Domino’s Pizza in a New Market
History
Domino’s Pizza, being the largest pizza franchised chain in the United States, shares the same history with Pizza hut, which is its rival. It was started by two brothers, Tom and James Monaghan in the nineteen sixties through borrowed equity. They bought a Michigan Pizzeria and named it Dominick’s and ran it jointly. Later on James sold his shares to raise money for a second hand car. As a result, Tom revitalized the company’s image including changing its name to Domino’s Pizza. The company had grown to more than 200 franchise businesses in the United States by the end of the seventies. This encouraged it to start considering the international markets. In the year 1983, Domino’s Pizza opened its first store outside the United States in Winnipeg. This is the same year it opened it’s a thousandth store. The first branch in Australia was in Brisbane, located on the east coast ( Shearn, 2011).
Domino’s Pizza’s locations then grew faster as they sprung up in numerous diverse places like Bogota. This however did not prevent the Domino’s Pizza from abandoning their traditional style. Their menu has been maintained as streamlined and simple. Only one type of pizza, named the regular pizza crust was sold. Domino’s Pizza was shaped through tossing the dough before pulling it into shape. The menu of the pizza was only comprised of two dough sizes. However, because of competition, they were later on forced to increase the size to medium and extra-large. The introduction of the Deep Pan pizza in 1989 changed the history of the Domino’s Pizza. The company was forced to react to the demands of the market for the first time in 25 years. It was through this move that company’s financial base was consolidated. It was in the same year that they opened the company’s five thousandth ( Lavin, Cohan, & Locke, 2012).
In the year 1992, Domino’s Pizza introduced into their menu the very first item, which was non-pizza. This was the Domino’s Pizza dough. The company then advertised that any pizza that will be delivered after 30 minutes from the time order will be delivered for free. This was however rescinded in 1993 when the company came up with a new strategy that allowed refund or delivery of a new pizza whenever a customer was not satisfied with the one delivered. Chicken wings were introduced as a marketing policy in 1994. This was the same year that the company opened its first store in Africa; Egypt to be precise. When it launched its first website in 1996, it announced a $3billion global sale.
Domino’s Pizza has given the pizza industry new standards of innovation despite the fact that it has hesitated in adding diverse products to its menu. The company is credited for the introduction of the oven for the belt driven oven. Besides, Domino’s Pizza introduced the use of delivery boxes made of corrugated cardboard that were effective for holding the pizza heat during the time of delivery. It also introduced a system of portable electric bag known as the Heat Wave for maintaining the hot temperature of pizza during delivery.
Domino’s Pizza Strategy in a New Market
The largest growing food types in the world are the fast foods. Fast food industry in many nations of the world is growing by an average of 40 percent. Incidentally, many countries in the world have readily available raw materials for preparing fast foods. As a result, major global chains are expanding their market share by entering into new markets. Many countries are increasingly witnessing growth of their nuclear families especially in urban centers. This could be owed to more exposure to western culture including their cuisines. Additionally, the number of women entering the workforce is also increasing. These have had tremendous impacts on the eating trends in many countries. Some of the international fast food players that are expanding their markets include McDonald’s, KFC, Pizza hut, Domino’s Pizza and Café coffee day (Jeyaseeli & Levi, 2006).
Domino’s Pizza has been on an expansive trail to explore new markets. A market like Kenya where Domino’s Pizza does not have any presence yet requires comprehensive marketing strategy. The company has three business segments that it believes perform best. If it decides to venture into the Kenyan market, it will use its supply chain, company-owned restaurants and franchised restaurants.
The Domino’s Pizza had just completed the establishment of its franchise chain of stores in South Africa. Presently, eleven stores are spread across three South African cities of Gauteng, Durban and Cape Town. There are many lucrative markets in these regions. The sale of fast food in South Africa by the Domino’s Pizza has been received positively and this can be emulated in other African countries like Kenya.
Supply chain segment
The supply chain segment at the Domino’s Pizza comprises of the facilities that are used in the manufacture of fresh dough together with other foods. Additionally, it comprises of food items delivery and supplies and equipment to both company owned and franchised stores. 63 percent of the Domino’s Pizza is derived from this segment in both domestic and international market supply chain sales. The company can rely on this segment to penetrate the Kenyan market. Unfortunately, higher costs of commodity can impact negatively on the supply chain segment as well as menu mix changes. The Kenyan market however has been voted as one of the best countries for ease of doing businesses. This implies that the commodity prices are favorable.
Company-owned stores
The stores that are owned by the Domino’s Pizza are mainly restaurants located in the United States market. 18 percent of Domino’s Pizza sales are derived from this. Out of the 11,000 stores that the system owns, only 300 are owned by the Domino’s Pizza. These stores are apparently used by the company in testing its products as well as operational and promotional activities prior to rolling out the system. The system wide store includes those that are owned by the company and the franchised ones. This is a good market strategy since it helps in ensuring that only the best products are distributed to its consumers. This is a rather smaller number as compared to some of its competitors in the industry. McDonald’s has more than 35,000 restaurants in its scheme. Another competitor, Papa John’s (PIZZA) has close to 680 restaurants that are owned by the company in the entire United States. On its part, Pizza Hut that operates under the Yum! Brands umbrella owns 1,970 restaurants. Apparently, Domino’s Pizza has the smallest number of company owned stores for easier management.
Franchised restaurants
The franchised segment for the Domino’s Pizza includes franchised restaurants in the United States and other international markets. The US franchise locations for the Domino’s Pizza accounted to a total sale of 12 percent as compared to 7 percent international franchise revenue.
Domino’s Pizza’s most predominant market strategy is the reliance on the supply chain segment. Indeed this segment contributed to 1.26 billion of revenue. This is nearly 63 percent towards its overall revenue in fiscal 2014. The company’s international master franchises are given rights to operate supply chains in their specific countries. The supply chain segment has various facilities that can help it venture into new markets. For its Kenyan market, the company boasts of a rise middle income population that is interested in testing new products and services.
The key to markets strategy for Domino’s Pizza will need to enter Kenya is deep understanding and proper knowledge of the country. It will need to understand its Kenyan market segment. The company is known to invest its time and resources in its previous international engagements towards understanding local preferences, tastes and customs of its franchise markets. This will enable it to differentiate between successful brands and those that do not thrive in the Kenyan market. This way, Domino’s Pizza’s will be able to connect to their new customers in through meaningful ways.
Domino’s Pizza has learnt new market strategies in their previous quests of entering new markets like India and South Africa. It recognizes that its main product, pizza is a food that cuts across cultures and draws some similarities to traditional meals prepared in their franchise countries. A good marketing strategy will therefor enable the company to invent a well thought out plan that will localize its brands completely even as it meets the expectation of Kenyans. This has the potential of drawing as many people as possible to its stores in Kenya once established ( Hill & Jones, 2008).
Domino’s Pizza can make and retain a continuous stream of happy and satisfied customers if it will commit to carrying out researches on local ingredients, finding out the best ways of keeping their prices within reach and calculating times for delivery accurately. Since it has exceeded expectations of most of the customers where it has ventured into like in South Africa and India, Kenya will not be different. It has managed to keep the pizza chain on top on these markets. It is against this background that the company will have to three key market strategies (Doole & Lowe, 2008).
Accurate planning and execution
Domino’s Pizza is a large global organization whose value offering does not say much about itself always. Their expansion to the Kenyan market will call upon their general managers to hugely rely on a disciplined process application of planning and execution of the game plan agreed upon. For instance, it will have to study Kenya’s streets, traffic patterns and neighborhoods in order to map out the delivery times that are best possible for 30 minute delivery. This insight will mostly be possible with expertise of the project managers.
Knowledge of the market
Any business that ventures into newer markets must know and understand the people for whom products and services should be sold to. The knowledge and understanding of the Kenyan people will be very critical for the Domino’s Pizza as a market strategy. This can be achieved through doing research on local ingredients and trying to find out the flavors that will be most appropriately appeal to the Kenyan people. It will also ensure that the pizzas are offered to the Kenyan people at the most effective prices. A direct conversation with Kenya’s budget conscious consumer can ensure the attainment of this. Therefore, Domino’s Pizza should take its time to lean its Kenyan customer base so as to prepare corresponding products and services to address their unique needs ( Klug, 2006).
Adapt to the set market strategy
One way of ensuring that Domino’s Pizza is successful in the Kenyan market is by ensuring that it delivers timely and most appropriate message and in the right local language to its Kenyan customers. This will most likely grab the attention of many customers. The company should first do more research about Kenyan pizza consumers, its target audience. It should establish the right mix of western culture and local values will be most appropriate for use as a marketing message. Apparently, efforts by advertising and marketing have the potential of speaking to broad audience directly in order to ensure success in great measures. The most widely spoken language in Kenya is Swahili. Domino’s Pizza can have translators to provide the needed local contents in a bid to support the efforts of the international market.
Conclusion
Domino’s Pizza, being the largest pizza franchised chain in the United States, shares the same history with Pizza hut, which is its rival. It was started by two brothers, Tom and James Monaghan in the nineteen sixties through borrowed equity. Domino’s Pizza has responded effectively to the desire to expand globally. This has acted as examples for many companies that are starting the same expansion journey across the globe. However, the journey can only be possible with the right marketing strategies. It is important to invest considerable amount of time and resources in learning more about the target audience or partnering with companies that are already established in those markets and fully understand the market better.
References
Doole, I., & Lowe, R. (2008). International marketing strategy : analysis, development and implementation. London : Cengage Learning.
Hill, C. W., & Jones, G. R. (2008). Strategic management : an integrated approach. Boston : Houghton Mifflin.
Jeyaseeli, K., & Levi, B. (2006). Market entry strategies of foreign Telecom companies in India. Wiesbaden : Dt. Univ.-Verl.
Klug, M. (2006). Market entry strategies in Eastern Europe in the context of the European Union : an empirical research into German firms entering the Polish market. Wiesbaden : Deutscher Universitäts-Verlag.
Lavin, F. L., Cohan, P. S., & Locke, G. F. (20122). Export now : five keys to entering new markets. Singapore : John Wiley & Sons (Asia).
Shearn, M. (2011). The investment checklist : the art of in-depth research. Hoboken, NJ : Wiley.
