MEDIA PLAN Anna Alexander Sarah Arch Anthony DiPiero Gina Ginnetti McKenna Goske Dave Koroczynsky Allison Mitzel Taalib Noble December 2, 2014 2 TABLE OF CONTENTS Executive Summary ...........................................................................................................................3 Situation Analysis ..............................................................................................................................4 Marketing Strategy Plan ....................................................................................................................6 Competitive Analysis .........................................................................................................................7 Brand Analysis ...................................................................................................................................8 SWOT Analysis .................................................................................................................................9 Media Plan .........................................................................................................................................9 Scheduling Strategies .........................................................................................................................11 Budgeting ...........................................................................................................................................12 Flowchart ...........................................................................................................................................14 Works Cited .......................................................................................................................................15 3 EXECUTIVE SUMMARY For more than fifty years, Pizza Hut has continued to grow and expand its spot as the leading pizza chain in the world. From offering specialty pizzas to side dishes, Pizza Hut is unique due to several factors: their market position, their determined demographic, and lastly, their overall market strategy. Pizza Hut has been a staple in the restaurant industry since 1958. It is important for the company to operate in the most efficient manner possible. The brand, as a whole, is an asset. The Pizza Hut name will remain sustainable with effective business and marketing strategies. By adapting to the ever-changing consumer market, Pizza Hut can continue to hold its position as the leading pizza franchise. Consumers are not the only variable that changes, however. Marketing strategies must change as consumer tastes, lifestyles, and demographics change. One marketing strategy that is the forefront in today’s advanced society is digital marketing. As an entity, Pizza Hut must utilize digital possibilities to its full advantage. Digital users fall into the 18-49 year old demographic. By grabbing a significant edge in this demographic (75% of orders done digitally through mobile applications, Hulu, Xbox, etc.), Pizza Hut can enter into the digital marketing fray that is currently controlled by other pizza franchises. Determining the market research before initiating a strategy is very important. As a company, Pizza Hut must market their brand. The brand is the most important asset that the company currently has in its operations. Our research indicated a variety of results: 1. 2. 3. 4. Advertise and market digital applications effectively Advertise to the key digital demographic Marketing strategies that will or will not be effective Competitors’ angle and how Pizza Hut can overcome said obstacles The results are staggering, but not impossible to conquer. As a brand, our mission is now determined: Market the digital applications effectively and consistently. Market the digital applications to the consumer’s mindset. Market the digital applications aggressively. Our strategy is to create a plan that gathers all four of our research results. The plan will market to the key demographic through a variety of outlets- social media, online, digital, television, and magazines. Pizza Hut remains the top pizza leader for many reasons. We strive to protect this brand and continue its successful position. The consumer is everything to us. We understand and respect the challenges. Marketing digitally will bring Pizza Hut into the twenty first century and we are excited to see the challenges and hopeful successes in the future. 4 SITUATION ANALYSIS SIZE AND SHARE OF MARKET For the year ended, September 2013, there were a total of 71,387 pizza stores in the United States. Over half of the market belongs to independent pizza stores (53.24%). Pizza Hut (8.57%), Domino’s (6.90%), Little Caesar’s (5.21%), and Papa John’s (4.38%) are known as “The Big Four” in the Pizza Industry and account for ¼ of the market. The remaining share of the pizza market belongs to the other pizza chains (21.67%) in the United States. SALES HISTORY, COSTS, & PROFITS After reviewing the Yum! Brand third-quarter earnings report for 2014, Pizza Hut has had a total year to date (September 6, 2014) revenue of $796 million with a total operating profit of $215 million. Over the course of 2012, the company had a 5% same-store sales growth whereas in 2013 the sales growth was 0%. After examining the third-quarter report, Pizza Hut’s sales and same-store sales both declined 2%. Looking at the 5-year growth (2009-2013) for Pizza Hut, the company has a 20% decline in sales in the United States. DISTRIBUTION PRACTICES Pizza Hut along with its main competitors Domino’s, Papa John’s, and Little Caesars, have similar distribution practices. Pizza Hut uses a direct channel of distribution. They use a direct channel of distribution because they have an extremely large market geographically and demographically. A direct distribution channel involves the producer selling a product directly to consumer without the help of intermediaries. “A direct chain of distribution may involve faceto sales, computer sales or mail order, but does not involve any form of distributor other than the original producer” (smallbusiness.chron). METHODS OF SELLING One method of selling is to deliver directly to the consumer. Customers can call one of Pizza Hut’s traditional restaurants or an “Express” unit for home or office delivery. A second method of selling is that customers can come in to Pizza Hut restaurants. They may either come in to sit down and eat or they can leave with an order. A third method of selling for Pizza Hut is the emergence of digital ordering. Among the major pizza chains, including Pizza Hut, ordering pizza through a digital channel now accounts for roughly 43 percent of all orders. These digital orders can be made via desktop, laptop, and through the Pizza Hut app on a mobile phone or tablet. This method is useful and more accurate because consumers have more time to select what they want without feeling rushed. Through digital means it is faster to order and the consumer is able to view a full current menu. USE OF ADVERTISING Due to the fact that the product is considered a family product, Pizza Hut markets to everyone rather than directly to a specific age group or gender. By advertising to everyone, they can capture a larger portion of the market. This is something that separates Pizza Hut from their competitors. In comparison, Pizza Hut’s competitors market to specific demographics of the market. Pizza Hut has been trying to reach another demographic with the use of mobile 5 marketing, in order to do so they have released a mobile app. Pizza Hut’s goal is to encourage more people to order directly from their smartphones. IDENTIFICATION OF PROSPECTS Pizza Hut considers most of their consumers to be higher income and dual-career families. Another portion of their market is a younger generation ranging from the ages of 12-30 years old. However, they are not limiting their market to these demographics. People, both male and female, between the ages of 18 and 55 that live a busy lifestyle and earn a middle to higher income are also considered prospects of Pizza Hut’s market. These include families with children, college students and even professionals. NATURE OF THE PRODUCT Pizza Hut is considered a fast casual, family restaurant. They offer a wide variety of products ranging from appetizers, such as wings and breadsticks, salads, sandwiches and most importantly, their pizza. They have a vast selection of toppings, pizza styles and even crust options. In recent years, Pizza Hut has focused on creating pizzas that were attention grabbing, such as their infamous stuffed-crust pizzas. The reasons behind Pizza Hut doing this, is because it is believed that consumers are demanding food that is higher in quality and considered to be more gourmet, but with unconventional flavor pairings. With consumers taste buds evolving, Pizza Hut is forced to stay with the trends and create new products to please their consumers, for example, they recently came out with garlic-parmesan pizzas (a five-cheese and a chickenbacon-tomato variety) and three barbecue pizzas, just to name a few. CONSUMER INSIGHTS Due to its popularity, the demographics for the pizza consumer encompass a large portion of the population. A 2011 study conducted by Mintel, revealed that the core pizza consumer ranges in age from 18-44, and those with an annual income of $75,000 to $99,900 are the biggest pizza users, as are households with children. Additionally, the survey revealed the consumer’s interest in health and mobile applications. The Mintel survey states, “Issues surrounding diet, health and weight could affect the industry, with nearly 1/3 of women indicating that they expect nutrition labeling to change what they order. Nearly half (47%) of survey respondents consider an online ordering option important. Among them are those aged 25 to 34 (57%) and those with three or more children (55%).” The rise of the millennial generation has supported the findings within this survey. Millennials are interested in healthier eating from restaurants that have fresh, quality ingredients. In addition, this generation is more likely to engage in social media and mobile applications to make purchases rather than traditional outlets. Currently, over 164 million people own a smartphone (Reporter’s Notebook). Consumers are more inclined to use their smart phone apps to complete daily tasks. Reporter’s Notebook states, “More than 40 percent of Domino's orders come through various digital channels. Papa John's boasts nearly 50 percent. Ordering a pizza is now as easy as pressing a couple of buttons and there's no waiting on hold.” Customers who are always on the go can enjoy the accessibility of the smart phone app, and complete tasks while running other errands. 6 MARKETING STRATEGY PLAN MARKETING OBJECTIVE It is important for a business like Pizza Hut to set goals when promoting a product or service. By determining their objective, Pizza Hut can reach their potential consumers (the 18-64 demographic) within the pre-determined time frame (May-December 2015). Pizza Hut must do three things to achieve their marketing objectives: increase product awareness, provide information to the consumer, and reduce resistance and the competitor’s market share. Increasing product awareness includes advertising of the digital platforms that Pizza Hut utilizes (Application, Hulu, Xbox, etc.). By advertising, the general consumer’s awareness levels will rise and potentially increase the digital share for Pizza Hut. Providing information to the consumer is also important in marketing. How do the application/Hulu/Xbox method(s) work? Is it easy? Is it time consuming? Are payment methods safe? These questions and more must be answered through different forms of marketing. By providing information to the consumer, the consumer will be more likely to order through digital platforms due to comfort, ease of use and trust levels towards Pizza Hut. Lastly, Pizza Hut must reduce resistance and the competitor’s market share, which can both be achieved through proper marketing. By marketing aggressively, consumer’s awareness levels will rise. Advertising the methods mentioned previously will reduce resistance as the general public will be more comfortable with the use of digital platforms. Marketing effectively can potentially reduce the competitor’s market share as the Pizza Hut digital methods will be used more frequently by the consumer, and in turn, will reduce the use of their competitor’s mobile/digital applications. In all, the marketing objectives are extremely important towards the sustainability and awareness of a brand. PRODUCT AND SPENDING STRATEGY The product and spending strategies for Pizza Hut must remain consistent and aggressive. The product strategy, for this plan, involves the digital platforms of the cell phone application, Hulu, Xbox, and other digital platforms. While other ordering methods are important, such as by phone or in person, this plan requires Pizza Hut to raise attention to the digital platforms. Therefore, the products involved require extensive setup through software, fees, etc. Although the cost is high in the short-term, marketing the digital platforms will be cost effective in the long-run. Spending must be aggressive. Spending will be through digital platforms (online websites, advertising on applications, Xbox, Hulu, etc.) and through more traditional methods (television). Spending aggressively on the proper outlets can increase consumer awareness as well as the brands overall image. Pizza Hut must succeed in this aspect to increase revenues. DISTRIBUTION STRATEGY For our distribution strategy we are going to make our pizza even more convenient than before, we’re going to continue our delivery system, but now we’re going to make it so you can order your pizza from an app right on your phone. This way you can continue with your busy life and not have to put everything on pause just to order your dinner. Not only are you able to order your pizza from your smart phone, but you can pay for it this way too! We’ll also make a way for you to create your own pizza. Now our pizzas will be more personalized than ever! We’re also going to begin using a frequent flyer card, this way we can track how often our customers are using our product, we will add this to the app where they can order and design their pizzas. After 10 orders they get 50% off of their entire purchase. 7 WHICH ELEMENTS OF THE MARKETING MIX ARE TO BE USED? We are going to use all 4 P’s of the marketing mix. PRODUCT- we are going to strongly advertise our product and how it’s now better than ever. PRICE- our prices are already reasonable, but now we’re starting a new frequent flyer card where you can get 50% off of your order when you’ve used our product 10 times. PLACE- Because of our delivery service, our product is convenient to acquire, but now it’s even easier to order because of our new phone app. PROMOTION- We are promoting our newest app and frequent flyer card to bring people into our store to buy our product. COMPETITIVE ANALYSIS Although Pizza Hut is the largest pizza establishment in the world, they are unable to compete on the same level as their other three competitors when it comes to the mobile and online ordering market. One main reason is that, they are seen as a more family oriented company and their target market isn’t using these apps and sources of online ordering. In order to capture this market Pizza Hut must use effective marketing strategies, which is highlighted in this plan, to get the attention of these consumers. Also, in terms of their product, Pizza Hut is viewed as more of an unhealthy restaurant because they don’t have as many healthy options on their menu yet. However, in recent articles, it states that Pizza Hut is getting more creative and innovative with their menu. They have also unveiled a new logo, which gives Pizza Hut a new brand image. We will see these new revisions in the upcoming months. When it comes to Pizza Hut’s competitors, it seems as if they are doing a better job at getting their message across. More specifically, Domino’s is advertising more than any of the main four competitors. They are using more means of communication in terms of advertising and marketing. From an end user standpoint, the Domino’s mobile app is better than what Pizza Hut is currently using. 8 BRAND ANALYSIS Founded in 1958 by the Carney brothers, Pizza Hut has developed into a global brand. Locations span across the globe, and offer dine-in, take-out, pick-up, and drive thru services. A partnership with WingStreet has allowed for menu expansion, and brand diversification. According to the YUM! 2013 financial data, the food chain maintains almost 15,000 restaurants worldwide. While the majority of the locations are within the United States, there has been a significant expansion in the Chinese market over the last 5 years. Pizza Hut has been experiencing a sales decline for the past year, despite the large number of locations. During this sales decline, their competitors have maintained a steady increase in business due to their mobile apps and menu improvements. As of November 19, 2014, Pizza Hut will overhaul their food offerings to entice customers and regain their market share. The updated menu will provide the classic pizza choices and allow for a variety of customization items. According to an article on Time.com, there will be 10 new crusts, new toppings, sauce options, and a selection of more low-calorie pizzas. The availability of customizations to menu items will enable Pizza Hut to take back their spot as the number one pizza chain. 9 SWOT ANALYSIS Strengths Weaknesses Brand recognition Market position Consumer awareness through traditional methods Menu options Consumer comfort/affordability Opportunities Rise of consumer digital use More modern marketing methods Word of mouth advertising Ease of use of application Weak marketing strategy Weak digital application Low consumer awareness through digital methods Perceived lack of consumer knowledge Consumer attention Threats Rise of competitor applications Competitor marketing Consumer patience/time Failed marketing strategies MEDIA PLAN MEDIA OBJECTIVE Within its new marketing strategy, Pizza Hut will offer advertising within online mediums such as Hulu and Xbox Live. As of October 2013, Xbox Live had roughly 48 million subscribers, a number which has likely grown with added perks to the Xbox Gold accounts. With advertising and ordering on the Xbox Live screen, Pizza Hut will be able to reach the active users more easily. As of April 2014, Hulu Plus announced that they will offer in-stream ordering for Pizza Hut, allowing Hulu’s 6 million users to utilize Pizza Hut’s menu and order directly from the advertisement without leaving streaming. To be able to combine two heavily-used online mediums with the current online ordering service will make the goal of raising their digital ordering to 75 percent more obtainable. According to data collected by Microsoft, “On average, Xbox One users around the world spend more than five hours a day on their console watching TV, playing games, using apps like Hulu, Netflix or Skype and spending time on the dashboard.” To ensure success of the campaign, it will be important to reach 50% of our target consumer an average of 2 times a week. The repeated usage of streaming mediums requires a lower frequency so that our advertising campaign remains effective and relevant with the consumer. MEDIA MIX STRATEGIES The general pizza customer is a pretty broad target, typically 18–64-year -olds In terms of digital, that target narrows to 18–49-year-olds. Recent advertising campaigns have used innovation to connect with millennials and differentiate the company from its competitors. Several forms of traditional and non-traditional media advertisements will be distributed to grab a hold of the target market. Television: The Fall seasons usually premier new television shows or new seasons of television 10 shows such as AMC's Walking Dead which has been renewed for a 6th season premiering Fall of 2015. Advertising will increase during the football season during primetime. ABC and NBC Networks will be included as vehicles for commecials. There is high opportunity to reach the target market. Outdoor: Billboards or outdoor media can have an impact on potential customers. Placing them near heavy target market areas is ideal if the opportunity is there. Placing advertisements on billboards on busy interstates also can potentially bring in new and remind old customers. Radio: Is heard almost by everyone. Besides advertising on basic radio stations by area, advertisements should also be run on Pandora which is a free music streaming engine that plays musical genres based on the user’s selection. Newspapers: Potentially can reach a number of target market individuals. Coupons may be distributed in the paper. Magazines: Sports Illustrated during football season can potentially reach consumers but may not reach all of the target audience. The magazine is availible for IOS devices which is appropriate for mobile ordering. As of August 2014 Sports Illustrated had over 33,000 readers according to statista.com Cinema: Although Cinema ticket purchases have been on a decline. Utilizing media space before specific new movies can aid in reaching the target market. There are a few promising movies premiering 2015. The Avengers: Age of Ultron (Part of Avengers/ Marvel Franchise), Jurassic World the 4th installment of Jurassic Park. Star Wars : Episode VII, Furious 7, Terminator: Genisys, Magic Mike XXL, Fantastic Four and The Hunger Games: Mockingjay Part 2 are just a few movies that apart of or spin-offs of a franchise that potentially are adorned by the target market. Internet: There is a large opportunity to reach the target audience in social media engines such as Facebook and Twitter and Internet Streaming sites such as Hulu and XBox Live. Facebook has over 1.3 billion users as of September 2014 according to (newsroom.fb.com) with Pizza Hut's Facebook page has over 15 million likes. Twitter has over 284 million monthly active users according to (about.twitter.com) while the Pizza Hut Twitter page has over 1 million followers. Internet Streaming sites such as Hulu that has over 6 million subscribers as of the end of the 2nd Quarter of 2014 (statista.com) and Xbox Live that has over 48 million members ending September 2014 (news.microsoft.com). Mobile: Most millennials are on the cell phone band wagon and since having a cell phone has become a necessity in society mobile advertising will have a large impact on consumers. Google Play and the App Store all have free downloadable games or applications some which have commercials or ads before you can actually play the game. Utilizing the push ads may gain attention from consumers but they also can potentially turn them away since they just want to play or use the application. Augmented reality which is a live direct or indirect view of a physical, real-world environment may potentially bring in consumers or push them to use mobile application in ordering. 11 SCHEDULING OBJECTIVE The best way to reach the target audience is through Pulse scheduling. In this instance media spending will increase every other month over the 6 month period. This is optimal in keeping awareness of the company and what new and exciting is happening also this type of scheduling doesn’t overload consumers and drive them away. REACH & FREQUENCY Pizza Hut is in a unique but promising situation. Typically, the average pizza consumer in the United States fits into the 18-64 year old demographic. As this is a wide range, it is important for Pizza Hut to narrow the demographic down in terms of digital use. This demographic of digital users, 18-49 year olds can then be narrowed even further into the millennials category, which falls in the 18-34 range. Pizza Hut is at a distinct advantage by targeting a smaller, more marketable demographic. However, the goal of increasing the percentage of pizza ordered digitally from 43 percent to 75 percent (A gain of 32 percent) must be accomplished through a well thought out and organized marketing plan. This plan will take place between July 1, 2015 and December 31, 2015. Pizza Hut must market to the digital target demographic in order to increase online sales. This marketing plan will only succeed if the reach and frequency strategy connects the consumer to the product. The reach and frequency strategy is listed below and directly correlates to the Pizza Hut scheduling strategy: Achieve 50% reach during the beginning of the campaign in July of 2015. The reach will range from 50-75% throughout the campaign that ends on December 31, 2015. The minimum effective frequency per cycle (Television, radio, digital ads- internet, mobile ads) is 4, as Pizza Hut’s goal is to reach 56,403,321 of the target audience (50%). SCHEDULING STRATEGIES The media scheduling strategy for Pizza Hut will be a relatively simple one, focusing more on television and online advertising. Beyond simple advertisements within websites, Pizza Hut will use the new approaches of targeting customers through Xbox Live and Hulu with in-stream advertising. The relative ease that comes with the in-stream advertising is that there is very loose “scheduling”, as the ads and ordering are always readily available. Between Xbox and Hulu, there are roughly 52 million subscribers, of which Pizza Hut is trying to reach at least 50 percent. For television, the primary focus will be primetime commercial slots. With programs that have large primetime audiences, our reach will be far greater than that of a daytime slot. For example, “The Voice” airs Mondays and Tuesdays seasonally in a primetime spot. With the high volume of viewers, and the recent addition of star Blake Shelton into the new television campaigns, the chance of reaching the potential customers is much stronger. Also, a good target for scheduling advertisements is during Sunday football games, as many Americans will be tuned in for the games, spanning between 1 PM and 11 PM, giving the company a great opportunity to reach a large number of viewers on a weekly basis. From a television standpoint Pizza Hut will have heavy advertising during the football season during those primetime television slots. Due to the fact that a lot of the millennial generation 12 watches shows on MTV, Pizza Hut will air commercials during prime time to hit that age group to encourage them to want to order Pizza Hut online and by word of mouth have them tell their friends and family about ordering online. The Walking Dead and Breaking Bad are also popular shows with the younger generation, Pizza Hut will want to air shows during commercial breaks. ABC and NBC are also important networks that air sports that will have a huge market reach for people to see their commercials. Pizza Hut will also want to put ads in Sports Illustrated Magazines during football season to promote the quick and easy use of their online presence. Their goal would be for people to order pizzas online for their football viewing parties and other events that they would have. They should also put short commercials on Pandora. This is a cheap and easy way to reach a large number of potential consumers. Pizza Hut will also want to continuously put ads up on Facebook, Twitter, and Instagram to target the younger demographic to encourage them to order online. There is also a slightly older generation that has a presence on Facebook that would have more money to spend on food. It will also be good to advertise to them about how ordering online for their families will save them on time and it will be more efficient. It will also heighten awareness for Pizza Hut. Pizza Hut should also have ads and commercials on Internet streaming sites such as Hulu and Xbox Live, as mentioned previously. BUDGETING In order to increase pizza sales ordered digitally by 32 percent, a media budget is greatly needed. Our budget will be derived from a percentage of our sales. Approximately $140 million in sales are projected through one quarter. We are looking to increase sales about $45 million for each quarter, taking it to about $180 increase in sales per year. In order to reach this, we must use 25% of sales from the previous year, which were about $560. The budget for our campaign will be 25% of $560 million, which equals $140 million. We use about 64% of our campaign budget for our media budget, 15% for our promotion budget, and about 11% for events and production budgets. Since we are trying to increase sales by digital ordering, we will target our media budget mainly to Internet advertising, about 48% of the budget. Next, television is another large medium to reach audiences so we will allocate about 27% of our budget to television advertising. Lastly, outdoor, radio, magazines, cinema, and newspaper have less reach than television and internet advertising so each will only be budgeted about 5% of the overall budget. Campaign Budget (in millions) Media $88.10 Events $15.45 Campaign Budget (in millions) 11% Promotion Production Total $21.00 $15.45 $140.00 15% 11% Media 63% Events Promotion Production 13 Media Breakdown (in millions) TV $23.60 Outdoor $4.46 Radio $4.46 Magazines $4.46 Cinema $4.46 Newspaper $4.46 Internet $42.20 Total $88.10 Media Breakdown (in millions) TV 27% 48% Outdoor Radio 5% 5% 5% 5% 5% Magazines Cinema Newspaper 14 FLOWCHART 15 Works Cited Backman, Melvin. "Time for a Wakeup Call at Pizza Hut?" CNNMoney. Cable News Network, 15 Oct. 2014. Web. 28 Nov. 2014. <http://money.cnn.com/2014/10/15/news/companies/pizza-hut/>. Barrett, Liz. "Pizza Power 2013 State of the Industry Report." Pizza Magazine. PMQ, Dec. 2012. Web. 28 Nov. 2014. <http%3A%2F%2Fwww.pmq.com%2FDecember2012%2FPizza-Power-2013-State-of-the-Industry%09Report%2Findex.php%3Fcparticle%3D4%26siarticle%3D3%23artanc>. Maze, Jonathan. "One Big Reason Pizza Chains Thrive." Nation's Restaurant News. Penton, 5 Nov. 2014. Web. 28 Nov. 2014. <http://nrn.com/blog/one-big-reason-pizza-chainsthrive>. Rhodan, Maya. "Pizza Hut’s New Menu Has All Kinds of Crazy Stuff." Time. Time Inc. Network, 10 Nov. 2014. Web. 28 Nov. 2014. <http%3A%2F%2Ftime.com%2F3575786%2Fpizza-hut-new-menu%2F>. "Yum! Financial Data." Yum! Brands. Yum! Brands RSC, 2013. Web. 28 Nov. 2014. <http://www.yum.com/investors/restcounts.asp>.