Marketing Project 1
Select an organization to analyze. Answer the following questions about an organization that offers a product or service that you are familiar with. As you review the questions you will see that this is assignment will be easier if you are indeed familiar with the product or service.
Also, while you are not required to do any research on your product or service, your report will sound more credible if you have facts and examples to back-up your answers. (While you don’t have to repeat the questions themselves, please follow this outline format and number your answers to these questions.)
Try to use concrete examples and specifics, rather than “many competitors” or “operates throughout the U.S.” or “a large sales force”.
You select a product or service of your own and answer the following questions about your product/service.
The questions you will be expected to answer will be shown in this bold type…while examples of an answer are shown in this type.
1. Product or service: Example used Domino’s Pizza (You select a product or service to analyze that you are familiar with, DO NOT simply use another pizza delivery business!)
2. What interests you about this product or service?
Example of an answer: Domino’s makes a reasonably good pizza. Also, it’s interesting that they came from almost nowhere to become a $2.3 billion company in the very competitive fast food market. Competition, however, has caught-up with Domino’s and the company’s growth has stalled. It will be interesting to see how the company responds to all of these challenges.
3. Is this a “consumer oriented” organization? That is, does the organization do anything special to satisfy the needs of its consumers? Explain.
Yes, I think Domino’s is marketing oriented. Until December 27, 1993, Domino’s standard was to get a tasty pizza to the customer in 30 minutes or less. If the customer was unhappy with the taste of the pizza, the store would send out a new pizza. If the pizza arrived in over 30 minutes, the customer got $3 off the price. If the pizza was over 40 minutes old, the pizza was free. Domino’s 70,000 drivers put in over 14 million miles, delivering more than 5 million pizzas a week.
In December 1993, a St. Louis jury hit Domino’s with a $79 million judgment. Because of the continued public perception of Domino’s drivers recklessly trying to meet the deadline, the company was forced to abandon their 30 minute guarantee. “In it’s place,” says Domino’s President Tom Monaghan, “we’ll put extra emphasis on our Product Satisfaction Guarantee. Simply stated, this means that if for any reason you are
dissatisfied with your Domino’s dining experience, we will remake your pizza or refund your money.”
4. Who or what are the organization’s target market? (Covered in Chapter 1.)
Eighty percent of Domino’s customers are probably 18-34 years old. They don’t want to cook and don’t want to bother going out to eat–even to a fast-food restaurant.
Examples of Domino’s market:
Rainy nights are busy nights for Domino’s…Super Bowl Sunday is the biggest single day for most Domino’s stores…Resort hotels with young people and with families are important…Parents who can’t cook for their children often leave “pizza money” for the kids or babysitter.
Typically, 20% of the residents of a Domino’s delivery area will produce virtually all of the store’s business. The challenge for a Domino’s store manager, therefore, is to try and keep that 20% happy.
5. Describe the organization’s marketing mix in terms of its: Product Strategy; Price Strategy; Promotion Strategy; and Place (Distribution) Strategy. (Covered in Ch. 2.)
a. Product Strategy: Until recently, Domino’s product strategy was very simple: they served tasty, but not exceptional pizzas (in only two sizes). They offered only 11 different toppings and they served only Classic Coke in a 12 oz. can. This limited menu made the operations of a Domino’s store very efficient. But as competitive pressures grew in the late 1980’s, Domino’s had to expand its offerings.
After market research showed that over 50% of Pizza Hut’s business came from pan pizzas, Domino’s made the first addition to its menu in nearly 25 years by offering its version of a Pan Pizza. Then the company began serving two (slightly smaller) pizzas for the price of one. Presumably, this strategy was aimed at fending-off increasing competition from Hungry Howie’s, Little Caesar’s and others.
Now, Domino’s menu is very complicated and probably confusing to customers. They now offer diet and regular Coke in various sizes, submarine sandwiches, twisty bread, salads, a 24-slice pizza called the Dominator (in response to Pizza Hut’s “Big Foot”), Buffalo Wings, potato chips, and even Haagen-Dazs ice cream.
b. Price Strategy: Previously, Domino’s had a reputation for pricing its product high–it charged a premium for its “free delivery”–and virtually everyone else priced in relation to Domino’s. Now, Domino’s pricing seems to be about the same as its competition.
In 2002, Domino’s tested a $1 deliver charge in 350 of its 4800 stores. The fee is due to the increased cost of ingredients and store operations. Pizza Hut charges $.50 for every pizza.
c. Promotion Strategy:
Personal (face-to-face) Promotion: Domino’s has no sales force that I know of.
Advertising: For a number of years Domino’s used a claymation character called the “Noid” to illustrate all the bad things that could happen when you have pizza at home. Recently, the company changed advertising agencies and launched its “Nobody knows like Domino’s” campaign. These ads stress Domino’s leadership and expertise in the pizza delivery business.
Lately, however, Domino’s advertising has been rather quiet. At the same time, the company’s competitors have gotten very aggressive. Pizza Hut’s advertising has gotten very confrontational–making Domino’s look bad in relation to Pizza Hut offerings.
Nationally, Domino’s uses a lot of television advertising and occasionally some radio. The tv ads appear on network, cable, and syndicated shows, with bulk of the ads appearing on “movies of the week” and selected sports events.
Direct Mail Domino’s makes heavy use of direct mail to advertise specials.
Sales Promotions (samples, discount coupons, premiums–items given free or reduced cost with the purchase of the product–contests): Locally, Domino’s distributes discount coupons through newspaper inserts, direct mail promotions, and “door hangars”. Store managers indicate that these are what generate the bulk of an individual store’s business.
Public Relations and Publicity (non-paid, non-personal promotion): The company worked very hard to change the perception of Domino’s drivers as being reckless and a danger to the community. At one point Domino’s pasted 30 million letter on the top of pizza boxes describing the company’s driver training program and the public service awards they have won from the Department of Transportation’s Highway Traffic Safety Administration.
d. Place (distribution) Strategy [How does the company make it easy for the consumer to buy the product or service?]: This was Domino’s key competitive assets: a tasty pizza DELIVERED to your door in 30 minutes or less. The company had located its stores and specified its delivery areas in such a way as to make the 30 minute delivery possible, even during peak rush hours.
In 2002, Domino’s had 4,800 stores in the U.S. (down from 5,100 in 1993) and nearly 1,000 in 23 other countries (up from 633 in 1993), including 200 in Canada, 200 in Britain and 150 Japan. In fact, while sales are slipping domestically, overseas sales are showing strong growth.
6. What external environmental factors affect the organization? Competitive? Political & Legal? Economic? Technological? Cultural & Social? (Covered in Chapter 3.)
a. Competitive Factors:
Direct Competition: Domino’s is under tremendous competitive pressure from all sides. Pizza Hut, with 8,000 outlets, for example, delivers pizza, but never did offer a 30 minute guarantee. Hungry Howie’s offers two-for-one pizza and has begun offering a delivery service. Little Caesar’s offers two-for-one, but normally doesn’t deliver. However, some Little Caesar stores have contracted with local taxi cab companies to do their delivery. Pizza Man in California and Casino’s Pizza in Florida both deliver pizzas, and if they don’t get it to you in 30 minutes it’s free.
Also, small local pizza parlors may have a driver on the weekends. Some of these local pizza honor Domino’s discount coupons.
Substitute Competition: Two former Domino’s managers started a Chinese food delivery-service called Ho-Lee-Chow. Steak Out delivers steak/potato/and salad dishes. The Burrito Runner delivers Mexican food in California. Pizza Man in California also delivers chicken.
In the Tampa Bay area there is a service called Dine-One-One (“for an emergency of the palate”). By dialing 870-Food, you can order from 25 area restaurants (from upscale restaurants to coffee shops). In addition to the menu price, there is a $4.50 delivery charge. The service is offered 24 hours a day.
Other alternatives the customer has: Restaurants of any kind, particularly a fast food establishment, is competition for Domino’s. If the consumer sees having a pizza as a form of entertainment, then there are wide variety of non-food things the consumer can do, like going to a movie or concert
Potential competitive threats: McDonald’s has begun offering pizza in some parts of the country. The American Pizza Co. makes a vending machine that dispenses a 6 inch pizza for $2.00. The machine holds 102 pizzas in 6 varieties. Finally, better frozen foods could come on the market, i.e., a good micro-waveable pizza.
b. Political & Legal Factors: The $79 million dollar judgment against Domino’s forced the company to abandon its 30 minute guarantee. The St. Louis jury awarded to sum to a family of man who had been killed by a Domino’s driver.
The judgment will not only cost Domino’s a lot of money in legal settlements, but it also destroys the major competitive advantage the company had against its major rivals in the pizza delivery business.
c. Economic Factors (recession, depression, unemployment, inflation): A dramatic increase in the price of gas, or a gas shortage would affect Domino’s drivers. A dramatic increase in the minimum wage (drivers are usually paid nearly the minimum wage +
mileage + their tips) could affect the company’s profitability. Also, in the event of a recession, customers could easily postpone ordering an expensive delivered pizza. If inflation heats up again, it would be difficult for Domino’s to significantly increase its already high prices.
d. Technological Factors: Better frozen (or otherwise preserved) pizzas would be a threat.
e. Cultural & Social Factors: People could want to eat out more. People could rebel against “junk food”, and put Domino’s pizza in that category. Also, as the American population tends to get older, it may be less receptive to pizzas.
7. What kind of “corporate citizen” is this organization? That is, what does the organization contribute to the community? Also, what criticisms might the community have against the organization?
a. Contribution: No high-profile contribution that I am aware of–nothing like Ronald McDonald House. Some individual stores may be active in their community, but there isn’t a company-wide program. Domino’s founder Tom Monaghan (and still major stockholder) is personally active in many church-related charities, but that is personal and not corporate. (In fact, Monaghan’s contributions to anti-abortion/anti-birth control activities has alienated some groups of consumers.) Also, Monaghan is an avid collector of antique and classic cars. He will occasionally display these cars as part of some charitable activity. But frankly, this is often seen as showing-off.
b. Criticisms: Although Domino’s claims to have one of the best safety records of any delivery business (including companies like Federal Express), many people perceived Domino’s drivers as reckless and a danger to other drivers and pedestrians.
Remember: Answer the above questions in terms of the product/service you select.
Answer all questions. Type this assignment. No pizza delivery service.