The pizza hut market
The pizza hut market
Swot Analysis of Pizza Hut
1. Pizza Hut is a welcomed fast food brand in the UK. In a survey, Pizza Hut's ranked No.4 in the "Most loved" list of eating out in UK (Marketing Online 2008).
2. Pizza Hut already uses the online ordering service successfully. Among the Unique audience ranking of Pizza Brand Site, Pizza Hut took the No.1, 515,000, which exceeded Domino's 365,000 (Luan, 2009)
1. Fault management decision. 'Pizza Hut's rebranding of some of its outlets as 'Pasta Hut' has generated consumer discussion, but it is a stunt that is unlikely to produce long-term growth for the brand'(Schrezenmaier 2008).
1. Nutritional food. 'Restaurant chain Pizza Hut has confirmed that it will become one of the first foodservice operators in the UK to offer nutritional information on its menus as part of new voluntary initiative.'(Market Watch: Global Round-up online 2009).
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2. ATM activity. 'Pizza Hut is launching an advertising campaign using cash machines to promote the launch of its fixed-price 'Happy Hour' menu' (Marketing Online 2009).
1. Domino's Price. 'Domino's has always priced its pizzas at a premium compared with those of Pizza Hut's delivery service and independent rivals' (Marketing online 2008).
2. Fat Concern. Pizza Hut listed its Mediterranean Deluxe cheesy bites pizza contends 4.392 calories. It keeps you going far about two days-daily intake should be 2,500 for men and 2.000 for women (Director online 2009).
Pizza Hut's Current Communication Mix
1) Sales promotion
One of Pizza Hut's more recent sales promotions is its "Happy Hour" menu. The Happy Hour menu provides consumers the choice not only pizza, but also pasta, salad and plus garlic bread and a drink. Pizza Hut promoted this menu at a £4 fixed price. Pizza Hut premiered this promotion using an ATM advertising campaign. The purpose of this campaign is to hopefully increase visits by customers to Pizza and was cleverly timed to premier around pay-day for most of the working public.
Pizza Hut possesses a wide sponsorship in different and variety areas from past until now. For instance, the notable sponsorship of Pizza Hut is as a part of PepsiCo's. There has also been partnerships with Formula one, Euro '96' and was a sponsor of the Newcastle Vipers ice hockey team from 2007/08 EIHL season. Nowadays, Pizza Hut is proud to sponsor National Family Week. This is the biggest official celebration of families and 'Pizza Hut is a gold sponsor of such an exciting new initiative backed by the largest coalition of family in the UK.' (The Greenwich Gazette, 2009) Therefore due to the association with such reputable brands, sponsorship is a very useful method of marketing for Pizza Hut and has helped communicate the image of Pizza Hut to its target audience.
The internet communication of Pizza Hut plays an important role for customers. Pizza Hut also has used social networking sites such as Facebook and Twitter to create E-marketing. Facebook users can join a Pizza Hut group and receive information of any promotions. This new form of marketing is Pizza Hut adapting to new technology and understanding there are a lucrative options for marketing this way. The target audience that use social networking sites most profoundly Generation X and this creates a parallel to a large proportion of Pizza Huts target audience.
In 2008 Pizza Hut rebranded its UK business to Pasta Hut. The expenditure of this rebranding cost '£100M' (Marketing Week, 2008) as it refurbished many restaurants and also created new outlets. The change of the brand's name could be seen as a trial exercise to promote and test the market's acceptability of the new name. It has been noted however that most of people still prefer the previous name 'Pizza Hut' and found the rebranding of 'Pasta Hut' stale and uninteresting.
Objective 1: To introduce a healthy alternative within the pizza market.
A motivational conflict arises for many people when thinking of going to Pizza Hut. Pizza Hut is seen by many people as a fast food restaurant and fast food restaurants are associated with unhealthy food and therefore obesity. This consciousness has become more apparent especially after such documentaries as 'Super Size Me' in which Morgan Spurlock carries out a task in which for a whole 30 days 'he can't eat or drink anything that isn't on McDonald's menu' (IMDB, 2009)
This is why Pizza Hut needs to be more aware of looking after its customer's health and to give a healthier option for the more diet conscious customers.
Therefore the proposal is a selection of pizzas in which you get one of your five a day, these pizzas will also use low fat and low salt. There will also be an option to have wholemeal pizza base to help increase customers fibre content.
Pizza Hut has already reduced their salt content in there pizzas; 'in some cases by as much as 30%' (InfoFrancise, 2009), in the last 3 months and since 2007 removed hydrogenated vegetable oils from all its food items, but it is viewed that there is limited awareness of this option for consumers.
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Objective 2: To ensure that Pizza hut has a healthy alternative in their main product to react to competitors healthy versions.
Although Pizza Hut has options of salad and healthy pastas, to compete with competitors there must be a healthy and interesting alternative for more health conscious people. This can be seen in fast food alternatives such as Subway in which there are 12 low fat options all under 6 grams of fat. Dominos, a main competitor of Pizza Hut have an option of reduced fat cheese in which it states '100% great taste, 33% less fat.' Therefore to compete effectively with competitors such as Dominos, Pizza Hut needs to produce a campaign that offers a healthy range and then communicate this to their customers. One of the main customer bases are parents either looking for more sophisticated and healthier options for themselves when taking their children to Pizza Hut or for the health conscious parents who are worried about their children eating fast food, this campaign needs to party be aimed at them.
Objective 3: To create a new image of Pizza Hut as a restaurant chain that cares and wants to keep its customers healthy.
The image of Pizza Hut such as many other 'fast food' restaurants to much of the public is associated with food that has high contents of fat and salt. As the rate of adult obesity is '23%, almost twice the level in France' (The Daily Mail, 2009) and also by far the worst rate in Europe, much focus by the government has been put on campaigns to bring attention to this worrying statistic and assist the public with information on how to keep healthy.
Therefore Pizza Hut has decided to bring out a new campaign and also through this, a new image of a restaurant that understands the growing issue of obesity and wants to provide and encourage its customers to choose healthy options when visiting Pizza Hut.
Hopefully also this campaign should encourage a new customer base of customers due to becoming more health conscious have not visited Pizza Hut as frequently. It is also aimed to encourage existing customers to visit more frequently by relinquishing the guilt of eating food with a high calorific count.
The 'healthy eating' campaign is directed at end user customers in order to generate increased level of awareness, change and/or reinforce attitudes, reduce risk, encourage involvement and ultimately provoke a motivation within the target group. The campaign hopes to create a motivation for the consumer to therefore stimulate action within the target audience. The consumer 'expects the offer to be available to them when they decide to enquire, experiment or make a repeat purchase' (Fill, 2009). The pull strategy requires the brand to allocate a large proportion of funds to advertising, this is especially so when using mass media and sales promotion.
Pizza Hut aims at attaining the objectives of the pull strategy by using television and internet advertising. These advertising forms are seen as very credible examples of mass media as they have the ability for mass penetration which in turn reduces the unit cost of the advertising. This above-the-line communication is accentuated by the use of sales promotions which is a below-the-line communication. Sales promotion which is another aspect of the pull strategy, it's aimed at creating a demand for the product in the consumers psyche, this creation of a want/need increases the likelihood of a purchase.
The Marketing Communications Mix
To ensure that our message manages to reach as much of the target audience as possible we have chosen to use the following communication approach. This approach uses a combination of advertising using two media forms, the internet and television. In accordance with the advertising, sales promotions and public relations will be carried out to hopefully guarantee the success of the campaign.
The creation of television provided a new opportunity for widespread effective advertising. When viewing advertisements the public assesses what the advert conveys and how it conveys this message. This causes the public to evaluate aspects such as presentation, creative appeal as well as of course the message. Therefore due to impact that this powerful audio-visual tool can have on the audience, it is imperative that much consideration is given to the impression that is portrayed.
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One major benefit of television advertising is that it has a very high level of penetration. Statistics have shown that in the United Kingdom on average the public watches television for '28 hours per person per week' (Nationmaster, 2009). This therefore provides a lucrative possibility for many corporations.
Due to the audio-visual possibilities that television advertising provides it gives the advertisers an opportunity to utilize the creative potential and fully portray the message desired which consequently helps the brand to achieve its aspired goals.
For the television advertisement, a brand such as Pizza Hut should produce adverts that are creative and entertaining but also ensures that the core message is clearly communicated. The advertisement must be appealing to keep the attention of the audience to hopefully limit the effect that surrounding noise and distractions may have.
There is a tendency of many consumers to directly link the credibility of a brand with the credibility of the medium, and television advertising is perceived as a highly credible source to most audiences. Therefore the credibility of the Pizza Hut campaign has high chances of being enhanced if it associated with TV adverts.
The television advertisement for the new campaign needs to be positively engaging on the emotional and psychological grounds. Our basic aim is to implement the pull strategy to create a demand for this new product category via the mass media.
The target audience for the pizza hut campaign is the health conscious segment, but health consciousness is reflected in varied shades for different individuals, and this consideration is depicted in the television advertisement. The advertisement shows an ordinary British family consisting of a mother, a father and two teenagers; a son and a daughter. They are discussing what to have for dinner at the dining table. One option that is discussed is pizza, and it shows the four different perspectives of having pizza for dinner. The mother's standpoint is that pizza wouldn't be suitable as it is unhealthy and lacks proper nutrients for the family, while the daughter's perspective is that she would have motivational conflicts due to the high calorie count and the diet she has been carrying out, the son also may have a similar negative perspective due an extensive work-out schedule that he has been keeping to and doesn't want to ruin and that father may be worried about blood pressure and cholesterol that are common with his age and therefore the consensus is not to order a pizza even though everyone would enjoy the experience.
A pizza base appears magically on their table and tops itself up with all the healthy ingredients like vegetables/grilled lean whit meat/low fat cheese etc, which adds to the health quotient of a pizza. The advert now describes the complete new range of healthy Pizzas from Pizza Hut. This advertisement aims to appeal to its audiences through an emotional stance. Understanding a mother's basic instinct to ensure the family keeps healthy, understanding many teenager's insecurities as well as understanding the worries about health for the majority of the aging population. The psychological perspective of this advert would be that people are enjoying a pizza without experiencing cognitive dissonance.
The advert would have a strong visual appeal to create the sense that it would be delicious and full of flavour, this would be carried out with visually appealing colours of the topping as well as the surrounding background of the advert.
The slogan used for this advert is "Pizzas Just Got Healthier." This is a clear, strong slogan and it also communicates the core idea of the whole advertising campaign in lucid, simple language which is easily retained by consumers. The slogan also is able to depict an image of the brand which cares about its customer's health through an product innovation.
The sales promotion that is integrated into the campaign will be shown at the end of the advert with a change in the tonal quality of the speaker, this is aimed at getting the audience to pay attention at the moment when the majority of the information is relayed. Refer to Appendix A for story board.
The last but not the least the advert would be following the Association Guideline within "C4'S Golden Guidelines"; the television advertisement will be aired throughout a entertainment/comedy section, throughout the time period of 6pm to 8 pm. This time period would be a high reach period as it after school and work when more members of the family are at home. It would be most viable to relate the advert to the shared territory and common targeting aspect of the Association Guidelines.
The internet is described by many as a one of the most important inventions of the century. It has been a part of a major revolution in technological development worldwide. With the advent of web based advertising in 1994, it has become an extremely convenient method for many brands to reach to the greater masses at a relatively lower cost in comparison to traditional media.
The current generation is highly dependent on the internet, and therefore advertising online in the form of banner ads, button ads, pop ups are the smart and viable options for many reputed brands. Potter (1994) 'estimates that web based marketing results in ten times the units sold at one tenth of the advertising budget, and that's one of the most important reasons to opt for an online advert.' An added bonus also is that consumers have the option of watching the advert as many times as they wish and so are able to obtain all the information that the advert provides.
The new Pizza Hut campaign focuses mainly on giving healthier alternatives when visiting Pizza Hut, mainly in the forms 'Healthy Pizzas'. This should be highlighted clearly to the audience as this should create an interest that may cause possible customers to acquire more information about the campaign.
Another rationale for using web based advertising is the higher chance of an instantaneous purchase, as long as there is a option of purchasing the product or service. This impulse purchase effect will occur especially with food producers such as Pizza Hut, as it satisfies a physiological need in Maslow's hierarchy of needs. To hopefully ensure a purchase it would be advisable for Pizza Hut to have an option of "Order Now" and a link to the website.
Harris (1998) indicates the 'purpose of marketing PR is to gain awareness, stimulate sales, facilitate communication, and build relationships between consumers and companies and brands.' This opportunity is an interesting prospect for Pizza Hut and alongside advertising may enable the campaign to reach more of the target audience.
Pizza Hut can use its public relations agency to promote its products, services as well as its corporate identity. This is especially useful as the campaign is aiming for an image change, public relations will help communicate this change to many different groups of stakeholders.
Corporate public relations is responsible for establishing understanding and trust with individuals who have a potential or actual interest in the organisation, (Kitchen, 1997). According to Gruning (1992), 'corporate PR is the management of communication between an organisation and its publics.' These may include health organisations, local businesses, local education authorities and potential customers along with many more groups. Pizza Hut can use and associate 'the high credibility attached to this form of communication.' (Fill et al, 2005) to create credibility and maintain the credibility of the brand.
In order for Pizza Hut to be effective when carrying out its public relations, it will introduce newsletters informing the previously mentioned groups of what they are trying to do in its new health campaign. Pizza Hut could also evaluate the effectiveness of its public relations by offering readers the chance to comment on the company and any articles through the feedback form at the back of the newsletter.
Pizza Hut has decided to put together an article with a major newspaper publisher about obesity levels and the new Pizza Hut healthy campaign. Public relations are often important at more of a corporate level and without this option Pizza Hut would struggle to be seen as a major food outlet. This can be seen as a form of publicity.
Pizza Hut should also conduct a certain amount of public relations to its internal stakeholders such as staff and external stakeholders. Internally the employee magazine should be used and these cues should 'develop images and perceptions' (Fill, 2005) in the mind of the stakeholders, internally as well as externally.
Therefore the ability for public relations to reach a medium size audience and also portray a credible image indicates that Pizza Hut should be using PR as one of its communication tools. It must not be ignored however that public relations is more effective when integrated with other communication tools. By combining such tools as advertising with public relations it is possible to gain full national coverage something that would not necessarily be possible with other communication tools.
The institute of sales promotion (2004) defines sales promotion as a 'planned and implemented activity that both enhances product or service appeal and changes customer behaviour positively in return for an additional benefit for purchase or participation'. (Yeshin, 2006)
According to Yeshin (2006) sales promotion can function on three levels by communicating, catching the customer's attention at the point of purchase'(Yeshin, 2006) as well as providing extra information that may influence the purchase decision. Sales promotions can also provide an incentive by offering 'some form of direct inducement, either immediate or delayed, which changed the perceptual base of the purchasing decision.' (Yeshin, 2006)
Sales promotions can also advance the purchasing decision and 'invite the consumer to engage in an immediate transaction.' (Yeshin, 2006)
Therefore there is a strong rationale for using sales promotions in the new Pizza Hut campaign. The ability to create a product trial and sampling is necessary aspect for the success of the campaign. Once attracting customers to try the new healthier pizza range, this hopefully will encourage repeat purchases and create a loyalty to the brand. Through this loyalty there will hopefully be an increase in frequency of purchase as well as different usage.
The sales promotions that Pizza Hut are planning on integrating into the campaign are such as a grouping with 'Innocent Smoothies.' Innocent Smoothies is a good association with this campaign as it is a well known smoothie brand which is related heavily with being healthy and prides itself on only using '100% natural, healthy renewable ingredients.' (Innocent Drinks, 2009) have also already had success with the health conscious target audience already and so will create added value in the mind of this audience.
The promotion that Pizza Hut is running is a 'Meal Deal' in which a choice of healthy pizzas accompanied with either an innocent smoothie or a side salad. This 'Meal Deal' will be set at £4.99.
Through these promotions there will hopefully be an increase in market share due to brand switching. A pull strategy will occur in which consumer decides to choose Pizza Hut over competing brands.
Unlike some other tools of marketing communication, which work over a longer term, sales promotion produces rapid results and return on investment is often substantial.
However it will be used along side with other marketing communication tools for this campaign so as to bring about an integrated marketing communication approach.
Scheduling and Implementation
All the creative's for the campaign will be carried out via an agency used by Pizza Hut on previous successful campaigns. As commented on the agencies website regarding the results of one of their campaigns. 'The following year Pizza Hut UK reported their best-ever financial results and achieved the goals in their five-year plan a year early' (Cchange, 2009)
'Media Planning essentially means the process of establishing the exact media vehicles to be used for advertising.' (Entrepreneur, 2009)
After having defined our specific target group which is the 'Health Conscious' customers, and using a pull strategy, the media planning would automatically be done for the mass media, and TV and web based advertising have been chosen based on their wider reach at a relatively lower cost.
The media planning has been done keeping in mind the following aspects:-
- Reach. Shown as a percentage, 'reach is the number of individuals (or homes) the product is aimed to be exposed to through specific media scheduled over a given period of time.' (Entrepreneur, 2009)
- Frequency. Using specific media, on average how many times an audience be exposed to the advertising message? 'It takes an average of three or more exposures to an advertising message before consumers take action.' (Entrepreneur, 2009)
- Cost per point. What's the cost of buying one rating point for the target audience; which equals one percent of target audience, it's a method used in comparing broadcast media.
- Impact. Does the medium used create opportunities when appealing to the senses, such as sight and hearing, in its design and production?
- Selectivity. To what extent can the message be limited to the people who are known to be the most realistic prospects.
The distribution in this case is direct B2C as the pull strategy is used extensively which aims at minimizing the distribution channels. Both the TV and web adverts will be aired January to August, and this timescale is chosen to synergize the idea of healthy pizzas with people trying to be on a diet and lose weight during the summer when the public is more inclined to exposing themselves to d summer sun, and a fit body is an added advantage to that.
The below table indicates the budget used during the previous years and hence the marketing campaigns will be based around these figures.
'Leading pizza restaurants and takeaway chains have increased their spend over the past few years.' (Mintel, 2009). Therefore as this will be Pizza Huts biggest campaign of 2010 a sizable budget will be assigned. This will be set at between 15-20% of their annual marketing spend assigned to this new healthy pizza campaign.
The campaigns will be targeted from January to August. The reasoning behind this is as the New Year is a time when people are beginning to make resolutions about their diet. The lead up to the holiday season summer should also be heavily targeted as many people will want to get in shape for their holidays and gain the perfect body.
Refer to Appendix B
The PR agency will be held by Pizza Hut on a retainer basis of £2,000 a month. The benefit for Pizza Hut is that 'most agencies will sacrifice some time recovery for the sake of certainty, so the client will always get better value through paying a regular fixed amount. (B2bm, 2009)
TV adverts cost have been calculated on the following basis.
'In general TV adverts are bought on a cost per thousand viewer basis, most channels offer discounts on ITV's standard price of £5.69* per thousand viewers.' (TV Advertising, 2009)
Since the advertisements will be carried out during peak evening and afternoon times when the family are together a higher rating will be achieved as a result a high budget has been set for this.
As commented by where on the earth group 'the average budget for producing a 30 second commercial in the UK is around £140,000' (Ehereontheearthgroup, 2009). Hence this is the budget set for the creative of the TV advert.
The banner advertising budget will be based on the fact that 'a banner ad on Yahoo! would cost you anywhere between $2,000 to $5,000 per month.' (Benchmark communications, 2009). In pounds that is roughly 1,500- 3500 a month. As other companies such as MSN will be used a sizable budget will be used every month. Pop up ads will be budgeted in a similar manner to this.
The micro site development costs will be based up the design of the site and hosting by an agency including having SEO developed within the site.
The main cost associated with these will be creative and done by the agency with the main cost be associated with printing of the sales promotion materials such as leaflets and inserts into the menus. As this is to be done nationwide the costs are expectedly high.
Evaluation and Control
Evaluation is important for two reasons. Firstly, as marketing becomes more important to management, performance of these campaigns 'increasingly affect remuneration.' (Les Binet, 2005) Secondly, what you measure influences what you do. If you evaluate things correctly, then you are able to increase profits by ensuring marketing funds are spent sensibly. If you evaluate things inaccurately there is a risk you marketing priorities will be distorted and funds assigned incorrectly. (Les Binet, 2005)
This campaign will be evaluated using the measuring techniques below:
- Recall and recognition:-In order to check the awareness level the target audience have about the advert the recall test will be used to check how many times viewers spontaneously remember the advert and how well they are able to recognised it when taken away and brought back
- Sales- The level of sales generated during this campaign will be compared to previous sales, this will help when evaluating the impact of the sales promotion and advertising on the target audience.
- Web site tracking: There will also be a comparison of traffic on the website before and after the campaign.
- Online advertising: The click through rate that is the percentage of viewers who click on a banner advert would also be tracked.
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