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Pizza Hut’s Marketing Strategy

Product

Pizza Hut is a well-known restaurant that is primarily focused on modern Italian and Western cuisine. The franchise represents the world’s largest pizza chain with over 12,000 establishments and delivery points worldwide. Furthermore, the chain is known for its innovative approach to new product development. Despite a fairly extensive menu, its main product is pizza, which is sold in three sizes: small, medium, and large. Given the increasing competition from McDonald’s, KFC, and Domino’s, the company also strives to meet local markets’ needs by creating unique local menus for specific regions. In addition, there is an opportunity for the client to make a combined order in the chain’s establishments, which may include salads, breadsticks, chicken wings, pasta, desserts, sauces, and drinks. The main innovations of Pizza Hut are Stuffed Crust Pizza, and the franchise developed Tandoori Paneer Pizza, Country Feast, Exotica, Paneer Vegorama as their signature dishes in different regions.

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Price

Pizza Hut’s pricing policy is based on competing for price analysis to meet the price-performance balance due to the competitive environment among pizza producers. However, the prices for franchise dishes are higher than the market average price in this segment. They can be characterized as a premium due to the high quality of the company’s product. The chain’s restaurants’ operation involves the active use of the price skimming strategy to achieve an optimal sales rate. To balance pricing, Pizza Hut operates a combined ordering system created in partnership with PepsiCo (Alon et al., 2020). Thus, the simultaneous use of several pricing strategies will allow Pizza Hut to sell many products without drastic price reductions.

Distribution

Pizza Hut sells through two main channels: restaurant orders and home delivery. It should be noted that most of the chain’s establishments are located in class A urban areas. This is necessary to maintain the entire chain’s premium level and sell products at prices above-market prices. A potential client needs to independently get to one of the chain’s restaurants, which increases the establishment’s value. Amid the 2020 COVID-19 pandemic, many restaurants, including Pizza Hut, were forced to suspend full operations and switch to home delivery. Even though Pizza Hut already had a delivery system and large pizzerias sales increased, in the summer of 2020, 300 restaurants of the franchise were closed throughout the United States (Valinsky, 2020). In conditions of visiting restaurants’ impossibility, customers began to place orders online, which caused a drop in demand for visiting restaurants.

Marketing

Regarding sales merchandising, the primary tool for selling through this mechanism is the restaurant design and menu itself. In the pandemic, the main leverage to increase sales was provided by promotions that users could use when ordering online (Sharma, 2020). Pizza Hut in 2020 began to invest more in advertising since, in the conditions of being forced to stay at home, customers consume more media content (Fleming, 2020). The increase in buyers’ number is due to active advertising campaigns, a mobile application, and online promotions, which offer lucrative offers for combined orders. The franchise also pursues to increase its regular customers, which is achieved by implementing loyalty programs and additional discounts for customers who make orders regularly. In conditions of impossibility for the company to directly contact customers through the network of restaurants and the provided service, the company seeks to form trust relations via the Internet. To achieve this goal, advertising campaigns were created dedicated to the safety of delivery of orders, compliance with all hygiene, and sanitary standards. In some regions, Pizza Hut organizes food delivery for public health workers (Sharma, 2020). This is a sign of the social responsibility of business in unstable times and a successful promotion, demonstrating the company’s readiness. According to the latest data, the average check for online orders increased by 50% during the pandemic because people live together within families and do not leave their homes (Sharma, 2020). Thus, Pizza Hut’s primary marketing strategy is to increase digital ad budgets, which has a beneficial economic impact on the franchise.

Each organization has strengths and weaknesses, as well as opportunities and threats to business development. SWOT analysis for Pizza Hut is as follows:

Strengths

Pizza Hut is the market leader in restaurants offering Italian cuisine, which includes pizza itself and other dishes. The company owns the largest restaurant chain, with more than 12,000 restaurants worldwide. Pizza Hut creates delicious and quality products, which is accompanied by a high level of service and meeting hygiene and sanitary standards. The company’s organizational culture is at a high level, which is accompanied by regular pieces of training for personnel and high motivation of employees for their activities. Pizza Hut is certified as an International Standard Organization. The business’s strengths also include complete autonomy of work: Pizza Hut has its regular suppliers, as well as a courier service, which allows the company to operate regardless of the circumstances. Moreover, in a pandemic, the corporation demonstrates rapidly the ability to change in the market and public life.

Weaknesses

The fact that Pizza Hut has a large-scale restaurant chain around the world is not only a competitive advantage but also a disadvantage. The company has to bear additional costs for maintaining its restaurants and staff, which distinguishes them from competitors with a vast network of establishments. Compared to other similar chains, Pizza Hut prices are higher, which can negatively affect the consumer choice towards a cheaper product (Mothersbaugh et al., 2019). Moreover, Pizza Hut is more focused on the Western type of taste than Eastern, which is a disadvantage in some regions where customers tend to eat traditional local food with specific taste.

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Opportunities

Given that Pizza Hut’s business is focused on the production and sale of food products, the most significant opportunity is the potential for expansion. Opening new restaurants, increasing the number of a loyal audience, occupying new market segments are areas in which the franchise can continue to develop. Since Pizza Hut is well recognized in the West and has a broad audience familiar with the brand, the East is the central region for development. Diversification and creating unique products for eastern countries will allow the company to increase its market share. In addition, access to a new market will expand the resource base, enabling the firm to lower prices for its products.

Threats

The main threat to Pizza Hut is the company’s competitors, as there are many highly competitive companies in the pizza and other food markets. The main rival of Pizza Hut is Domino’s Pizza, which continues its active expansion into the Eastern market. The coronavirus pandemic still poses a real threat to the food sector due to restaurant bans. Given Pizza Hut restaurants’ negative performance dynamics in 2020, this trend may continue if restrictions are extended.

References

Alon, I., Jaffe, E., Prange, C., & Vianelli, D. (2020). Global Marketing: Strategy, Practice, and Cases. Routledge. 3rd edition.

Mothersbaugh, D. L., Hawkin, D. I., & Kleiser, S. B. (2019). Consumer behavior: Building marketing strategy. McGraw-Hill Higher Education. 14th edition.

Fleming, M. (2020). How Pizza Hut overhauled its media strategy to be more efficient. Marketing Week. Web.

Sharma, K. (2020). Marketing in the times of COVID-19: Pizza Hut. Business Insider. Web.

Valinsky, J. (2020). 300 Pizza Huts are closing after a giant franchisee goes bankrupt. CNN Business. Web.

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