreign cuisines and customized pizza types at higher prices. The firm should invest in the products so that they become unique with original tastes to retain the clients. The improved flavors would give the consumer value for their money. Therefore, the consumers would be more attracted to the pizza and meals than to how much they spend at Pizza Hut. The pricing strategy will enable the company to increase its profits, becoming financially sustainable. Furthermore, the value-based pricing strategy would build on the existing brand image. Therefore, adopting a value-based pricing strategy makes Pizza Hut sustainable through economic hurdles.
Place
Pizza Hut has over 17,000 restaurants worldwide, making it one of the largest fast-food chain stores in the world. Sales touchpoints must span every channel to increase client reach and purchase frequency. Pizza Hut increased its coverage area to be as close to its clients as possible. This increases the likelihood of attracting new customers while preserving current ones. Due to their capacity to satisfy high standards of quality and their typical delivery time of thirty minutes, consumers express happiness. Although the firm has established its stores near the clients, its competitors have adopted effective mechanisms that attract more consumers than the firm.
Pizza Hut was the first fast-food chain store in the world to launch franchises exclusively vegetarian in Tier 1 and Tier 2 cities in India, including Ahmedabad, Surat, and Mumbai. The restaurants are built at dining locations, hybrid locations, bistro settings, or college campuses to appeal to various customers, including families, businesses, and students. Pizza Hut employs a direct route as its mode of distribution. The direct channel is effective when there is a huge, geographically scattered market. The direct route is also helpful when there are many purchasers, but they are each only purchasing a tiny amount.
Specific Location Expansion Strategy
The target market involves college students and people who are working in corporate firms. Delivery time is an essential feature that customers consider when selecting a restaurant for a take-out delivery option. Therefore, the firm could encourage its agents to relocate near colleges and corporate firms. The store near colleges would attract the campus students who love fast food. Meanwhile, locating the restaurants near corporate firms would attract those at work. The reduced distance between the restaurant and the target market will allow a shorter delivery time. Moreover, the restaurants would need fewer drivers since one can make many deliveries within a shorter period. Therefore, Pizza Hut should relocate its stores near colleges and corporate firms.
Promotion
Many customers are reached by Pizza Hut’s marketing strategy that espouses emotional appeal. Emotionally appealing advertising is a form of promotion that arouses consumers’ emotions. They consider what inspires and worries viewers before crafting a narrative that connects with them. They do this by utilizing the most popular platforms, such as TV and social media. Product placement in movies and television shows is popular due to the worldwide brand’s accessibility in practically every market. Advertising, public relations, sponsorships, direct marketing, personal selling, and word of mouth make up Pizza Hut’s communication mix. However, conducting a social media campaign and introducing a customer referral program would help the company attract the target market.
Social Media Campaign
Technological advancements have led to the development of social media platforms that attract many people. Recent statistics show that more than half of the world’s population utilizes social media platforms for interaction and information seeking. Facebook, Twitter, Instagram, and TikTok, among others, are common for youths of ages sixteen to thirty-five years. Therefore, Pizza Hut can conduct a social media campaign to attract users. Various contents will be shared online with the slogan “Pizza Hut is a unique taste,” as shown in figure 1.0 (Appendix). TikTok is a game-changing social media platform that has doubled its user from 291.4 million, in 2019, to 655.9 million in 2021 (Azpeitia, 2021). Pizza Hut can share the promotional content on TikTok to influence more consumers and attract potential customers. Additionally, the corporation could make use of Instagram and Facebook, which are common among the youths.
Customer Referral Programs
The target market involves people who are more powerful and can influence their peers. For instance, it is easy for college students to tag along with their classmates at a Pizza Hut restaurant. Additionally, many workmates enjoy having a meal together when at work. Pizza Hut would introduce a customer-referral program that encourages the existing clients to tag along with their mates to the restaurants. The program would also allow the customers to share unique codes with their mates who make dial-in orders. The referees will be encouraged by offering discounted prices on their orders. Moreover, the company will introduce free delivery costs for any customer who introduces new clients. The referral program would be applied specifically to the newly introduced foreign cuisines and expanded menu.
Marketing Offering and Proposed Strategy
The proposed marketing tactics are in line with the proposed strategy of retaining and gaining more clients. The pricing strategies will enable Pizza Hut to remain profitable while selling the products at affordable prices. Meanwhile, expanding the menu would position the brand as diverse and unique in the fast-food industry. The foreign cuisines would attract clients with a multicultural background and improve the sales volumes. Relocating the stories near colleges and companies would encourage the target market and make the delivery services more effective. Furthermore, the use of social media platforms and referral programs enhances brand loyalty and a broad-consumer base. Therefore, the proposed tactics are crucial in countering Pizza Hut’s prevailing challenges.
Budget, Metrics, and Timeline
Estimated Budget
The proposed marketing plan would require considerable investment. The activity will actively involve the management and the marketing department. The management will help in decision making while the marketing plan will be involved in conducting the promotional activities. Since the plan targets a population of age range from sixteen to thirty-five, digital marketing will be significant. The firm will design flyers and storyboards that will be shared on social media platforms. An attractive flyer design would cost the company about $1000. Meanwhile, a storyboard design would cost the company about $1500. The flyers and the storyboards would be printed and displayed on the stores’ main entrances. The printing cost of the flyers will be $ 3 per flyer. The storyboard will be designed and printed in a shape that can be put on the stores’ walls. The amount for printing a single storyboard is $100. The budget will also include the referral program costs and miscellaneous as summarized in table 1.0 (Appendix). The campaign will cost the company a total of $ 653 500.
Project Timeline
The marketing activity will be conducted for one year, with quarterly timelines and targets. Therefore, the activity will take place in three phases with particular milestones. The first milestone involves increasing the number of customers by 50%. The metrics used in measuring whether the milestones are achieved or not are the sales volumes and registered quarterly profits. The second milestone will be doubling the profits of the foreign cuisines and the expanded menu. The metrics used in measuring the achievement of the second milestone are the net profits of the foreign cuisines and the newly introduced pizza types. The last milestone will be the establishment of a competitive and profitable brand. The metrics used are the customer satisfaction level, comparative competitors’ profits, and the percentage increase of the consumers.
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Appendix
Table 1.0 Estimated Campaign Budget
