The pizza segment of the fast food industry

The pizza segment of the fast food industry operates on low profit margins and in a highly competitive environment. Once the realm of local and regional operations, the market is now characterized by national chains which offer takeout, delivery and dinein service in restaurants. In addition, the market has attracted "gourmet" pizza outlets which combine interesting ingredients with hightech decor in order to attract the wellheeled professionals who traditionally do not purchase pizza on a regular basis, but do order it occasionally for parties or who are attracted to the gourmet stylings.

Pizza Hut is one of the most successful of the traditional pizza restaurants. Owned by the soft drink giant PepsiCo (which also owns Taco Bell), Pizza Hut offers dinein restaurants as well as takeout and delivery service from most of its locations. In addition, the chain also features some small stores which only feature the delivery/takeout service, which is in direct competition with companies such as Domino's and Little Caesars as well as independent operators.

This research considers a marketing program for Pizza Hut taking into account the company's stated strategy of introducing four new products each year and using the demographics and marketing information associated with this industry. Because profit margins for pizzerias are lean, special attention is given to helping to boost sales of new products during the critical first months of their introduction.

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ch as $2 more for pizzas than Little Caesars' nationally advertised prices, which sparked complaints by customers to corporate. Pizza Hut has successfully built a strong relationship with its franchisees which has prevented it from seeing the same problems as Little Caesars. In recent years, the urgent task for Domino's (which focuses on delivery) was to turnaround serious losses posted in the early 1990s. The 5,200unit chain suffered a $48.7 million loss in 1991 on a system-wide sales decline of $250 million. Sales fell another $400 million in 1992 to an estimated $2 billion. That represents a net loss of nearly 25 percent in system-wide volume over two years (Lee, 1996, p. 12). Part of Domino's problems came from Pizza Hut's own entry into delivery as well as by increasing numbers of regional chains and independent operators who also offer delivery services, in part because of Domino's phenomenal success in this area. Domino's also failed to articulate any clear marketing strategy to counter the increased competition. Rather than staging bold counterattacks or even mounting a new ad campaign, the company appeared to rely simply on its 30minute guarantee as its chief marketing advantage. Adverse publicity resulting f

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