Pizza Hut Working With Pg Final

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Title of the term paper

Developing a marketing plan on Pizza Hut.

Company

Pizza Hut-Bangladesh

Group Name: CREATIVE

“We like to satisfy but love to create first”

Group Members: I. D Numbers:

1. Azmir Hasnat……………………………………...….0720153

2. S. M. Riffat Wahid…………………………………….0610094

3. Badrul Hasan…………… ………………………..….. 0620224

4. Md. Shahadat Hossain Emon…………………..….....0720257

5. Mehedi Jannat……………….…….…………………..0720395

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Letter of Transmittal

19th April 2009

Noorjahan Parvaz

Department of Business Administration

Independent University, Bangladesh

Subject: Submission of Marketing Plan of Pizza Hut. Dear Madam,It is an honor and great pleasure for us to present our marketing plan report on Pizza Hut.

During threw process of constricting our assignment on Pizza Hut, we had the chance of

experiencing and rediscovering our potential. This marketing plan gave us an opportunity to

apply our theoretical expertise, sharpies our views ideas and communication skills and bride

them with the real world of practical experience, which will be good start for our future

professional career.

We hope you will find the term paper presented in an appropriate manner. We deeply appreciate

your cooperation.

Thanking you and looking forward to receive your cordial approval of your submission.

Sincerely

Members of group:

1. Azmir Hasnat ID# 07201532. S. M. Riffat Wahid ID# 06100943. Badrul Hasan ID# 06202244. Md. Shahadat Hossain Emon ID# 07202575. Mehedi Jannat ID# 0720395

School of business Independent University, Bangladesh

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Acknowledgment

The successfully accomplishment of this assignment is the outcome of contribution and

involvement of a number of people, specially those who took time share their thoughtful

guidance and suggestion to improve the assignment .At the beginning we would like to

pay our gratitude to the almighty for giving us ability to work hard under pressure.

We have deepest gratitude to our respected course instructor Noorjahan Parvez. We are

thankful to her for her continuous support and supervision, suggestion, providing us with

valuable information that was very much need for the completion of this marketing plan

for a new product. We also thankful to the several employees of Pizza Hut who gave us

sufficient information of the company when we demanded to them.

Finally, our sincere gratitude goes to our classmates who helped us whenever we needed.

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Executive summary:

Pizza Hut, a world famous franchise international fast food

chain has been in operation in Bangladesh for more than

one year. They have started their operation in Bangladesh at

the end of 2003. Since then, they have been able to attract a

wide range of customers especially from the elite society.

Some of their mouthwatering menus include the famous

‘Pan Pizza’- pizza made on a flat pan with delicious

toppings of mushrooms, capsicum, beef and bar-b-que chicken. Even though there were

several fast-food stores operating in Dhaka city, they in fact focused on a bit of every

item. Pizza Hut is the first of its kind to concentrate only on pizza. Introduction of

Pizza hut in Bangladesh has generated a fairly tough competition among the reputed and

existing fast-food stores in Dhaka city.

Our report focuses on the situation analysis of pizza Hut, international competitiveness

and a thorough analysis of the marketing strategy in terms of Mission, Marketing

Objectives, Financial Objectives, Target Market (s), Strategies, and Marketing Mix which

includes price, product, place and promotion. The report also focuses on customer

relationship management and offers recommendation to improve customer equity and

customer relation.

Finally an assessment on Pizza Hut’s SWOT analysis, five forces of industry

competitiveness are provided. In the course of this report, we have discovered that there

are more to learn in the real life business scenario and that it differs from the text book

information in several ways.

http://en.wikipedia.org/wiki/Franchising

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Table of Contents

IndexContents Page #

01. Introduction---------------------------------------------------------------------------- 07

02.Company Background------------------------------------------------------------ 07

03.Pizza Hut in Bangladesh------------------------------------------------------- 08

04.Situation Analysis: The

Company----------------------------------------------------------------- 10

Existing products----------------------------------------------------------- 11

New products----------------------------------------------------------------- 11

Market Summary: The

market------------------------------------------------------------- 12

Market Demographics---------------------------------------------- 13

Geographic------------------------------------------

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----------- 13 Demographic----------------------------------------

---------- 13 Behavior

Factors--------------------------------------------- 13

Target Market and Segmentation------------------------------ 14

Market

analysis----------------------------------------------- 15

Market Needs---------------------------------------------------------- 16

Market Trends--------------------------------------------------------- 17

Market

forecast----------------------------------------------- 18

Market growth--------------------------------------------------------- 18

Target market growth

graph----------------------------- 19

SWOT analysis-------------------------------------------------------------- 19

Strengths----------------------------------------------------------------- 20

Weaknesses----------------------------------------------------------- 21

Opportunities---------------------------------------------

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----------- 22 Threats-----------------------------------------------------

-------------- 23

Competition-------------------------------------------------------------------- 23

Growth and share analysis--------------------------------------- 24

The five forces of industry competitiveness---------------- 24

Total revenue of global competitors--------------------------- 27

Product Offerings------------------------------------------------------------- 27

Key to success------------------------------------------------------------------ 29

Critical issues------------------------------------------------------------------- 29

05.Marketing Strategy: Mission----------------------------------------------------------

------------------ 30

Marketing objectives and goals------------------------------------- 30

Financial objectives-------------------------------------------------------- 31

Branding and Positioning---------------------------------------------- 31

Marketing Mix----------------------------------------------------------------

8

33 Product----------------------------------------------------

---------------- 34 Price--------------------------------------------------------

---------------- 37 Place-------------------------------------------------------

----------------- 41 Promotion------------------------------------------------

--------------- 42

Customer Relationship Management (CRM)--------------- 44

Ethical and Social Responsibilities------------------------------ 47

Marketing Research------------------------------------------------------- 48

06.Financial Analysis: Break-Even

Analysis------------------------------------------------------50

Sales Forecast------------------------------------------------------------------ 79

Expense Forecast------------------------------------------------------------- 83

07.Conclusion-------------------------------------------------------------------------------- 84

08.References-------------------------------------------------------------------------------- 84

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PIZZA HUT-BANGLADESH 01. Introduction:

The urban community in Bangladesh has always longed for a reputed fast-food chain to

be in operation in this country, which add an extra

dimension to the city life and would also facilitate a

particular segment of the community to ‘hang out’ in

their free time. By opening a franchise store in Dhaka

city, Pizza Hut has fulfilled the long-term dream of the

city dwellers. They started their operation in Bangladesh

at the later part of 2003. In our report, we have talked

about the preliminary operation of Pizza Hut in Dhaka and how they have planned their

marketing.

02. Company Background:

Pizza Hut started its journey in a busy locality in Wichita, Kansas USA in the year 1958.

It was the idea of two college students and also brothers, Dan and Frank Carney who

started the business with a capital of $600 borrowed from their mother. 1959 Pizza Hut is

incorporated in Kansas and the first franchise unit opened in Topeka, Kansas. In 1971

Pizza Hut became the number one pizza restaurant chain in the world on both sales and

number of restaurants. Pizza Hut got their big break in 1977 when PepsiCo by 3000 U.S

units, bought them out. The Pizza hut management took a philanthropic effort when they

employed 10,000 disabled people in different positions in the organization under the ‘Job

Plus’ program. 1997 On October 6, 1997, Tricon Global Restaurants, Inc. was formed as

a result of a spin-off from PepsiCo Inc. of the three restaurant concepts - Pizza Hut, KFC,

and Taco Bell. Pizza Hut launched "Totally New Pizzas", a quality initiative putting

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sliced, fresh vegetables and meatier meat toppings on pizzas. Currently they have 12,500

restaurants across 91 countries. Today, they are the highest-flying brand of 'Yum!

Restaurants International’. The franchises of Pizza Hut are spread all around the world

covering major parts of the Northern hemisphere namely USA, Canada, Ireland, U.K and

other major European cities. Currently Pizza Hut is the recognized leader in the fast-food

business with a global asset of $25 billion. Every year, Pizza Hut uses more than 700

million pounds of flour, 525 million pounds of tomatoes and 700 million pounds of

pepperoni. If all those pepperoni slices were laid side by side, they would stretch around

the world twice and go to the moon!

Their introduction into the subcontinent started when they came to India in 1996. From

then onwards, they have been doing very productive business with excellent promotional

campaigns.

03. Pizza Hut in Bangladesh:

Pizza Hut moved into Bangladesh with the motto of ‘Think global and act local’ and

their observed marketing activities totally agree with this motto.

Pizza Hut started its operation in Bangladesh on the 6th of December 2003 under the

banner of Transcom Food and Beverages (LTD) a concern of Transcom group Ltd, with

the head operation of Bangladesh, Mr. Akku Chowdhury.

‘Pizza Hut’ always maintains good quality service. They know what the customer wants

and are also aware of the customers’ desired service. They are also aware of the

customer's desired service. That is why the management and the employees are always

trying to deliver the service that the customer desires from them. In this way, they believe

that they would be able to maintain the topmost position in Bangladesh and thus giving

them an upper hand over their competitors.

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The outlet, with a seating capacity of 220 persons, is located on South Avenue, Gulshan

1. Covering an area of 6000 sq ft, it is one of the largest Pizza hut in Indian subcontinent.

This is the first of a total of five outlets that they plan to open in the country over the next

three years. In all the outlets that they are planning to open, they are relentlessly trying to

promote the sense of ‘Family Pizza Place’ - a perfect outing place for any family.

The main mission of Pizza hut Bangladesh is to serve the best pizza to any pizza lovers

and also other customers. However, for the sake of proper commercialization, they have

focused mainly on the upper middle class and higher-class residents of the Dhaka city.

They have also targeted the foreigners residing in Bangladesh as their customers.

Starting with this mission, Pizza hut Bangladesh won the excellence award for the year

2004, being the best restaurant all over the subcontinent. The

award has been given to Mr. Akku Chowdhury and the whole

Pizza Hut team, Bangladesh.

The success of Pizza Hut relies heavily on delighting customers

by ensuring that all their needs and desires are met in every

way. Hence, they give strong importance to their marketing

efforts to ensure that Along with customer satisfaction, they make sure, that the business

makes money! Therefore, the first task is to understand their consumers from every

aspect.

In this regard, they have tried to gain a thorough understanding of their competitive

environment and continuously strive to develop unique business ideas to make their

business a success. Thus, Pizza hut has successfully attained a broad range of loyal

customers, to whom pizza has gained extreme popularity. In order to expand this range,

their marketing team is involved in developing new products and concepts, all the time.

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Above all, not only do they make GOOD FOOD,

they are also famous for providing great service and

dining experience, to give their valued customers

more reasons, to return.

04. Situation analysis:

The Company: A brief information about the company are given below:

Company Name: Pizza Hut-Bangladesh

Company Type: Franchise.

Ownership: Transcom Food and Beverages (LTD).

Parent brand: Yum! Brands.

Industry: Restaurants.

Type of Product: Pizza

Brand Icon:

Website: www.pizzahutbd.com

http://www.pizzahutbd.com/

http://en.wikipedia.org/wiki/Restaurants

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Existing products:

Pizza Hut-Bangladesh is passionate about making and serving the best pizzas just like its

other global franchises. Over the year, Pizza Hut has delighted customers with a variety

of innovative pizzas. Pizza Hut sells pizzas in four different sizes: personal (an individual

serving), small, medium and large, though most stores have done away with the small

size. The menu of Pizza Hut in three branches in Bangladesh which are located at

Gulshan, Dhanmondi and Chittagong is same. Existing product of Pizza hut in three

branches are given below:

Pan Pizza.

Italian Pizza.

Thin ‘n’ Crispy.

Stuffed Crust.

The Big New Yorker.

The Sicilian Pizza.

The Hand Tossed Pizza.

New products:

Recent products of Pizza Hut of Bangladesh are given below:

Seafarer: Shrimps, tuna, tomato chunks and mozzarella cheese. A true seafood

lover's blend of tuna and shrimps sauteed with herbs and garlic covered with

tomatoes and cheese.

Seafood Symphony: Shrimps and red paprika with mozzarella cheese. Shrimps

sauteed with herbs and garlic topped with red paprika and mozzarella cheese.

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The Works: Beef pepparoni, chunks of beef, BBQ chicken and chicken topped

with onions, mushrooms, black olives, capsicum and mozzarella cheese.

Beef Supremo: Beef pepperoni topped with beef chunks oozing with mozzarella

cheese; a delight for beef lovers.

Market Summary:

The Market: The market of Pizza hut in Bangladesh is not very competitive in

Bangladesh. The only large one competitor is Domino’s which has several outlets

in Dhaka. Pizza hut has the large market share as well as the customer share in

Bangladesh. This company is not only a local company; it is very wide and big

enough to meet their customer needs. It has very few competitors in local market

but there are many competitors in global market. Pizza Hut of Bangladesh is

considering socially elite people as their target market. That’s why they establish

their two outlets in two aristocratic areas in Dhaka which are Dhanmondi and

Ghulshan.

Market Demographics: Market demographics generally consist of three

factors. They are listed below- arosacative

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Geographic: Considering geographic target area in Bangladesh,

Pizza Hut targeted Dhanmondi and Ghulshan in Dhaka as the people

of these areas are status sensitive. Pizza Hut also targeted Chittagong

as they have an outlet there.

Demographic: Pizza Hut of Bangladesh always focuses on

teenagers. They encourage teenagers by offering many discounts and

allowance. Pizza Hut also targeted high income and social class and

educated people as a demographic segment.

Behavior Factors: Bangladesh is full of occasions. Bangladeshi

people have PAHELA BOISHAK, Valentine’s Day, Birthday

parties, and many celebration parties. So, Pizza Hut of Bangladesh

can use of these opportunities. They can deliver quality pizzas to the

special occasion. Customers of Pizza Hut are willing to pay a

premium for higher quality, tastier Pizzas. There is a value attributed

to the more attractive presentation of a salad mix and many more.

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Target Market:

The target market strategy is undifferentiated. It means that they do not target any

specific type of customer. Pizza hut started its journey with the focus of serving families

mainly but they cater to people of all age group. Most of the male and female come in

groups of friends.

In fact the management claims that their target customers would be anybody who loves

pizzas. Since it is quite impossible to focus on the entire target group, they have limited

their attention to the foreigners living close to the diplomatic zone and the teenagers

who come from an elite society. However, for the sake of proper commercialization,

they have focused mainly on the upper middle class and higher-class residents of the

Dhaka city. All the customers are coming both individual and with family or group

and many pizzas are also taken out. They have also targeted the foreigners residing in

Bangladesh as their customers. Their main focus is on offering a food that is made by

fresh ingredient.

The market can be segmented into three target populations:

Individuals: people that dine in by themselves.

Families: a group of people, either friends or a group of nuclear relatives dining

together.

Take out: people that prefer to eat Pizza Hut’s food in their home or at a different

location than the actual restaurant.

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Market Analysis:

Years 2004 2005 2006 2007 2008

Potential Customers Growt

hCAGR

Individuals 8% 13000 14500 15000 16000 18000 8.4%

Families 9% 9500 10000 10500 12000 13500 9.0%

Take out 10% 25000 26500 28000 32000 36500 10.0%

Total 8.9% 48000 51000 53500 60000 67500 8.9%

CAGR of Individuals: {(18000÷13000) (1÷4) -1}*100=8.4%

CAGR of Families: {(13500÷9500) (1÷4) -1}*100=9.0%

CAGR of Take out: {(36500÷25000) (1÷4) -1}*100=10.0%

CAGR of Total: {(67500÷48000) (1÷4) -1}*100=8.9%

NOTE: CAGR=Compound Annual Growth Rate.

http://www.mplans.com/sample_marketing_plans/Pasta_Restaurant_Marketing_Plan/Target_Markets.jpg

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Market Needs: Regionally ‘Pizza Hut of

Bangladesh’ is facing different market needs. As

Pizza Hut of Bangladesh is targeting social elite

people, they have to provide high quality as the

customers needs. On the other hand, Pizza hut also

targeted teenagers. The teenagers are always

looking for tasty, stylish and delicious product at a

minimum price. So, Pizza Hut have to be flexible in

quality and price and design of the product. Pizza

Hut satisfies socially elite people by delivering different kinds of products with

different designs or features with very high quality. But for the teenagers, pizza

hut arrange many discounts, allowance and many unique offers.

Pizza Hut provides high-quality pizza to their customers. They seek to fulfill the

following benefits that are important to their customers.

Selection: A wide choice of different Pizzas and other products with the

flexibility.

Accessibility: In Dhaka, there are two big outlets in getable places and

there is another huge outlet in Chittagong.

Customer service: Pizza Hut provides the customers high qualified

service. They always try to impress their customers with the level of

attention of needs.

Competitive pricing: All products are priced competitive to true

substitutes with many discount offers.

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Market Trends: The market trend for Pizza Hut is headed toward a more

sophisticated customer. The restaurant customers today relative to yesterday is

more sophisticated in a number of different ways.

Food quality: The preference for high-quality ingredients is increasing as

customers are learning to appreciate the qualitative differences.

Presentation/appearance: As presentation of an element of the cooking

experience becomes more pervasive, customers are learning to appreciate

this aspect of the industry.

Health consciousness: Bangladeshis are becoming more aware of their

health, evidenced by the increase in individuals exercising and health club

memberships, customers are requesting more healthy alternatives when

they eat out. They recognize that an entree can be quite tasty, and

reasonably good for you.

Selection: People are demanding a larger selection of foods, they are no

longer accepting a limited menu.

The reason for this trend is that within the last couple of years the restaurant offerings

have increased, providing customers with new choices. Pizza Hut customers no longer

need to accept a limited number of options. With more choices, customers have become

more sophisticated.

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Market Forecast:

Market Growth:

In 2002, the market of Pizza Hut reached at

$8 billion dollars. Pizza sales are estimated

to grow by at least 10% for the next few

years. This growth can be attributed to

several different factors. The first factor is an

appreciation for health conscious food.

While not all pizza is "good for you,"

particularly the cream based sauces, pizza

can be very tasty yet health conscious at the

same time. Pizza is seen as a healthy food because of its high percentage of carbohydrates

relative to fat.

Another variable that is contributing to market growth is an increase in the number of

hours their demographic is working. Over the last five years the number of hours spent at

work of their archetype customer has significantly increased. As the number of work

hours increases, there is a high correlation of people that eat out at restaurants. This is

intuitively explained by the fact that with a limited number of hours available each day,

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people have less time to prepare their meals and eating out is one way to maximize their

time.

Target Market Growth

SWOT Analysis:

SWOT stands for Strengths, weaknesses, opportunities, and threats. SWOT analysis

reveals the internal strengths and weaknesses and external potential opportunities and

threats of a firm. The SWOT analysis of Pizza Hut will give us the overall profit potential

of this firm. Our SWOT analysis has tried to focus on the controllable factors that Pizza

Hut has already taken into consideration.

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Strengths:

The brand image of Pizza Hut is presumed to be one of the greatest strength they

possess. The customers of Bangladesh are easily attracted by the brand image of

the Pizza Hut.

As a successful international food chain Pizza Hut knows how to blend with the

different cultures across the globe. This is the story behind the international

success of this company and considered one of the greatest strengths of Pizza Hut.

The strictness of the procedure to acquire and retain the franchising of Pizza

Hut is one of the strengths of the company. Through this the franchisees will be

able to maintain the quality of food and the quality of service thus the customers

will get the maximum satisfaction with the touch of international hospitality.

In Bangladesh, the location of Pizza Hut can also be regarded as one of its prime

strengths. Elite members of the society, one of their target audiences, frequently

visit Gulshan Avenue and the eye-catching exterior decoration of the franchise

makes people to stop for a while and take a look inside. As they move inside, they

do not usually leave without having a bite. Also the floor space is another

encouraging aspect of it.

An educated and smart group of young energetic employees has added to the many

plus points of Pizza Hut. Their sober behavior and efficient way of handling

customers has certainly added value to the franchise.

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Pizza Hut has been to be a division of PepsiCo since 1977 and now an integral part

of Tricon. It is the world's largest pizza restaurant as outlined above. It has a good

reputation and a good branding. It can raise the profile of the company to gain the

ability to sell at higher price, to recognize its products through the corporate image

and to launch new products more easily.

Pizza Hut also offers a sit-down, conversational type restaurant where families can

take their children for birthday parties for example.

Pizza Hut's broad selection of products also makes it easier for them to market to

different market segments.

Weaknesses:

Globally, Pizza Hut faces one major problem and that is the internal conflict

between the franchisees. Such problems are widespread when there is more than

one franchise of the same company in the same country.

The franchising fee of Pizza Hut is very high as the money has to come from

franchisee’s own pocket. This has an adverse effect on the pricing of its products

in Bangladesh which is a quite high comparatively. This high price acts as a

barrier of tapping into the full market potential of Bangladeshi consumers.

Due to heavy traffic congestion in Dhaka city and there is only two outlet of Pizza

Hut, it is not possible to deliver hot pizza in 30 minutes. As a result, there is no

home delivery service like the other fast food shops for examples – Domino’s

Pizza, Subcity.

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Unavailability of quality raw materials in Bangladesh is a big weakness to be

considered which affects the price and quality of the product.

The initial set up cost is too high to invest for an investor in this country which

increases the risk of the project.

They are yet to develop any specific meals for the children like the other fast-food

chains in Dhaka.

Very weak promotional campaign can also be regarded as one of their major

weaknesses. People expect that such a large multinational franchise would be

creative in their promotional approaches. But when their advertisements are very

rarely seen in the newspaper and are not aired on the T.V where their main

competitor “Domino’s” telecasting ads very frequently.

Opportunities:

The demand for Pizza Hut is here in Bangladesh among the young generation

and this is the best opportunity for Pizza Hut to increase their profitability here and

capture a very big market share.

Another opportunity that Pizza Hut can have is introducing a new ordering

online system. Anyone with Internet access can order whatever they wish and get

it delivered to their house without even speaking to someone.

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The cheap labor cost in Bangladesh acts as a very good opportunity for Pizza

Hut as they can run the business relatively at a lower cost in spite of the huge

initial set up cost with high franchising fee.

Threats:

Pizza Hut's number one threats are from their competitors. Currently, their closest

competitor is Domino's Pizza. Domino's main competitive advantage over Pizza

Hut is their price. It is generally lower than Pizza Hut. Also, Domino's was very

profitable when they ran the promotional deal of delivering a pizza at home.

Recently created ‘Jamuna Future Park’ there will be the first outlet of

MacDonald in Bangladesh which is a global competitor of Pizza Hut. So, this

can be a big threat for Pizza Hut of Bangladesh.

The other competitors who are considered as threats for Pizza Hut for delivering

quality of food and service and also with the experience of international market

includes, KFC, Nandos etc.

Competition

Competition of Pizza Hut is competitive even though they are operating their operation as

a market leader of the Pizza market. Their main and direct competitor in Bangladesh is

Dominos. Dominos has several outlets throughout the Dhaka. They also provide quality

Pizzas at a competitive price. But they have less option regarding the menu comparing

with Pizza Hut. Another competitor is pizza corner. It has one outlet in Dhaka. It has low

option in terms of menu and low quality comparing with Pizza Hut. Other indirect

competitors are Nandos, KFC, BFC, Helvetia, and so on.

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Growth and Share Analysis: Growth and Share

Competitors Price Growth Rate Market Share

Dominos (Pizza) BDT 165(Min.) 8% 20%

Pizza Corner (Pizza) BDT 120(Min.) 7% 15%

Other BDT 50(Min.) 7% 30%

Average BDT 111.67 7.33% 21.670%

Total BDT 335.00 22.00% BDT 65.00%

THE FIVE FORCES OF INDUSTRY COMPETITIVENESS

The five forces that determine industry competitiveness are:

BARGAINING POWER OF BUYERS

BARGAINING POWER OF SUPPLIERS

THE NEW ENTRANTS

THE THREAT OF SUBSTITUTES

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RIVALRY

BARGAINING POWER OF BUYERS:

All companies when entering into a foreign market predicts the likelihood of maintaining

their customers. In the market of Bangladesh, Pizza Hut has a number of competitors,

such as Domino’s Pizza, Pizza Corner, Wimpy, KFC, Helvetia, King’s Confectionary etc.

So to attain a large market share the company is trying to offer competitive prices and

carry out extensive promotions. Since Pizza Hut offers a wide variety of items it also

helps the shop to attract a larger number of customers, where they can get quality meals

for themselves.

BARGAINING POWER OF SUPPLIERS:

All companies when entering into a foreign market looks at the power of the industry’s

suppliers to see if it can gain a competitive advantage in the market. In this case, the

franchiser of Pizza Hut is trying to build up a supply chain that is necessary to maintain

production. But till to date the franchiser is fully responsible for supplying the materials

to Pizza Hut in Bangladesh.

THE NEW ENTRANTS:

Entry of Pizza Hut in the market of Bangladesh had opened up an opportunity for new

firms such as McDonalds, Barista café, House of Doughnuts, Dunkin Doughnuts entering

the industry. Pizza Hut will continuously try to determine the impact they might have on

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their company. So to deal with such new entrant’s pizza Hut will keep their prices

competitive and high customer loyalty by maintaining the quality of their products. On

the other hand having a strong brand image and product differentiation Pizza Hut will

also act as a threat to the new entrants in the market.

THE THREAT OF SUBSTITUTES:

Pizza Hut is always considering the availability of substitute goods, such as burgers,

shawrma, chicken fry etc offered by various international fast food chain, hotels, and

restaurant and anticipate the reactions of their customers. So to offset such competitive

forces they are trying to keep the prices competitive, which will help them to maintain the

existing customers. Their product differentiation is also helping them to avoid the threats

of these substitutes.

RIVALRY:

Pizza Hut to maintain competitiveness is examining the rivalries that currently exists

between themselves and the competitors and seek to anticipate future changes in this

arrangement. There are a number of rivals for Pizza Hut, such as Domino’s Pizza, Pizza

Corner, Wimpy, KFC, Helvetia, King’s Confectionary etc. Common strategies that Pizza

Hut must use to maintain and increase their market strength include:

Increasing productivity by training the workers. A trained workforce will mean

more efficiency, thus reducing overall costs.

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Differentiating current goods and services from those of the competition through

quality and competitive pricing.

Providing a spacious homely and calm atmosphere in their store so that customers

feel the urge to frequently visit the place.

Revenue of global competitors:

Product Offering:

Pizza Hut provides the perfect mix of great food, great service and great place at a great

value to their customers who are looking for a grand experience. They believe in positive

intension, and maintain a strong internal environment by developing their competitive

work force, which they trust. The latest technological tools along with the best support

systems from their franchiser YUM! International is used to ensure easy workflow and to

make their restaurants the favorite in the Country. Pizza Hut-Bangladesh is passionate

about making and serving the best pizzas just like its other global franchises. And that

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includes going to any length to make the customer’s experience with Pizza Hut an

enjoyable one. The signature pizza crusts at Pizza Hut are Pan Pizza, Italian Pizza, Thin

‘n’ Crispy, Stuffed Crust, the Big New Yorker, the Sicilian and the Hand Tossed Pizza.

Initially, two of these crusts are being served at the new outlet in Dhaka – Pan Pizza,

which is golden brown and crisp on the outside, and light and fluffy on the inside; the

Italian Pizza, made with a traditional Italian sauce, with a thin and crispy crust.

Other than pizzas, Pizza Hut also offers a range of Soups, refreshing Beverages, Pasta,

Shrimp cocktail, Chicken Calypso, Shrimp and Chicken Mushroom, fresh and crispy

fruits and vegetables (and dressings) at the Salad Bar, and delightful Desserts.

They produce the food on the basis of order. They try to deliver the production as quickly

as possible.

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Keys to success:

Some key points by which Pizza Hut –Bangladesh is taking the taste of success are

given below:

Cleanliness

Hospitality

Accuracy

Maintenance

Product

Speed

Critical issues:

Globally, Pizza Hut faces one major problem and that is the internal conflict between

the franchisees. Such problems are widespread when there is more than one franchise of

the same company in the same country. The franchising fee of Pizza Hut is very high as

the money has to come from franchisee’s own pocket. This has an adverse effect on the

pricing of its products in Bangladesh which is a quite high comparatively. Pizza Hut's

opportunities are almost endless. Unavailability of quality raw materials in

Bangladesh is a big weak spot to be considered which affects the price and quality of the

product. Their prime weak point is the lack of home delivery service like the other fast

food shops for examples – Domino’s Pizza. Very weak promotional campaign can also

be regarded as one of their major disadvantage. Currently, their closest competitor is

Domino's Pizza. In the Jamuna Future Park there is a possibility of opening Domino’s

Pizza and brand new outlet of MacDonald.

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05. Marketing Strategy:

Mission:

“Think Global, Act Local”- with this motto Pizza Hut, Bangladesh dedicated its

resources and offered excellent service in providing delicious pizzas and at the same time

achieving customer’s satisfaction. Their mission statement is given below:

‘Pizza Hut provides the perfect mix of great food, great service and great place at a

great value to our customers who are looking for a grand experience. We believe in

positive intension, and maintain a strong internal environment by developing our

competitive work force, which we trust. The latest technological tools along with the

best support systems from our franchiser YUM! International is used to ensure easy

workflow and to make our restaurants the favorite in the Country.

Marketing Objectives and Goals:

The marketing objectives of Pizza Hut of Bangladesh are given below:

To hold the number one marketing position in the fast-food industry in

Bangladesh.

Be recognized chiefly for providing quality products, excellent care and

satisfaction to the customer.

To increase the number of pizza sales by increasing the number of outlets in

Dhaka city as well in other profitable parts of Bangladesh.

Successfully open two more outlets in Dhaka city in areas like Uttara and

Dhanmondi in the next 2 years and also in Sylhet.

To open a kid’s zone and serve meals specially designed for kids.

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Financial objectives:

The financial objectives of Pizza Hut of Bangladesh are given below:

Increasing gross profit by at least 10% by every year.

Pizza Hut plans to roll out another 3 outlets in Bangladesh within next 3 years.

Accelerating the internal growth through the development of more innovative product.

Increasing growth rate at least 10%.

Keeping sufficient amount of money for advertisement in mass media.

To gain 70% of the market for pizza industry by 2010.

Maximizing long-term return to shareholders while being mindful of their

overall responsibities

To achieve a 25% return on capital employed by 2011.

Branding and positioning:

Pizza Hut has been very successful in positioning their brand name in the target

customer’s mind. The only things that Pizza Hut accomplishes while brand positioning is

that it has a superior product attribute. They can give a unique taste and experience when

one visits Pizza Hut. Pizza Hut positions themselves with strong benefit attribute by

giving excellent service within convenient time. The strongest attribute in brand

positioning - beliefs and values, does not have so much to do with Pizza Hut. All they can

do is make the consumers believe that they are given extra care and importance. Other

than that, eating pizza doesn’t actually make you feel more important or attractive.

34

Pizza Hut was very careful when it selected its name. The name “Pizza Hut” was named

keeping in mind all the crucial aspects needed to name a company in order to be

recognized in consumer’s mind. An important part of branding is that the name itself

should by itself inform the consumer about what the company is all about. For this

instance anyone can identify that “Pizza Hut” has something got to do with pizzas.

“Pizza Hut” is easy to pronounce, recognize and remember. The brand name “Pizza

Hut” is distinct from most of its competitors (especially in Bangladesh). Another

important thing is that the name should be extendable – and “Pizza Hut” can be easily

extended to www.pizzahut.com. The name of a company should be easily translated

into foreign languages. In order to avoid any sort of dispute or dissatisfaction when the

name is translated giving any vague or indecent meaning is not probably possible with

Pizza Hut. Finally, “Pizza Hut” like it should be is registered and has legal protection. We

can say that “Pizza Hut” gave a lot of thoughts when selecting their name in order to have

a positive and long-lasting position in consumer’s mind.

Another important thing that should be noted is that Pizza Hut in its all outlets serves

only Pepsi Co beverages. This is another plus point why consumers are likely to

remember the brand name “Pizza Hut”, since Pepsi is a very well recognized brand by

itself and almost everybody knows about their product.

It is quite easy for Pizza Hut to introduce additional items to their product category under

the same brand name, such as new flavors, forms, colors, ingredients, or package sizes.

The vast majority of all new-product activity consists of line extension.

After having a positive brand positioning in consumer’s mind Pizza Hut has been quite

successful managing their brand. They offer the same quality and gives higher priority to

all consumers throughout the world. For all these reasons Pizza Hut has been able to

serve so many consumers for such a long time and hopes to do the same in the future.

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Marketing Mix

Pizza Hut marketing mix is comprised of the following approaches to product, pricing,

promotion, distributing. The marketing mix concept is regarded as a set of controllable

variables at the disposal of marketing management that can be used to influence

customers

Product: Price:

Variety List price

Quality Discounts

Design Allowances

Features Payment period

Brand name Credit terms

Packaging

Services

Target customers

Intended positioning

36

Promotion: Place:

Advertising Channels

Personal selling Coverage

Sales promotion Assortments

Public relations Locations

Inventory

Transportation

Logistics

Pizza Hut has been able to attract a wide range of customers in Bangladesh especially

from the elite society. Pizza Hut is the first of its kind to concentrate only on pizza. Our

report focuses on the basic marketing research, international competitiveness and a

thorough analysis of the marketing strategy in terms of price, product, place and

promotion and suggests ways to improve the 4Ps. There objective is compete on quality

not compete on price. They have achieved this by a quality initiative putting sliced, fresh

37

vegetables and meatier meat toppings on pizzas. Pizza Hut moved into Bangladesh with

the motto of ‘Think global and act local’ and their observed marketing activities totally

agree with this motto. ‘Pizza Hut’ always maintains good quality service. They know

what the customer wants and are also aware of the customers’ desired service. That is

why the management and the employees are always trying to deliver the service that the

customer desires from them. In this way, they believe that they would be able to maintain

the topmost position in Bangladesh and thus giving them an upper hand over their

competitors. Pizza Hut-Bangladesh is passionate about making and serving the best

pizzas just like its other global franchises. They have focused mainly on the upper middle

class and higher-class residents of the Dhaka city.

Product:

The first and the only truly international chain restaurant in Bangladesh, Pizza Hut offers

the same great taste, wonderful dining experience and excellent service.

Since the majority of the population in Dhaka city is Muslim,

it is very important that Pizza Hut serves meals, which are to

be accepted by their respectful customers. The Pizza Hut team

needs to assure that the food served is HALAL since it really

does not matter in other countries whether the food is HALAL

or HARAM as long as the foods are hygienic.

Pizza Hut is offering different types of product. In planning its

marketing offering, the marketer needs to address five product levels. The product they

are offering must should have the core benefit, that the service or benefit the consumer is

really buying. Pizzas have the core benefit as because they are minimizing the hunger. At

the second level, the marketer has to turn the core benefit into a basic product. Pizza Hut

is offering pizzas that have vegetables and meatier meat toppings and so on. At the third

level, the pizza hut marketer is preparing an expected product (a set of attribution and

38

condition buyers normally expect when they purchase the product). Pizza Hut marketer is

offering fresh pizza which are made by fresh ingredients. At the forth level the marketer

prepares as augmented product that exceeds customer expectation. Anyone can easily

differentiate pizzas product from Dominos product. At the fifth level stands the potential

product, which encompasses all the possible augmentations and transformations the

product or offering might undergo in the future. Pizzas have this opportunity because any

time pizza marketers can add different features in the future.

The vast array of goods consumers can be classified on the basis of shopping habits. We

can distinguish among convenience, shopping, specialty and unsought goods. Shopping

goods are goods that the consumer in the process of selection and purchase,

characteristically compares on such bases as suitability, quality, price and style. In the

process of purchase of pizza consumers can easily compare the product with the

competitors based on quality. So pizzas are shopping goods. The product they are

offering is tangible.

Product attributes:

Developing a product or service involves defining the benefits that it will offer such as

product quality, product feature, product style and design.

Product quality: Ability of a Product to Perform Its

Functions; Includes Level & Consistency. Pizza Hut is

offering a certain level of quality all over the world and

any one is buying a pizza form Pizza Hut can expect a

certain level of consistency of the pizza.

39

Product Features: helps to differentiate the Product from Those of the Competition.

Anyone buying a pizza from Pizza Hut can easily differentiate the pizza from Dominos or

other competitors.

Product Style & Design: Process of

designing a product’s style & function. The

outlooks of pizzas are its design and if the

outlook has the benefit we call it design. The

outlook of Pizza Hut has some benefit as

though it can attract customers by its

delightedness.

Price:

40

Selecting the pricing objective:

Pizza Hut wants to maximize its market share by product quality leadership. The

company first decides where it wants to position its market offering. The clear a firm’s

objectives, the easier it is to set price. Pizza Hut wants to be the leader in the market of

the world. Survival was a short run objective for Pizza Hut; in the long run, Pizza Hut

learned how to add value or face extinction. Maximize current Profit is not the goal of

Pizza Hut in the short run. Some company wants to maximize their market share by

pricing low. They believe that low price will lead to higher sale and higher sales will lead

to lower unit cost and higher long run profit. But Pizza

Hut cannot offer lower price because they are offering

quality product. Companies unveiling a new

technology favor setting high prices to maximize

market skimming. Market skimming is where prices

start high and are slowly lowered over time. Pizza Hut

is using maximizing market skimming strategy. Pizza

Hut aim to be the product quality leader in the market.

They are offering high level of perceived quality and taste.

Determining Demand:

Each price will lead to a different level of demand and therefore have a different impact

on a company’s marketing objective. Price sensitivity reflects that in case of increasing

or decreasing price, what will be the response of the customers. Customers are very price

sensitive in case of specialty product, less price sensitive in case of convenience product.

Though pizzas are not specialty product nor convenience product, but shopping product,

the marketer has no chance of pricing high. They also can not charge low because they

are providing quality product. Most companies make some attempt to measure their

demand curves using several different methods. Companies use statistical analysis

41

method to measure their demand. Pizza Hut’s Pan Pizzas sales in 2010 will be 15000

unites, 2011 sales will be 17000 unites and 2012 sales will be around 19000 unites. Price

experiments can be conducted. Pizza Hut gives discount to see the responses of their

customers and found that sale increases in the discounted period. Another can be use that

is survey. Company can ask customers if the price will increase than what will the

customer do? Whether they will purchase the same quantity in case of price increase or

not? Marketers need to know how responsive, or elastic, demand would be to a change in

price. If demand hardly changes with a small change in price, we say the demand is

inelastic. If demand changes substantially with the change in price, than we say elastic

demand. Pizza Hut can change its price and then measure the elasticity. If demand is

inelastic, than they can increase the price of their product. Now we will consider the cost

of the company. Pizza Hut’s cost of the company can be divided into two parts, fixed

cost and variable cost. We measure detail those things in the financial part. Fixed cost

for 2010 will be 4700000 and variable cost will be 2000,000. Total quantity sale will be

70750. So their average cost will be 6700000/70750 = 94.70 per unit. Now we will

consider accumulated production for the Pizza Hut. Accumulated production is total

production. The decline in the average cost with accumulated production experience is

called the experience curve learning curve. After a long experience, which is gathered

from working a long time, they have now experience in making pizzas. They can produce

pizzas with lower cost than their competitors. So they can offer pizzas with lower cost

than their competitors. Activity based costing tries to identify the real costs associated

with serving the each customer. It allocates indirect cost like clerical costs, office

expenses, supplies, and so on, to the activities that use them, rather than in some

proportion to direct cost. Both variable and overhead costs are tagged back to each

customer. Pizza Hut should do their activity based costing correctly. Now we will

consider the markup pricing for Pizza Hut. Now we are considering mark up price for

Pan Pizza.

42

We assume that the desired return on sales is 45%.

Variable cost per unit tk. 61.6

Fixed cost (30% of unite sale) tk. 396000

Expected unite sales 15000 unit

The unit cost

= variable cost per unit + fixed cost / unite sales = tk. 88

Markup price for Pan Pizza = Unit cost/ (1-desired return on sales) = 88 / (1-.45) = tk.160

Though Pizza Hut sale directly to its customer, they can sale the product at tk. 180.

By using the same technique we calculate the mark up price of Italian pizza is tk.

190, Thin ‘n’ Crispy is tk. 150, Stuffed Crust Pizza is tk. 160, The Big New York is

tk. 160, Soups is tk. 80, refreshing Beverages is tk. 50, scrumptious Pasta is tk. 130,

fresh and crispy fruits and vegetables at the Salad Bar is tk 70, delightful Desserts is

tk. 45.

Perceived value pricing is that the marketer must deliver the value promised by their

value proposition, and the customers perceive this value. Pizza Hut using the other

marketing-mix elements, such as advertising and sales force, to communicate and

enhance perceived value in buyers mind. Perceived value of Pizza Hut is made up of

several elements, such as buyer’s image of product performance, customer support, and

softer attributes such as the suppliers reputation, trustworthiness. There are three types of

buyers for Pizza Hut, Price buyers, value buyers and loyal buyers. Pizza Hut need

different strategies for different buyers. Such as for price buyer Pizza Hut offering

striped-down product and reduced services. For value buyers Pizza Hut is keeping

innovative new value and aggressively reaffirming their value. For loyal buyers, Pizza

Hut is investing in relationship building and customer intimacy. Value pricing is for

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loyal customer company is charging low price for a high quality offering. Pizza Hut

cannot use everyday low pricing and high-low pricing. Because they do not has retailer.

They are selling their final product directly to their customer. But, they can keep lower

price because they are not bound for that to anybody. In going-rate pricing, the firm

bases its price largely on competitors’ prices. Pizza Hut is following going-rate pricing.

They are charging slightly high than their competitors because their image positioning is

high in minds of consumer. Auction type pricing is growing more popular, especially

with the growth of the internet. One major purpose of

auction is to dispose of excess inventories or used goods.

Pizza Hut needs to be aware of the three major types of

auctions and their separate pricing procedure. Currently

Pizza Hut is not using this type of pricing.

For holding marketing position, Pizza Hut is practicing

Psychological Pricing Strategy during promotions and other special occasions. The

authority can take steps to offer pizzas at an economy price (e.g. a price range of Tk. 80

to Tk. 100, (excluding the VAT). The ground for recommending this price range is, since

Pizza Hut can afford to offer pizzas during sales promotion at Tk.99, therefore it is

justifiable to offer pizzas at the above recommended price. The manager informed us that

this increases their profit margin by around Tk.40000.

Place:

If Pizza Hut wants to make significant profit out their operation in Bangladesh, like in

any other countries it is very important to position it in proper locations. Currently they

have their outlet in Gulshan-1, Dhanmondi and Chittagong, which is a very good

locations and have access from all parts of the country. The nearby roads and the

44

environment itself are satisfactory. Even though they have these outlets located in a very

good locations many people is unwilling to travel all the way from their home to have

pizzas because of the distance. So, Pizza Hut are planning to set up 3 more outlets in

different suitable position in Dhaka.

The distribution policy for Pizza Hut is that they distribute their final product to the

customer directly. Pizza Hut’s market coverage is the whole world. They use logistic

service level. They bring their ingredients from their supplier through different kind of

transportation. They collect their required ingredient from different source. They have

only upstream suppliers; they do not use any down-stream channel. They have chosen

the most favorable location to available their product to the final customer. They have

built long term relationship with their

suppliers.

Promotion:

Since the focus has been to develop a

product mix, which uploads the tradition

of Bangladesh, it would be wise to

promote this product through a campaign,

which would clearly emphasize on cultural values. Blending the western concept with the

local image will be a difficult task and at the same time not a very good approach for

marketing. Therefore, if Pizza Hut introduces or launches their new product during any

traditional festival that the Bengalis give value would be given higher priority. For

instance, rather than launching the product during any time, it would be better if the

45

product is launched on the occasion of “Pahela

Baishakh”. This can add a positive impact and people

would really trust to what Pizza hut means saying –

Think Global, Act Local. Since Pizza Hut does very

little promotions on T.V, most of the consumers have

heard about Pizza Hut mainly through friends and

relatives. Our survey showed that 51% of the IUB

students have heard of it from word-to-mouth sources

and 39% were informed through leaflets. The Pizza

Hut authority can take initiatives to air more number of

ads on the television and newspapers and also in attractive posters on selected magazines

could proved to be the best promotional tools for Pizza Hut. The ads on T.V should be

broadcasted in Channels like NTV, Channel I, Channel 1(one), and Bangla vision during

the time of 6pm – 11pm, which is considered to be the prime time for families.

One advertising promotion that Pizza Hut undertakes is, they distribute leaflets hand to

hand in front of universities like IUB, NSU, EWU, BRAC and AIUB etc, to attract more

and more students. In the month of March in 2008, Pizza hut provided the “Shadhinota

Offer” on the occasion of the Independence Day. Later, they decided to extend the offer

till the end of April because of the Bengali New Year coming up. The offer included one

personal pan pizza (PPP) for Tk 99 only. Such an offer was also given during the month

of Ramadan when customers were allowed to have ‘as much as they can’ paying Tk 200

only.

One of the main focuses of Pizza hut should be ‘home delivery’ service. This could gain

more customers. Promotion can also be done through direct marketing. Customers can be

provided special discounts on the Valentine’s Day, Christmas Day etc. The local

authority should keep in pace with all the current trends of the world and try to identify

46

the needs of the younger generation. In order to have a leading position, adapting the

ever-changing world is very crucial.

This is a very important tool for an acclaimed business organization like Pizza Hut

operating in a market like Bangladesh. So, Pizza Hut can improve its operations by

conducting a rigorous advertisement campaign. This is very important for Pizza Hut as

well as we all know that, a big portion of our target customer, the younger generation of

this country is well aware of Pizza Hut. So there can be any misconception among the

customers about Pizza Hut or about the food of Pizza Hut as they did not get the

information from any formal or official sources. So this is a big time for Pizza Hut to

stand strong and declare their standing on any issue through their promotion to avoid

these misconceptions (if any) among the target customers. This is also an opportunity for

Pizza Hut to acquire those customers of this country who are not at all aware of Pizza Hut

and that can be done through effective promotion.

The promotion plan for Pizza Hut is as follows:

Our advertising campaign is for 1 year. We want to divide our advertising into four

segments:

1st month intensive advertising with 360 degree approach

2nd month advertising with little less effort

3rd month advertising with minimum effort

After 3 months we will run ads on television channels and newspapers randomly to get in

touch with our customers. Between this time if there is any occasion and festival or any

new offer is introduced then there will be suddenly a lot of TV and news paper ads to get

the customers noticed about the offer.

Customer Relationship Management

47

One of the main reasons for Pizza Hut’s success is building close customer relationship.

The brand image of Pizza Hut helped it to gain eager consumers but their more than a

year journey was successful because of building profitable customer relationships by

delivering superior customer value and satisfaction. It is what Pizza Hut calls “Customer

Mania.”

Since the promotion and advertisements of Pizza hut are limited, it is only the satisfied

customers who spread words about Pizza Hut’s superior values. The effort and the extent

to which Pizza Hut’s employees undergo to satisfy consumers are given below in some

dramatic illustrations.

‘On a rainy night, a couple on their first visit to Pizza Hut was escorted by Amit - one of

the employees of Pizza Hut. He then introduced them to the server, Shohug. While

serving their food, Shohug somehow found out that it was their first wedding

anniversary. He went up to Amit and requested to be released for 5 minutes. He came

back drenched to the bone, with a bouquet of flowers in his hand. Shohug along with the

team then went up to the couple and wished them. The couple was totally taken aback

and on their way out, wrote on the comment card that they’ll never forget this visit which

had indeed touched their hearts.’

‘In yet another busy day at Pizza Hut, Jasim - a server, came up to Akku Chowdhury, the

directing manager of Pizza Hut and told him about one of the customer who did not have

any local currency (Tk) but only carrying dollars with him. He was not even carrying a

credit card. Mr. Akku Chowdhury, went up to Mr. Islam, the customer and found out that

he had come with a guest, and would be put in a very awkward position of his guest had

to pay. Mr. Akku did not hesitate for even a moment and settled the entire bill from his

48

own pocket. Till now the customer has not come back to refund the money, but at that

moment Akku with his instant foresight had saved Mr. Islam from the embarrassment.

‘A foreign family came with their child to the Gulshan outlet of Pizza Hut. The child was

playing in the children’s zone with his mother. The child started crying out of hunger

while the family was eating, as the toddler could not eat the pizza. The mother had

forgotten to bring the milk for the child. Akku saw the plight of the child and rushed to

the nearest shop and bought a pack of milk. The family was so appreciative of the great

concern shown by Akku that they thanked him profusely and acknowledged that they had

never seen such service all their life.’

These are only a handful illustration what Pizza Hut is ready to do to delight the

consumers. Serving the consumers within the promised is another of their strengths.

Usually Pizza Hut serves the consumer a few minutes before the promised time, which

not only satisfies the consumers but also delights them.

Pizza Hut goes to the length of satisfying consumers by providing various entertainment

and surprise gifts. Standing on the chair, singing and dancing are one of their unusual but

frequent ways of wishing a ‘birthday person’. Customer Relationship Management

simply doesn’t stop here. Giving promotional offers during Noboborsho (Bengali New

Year), Shadhinata Dibosh (Independence Day) and Ramadan month reflects the

franchising company’s respect for our culture and impresses upon the mind of the

consumer that Pizza Hut is thinking globally and acting locally. All the initiatives and the

efforts that Pizza Hut undertook to delight the consumers with outstanding service earned

them on January 2004, the 22nd ‘Restaurant Excellence Award’ in the whole

subcontinent.

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As mentioned before in this report that Pizza Hut does not do any customer segmentation

hence they give all consumers equal priority. But it can be recommended that to increase

consumer equity, Pizza Hut can offer their loyal and regular customers discounts once or

twice a year.

Though Pizza Hut do send their promotional offers and birthday wishes to their

consumers based on information collected through questionnaires and feedback received

from the net, our survey revealed that most of the consumers who dine out at Pizza Hut

hardly ever return the questionnaire. Pizza Hut can increase consumer’s feedback by

making ‘loyal consumer of the year’ through feedback and can offer special promotional

offers for the individual and the family. This will not only increase feedback for Pizza

Hut to know their consumer’s better but consumer’s will be more eager to give feedback

and might more frequently dine at Pizza Hut.

As Pizza Hut is open from noon to midnight, they have some regular and fixed number of

customers at late night. They can offer a free appetizer item with pizzas or other

promotional offers starting from 11:00 pm-12:00 am which can increase the number of

late night consumers.

Though Pizza Hut does an excellent job of

satisfying customers but the above suggestions are

worth mentioning as it always costs 5 times more to

attract a new customer than to keep a current

customer happy.

Ethical and Social Responsibilities

To earn customer’s trust and to stay put in business,

it is indispensable that a company should practice ethical and social responsibilities.

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Pizza Hut imports all its raw materials from abroad but they also keep in mind the

religion sensitive people of this country. Therefore, all the raw materials purchased are

halal and under strict monitoring of the Pizza Hut’s authorities. Under Pizza Hut’s code

of conduct, they strictly maintain cleanliness and hygiene food and never serve a day-old

product items.

It is also ethical that Pizza Hut provides a nutritional chart in its website which informs

health conscious consumers how much cholesterol and other proteins that they are

having.

If Pizza Hut includes the ingredients used for their items in the website and have a

ingredient chart in their outlet, this would then be a ethical responsibility to inform

consumers who might have restriction on consumption of certain ingredient items.

Pizza Hut is also going to introduce the online delivery service within the next few

months. It is their ethical responsibility to protect consumers’ private information on the

website.

Pizza Hut often undertakes social responsibility. As they are the part of the society, Pizza

Hut takes part in performing social responsibility. For example, Pizza Hut treated 150

orphans for free in their fast food shop. Pizza Hut

already practices “green marketing” – the use of

environmental friendly materials such as water based

paint and recycled Pizza boxes.

Pizza Hut defines its mission statement in broad social

terms rather than narrow product terms and focuses

their business actions towards socially responsible

marketing. Their mission statement includes not only

51

welfare of its consumers and employees satisfaction but also asserts maximization of life

quality through improvement in the quality of the environment.

Marketing Research

Before launching any new product, Pizza Hut conducts extensive research to find out:

What people think about pizzas (what role do they play in people's lives, when do

they eat them and so on)

What do they like about pizza

What do they dislike about pizzas

What do they want from pizzas

What are the expectations about their food, when they enter into their store.

52

This information is collected together and used to create ideas for prototypes. The ideas

are tested first, before introducing new items. Once Pizza Hut has perfected the pizza,

They LAUNCH!

Due to the vast success of our flagship restaurant in Gulshan, and huge demand from

their consumers, opening of new stores in different cities are already under way. And

from this experience their marketing team has the recognition and understanding of

cultural influences

governmental and political influences

demographic and lifestyle trends

local and national economic trends

06. Financial analysis:

The f inancia l p ic ture of Pizza Hut i s qui te encouraging. In th is

sec t ion we wi l l of fer a f inancia l overview of Pizza Hut which deals

about break even analys is , sa les

forecas ts , and expenses forecas ts .

Break even analysis

In our projection we are expecting that in fixed

asset we will expense 30% of total expense

budget and for variable expenses we also

expecting that we will expense 70% and

contribution margin will be 61.5%. As in first

53

year, we will have a total expense of Tk.4745125 and from this, we will spend

Tk.1423537.5 in fixed cost and we will spend Tk. 3321587.5 in Variable cost. As we are

producing verities product so we calculate Break even fo r each produc t s .

Break even point of each product:

Break even for Pan Pizza:

BEP in Units sales = FC / unit contribution margin

= 396000 / 98.4

= 4024.39 units

= 4024 units (round up)

CM Ratio = Unit CM / Unit Sales Price (P)

= 98.4 / 160

= 61.5%

BEP in total sales in dollar = FC / CM ratio

= 396000 / 61.5%

= Tk. 643902

Profit

Tk. 1080000

Tk.0

54

Tk. 643902 Tk. 2, 400,000 Sales

Yearly based break even for Pan Pizza

Breakeven point = where line intersect with 0s

From that Break-even we can see that in BEP dollar sales is Tk.643902 but our

expected sales for 1st year is Tk.2400000 and assume that we will be able to make

profit at Tk.1080000 in the 1st year, which will be a great achievement. We

expect that profit to grow over time.

For Pan Pizza in year 2010:

FC = TK.396000

VC = Tk.61.6 Total Per unit

Sales (15000) Tk.2,400,000 Tk.160

(-) VC Tk.924000 Tk.61.6

Contribution margin Tk.1476000 Tk.98.4

(-) FC 396000

Operation income Tk.1080000


FC = TK. 448800

55


Sales (17000) Tk. 2720000 Tk.160

(-) VC Tk.1047200 Tk.61.6


(-) FC 448800



FC = TK.528000


Sales (20000) Tk. 3200000 Tk.160

(-) VC Tk.1232000 Tk.61.6


(-) FC 528000


Break even for Italian Pizza:


= 195937.5 / 116.85

56

= 1676.83 units



= 116.85 / 190

= 61.5%

BEP in totals sales dollars = FC / CM ratio

= 195937.5 / 61.5%

= Tk. 318597.56

Profit

Tk. 534375

Tk.0

Tk. 318597.56 Tk.1187500 Sales

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Yearly based break even

Breakeven point = where line intersect with

From that Break-even we can we can see that in BEP dollar sales is Tk.318598

but our expected sates for 1st year is Tk.1187500 and assume that we will be able

to make profit at Tk.534375 in the 1st year for Italian Pizza. We expect that profit

to grow over time.

For Italian Pizza in year 2010:

FC = TK.195937.5


Sales (6250) Tk.1187500 Tk.190

(-) VC Tk.457187.5 Tk.73.15

Contribution margin Tk.730312.5 Tk.116.85

(-) FC 195937.5



58

FC = TK.188100


Sales (6000) Tk.1140000 Tk.190

(-) VC Tk.438900 Tk.73.15


(-) FC 188100



FC = TK.282150


Sales (9000) Tk.1710000 Tk.190

(-) VC Tk.658350 Tk.73.15


(-) FC 282150


Break even for Thin ‘n’ Crispy:


= 210375 / 92.25

= 2280.49 units

59



= 92.25 / 150

= 61.5%


= 210375/ 61.5%

= Tk. 342073.17

Profit

Tk. 573750

$0

Tk.342073.1 Tk.1275000 Sales




but our expected sates for 1st year is Tk.1275000 and assume that we will be able

60

to make profit at Tk.573750 in the 1st year for Thin ‘n’ Crispy. We expect that

profit to grow over time.

For Thin ‘n’ Crispy 2010:

FC = TK.210375


Sales (8500) Tk.1275000 Tk.150

(-) VC Tk.490875 Tk.57.75


(-) FC 210375



FC = TK.247500


Sales (10000) Tk.1500000 Tk.150

(-) VC Tk.577500 Tk.57.75


(-) FC 247500



FC = TK.371250

61


Sales (15000) Tk.2250000 Tk.150

(-) VC Tk.866250 Tk.57.75


(-) FC 371250

Operation income Tk. 1012500

Break even for Stuffed Crust:


= 132000 / 98.4

= 1341.46units



= 98.4 / 160

= 61.5%


= 132000 / 61.5%

= Tk. 214634.15

Profit

Tk. 576000

62

$0

Tk. 214634.15 Tk. 800000 Sales




but our expected sates for 1st year is Tk.800000 and assume that we will be able to

make profit at Tk. 576000 in the 1st year for Stuffed Crust. We expect that profit

to grow over time.

For Stuffed Crust in year 2010:

FC = TK.132000


Sales (5000) Tk. 800000 Tk.160

(-) VC Tk.308000 Tk.61.6


(-) FC 132000



63

FC = TK.211200


Sales (8000) Tk. 1280000 Tk.160

(-) VC Tk.492800 Tk.61.6


(-) FC 211200



FC = TK.264000


Sales (10000) Tk. 1600000 Tk.160

(-) VC Tk.616000 Tk.61.6


(-) FC 264000


Break even for the Big New Yorker:


= 158400/ 98.4

= 1609.76units


64


= 98.4 / 160

= 61.5%


= 158400 / 61.5%

= Tk. 257560.97

Profit

Tk. 432000

$0

Tk. 257560.97 Tk. 960000 Sales



From that Break-even we can we can see that in BEP dollar sales is Tk. 257560.97

but our expected sates for 1st year is Tk. 960000 and assume that we will be able

65

to make profit at Tk. 432000 in the 1st year for the Big New Yorker. We expect

that profit to grow over time.

For the Big New Yorker in year 2010:

FC = TK.158400


Sales (6000) Tk. 960000 Tk.160

(-) VC Tk.369600 Tk.61.6


(-) FC 158400



FC = TK.184800


Sales (7000) Tk. 1120000 Tk.160

(-) VC Tk.431200 Tk.61.6

66


(-) FC 184800



FC = TK.184800


Sales (7000) Tk. 1120000 Tk.160

(-) VC Tk.431200 Tk.61.6


(-) FC 184800


Break even for soup:


= 105600/ 49.2

= 2146.34units



67

= 49.2 / 80

= 61.5%


= 105600 / 61.5%

= Tk. 171707.31

Profit

Tk. 288000

$0

Tk. 171707.31 Tk. 640000 Sales


Break even point = where line intersect with 0s



to make profit at Tk. 288000 in the 1st year for the soup. We expect that profit to

grow over time.

68

For the soup in year 2010:

FC = TK.105600


Sales (8000) Tk. 640000 Tk.80

(-) VC Tk.246400 Tk.30.8


(-) FC 105600



FC = TK.118800


Sales (9000) Tk. 720000 Tk.80

(-) VC Tk.277200 Tk.30.8


(-) FC 118800


69


FC = TK.158400


Sales (12000) Tk. 960000 Tk.80

(-) VC Tk.2369600 Tk.30.8


(-) FC 158400


Break even for refreshing Beverages in year 2010:


= 33000/ 30.75

= 1073.17units



= 30.75 / 50

= 61.5%

70


= 33000 / 61.5%

= Tk. 53658.54

Profit

Tk. 90000

$0

Tk. 53658.54 Tk. 200000 Sales



From that Break-even we can we can see that in BEP dollar sales is Tk. 53659


to make profit at Tk. 90000 in the 1st year for the refreshing Beverages. We

expect that profit to grow over time.

71

.

For the refreshing Beverages in year 2010:

FC = TK.33000


Sales (4000) Tk. 200000 Tk.50

(-) VC Tk.77000 Tk.19.25


(-) FC 33000



FC = TK.41250


Sales (5000) Tk. 250000 Tk.50

(-) VC Tk.96250 Tk.19.25


(-) FC 41250


72


FC = TK.66000


Sales (8000) Tk. 400000 Tk.50

(-) VC Tk.154000 Tk.19.25


(-) FC 66000


Break even for scrumptious Pasta:


= 128700/ 79

= 1609.75units



= 79.95/ 130

= 61.5%

73


= 128700 / 61.5%

= Tk. 209268.29

Profit

Tk. 351000

$0

Tk. 209268.29 Tk. 780000 Sales





to make profit at Tk. 351000 in the 1st year for the scrumptious Pasta. We expect

that profit to grow over time.

74

For the scrumptious Pasta in year 2010:

FC = TK.128700


Sales (6000) Tk. 780000 Tk.130

(-) VC Tk.300300 Tk.50.05


(-) FC 128700



FC = TK.117975


Sales (5500) Tk. 715000 Tk.130

(-) VC Tk.275275 Tk.50.05


(-) FC 117975

75



FC = TK.193050


Sales (9000) Tk.1170000 Tk.130

(-) VC Tk.450450 Tk.50.05


(-) FC 193050


Break even for fresh and crispy fruits and vegetables at the Salad

Bar:


= 63525/ 43.05

= 1475.61units



= 43.05/ 70

= 61.5%

76


= 63525 / 61.5%

= Tk. 103292.68

Profit

Tk. 173250

$0

Tk. 103292.68 Tk. 385000 Sales




but our expected sates for 1st year is Tk. 385000and assume that we will be able to

make profit at Tk. 173250 in the 1st year for the fresh and crispy fruits and

vegetables at the Salad Bar. We expect that profit to grow over time

77

For the fresh and crispy fruits and vegetables at the Salad Bar in

year 2010:

FC = TK.63525


Sales (5500) Tk. 385000 Tk.70

(-) VC Tk.148225 Tk.26.95


(-) FC 63525



year 2011:

FC = TK.69300


Sales (6000) Tk. 420000 Tk.70

(-) VC Tk.161700 Tk.26.95


(-) FC 69300


78


year 2012:

FC = TK.80850


Sales (7000) Tk. 490000 Tk.70

(-) VC Tk.188650 Tk.26.95


(-) FC 80850


Break even for delightful Desserts:


= 48262.5/ 27.675

= 1743.90units



= 27.675/ 45

= 61.5%

79


= 48262.5 / 61.5%

= Tk. 78475.61

Profit

Tk. 131625

$0

Tk. 78475.61 Tk. 292500 Sales




but our expected sates for 1st year is Tk. 292500 and assume that we will be able to

make profit at Tk. 131625 in the 1st year for the fresh and crispy fruits and

vegetables at the Salad Bar. We expect that profit to grow over time

80

For delightful Desserts in year 2010:

FC = TK.48262.5


Sales (6500) Tk. 292500 Tk.45

(-) VC Tk.112612.5 Tk.17.325

Contribution margin Tk.179887.5 Tk.27.675

(-) FC 48262.5


For delightful Desserts in year 2011

FC = TK.59400


Sales (8000) Tk. 360000 Tk.45

(-) VC Tk.138600 Tk.17.325


(-) FC 59400


For delightful Desserts in year 2012:

FC = TK.89100


Sales (12000) Tk. 540000 Tk.45

(-) VC Tk.207900 Tk.17.325


81

(-) FC 89100


Sales forecast

Unit sales:

Years 2010 2011 2012

Pan Pizza 15000 17000 20000

Italian Pizza 6250 6000 9000

Thin ‘n’ Crispy 8500 10000 15000

Stuffed Crust 5000 8000 10000

the Big New Yorker 6000 7000 7000

Soups 8000 9000 12000

refreshing Beverages 4000 5000 8000

scrumptious Pasta 6000 5500 9000

fresh and crispy fruits

and vegetables at the

Salad Bar

5500 6000 7000

delightful Desserts 6500 8000 12000

Total sales 70750 81500 109000

82

Unit sales figure:

Assuming=Series 1=2010, Series 2=2011, Series 3=2012

Unite price:

Years 2010 2011 2012

Pan Pizza Tk.160 Tk.160 Tk.160

Italian Pizza Tk.190 Tk.190 Tk.190

Thin ‘n’ Crispy Tk.150 Tk.150 Tk.150

Stuffed Crust Tk.160 Tk.160 Tk.160

the Big New Yorker, Tk.160 Tk.160 Tk.160

Soups Tk.80 Tk.80 Tk.80

refreshing Beverages Tk.50 Tk.50 Tk.50

scrumptious Pasta Tk.130 Tk.130 Tk.130



Salad Bar

Tk.70 Tk.70 Tk.70

83

delightful Desserts Tk.45 Tk. 45 Tk.45

Total Sales:

Years 2010 2011 2012

Pan Pizza Tk.2,400,000 Tk.2720000 Tk.3200000

Italian Pizza 1187500 1140000 1710000

Thin ‘n’ Crispy 1275000 1500000 2250000

Stuffed Crust 800000 1280000 1600000

the Big New Yorker, 960000 1120000 1120000

Soups 640000 720000 960000

refreshing Beverages 200000 250000 400000

scrumptious Pasta 780000 715000 1170000



Salad Bar

385000 420000 490000

delightful Desserts 292500 360000 540000

Total sales Tk.8627500 Tk. 10585000 Tk.13440000

Sales forecast:

The company sa les forecas t assumes tha t in % of f ixed cos t and

var iable cos t wi l l not changes but to ta l uni t of sa les wi l l increase

f rom Tk.8627500 to Tk. 10585000 in the year 2010 to 2011 and then

sa les wi l l increase Tk. 10585000 to Tk.13440000 in the year 2011 to

2012 and cm ra t io wi l l remain same.

84

For 2010 the company wi l l in ternal ly develop new amount of

product and i t s var iance which wi l l increase the new cus tomer

group. The focus wi l l be on fami ly , s tudents , and young people .

VC

Expense budget

Marketing

Expense Budget

2010(thousand) 2011(thousand) 2012(thousand)

Production cost 3321587.5 4075225 5174400

Ads/Promotion 800000 1000000 1500,000

Wages &

Salaries

300000 300000 300000

Others expanses 323537.3 446525 417600

Total Expense 4745125 5821750 7392000

Sales (%)

Contribution

Margin

61.5% 61.5% 61.5%

FC 30% of total

expanses

30% of total

expanses

30% of total

expanses

VC 70% of total

expanses

70% of total

expanses

70% of total

expanses

FC

85

Expenses forecast:

The main expense area of p izza hut i s adver t i sement . They spend

16.86% of to ta l expenses . Every year the market ing budget of

p izza hut i s increas ing a t a grea t dea l wi th the increase of sa les

and revenue.

07. Conclusion:

The overall image that Pizza Hut has brought in

Bangladesh is undoubtedly a positive one since

there has been no other international fast food

chain in Bangladesh. With the idea of global

thinking along with its application locally has

proven to be successful for the company. The

profit maximization margin of Pizza Hut is quite

remarkable compared to the fast food shops like

Domino’s Pizza, Subcity, Shawrma Palace and others. They have developed their strong

image of being a part of Tricon Global Restaurants and the Yum! International Brand, by

developing the services in their only outlet in Dhaka. Their competitive edge has been the

excellent service that they provide-something very rarely observed in Bangladesh fast

food industry. Their presence has added charisma to the city life and certainly gave the

younger people someplace to ‘hang out’. Their control method of their operation has

certainly helped them to attain one of the top market positions and that too within a year

only.

86

The quality and service timing makes it exceptional and its promotional offers during our

different cultural occasions undoubtedly makes it more popular among the people. With

the online delivery service coming up within a few months, it will be the role model

among the fast food shops with its innovative ideas. The policies and strategies that Pizza

Hut practices will positively lead them to success. And the recommendation that we have

offered throughout the report can make Pizza Hut a unique fast food shop amongst the

rest.

08. References:

01. www.pizzahutbd.com

02. http://www.pizzahut.com/Deals.aspx 03. http://en.wikipedia.org/wiki/Pizza_Hut 04. http://www.pizzahuthawaii.com/

05. http://www.thefreelibrary.com/Pizza+Hut+BOOK+IT!+Program+and+HarperCollins+Publishers+Join+Forces...-a0139467739

http://en.wikipedia.org/wiki/Pizza_Hut

http://www.pizzahut.com/Deals.aspx

http://www.pizzahutbd.com/

Documents

Pizza Hut Working With Pg Final