Domino’s Pizza, Marketing Plan Example

Introduction

It has been carefully observed in the SWOT analysis of Domino’s Pizza, that the company strengths were a cost efficient store model, strong brand awareness, successful new pizza recipe and the installment of Domino’s  Pulse point of sale system at all company and franchise operating stores (Sauber, Marold & Anderson, N.D).

Assuming these features is operational at the Columbus, Ohio location, this Account Director plan to utilize them to the maximum in order to ensure that the proposed Test Plan and the Groupon project succeed.

The company’s weakness as it relates to this project is the question of consumer perception that its pizza in terms of taste lies at the bottom of the ladder, but with the launch of customized surveys, and timely analysis and decision making, this problem will be solved within the operating timeline given.

This presenter also hope at the end of these projects, the outcomes will be used to strengthen strategic arm of the company and push back the thrust from its strong competitors in the pizza chains, among independents, take and bake operations and among the QSR entities not associated with pizza (Sauber, Marold &Anderson, N.D).

Direct Marketing Concept and Its Relevance to the Projects

Direct Marketing is an interactive system that uses one or more advertising media to effect measurable response and or transactions at any location, according to Lambin (2007).

It is timely that Domino’s Pizza has chosen to use direct marketing to penetrate the different market segments it has identified as having significant growth potential that will lead to revenue maximization with very minimal increase in cost, because, according to Elliott (2012), forecasters are predicting that despite concerns about the economy, spending for direct marketing will continue to grow.

In a forecast called “The Power of Direct Marketing “, the Direct Marketing Association, in conjunction with its annual general meeting, the D.M.A. 2011 Conference and Exhibition, reported that direct marketing advertisements in the media, like direct mail, catalogs, television, telephone marketing, internet marketing, and social networking will reach $163 billion this year, which is an increase of 5.6% on the 154.4 billion in 2010 (Elliott, 2011).

There is also a forecast for increase spending in 2012, according to Elliott (2011), as businesses seek to make inroads into national, international and global markets, using the very latest technology as well as marketing channels.

Domino’s Pizza, therefore with its 9000 stores globally, strong brand recognition, its propensity to change its pizza menu to match changing consumer tastes, the strong growth performance of its international division in 2009 despite the economic recession, and the possession of one of the best online ordering system in the world, is making the right strategic move to conduct a Test Plan in a location that models many others, using direct marketing.

As a credit to the quality of the company leadership and its level of forward thinking, the decision to use the result of test to determine whether sustainability can be achieved and to replicate the strategy used if success has been achieved, was an excellent one.

A Test Plan, according to IBM Information Center (2012) must describe the scope of an overall test and provide a record of the test planning process, and with Domino’s Pizza using the requisite direct marketing tools, efforts will be made to increase the carrying out business while keeping delivery cost constant, especially as it relates to the 18-24 and 65 and over marketing segments over a three month period, with an operating budget that will not exceed $150,000.

The strategic marketing details supplied by Mintel for the Columbus Ohio location were and to be used as the basis for the Test Plan and Groupon were,

1. Domino is presently operating at its delivery capacity in terms of drivers and deliveries
2. There is room for increasing carrying out business without increasing operating cost
3. 21 % of customers in the 18-24 age group purchase Domino’s Pizza at least three times per month (Pizza Power Report 2009)
4. 7% of the 65 and over age group purchase Domino’s Pizza at least three times per month (Pizza Power Report, 2009).
5. 20 % of household with children purchase pizza more than three times per month versus 7% of those without children (Corporate Profile, 2010)
6. High income earners are more likely to purchase from independent competitors, and others, while household with children are likely to visit pizza locations (Corporate Profile, 2010).

Marketing Strategies and Objectives

According to McDonald (2002), every marketing objective should involve activities like marketing penetration, the introducing of new products to existing markets, introducing existing products to new markets, and the introduction of new products to new markets.

A matrix of these objectives will be considered and used where necessary in the Test Plan and Groupon projects which will operate concurrently.

McDonald (2002) also listed a number of strategic objectives that companies should embrace while implementing their strategic objectives, and for these assignments, consideration will be given to changing product design, performance, quality or product features, changing of delivery or distribution patterns, changing of advertising or promotional activities, changing service levels, and standardizing designs.

Test Plan Objectives

The Test Plan objectives will be to use direct mail, mail order catalogues, telemarketing and electronic shopping to stimulate sales within the 18-24 and 65 and over age group over three months, while measuring outcomes on a weekly basis to determine the level of progress being made.

The Proposal

In this proposal the Account Director intend to vary the use of these measurable direct interactive tools to achieve the market penetration it desire during this 15 stage test plan.

Methodology

It is proposed to collect data using the census for Columbus, Ohio, from credit cards, debit cards, coupons distributed, service feedback cards returned by drivers, newspaper inserts returned, telemarketers, postal inserts, and via electronic commerce. These will be stored in the company data warehouse (McDonald (2002) and later used to make menu changes to reflect the taste of customers  during the period , as well as to create new advertising strategies to further increase market penetration.

We expect to collect data like customer name, credit card number, debit card number, e-mail address, residential address, telephone number, gender, types of order and buying frequencies from customers transacting electronically.

Additionally, it is proposed to use the data collected online in the data warehouse to develop customer profiles. These profiles will then be used to develop advertising strategies, and provide addresses for our mail orders, newspaper inserts and telemarketers to target in order to grow sales and increase market share in specific marketing segments.

In an effort to provide greater incentives to the 65 and over age group of the market, Domino Pulse point of sale system will be calibrated to advertise 5% discounts, complementary gifts, free pizza with each order above certain price, and membership in Domino Golden Agers Club for making 4 or more monthly purchases, for those who choosing to accept home deliveries instead of the other alternatives.

Further, the advertising to this group will be extended to billboards, radio and television program that target this age group and via the internet.

The carrying capacity of Domino’s Pizza delivery drivers will be assessed and compared with others in the market to through prototype testing, which Gershenson (2012) appropriately defined as a process of building a working model of a system, in order to test various aspects of the design as well as to illustrate concepts and to invite feedback.   It is hoped to have the final product meet the required specifications that will ensure Domino’s driver delivery capacity is maximized operationally.

Delivery drivers during this period will be given service feedback cards for all customers, which on return will be grouped according to income, and the rich customers’ information that should include telephone number, cell phone number, address, e-mail address will be used to develop workable strategies to attract them way from competitors like independents entities, take and bake and other non pizza providers.

The proposal will also entail a market saturation strategy using mail order and newspaper inserts, and catalogues to attract other members of the population outside the target groups, especially high income earners ($100,000 and above) and families that have children. This approach seek to set the stage for the development of loyalty programs, which Lui and Yang (2009) contend has not yet abated due to the continuing enthusiasm among customers to embrace them.

It is our intention after the market saturation drive to fine tune the data on families with children and give them to our telemarketers to make contact and provide incentives to the members of these families, 20 % of which according to Mintel purchase pizza at least thee time per month, in an effort to increase the level of purchasing.

Analysis of the Test Plan will be conducted in two stages, and in doing so the Accounts Director plan to use (with the help of the requisite experts) the features of technological systems of both the data warehouse and Domino PULSE to effectively determine the market share and growth achieved in this specific location during the period.

The analysis will in part major on measuring the performances of the different direct marketing methods used to attract rich customers, customers household  with children, customers household without children, those customers in the 18-24 age group and in the 65 and over category.

It is our intention to use the data warehouse to provide us with valuable decision making information, in terms of the percentage contribution of each method with respect to the revenues generated, the sales from each market segment, a pie chart to reflect % distribution, and the respective market share increases realized.   At the end of the twelve weeks we hope to provide management with all the specific answers to the questions that were submitted prior to the start of the project.

Step1

Assemble marketing team to assigning specific duties, and discuss time line as well as budgetary constraints.

Expected cost = $5000 (Travelling, meeting and entertainment expenses).

Step 2

Use available census data and company sales data to compile master list for the 18-24 and 65 and over age group in Columbus, Ohio.

Expected cost = $1000.

Step3

Devise a population sample plan for each group.

Expected Cost = $500.

Step 4

Use population sample to conduct three of surveys of the 18-24 and 65 and over age group using questions based on perceptions of Domino’s Pizza recipe, reasons for perceptions, favorite pizza, recipe changes of interest, complementary side items, delivery service quality, types of transaction, buying frequencies, reason for choosing Domino’s Pizza, income, family structure, preferred locations, mail order experience,

Expected Cost = $20,000.

Step 5

Draft customized letters with inserts base on survey outcomes and use direct mailing list to dispatch to target groups surveyed.

Expected cost =$20,000.

Step 6

Employ 12 Telemarketers to target both 18-24 and 65 and over age groups, offering discounts, coupons, quantity base offers, gifts packages, and  vacation packages if they make 4 or more purchases per month.

Expected cost= $30,000.

Step 6

Advertize Domino’s Pizza product range and service quality to entire Columbus, Ohio market, using e-mails, newspaper, strategic located billboards, on prime time television advertising spots, and on radio in a market saturation move.

Expected cost = $20,000.

Step 7

Dispatch service feedback cards with delivery drivers with incentives provided for each hundred delivered and returned from each delivery as well as free pizza for customers repeating their orders within each month.

Expected cost = $3000.

Step 7

Develop profile for each customer returning feedback cards using data warehouse system and create advertising strategies to improve sales in all segments identified from return cards.

Step 8

Make Test Plan compatible with Domino’s PULSE point of sale system through services provided by Domino’s computer experts and request maintenance services for the duration of the test.

Step 9

Conduct capacity measurement through marketing intelligence of Papa John, Pizza Hut and make comparison with Domino’s to see what modification can be made.

Expected cost = $3000.

Step10

Develop prototypes of delivery unit and recruit drivers to use them.

Use feedback to make changes and implement units gradually across Columbus, Ohio.

Expected cost =$5000

Step11

Collect reports from marketing team and analyze performance in both 18-24 and 65 and over marketing segments. Adjust marketing strategies where necessary and report to Domino’s management.

Step 12

Repeat steps 2 -7 for the next 6 weeks.

Step 13

Conduct second analysis submit report to Domino’s management with specific emphasis on cost incurred, goals achieved, present market status, and views regarding the sustainability of the project.

Total expected cost =$107, 500

Groupon Test

History of Groupon

In commenting on the history of Groupon, O’Dell (2011) reports that 2010 was the year for it to rise and shine, because although it did not reach the ubiquitous heights that Facebook attained, or became a household name, it certainly made huge waves in the past 12 months (reference to 2009).

According to O’Dell (2011), as competition in the daily deals space became more intense; Groupon blew its competitors out of the water, generating a startup of $6 billion acquisition offer from Google, which it found hard to reject.

The reason for Domino’s Pizza marketing failure in this regards then become difficult to understand, given the level of brand recognition, the success of Domino’s PULSE point of sales system, its enhanced ordering capability including pizza tracker, the financial position of the company, and the level of investment made in 2007 in online mobile ordering as well as its the 9000 stores the company had in 2009 to exploit the concept to the maximum.

However, O’Dell (2011) provided some of the possible external environmental marketing threats that face Groupon despite its global success. As dominant as the business was O’Dell (2011), infer, there were 200 copycats sites currently operating in the United States at that time, as well as a possible 500 open for business globally, including 100 in China alone.

The biggest threat to Groupon, which has to be noted while developing strategies for the Domino’s project, is Living Social Action.com, which raised $40m since being launched in July 2009, and as an indication of its marketing strength and competitiveness, its leadership has developed plans to double the number of cities it serves to 300 (O’Dell, 2011).

The success of Groupon industrially, according to Raice and Ovide (2012) have re- kindled memories of the dot.com era, but in Domino’s case, with emphasis on pizza that will reflect the changing taste of consumers in different marketing segments, a scientifically based trial effort, a greater level of knowledge regarding the competition, the threats, and challenges to expect, a second attempt may bear fruit, considering the level of expertise that will be involved and the monitoring  strategy that will involved.

Proposal

With respect to the Groupon Test at Domino’s Pizza Columbus, Ohio location, it is recommended that this project operate in isolation throughout the 12 weeks, so that it can be independently managed. Specially trained sales leaders will first be recruited and will operate much like telemarketers but with a different focus and shorter timelines.

The reason for this approach is based on Kotler (1999) theory. According to Kotler (1999), one of the most expensive marketing communication tool in a company is it sales force, especially when they are in the field travelling, hunting for prospects and keeping customers satisfied.

However, he infer, these personnel provide a company with the significant advantage of being more effective than advertisement and direct mail pieces. Additionally, according to Phillips and Rasberry (1997), where appropriate, the most direct and effective marketing stimulus is to contact customers by telephone or in person to inform them of some new offering.

In the training of these sales leaders, the philosophy of Cichelli (2011), which states that there are four components of a leadership system, and they are (a) the provision of an ambitious destination, (b) the allocation and application of resources, (c) the soliciting and securing of commitments, and (d) measurement of outcomes for improvement, will be applied.

It is postulated that this approach this time around, with the appropriate training that will be provided, will bring the results desired by the senior leaders of this Columbus, Ohio facility as well as up in the higher rungs of the national organizational structure.

Methodology

In order to ensure the project is successful, an analysis of the previous Groupon project will be done to ascertain its strengths, weaknesses, threats, especially in terms of competitors, the promotional activities pursued, financing provided, the level of staffing, the technological inputs, number of sites operated, quality of preparations made for the launch, leadership given, as well as its duration and why it was terminated.

Additionally, management and staff will be interviewed to generate feedback concerning this project, especially their attitude and interest regarding it, and the incentives if any that were provided.

Information gleaned will be used to develop strategies that will strengthen the operating process that will be designed.

Advertising strategies will be used based on the outcomes of the general survey done in the Test Plan, and it is our plan to use e-mails and direct mails, as well as the Domino’s Pulse system to generally lure customers to this project during the 12 weeks of operation.

Special request will be made to management to increase the production of specific pizza on the menu by 5% initially to cater for projected incoming demands, as a result of the effective advertising strategies that will be implemented.

The output of this plan will contribute to increase the carrying out capacity of the company, since the same set of delivery drivers will be used to supply these customers.

Groupon Projected Steps

Step1

Recruit and train 6 Sales Leaders for the project for three weeks.

Expected cost =$15,000

Step 2

Conduct a survey across all market segments using data from the census as well as internal consumer data to determine consumers taste for Domino’s products.

Expected cost = $2000

Step 3

Analyze results and make production request for 5% increase in production of these products initially for 6 weeks.

Step 4

Advertize these products to the general population using emails, direct mail, newspaper inserts, postal inserts, telephone, on delivery vehicles and by posters carried delivery men across Columbus, Ohio.

Expected Cost= $5000

Step 5

Make products instantly available on Domino’s PULSE point of sale system the moment the survey is completed so that sales opportunities are not wasted.

Step 6

Advertize program on college campuses, near high schools, in supermarkets, near post offices, on televisions and outdoor signboards near all highways leading in an out of the city.

Expected cost= $5000

Step 7

Offer gift cards to first time responders and cell phones to winners of quiz contest on radios and televisions.

Expected cost =$5000

Step 8

Secure feedback on sales performance through all advertising, telemarketing and other promotional channels after 6 weeks and measure outcomes against investment.

Step 9

Modify strategies where necessary and continue the program.

Step 10

Secure final reports from sales, analyze the results, and submit report to management responsible for the assignment.

Step 11

Transfer all relevant from Groupon to data warehouse for use in developing customer profiles as well as creating future customer specific advertising strategies to grow sales and market share in the QSR industry.

Final expected Groupon cost = $32,000

Final overall cost for both projects= $ 139,500

Conclusion

All things being equal both project should finish on time and under budget with the marketing goals of increasing the percentage of customers in the 18-24 and 65 and over age groups by 15 % within the 12 week period, as well as the re-establishment of Groupon as a viable strategy by Domino’s pizza to attract specific segments of the population on an ongoing basis.

In the future where replication of the strategy will be done, a number of the steps outline in both the Test Plan and Groupon can operate concurrently to improve the efficiency of the process,

Finally, it is recommended that a patent be taken out or this marketing strategy as the success of the company will be reported in the media, and attempts through marketing intelligence may be made by competitors to secure operating details for implementation.

Reference

Cichelli, D.J., (2011), The Sales Growth Imperative McGraw-Hill pp.14-16

Corporate Profile”, Domino’s Investor Relations (2010).

http://phx.corporate-ir.net/phoenix.zhtml? c=135383&p=irol-homeprofile/

Elliott, S., (2011), A Bright Forecast for Direct Marketing, New York Times http://mediadecoder.blogs.nytimes.com/2011/09/30/a-bright-forecast-for-direct-marketing/?ref=directmarketingassn 10/20/12

Gershenson, J.K. (2012), Prototype Testing NASA ESMD Capstone Design http://education.ksc.nasa.gov/esmdspacegrant/SmallSpacecraftCourse/15_Prototype%20Testing_NASA.pdf  10, 19/12

IBM Information Center (2012) Test Plan Task http://publib.boulder.ibm.com/infocenter/rqmhelp/v1r0m0/index.jsp?topic=%2Fcom.ibm.rational.test.qm.doc%2Ftopics%2Fc_planning_overvi, 10/19/12

Kotler, P. (1999). Kotler on Marketing The Free Press New York NY p.112

Lambian, J-J. , (2007), Direct Marketing Market Driven Management Supplementary Palgrave Mac Millian www.palgrave.com/business/lambian/students/pdfs/Note%2011.pdf 10/18/12

Liu, Y., Yang, R., (2009). “Competing Loyalty Programs Impact of Market Saturation, Market Share, and Category Expandability” Journal of Marketing Vol.73 pp93-108

McDonald, M., (2002), Marketing Plans Butterworth-Heinemann Woburn MA pp.469-473

O’Dell, J., (2011), The History of Groupon   Forbes www.forbes.com/site/mashable/2011/01/07/the-histroy-of-groupon/ , 10/20/12

Phillips, M., Rasberry, S., (1997). Marketing without Advertising Nolo Press Berkley CA p.12.5

Pizza Power Report, (2009). PMQ Pizza Magazine, September 2009, www.pmq.com/

Sauber, M.H., Marold, D.A., Anderson, A., (N.D) Domino’s Pizza: Growing Sales with Technology The IMC Handbook Case # 8 Eastern University of Michigan