Pizza Wars

We are not reay competng wth Domnos were not n the same category.
Domnos s more devery and take-aways, whe we offer a compete dnng
experence n addton to devery and take-away optons. Pankaj Batra,
Marketing Director, Tricon Restaurants, India.
One has to take rsks to reach economes of scae. Domnos aso shook up
competton when t reached a target of 100 outets. Hari Bhartia, Co-
Chairman, Dominos Pizza India.
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Unt 1996, Pzza n Inda was synonymous ony a bready dough base sathered wth
some ketchup. Snce 1996, there was a proferaton of hgh-prced branded pzzas
n the market, wth the entry of nternatona pzza chans. Domnos and Pzza Hut ,
the two bg US fast food chans entered Inda n 1996. Each camed t had the
orgna recpe as the Itaans frst wrote t and was tryng desperatey to create
brand oyaty.
Domnos and Pzza Hut tred to grab as arge a sce of the pzza pe as possbe.
(Refer Tabe I and II for market shares). Whe Pzza Hut reed on ts USP of dnng
experence, Domnos USP was a 30-mnute devery frame. To penetrate the
market, both the payers redefned ther recpes to sut the Indan tastes. Domnos
went a step ahead by dfferentatng regons and appyng the taste-factor
accordngy.
Domnos aso made orderng smper through a snge to-free number through out
the country. Domnos and Pzza Hut expanded ther market ever snce they entered
Inda. Domnos had grown from one outet n 1996, to 101 outets n Apr 2001.
Pzza Hut too, whch began wth |ust a snge outet n 1996 had 19 outets n 2001
T$B%& I - M$R'&T (H$R&() *+++
PIZZA CHAIN MARKET SHARE (%)
Pzza Hut 46.42
Domnos 21.67
Others 31.91
Source: Fnanca Express
T$B%& II - M$R'&T (H$R&() ,---
Pzza Chan 2000 Market Share (%)
Pzza Hut 18
Domnos 70*
Others 12
Source: Busness Standard, *As camed by the company
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Domnos entered Inda n 1996 through a franchse agreement wth Vam Bharta
Corp. The frst outet was opened n Deh. Wth the overwhemng success of the
frst outet, the company opened another outet n Deh. By 2000, Domnos had a
presence n a the ma|or ctes and towns n Inda. Pzza Hut entered Inda n |une
1996 wth ts frst outet n Deh. Intay, the company operated company-owned
outets.
However, keepng n ne wth ts wordwde pocy where Pzza Hut was graduay
makng a shft from company-owned restaurants to franchsee owned restaurants,
Pzza Hut made the shft n Inda too. Pzza Hut had four company-owned
franchsees Unversa Restaurants Pvt. Ltd. (Deh, Uttar Pradesh and Ra|asthan),
Specaty Restaurants Pvt. Ltd. (Pun|ab), Dose Corporaton (Gu|arat, Karnataka and
Andhra Pradesh), Pzzera Fast Food Pvt. Ltd. (Pune and Tamnadu) and Wybrdge
Hodngs (Mumba).
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When Domnos entered the Indan market, the concept of home devery was st n
ts nascent stages. It exsted ony n some ma|or ctes and was restrcted to devery
by the frendy neghborhood fast food outets. Eatng out at branded restaurants
was more prevaent. To penetrate the Indan market, Domnos ntroduced an
ntegrated home devery system from a network of company outets wthn 30
mnutes of the order beng paced.
However, Domnos was not the trendsetter so far as home devery was concerned.
Deh based fast food chan, Nruas was the frst to start free home devery n
1994. But where Domnos stoe the market was ts effcent devery record.
Goutham Advan (Advan), Chef of Marketng, Domnos Pzza Inda, sad, What
reay worked ts way nto the Indan mnd set was the promsed thrty mnute
devery. Domnos aso offered compensaton: Rs.30/- off the prce tag, f there
was a deay n devery. For the frst 4 years n Inda, Domnos concentrated on ts
Devery act. For ts devery promse to work, Domnos foowed a 11-mnute
schedue: one mnute for takng down the order, one mnute for Pzza-makng, sx
mnutes oven-tme, and three mnutes for packng, seang and ext.
Pzza Hut, on the other hand, ad more emphass on ts restaurant dnng
experence. It postoned tsef as a famy restaurant and aso concentrated on
woong kds. Its devery servce was not tme-bound. A company offca sad, The
Pzza makng process takes about 20 mnutes and snce we dont usuay dever to
paces whch are beyond the reachabe-n-haf-an-hour dstance, customers can
expect home devery wthn 45 mnutes. Moreover, anaysts fet that Pzza was
somethng that |ust was not meant to be devered. Sad Vvek Sure, Pro|ects
Manager, Pzza PzzaExpress, If you dont eat pzza fresh, t turns cod and soggy.
However, Domnos seemed to have overcome ths probem through ts devery
pack caed Domnos Heatwave.
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Snce ts entry nto Inda, Domnos ntroduced nne new toppngs for Pzzas to cater
to the oca tastes. Dfferent favors were ntroduced n dfferent parts of Inda.
Advan sad, The Indan paate s very defntve peope are extremey fncky and
choosy, not too wng to experment. Food tastes vary from regon to regon. To
capture the market, we had to ocaze favors.
Thus, Deuxe Chcken wth Mustard Sauce and Sardnes were confned to the East,
Mutton Ghongura and Chcken Chettnad to the South and Chcken Pudna to
Mumba. Butter chcken, Makhan Paneer and the Chatpata Chana Masaa were
confned to the North. Very soon, Pzza Hut foowed Domnos and offered
customzed Spcy Paneer and Chcken Tkka toppngs.
Apart from ths, t aso opened a 100% vegetaran restaurant at Ahmedabad, a one-
of-ts-knd wordwde. The restaurant aso offered a speca |an menu, whch dd not
have a snge root-based ngredent to ft n wth the food habts of |ans. Another
cty-specfc adaptaton of ts menu by Pzza Hut was the restaurant n Hyderabad,
(Andhra Pradesh) whch offered Haa meat and chcken ony wth no beef and pork
products n the menu.
PRICI!. $!D PR"M"TI"!$% W$R(
Domnos sod a 12 Pzza for Rs 265. (Refer Tabe III for prce range). Commented
Panka| Batra (Batra), Manager (Marketng), Trcon Internatona sad, Indans are
vaue-senstve, not prce-senstve. We need to offer comeback vaue to our
customer. The hgh prce was attrbuted to the hgh quaty of ngredents used. For
nstance, Domnos sourced ts Peperon and |aapeno needs from Austraa and
Span respectvey. However, wth competton ncreasng from Pzza Hut, Domnos
ntroduced prce cuts, dscounts and freebes to attract the customers. In 1998,
Domnos ntroduced the Pzza Mana scheme where t offered a arge pzza for
Rs.129/-. The demand was overwhemng and the company sod cose to 5000
pzzas n the frst week of ts aunch.
Durng ate 1998, both Domnos and Pzza Hut were tryng to ure the customers
wth dscount coupons by ssung such coupons through severa schemes. Sad an
anayst, Even then, the prces are too hgh. Gobay, fast food chans ony succeed
when they brng ther prces down to the same eve as the street food. However,
both Domnos and Pzza Hut were concentratng more on data base marketng and
beow-the-ne actvtes and speca offers.
TABLE III - PIZZA PRICE COMPARISON
Com0an1 Price Range 2Rs3
Dominos 4+-,56
PizzaHut 76-46-
Domnos was spendng 50% of ts tota marketng budget on speca offers and
dscounts aong wth devered drect maers and pzza tranng casses. Domnos
aso had a te-up wth Dscovery Channe under whch the channe advertsed ts
pzzas whe Domnos put the channes name on ts maers. Domnos conducted
Pzza makng casses for schoo students. In 1998, t offered a cock to a ts
customers who had bought Rs.15,000 worth of pzzas throughout the year. Sad a
company offca, Database marketng s an mportant part of our strategy. We
have a speca ce anayzng our database to ook for repeat and oya customers.
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Domnos and Pzza Hut ntay restrcted ther ad strategy to banners, hoardngs
and specfc promotons. In August 2000, Domnos aunched the Hungry Kya? (Are
You Hungry) sequence of advertsements on teevson. A company offca sad,
We reazed that a Pzza coudnt be sotted t coud be a snack; then agan, t
coud aso be a compete mea The ony defntve common nk between Domnos
Pzzas and eatng was the hunger patform.
The aunch of Hungry Kya? campagn concded wth Domnos te-up wth
Mahanagar Teephones Ngam Ltd. (MTNL) for the Hunger Hepne. The hepne
enabed the customers to da a to-free number (1600-111-123) from any pace n
Inda. The number automatcay hunted out the nearest Domnos outet from the
pace where the ca was made and connected the customer for pacng the order.
The number aso heped Domnos to add the customers name, address and phone
number to ts database.
Ths was foowed by Pzza Huts frst campagn on teevson n |uy 2001, whch
sad, Good tmes start wth great pzzas. The ad was ared durng a the mportant
programs on Star Pus, Sony, Sony Max, Star Moves, HBO, AXN, and MTV. Pzza Hut
panned to spend between Rs.70-75 mon on the ad campagn n 2001. Sad
Panka| Batra, The frst ad campagn on TV defnes Pzza Hut as a brand, and what t
offers to ts exstng and potenta customers. Once the awareness of ths message
s hgh, we w focus on other facets of the brand and ts offerngs.
Hungry Kya? : A woman suggestvey nbbes at her husbands ear as he surfs the
Net. Eventuay, he asks her n an rate voce: Hungry Kya? She nods expectanty,
so he advses her to order a Domnos Pzza. A roadsde Romeo whstes
apprecatvey at a young gr. She whps around, grabs hm by the coar and asks
hm n a husky voce: Hungry Kya? and a voce over orders a Domnos Pzza.
Good tmes start wth great pzzas : The ad was woven around the tradtona
arranged marrage scenaro, n whch the parents of the gr after fndng a sutabe
boy for her fx up a meetng for them at Pzza Hut. The commerca begns wth a
man watng for somebody outsde Pzza Hut, and s ater seen practcng the way he
woud ntroduce hmsef. Meanwhe, the gr for whom the man was watng for,
arrves and catches hm unawares whe he was takng to hmsef. Though both of
them seem to be apprehensve of each other, they eventuay decde to order food.
Whe the man orders for a vegge supreme pzza, the gr opts for a Peps and saad.
She s not abe to resst the temptaton when the pzza actuay arrves. The pzza
acts as the catayst and heps them get over ther nta awkwardness and shyness.
The commerca sgned off wth a hnt that the two of them are pannng to share
the rest of ther ves, wth the sgn-off ne sayng, Good tmes start wth great
pzzas.
MTV : Prvate cabe and satete channes.
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By March 2000, Domnos opened 37 outets a over Inda. Between Apr 2000 and
February 2001, Domnos set up 64 more outets n Inda. Deh had the maxmum
number of outets 17, foowed by Mumba wth 13. Domnos had the argest reta
network n the fast food segment n Inda- wth 101 outets across 40 ctes.
Domnos had a te-up wth a rea estate consutant Rchard Es to hep wth
ocatons, conduct feasbty studes, and manage the constructon. It was aso
ookng at non-tradtona outets ke arge corporate offces, raway statons,
cnema has and unversty campuses. In eary 2000, Domnos had opened an
outet at Infosys, Bangaore, whch was very successfu. It aso had outets at
cnema has PVR n Deh, Rex n Bangaore, and New Empre n Kokata.
By |anuary 2001, Pzza Hut had 19 outets across Inda. In a move to expand further,
Pzza Hut panned to open an addtona fve restaurants n Mumba and 30
restaurants across ma|or ctes n Inda, by 2001 end. Trcon announced that the
company woud nvest Rs.30 mon on each of the restaurants. In March 2001,
Pzza Hut opened ts frst three-storeyed 125-seater dne-n restaurant at |uhu n
Mumba. Sad a company offca, We are expandng the number of restaurants
across the ma|or ctes to cater to todays youth whch has taken to pzzas as a
cusne.
:#&(TI"!( ;"R DI(C#((I"!
1. Domnos entered Inda at a tme when Pzza Hut and McDonads were aready n
the market. What was the strategy adopted by Domnos to make a dent n the
Indan market?
2. Database Marketng was an mportant part of the strategy n the Pzza Industry.
Comment.
3. Though Pzza Hut entered Inda before Domnos, t eventuay ost ts share to
Domnos. How can Pzza Hut counter the competton from Domnos?
&<HIBIT I
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Intay, Domnos worked on a smpe mode: t had three commssares n New
Deh, Mumba and Bangaore, whch worked as sef-contaned, ndependent outfts.
They bought ther own wheat, tomatoes and other ngredents, processed them,
then devered them n refrgerated trucks to each outet. But ncreasngy, as
voumes began to grow and more towns were brought under the fod, the mode
stretched far too wde. In |anuary 2000, Domnos began rong out ts own ogstcs
mode. Domnos frst decded procurement strategy for ts key raw materas ke
wheat, baby corn tomatoes and spces.
For nstance, wheat was cheapest n |aandars whoesae market. Its refrgerated
trucks then got the wheat back to the commssary n Deh, whch handed the
processng of the wheat and prepared the pzza base. As the trucks had to go
through Chandgarh, to reach |aandhar, and snce Chandgarh was a potenta
market for Domnos products, t opened an outet there. The cost of entry was very
ow because there was no addtona transportaton cost. The same ogc was
extended to Shma. From Chandgarh, Shma was |ust a three-hour drve away wth
a arge market, especay n the tourst season. And on the way back to Deh, the
trucks pck up cheese from Karna, a town on the Chandgarh-Deh hghway. Ths
cheese was transported to ts commssares across the country.
There were three obvous benefts: ower transportaton costs, cheaper procurement
and economes of scae. It aso cut out the dupcaton n procurement and
processng of the raw materas across each of the three commssares. Based on
the agrcutura map of Inda, Domnos was ookng for the best product at the
owest cost. Identfyng specaty crops n each regon aso had strategc mpcatons
for Domnos. It aowed the commssary n a regon to specaze n processng a
partcuar crop. For nstance, the commssary for the eastern regon n Kokata was
responsbe for buyng tomatoes, processng them and then sendng them to a the
other commssares. Smary, the northern commssary sent out pzza bases. Ths
way, not ony dd t cut out dupcaton, the dangers of pershabty were aso
mnmzed. Domnos aso panned to use ts feet of 25 refrgerated trucks to
transport products of other companes on the same route. The savngs from the
ogstcs mode and money from thrd-party transportaton was passed on to
customers n the form of ower prces.
(ource) com0=ied >rom ?arious source.