EXECUTIVE SUMMARY:

The current size of pizza market in India is INR 1750 crores and is growing at the rate of 25-30% per
year. But there is almost no presence of the frozen pizza in India. Contrasting this to the USA where
frozen pizza industry accounts for 13.6% of total USD 40 billion pizza industry. Thus there exists an
opportunity to launch a product in this area. In this report, we are trying to achieve the following:
market research to gauge consumer behaviour and preferences, followed by Segmentation, Targeting
and Positioning for frozen pizza product in India and finally building a marketing strategy to launch it.
We started with the Porter’s Five Forces analysis. We found out that Intensity of Industry Competition
was low to medium, Availability of Substitutes was low to medium, Potential Entrants were High,
Buyer Power was low and Supplier Power was low-medium. This was followed by primary research
where we took surveys (online and live). This was supplemented with secondary research to find out
the various aspects of consumer behaviour. The core benefits were identified as “Easy to Cook” and
“Tasty Food”. Generally, the decision makers are the young earning professionals or the earning
member of the family/housewife. In case of the housewife, their decisions are normally influenced by
their pestering children. We then did market segmentation basis various methods like customer
characteristics (geographic, demographic, socio economic, psychographic), buying situation
(consumption rate, consumer predispositions), mediagraphics and personas. We decided to target
people in age group of more than 23 years of age with earnings of more than 2 lakhs per annum. We
thus positioned our product as - To all those who want a comfortable life and who love good & healthy
food, Frizza is a unique looking product that lets you enjoy the taste of heaven, saves your time and is
there for you – Anytime you want it. The product was named as “Frizza” with the tagline – “Anytime
Pizza”. We then decided the marketing strategy. Starting with Product decision, we saw that Frizza is
differentiated from its competitors like Dominos basis 4 main parameters – (i) Lower price at same
taste; (ii) Convenience factor (of using the product anytime rather than just 12 hours during which a
restaurant is open); (iii) Square shape rather than circular shape, which would appeal to children and
adults alike; (iv) Emotional satisfaction for mothers coming out of the feeling that she has cooked a
meal for her children. We then decided various characteristics of the product like toppings, etc. basis
results from the survey. Due to many reasons as explained in the report, the pricing came to as 30-40%
lower than that of competition like Dominos’s. In terms of the place, we decided to launch the product
only in cities given the infrastructural constraints at the beginning. The retail channels were decided as
supermarkets, speciality stores and super stores, thus following the selective distribution strategy.
Various promotional activities (both ATL and BTL) like television ads, Facebook, newspapers, events,
etc. were planned. Finally, financial analysis was done to conclude the breakeven point as 7 quarters.
MOTIVATION:

The pizza industry in India is mainly divided into 2 formats – dine in and take away. The current size of
pizza market in India is INR 1750 crores and is growing at the rate of 25-30% per year. The holding
company of the current market leader, i.e. Dominos grew 9 times from INR 155 crores in 2007 to INR
1407 crores in 2013 brining the annual growth rate to an amazing figure of 45%. But there are gaps in
the market. First, the pizza stores are limited in number, reach and timing. Thus accessibility is limited.
Secondly, although pizzas at lower price points are available, higher end pizzas or pizzas offering
variety of toppings cost upward of INR 200 per pizza. Thus, there is scope to use low pricing as a
competitive advantage. Hence comes the frozen concept to fulfil the existing gaps. This concept is
already prevalent in developed countries. In USA for example, frozen pizza industry accounts for 13.6%
of total USD 40 billion pizza industry. As per Frozen food global industry guide from Market Line, sale
of frozen pizza & ready meal market globally account for 41.1% of overall frozen food market. Also,
Asia-Pacific is the largest market for frozen foods, accounting for 34.3% of global market value, and
supermarkets and hypermarkets form the leading distribution channel for frozen food account for
70.2% of the market’s value.

OBJECTIVE:

In this report, we are trying to achieve the following: market research to gauge consumer behaviour
and preferences, followed by Segmentation, Targeting and Positioning for frozen pizza product in India
and finally building a marketing strategy to launch it.

METHODOLOGY:

Primary research: We had two kinds of approach towards primary research. We prepared a
comprehensive questionnaire to gauge the demographic, socio-economic & psychographic traits and
market reaction towards the existing products and willingness to pay of respondents for the frozen
pizza product. We conducted live surveys in the nearby malls (Gopalan Mall and Meenakshi Mall)
during peak days (a Sunday and the Independence Day) by distribution of questionnaire among people
of different age, gender and income groups for example college goers, mothers, single men, married
couples etc. We also collected online responses across diverse geographic and professional groups via
social networking sites and emails.

Secondary research: We used online resources to study the global frozen pizza markets and potential
growth of the same in Indian markets and to gather information about the existing players and their
positioning.
 FINDINGS:

1. Porter’s Five Forces to Understand Industry Competitiveness:

Intensity of Industry Competition: Low-Medium

 Number of firms- There are large no of players in Indian Pizza market. These include the market leader
Dominos, Pizza hut, Papa john’s, Pizza corner, Pizza Express, Smoking Joes, Amul and Local Pizza
Producers. But there is no popular brand in frozen Pizza other than Amul.
 Highly concentrated market (Low HHI)- The market is highly concentrated with high HHI of approx
4700.Dominos leads the market with 67% market share with its 600+ stores. Pizza hut is second with
around 20% market share and 180 + stores. Others have market share from 2-5% with 20-40 Stores.
Share of Amul is very low.
 Demand Supply mismatch- As per our estimates; there is clearly no supply in the market, although
there seems to be strong demand.

Availability of Substitutes: Low-Medium

 Buyer propensity to substitute –Though overall competition is high, Competitors in the frozen pizza
market segment are low; therefore buyer propensity to substitute is very low.
 Product differentiation & Pricing- The products offered by most of the Pizza producers are similar and
there is no differentiation in product currently. The number of products available at comparatively
lower prices is less.

Potential Entrants: High

 Attractive Market-Indian quick service restaurant industry is estimated to be 6000 Cr and is expected
to reach 18000 Cr by 2018. The pizza industry is expected to grow at a CAGR 25-28%.
 Low Entry Barriers and low exit barriers- The capital requirement is comparable to other product
providers in the market and is not massive in any way. Even the exit barriers are less.
 Big brands-Big global brands like Papa Murphy, Little Caesers are not in India yet and there is
potential threat of them Entering India. McCain though not in frozen Pizzas, may enter in the future.

Buyer Power: Low

 Uniqueness- Frozen Pizza is still a unique concept in India and the firms providing it are also less.
 Large no. of buyers –The large no of Buyers with very few suppliers of frozen Pizza, decreases the
bargaining power of buyer.
 Switching cost- The current pricing structure of big brands which is very similar also decreases the
power of consumers, forcing them to buy from the available options.

Supplier Power: Low-Medium

 Material Suppliers- There is large number of suppliers for ingredients like flour, vegetables, etc. The
suppliers for Cheese and imported vegetables are less and so they have more power.
 In-house technology-The technology used by most of the Pizza Manufacturer is in-house, which
reduces supplier’s negotiation power.

Amul Frozen Pizza: Foreseeing the growth of the frozen food market in India, Amul launched frozen
pizza in 2001 in Gujarat. It planned to introduce the product all over India through its already existing
channel. But it failed to capture the market and had to close the product category soon. It could not
adapt to the changes that the Indian quick restaurant and the Pizza market were undergoing in that
period. The pricing of Amul Pizza was Rs 45 for a small Pizza which was very high at that time. Also, the
product was not positioned well in the market and proper segmentation was not done. But recently,
Amul has re-launched its frozen pizza product.

2. Consumer Behaviour:

Primary market research: We received 161 responses (43 offline & 118 online responses) for our
survey. The survey data was then filtered based on our target segment (discussed later) –
Employed/Earning member of the family in the age group of 24-41 with more than 2 lakh/annum
salary of household. Thus, 83 of our respondents fell under our target market.

Core values & Benefits sought by the consumers: Based on our survey, we came to know that, 27%
consumers take pizza, whenever they feel ‘Too lazy to cook’, and 40% take pizza for ‘Lunch or Dinner’.
The core benefits thus are “Easy to Cook” and “Tasty Food”. Hence our product must be designed to
satisfy these core benefits. In addition to this, following are the results for various factors as rated by
the respondents. These are on a scale of 1 to 5 with 1 as least important and 5 as most important.
 Decision Making Unit: Based on our primary market research, it is evident that 55% of our
customers who are in the age group of 24-41 are variety-lovers and they used to try latest trends &
products. Generally, the earning member of the family or the housewife makes the purchase
decision. But their decisions are normally influenced by their pestering children.

Decision Making: The taste and variety of the food forms the basic evaluation criteria for the
purchase decision. Majority of the respondents are passive in information search. And, out of
various medium of information, people preferred to spend time on TV and the list is followed by the
social networking sites.

3. Segmentation, Targeting, Positioning:

Segmentation: Market research results helped in identifying the market segments. We will use
below three broad bases on which we will identify our target market.
(a) Based on Customer Characteristic:
Geographic: We expect large no. of customers to come mainly from metro cities in India. Based on
our survey, we see less familiarity with the frozen pizza product in Bangalore despite it being one of
the biggest cities in India. We expect the situation to be much worse in smaller cities.

Ever had Frozen Pizza before? Interested to buy?

16% Neutral to
No 34% Positive

84% Yes 66% Disinterested

Demographic: The general market segment can be divided in younger generation with an age group
between 12-23 years, Mid-age working people who can spend money on high quality frozen pizzas
with their high disposable income and 35+ women mothers who make the Pizza purchase decision
for their kids.

Socioeconomic: We can target SEC middle segment of B2&C along with upper segment of A2&B1.

Psychographic:
Based on VALS framework, we have identified 3 major segments (out of 8) as following:

 Strivers – They are resource constrained people with high elasticity of demand, who like variety in
general and would be keen to try new products offered at an attractive price.
 Achievers – This segment has goal-oriented people with a deep commitment to career. They are
looking for timesaving alternatives in marketplace.
 Believers – They are conservative, conventional people with established routine and exhibit high
brand loyalty. They are predictable and favor familiar brands.
(b) Based on Buying Situation:

Consumption Behavior/Usage Rate: Through the survey we identified people with varying
consumption frequency of pizza from weekly to monthly. The typical 80/20 rule where 80% of firms
sales are obtained from 20% of customers, doesn’t apply in our context.

Consumer Predispositions/Product knowledge & Attitude: Some of the non-earning teenagers show
willingness to pay a higher price and ability to afford high discretionary expenses. There is another
segment with an indifferent attitude towards the product.

(c) Based on Mediagraphics: It is a new term in marketing literature describing media viewing habits of
customers. It helps identify type of promotional media consumer prefers. (TV, radio, internet etc.)

TV RADIO MAGAZINES

NEWSPAPER INTERNET SOCIAL NETWORKING

(d) Personas: Basis the above inputs, we made the following personas-

Anjali (16): College-going student who lives with her parents and spends most of the time with her
college friends. She has a large circle of girl friends with a very busy social life. She doesn’t have a
strong brand loyalty and currently consumes pizza from all available major brands by taking turns. She
is also very active on social networking sites.

Rahul (27): Rahul is an unmarried IT engineer. His work life is very hectic and often eats out or gets
food delivered at home. He lives in an apartment and is earning reasonably well. He spends lot of time
on Internet but doesn’t have a very busy social life, virtual or otherwise. He is bit health conscious and
when it comes about Pizza, he largely sticks with Dominos as his preferred brand. He likes their speedy
delivery and ease of ordering.

Mrs. Bhargav (40): Mrs. Bhargav is a working mother who has a 9 to 5 job. She has two kids less than
10 years of age. She earns well for herself and often buys pizza for her kids depending as and when
they insist. She doesn’t use Internet match but follows some TV programs very closely. Because of her
workload, she often gets tired after coming back from office and doesn’t like idea of home cooked full-
fledged meal every day.

Targeting: Criteria while picking target segment-

Criteria Segment 1 Segment 2 Segment 3

Age <23 23-35 >35
Usage Rate High Moderate Moderate
Willingness to Pay Low High Moderate
Calorie Consciousness Low High High
Time Crunch Moderate High High
Media Preference Internet TV + Internet TV
Cost of reaching the segment Low Moderate High
We primarily think Segment 2 & segment 3 could be attractive for us during the initial stage of product
launch in Indian market.

Positioning:

Positioning Statement - To all those who want a comfortable life and who love good & healthy food,
Frizza is a unique looking product that lets you enjoy the taste of heaven, saves your time and is there
for you – Anytime you want it. The product is named as “Frizza” with the tagline – “Anytime Pizza”

Competitive Frame of Reference: Current pizza players will continue to be biggest competitors in the
initial stage when market awareness for frozen pizza can take time to build and we may find it difficult
to get reasonable market share from existing consumers who might not have a strong reason to switch
to our product.
Point of Difference: Price definitely is a point of difference since we claim our product to be 30-40%
cheaper than existing pizzas in the marketplace. We also think that a square shape and convenience
factor could be defining features of our product. There is also an added emotional benefit for people of
cooking at home. They would feel like that they are actually cooking a meal for their family, thus giving
them satisfaction.

Point of Parity: Availability of quality pizza with multiple toppings and similar taste.

IMPLEMENTATION PLAN:

1. Product & Price:

The customer value hierarchy for our product along with some examples for each of the levels are:

Product Level Description

Core Benefit Easy to cook, Tasty food
Basic Product Hygienically made product, ingredients properly washed
Expected Product Fresh and good quality ingredients
Augmented Product Added/extra toppings
Potential Product Low fat cheese, low calories

The product Frizza is differentiated from its competitors like Dominos basis 4 main parameters –

(i) Lower price at same taste; (ii) Convenience factor (of using the product anytime rather than just 12
hours during which a restaurant is open); (iii) Square shape rather than circular shape, which would
appeal to children and adults alike; and (iv) Emotional satisfaction for mothers coming out of the
feeling that she has cooked a meal for her children.

Product Mix: Pizza is a durable and convenience good. There would be only one product line which
would comprise of frozen pizza and associated products.

The product mix is described as follows. The width is 1. The length would be 1 initially (frozen pizza)
which would increase in the expansion stage. The increase in length would be because of addition of
new products such as: additional frozen toppings in boxes with 4 and 6 toppings per box; garlic breads,
potato wedges, etc. The depth of the product mix is mentioned in the following page along with the
prices. Basis the nature of the product, the various products are highly consistent.

Product Characteristics: In the survey, questions regarding the characteristics of a pizza like –
toppings, crust, etc. were asked and basis those results and also basis competitive benchmarking, the
combinations of toppings were decided to finalize the variants being offered. The variants along with
the prices are shown in the following page.

Pricing: With respect to the pricing, following are the assumptions that have been made:

a) The cost of materials like – wheat flour, cheese, toppings, etc. would be nearly the same as that
incurred by competitors like Dominos and Pizza Hut.

b) The difference in cost will come from the freezing required in our product and transportation in
frozen condition. This will add to the cost as compared to competitors as the competitors only transfer
toppings and cheese in frozen condition, whereas we will transfer the entire frozen pizza.

c) But there will be significant savings in following costs: (i) Fixed cost of outlets like rent, electricity,
employees, etc., (ii) Margins that franchises get, and (iii) The square shape will lead to 21% savings in
transportation cost as compared to using circular shape.

In addition to this, manufacturing will take place at one location, instead of thousands of locations as
in the case of pizza chains and restaurants. Thus we will get economies of scale.

Due to above reasons, we will be able to charge at least 30-40% lower price than pizza chains and still
provide the same quality pizza. Also since the price elasticity of demand in our target segment is more
than 1, the percentage increase in the number of customers will be more than the percentage
decrease in price. Thus, our final pricing will be on these lines and are mentioned in the following table
along with the product variants. These prices are in line with the responses received in the survey.
Basis the survey, 72% of the targeted people were willing to pay more than INR 150 for a medium
pizza.

Toppings Price Type Toppings Price Type

(INR) (INR)

Onion, Capsicum 139 Veg

Cheese, Tomato 139 Veg Cheese, Chicken 159 Non-Veg
Onion, Capsicum, Tomato, Paneer 159 Veg Chicken, Onion, Capsicum 179 Non-Veg
Jalapenos, Onion Mushrooms 159 Veg Pepperoni, Chicken, Olives 179 Non-Veg
Jalapenos, Capsicum, Mushrooms, Mushroom, Sausage, Keema,
179 Veg 199 Non-Veg
Olives Chicken

Variants: The above table shows the list of 9 variants that will be launched initially. Basis customer
feedback regarding these variants and through a Facebook campaign (where customers would be
asked to create their own pizza and few of those would be finally launched), more variants will be
added in the future. This would also ensure events and activities happening at regular intervals.

Size: Secondly, the size of these variants will be medium (10 inches in diamater) which is enough for
upto 2 persons depending upon their appetite. Large pizzas (14 inches) may be launched in the future,
but small sized pizzas (7 inches) will not be launched as they won’t be economical due to higher per kg
variable cost. So either our margins would have to be less, or the price of a small pizza would be about
70% of the price of medium pizza, which will not be optimum opening price for a small sized pizza.

Crust: The launch will happen with standard crust. Later on, thin crust will be added.

Cooking: The frozen pizza could be cooked in a microwave, an oven or a gas stove also.

Topping Box: The pricing of the toppings box will be as follows:

Type Toppings Price (INR)

Box of 4 (Veg) Jalapenos, Mushrooms, Capsicum, Pineapple 60
Box of 6 (Veg) Jalapenos, Mushrooms, Capsicum, Pineapple, Olives, Sweet Corn 90
Box of 4 (Mix) Olives, Chicken, Sweet Corn, Keema 75
Box of 6 (Mix) Capsicum, Chicken, Pineapple, Pepperoni, Jalapenos, Sausage 110

2. Place:

Supply of Raw Materials: The procedure for procurement of raw materials will be benchmarked
against our competitors’. In Dominos, for example, different regional commissaries are entrusted with
the task of processing specialty crops of that particular region. The commissary for the eastern region
is responsible for buying tomatoes and processing them and so on.

Manufacturing Units: We will be having one manufacturing unit to start with. Warehouses at the
factories will be of adequate capacity with suitable refrigeration facilities.

Logistics: We will be partnering with Kelvin Cold Chain which has a strong transport network across
major cities in the country for long haul, short haul and city distributions. It distributes to retail partners

and local distributors. By doing so, we can bypass the need to acquire or construct refrigerated
facilities in every distribution location. (http://www.kelvincoldchain.com/distribution.htm). During
expansion stage, we will build our own warehouses and cold chain logistics.

The frozen food storage facilities should maintain a steady product temperature of -18 degree C or
lower and should also provide for proper inventory control, stock rotation and rotation of air around
 the frozen pizzas. The display cases should be located away from direct sun and heat producing
equipments.

Distribution: Our channel strategy is to use selective distribution at first, marketing Frizza through
ready to eat (frozen) product shelves of well known retail chains. Large scale retailing including super
stores, convenience stores in residential areas and super markets will be the initial channels for
distribution so as to achieve market penetration. The selection of these outlets will depend on their
location and type of clientele, for eg. a super market located in a 1st tier city close to IT hubs so that is
will be frequented by young professionals, convenience stores near residential areas which are
frequented by families etc.

Direct distribution will be done to super stores and marts having their own cold warehouses and for
large grocery stores and convenience stores, indirect distribution will be done via local distributors.

 Subsequently, we plan on partnering with Mother Dairy to sell our product at their outlets for the
mutual benefit of increasing our coverage and increase in product line for them to be at par with
competitor, Amul. This will also imbibe values of Mother Dairy into our product which are reasonable
prices and health benefits.
 Additionally, the product will be distributed to quick service restaurants (like Athicas at IIMB)
depending upon availability of proper freezers and microwave facilities at these outlets. Detailed
product catalogue handouts, full colour photos and displays featuring the product will be used to
support sales in these distribution channels.

3. Promotion:
Promotion would be done through different strategies. Above The Line strategy would include:
 Advertising through Television: The objective of this medium would be to communicate to
geographically dispersed buyers, especially working mothers, the uniqueness and the main theme
behind launching ‘Frizza’. This would help us in carving a niche for the new launched product and
building a brand image. The plan is to have three such ads which would focus on the differentiation
attributes of Frizza:
(i) Convenience: We have tried to show the concept of the ad in this video -
http://www.youtube.com/watch?v=fLcCTYrJekc&feature=youtu.be
(ii) Pricing: This ad would show a family enjoying their pizza in one of the outlets. Their
happiness is disturbed by seeing the bill the waiter brings in. This scene is followed by inviting them to
try low priced Frizza with a slogan saying- ‘cause best things in life cost less’.
 (iii) Shape: The first scene would start with a few friends trying on clothes which do not seem
to fit them and not being happy about it. They order pizza which is round in shape but comes in a
square box. The pizza then comes to life and cries out its misery of having huge clothes saddening the
people too who can relate to the story. At that instance, ‘Frizza man’ comes with Frizza with the
slogan ‘the pizza that fills the box’.
 Social Media: Communicating through social networking sites like Facebook would help to gain an
advantage since most of the targeted consumers are young working professionals who spend most of
their time online. The initial approach would be to create a Facebook page, identify few influential
people and ask them to promote the page hugely in exchange for some rewards. We will be finding
opinionated and influential bloggers and ask them to throw good light into Frizza. Six months down the
line we would start with ‘My Frizza, My Story’, a contest where people will share their Frizza story with
us in order to get printed on the cover of our product and/or get discount coupons.
 Newspapers: Promotion through newspaper would be another ‘cheap and easy approach’. Keeping, in
view the target consumers, newspapers would be the most easiest and effective way to reach them.
Huge and attractive pictures of the product with the tagline ‘Anytime Pizza’ would help people identify
and relate themselves to the product.

The BTL strategy would include:

 Price promotions: These will include percentage discounts during launch period.

 Vouchers and coupons: Frizza will include gift vouchers and coupons inside some packets to
encourage people to buy more.

 Gifts with purchase: We will give free topping boxes to consumers who buy in bulk.

 Events: There will be events in malls and shopping complexes like Frizza tasting sessions, etc.

Apart from this, we are going to give 7% discount margin instead of the normal 5% to distributors and
12% discount margin instead of 10% to retailers for the first 6 months post launch in order to establish
a strong relationship with them.

4. Financials:

We looked at competitor Jubilant Foodworks Ltd’s operating margins and cost structure and have
based our assumptions on similar lines. We operate at about 30% less cost compared to Dominos as
explained before. We have made assumptions about fixed and variable costs with regard to
warehouse, raw material, employee, electricity, shipping etc. and have incorporated impact of funding,
growth and inflation on bottom-line. We have adopted Markup pricing model and as per projections
for next 2 years, we look to breakeven in 6th quarter while operating at similar profit margin as biggest
player in the market. We look to grow our market share aggressively and hence there is higher
advertisement and promotional discount expense at the start. We have also done a worst case
scenario analysis when growth is somewhat stalled and breakeven occurs only in seventh quarter.
Working has been attached in the spreadsheet.

LIMITATIONS:

The infrastructure for frozen food is not much developed in India. There are limited warehouses with
cold chain or frozen chain facilities. The number of refrigerated vehicles with appropriate temperature
control is less than current demand. Hence, there is a need to build transportation systems,
distribution systems and the capacity of the retailers to hold frozen products.

Apart from this, there is electricity shortage in most regions in India which leads to power cuts. The
frozen pizza might spoil if there is no current for more than 4-5 hours. Hence, there is a need to find a
solution to problem of electricity shortage if business needs to scale into smaller cities.

Thirdly, there is inherent inhibition among Indian people against food that has been cooked before.
They tend to feel that it won’t taste as good. Hence that inhibition has to be removed by proving that
the taste of the frozen pizza is as good as that of a traditional restaurant pizza.

CONCLUSIONS:

We thus started with the analysis of industry and saw potential for the particular product because of
existing opportunities. We then did a market survey and used secondary data in addition to find out
the consumer behaviour aspects. We planned 4 main points of difference – lower price, unique shape,
24 X 7 availability and emotional satisfaction to mothers cooking pizza for their families for our target
segment, which is working people above 23 years of age with more than 2 lakhs annual household
income. Finally, we planned the marketing strategy, the 4 Ps for the product launch and saw that the
breakeven happened in 7th quarter from launch.
APPENDIX: The survey questionnaire is mentioned below: