Pizza Market Analysis Process Flow Situational Analysis SWOT

Pizza Market Analysis

Process Flow Situational Analysis SWOT Analysis Little Caesar Competition Pizza Market analysis and Pizza hut internal analysis Discover Pizza Hut’s strengths, weaknesses, opportunities and threats. Strategy, marketing, target group differences Data Deep Dive Search for Bigfoot characteristics preference among existing customers Regression Analysis Analyze the data and the factors contributing for customer’s loyalty Visualization & Insights Data Preparation Recommendations Decision Compare and contrast Offer alternatives Should Pizza Hut launch the “Bigfoot Pizza”? Big opportunities versus big money pits

Pizza Market – Situational Analysis ● According to statistics from Franchise Disclosure Documents, Americans eat on average 100 acres of pizza daily or 350 slices per second. In addition, 93 percent of Americans eat at least one pizza per month, ● $40 billion industry (measured by sales per year) ● Approximately 17 percent of all restaurants in the nation ● The “Big Four” pizza franchises are Pizza Hut, Domino’s, Papa John’s, and the Little Caesars franchise. ● Four major pizza market approaches : 1. Sit-down dining”- Pizza Hut 2. “Delivery”- Papa John’s, Pizza Hut, Domino’s, 3. “Carry out”- all of them 4. “Take’N bake”- Papa Murphy’s California Pizza Kitchen

Pizza Hut -Strengths ● Market leader in providing varieties of pizzas ● One of the largest restaurant chains in the world ● Large variety of pizzas ● Specializes only in pizzas ● Has full service restaurant as well as delivery services ● Strong franchisee network ● Good marketing – many media partners

Pizza Hut - Weaknesses ● High overhead costs due to large number of restaurants ● Higher price ● More expenses since it is a full service restaurant ● Conflicts among the franchises ● The loyal customers of Pizza hut feel that there is a decline in satisfaction and other pizza restaurants are giving much more ● Slower in delivery than Dominos

Pizza Hut - Threats ● The differentiation strategy followed by any pizza chain is sooner or later adopted by all pizza industry players ● The number of competitors is very large- the industry growth is high and fixed cost involved is high ● Main competitors- Dominos, Little Caesars, Papa John’s ● Threads from other fast food companies, selling sandwiches, burgers, and etc. ● Large availability of substitute goods ● Customers look for availability and affordability ● Rising prices of cheese ● Little Caesar's established a "value niche" with its two-for-one deal

Little Caesar vs. Pizza Hut Arguments Pizza Hut Little Caesars ● Little Caesars is a new chain that offers inexpensive $5 pizzas and it is the fastest growing chain in USA ● Pizza Hut's pizzas run more than $10 per pizza, focusing more on quality and taste. ● Low-rent storefront with little or no seating ● Has full service restaurant ● Little Caesars leads the economy-pizza category ● Pizza Hut is not in the category for economy pizza ● Media shy privately held chain ● Good marketing – many media partners ● Concentrated on the lower and middle class ● Concentrated on the middle and upper class ● Targets economy-minded single adults and families looking for a quick, satisfying meal and teenagers , because usually they are a bit short of cash. ● Pizza hut targets: ● ● Families who like to go out for dinner once in a week. ● Teenagers in school with extra money to spend. Little Caesars needs little to no preparation or clean up ● People who spend money on non essential things like pizza. ● Offers vegetarian meals ● ● Little Caesars’ market share among pizza chains in the largest 100 restaurant companies has more than doubled, from 8. 7 % in 2009 to 19% in 2014 It has vegetarians options- the company offers meat-free pizzas with salad and pasta so that people who don’t want to eat meat can still enjoy quality food ● Pizza Hut prioritize higher the customer experience and customer satisfaction. ● For years now Pizza Hut, Inc. has been the leader of the pizza industry. We are privileged to have the opportunity to perform research on advancements we can make to maintain this reputation.

Analysis Background: To determine a customer profile for who would be the target market for the Bigfoot Pizza, Team 5 performed a review based on several regression analyses looking at what variables impact people who are highly motivated by coupons, discounts, specials, and do not like to spend a lot of money. ●Regression analysis on selected significant variables ● Customer profile target market for the “Bigfoot Pizza” ● Dependent Variables: ● Coupons ● Discounts ● Specials ● Do not like to spend a lot of money

Analysis on Coupon vs Sports and Income 66% of the variance in “Coupon” can be explained by this model. The primary influencers are “Sports” and “Income”. ● For customers who enjoy sports and competition the most, we will expect to see about 66% motivation to buy a pizza based upon a coupon. ● For customers making over $100, 000 per year, we will expect to see about a 28% decrease in motivation to buy a pizza based upon a coupon.

Analysis on Discount vs Sports and Income (cont. ) ● Sports & Income also best explained the variance in motivation to buy a pizza based upon Discounts, with an expected increase in motivation to purchase a pizza based upon discount being about 89% for those the most interested in sports and competition, and falling 27% for individuals making over $100, 000 per year. .

Analysis on Specials vs. Travel, Sports, Income & Family Size ● Sports & Income also best explained the variance in motivation to buy a pizza based upon Specials offered, with an expected increase in motivation to purchase a pizza based upon having a special rising about 75% for those most interested in sports and competition, and falling 26% for individuals making over $100, 000 per year.

Analysis on Money vs. Travel, Sports and Income ● Sports, Income, and Travel best explained the variance in not liking to spend a lot of money on pizza, with an expected increase in not liking to spend money on pizza rising about 67% for those most interested in sports and competition, falling about 20% for those making over $100, 000 per year, and falling 11% of those most interested in travel and new experiences. .

Conclusions ● We conclude that there is a market for launching the new pizza. It would consist of Sports oriented people as a result of the 4 multiple linear regressions that we ran using "coupon", "discount", "specials", and "money" as our Dependent Variables. ● Even though income showed a significant impact on these four dependent variables, the impact was very small. Team 5 concludes that the Bigfoot Pizza would most appeal to competitive people who enjoy participating in sports. ● We would expect to see total average motivation to purchase a pizza to rise about 73% based upon coupon, discount, special, and money for a person who self-identifies as the most strongly agreeing that they are a competitive person who enjoys participating in sports. This pizza would probably do well being marketed to athletes , intramural teams, and coaches.

Loyalty to Pizza Hut We went over the loyalty distribution to get an idea how many people consider themselves loyal to the brand. The loyalty level is distributed in the sample set as follows: 1= 26%; 2 = 18%; 3 = 20%; 4 = 27%; 5 = 9%

In order to support our regression analysis we did two visualisations based on the sum of the scores per category. The first visualisation shows us the customer preferences for the loyalty level of one and two combined. The second visualisation shows us the customer preferences for the loyalty level of four and five combined. As we can see, most loyal customers does not care about price, coupons, and discounts as much as flavor and taste.

Should Pizza Hut launch the “Bigfoot Pizza”? Answer: NO Even though there is a market for this product, Pizza Hut should NOT launch the Big Foot pizza. A multiple linear regression showed that Pizza Hut's most loyal customers care more about taste over price, and value unique experiences, such as traveling and trying new foods. A person who strongly cares about the taste of pizza over the price of it would likely feel 72% loyalty towards Pizza Hut. A person who strongly loves traveling, seeing new places, and trying new foods would likely feel 58% loyalty towards Pizza Hut. Adding a discounted pizza to Pizza Hut's current product line could make these loyal customers feel as though the Pizza Hut brand product has been devalued, thus causing them to lose loyalty and, thus, purchase less (Pizza Hut Loyalty was shown to be the most influential variable (p<0. 01) on amount spent at Pizza Hut - for every 20% increase in loyalty towards Pizza Hut, a customer will likely spend about an extra $85 per year).

Should Pizza Hut launch the “Bigfoot Pizza”? (cont. ) Answer: NO Since it costs less to retain current customers than it does to gain new ones, attempting to reach a market that cares more about coupons, discounts, and specials may not be the best course of action for Pizza Hut to maintain its brand image and current loyal customers.

Recommendations Pizza Hut should create a product line catered towards their current market - people who value flavor, taste, and new experiences over price. Possibly by adding a line of specialty pizzas, Pizza Hut could retain their current customer base while gaining new customers who also value those traits. Some additional recommendations are: ●Expansion through online ordering system ●Introduction of more innovative pizzas to the traditional pizza concept ●New target - senior citizens ●Introduce new healthy and fresh food items ●Healthy pizzas ●Discounting some premium varieties ●Personalized offers (requires strong data analytics around customer behavior) ●Work on better customer segmentation models

Credits: ● ● Kerri Easterbrook Xiazhi Fang ● Madlen Ivanova ● Diana Kinney ● Mahalakshmi Vishnampettai Raghuraman ● ● Aravindharaj Rajendran Divya Ravi

Thank you for your attention!