Final Project: Marketing Promotion

Marketing Management

Final Project: Marketing Promotion

Domino’s Pizza

Date: 6/25

TEAM: D. S

9631005余柔誼

9631007 梁容容

9631012 馬瑞雲

9631025 蔡易群

9521011蔡興翰

Content

I. Introduction

II. Literature Review

III. Hypotheses

IV. Methodology

V. Research Analysis and Results

VI.Conclusion

VII. Reference

I. Introduction

Domino’s pizza is an international pizza delivery corporation, which is established in 1960 by Tom Monaghan. The corporation was headquartered in Michigan, United States. It was the second-largest pizza chain behind Pizza Hut, with about 8,500 franchising stores around the world. They focused on fast delivery of products.

The first Domino’s pizza in Taiwan opened on November, 1989. Since then the brand had become the leading brand of delivery pizza. According to the survey form itself, the business in Taiwan area had the fastest growing rate. Now there are over 119 stores in Taiwan area.

We live in a globalized world. Just like cultures, foods and eating style are exchanged by people around the world frequently. Pizza chain stores, like fast food stores mushroomed all over the area. Therefore, pizza became a common food in Taiwan and people often related it to the idea of gathering, celebrating or sharing. Eating pizza is quite popular for students in NCTU. However, due to the current economic crisis, their business is going down, and it is much worse than before.

According to the current business statement, we can define the following problems:the business crisis occurring currently has made people reduce their expenditure on parties and gatherings. So when it comes to choosing food, people prefer to pay only for their own share. Therefore, weare tryingto find out whethera certain type of promotion could attract customers and increase the sales of Domino’s Pizza. Wehave developed three types of promotionfor Domino’s Pizza, and are going to test which one is the most preferred by NCTU students.

We hope to understandwhether the idea of pizza promotion is effective or not, and whether changing the business design of Domino’s Pizza is necessary.

II. Literature Review

The term innovation means a new way of doing something. It may refer to incremental, radical, and revolutionary changes in thinking, products, processes, or organizations.

“The way to thrive consistently in an environmentnowadays is by innovating– innovating in technologies, innovating in strategies, innovating in business models.” Sam Palmisano, CEO of IBM, stated at an innovation- themed leadership conference recently. Indeed, success in business today does demand innovation.The environment is always on the change, so it’s up to the company to do its best to gain flexibility and to respond quickly.

Innovation is not only influenced, or stipulated, by improving technology, but also by consumers. People get bored easily, making those companies who cannot gain an edge in consistence attraction in customer’s interesteasily eliminated.

Understanding external environments is the key to understanding the future today. Retailing operates in an open environment. This open environment consists of socioeconomic, technological, and legal environments and the behavior of competitors, channel member, and consumers. Changes in the environment today are lead indicators for retail developments in the future. Socioeconomic, technological, or legal environment changes behavior by competitors, channel members, or consumers, and this stimulates strategic redirections in retailing (Retail management, Lusch and Dunne, Page.702).

Changing demographic and economic factors are not sufficient to explain changing consumption patterns in U.S.; an understanding of psychographic is also fundamental.Psychographic is the examination of the activities, interests, and opinions of a meaningful segment of the population, Psychographics is commonly referred to as life-style analysis by retailers. An example of the latter would be McDonald’s using life-style positioning to achieve its market dominance. McDonald’s achieved this dominance by selling only on specialty product-hamburgers, when other fast food restaurants offered complete menus, Its menu appealed to young couples with children, who wanted to avoid long waits and the resulting opportunities to spill drinks, make messes, etc(Retail management, Lusch and Dunne, Page.124).

The example of McDonald’s tells us that a whole new ideain selling products can be an attraction to consumers; convenient, time-saving, and specialty products are clearly incentives for making consumers want to make a purchase.

III. Hypotheses

Students in NCTU would normally only order pizza delivery on special events. Though Domino’s Pizza provides delivery service, and enjoys a fair amount of customers, recently we have noticed that students are gradually turning more to Pizza Hut. This is because the value perceived from us students are changing. Domino’s Pizza provides low price median quality; while Pizza Hut provides high price high quality. To position the value of both brands, Domino’s lines with “the same for less”, and Pizza Hut lines with “the more for more”. The difference in expenses matter little to students, so naturally students turn to the brand with the better taste.

It is in our interest to think of a way that would help Domino’s recapture customer value. We want to turn Domino’s Pizza into something that’s more than just a normal pizza delivery. We think that Domino’s has the potential to profit consistently in the form of a restaurant. To put it in a more impressive term, a pizza restaurant with a famous brand. We have designed three different kinds of restaurant themes for Domino’s Pizza, each of themillustrates different creative ways of selling pizza. While Domino’s still remains its original features, we now slightly turn the spotlights from groups to individual customers.We now can know whether these promotions can attract the interest of NCTU students and turn their heads away from Pizza Hut. Therefore, the following hypotheses are proposed:

Hypothesis 1: Students of NCTU would want to make pizza purchases as an individual.

Hypothesis 2: If pizza is sold to customers in singular slices, their desire to purchase would increase.

Hypothesis 3: Among the three kinds ofpromotion samples,‘sample A : meals‘is the preference among NCTU students.

VI. Methodology

Our target samplefor this research consists ofNCTU students, those who have heard of or have had experience with Domino’s Pizza. 30 questionnaires will be distributed among classmates and around the campus.

After the individual hypotheses weredeveloped, we examined it by using artificial explanationand T-test in the first step of analysis. We conducted T-testto assess the most influential factor to students’ consumption willingness at Domino’s Pizza, and prove whether or not our hypotheses are true.

For the questionnaires, we have developed three types of innovative themes for Domino’s Pizza. We described these three themes to the interviewees and asked them some question about the new designs, and thus have tested and collected the results of customers’ reaction toward them. The three themes are under the assumption that the pizza of Domino’s remain the same quality.

The first theme is ‘meals’. Similar to McDonald’s, Domino’s Pizza now offers combo meals. Apart from the main dish ‘pizza’, which comes in different sizes, there are side dishes such as fried chicken, French fries, salad, soft drinks, breakfast items,and desserts. Domino’s Pizza now does not only offer delivery service andcounter service, but alsodrive-through service.

The second theme is ‘bar’. This theme is somewhat like a buffet, different flavors of freshly-baked pizzas are displayed on a counter along with some side- along dishes. Customers can just grab a trayand pick any amount of food they want, then pay for it at the checkout counter, both time-saving and convenient.

The third theme is ‘DIY’. Similar to Subways, samples of the ingredients of the pizza are displayed behind the counter. Customers can first choose how many pieces and the sizes of pizza they want, and then show the clerk what ingredients they want by saying or pointing, thus creating their very own recipe. After that, the freshly-made pizza(s) would be put in the oven for baking.

All three themes are new types of promotion we designed for Domino’s Pizza, each giving customers different experiences in eating pizza. We think that the only way to recapture customers value, is to try make pizza become a part of our everyday life. Students can now eat pizza anytime they want. In the first theme, we offer students a whole new option of fast food store other than just McDonald’s or KFC; in the second theme, Domino’s Pizza can try out more new recipes, cause it will be more appealing for students to try out a new flavor when it comes in a single slice instead of a whole piece; and third theme is for people who likes to try out new stuffs.In either way, it provides incentive for customers to come and consume, so as to increase the sales of Domino’s Pizza.

V. Research Analysis and Results

Hypothesis 1: Students of NCTU would want to make pizza purchases as an individual.

To test the hypothesis 1, we listed 5 questions:

1. Do you know “Domino’s Pizza?”

Yes / No
30 / 0

Fig.1: The percentage ofNCTU students who have ever heard of Domino’s Pizza.

1. Have you ever ordered “Domino’s Pizza?”

Yes / No
28 / 2

Fig.2: The percentage ofwhether or not NCTU students have ever ordered Domino’s Pizza.

According to the first and second question, we know that every NCTU students know about Domino’s Pizza, and 93 percent of NCTU students have ordered pizza from them. We can conclude that Domino’s Pizza is well-known among NCTU students.

1. How many slices of pizza do you need in order to be satisfied?

In average, how many slices of pizza do you have when sharing pizza with other people?

We compare the answers of these two questions, and then conclude the degree of satisfaction when NCTU students have pizzas in groups.

hungry / satisfied / too much
20 / 7 / 3

Fig.3:Each segmentmeans thepercentage of how NCTU students feel when sharing pizza with other people.

67 percent,which is a big portion, of NCTU students are still hungry after they have pizza with others. It is evident that their need isn’t satisfied when having pizzas in groups.

4. Do you ever find that your choice in flavor is limited when in a group order for pizza？

Yes / No
17 / 13

Fig.4: The percentage of whether or not students ever find that their in flavor is limited when in a group order for pizza.

It is a common thought that everyone would want to choose the flavor they prefer. We can see from Fig.4 that there are 57 percent of NCTU students have felt that their choice is rather limited when the flavor is decided by the entire group. They have to compromise with other people in the group. But if they were to order pizza alone, there will be no such problem.

5. Have you ever been discouraged in ordering pizza from failing to gang up enough people？

Yes / No
22 / 8

Fig.5: Percentage segments of NCTU students of whether or not they have ever gave up due to

not having ganged up enough person

There are 73percent of NCTU students who have found themselves in a situation where they want to eat pizza, but if it were not for reasons like not being able to find enough people or that they find an entire piece of pizza too much, they gave up the thought of ordering pizza. It’s a pity that so many students cannot have pizza as they would like to, we figure that if Domino’s Pizza were to slightly change their focus to individual customers, their sales would increase.

Hypothesis 2: If pizza is sold to customers in singular slices, students’ desire to purchase would increase.

To test hypothesis 2, we make it easy to compute by setting five options into score. That are “Very attractive/important”=’5’; “attractive/important”=’4’; “So-so=3; Not attractive/not important”=’2’;”Not attractive/not important at all”=‘1’.

Question 1:Does this idea sound appealing to you and therefore would make you willing to make a purchase?

Very attractive / Attractive / So-so / Not attractive / Not attractive at all / Total
Score / 5 / 4 / 3 / 2 / 1 / ---
Count(n) / 1 / 9 / 17 / 3 / 0 / 30(N)
加權score(xi) / 5 / 36 / 51 / 6 / 0 / 98
Average() / σ2=
3.266667 / 0.478161

Fig.6: The proportion of how consumers are attracted by pizza sold in singular slices.

Table 1: Statistics of T-test when test value is 3

Statistics of T-test
Test value ＝3
T / df / Level of sig.
(two-tail) / 95% Confidence interval
Lower bound / Upper bound
attractiveness / 2.1122 / 29 / .05 / -3.00848 / 3.52488

Table 2: Statistics of T-test when test value is 3

More than half of NCTU students who answered this question doesn’t show much enthusiasm to the idea of selling pizza in singular slices. We think the reason is that the students here in NCTU might not yet be ready to change their perceptions of eating pizza, and have not yet put too much thought on this new experience.

Question 2:What kind of reason would make you come and purchase this new product？

Factor 1: A pizza personally tailored for the customer.

Fig.7: The percentage segments of what the students think of factor 1.

Very important / Important / So-so / Not important / Not important at all / total
Score / 5 / 4 / 3 / 2 / 1 / ---
Count(n) / 4 / 11 / 11 / 4 / 0 / 30(N)
Weighted
score(xi) / 20 / 44 / 33 / 8 / 0 / 105
Average() / σ2=
3.5 / 0.810345

Table 3: Statistics of T-test when test value is 3.

More than 50 percent of NCTU students seem to like the idea of a pizza especially tailored for them. We think this is maybe due to the fact that this is a whole new type of pizza-eating experience.

Factor 2: Customers can choose freely among any flavors.

Fig.8: The percentage segments of what the students think of factor 2.

Very important / Important / So-so / Not important / Not important at all / total
Score / 5 / 4 / 3 / 2 / 1 / ---
Count(n) / 8 / 16 / 4 / 2 / 0 / 30(N)
Weighted
score(xi) / 40 / 64 / 12 / 4 / 0 / 120
Average() / σ2=
4 / 0.689655

Table 4: Statistics of T-test when test value is 3.

More than 90 percent of NCTU students think that the idea of being able to choose freely among pizza flavors is important. We conclude that this, on some level, have something to do with people feeling limited in selecting flavors when in a group order for pizza.

Factor 3: You can choose the amount of pizza you feel fit.

Fig.9: The percentage segments of what the students think of factor 3.

Very important / Important / So-so / Not important / Not important at all / total
Score / 5 / 4 / 3 / 2 / 1 / ---
Count(n) / 11 / 9 / 7 / 1 / 2 / 30(N)
Weighted
score(xi) / 55 / 36 / 21 / 2 / 2 / 116
Average() / σ2=
3.86667 / 1.36092

Table 5: Statistics of T-test when test value is 3.

More than 67 percent of NCTU students find that whether or not they can choose the amount of pizza they personally prefer important. We can conclude the fact that in normal occasions, students do find that sometimes there is too much and sometimes there is too little pizza to eat.

Factor 4: Convenient(No need to rally several people in order to order a pizza)

Fig.10: The percentage segments of what the students think of factor 3.

Very important / Important / So-so / Not important / Not important at all / Total
Score / 5 / 4 / 3 / 2 / 1 / ---
Count(n) / 10 / 13 / 4 / 1 / 2 / 30(N)
Weight
score(xi) / 50 / 52 / 12 / 2 / 2 / 118
Average() / σ2=
3.93333 / 1.236782

Table 6 Statistics of T-test when test value is 3

Test value＝3
T* / df / T / Mean
1. / 3.0422 / 29 / 1.699 / 3.5
2. / 6.5954 / 29 / 1.699 / 4
3. / 4.0690 / 29 / 1.699 / 3.866667
4. / 4.5968 / 29 / 1.699 / 3.933333

Table 7:Comparison of the 4 factors.

Hypothesis 3: Among the three kinds of promotion samples, ‘sample A : meals ‘ is the preference among NCTU students.

Very attractive / Attractive / So-so / Not attractive / Not attractive at all / Ave. / σ2
5 / 14 / 9 / 2 / 0 / 3.7333332 / 0.685057

Fig.11: The percentage segments of what the students think of theme ‘meals’.

Very attractive / Attractive / So-so / Not attractive / Not attractive at all / Ave. / σ2
7 / 15 / 7 / 1 / 0 / 3.933333 / 0.616092

Fig.12: The percentage segments of what the students think of theme ‘bar’.

Very attractive / Attractive / So-so / Not attractive / Not attractive at all / Ave. / σ2
2 / 7 / 18 / 2 / 1 / 3.233333 / 0.667816

Fig.13: The percentage segments of what the students think of theme ‘DIY’.

To test hypothesis 3, we quantify our data by setting ‘5’=“Very attractive”; ‘4’= “attractive”; ‘3’=”So-so”;’2’= “Not attractive”; ‘1’= “Not attractive at all”. Under the T-test, we set the test value of 3.5 in the beginning because we want to know whether these ways to promote are attractive or not as we can see it from Table 3.

We assume that the value which larger than 2 indicates potential for consuming. The Promotion A and B both have T test larger than t0.05, therefore, Promotion A and Promotion B could work according to 95% confidence. However, Promotion C has a t value less than t0.05, so Promotion C may not work according to 95% confidence.

Comparing the t value of Promotion A and t value of Promotion B, the later has larger value, therefore, Promotion B is the most popular one according to 95% confidence. The hypothesis needs to be rejected since Promotion A fell to the secondly popular one.

Test value＝2
T / df / P value / Mean
Promotion A / 2.0941 / 29 / 0.0268 / 3.733333
Promotion B / 2.4631 / 29 / 0.0100 / 3.933333
Promotion C / 1.5094 / 29 / 0.1256 / 3.233333

Table 8: Statistics of T-test when test value is 2.

VI. Conclusion

From the research we made above, we found that the result from the research questions or questionnaire accept two out of the three hypotheses we made, one being rejected. Hence, we came up with the following conclusion:

It is true that the NCTU students have the experience that they could not be satisfied from purchasing pizza in group form. They are not satisfied because of the quantity of pizza or the flavors. Furthermore, a high percentage of the students had gave up purchasing pizza because they could not find enough people to share it with. As a result, they would rather prefer making pizza purchases as an individual. Due to the existence of this circumstance, we provided new ways of pizza promotion. We wanted to test if they would like our promotion due to several factors. Among the four factors considered while consumingpizza, wefound out that the customization of flavor of pizza is the most important factor that people chose to purchase individually. The second factor is the freedom to select how many slices of pizza. The calculations also showed that all factors will lead students to consume pizza as an individual, in other words,if pizza is sold to customers in singular slices, their desire to purchase would increase.