PIZZA HUT

Pizza Hut, a subsidiary of Yum! Brands, is the worlds largest pizza company, specializing in the pizzas you never
have to settle for Pan Pizza, Thin N Crispy Pizza, Hand-Tossed Style Pizza and Stuffed Crust Pizza. Pizza Hut
began 58 years ago in Wichita, Kansas, and today is an iconic global brand that delivers more pizza, pasta and wings
than any other restaurant in the world. A true innovator in the pizza category, we were not only the first to provide
America with Pan Pizza, but we were also the first ever online purchase.
Our Pizza Hut division includes more than 14,100 restaurants in over 90 countries, excluding the Yum! China
Division. We are taking the powerful Pizza Hut Red Roof icon and continuing to open new units around the world.
We began building delivery carryout units in 1988 and today it is the fastest growing part of our business. With
Delivery, our strategy is to take advantage of our existing scale and quickly grow the brand in both developed and
emerging markets. Our Express business found in shopping malls, large retail chains, travel centers and on military
bases is the clear leader in the U.S. and we are growing it internationally. Dine-In has always been at the heart of
our business. We are building vibrant casual dining Pizza Hut restaurants in many international markets and offer a
Pizza and More menu strategy. We have also developed a new sub-brand in the U.S. called WingStreet, making
Pizza Hut the first big American chain to deliver chicken, sides and complete chicken dinners.

For years now Pizza Hut, Inc. has been the leader of the pizza industry. We have been privileged to have
had the opportunity to perform research on advancements we can make to maintain this reputation.
Based upon our Economic Analysis we have decided to not launch the BIGFOOT pizza. The following
gives a detailed analysis, offers alternatives to improving the Pizza Hut experience, and gives reasons
why we came to this conclusion.
Economic Analysis:
First off, we appreciate the opportunity to have had an important role in Pizza Hut's latest product
development, BIGFOOT. As you know, over the past five years market shares for the industry have
changed much more drastically than in recent years. Our market share has been stagnant, and sales are
down 10% this year in relation to last year's numbers.
During the same period, Little Caesars made a strong push and they have continued to grow. Little
Caesars' "two for one" marketing approach was effective in infiltrating the "mom's night off" segment, and
is seen by customers as a great value. This is adding direct competition into our niche market share. Little
Caesars is surely not making headway with the pizza connoisseurs, but it has effectively targeted a
market in which Pizza Hut does not currently have a strong presence. 50% to55% of this market is made
up of family dining situations. Our marketing team has conducted multiple data analyses on ways in which
we can gain market share from Little Caesars within this market. After much thought and many hours of
research, we have devised a marketing plan that will potentially improve our market share.

As previously presented, the new pizza being introduced to the public is the BIGFOOT. This product was
conceived as Pizza Hut's primary rebuttal to Little Caesars' "two for one," and from our regional market
testing it seems to have a good chance of succeeding. BIGFOOT's price point is set at $7.99 because we
determined from our research that Little Caesars' target market appreciates the fact they can feed the
entire family for less than $10.
The BIGFOOT $7.99 price point will appeal to the lower to middle class families and potentially win over
many of Little Caesars' swing group customers. This is the primary economic factor because the key to
reaching the target market is price. Little Caesars has proven that quality is not as much of an importance
because they have been able to increase sales despite making a lower quality pizza.
As shown in Exhibit G of the handout data, the anticipated net margin for the BIGFOOT Pizza is $7.67,
and the net margin of other Pizza Hut's pizzas is $12.03. It is anticipated with the lower price that it will be
easier to sell many more of the BIGFOOT pizzas. However, with price being set so low, it is necessary to
understand that Pizza Hut will need to sell 1.63 BIGFOOT Pizzas to every one "Other Pizza." This is
significant because it will be difficult to achieve a large enough sales volume to compensate for the
difference in margin as well as the lost sales. Exhibit G shows that the difference in gross margin of the
two products is $2.73. To compensate for this difference, it will be necessary to penetrate a significant
portion of Little Caesars' "love group." History has shown that capturing the hearts of any competitors
"love group" is extremely difficulty if not impossible.
Alternative:
The family dining situations, described in the Pizza Hut marketing research, indicate there are alternative
sectors in which a marketing campaign could be launched to improve Pizza Hut's overall sales and
profitability. We conducted a profile of the different segments of which Pizza Hut currently has customers.
One hundred customers where questioned *about their "attitudes towards pizza." These responses were
inserted into a correlation matrix and two conclusions were drawn (See Exhibit 1):
1. The first attitude towards pizza taste' is highly correlated to four different attitudes: favorite, flavor,
serve, and occasion. These have been labeled as "Pizza Fanatics."
2. The second attitude towards pizza coupon' is highly correlated to the four remaining attitudes:
discount, leave, specials, and money. These attitudes have been labeled "Frugal."
From these two new groups created by our correlation our marketing group then chose to create a scatter
plot to get a better understanding of where our customer interests* lie in each segment (See Exhibit 2).
This better enabled us to determine who exactly our target markets are and towards who we should be
marketing this new product.
With this valuable knowledge in hand, we were then able to profile each of the four segments based upon

our customers' survey responses of their "general attitudes" towards sports, politics, travel, and income
demographics (See Exhibit 3). While profiling our customers we were also able to determine our *"love
groups", or target markets, based upon the frequency of visits to our stores over the past six months (See
Exhibit 4). These groups are the High/Highs and the High/Lows'. They are characterized in the following
ways:
High/Low
Pizza fanatics
Willing to spend money
Not active in sports
Love to travel
o See new places
o Taste new food
Politically neutral
Average family size is four
Income between $90,000+ High/High
Pizza fanatics
Extremely frugal
Enjoy participating in sports
Love to travel
o See new places
o Taste new food
Politically Neutral
Income $70,000+
Average family size between 4 and 5
Furthermore, after performing regression analyses (our dependent variables being our customers'
responses to "Pizza Hut Purchase Information" and our independent variables being "Attitudes Towards
Pizza Hut") we determined the situations owned by Pizza Hut are the following (See Exhibit 5):
1. Mom's Night Out
a. Loyalty
2. Kid's Treat
a. Loyalty
b. Satisfaction
c. Value
Based upon our research and data analyses, we have developed several alternatives we feel may be
more effective than the BIGFOOT Pizza marketing campaign. These alternatives have the potential to
regain lost sales and grow our stagnant market share.
Alternatives include:

1. Marketing a fun, social atmosphere in Pizza Hut's sit-down restaurants: By marketing this approach to
the Kid's Treat segment Pizza Hut can create loyalty form the parents. Parents can count on their kids
having great tasting pizza as well as a great time doing so. Their children will develop a loyalty to Pizza
Hut because it is the restaurant they have grown up enjoying. Regression analysis has shown that loyalty,
satisfaction, and value are the most important factors in the Kid's Treat dining situation. If we were to
increase sales in this segment it is crucial that we improve the said loyalty, value, and satisfaction. By
paying special attention to the coefficient variables we have determined that by increasing the response
from customers one point, will increase the amount each customer will spend over the next six months by
$13.57, $22.09, and $15.29 respectively (See Exhibit 5)
2. Coupons: The coupons will place the "Other Pizza" into the under $10 price market. By doing so, this
will attract those individuals in the High/High swing group segment. By not compromising the quality of the
pizza, the coupons will attract these swing group individual and potentially convert them into our love
group of the High/Low segment (See Exhibit 2 & 3).
3. Free Delivery: Mom's Night Out is designed for a no hassle, quick, and easy meal. Free delivery would
make the meal nearly hassle free. This will create more loyalty as Pizza Hut makes it easier than
competitors that don't offer a similar service. By increasing the loyalty in this group our regression analysis
has proven that if we increase the survey response one point, we project that the customer will potentially
spend an additional $31.48 over the next six months (See Exhibit 6).
Launch Decision
Upon completion of our research and analysis our marketing team has reached a conclusive decision that
Pizza Hut should not pursue the proposed BIGFOOT Pizza product launch. As previously stated in the
Economic Analysis, the BIGFOOT's gross margin is not significant enough to compensate for the required
increased volume of sales coupled with the lost sales of "Other Pizzas."
Our research analyses have shown that it will be much more effective to continue targeting our love group
while at the same striving to capture more customers from Little Caesars' swing group. Further regression
analysis on this subject has shown that by increasing our love groups' survey responses, particularly in
Mom's Night Out, one point, the total amount they could potentially spend over the next six months will be
increased an additional $65.90 (See Exhibit 7). Our love group makes up the most significant part of
Pizza Hut's revenue and by further targeting this market we can increase revenue by an additional 16.6
percent (See Exhibit 8).
Although the idea behind the BIGFOOT Pizza is very creative and interesting, as we stated earlier, it is
almost impossible to try and steal away the love group of a competitor. We feel in the long run it will be
more beneficial to Pizza Hut to maintain their standard of high-quality pizza at a competitive price. We

also recommend investigating the market response to the alternative solutions listed in the Alternatives
section of this document.

Pizza hut is one of the leading pizza fast food chains in India. The pizza chain was
one of the first entrants in India for pizza and was soon followed by Dominos.
However, the pizza chain continues to maintain its premium image. This article
discusses the marketing mix of Pizza hut which falls in services marketing and
hence 7 Ps of Pizza hut are mentioned herewith.
Product in marketing mix of Pizza hut Pizza hut is most prominently
known for its Italian products, viz Pizzas, breads and pastas. But at the same
time, due to increasing competition from Dominos, McDonalds and KFC, Pizza
hut has gone local as well with its Birizza which is a type of Biryani. However, the
pizza hut chain is most known for its tasty variety of Pizzas. The product
characteristic of Pizza hut pizzas is that the pizzas are high quality and are served
in sizeable portions. Thus, people love the rich taste of pizzas and pastas of Pizza
hut. Another companion of Pizza hut is the Pizza hut delivery, which like
Dominos, is concentrated on delivering the pizzas at home.
Price in the marketing mix of Pizza hut The pricing of Pizza hut is
premium / skimming pricing. Pizza hut knows that it is the first entrant for pizzas
in India. On top of it, Pizza hut provides higher quality food as compared to its
competitors and at the same time the ambiance of the pizza hut chain is better
and richer than most of its competitors who serve Italian products. Thus, even
though Pizza hut has a premium pricing, people prefer Pizza hut over others.
Place in the marketing mix of Pizza hut Pizza hut is present in most of
the A grade places across urban areas. This placement helps Pizza hut maintain
its premium positioning in the mind of people, because B grade town people will
have to go to the A listers area to actually have a pizza hut pizza. On the other
hand, A grade towns are more likely to have pizza from pizza hut than from
dominos because of the price positioning. Due to a higher price, and a higher
quality of food, pizza hut has to be present in A grade towns only. In B grade
towns, people would more likely prefer the more affordable Dominos.
Promotions in the marketing mix of Pizza hut Pizza hut is known to be a
smart promoter for its own products. The ATL promotions mostly concentrate on
introduction of new products as well as to build brand equity. During festivals,

the ads take a different route and promote discounts and offers on products to
attract customers. At the same time, pizza hut does several enterprise discounts
as well and gives discounts to corporate customers. Finally, the success of the
chain depends on local marketing. And local marketing depends on the local
pizza hut outlet which may use BTL activities like hoardings, newspaper inserts,
guiding customers to the outlet and lollipops.
People in marketing mix of Pizza hut The best part of Pizza hut are the
people. Pizza hut introduced a novel way of showing customer appreciation the
bell. Anyone who rings the bell on exiting from Pizza hut is greeted with a loud
thank you from all the waiters in Pizza hut. These people also do performances
frequently on celebrations and most important of all, the pizza hut chain has the
most polite and well mannered people in the fast food industry.

Physical evidence in the marketing mix of Pizza hut The only reason
Pizza hut is able to demand premium pricing is because of its physical evidence
and the ambiance. The cutlery of Pizza hut is fantastic and it is an enjoyable
experience to have the pizza out of the pan right into our plate. The bowls served
along with pasta are also good. The glasses are big. And the seats and tables are
comfortably spaced giving people the complete experience of luxury dining.
Combine that with the excellent people in Pizza hut and you have an excellent
afternoon or evening of dining out for Italian cuisine.
Process in the marketing mix of Pizza hut Pizza hut serves only freshly
made Pizza and pastas. The process of Pizza hut involves having the raw
materials half prepared in the kitchens of Pizza hut. Once the order is received,
the pizza is immediately prepared and served hot. In case of pizza hut delivery,
pizza hut has gone a further length and introduced a hot mark on all their
packaging for Home delivery. If the mark is not red, than the pizza is not hot and
it can be returned to the outlet. Furthermore the outlet also promises 30 minutes
delivery for which it has to maintain a slew of drivers who deliver the pizza.
This completes the marketing mix of Pizza hut. The reality of the market is that
Pizza hut is a fantastic food chain, but it is slowly being overtaken by Dominos

because of the presence of Dominos to deliver pizzas to even B grade towns and
cities. Ignoring the B grade towns is a deliberate marketing strategy of Pizza hut.
But in the long term, whether this marketing strategy is right or wrong, only time
will tell.

Pizza Hut parent company Yum! Brands will tweak its marketing strategy for the brand
in the US to strike a balance between appealing to millennials and mainstream
consumers as it reported flat sales in the first quarter.
Speaking on a call with investors chief executive of Yum! Brands Greg Creed admitted
that marketing for Pizza Hut hadn't been effective enough, and that the fast-food brand
has struggled to balance its efforts to target different age groups.
"Our results have admittedly been soft and worse yet were being outperformed by the
competition," he said. "As you know we recently launched a new pizza platform in the
US where over half the divisions profits are generated. This new platform gives our
customers unparalleled variety with exciting new toppings, crusts and flavours.
"Unfortunately we havent been as effective as weve liked with our marketing and need
to balance its appeal to millennials with mainstream pizza customers. We intend to do
this going forward while working with our franchisees to bring more competitive value to
the market."
Despite a disappointing performance, Pizza Hut is expanding fairly rapidly having
opened 35 new international restaurants in 20 countries in the first quarter. This
included 16 units in emerging markets, with almost all (94 per cent) opened by
franchisees.
Creed said Yum Brands! is also making the "needed investments" in digital across all
Pizza Hut markets. "We have a firm grasp on what needs to improve and are taking the
necessary actions globally to drive better performance," he said.
Yum! Brands also owns and operates KFC and Taco Bell and reported a 3.7 per cent
dip in revenue to $362m compared to $399m in the same quarter last year. Sales grew
4 per cent.