Services Marketing Decision Case #8 Rickʼs Pizza Corporation

Transcription

1 Services Marketing Decision Case #8 Rickʼs Pizza Corporation Course Instructor: " " Will Mlacak Course Code: " " MKTG211 Sections Number: " " 5 A Date: "" " " April 21, 2011 Name: Qaahir Stewart

2 Table of Contents Summary.1 SWOT Analysis... 2 Major Problems, Sub-Problems...3 Alternative Solutions...4 Recommendation...5 Implementation Solving the Problem 8

3 Summary Rick's Pizza is a North American Franchise Chain with 5000 outlets (and growing) and delivers 230 million pizzas a year with over $3 billion in sales. Franchises make up 65%, and corporate owned stores make up 35% of the restaurants. The company has been around for 20 years and is well-known for their 30 Minute policy - if the pizza is not delivered in 30 Minutes from the time of an order, they deduct $3from the price. The company's speedy delivery has influenced their marketing team to create the slogan, "It's quick at Rick's". Rick's has employed 75,000 part-time drivers (approximately 4 fulltime drivers at each outlet).the main leaders of the company are: Richard (Rick) Firenze, the chief executive of Rick's Pizza Corporation, Randell Meins, Vicepresident and Harry Carpaccio, the senior vice-president of marketing. Page 1

4 SWOT Analysis Strengths: Rick s slogan It s Quick at Rick s establishes good reputation for fast service; rapid preparation rate and quick delivery service Ricks Pizza Corp. is a very successful and stable pizzeria. 230 million pizzas have been sold in the last year and 3 billion in sales Rick s promise to deliver within 30 minutes of a phone call or they will cut 3 dollars off the customers purchase boosted the pizzeria from one location to thousands of outlets across North America Weaknesses: Rick s Pizzeria hires part time delivery drivers, majority under the age of 18; some being reckless, inexperienced and irresponsible Staff is against the company policy of rushing the drivers Rick s drivers are inconsistent in delivering pizza safely Opportunities: With safety concerns, since the company is providing their staff with driving lessons, the company can establish a reliable reputation for their customers The change in their 30 Minute policy can show the customers the company s concern for their employees Threats: Negative publicity against the company lowers the possibility of sales Legal actions and notices against the company are financial burdens, expenses, that decrease the net profit every year There are plenty of pizzerias that offer the same styled pizzas and quick delivery service without a large number of accidents Page 2

5 Major Problems In 2005, Rick s Pizza Corporation s drivers were causing serious accidents. 20 lives were taken by the drivers; 18 during pizza deliveries. Following the 30 Minute Policy, drivers are under great pressure and according to their testimonials, they do not always follow the laws and rules of traffic. There are 75, 000 part-time delivery drivers hired by Rick s, of which the majority are 18 years old and under. The policy of the corporation, which describes the age limit of hiring only 18 years or older, is not followed by the management of franchises. The deaths not only involve the employees, other drivers on the road are being injured or killed in the collisions. The accidents are costing the company $90,000 in death benefits for each person involved. The company is also responsible for compensating individuals for damages caused during the accidents. Protesters and lawyers are working on raising the amount of liable charges to $500,000 for the corporation to persuade them to change their 30 Minute Policy. Sub - Problems Franchise management is creating pressure of the drivers by forcing them to deliver 3-4 orders during each 30 Minute pizza delivery. The drivers testified, if they are running two minutes behind and have a minute left for the delivery they will often run stop signs and cut corners to get the delivery on time disregarding safety rules and laws. In one franchise, employees are given The King of the Lates badge on a weekly basis for poor performance. This sort of punishment is demeaning of the employees. In one death case, witnesses stated that a manager rushed to the scene and told the driver to get the pizza on the road. The pressure of delivering on time and fearing the loss of sales is the cause of accidents occurring on the road during pizza deliveries. Page 3

6 Alternative Solutions Change delivery drivers age limit ( Age 25+) o Advantage: More experienced and mature drivers are trusted to make better driving decisions o Disadvantage: Number of drivers to hire is limited and the wage to pay is higher Give management specific and ethical training on how to lead employees o Advantage: Reduce the amount of managers forcing their employees to rush deliveries o Disadvantage: Effectiveness of training may not change how managers lead employees Hiring experienced management in each franchise should be made mandatory o Advantage: Better leading decisions will be made by management, which will reduce the number of incidents o Disadvantage: Higher salary expense Expand allowance time of deliveries to 45 minutes and ban The King of Lates badge distributed weekly o Advantage: Allows for more time to make deliveries, reduces pressure o Disadvantage: Competition market will increase Create a budget for allowed late deliveries (set an allowed amount of late deliveries per week) o Advantage: Allows for late deliveries to be made thus employees would not rush o Disadvantage: Expense for the company Change marketing strategy of delivery time from 30 mins. to 45 mins. o Advantage: Takes the focus away for the 30 min. guarantee and the need to rush delivery o Disadvantage: Might send the wrong message to existing customers Page 4

7 Recommendations The best solution recommended for the company is a combination of three alternatives: changing the hiring age to 25+, educating the management according to company policies and regulations, and creating a budget of allowance for late deliveries every week. The company needs to change their hiring age limit of their delivery drivers to 25+. This will allow for more mature and responsible drivers; thus reducing the risk of accidents. Changing the age limit will allow the company to reduce the expense of insurance rates as well. A disadvantage to this solution is the limitations of people being hired. When increasing the age limit to 25, the company will have fewer people to choose from. The company would have to pay higher salaries because the employees would be mature male and female individuals. Another solution is educating management on ethical leading practices. The managers of franchises are directly related to the problem, they should also be educated and motivated to make good decisions on behalf of the company. Managers are to encourage the employees as opposed to reprimanding them for late deliveries. However, there is no straight forward way to measure the effectiveness of the training and the time it takes for managers to change their way of leading, also, the sessions will be are costly and time consuming. The last recommendation is creating a budget allowance for the late deliveries. Every week the drivers should be allowed to have $100 (maximum) deducted of their late pizza deliveries. The $3 deducted from orders with each late delivery can accumulate easily, which is an expense for the company. However, the costs of late deliveries compared to the amount of costs for compensating individuals involved with accidents is minimal. Allowing the drivers to accumulate a certain amount of late deliveries will help ease the pressure of being late for a delivery. This way the company would not have to change their promised delivery time and their entire marketing strategy. Page 5

8 Implementations Changing the drivers hiring age to 25+ The company executives are required to change the policy of hiring age to 25+ and implementing it within franchises. During the hiring process of new drivers, the managers need to make sure the drivers are experienced and understand that they need to obey traffic rules and laws. Each franchise needs to hire at least 5-6 new drivers for the new policy to be effective and they need to replace drivers, currently hired, under the age of 25. The representatives of the corporation need to explain to the franchise owners of the negative reputation the driving accidents are creating for the company. The new implementations will be time consuming; it should take 1-2 months for every franchise to let go of the current underage drivers and hire new staff. To eliminate staff shortage, the new staff should be hired before the underage staff is let go. Training the new staff should take 2-3 weeks to be placed on payroll and to be trained by management. Creating a budget allowance for late deliveries Every week, franchises are to be given a budget allowance for deliveries. A maximum of $100 of late deliveries is allowed every week per franchise. Managers need to make sure they keep track of the amount of late deliveries every week. Every night, during closing, the manager is to write a report for all the drivers and the results of late deliveries. The drivers need to report the amount of time they deliver the pizzas late. They need to take the time to record every delivery and provide the managers the receipts after the sale. Everyone needs to be updated of the budget change before their shifts. Page 6

9 Managers are responsible for monitoring their employees(drivers) on their deliveries and for implementing this new policy. The owners should be involved in rewarding their employees if they are within the allowed budget, which will create trust and encouragement within the company. Cooperation of the employees within the franchises will create harmony and more prosperous performance. It is expected of the employees of each franchise to take time to adjust to the new rule. Within a month, the drivers should be adjusted to the new rules and the pressure will be reduced greatly. Educating management on leadership and the company s expectations Educational seminars are to be organized by the company executives. All management and franchise owners need to be invited to a world-wide meeting, organized in a seminar hall. Speakers are to represent the company and deliver the new policy which is designed to overcome the negative publicity created by accidents. A one - week - long training is required for every manager and franchise owner to attend. Renting a seminar hall for 2 weeks and organizing events should be the responsibility of company representatives. Also, hiring event organizers will be beneficial to make the event fun and entertaining. Most of the attendees will be traveling out of their provinces or states; therefore, they need to be accommodated with hotel rooms and food or drinks for the week. The franchise owners and management need to be able to enjoy their time while learning about serious changes in the company policy. Page 7

10 Solving the Problem Changing the drivers hiring age to 25+ will relate to the major problem that the company is facing, which is negative publicity caused by the accidents occurring during pizza runs. Customers are outraged by the 30 Minute policy not implemented properly. The short delivery time is the result of drivers causing accidents. Hiring experienced drivers will create a better delivery team for each franchise. This will allow the company to keep their marketing slogan and 30 Minute policy. Experienced staff will be trained to deliver pizzas safely without causing any accidents or harming anyone on the road. This solution will close Gap #2, (Not having the Right Service Designs and Standards) and Gap #3, (Not Delivering to Service Designs and Standards). The Customer Gaps will be closed this way by following rules and still meeting customer expectations of the speedy delivery. Creating budget allowance for late deliveries closes Gap #4, which describes Not Matching Performance to Promises. Providing financial empowerment for drivers removes the pressure of the staff. Allowing the employees to be late and deducting $3 from pizza deliveries will not only show the customers that the company lives up to their promises, but also allows for the drivers to arrive safely without causing any accidents by rushing to make the deliveries on time. Educating management on leadership and company s expectations also closes Gap #4. The ineffective horizontal communications between the management and the employees are creating pressure in the operation of the business. If management is better educated on the company s policies, the staff can deliver a better performance and attract more customers. Better trained management will create better communications within the company. Team effort and a more relaxed atmosphere at work will encourage staff to perform their job according to rules and regulations. Page 8