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Final Term Project

For



YOU GOT 30 MINUTES


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Retail Management
Dr. Anshu Arora
November 25, 2012
WRITTEN BY:
Reginald G. Walker, Jr.



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Tables of Contents
I. Company Background...... 4
II. External and Internal Environmental Analysis ............. 4
a. SWOT Matrix 4-5
III. Competitor Analysis................................................................................................. 6-9
a. Direct Competitors 6
i. Pizza Hut 6
ii. Papa J ohns.6-7
iii. Little Caesars 7
b. Indirect Competitors.. 7
i. Subway.. 7-8
ii. Firehouse and Baldinos Subs........ 8
iii. McDonalds. 8-9
IV. Market/Submarket Analysis...................................................................................... 9-12
V. Customer Analysis.........................................................................12-14
VI. Comprehensive Strategy Assessment....................................14-19
a. Driving sales, traffic with digital...14-15
b. The Strategy...15-16
c. Key strategies maintain consistency.. 16-18
d. Marketing focus on product upgrades... 18
e. What Dominos is doing right... 18-19
f. Key Competitors & their Competitive Advantages.. 19-20
VII. Future Strategies/Recommendations..........................................................................20-21
VIII. References..................................................................................................................22-23




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Company Background
The World Leader in Pizza Delivery was founded in 1960 by two brothers, Tom and J ames
Monaghan, who borrowed $500 to purchase a pizza store. After a whole year, J ames sold his part
of the store to Tom for a Volkswagen Beetle automobile. Tom then renamed the company,
Dominos Pizza, Inc. Now Dominos Pizza is the second-largest pizza company in the world
today. Although Dominos is the second-largest pizza company, they lead the pizza market in
annual sales, franchises and number of stores. Simplicity is a driving and primary factor in why
Dominos Pizza, Inc. is the world leader in pizza delivery. They once only focused on pizza
delivery and customer carryout rather than the standard dine-in seating areas like other fast-food
chains like competitors McDonalds and Pizza Hut. Dominos menu used to only consists of one
type of hand-tossed pizza dough available in two sizes (12- and 16-inch), 11 toppings and bottled
Coca-Cola as the only beverage option. However, Dominos was focused to change in response to
consumer preferences and competitors offerings. Now, Dominos Pizza leads the pizza market
in a variety of major categories and are looking to occupy the #1 position in all categories in due
time (Dominosbiz.com, J une 2010).
External and Internal Environmental Analysis



Internal Factors
&
Strength-S
S1 Product Price
S2 Sales Promotion
S3 Various Store Locations
S4 Delivery
S5 Renovation of Taste (Product
Quality)
Weakness-W
W1 Major Direct Competitors
W2 Previous Bad Taste Quality
(Loss of some previous
customers due to bad taste)
W3 No changes in taste and
preferences due to region or
country (same taste everywhere)
W4 Brand Image not as strong
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External Factors
SWOT Analysis




S6 Positioning in Pizza Market (2
nd

behind Pizza Hut)
S7 Annual Sales
S8 Constant Innovation
S9 Strong Brand Image Domestically
internationally
Opportunities-O
O1 Continuing to develop taste
O2 Enhancing Taste Quality of
minor products (sandwiches,
wings, breadsticks, etc.)
O3 Expanding Growth in
developing countries like
China & India
O4 Improving Online Ordering
Procedures
SO Strategies
SO1 Potentially pondering upon
purchasing the declining sales
privately-owned company, Quiznos
Subs S1S3S6S7O1O2

WO Strategies
WO1 Change in taste and
preferences in different regions
and countries W304
Threats-T
T1 Indirect Competitors
T2 Potential Competitors
T3 People becoming more
aware of their health

T4 Change in Economy and
Increases in operating cost(s)
ST Strategies
ST1 Developing a vegetarian pizza and
menu selection for these customers
conscious of their diet and health S5T3
WT Strategies
WT1 Various Healthy Choices on
menu(s) in all regions and
countries offering Dominos
Pizza services W3T3

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Competitor Analysis
In 2010 there were 67,554 pizza stores in the United States. The number of pizza restaurants is
pretty large; on that behalf Dominos will forever have strong competition. The competition is
fierce in the pizza market because of the major franchised stores but even the smaller
independent owed stores. All the pizza restaurants are fighting for the consumers dollars and try
their hardest to stay on top of the market. Dominos direct competitors are Pizza Hut, Papa
J ohns Pizza and Little Caesars.
Direct Competitors
Pizza Hut
The first direct competitor of Dominos is Pizza Hut. In 2010 Pizza Hut was leading the market
with over five billion dollars in U.S sales. Pizza Hut
was founded 1958 in Kansas by Dan and Frank Carney.
Pizza Hut has over 11,000 locations in the United States
with over 140,000 employees. Pizza Hut is an
American restaurant chain and international franchise
that has been leading the pizza market. Other than
Dominos Pizza Hut is split into several different
restaurant formats; the original family-style dine-in
locations; store front delivery and carry-out locations; and hybrid locations that offer carry-out,
delivery, and dine-in options.
Papa Johns

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The second direct competitor is Papa J ohns. Papa J ohns is the third largest pizza restaurant
chain in the United States. Their slogan is Better
Ingredients. Better Pizza. Papa J ohns. Papa
J ohns is rarely new compared to Pizza Hut and
Dominos being founded 1984 in Kentucky by J ohn
Schnatter. There are over 4,000 locations across the
world and have over 16,000 employees. Papa
J ohns has been through numerous of lawsuits and been in controversy since they opened.
Little Caesars
The third direct competitor is Little Caesars. Little Caesars is the fourth largest pizza chain in
the United States but is not too far from its competitors. Little Caesars was founded 1959 by the
Illich family in Michigan. The name of
Little Caesars was thought of by Marian
Illitch and it came from the nickname she
called her husband Mike Illitch. The
company is famous for its
advertising catchphrase, "Pizza! Pizza!
that was introduced in 1979. The phrase refers to two pizzas being offered for the comparable
price of a single pizza from competitors Little Caesars are known for their Hot-N-Ready pizzas
thats cost $5 plus tax, this is extremely cheaper than the competitions prices.
Indirect Competitors


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Subway
Even though Dominos have some direct competitors they also have some indirect competitors.
One of their indirect competitors will be Subway strangely but true. The reason why Subway is
one of Dominos competitor is because of the Dominos entered the sandwich market as well.
Becoming a competitor during the lunch
period Dominos seen an opportunity to take
and gain profit from. Dominos introduced
their oven baked sandwiches in 2008, which
came in four different styles. Early marketing
for the sandwiches made varied references to
its competition, such as offering free sandwiches to customers named "J ared," a reference to
Subway's spokesman of the same name.
Firehouse & Baldinos Subs
There were other restaurants that were affecting by
Dominos new menu change in 2008. Fire House
Subs and Baldinos are indirect competitors of
Dominos Sales were decreasing tremendously due to
the big buzz about Dominos oven baked sandwiches.
Firehouse sandwiches US-based, fast casual
restaurant chain that specializes in hot subs. Founded
in 1994 in J acksonville, Florida by former firefighter



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brothers Robin and Chris Sorensen, Firehouse Subs serves sandwiches with meats and cheeses,
"steamed" hot and placed on produce on a toasted sub roll. Locations offer a family-oriented
atmosphere, with a firefighter theme that includes fire equipment throughout the store and a
menu that features. Baldinos is very similar to Firehouse Subs.
McDonalds
A massive worldwide franchise that specializes in the fast food industry is McDonalds. In
2008, McDonalds revenues exceeded $23 million. McDonalds brand image is a major strength
for them as people of all ages across the globe recognize the golden arches logo. With their well-
recognized logo, McDonalds has been involved in many
legal issues such as being accused for false advertising and
violation of fraud acts (Henry, 2010). Due to the fact that
McDonalds is a highly profitable and recognizable fast
food chain industry, they are an indirect competitor to
Dominos because of them being a part of the same
industry, which is the fast food industry.

Market/Submarket Analysis
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The pizza industry is a highly competitive and mature market. There are more than 150 well
known pizza franchises, which
account for 60% of the entire
market. It is also an ever-
changing market with constant
new and fierce competitors
entering the market at various
times which could consume some
profits from the other many pizza
franchises throughout the country
and world. This also causes for
more competition throughout the
pizza and fast food industry
(Henry, 2010).
The industry has faced some hardships with the trends of society and declining economy.

This graph symbolizes U.S. Pizza Companies Sales and
their percentages in the pizza market out of 100 percent
total. Dominos is second among mainstream pizza
companies.
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Consumers now are requesting healthier choices for themselves and their families. Many people
are also more interested in where the products are produced and what ingredients go into making
their food. To combat
this health awareness
among consumers, pizza
restaurants are trying to
change their dough by
having healthier fats,
which is done by
incorporating more
whole wheat into their
crusts. The pizza
toppings are also
becoming healthier, and
some pizzerias are
introducing salads into
their menus.
The rise in minimum
wage has also posed
obstacles for the
industry, requiring more
of their operating


This graph symbolizes U.S. Pizza Companies Stores and their
percentages in the pizza market out of 100 percent total.
Dominos is second among mainstream pizza companies stores.
However, Dominos Pizza has franchised the most stores in the
pizza market and the largest growth of stores of all pizza
restaurants.
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income to be dedicated to labor costs. The increase in the price of inputs has also changed their
profitability. The cost of wheat has tripled, cutting the amount of profit per pizza (Henry, 2010).
In 2010, Forbes ranked Dominos the number one franchise for the money and Pizza Today, a
leading industry publication, named Dominos the chain of the year, an honor that was repeated
in 2011 (Franchise Times, October 2011).
Also in 2010, there were 67,554 pizza stores in the U.S., which represented 12% of all
restaurants in the market. Franchised or chain stores made up 60% of the units and generated half
of the revenue; the remainder came from independently owned stores which were often referred
to as mom and pops restaurants. Independent pizza shops had always been a strong source of
competition for consumer dollars even though these (usually) single units did not have the
purchasing power or the advertising ability of the large chains (Franchise Times, October 2011).
By J uly 2011, Dominos had grown to 9.436 company-owned and franchised stores in all 50
U.S. states and across 65 international markets, making it the second-largest pizza company in
the world behind Yum Brands Pizza Hut. Dominos had approximately 10,900 employees,
referred to as team members, spread across company-owned stores, supply chain centers, the
World Resource Center, and regional offices. The company estimated that another 185,000
individuals were employed by independent Dominos franchisees worldwide. For the first time
in Dominos history, international retail sales eclipsed U.S. sales in the second quarter of 2011
when overseas markets generated 51% of total company sales (Franchise Times, October 2011).

Customer Analysis
Despite Dominos' negative experience with social media earlier this year, which involved the
explosion of a YouTube video showing two employees doing repulsive things with Dominos
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ingredients, the brand is now embracing the channel to promote its brand with its new Pizza
Turnaround campaign.
For a brand, one advantage of social media involvement is the opportunity to generate instant
customer feedback. Dominos' new strategy is a great example of a company using social media
to listen to and react to its customers in order to solve a problem.
The Problem: Dominos
has had the same pizza
recipe since they
launched 50 years ago,
and while it finished first
in pizza delivery and
value according to a
2009 Brand Keys survey
of national restaurant
chains, it also finished
dead last in consumers'
taste preference. With
pizza deliveries down 6%
compared to last year according to USA Today, Dominos knew it needed to make a change. The
Solution: Dominos decided to completely change its pizza recipe, hoping to reinvent its brand
and change its reputation for taste. Based on two years of research involving customer taste tests
of 50 blends of seasonings, 15 sauces and dozens of cheeses, Dominos launched its new recipe to

This graph depicts customer preference in product quality and taste
between various pizza restaurants in market. Dominos was not near
the top so a change HAD to be made to maximize product quality, taste
and customer satisfaction and to aggrandize profitability.
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customers yesterday, featuring a sweeter sauce, a newly seasoned crust and a different blend of
cheeses (Seiple, 2009).

Comprehensive Strategy Assessment
Dominos Pizza said a combination of new digital-marketing technologies and social media,
coupled with consistent menu pricing strategies, will help maintain the sales momentum the
pizza chain has enjoyed over the past two years. Executives of the Ann Arbor, Mich.-based chain
credited its new, inspired pizza, launched at the end of 2009, as the main driver of its same-
store sales growth. However, they also underscored the importance of marketing innovation over
that time (Brandau, 2012).
Driving sales, traffic with digital
The marketing investments, chief marketing officer (CMO), Russell Weiner has pushed since
joining Dominos in September 2008 include a mobile-optimized website for online ordering,
new audible formats for the chains popular Pizza Tracker, smart-phone and table apps for
ordering, and the Pizza Hero game for the iPad launched in November. We couldnt do just
another ordering app, Weiner said of Pizza Hero. It needed to take advantage of interactivity
available on an iPad, and we think this really does. Online ordering represents a significant
portion of Dominos sales and mobile and tablet app ordering also are building momentum, he
said. Sales from apps are approaching $140 million per year, or about 5 percent of Dominos top
line. The brand also has grown its Facebook and Twitter fan base by more than 400 percent in
the past 12 months, Weiner added. Last year, Dominos integrated social media into its national
Pizza Turnaround advertising campaign, setting up the Times Square Tracker, which shares all
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tweets positive and negative customers write about Dominos when they order online
(Brandau, 2012).
The Strategy
To launch its "turnaround,"
Dominos has created a new
website, www.pizzaturnaroun
d.com, which features a
new video documentary on
YouTube (see above) that
uses real Dominos employees
to tell the story of how
Dominos listened to its critics
and is changing its pizza
recipe for the better. The site
also includes a Twitter
stream showing people's
reactions to the new recipe
(via the hashtag #newpizza).
Dominos is encouraging
consumers to try the new
pizza and offer feedback via
social media like Twitter,


This graph depicts Dominos Pizzas Income Statement and
Statement of Cash Flows.
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Facebook and YouTube. Perhaps an even bolder approach, the brand is also reaching out to food
bloggers who have previously made negative comments about the pizza's taste, asking them to
publicly review the new recipe (Seiple, 2009)
Weiner said the Times Square Tracker has
given Dominos a few hundred million
mystery shoppers around the country,
and motivated crew members to perform
better, reducing service times and driving
customer satisfaction scores as a result.
Doyle added that the comments also are
factored into store audits used to evaluate
company-owned and franchised units.
They still get the traditional physical
audits measuring cleanliness and the
condition of the pizzas they deliver, but
part of that score now includes the online
feedback as well, Doyle said.
You can even take it down to who the
manager was running a shift that got a lot
of comments, he continued. The
correlation between that and the sales results of the stores is very high (Seiple, 2009).
Key strategies maintain consistency


This ad symbolizes Dominos Pizzas effort
to promote their on the social media and
attempting to utilize online purchasing for
the convenience of their customers.
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For all of the benefits that investing in new technologies has brought, Dominos plans to keep
several key marketing strategies consistent, Weiner and Doyle said. Beginning in 2010,
Dominos also reformulated its required franchisee contribution to the national marketing fund.
Instead of a 6-percent royalty split between a 4-
percent contribution to Dominos for national ads
and 2 percent required to be spent on local and co-
op advertisements the company required a 5.5-
percent contribution that funded only national ads.
Franchisees could continue to spend additional
funds on local ads, Weiner said, but none was
required to do so. The chains executives did not
disclose any plans to change the contribution rate.
When asked if Dominos would consider changing its $5.99 price point for national promotions,
Weiner replied that the brand could advertise its brand attributes better by keeping its prices
consistent. Price is the tie breaker, but if you dont have the other pieces to your brand, all you
have is price, he said. If you shout that you have $10 pizza, the next guy shouts about $9 pizza
and so on, and that destroys the category. Were bigger believers in brand stories. If the price
doesnt stay constant in a 15-second spot, I cant tell you about all this stuff going on, like our
new pizza or new chicken (Brandau, 2012).
Doyle reiterated that Dominos has no plans to increase the price of its popular $5.99 medium
two-topping pizza introduced in late 2009 with the reformulated pizza. The offer drives the most
cash profits for Dominos domestic stores, he said, even though it occasionally gets some
pushback from franchisees concerned with the offers lower margins. Are franchisees always

Print Advertisement for
Dominos Pizza
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happy with [the price]? Doyle said. When cheese prices spiked last summer, the answer was
no, they werent. They would have liked us to take it up more, and there was a lot of debate
with the system, and that continues. We do it to drive maximum dollars, not maximum
percentages, to our franchisees. He added that national offers, like the two medium, two-
topping pizzas for $5.99, comprise between 20 percent and 30 percent of sales for the system.
So 70 percent to 80 percent of sales will come from local coupons and local menu prices,
Doyle said. Those franchisees can control directly (Brandau, 2012).
Marketing focus on product upgrades
For the near future Dominos will continue to focus its advertising on new products aligned with
the corporate goal of continually improving its offerings, as reflected in current commercials for
the chains new Stuffed Cheesy Bread, Weiner said. He added that he would keep the emphasis
on the brand and its products, rather than fall back on marketing tie-ins, because he considered
that borrowing equity from some other brand and not emphasizing Dominos strengths. If you
dont have enough news on your brand to talk about, you need to change the news, he said.
Dominos Pizza operates or franchises 9,541 restaurants in the United States and 70 foreign
markets (Brandau, 2012).
What Dominos is Doing Right
The Dominos' campaign can be respected for numerous reasons. One reasoning is---they're doing
a great job of taking advantage of multiple social media channels (e.g. YouTube, Twitter,
Facebook) to accomplish their goal. Secondly, they're actually listening to what their customers
are saying in order to improve their brand and their customers' experiences. They're also being
extremely transparent in their approach by asking their customers and critics to offer their
feedback, whether positive or negative. While it's too soon to tell if the company is benefiting
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financially from its new reinvention, Dominos' marketing approach is definitely admirable and
unique. In the very least, it's certainly generating some initial buzz and curiosity (Seiple, 2009).

Key Competitors & their Competitive Advantages
Brand Image




HIGH

Taste Quality



LOW
{---The above diagram depicts Dominos Pizza, Inc. positioning within the pizza market, sub market and
market of fast food. McDonalds leads the brand image category because, according to InterBrand.com,
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McDonalds is ranked #7 with a 13% increase from last year to the year 2012. Also, Pizza Hut has a
stronger brand image than that of Dominos because they ranked #86 out of the top 100 best global
brands, while Dominos was not ranked at all. However, Dominos Pizza is the second-largest pizza
company in the world in profitability and rank #1 in stores and franchises. Papa Johns is also a fierce
competitors because of their constant effort to promote sales promotion for their customers and out of the
top three ranked pizza companies, Papa Johns leads in taste and quality even though ranked #3 behind
Pizza Hut and Dominos Pizza. Subway, Quiznos Sub, Firehouse Subs and Baldinos Subs are all indirect
competitors because Dominos Pizza is now starting to sell sandwiches so they will be in competition
indirectly with local and global sub sandwich companies around the world.
Dominos Pizza, Inc. competitors competitive advantages include brand image, profitability, brand taste
and brand quality. The competitive advantages that these competitors to Dominos should adapt would be
continually to grow and expand globally which would enhance productivity and profitability. They should
also consider enhancing their visibility online and within the social media. We would recommend these
strategies because it would allow for them to control a good percentage of the market and maximize
profitability and customer expectations and satisfaction. These strategies should be implemented by
researching global market that they look to and should look to penetrate by understanding the culture
and offering some products and services that they are accustom to and familiar with. Their success
should be measured by the increase and/or decrease in sales in global market annually and/or biannually
and also should be measured upon customer satisfaction.}
Future Strategies/Recommendations
Our recommendation for Dominos Pizza, Inc. would be to purchase Quiznos Subs since
Dominos Pizza is penetrating the sandwich market anyways and Subway is currently an indirect
competitor of Dominos Pizza, Inc. The reason being is---an article, titled Quiznos chain faces
tough finance issues, indicated the Denver-based Quiznos, a privately-owned QSR sandwich
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company with 4,000 U.S. stores, was nearing bankruptcy due to sharpening competition,
waning sales, and debt woes. One of the problems cited was Quiznos protracted battle with
its franchisees over operating costs and profitability, with some franchisees blaming low or
nonexistent store profit margins on Quiznos requirement that they buy food at allegedly above-
market prices from a Quiznos-mandated supplier network. Analysts also blamed Quiznos
problems on rising commodity prices, which had dramatically increased the cost of raw
ingredients (Raabe, 2011). This would be vital for Dominos because first, it would increase
profit margin and allow for their brand image to matriculate. Due to the fact that Dominos
constantly prepares for rising commodity prices unlike Quiznos and the fact that Dominos leads
its market in the opening of new stores. This would allow for Dominos Pizza to produce stores
for Quiznos after buying out the failing and falling company, which is looking to file for
bankruptcy, build their brand image and have a familiar sub sandwich product sold in their
Dominos stores courtesy of Quiznos but Quiznos will still have their own store, logo and
product but will be sister stores as Pizza Hut, Long J ohn Silvers and Kentucky Fried Chicken
(KFC) is with Yum! Brand stores. This will jumpstart profitability and allow for Dominos to
potentially reach and hold the #1 position in the pizza market both domestically and
internationally.






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References
Brandau, Mark, A look behind Dominos marketing strategies: Executives discuss digital
marketing, social media as keys to driving sales, Nations Restaurant News,
J anuary 13, 2012,
http://nrn.com/archive/look-behind-domino-s-marketing-strategies, assessed November
2012.
Dominos Pizza, Inc. About Dominos Pizza, Dominos Pizza, Inc. website,
http://www.dominosbiz.com/Biz-Public-EN/Site+Content/Secondary/About+Dominos/
History/, assessed August 2011 and November 2012.
Dominos, About Dominos Pizza and Mandy Wolf Detwiler, Change is Good, Pizza Today,
J une 2010.
Henry, J ohn, Dominos Pizza, International Business, March 8, 2010,
http://www2.dsu.nodak.edu/users/rbutz/International%20Business/PDF/Sample_S10case.
pdf, assessed November 2012.
Interbrand, Best Global Brands 2012, Interbrand, 2012
http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012-Brand-
View.aspx, assessed November 2012.
Maze, J onathon, 2010 Franchise Times Top 200 Franchise Systems, Franchise Times,
October 2011,
http://www.franchisetimes.com/content/story.php?article=02285, assessed September
2010.
J argon, J ulie and Spector, Mike, Hamburgers, Fries and a Shakeout, The Wall Street Journal,
November 2, 2011, available at
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http://online.wsj.com/article_email/SB10001424052970203752604576645300258978190
-IMyQjAxMTAxMDAwMTEwNDEyWj.html?mod=wsj_share_email, assessed
November 2011.
Pizza Franchise Industry Report, Franchise Direct, 2010, available at
http://www.franchisedirect.com/foodfranchises/pizzafranchises/pizzafranchiseindustry
report2010/80/275, accessed September 2010.
Seiple, Pamela, How Dominos is using customer feedback and social media outreach to
reinvent its brand, HubSpot, December 28, 2009,
http://blog.hubspot.com/blog/tabid/6307/bid/5426/How-Dominos-is-Using-Customer
Feedback-and-Social-Media-Outreach-to-Reinvent-Its-Brand.aspx, accessed
November 2012.