Marketing Research

Pizza Hut strategic plan Executive Summary This proposal describes Pizza Hut and the introduction of a new product called "The Extreme." A brief history of Pizza Hut is provided at the beginning of this proposal along with an analysis of the fast food industry. Current trends in demographics and eating habits are included.

A SWOT analysis has been done to identify Pizza Hut's strengths, weaknesses, opportunities, and threats so that these factors can be taken into consideration in deciding whether or not to launch the new "Extreme Pizza." Some of the key elements of our marketing plan first describe the "Extreme Pizza." It will be the largest pizza on the market, with double the cheese and double the toppings. We will target the X and Y Generations, which is the fastest growing segment in America. This segment has been successfully targeted before using the "extreme" angle. This segment is has been a segment that hasn't been targeted to the level that they should in this industry and we plan on changing that. We have used past financial data to establish reasonable goals for the product and have set limits on promotional spending. We will be using a high/low pricing strategy, pricing this new pizza at $9.99.

Our main sales promotions will be offering the Extreme Pizza bundled with Mountain Dew to target Generation X and Generation Y. We will be using direct channel distribution as well. This pizza will be available through dine-in, carry-out, delivery, and ordering on the Internet.

1)Introduction Pizza Hut was started in 1958, by two brothers in Wichita, Kansas. Frank and Dan Carney had the idea to open a pizza parlor. They borrowed $600 from their mother, and opened the very first Pizza Hut. In 1959, the first franchise unit opened in Topeka, Kansas. Almost ten years later, Pizza Hut would be serving one million customers a week in their 310 locations. In 1970, Pizza Hut was put on the New York Stock Exchange under the ticker symbol PIZ.

In 1986, Pizza Hut introduced delivery service, something no other restaurant was doing. By the 1990's Pizza Hut sales had reached $4 billion worldwide. In 1998, Pizza Hut celebrated their 40th anniversary, and launched their famous campaign "The Best Pizzas Under One Roof." In 1996, Pizza Hut sales in the United States were over $5 million. Out of all the existing pizza chains, Pizza Hut had the largest market share, 46.4%. However, Pizza Hut's market share has slowly eroded because of intense competition from their rivals Domino's, Little Caesar's and newcomer Papa John's. Home delivery was a driving force for success, especially for Pizza Hut and Domino's.

However, this forced competitors to look for new methods of increasing their customer bases. Many pizza chains decided to diversify and offer new non-pizza items such as buffalo wings, and Italian cheese bread. The current trend in pizza chains today is the same. They all try to come up with some newer, bigger, better, pizza for a low price. Offering special promotions, and new pizza variations are popular today as well. For example, chicken is now a common topping found on pizzas.

In the past, Pizza Hut has always had the first mover advantage. Their marketing strategy in the past has always been to be first. One of their main strategies, that they still follow today is the diversification of the products they offer. Pizza Hut is always adding something new to their menu, trying to reach new markets. For example, in 1992 the famous buffet was launched in Pizza Hut restaurants worldwide. They were trying to offer many different food items for customers who didn't necessarily want pizza.

Another strategy they used in the past and are still using is the diversification of their pizzas. Pizza Hut is always trying to come up with some innovative way to make a pizza into something slightly different - different enough that customers will think its a whole new product. For example, let's look at some of the pizzas Pizza Hut has marketed in the past. In 1983, Pizza Hut introduced their Pan Pizza, which had a guarantee of being ready to eat in 5 minutes when dining at Pizza Hut restaurants. In 1993, they introduced the "BigFoot," which was two square feet of pizza cut into 21 slices. In 1995, they introduced "Stuffed Crust Pizza," where the crust would be filled with cheese. In 1997, they marketed "The Edge," which had cheese and toppings all the way to the edge of the pizza. Currently, they are marketing "The Big NewYorker," trying to bring the famous New York style pizza to the whole country.

Lastly, Pizza Hut has always valued customer service and satisfaction. In 1995, Pizza Hut began two customer satisfaction programs: a 1-800 number customer hotline, and a customer call-back program. These were implemented to make sure their customers were happy, and always wanted to return. In our plan, we will first give a situation analysis of current and relevant environmental conditions that affect our plan. Next, we will give a brief analysis of the current fast food industry, and any trends or changes that might occur in the future.

Also, a SWOT analysis of Pizza Hut will be included. Identification of current and potential competitors will be discussed in the SWOT analysis as well. Next, we will list our marketing objectives for this plan and our rationale for the selection of these objectives.

2) Situational Analysis A number of demographic and societal trends in the United States contributed to increased demand for food prepared outside the home. The divorce rate is almost 50%, and there is a growing trend showing that people are choosing to get married later in life. Because of these factors and many others, the single-person household represented about 25% of all U.S. households in 1998, up from 16% in the 1970's. There has also been a trend in the 1990's showing that individuals are choosing to eat out more often than eat at home. Another factor to consider is the increased number of women working outside the home. In 1998, 59% of all married women had careers. As a result of more women in the workforce, household incomes are now combined and are much higher than previously. According to Restaurants and Institutions magazine, more than one-third of all households had incomes of over $50,000 in 1996. The combination of higher incomes and dual-career families result in less time! in the home, therefore less time to cook food at home. Also due to higher incomes, consumers have more disposable income, allowing them to eat out more often. However, in the early 1990's, the growth of traditional fast food restaurants slowed down because the U.S. market had become