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Case Study
For Domino’s, carryout offers the chance to gain more market share from
other pizzerias because it is a larger market overall than delivery. Carryout
offers 2.5 times the market opportunity of delivery, according to a September
note from Guggenheim analyst Matthew DiFrisco.
Nearly 45% of Domino’s sales came from carryout during its fiscal third
quarter, according to Allison. Its strategy to add more U.S. stores and to
update existing locations has helped drive carryout orders. The pizza chain
also introduced more crust options to its daily $7.99 carryout deal.
Still, Domino’s maintained its forecast for net store growth for the next two to
three years as it continues to add more domestic stores strategically to
decrease delivery times and increase its market share.
Target Market
A part of Domino’s Pizza’s success is their ability to aim its market toward all
age group from kids to seniors.
One of the reasons why Domino’s is the world’s largest pizza chain is their
ability to adapt means they have something for everyone on their menu
whatever your preferences are.
Market Awareness
Domino’s is currently the biggest pizza chain, not only in the US but around
the world as well.
They are able to stay above their competitors due to their various locations
worldwide, from Michigan, USA to parts of south East Asia.
Success
With over 600 stores worldwide, domino’s is a giant in the pizza chain.
And with new deals and now a vast majority of food items, wings, cheesy
bread, cakes, garlic bread, and even subs Domino’s will be the leader in the
pizza chain for quite some time
Domino’s Pizza is in the growth phase of the two life cycles. This can be
substantiated thus.
Over the years Dominos Pizza has created a marketing campaign that
has focused primarily on the male consumers, in particular sports fans
aged 18-44, mixed in with those consumers are the current pizza lovers
across America. While this audience is for the most part composed of
male sports lovers, Dominos Pizza is treading water in its effort to attempt
in targeting a younger, more feminine, and more diverse market as they
gain knowledge of how to appear more upbeat to the teenage and female
consumer segments.
For teenagers, pizza is considered one of the main four food groups
(especially for college students.) Dominos Pizza has not become
acceptable to the average teenager’s eye; instead, it is perceived as
being un-cool. Everyday men and women are becoming increasingly
more health conscious. The inclination towards a healthier life style or
dietary preferences has created a demand for healthy and nutritious
foods. However, Dominos Pizza has become more dependent on its
pizza product. Any decrease in demand would have an adverse affect on
the business. Growing health conscious, in the minds of the people, may
result in lower sales of fast food such as pizza, which would affect the
revenues of growth within the company.
Even though Dominos is rated one of the top pizza deliverers, their
market shares have declined from 55% to 43 % and profits have fallen
from 2.65 billon- 2.5 billon. Dominos Pizza Vice-president blames the
recent decline on advertising. Dominos Pizza decided that they needed a
new identity to appeal to the teen segment. Grays’ advertising decided
that a good step for Dominos Pizza is to show their quality ingredients
and their fast free delivery but in a cool upbeat way that would attract the
teen’s attention.
Dominos Pizza should remain focused on their delivery system to keep
up with their fast-paced consumers. Dominos has done a terrific job at
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6. Will our client’s products became less useful over time with technological
advances?
Following are the top 10 innovations that have helped Domino’s grow to become
America’s leading pizza chain.
1. Dominos.com
2. Domino’s HeatWave
3. Online Ordering
4. Domino’s Tracker
6. Pizza Theaters
9. AnyWare Ordering
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10. HotSpots
Political factors play a significant role in determining the factors that can
impact Domino's Pizza, Inc.'s long term profitability in a certain country or market.
Domino's Pizza, Inc. is operating in Restaurants in more than dozen countries and
expose itself to different types of political environment and political system risks. The
achieve success in such a dynamic Restaurants industry across various countries is
to diversify the systematic risks of political environment. Domino's Pizza, Inc. can
closely analyze the following factors before entering or investing in a certain market-
A firm should not only do technological analysis of the industry but also the
speed at which technology disrupts that industry. Slow speed will give more time
while fast speed of technological disruption may give a firm little time to cope and be
profitable. Technology analysis involves understanding the following impacts -
operate in those markets. Some of the environmental factors that a firm should
consider beforehand are -
Weather
Climate change
Laws regulating environment pollution
Air and water pollution regulations in Restaurants industry
Recycling
Waste management in Services sector
Attitudes toward “green” or ecological products
Endangered species
Attitudes toward and support for renewable energy
In number of countries, the legal framework and institutions are not robust
enough to protect the intellectual property rights of an organization. A firm should
carefully evaluate before entering such markets as it can lead to theft of
organization’s secret sauce thus the overall competitive edge. Some of the legal
factors that Domino's Pizza, Inc. leadership should consider while entering a new
market are -
Its ability to prepare a pizza within a short time, to deliver it within 30 minutes of
recording the order, and the store location.
COMPETITION
1. Who are the main competitors and what are their market shares?
Pizza Hut had 13.2 percent of the market. Pizza Hut was one of the
topmost Domino’s competitors in pizza followed by the Papa John's held onto
7.2 percent. By the end of 2018, Kalinowski forecasts that Domino's market
share will surpass 15 percent and Papa John's will slip below 7 percent. He said
that Pizza Hut's market share would remain flat.
2. How do the competitors’ products compare to our client?
When an urge for pizza hits, the pizza delivery choices can be a tad
overwhelming. But two go-to choices for pizza lovers everywhere are Pizza Hut
and Domino's.
Historically, Pizza Hut has enjoyed the No. 1 spot as the largest pizza
chain in the world. But in 2017, Domino's overthrew the pizza chain and became
the top pizza seller in the world in terms of global retail sales. In 2018, Domino's
had global retail sales of more than $13.5 billion. We ordered similar popular
items from each store and soon discovered why Domino's has risen in the ranks
to become the world's biggest pizza chain.
Pizza Hut is arguably one of the most significant Domino’s Pizza Competitors
that directly competes with the brand in the fast food industry. It specializes in take-out
and delivering of pizza and has established quite a considerable number of stores in the
US and other countries including Canada, Mexico, UK, Germany, Spain, and France
among others. In 2016, Pizza Hut was ranked as the leading pizza outlet in the entire
world.
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1. Pizza Hut is a huge popular brand name and high brand loyalty
5. Pizza Hut has good advertising and marketing through TVCs, print, online ads
and OOH media
6. Over 15,000 franchises around the world which also provide excellent home
delivery
9. Pizza Hut has invovled in sponsorship of events, sports teams, movies etc
between design and execution; and The overall complexity is beyond the
management capabilities of the organization.
Buying the perfect business starts with choosing the right type of
business for you. The best place to start is by looking in an industry you're
familiar with and understand. Think long and hard about the types of
businesses you are interested in and which are the best matches with your
skills and experience. Also consider the size of business you're looking for, in
terms of employees, number of locations and sales.
Next, pinpoint the geographical area where you want to own a
business. Assess the labor pool and costs of doing business in that area,
including wages and taxes, to make sure they’re acceptable to you. Once
you’ve chosen a region and an industry to focus on, investigate every
business in the area that meets your requirements. Start by looking in the
local newspaper’s classified ad section under “Business Opportunities” or
“Businesses for Sale.”
And just because a business isn’t listed doesn’t mean it isn’t for
sale. Talk to business owners in the industry; many of them might not have
their businesses up for sale but would consider selling if you made them an
offer. Put your networking abilities and business contacts to use, and you’re
likely to hear of other businesses that might be good prospects.
When purchasing an existing business, you'll definitely want to put
together an “acquisition team”—your banker, accountant and attorney—to
help you. These advisors are essential to what is called “due diligence,” which
means reviewing and verifying all the relevant information about the business
you're considering. When due diligence is done, you'll know just what you're
buying and from whom.
The preliminary analysis starts with some basic questions. Why is
this business for sale? What's the general perception of the industry and the
particular business, and what's the outlook for the future? Does—or can—the
business control enough market share to stay profitable? Are the raw
materials needed in abundant supply? How have the company’s product or
service lines changed over time?
You also need to assess the company’s reputation and the strength
of its business relationships. Talk to existing customers, suppliers and
vendors about their relationships with the business. Contact the Better
Business Bureau, industry associations, and licensing and credit-reporting
agencies to make sure there are no complaints against the business.
While you and your accountant review key financial ratios and
performance figures, you and your attorney should investigate the business’s
legal status. Look for liens against the property, pending lawsuits, guarantees,
labor disputes, potential zoning changes, new or proposed industry
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regulations or restrictions, and new or pending patents; all these factors can
seriously affect your business. Be sure to:
Conduct a uniform commercial code search to uncover any recorded
liens (start with city hall and check with the department of public
records).
Ask the business’s attorneys for a legal history of the company, and
read all old and new contracts.
Review related pending state and federal legislation, local zoning
regulations and patent histories.
Legal business liabilities take many forms and may be hidden so
deeply that even the seller honestly doesn’t know they exist. Be sure to have
your lawyer add a “hold harmless and indemnify” clause to the contract. This
assures you’re protected from the consequences of the seller’s previous
actions as owner.
Also make sure your deal allows you to take over the seller’s
existing insurance policies on an interim basis. This gives you time to review
your insurance needs at greater leisure while still making sure you have basic
coverage from the minute you take over.
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4. How will the company exit the new market if things don’t go well?
They can exit through their exit strategies; an exit strategy is how
entrepreneurs (founders) and investors that have invested large sums of money
in startup companies transfer ownership of their business to a third party. It’s how
investors get a return on the money they invested in the business. Common exit
strategies include being acquired by another company, the sale of equity, or a
management or employee buyout. Including your exit strategy in your business
plan and in your pitch is especially important for startups that are asking for
funding from angel investors or venture capitalists for funds to grow and scale.
Most of the time, small businesses don’t need to worry as much about it because
they probably won’t seek investment (not all good businesses are good
investments for angels and VCs). The small business founder’s goal might be to
own the business themselves for the foreseeable future. This list should give you
an idea of common types of exit strategies. The type of strategy you adopt will
depend on what type of company you are and your financial and strategic goals.
Here are some of the most common:
1. Acquisition- known as a “merger and acquisition.” This is because, when a
company decides to sell itself to another company, the buyer will often
incorporate or merge the services of that company into their own product or
service offerings.
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2. Initial Public Offering (IPO) -This exit strategy is right for a small number of
startups and larger corporations, but is not suited to most small businesses,
primarily because it means convincing both investors and Wall Street analysts
that stock in your business will be worth something to the general public.
3. Management buyout - If you’ve built a business whose legacy you want to see
continued long after you’re gone, you may want to consider turning to your
employees.
4. Family succession- On that note, if your family has been brought up with an
intimate knowledge and understanding of your business, they may well be the
best people to pass things on to.
5. Liquidation- For small businesses, liquidation is a common exit strategy. It’s one
of the fastest ways to close a business, and may sometimes be the only option in
cases where the operation of the business is dependent solely upon one
individual, where family members are not interested in or capable of taking over,
and where bankruptcy is close at hand.