Marketing Management

Project of Marketing Management of Pizza Hut

Page 1

Marketing Management Submitted to:

Mam Sara Saleem

Submitted by:

Abadullah M.Waqas Sagheer Omer Farooq

(MBD-12-63) (MBD-12-32) (MBD-12-19)

BZU Sub Campus DGK

Page 2

Marketing Management

Table Of Content:
Acknowledgement Questionnaire Introduction Pizza Hut in Pakistan Pizza Hut in Multan Vision Statement Mission Statement Competitors of Pizza Hut Products of Pizza Hut Supply Chain Management Diagram of SCM Quality Management Supply Chain Management of Pizza Hut Drivers of supply chain Facilities Inventory Diagram of Inventory Control Transportation Information Sourcing Suppliers of SCM Direct Suppliers Indirect Suppliers Pricing Diagram of SCM of Pizza Hut Demand estimation of Pizza Hut Operation/Production of Pizza Hut Responsiveness and Efficiency 05 05 06 07 08 09 09 09 10 12 13 13 14 15 15 16 17 18 19 21 22 22 22 23 24 25 25 27
Page 3

Marketing Management
Strengths Weakness Opportunities Threats Conclusion Recommendations Bibliography 28 28 28 29 29 29 30

Page 4

Marketing Management

ACKNOWLEDGEMENT
This research report is the result of dedicated group efforts, which we did to complete this project. We are thankful to

Almighty ALLAH
That He has empowered His blessings on us while doing our research project. Our gratitude goes to Shahid Siddique Assistant Restaurant General Manager Pizza Hut Multan who provided us with all the relevant information about the product. We would like to thank Mr. Khalid Lodhi for her guidance and help all the time during this project.
Questionnaire

Who are the competitors of Pizza Hut? What is the mission of Pizza Hut supply chain? Who are the suppliers of Pizza Hut? What are the products of Pizza Hut? What types of facilities are given to customer at Pizza Hut? Where you store your products? How can you maintain Pizza quality? How can you treat a customer to gain their trust? How maintain your inventory? Which mode of transportation you are using to maintain the supply chain?
Page 5

Marketing Management
Will company charge additional transportation cost? Is company give information to customer about products? Is company maintaining the proper information of customer? Are your company outsource or in source your product materials? Which products you are outsource and where? Which products you are in source? Which price strategy you are using? Which method you use to reduce the cost? What are your inbound logistics? What are your outbound logistics? Which mode of transportation you are used to deliver the products to the customer? What are your strengths? What are your weaknesses? What are your opportunities? What are your threats? What is your competitive advantage? Either you are adopting efficiency or responsiveness? When you find that you do not know how to complete a task, what do you usually do?

Introduction:
The world-renowned Pizza chain, globally known as Pizza Hut, was initiated in the year 1958 by brothers Dan and Frank Carney in their hometown of Wichita, Kansas. Pizza Hut Inc., Pizza Hut is an American restaurant chain and international franchise that offers different styles of pizza along with side dishes including salad, pasta, buffalo wings, breadsticks, and garlic bread. Corporately known as Pizza Hut, Inc., it is a subsidiary of Yum! Brands, Inc., the world's largest restaurant company. As of 2012, there were more than 6,000 Pizza Hut restaurants in the United States, and more than 5,139 store locations in 94 other countries and territories around the world. Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in their hometown of Wichita, Kansas. When a friend suggested opening a pizza parlorthen a raritythey agreed
Page 6

Marketing Management
that the idea could prove successful, and they borrowed $600 from their mother to start a business with partner John Bender. Renting a small building at 503 South Bluff in downtown Wichita and purchasing secondhand equipment to make pizzas, the Carneys and Bender opened the first Pizza Hut restaurant; on opening night, they gave pizza away to encourage community interest. A year later, in 1959, Pizza Hut was incorporated in Kansas, and Dick Hassur opened the first franchise unit in Topeka.

Pizza Hut Pakistan

Pizza Hut initiated its operations in Pakistan with its first restaurant way back in 1993. The journey that started then continues to this day, as the chain consists of over 43 outlets spread all across Pakistan, and is arguably the largest restaurant chain in Pakistan. The team at Pizza Hut has launched various amazing flavors and toppings during our time here, in addition to our beloved and timeless classics, and continually strives to deliver new and ever-better tastes. The critically acclaimed topping, Chicken Tikka, which has swept the world since its creation, was introduced for the first time in Pakistan. Our Customers prefer us because of our innovative products and concepts, and the consistently high level of service, quality and standards that we set and meet every day. This is the mantra we uphold in all our restaurants, touching the lives of hundreds and thousands on a daily basis.
Page 7

Marketing Management

Pizza Hut in Multan

Multan, otherwise famously known, as the city of saints will have another local attraction to boast about, now a Pizza Hut, the Worlds No. 1 Pizza Chain and the largest international food franchise in Pakistan has recently opened its doors to the people of Multan.

The opening ceremony was attended by Pizza Hut officials, dignitaries and local media personalities. Speaking on the occasion, Mr. Manzar Riaz, Managing Director of the 100% locally owned MCR (Pvt.) Ltd, who are the franchise of Pizza Hut in Pakistan, said:

"It is a matter of great pride that our company has created business opportunities for more than 1000 local suppliers, has contributed above Rs. 120 million to the national exchequer and has provided employment to over 1000 people working in the system. Backed by an intended investment of Rs. 1 billion, over the next two years we plan to open another 20 restaurants... and this is but the first step in that plan. Imagine the potential that we have of serving Pakistan once we fully leverage our growth.

I sincerely believe in people capability first... satisfied customers and profitability follow. People are the most important asset for any company or nation. We would like to play our small part in making the working conditions & atmosphere in Pakistan attractive enough, so that we can stop the current brain drain." The opening of Pizza Huts outlet in Multan comes at a time when MCR (Pvt.) Ltd. is celebrating its 10th year of operations in Pakistan. Besides the outlet in Multan, Pizza Hut is operating restaurants in Karachi, Hyderabad, Peshawar, Islamabad, Lahore and Faisalabad as well.

The opening of the new Pizza Hut outlet will provide entertainment to the Multanites, and will also bring the famous international brands flavor and experience to them - an experience that is already a household name in 6 other cities across the nation.
Page 8

Marketing Management
Address: Main Road, Gulgasht Colony, Multan. Multan, Punjab Phone: 061-6522775

Website: http://www.pizzahut.com.pk/

Vision Statement
Pizza Hut's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value, so that they make every customer in every restaurant smile. To achieve their vision, they are focused on three worldwide strategies:

Mission Statement
"We take pride in making a perfect pizza and providing courteous and helpful service on time, all the time. Every customer says, "I'll be back!"

Competitors of Pizza Hut

Domino Pizza

Page 9

Marketing Management

Italian Pizza

PRODUCT LINE
Starters

Soupes & Salads

Page 10

Marketing Management

Pastas

Sandwiches

Pizzas

Page 11

Marketing Management

Desserts

Beverages

SUPPLY CHAIN MANAGEMENT

The movement of material from source to end customer is called supply chain. Supply Chain includes purchasing, manufacturing, warehousing, transportation, customer service; demand planning, supply planning and Supply Chain management. It is made up of the people, activities, information and resources involved in moving a product from its supplier to customer.

Page 12

Marketing Management

QUALITY MANAGEMENT
To ensure stringent international bench-marks in the quality of products and services at all its restaurants across the world, Pizza Hut has a mystery shopper program in which an unknown official visits a restaurant and evaluates it on certain defined parameters called C.H.A.M.P.S. that stand for Cleanliness Hospitality Accuracy Maintenance Product quality Speed
Page 13

Marketing Management
Based on the report submitted by the official, the restaurants are rated and in the rare case of finding under performers, they are kept under strict vigil. This is the most important for a food chain like Pizza Hut. All the employees back of-the-house i.e. the kitchen assistants are trained accordingly. They are given extra classes in order to meet the quality standards set by Pizza Hut around the world. This strategy is important in order to satisfy the CHAMPS. This strategy is strictly implemented in Pizza Hut in order to fulfill the quality standards. Different quality management staff is also there at Pizza Hut. The shift managers have the task to observe whether the quality standards are met or not, whereas there are a total quality management department at the main office. This department has the task to implement quality standards and know whether they are achieved or not.

SUPPLY CHAIN MANAGEMENT OF PIZZA HUT Drivers of Supply Chain

Supply chain management is the factor that differentiates the winners and the losers in this business. The cross-functional and logistical drivers of supply chain performance are: Logistical drivers Facilities Inventory Transportation

Cross-functional drivers Information Sourcing Pricing

Page 14

Marketing Management
Companys supply chain achieve the balance between responsiveness & efficiency that best meets the needs of the company competitive strategy.

Drivers of Supply Chain Performance

Efficiency

Responsiveness
Supply chain structure

Inventory

Transportation

Facilities

Information

Sourcing

Pricing

Drivers

Facilities:
Facilities are the actual physical locations in the supply chain network where product is stored, assembled or fabricated. The two major types of facilities are Production sites Storage sites.
Page 15

Marketing Management
So the fundamental trade-off that managers face when making facilities decision between the cost of the number, location & type of facilities (efficiency) & the level of responsiveness that these facilities provide the companys customer. There are some facilities that are provided to the customers of Pizza Hut.

Air Conditioning Parking in the Oracle Take Away Children's Goodie Bag Buffet Outdoor Seating in summer Disabled Facilities These facilities attract the customers and make them loyal to their product. These facilities provided at the restaurant and there is another facility of home delivery is provided by the Pizza Hut to their customers.

Inventory:
It encompasses all raw materials, work in progress and finished goods within the supply chain. Changing inventory policies can dramatically alter the supply chains efficiency & responsiveness. The base is prepared in the commissionaires and then transported to different retail outlets. The outlets keep the inventory stock of only three days because it is a perishable good. Hence, the inventory stock cost is reduced. As only the base is transferred to the store, in case of any particular item demand is increased, it does not create any problem. Cycle Inventory: This is the amount of inventory needed to satisfy demand for the product in the period between purchases of the product. In pizza hut only specific quantity of material is stored to satisfy the demand of customer because all material is perishable.
Page 16

Marketing Management
Safety Inventory: Inventory that is held as a buffer against uncertainty. If demand forecasting could be done with perfect accuracy, then the only inventory that would be needed would be cycle inventory. In Pizza Hut there is no safety inventory because material is not stored for longer period only the beverages are stored for the customers. In inventory control procedure all the activities are shown. How the material brings to cold and dry freezers and reached to the oven.

Procedure Inventory Control:

Cold Storage

Dry Storage

Freezer

Prep Room

Walk In

Proffer

Retarder

Make Table

Oven

Page 17

Marketing Management Transportation:

Transportation entails moving inventory from point to point in the supply chain. Transportation can take the form of many combinations of modes & routes, each with its own performance characteristics. They use the refrigerated trucks in which the base is kept and there is controlled temperature. There are 80 trucks to supply the bases across Pakistan . There is also a vacant space in which extra base is kept to fill the demand of a particular store. The company will not incur any additional transportation costs as the counters are along the highway or on the trucks route. 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.

Page 18

Marketing Management
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.

Information:
Information serves as the connection between various stages of a supply chain, allowing them to coordinate & maximize total supply chain profitability. It is also crucial to the daily operations of each stage in a supply chain for e.g. a production scheduling system. There was no proper medium of coordination between the suppliers and the outlet managers, due to this the flow of information at times the information was misinterpreted and not correlated this all happened because of no customer data base was maintained and outlet manager could not recall the need of customer. There was not a proper inventory control, some outlets receive excess amount of inventory so the cost is increased and they were not able to come across this problem in the absence of proper information system. Billing problem, there was a
Page 19

Marketing Management
deep problem faced by pizza hut in initial years working of frauds at billing, of some unusual favors done by staff. To tackle the billing system they made centralized. They had built in server storage system, but due to continuous exponential growth, the system collapsed because of small storage capability. This system didnt allow any type of centralization in respect of billing process and inventory control. They need such a storage infrastructure which can be scaled up against increasing demand. So at that point of time they went in for a direct attach- storage solution from HP with the capacity of 3tetra bytes. With the daily requirement of data base of about 2 giga byte which was to be stored and maintained ,to scale up the system with demand, in march 2008 Pizza Hut took the call to upgrade its system from Intel Xeon environment to Intel intaniom based HP integrity based system. Pizza hut developed SAN of 15 tetra byte capacity .the SAN went on floor in 2008 after 1 month of testing ,it has been sized for 3 years keeping in mind of 2 giga byte growth per day pizza hut opted to run its SAP ERP application on SUSE Linux enterprise server. Based on operating systems prize performance, reliability and scalability. The ERP environment is hosted in data centre managed by third party specialist and offers extremely high resilience. They customized the SAP software for ccd requirements managed its roll out across the organization and provides support and maintenance for SAP ERP. The software is based on JAVA. SAP ERP plays the crucial role in helping to manage the internal operations and to maintain the extended supply chain. The five SAP servers connected to SAN and this is how increased capacity has helped pizza hut increase its oracle data base space. This was how pizza hut managed its data base and keep on inventing ways to maintain ever increasing data base. But how to know customer preference, customer contacts, customer satisfaction, eusage to guarantee customer top of the world service. There was no proper medium of coordination between the suppliers and the out let managers. This all happened because of customer database was not maintained and outlet manager could not recall the need of customer. The cost got increased and they were not able to come across this problem in the absence of proper information system. Therefore, commissionaires were created.
Page 20

Marketing Management
As someone new to our business youll be amazed with the state-of-the-art technology weve adopted to make the task of leading your business as robust and efficient as possible. We constantly invest time and money in the management information systems that help our stores forecast and monitor performance, labor usage, and food ordering and inventory management. These systems are supported by a skilled internal team to make sure you get the best use from them. And we never rest on our laurels. Were constantly adding new technology to help make the business even more successful. Our current plans include:

Real time performance reporting - so you can monitor the progress of your business anytime, anywhere via remote log-in functionality.

Online recruitment of team members where only applicants who meet the minimum success criteria are added to your shortlist.

Online training for managers and team members. Digital marketing including online and mobile handsets.

Sourcing:
Sourcing is the set of business processes required to purchase goods & services. Managers must first decide which tasks will be outsourced & those that will be performed within the firm. The Pepperoni and Mozzarella a cheese is imported from Australia and Spain respectively. To compensate an increased cost, they maintain a local supply chain to reduce the cost like vegetables, wheat, tomatoes. This provides the world class facility and taste by importing its main ingredients from Spain and Australia but other ingredients from local vendors.

Page 21

Marketing Management Supplier of Pizza Hut:

Supply chain of pizza hut starts from the suppliers of pizza hut. There are many suppliers of the pizza hut but we divide them in two parts. Direct suppliers Indirect suppliers

Direct suppliers:
There are three direct suppliers of Pizza hut named as: Pepsi Company Bake parlor company (Buns) Habib oil Mills (First mineral water)

Indirect suppliers:
Pizza hut have many indirect suppliers because they need all other material like Cutlery, meat, vegetables, sauces, and all other material come from their warehouse named as Commissary. That material is purchased by Commissary means indirect suppliers of Pizza hut are: Meat market (Their owns cattle) Vegetable market Sauces companies

Explanation:
Pizza Hut demands the direct material on daily basis. On every day end pizza hut manager forecasts the demand of next day and gives the order to the suppliers than next day morning the goods come to the Pizza hut. All indirect material i.e. vegetables, sauces, meat, cutlery and all material is purchased by the ware house named by Commissary.

Page 22

Marketing Management
Then Pizza hut takes the orders from its customers who come to pizza hut and also take the orders from the delivery service there is a specialized system in pizza hut which is connected to the delivery orders service so that 1 order list at a time come in the kitchen and at the managers table also. Than production of pizza according to order starts and they deliver it within 45 minutes at the door of customer and in pizza hut they just take 20 minutes to prepare the pizza and serve it to the customer.

Pricing:
Pricing determines how much a firm will charge for goods & services that it makes available in the supply chain. The level of competition a business faces determines its pricing strategy. Sometimes a business has the scope to set its price and sometimes a business cannot. When a business has the scope to set its price there is a number of pricing strategies or policies it might choose. As there are no such competitors of Pizza Hut which could compete with the quality of pizza produced at Pizza Hut, therefore, the pricing strategy adopted by Pizza Hut is 'market skimming'. Pizza Hut has adopted this pricing strategy as they want to hold maximum share of the market by maximum profit. This is a golden era for Pizza Hut, as there are no competitors and hence, Pizza Hut is free to charge any price they want. They are charging higher prices due to the uniqueness of the product. They satisfy the target market as the food quality is worth the price paid. The pricing strategy is not just to get the worth of quality but also to gain maximum profits before any competitor enters because then Pizza Hut will have to change its pricing strategy. Although the prices would be lowered with the new entrants in the market but not to a greater extent as the quality food products are not home-produced. They are imported from different countries keeping in view the best quality. Pizza hut is using Market Skimming Price Strategy. Low price for meal and expensive for just one Coupons Worldwide and Gift Card in Developed Countries Charging method in Pakistan is, Price +21% Tax e.g. For a Pizza of 999 you will pay Rs. 1208

Page 23

Marketing Management

Page 24

Marketing Management Demand estimation of Pizza Hut

Pizza Hut estimates demand on daily bases. Demand estimation is based on past experiences where chances of buffer are also considered and 10% buffer ratio is taken. Demand estimation is done through the mutual participation of the managers of the particular outlet. While estimating customers demand, both, the home delivery orders of customers and those customers who used to dine inn, take into account.

Operations/production management of Pizza Hut

Operation process started. From 8am to 11am pizza hut gets open for the production function only. From 11am till 3 at night, customers are welcomed to come in and enjoy their meal. Operation/production includes the preparation of pizza dough according to the estimated demand. The preparation of dough is go through by three different processes.

First process includes the addition of different spices and yeast in flour. All the ingredients are measured and followed SOPs to help maintain the same taste at all outlets in all cities. Skilled and trained labor is used to make the whole process speedy and efficient as well as to reduce the lead time of each process.

After the addition of spices, in second process, the different sizes of dough is prepared to response the requirements of customers.

In third process, dough gets baked.

All of the three processes include machines and labor both. Each dough is not prepared by a single person but each person is assigned to complete a single task in order to improve efficiency. Till 11am, all the dough get prepared and rest of the pizza preparation process i-e, filling, topping and baking, is done after receiving orders from customers. After the order placement of customers, preparation of pizza get started, the preparation time of pizza or the serving time of customers order is max 16 minutes. Whether there are too many customers orders and takeaways, but the pizza huts serving time never exceeds up to 16 minutes. Their ready dough helps them to make the entire customers satisfy in time. In case of unexpected large number of customers or too many take away and delivery orders, the work is
Page 25

Marketing Management
done in a way that one person spreads sauce, other add veggies, other one fills meat and the other person spreads cheese on it and then finally pizza goes in oven. This chain helps to serve customers as quickly as possible. But in normal routine only one person is responsible to prepare a single order (filling, topping etc). The detailed steps in pizza production are given below:

Identify toppings Saucing procedures Using quality rings Layout method overview Placement of Pizza in the oven In-store production, time concept Need to give priority to home delivery tickets Hands-on practice of making pizzas Making half-n-half pizzas, single topping pizzas, special instructions, substitutions, making

Using the Peak Revenue Period Checklist Explain the service times of all items served by the station Closing of the make table Storage of left over toppings Cleaning procedures Thawing charts usage and placing meats for thawing Tracking wastages on the make table

In pizza hut, here is no inventory left at end. All the pizzas are prepared as per customers demand. But sometimes, in case of any food festival or food stalls at exhibitions, there may some error occur to estimate the demand of unexpected arrivals of customer. If expected demand is high as compare to actual demand then finished goods inventory may left. At the end the cost has to be paid by company. To cut this cost pizza hut has a straight policy that this ending inventory (remaining pizzas) neither distributed among employees/workers nor stored in refrigerators to resell the next day but directly through into dustbin. The aim is to demotivate workers for
Page 26

Marketing Management
producing extra units, keep them not to think that remaining pizzas would be serve to them or they may take away to their homes. The other reasons are to estimate demand more carefully and not to compromise on quality.

Responsiveness and Efficiency:

As we have seen that pizza hut open their outlets in a particular city so they are responsive enough and they provide delivery within 30 minutes or offering it free is also to increase their responsiveness. It is difficult to maintain such kind of responsiveness because it will incur extra margin and the profit margin will decrease thats the main reason they open their outlets and if a particular customer order a pizza where pizza store is not available that store immediately call the nearest pizza corner to deliver that particular order to be responsiveness and if a particular product is not available they use to do transfer in and transfer out in which they take the product from different outlet.

Page 27

Marketing Management Strengths:

Good Quality Food (Hygiene): All the ingredients except local vegetables are provided by Yum Restaurants through their Restaurant Support System. All other inputs are according to the quality standards provided by them. Brand Name: Pizza Hut is a franchise of Yum Restaurant which has its outlets worldwide. Food worth its Price: Employing economies of scale, Pizza Hut has made its offerings more affordable. They have starting range of Pizza with just Rs 75 and individual serving pizza with cold drink for Rs 99 only. Good Service: They provide good service in terms of timeliness of pizza, courteousness of employee, knowledge of employees, taste of pizza etc. They provide pizza before time, their staff are scattered around near all the tables so that incase the customer wants to call pizza boy they just have to wave.

Weaknesses
Que during Peak Hour Higher Overhead Costs They advertise very less Fewer Outlets: Their outlets are not spread all over the city as compared to other competitors.

Opportunities
Pizza Slice: They are one of the best pizza makers. In their take away they can start with pizza slices. This will attract people with small budget as well as those who wish to try

Page 28

Marketing Management
pizza hut. This has been started by Dominos one of its competitors. Pizza Hut being in market for a long time can cash on this opportunity

Threats
Competitors like Dominos, Italian Pizza. Housewives are interested in making Pizzas & other Fast Food at home.

CONCLUSION:
It is the time and money that lets you enter the race but it is the services that you provide wins you the race. It shows that better services and responsiveness increase the loyalty and demand. It conclude that if supply chain is good and effective then a company get good response from the customer.

Recommendations:
The supply chain strategy of Pizza Hut is very good but there area of supply is so small. They are providing their products only in big cities of Pakistan. There is so much demand in small cities like Sargodha, Gujarat, Sialkot, and Gujranwala. There other competitors are moving in these cities so if they will not make their outlets there they will lose competitive advantages. The other thing is there prices are high if they will lose their prices poor people will also like to buy there pizzas and the house hold trend of food will change after some time, people will like to buy food rather than making it at home. After implementing these strategies they can get:

Maximum return on their investment Value proposition Expands their business growth Increase in sales

Page 29

Marketing Management Bibliography: Websites www.pizzahut.co.in www.pizzahut.com www.images.google.co.in www.wikipedia.org www.google.co.in

Pizza Hut Main Road, Gulgasht Colony, Multan. Multan, Punjab Pakistan

Page 30