Strategic Marketing Management

Transcription

1 Strategic Marketing Management

2 Table of Contents Introduction... 3 Task The role of the marketing manager A marketing plan for the strategic direction of Pizza hut Identification of corporate strategy of Pizza hut and how it is linked to the mission statements of pizza hut Task Porter s five forces and SWOT models for Pizza Hut Marketing tactics used in positioning Relationship marketing to maintain the customer loyalty at Pizza Hut Task Usage of appropriate marketing techniques to achieve the corporate objectives of Pizza Hut Strategic options in the restaurant market Using the four P s for the marketing objectives of Pizza Hut Task Environmental changes going on in the restaurant market SWOT analysis of Pizza Hut Marketing responses to the environmental changes Conclusion References WEB References Bibliography... 20

3 Introduction This project report provides details on the strategic marketing management of the Pizza Hut restaurant chain, which is an American restaurant group as well as an international franchise which is offering different types of Pizzas with side dishes and deserts too. It was found on the 15 th June 1958 by Dan and Frank Carney in their hometown, Kansas. This is a subsidiary of the largest restaurant company in the world which is Yum! Brands, Inc, By 2012 more than 6000 pizza hut restaurants were available in US. This company has one of the best reputations for providing new kinds of pizza products which always have a good demand. The mission statements of the company are To be the best pizza for every pizza occasion and Alone we are delicious, together we are Yum (Pizza, 2012). The vision of the Pizza hut company is to run great restaurants. Further this report provides information on the pizza hut company chain, roles of marketing managers in pizza hut, marketing plans, corporate strategies, mission statements, porter five forces and SWOT models for pizza hut, marketing tactics used in positioning, relationship marketing, marketing techniques, four P s used in pizza hut, environmental changes and responses in the restaurant market and SWOT analysis of pizza hut. Task The role of the marketing manager There are many different institutional approaches to marketing in all the businesses. According to the availability of budget and the skill of the team all the responsibility goes to the marketing manager. According to Kotler et al. (1999) the key roles of the marketing manager can be classified as : Instilling a marketing led culture throughout the business, Conducting researches and then reporting on the external opportunities, Understanding the current and the potential customers of Pizza hut, Managing the customer relationship, Development of the marketing strategies and plans in pizza hut, Managing the marketing mix, Agency management, Management of the budget and measuring the success of pizza hut, Ensuring the deliveries on time, Writing copy, Approving and developing guide lines, Making decisions by focusing the customers, Identification of potential markets and New product entries. These are the roles of the

4 marketing manager of pizza hut. Pizza hut marketing managers are focused on applying the above-mentioned roles in the most practical ways. In order to perform these roles or functions effectively and efficiently, they should be in pocess of excellent communication skills and analytical skills. Therefore, as we can see the marketing manager are in charge of the entire marketing activities in the organization. 1.2 A marketing plan for the strategic direction of Pizza hut Pizza hut is always known for providing high quality pizza. But there is a chance of risk in the reduction of customers. Therefore, a marketing plan and planning processes for the strategic direction of pizza hut is necessary. In order to develop a marketing plan for the strategic direction of pizza hut, first the situation must be analyzed. Quite a number of social and demographic trends in UK are increasing the demands for these quick service restaurants. Another such influence is the increased number of women who goes to work. Due to this situation, the family members have to take fast foods such as Pizzas and this rate is increased in UK. Let us conduct an environmental factor analysis of the Pizza Hut. Political factors including the regulatory and the judicial system affects the business. But there are no serious political issues in the market. The economic slump in UK is affecting the Pizza Hut immensely as pizzas are very expensive. People of UK are from various backgrounds and different religions and values. This too affects the Pizza Hut. Pizza Hut is using the internet technology in order to carry out very effective promotions. This restaurant is having many opportunities in the market today due to the situation in UK and they are having a huge competition from Domino s pizza hut, McDonald and KFC. As Baker (2008) mentions, these situations can be further analyzed by using Industry analysis, Marketing analysis, Competitive analysis and International analysis. Pizza Hut Company should now use strategies and tactics to control the situation of Uk for example introducing new kinds of pizzas at comforting prices and favorable tastes. Next they should develop a budget in order to achieve the marketing plan created by them. The marketing plan created here by the Pizza Hut Company must be affective and efficient. Pizza Hut is using strategic marketing analyses, objectives, perceptual mapping, environmental factor analyses, evaluations, formulations and implementations and control to create a strategic marketing planning process at the Pizza Hut.

5 A market plan for the strategic of pizza hut is also being shown by a diagram below. Pizza Hut Company Chain Market Strategic Direction Pizza Hut products Pizza Hut marketing strategies Pizza Hut pricing Budgeting and forecasting Strategic direction plan of Pizza Hut (Source: Designed by Author)

6 1.3 Identification of corporate strategy of Pizza hut and how it is linked to the mission statements of pizza hut. According to Pizza hut (2013) the mission statements of Pizza hut are To be the best pizza for every pizza occasion and Alone we are delicious, together we are Yum. The corporate strategy of pizza hut is based on the current position of the organization, the future position of the organization and the plan to achieve this target. Therefore, we can see that in order to keep up the mission statements of the pizza hut the corporate strategy should be taken into consideration and the functions of corporate strategy should be carried out accordingly. For example, the corporate strategy of the pizza hut is concerned with developing the available facilities and resources so as to achieve its objectives. According to Denison et al. (2004) this strategy will be affecting the overall direction of the organization including its mission statements and also establish the future working environment of the Pizza Hut Company. Therefore, corporate strategy of the company is defining the markets and choosing the methods in which this business is to operate and it is typically deciding in the context of the Pizza Hut Company s mission and vision.

7 Task Porter s five forces and SWOT models for Pizza Hut Porter s five forces are: - Bargaining power of suppliers Bargaining power of customers Intensity of Existing Rivalry Threat of Substitutes Threats of new competitors These five forces help the marketers to create a more competitive environment. It also has similarities with other tools for environmental audit such as PESTEL analysis. Let us further discuss these five forces. Bargaining power of customers: The bargaining power of the customers is also being described as the market of the outputs. The customers have the ability of putting the Pizza Hut Company under pressure. Bargaining Power of suppliers: Here it is described as the market of inputs. The suppliers who provide raw materials, components, labor and services to the company is known to be a power source over the firm according to Kotler and Keller (2006). Intensity of Existing Rivalry: The intensity of the existing rivalry is known to be the major determinant of this industry s competitiveness. Threat of Substitutes: Due to the existence of products outside the original product the chance for the customers to move on to alternative products is more. For example, if the quality of the pizza is low, the customer may move on to a restaurant providing more quality pizzas (Porter, 2008). Threats of new competitors: The entering of new competitors to the market will eventually decrease the profitability of the Pizza Hut Companies in the industry, unless their own quality and customers keep on increasing. The table below shows how Porter s Five Forces influence the Pizza Hut Company.

8 Bargaining power of suppliers Diverse distribution channel of Pizza Hut Large number of substitute inputs from pizza hut Inputs are having a little impact on the cost. Bargaining power of customers Availability of a huge number of customers for Pizza Hut Companies Requirements of special customizations from the buyers. Intensity of Existing Rivalry Brand identification of the Pizza Hut Large industry size Rapid growth rate in the industry Threats of substitutes Considerable product differentiation (Pizza Hut) The alternative Pizza is of lower quality The alternative pizza may not have the original tastes or the look. Threats of new competitors Pizza Hut s customers loyalty exists to the brand High capital necessities Patents limits the new competition Higher switching costs for the customers Entering barriers are high Porter s Five Forces influence on the Pizza Hut Company (Source: Designed by Author)

9 Let us now see a SWOT model for the Pizza Hut Company. STRENGTHS Marketing campaigns of Pizza hut One of the largest chains of company s Deliver products efficiently WEAKNESSES High price Low salaries Problems within the Pizza company Strong brand Name OPPORTUNITIES Emerging markets Innovative Pizza Different Payment Options Sports Season THREATS Economic slowdown The rising cheese price Credit card rates Price wars Competition of Pizza Hut Companies SWOT model for Pizza Hut Company (Source: Designed by Author) After considering all these facts we can see why these are important tools used to develop marketing plans for the restaurant.

10 2.2 Marketing tactics used in positioning Positioning is defining the products according to the needs and buying characteristics of people who are in need of buying the products. And, it locates the market venue where you can find the targeted customers. The following dimensions are being considered when a market positioning strategy is developed: - Brand Positioning strategy, Product Positioning strategy, Competitive Positioning strategy, Competitive Pricing strategy and Alternatives to marketing consulting firms. According to Kotler (1997) there are few marketing tactics used in positioning. Some of the tactics used in positioning are: - Marketing Tactics Perceptual Mapping Positioning a product to specific segments Communication Process Positioning maps Let us further discuss these. Perceptual Mapping: This is done by the pizza hut company to show what the customers might be thinking about their products and services. For example: providing customers with handouts to be filled with their opinion about the company. This represents both brand and people. The environmental changes too cause changes in positioning. Positioning a product to specific segments: The next step followed by Pizza hut is the positioning of the product to specific segments. Pizza Hut Company cannot provide everything to its customers. They have to classify who their competitors are and plan carefully how to compete. Communication Process: When the plans are made by Pizza Hut Company, they consider about how to represent the product, price and services to the customers through a communication message. Communication helps the marketing managers of the Pizza hut to build up the image of their product. More than the budget the methods of communication influence the effectiveness of the Pizza Hut Company s products. Positioning maps: As Baker (2008) mentions the products and the services provided by Pizza Hut Company is mapped in a positioning map. This is allowing products and services to be compared and differentiated. This

11 is the main strength of the Pizza Hut Company because this helps for the development of the company s positioning. For example Pizza Hut Company, can identify their product s strengths and weaknesses and the level of competency they face. 2.3 Relationship marketing to maintain the customer loyalty at Pizza Hut Relationship marketing is one of the strategies designed in order to foster customer loyalty, communication and long term commitment. This relationship marketing management approach is focusing mainly on preserving their customer loyalty rather than loosing the customer s loyalty (Gordon, 1999). Pizza Hut is using relationship marketing to maintain their customer loyalty. For example, Pizza Hut provides their customers with all the necessary information. Also, they communicate openly with their customers. This helps to develop strong connections with the customers. Currently, the customers of Pizza Hut are informed well about the company and its products so that relationship marketing has become very important than ever before. Many businesses do not have clear understanding about relationship marketing but Pizza Hut does. It also includes s and online marketing. No matter how greatly the technology has developed, the personal support will always be the basics in creating a great customer service so that their loyalty is maintained. For example Pizza Hut has been capable of winning the customer s loyalty by providing great customer service (Pizza Hut 2012).

12 Task Usage of appropriate marketing techniques to achieve the corporate objectives of Pizza Hut The market techniques used by Pizza Hut to achieve the corporate objectives are: defining the target market, positioning of the product, pricing, promotion and distribution. Let us now discuss them in brief. Pizza Hut target market should be defined so that the message could be sent to the right market. Pizza Hut management should be aware about exactly who their target is. Regarding the positioning of the product, factors such as features, names, packing, services and guarantees are being considered by the Pizza Hut team. The next is the pricing technique. Pizza Hut should consider this very carefully because only if the price is appropriate the customers will consider about purchasing the products. Then the promoting campaigns are being carried out by the Pizza Hut Company which can result in an immense increase in their business. Finally they should see about an effective and efficient way of distributing their products. According to Homburg (2009) these are the appropriate marketing techniques used by the Pizza Hut Company. 3.2 Strategic options in the restaurant market Porter s Generic strategies, the core competencies and the competitive advantages are the strategic options available in the Pizza Hut restaurant according to Sanson (2009). Let us first take Porter s Generic strategies into consideration. Focus, cost leadership and differentiation are the strategies in the Porter s generic strategies. As we discussed above we identified that the social situation of UK is having a high demand for fast food. Therefore, Pizza Hut is focusing more on satisfying these demands of the people. Under the cost leadership strategy, the company can produce a large quantity of products at lower costs. Owing to this the companies such as Pizza Hut are having internal strengths such as access to capital, skills in designing the products and very efficient distribution channels. Finally, Pizza Hut is having a wide range of pizzas which satisfies the customers very well. This differentiation strategy is the best strategy used by Pizza Hut. Building strong relationships with the customers by the brand image, positioning, unique merchandize, the customer service of Pizza Hut and the customer relationship

13 management programs is a competitive advantage of Pizza Hut. Achieving efficient internal operations by the use of CHAMPS in Pizza Hut, building of strong relationships with the suppliers using the YUM! Brand and the locations of this business are also features of the competitive advantage of Pizza Hut. 3.3 Using the seven P s for the marketing objectives of Pizza Hut The seven P s are the components of the extended marketing mix. These 7 P s can be used for the gaining of marketing objectives of Pizza Hut. The following table below shows how the 7 P s are used for the marketing objectives of Pizza Hut. PRODUCT PRICE PLACE PROMOTION The varieties of Pizza products The quality of the Pizza Hut Designs Features available in Pizzas The brand and packing Different sizes Services provided by Pizza Hut Warranties and returns The price list of Pizza Hut Discounts given by Pizza Hut Allowances provided by Pizza Hut Payment period Terms of credit Channels Coverage areas Assortments Inventories Locations and transport Sales promotion of Pizza Hut

14 Advertising campaigns carried by Pizza Hut Sales force Public relationships Direct marketing People Pizza Hut are having trained employees They are always appearing well cleaned and groomed They are maintaining the customer and employee relationships very well The Pizza Hut restaurant is having a standard uniform for their employees Process The process of manufacturing food at the Pizza Hut is transparent The customers are being invited to test on the ingredients used to manufacture pizzas Delivery is on time or it will be free the next time Physical evidence They are having a very nice looking environment The interior decorations makes it look quite rich Focuses mainly on a clean and a neat environment They believe they provide quality services to their customers How Four P s are used in Pizza Hut? (Source: Designed by Author)

15 Let s discuss these in brief. According to Borden (2013) the P s are a practical formula to achieve objectives in an organization such as Pizza Hut. The first P which stands for product can be either tangible or intangible which helps to fulfill the needs and wants of the customers. Price determines the profit margins, supplying quantities, demands and marketing strategy of Pizza Hut. Then as the product and the price is available the product of Pizza Hut must be promoted by using methods such as advertising campaigns, leaflets, or telecast advertisements. Finally let s see about the place. This is all about putting the right product at a right price in the right place on the right time. This is how the Four P s are used to achieve marketing objectives such as a target market, good profits, customer loyalty and etc. Task Environmental changes going on in the restaurant market There are environmental changes going on in the restaurant market. The fashionization of the markets, the rising expectations in the market, the technological changes, competition, globalization impacts, the importance of the customer services, the erosion of the brands and new constraints are some of the environmental changes that are going on in the restaurant market (Gilbert et al, 2004). Let us discuss some of these changes in brief. First let us see some of the rising expectations in this market environment. Changing the face of these fast food restaurants, using more advanced technology to make fast deliveries and production and food quality revolution are some of the rising expectations. Providing of good and quality customer services changes the environment competitiveness. That is because the customers are attracting to the restaurants with best customer services. If the restaurant doesn t satisfy the customer s needs they go elsewhere. Therefore, the customers should be well served in a well kept and a clean environment. And finally, the technological changes are highly influencing the market environmental changes. If the company is not using the most up to date technologies the other companies in the industry will definitely beat up and win the market. These are the environmental changes.

16 4.2 SWOT analysis of Pizza Hut Here we are going to conduct a SWOT analysis on Pizza Hut. The table below represents this analysis. STRENGTHS Popular brand name Brand leader in UK Various kinds of new pizzas under the same roof Good financial situation and international turnover Very good advertising and marketing system More than 20,000 franchises around the world Part of the largest restaurant chains in the world It is placed on top of the global fullservice restaurant tree WEAKNESSES The loyal customers feels that the satisfaction gained by pizzas is declining Franchise management Unavailability of organic pizzas which will cause a limitation in the target market As Novak has mentioned that the expansion of Pizza Hut into China is doing extremely well there is a big problem in New Zealand and Australia.

17 OPPORTUNITIES New pizzas of various crust size and flavors Pizza Hut expands the Indian market menu while looking to old favorites to support the sales in US Pizza Hut target upscale the products and a downscale consumer base THREATS Threats from other restaurants such as Dominos pizza and McDonalds People who are conscious of their health The price increase in ingredients like cheese, which is essential for pizzas SWOT analysis of Pizza Hut. Author designed (Source: Designed by Author)

18 4.3 Marketing responses to the environmental changes All the businesses are operating within an environment of changes. The most important aspect of change is the changing of the market place with the high demands of the customers. In order to survive in the rising competitive market businesses should have the ability to respond to the environmental changes (Aaker, 2008). Here we can see how the environmental changes get its response. In order to minimize the chance of an unknown setback due to the environmental changes, the companies should be able to make some changes in their typical strategies. The marketing responses provided due to the environmental changes are: simplifying, diversifying, Avoiding aggressive strategies and considerations. The environmental changes on going in the restaurant market as mentioned above in activity 4.1 could be handled with these responses. These responses might help the Pizza Hut Company through rough patches or it might also cause to miss golden opportunities. These are the marketing responses to the environmental changes. Conclusion This assignment provides a detailed report on the Pizza Hut Company. It provides information on the role of marketing manager in Pizza Hut, marketing plans for the strategic direction of Pizza Hut, corporate strategy of Pizza Hut and how it is linked with the mission statements of Pizza Hut, the importance of Porter Five forces and SWOT model in developing marketing planning for the restaurant, the marketing tactics used in positioning Pizza Hut, how to maintain customer loyalty using relationship marketing, marketing techniques used to achieve the corporate objectives of Pizza Hut, Strategic options, Four P s, environmental changes going on in the restaurant market, SWOT analysis of Pizza Hut and marketing responses to the environmental changes. According to my point of view this report covers the entire section of strategic marketing management of the Pizza Hut Company and shows that it would be more appropriate if Pizza Hut Company had more accurate delivery service.

19 References Aaker, D. (2008), Strategic Market Management. Baker, M. (2008), The Strategic Marketing Plan Audit, Cambridge Strategy Publications, p. 3. Baker, M. (2008), The Strategic Marketing Plan Audit, Cambridge Strategy Publications, p. 27. Borden, N. (2013), "The Concept of the Marketing Mix". Denison, D. R., Haaland, S. and Goelzer, P. (2004) "Corporate Culture and Organizational Effectiveness: Is Asia Different from the Rest of the World?" Organizational Dynamics, pp Gilbert, G. R. et al, (2004) "Measuring customer satisfaction in the fast food industry: a crossnational approach", Emerald 18, (2004) Gordon, I. (1999). Relationship Marketing: New Strategies, Techniques and Technologies to Win the Customers You Want and Keep Them Forever, John Wiley and Sons Publishers, p Homburg, C., Sabine, K. and Krohmer, H. (2009): Marketing Management - A Contemporary Perspective (1st ed.), London. Kotler, P. (1997). Marketing Management, Prentice-Hall, Inc. Kotler, P. and Keller, K. (2006), Marketing and Management, Pearson Prentice Hall, Upper Saddle River, NJ, USA Michael, S. (2009). Restaurant Hospitality: State of the Industry: Survival Mode,. Porter, M.E. (2008) The Five Competitive Forces That Shape Strategy, Harvard business Review, January 2008 Schnaars, S. P. (1995), Marketing Strategy: A Customer-Driven Approach. Reference ed. New York: Free Press.

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