Pizza Hut is an American restaurant chain and international franchise that offers different styles of pizza along with side dishes including pasta,buffalo wings, breadsticks, and garlic bread. Pizza Hut is a subsidiary of Yum! Brands, Inc. (the world's largest restaurant company) with approximately 34,000 restaurants, delivery/carry-out locations, and kiosks in 100 countries.
Seeing that Pizza Hut holds the most market share in the pizza industry, the perceived quality and service of the company will help to ensure a better than average chance at a successful introduction of a new product. The pizza industry firms are famous for introducing new products to spark short-term sales. Pizza Hut as stated earlier has been very successful at accomplishing this. The introduction of a product that keeps with today's trends is also important to reduce the risk of failure. In recent years there has been an increase in the marketing of products with an extreme twist to them. Mountain Dew, which is a brand name owned by Pizza Huts parent company, Pepsico, has been very successful at repositioning itself to this segment of the market, which has sparked new interest in the soft drink. Many other imitators have followed in there footsteps and have been successful as well. Pizza Hut has the resources available to research and implement a new product with great success.
Pizza Hut is the leader in innovative products and this new product that we are proposing will surely be a success, given Pizza Huts track record. With high competition from the other top firms in the industry, the introduction of a new product is necessary to keep one step ahead of the competition. We propose that Pizza Hut introduce the Extreme Pizza. This pizza will be larger than the competitors at twenty-inches and have twice the toppings that the competitors have. Pizza Hut will market this product along side other extreme products such as Mountain Dew, to help Pizza Hut capture part of this new segment of the market. The selection of pizza's offered by the competition have been significantly less creative than that of Pizza Hut in the past and Pizza Huts reputation of offering high quality, new products will allow this new product to move into the market as other new offerings have in the past. With the introduction of a new product, one of our main objectives is to create recognition for our product. Our goal is to reach 85% recognition of the new product in our target market.
As with all businesses, the most important goal of a company is to increase revenue and profits. With the introduction of this new product we hope to increase the overall sales of the company by 7%. If we can in fact reach our goal of 85% recognition of the product, through a successful promotions mix, then the increase in sales should be easily acquired. The type of distribution channel used by Pizza Hut is the direct channel. The direct channel is successful when there is an extremely large market that is geographically dispersed. The direct channel is also useful when there are a large number of buyers, but a small amount purchased by each. Pizza Hut uses three different methods of selling its products directly to the market. The first method of distribution used by Pizza Hut is delivery. Customers can call Pizza Hut ahead of time, place an order, and the order is delivered to the customer's home. Another method of distribution is for customers to dine-in. Customers can go to the nearest Pizza Hut, place an order, and either leave with the order or eat at the restaurant. One of Pizza Hut's largest competitive advantages is its restaurant style facility. Pizza Hut offers a clean place to sit down and enjoy the variety of pizzas, salads, and sandwiches in a fun, family atmosphere. The third method of distribution is! online ordering. Customers can now go on the Internet and place an order. This method is useful because it allows customers to view the entire menu, download any special coupons, and order without having to disclose any credit card numbers. The market coverage for "The Extreme" will be nationwide. Customers all over the country will be able to order "The Extreme" by one of the three distribution methods.
Summary and Conclusion Pizza Hut has a successful history of introducing new products to increase sales and reach new customers. This introduction of new products to the market on a regular basis is what makes Pizza Hut the leader in their industry. The level of success that the "Extreme Pizza" will bring Pizza Hut depends heavily on the correct promotions mix. As we had stated earlier, the segment of the market that we have targeted is a very diverse group. This means that the promotion of the product must be done in a diverse fashion. This will result in a more expensive advertising campaign than in past campaigns, but the potential for a successful product will cover the costs and bring in substantial profit.
The advertising campaign is going to be budgeted to use 8% of projected sales. We are forecasting that the introduction of the Extreme Pizza will increase sales by 7%. This forecast is based upon other new products that Pizza Hut has introduced and the impact that they have had on Pizza Huts revenues. A 7% increase in sales for Pizza Hut will bring a total of $547 million dollars in revenue, making the advertising budget $43.76 million. This kind of advertising budget will allow for a mass media blitz of promotions featuring our new "Extreme Pizza". Our target market spends many hours a day in front of the TV and computer, so the constant messages being played will allow our product to generate a high level of awareness.
The advertising of the product is very important but the promotion of this product along side Mountain Dew will help to put our product in a more specific category. Mountain Dew has targeted our target market for several years and is by far one of the leaders in this market. With this in mind promotions with Mountain Dew will be crucial to the success of the "Extreme Pizza". With competition being so strong in this industry the threat of imitation products will surely be a problem to be dealt with. Pizza Hut will however have the first mover advantage with this product. With the entry of imitation products into the market, Pizza Hut will have to adjust its mixes to accommodate change. The promotions may have to be bigger and better than the competition, or the product may need to be altered to give it that little bit of an edge over the competition. For example stuffing the crust with cheese or giving a free topping with the purchase would help give Pizza Hut an edge over the competition. Basically, Pizza Hut will need to remain flexible in the maturity stages of the product life cycle in an attempt to continue to be the market leader. Overall, this is a product that is not much unlike any of the other new pizza's that Pizza Hut has introduced. What makes this new product so exciting is the marketing plan that is directing the product at a new segment. We are taking a large pizza with a lot of toppings and marketing it as an "Extreme Pizza" to a generation of younger adults that are consumed by this marketing tool. This is what will make this a success. The mix of promotion and advertising we will be using will target a very profitable, sometimes overlooked market segment known as generations X and Y.
Supply Chain deals with the logistics of getting more than 300 food products from the field to the fork. We're also responsible for the procurement of the company's non-food items - from chairs, uniforms and cutlery in the restaurants, to stationery, light bulbs and suppliers such as cleaners at the RSC. That may involve liaising with New Product Development and Planning to source cost-effective ingredients for new menu items, negotiating rates for new restaurant fittings in association with Business Development, or streamlining the distribution network to obtain maximum value for money. Supply Chain also includes our vitally important Quality Assurance department, where we closely monitor the quality of all our products and ingredients - so there's lots of tasting involved!
Seeing that Pizza Hut holds the most market share in the pizza industry, the perceived quality and service of the company will help to ensure a better than average chance at a successful introduction of a new product. The pizza industry firms are famous for introducing new products to spark short-term sales. Pizza Hut as stated earlier has been very successful at accomplishing this. The introduction of a product that keeps with today's trends is also important to reduce the risk of failure. In recent years there has been an increase in the marketing of products with an extreme twist to them. Mountain Dew, which is a brand name owned by Pizza Huts parent company, Pepsico, has been very successful at repositioning itself to this segment of the market, which has sparked new interest in the soft drink. Many other imitators have followed in there footsteps and have been successful as well. Pizza Hut has the resources available to research and implement a new product with great success.
Pizza Hut is the leader in innovative products and this new product that we are proposing will surely be a success, given Pizza Huts track record. With high competition from the other top firms in the industry, the introduction of a new product is necessary to keep one step ahead of the competition. We propose that Pizza Hut introduce the Extreme Pizza. This pizza will be larger than the competitors at twenty-inches and have twice the toppings that the competitors have. Pizza Hut will market this product along side other extreme products such as Mountain Dew, to help Pizza Hut capture part of this new segment of the market. The selection of pizza's offered by the competition have been significantly less creative than that of Pizza Hut in the past and Pizza Huts reputation of offering high quality, new products will allow this new product to move into the market as other new offerings have in the past. With the introduction of a new product, one of our main objectives is to create recognition for our product. Our goal is to reach 85% recognition of the new product in our target market.
As with all businesses, the most important goal of a company is to increase revenue and profits. With the introduction of this new product we hope to increase the overall sales of the company by 7%. If we can in fact reach our goal of 85% recognition of the product, through a successful promotions mix, then the increase in sales should be easily acquired. The type of distribution channel used by Pizza Hut is the direct channel. The direct channel is successful when there is an extremely large market that is geographically dispersed. The direct channel is also useful when there are a large number of buyers, but a small amount purchased by each. Pizza Hut uses three different methods of selling its products directly to the market. The first method of distribution used by Pizza Hut is delivery. Customers can call Pizza Hut ahead of time, place an order, and the order is delivered to the customer's home. Another method of distribution is for customers to dine-in. Customers can go to the nearest Pizza Hut, place an order, and either leave with the order or eat at the restaurant. One of Pizza Hut's largest competitive advantages is its restaurant style facility. Pizza Hut offers a clean place to sit down and enjoy the variety of pizzas, salads, and sandwiches in a fun, family atmosphere. The third method of distribution is! online ordering. Customers can now go on the Internet and place an order. This method is useful because it allows customers to view the entire menu, download any special coupons, and order without having to disclose any credit card numbers. The market coverage for "The Extreme" will be nationwide. Customers all over the country will be able to order "The Extreme" by one of the three distribution methods.
Summary and Conclusion Pizza Hut has a successful history of introducing new products to increase sales and reach new customers. This introduction of new products to the market on a regular basis is what makes Pizza Hut the leader in their industry. The level of success that the "Extreme Pizza" will bring Pizza Hut depends heavily on the correct promotions mix. As we had stated earlier, the segment of the market that we have targeted is a very diverse group. This means that the promotion of the product must be done in a diverse fashion. This will result in a more expensive advertising campaign than in past campaigns, but the potential for a successful product will cover the costs and bring in substantial profit.
The advertising campaign is going to be budgeted to use 8% of projected sales. We are forecasting that the introduction of the Extreme Pizza will increase sales by 7%. This forecast is based upon other new products that Pizza Hut has introduced and the impact that they have had on Pizza Huts revenues. A 7% increase in sales for Pizza Hut will bring a total of $547 million dollars in revenue, making the advertising budget $43.76 million. This kind of advertising budget will allow for a mass media blitz of promotions featuring our new "Extreme Pizza". Our target market spends many hours a day in front of the TV and computer, so the constant messages being played will allow our product to generate a high level of awareness.
The advertising of the product is very important but the promotion of this product along side Mountain Dew will help to put our product in a more specific category. Mountain Dew has targeted our target market for several years and is by far one of the leaders in this market. With this in mind promotions with Mountain Dew will be crucial to the success of the "Extreme Pizza". With competition being so strong in this industry the threat of imitation products will surely be a problem to be dealt with. Pizza Hut will however have the first mover advantage with this product. With the entry of imitation products into the market, Pizza Hut will have to adjust its mixes to accommodate change. The promotions may have to be bigger and better than the competition, or the product may need to be altered to give it that little bit of an edge over the competition. For example stuffing the crust with cheese or giving a free topping with the purchase would help give Pizza Hut an edge over the competition. Basically, Pizza Hut will need to remain flexible in the maturity stages of the product life cycle in an attempt to continue to be the market leader. Overall, this is a product that is not much unlike any of the other new pizza's that Pizza Hut has introduced. What makes this new product so exciting is the marketing plan that is directing the product at a new segment. We are taking a large pizza with a lot of toppings and marketing it as an "Extreme Pizza" to a generation of younger adults that are consumed by this marketing tool. This is what will make this a success. The mix of promotion and advertising we will be using will target a very profitable, sometimes overlooked market segment known as generations X and Y.
Supply Chain deals with the logistics of getting more than 300 food products from the field to the fork. We're also responsible for the procurement of the company's non-food items - from chairs, uniforms and cutlery in the restaurants, to stationery, light bulbs and suppliers such as cleaners at the RSC. That may involve liaising with New Product Development and Planning to source cost-effective ingredients for new menu items, negotiating rates for new restaurant fittings in association with Business Development, or streamlining the distribution network to obtain maximum value for money. Supply Chain also includes our vitally important Quality Assurance department, where we closely monitor the quality of all our products and ingredients - so there's lots of tasting involved!