The Market is Increasingly Changing With the Introduction of Technology, Changes in Consumer Tastes and Products

The market is increasingly changing with the introduction of technology, changes in consumer tastes and preferences, and the need to have a healthy lifestyle. Businesses must keep up with the pace to remain relevant and maintain their customer base. The paper focused on the restaurant industry and introduced a new product, Vegan Pizza, for Pizza Hut. The analysis revealed that even as restaurants are keen to expand their operations, the needs of the vegetarians have not been considered. Most pizzas are made using meat toppings, which to a greater extent do not accommodate the rising demand for pizza made from vegetables. Industrial and consumer analysis have been discussed to achieve the objectives for the new product. With the changes in the market, there was a need to conduct a situational study to establish the internal and external factors likely to affect the performance of Vegan Pizza.

Business Background

Pizza Hut is one of the major players in the pizza sector globally. Through the years, the business has expanded its number of outlets and market share. The primary objective of the company is to provide foods and services of higher quality and value to improve the lives of its customers. According to He, Zha and Li (2013, p.468), the market has become competitive, especially in the restaurant industry. There are more customers considering to eat in hotels and restaurants rather than in the houses, which has created a market opportunity for some industrial players. Pizza Hut is the major flagship brand of Yum! Restaurant and currently the main pizza chain globally with more than 12,500 outlets working in more than 91 states (Bhasin, 2018). The business began in 1958 by two brothers, Frank and Dan Carey, in Wichita, Kansas (Bhasin, 2018). Pizza sectors are increasingly becoming popular with increased demand across the market segments. The plan has been developed to launch a new product, Vegan Pizza, to cater to the needs of growing vegans in the American markets. During the past decades of its operations, Pizza Hut focused on building its reputation for excellence to earn the trust of the customers. The focus has been on the quality and dedication to delivering value and customer service to create the company as a brand (Beer & Doeser 2009, p.115). Based on the current strength of heritage, franchisees, culture, and people, Vegan Pizza will ensure the success of the restaurant in the new market segment: an increasing number of vegetarians. Various targets have been set to achieve these objectives.

Comparative Strategy

Pizza sector has become more competitive, and businesses operating within the industry have resorted to diversify their operations in a bid to maintain their market base (Sheehan 2014, p.42; Basas 2010, p.141). As a result, new methods have been developed to engage the new market segment. Many pizza chains, including Pizza Hut, decided to diversify their menu through offering non-pizza items. The current trend in the pizza market has remained the same. Various businesses have come up with newer, bigger, and better-priced pizzas to attract customers. Most of the companies resorted to using chicken for topping while preparing pizza (Singer & Mason 2006, p.73). In the previous years, Pizza Hut was considered the pacesetter in the industry, which is set in its marketing objectives. For example, in 1992, Pizza Hub started the famous buffet in all its global outlets in a bid to offer different food items to the customers who did not want pizza. Pizza Hut has always focused on meeting the needs of the customers by making pizza that is different from those of the competitors. Being the largest pizza chain globally, the business dominates the major markets, and with the introduction of Vegan Pizza, the Pizza Hut will be able to meet the needs of the vegetarians (Trocchia & Janda 2003, p.15). When customers think of healthy food, pizza is never on the list despite pizza having plenty of toppings that serve various options to assist in ensuring healthy living lifestyle (Singer & Mason 2006, p.49). Most ingredients of pizzas have meat. However, with increased health concern among the customers, it has become essential to consider the needs of the vegetarians within the industry. To attract more customers, Pizza Hut should focus on developing a customized menu for customers to enable them to decide on the ingredients they need.

Situational Analysis

The restaurant industry has become very complicated (Pearce & Robinson 2013, p.128). Besides, most of the industrial players are keen on selling pizzas to their customers, which is a threat to Pizza Hut. Market entry for the established businesses is easy. With the situational analysis, it will be easy to determine and understand the internal and external environment factors that will affect the sales of Vegan Pizza. For external factors, the research considered PEST (Political, Environment, Social, and Technological) analysis and for internal investigation, the paper considered SWOT (Strength, Weakness, Opportunity, and Threat).

External Factors

Political Factors

Political factors that could influence the operations of Vegan Pizza are a regulatory framework, international relations, political stability, and taxation differences across the markets (Cunningham 2012, p.88). Pizza Hut is a global business that operates from the developed nations such as the US to the third world states such as Asia. Vegan Pizza will be rolled out across the major markets, and with political differences, legal frameworks will be considered. Most countries are currently experiencing a stable political atmosphere which is an opportunity for the company to expand its menu in the foreign markets (Sheehan 2014, p.42). Factors such as laws on competition, employment, pollution, and taxation are applicable across the industry.

Economic factors

The overall economic system of the states and regions under which Pizza Hut operates play essential roles in determining organizational success. Economic factors determine taxation rates, interest rates, the purchasing power of customers, prices of products and services, inflation rate, and the overall cost of production (Sonesson, Berlin & Ziegler 2013, p.32). Countries with stable economic systems are highly attractive for various business operations (He, Zha & Li 2013, p.471). The demand for vegetable pizzas has grown, and with the high purchasing power of the customers, it will be easy to meet the objectives of Vegan Pizza. Additionally, the better foreign direct investment (FDI) of a country, the more franchise of the business in that country.

Social Factors

Globally, pizza has been associated with increasing obesity among the customers. As a result, health has become of great concern. Countries are keen to regulate the food industry to protect the consumers. Pizza Hut originated in America; thus, it is overwhelmed by the western culture (Trocchia & Janda 2003, p.22). Differences in social norms, values, beliefs, and religion could affect the performance of Vegan Pizza in the market. Changes in lifestyle among the customers present significant opportunities for Pizza Hut. The urban population and demand for fast foods have been on the rise across the major global markets, which is an excellent opportunity for the company to explore.

Technological Factors

In each market segment, technology has become a valuable tool used to enhance efficiency and meeting the needs of the customers. Beer and Paul opined that with technology, customers could order their Vegan Pizza in every geographical location and receive them at their convenience (2007, p.71). Moreover, with online platforms, customers can ask questions and receive timely responses and make orders for their customized pizzas. Computer-based management information system (MIS) has made it easier to collect customers’ data, forecast on the future operations, monitor transactions for each type of pizza, and decision making.

Internal Factors

Strengths

Pizza Hut is an internationally recognized brand (Goldstein & Goldstein 2009, p.52). Therefore, selling Vegan Pizza might not present significant challenges. As the market leader, the business provides various products. Different factors support organizational brand image: good taste, qualified personnel, quality products, and hygienic conditions. These factors form the background under which Vegan Pizza will be produced. Pizza Hut offers home delivery for all its products, which assist customers from moving around to pick their orders. The business enjoys a more significant competitive advantage than its competitors since it has restaurants. Consequently, it will be uncomplicated to market Vegan Pizza across various market segments, which the other pizza restaurants cannot access.

Weaknesses

Although Pizza Hut enjoys various advantages, it lacks a specialized restaurant to deal with its pizza. The restaurant industry is price sensitive. Thus, a slight increase in costs could affect the profitability and customer base of the company. However, some customers relate prices with quality (Beer & Paul 2007, p.156; Winson 2010, p.592). Since Pizza Hut sells the product of higher quality, its rates are higher than those of its competitors. At the initial stages, the amount of Vegan Pizza will be lower though it will increase over time. Besides, the business is not a low-cost producer. Instead, it focuses on quality and excellent customer service in accounting for its higher prices. Pizza Hub focuses more on the Western culture and tastes, which could affect the sales of Vegan Pizza in the other markets.

Opportunities

Increased demand for pizza with vegetable toppings and associated ingredients should be the focus of Pizza Hut: this represents an opportunity that the business needs to explore (Young 2016, p.141). Pizza Hut should come up with new products to meet the needs of the other market segments. Diversifying products helps to increase market share of the business, and since it has readily available resources, it should reduce its prices to attract more customers. With the rising competition, Pizza Hut needs to remain relevant and committed to delivering the needs of customers through producing Vegan Pizzas of different crust sizes and flavors to attract customers with new tastes. Vegan Pizza should be included in menus across the branches although with focus on the needs of a particular market segment.

Threats

The competition presents the most significant threat to Pizza Hut’s products. Currently, the Domino Pizza is the leading business that produces pizza made from vegetable products and as a well-established restaurant, it presents competition threat for Vegan Pizza. Besides, Domino Pizza has branches across the major markets and uses low-price marketing strategy. English (2009, p.16) opined that countries across the globe are strengthening regulations within the food industry in a bid to ensure customer buy healthy products which are suitable for consumptions. Although Pizza Hut is compliant with most global regulations, escalating corruptions levels in the developing countries is a threat for its survival (Beer & Paul 2007, p. 89). There have also been increasing cases of local pizza sellers offering their products that meet the local tastes of the customers. With the rising demand for vegetable products, the prices are set to increase which could affect the quality of the ingredients used to prepare Vegan Pizza.

Marketing Strategies and Objectives

Marketing Goals and Objectives

Marketing goals

The goal of a marketing plan for Pizza Hut is to increase the level of awareness for the new product: Vegan Pizza. Increased awareness will impact the business significantly and allow Pizza Hut to grow and improve its market performance. Accordingly, most of the weaknesses will be turned to strengths through increased customer base and revenue stream.

Marketing Objectives

Improving awareness: ensuring that Vegan Pizza is available in every market segment by 2021

Increasing the sales of Vegan Pizza: increasing the number of customers purchasing Vegan Pizza by using the marketing strategies that will lead to high sales, ensuring increased 20% sales by 2020

To increase brand awareness, Pizza Hut will offer t-shirts with its logo at discounted prices, participate adequately in various community events to promote the brand, driving trucks to draw the attention of the customers, and inform the customers about the uniqueness of the product.

Through increasing sales annually, Pizza Hut will expand its customer base. To achieve this, the business will provide a menu containing Vegan Pizza, conduct small promotions with low traffics days, give sample flavors to the customers.

Product and Customer Analysis

Pizza is eaten in every market segment and loved by all including the vegan and vegetarians. However, most of the pizza businesses have been focusing on the meat consumers leaving behind the vegetarians. Most customers are increasingly becoming concerned about their health, and one of the strategies they have adopted is to reduce protein consumption. With the Vegan Pizza, the needs of these customers are covered. Vegetables have become topping substitutes for the meat. With the current plan at Pizza Hut, several topping combinations will be developed to accommodate the needs of the vegetarians. Most of the ingredients used in preparing Vegan Pizzas will include sliced mushroom, onions, fresh mozzarella cheese, broccoli, spinach, tomatoes, green peppers, green and black olives, and savor for flavoring. With increased awareness to reduce obesity complications and improve healthy eating habits, the menu with Vegan Pizza will attract a significant number of customers to buy a meal since it is healthy, contains essential nutrients, and less fat.

Within the restaurant industry, there are different types of customers which the business aims serve: dine-in, takeaway, and home delivery. The targeted customers for Vegan Pizza include the vegetarians, Asians, students, dual-career families, single person households, and high and medium income professions. Globalization has made people consume cuisines from different countries. The Asian populations like spicy food with most of them always considering vegetable products. Thus, Vegan Pizza will cover their needs. For many years, students have always been the target market of Pizza Hut, and through diversifying the menu to accommodate the demands of the vegetarians, the business’ market share is set to increase. Dual-career families often result in fewer time people spend at home. Therefore, they have less time to cook food, and with their high incomes and tight schedules, Vegan Pizza will be readily available for them to buy. The single person household makes the largest percentage of the target market since they like to eat out most of the times. Since Pizza Hut’s product prices depend on the quality and ingredients, the cost of Vegan Pizza will be higher than those of its substitutes. Hence, most of the targeted customers will be higher and medium income professionals due to their high disposable incomes.

Market Segmentation

With the rising level of competition, market dynamics have become complicated. Consequently, many businesses focus on identifying their target markets while channelling their marketing objectives towards increasing sales and brand awareness. For Pizza Hut, market segmentation is simple and easy to understand, which makes it easy to identify the customers and adjust various marketing practices towards their needs. Pizza Hut has segmented its market into multiple elements: geographic, demographic, psychographic, and behavioral.

Geographic

The geographic segmentation of the business is globa. Pizza Hut started in the United States and had since grown to operate in more than 80 countries across the continents. The tastes and preferences of the customers are increasingly changing depending on the prevailing cultural, beliefs, and lifestyles. Consequently, this has created an opportunity for Vegan Pizza. With the availability of the business in the market markets, it will be easier to gain access to various market niches to ensure than Vegan Pizza reaches the required sales target.

Demographic

Demographically, the business focuses on the younger generation as its general market segment. Nevertheless, with the diversity of the market, the business has expanded its menu to accommodate the needs of the other customers. Further, the market is divided demographically into high and medium earnings, and classy families spending more money on quality pizza in the market. However, within the same market segments, there are vegetarians whose needs have not been considered for many years in the pizza industry (Entrepreneur Group & Entrepreneur Press 2012, p.112). Pizza Hut’s slogan tends to summarize its intentions for various market segments: Now it’s time to eat more.

Psychographic and Behavioral

The psychographic segment for Vegan Pizza will be similar to those of other pizza types. Generally, the psychographic segment includes customers with the right attitude about the sense of food, especially the pizza groups and those who want to have fun with their friends. Since pizza serves all types of personalities and lacks products for any character, Vegan Pizza will be available to all customers regardless of whether they consume meat or vegetables (Mohamed, Terano, Yeoh & Iliyasu 2017, p.88). Allowing customers to choose their orders is an excellent opportunity to meet the outlined objectives (Olson 2010, p.161). Lifestyle is also an essential element of the psychographic segment to be considered. At Pizza Hut, the behavioral portion of customers include a class of customers who love spending money on food items.

Target Marketing

Based on the targeted market for the business, Pizza Hut’s products are considered family products. The firm does not rely directly on its customers. The middle and high-income families are the primary targets of Pizza Hut. As previously noted, the highly paid are the prime targets of the business. However, with the changing nature of the markets, Pizza Hut has diversified its customer base. Through Vegan Pizza, Pizza Hut will be targeting all the customers from across market segments. The business will focus on generation X since they are more active to spend money on the products considered non-essential (Kalich, Bauer & McPartlin 2009, p.44). The vegetarians remain the most significant targets for Vegan Pizza.

For the vegetarians, the pizzas will be meat-free served with pasta and salad for the customers who do not want meat but want to enjoy quality pizza from Pizza Hut. For many years, Pizza Hut has been known to be the right place for university and college students since most of them like organizing treat parties. Pizza Hut targets using various methods: dine in and delivery and take away. Dine-in customers are those who love having good times with their colleagues within the premises of the restaurant while takeaway customers are those who do not have to reach Pizza Hut outlets but needs the products. The takeaway customers can give orders and receive them within 30 minutes based on the policy. For Vegan Pizza, Pizza Hut will also target the executives and corporate meetings and discussions.

Target Market Selection Criteria

Production of Vegan Pizza will be a market breakthrough for Pizza Huts, as it will assist to increase the organizational target market and customers. However, there are the different basis that will be used to select the target markets. The main criteria for selection are considering customers in need of pizza made from vegetables and those cautious about their health. Another selection method is focusing on the customers with high incomes and love eating in restaurants and are ready to spend money in the best business environment offered by Pizza Hut (Garlough 2011, p. 102). In the Asian countries, Vegan Pizza will target not only the Muslims and Buddhists but also the minorities in need of vegetarian foods, and with Pizza Hut as the prime business offering the product, overall sales are set to increase. Based on the established brand of the company, the vegetarians will trust Vegan Pizza. The target market has also been selected based on the increasing number of families going out to have fun. Pizza Hut focuses on generation X since they are more active than the previous generation. Based on the study conducted by Mohamed, Terano, Yeoh, and Iliyasu (2017, p.85), the generation X is more empowered with technology and information on the convenient pizza ordering process and health importance of considering pizza made with vegetable toppings.

Marketing Mix

Marketing plays a significant role in developing a new product for the market (Longenecker 2006, p. 171). With the marketing mix, a combination of 4Ps has been considered for Vegan Pizza. The mixture will not only make Pizza Hut the best brand in the market but also ensure that Vegan Pizza reaches the required target segments. The 4Ps include product, price, place, and promotion.

Product

The product’s name Vegan Pizza, which is a pizza type made from the vegetables. Pizza Hut will sell the product in four different sizes: small, medium, large, and personal (customized based on the needs of the customers). However, business no longer produces pizzas in small sizes. For the sake of the new product, small Vegan Pizzas will be considered (Bhasin, 2018). The business will avail several toppings including Pepperoni Lovers, Meat Lovers, Supreme, Double Cheeseburger, Cheese Lovers, Veggie Lovers, and the new Vegan Pizza. Since the introduction of vegetable pizzas in Domino Pizza, the number of customers seeking the product has increased significantly. Even as Pizza Hut plans to roll out the new product, Vegan Pizza already has a stable market in the industry. The product will have a thick crust, which could assist to attract and retain the customers. As the business intends to increase its sales in the current market, the new product will be presented in all the market segments.

Price

The restaurant industry is price sensitive (Pearce & Robinson 2013, p.110; Neulinger & Simon 2011, p.541). Therefore, an increment in price could lead to a reduction in customer base. Besides, the market has several pizzas, which could act as substitutes for Vegan Pizza. For the new product, the pricing strategy considered is market skimming since it wants to ensure maximum market share and profit. Due to uniqueness and high quality of its products, Pizza Hut charges considerably higher than its competitors. The business is focused on meeting the needs of the customers who relate quality and price. However, since Vegan Pizza will be produced in different sizes, the prices are likely to vary. The high-low pricing approach could assist in creating excitement among the customers. With the current Meal Deals at Pizza Hut, discounts will be given to customers who order products in bulk.

Place

Product distribution is vital to ensure accessibility in various market segments (Garlough, 2011, p. 142). Currently, Pizza Hut has more than 34,000 outlets and operates in more than 80 countries. The competitive advantage of the business lies in the distribution channel. Vegan Pizza will be available in the outlets to cater to the increasing needs of the vegetarian pizza lovers. There are various approaches used in selling products to the customers. The first distribution method is home and office delivery in which clients place their orders through calling and have their orders delivered at their convenience (Brook Lapping Productions 2010, p. 66). The second distribution is dine-in in which customers visit Pizza Hut outlets, place their orders, and either leave with pizza or eat in the restaurant. The business is known for a clean environment where customers sit as they enjoy their meals. The third distribution approach is online ordering through the Internet.

Promotion

Different methods of promotion will be considered to increase awareness of Vegan Pizza: advertising, personal selling, public relations, and sales promotion. Most Pizza Hut products are advertised through Newspapers, televisions and radios, billboards, and magazines. For Vegan Pizza, various promotional plans will be developed to position the product in the market and ensure the newly introduced product stimulates demand, motivates the repeat customers, and shift the short-term behavior of the customers. Promotional strategies include using coupons for purchase and distributing brochures door-to-door to attract more customers (Bhasin, 2018). Moreover, Pizza Hut will offer discounts to the new customers and develop schemes such as Meal Deals, Winter Treat, Ramazan Deals, and Midnight Deals.

Industrial and Competitor Analysis

According to Beer and Doeser, in the primary market such as the United States and the United Kingdom, pizza has become a passion for most customers (2009, p.107). Pearce and Robinson (2013, p.179) estimated that in North America, the rate of industrial growth for the years 2014-2016 is 2.35% with the number of outlets expected to increase by 2.35%. With the current increase in the demand for pizza, most restaurants have expanded their menu, which is a threat to the business. However, for Pizza Hut products, the primary competitors are Domino’s Pizza, McDonald’s, KFC, and Pizza Inn (IBISWorld, 2016). Domino’s Pizza is a direct competitor of Pizza Hut, and since it also produces pizzas made from vegetables, it could threaten Vegan Pizza. With its estimated annual income of $455 million, it is a strong contender in the pizza industry. In 2016, Domino’s Pizza was valued at about $720 million and based on continuous expansion into the new markets, Pizza Hut must never underestimate its ability to compromise the sales of Vegan Pizza. On the other hand, McDonald’s is considered the leading fast food outlet within the industry in all the aspects since it covers considerable market share: locally and globally. At the end of 2016, McDonald’s had a net income of $4.7 billion annually, which makes it the highest earner within the restaurant industry.

The industry is fast changing with customers preferring the convenient ordering system, as studies revealing that customers spend more money when they order their products online and are likely to re-order (Goldstein & Goldstein 2009, p.78). Since the integration of technology, about 50% of Domino’s sales come from online ordering system. Among the pizza chain businesses, the market share is concentrated among the lead players in the market: Pizza Hut and Domino’s Pizza. Some trends continue to influence the performance of the industry: healthy options, environmental consciousness, fast casual restaurants, and technology enablement. The need for vegetable pizzas has been attributed to the rising demand for healthy choices. The global consumers are increasingly trying to enhance their lifestyle, and with the vegetables in the menu, Pizza Hut will address their needs (Brook Lapping Productions 2010, p. 77; Magazine 2012, p.181). Pizza parlors provide diverse cuisines offer healthy salad and vegetable options for the customers, and since Pizza Hut is among them, it is undoubtedly that Vegan Pizza will meet the needs of most vegetarian customers. Fast-casual restaurants are the fastest growing segment in the restaurant industry since they are based on the specific needs of the customers.

Measuring Business Performance

In every business, it is essential to understand what works and what does not. As the market structures continue to change, businesses have become unpredictable, which makes it necessary to measure organizational performance. Although the literature has various dimensions of business success including financial performance, non-financial performance, performance-based on comparison with the competitors, and business growth (Braun & Latham 2014, p.117). For Pizza Hut, success is driven by the motivation to achieve the needed objectives. Thus, the business is self-confident, adaptable, creative, and innovative. For Vegan Pizza, Pizza Hut will use different methods to measure success including network traffic, repeat business, and operational efficiency. Since Pizza Hut will develop a website portal to enable customers to order their Vegan Pizza, analyzing organizational network traffic will be a great indicator of measuring the success of the product regarding attracting the right customers to the site. In the first year, it is projected that product will have one million customers, both vegetarians, and meat-lovers. The sales are expected to increase annually. The product will also benefit from the repeat customers. Since Vegan Pizza has been developed to meet the specific needs of the customers, it is undoubtedly that there will be more return clients.

Historically, 55% of Pizza Hut customers are return clients, as it produces quality products. With such a vast number, the business has the foundation of scaling up the operations that will ensure maximum sales of Vegan Pizza. Operational efficiency is important since it reflects on an organizational commitment to achieving the results (Dresner 2008, p.71). There are outlined objectives for Vegan Pizza. If the business operates efficiently and with minimum wastage, then there are high chances that it will achieve the outlined goals. However, Pizza Hut should consider factors such as the market share, customers satisfaction, and ethical considerations within the business in three years. To measure achievement of specific business objectives, Pizza Hut will look at various financial statements, check the level of customer satisfaction, average number of customers, conducting performance and reviews, business relevance in the market, and assessment of business expectations. The primary product objectives include improving awareness and increasing sales. To measure the level of awareness, the business will assess the availability of Vegan Pizza in all the market segments by 2021, and for the level of sales, the company will measure the number of customers purchasing the product and ensure that sales increase by 20% annually. When measuring the success of the product, the business should estimate how much money it is generating (Li & Stacks 2015, p.83).

For Vegan Pizza, three primary financial statements will be used: profit and loss account, balance sheets, and cash flow statements. The balance sheets will be used to show the financial health of the business and cash flow to show the liquid cash at the company. Measuring business performance means checking financial flow in the company (Dresner 2008, p.110). Customer satisfaction is another method of measuring business success. If customers are unsatisfied with Vegan Pizza, they will not return. Pizza will measure customer satisfaction in various ways: surveys and reviews. At Pizza Hut, the business prides itself on excellent customer satisfaction. According to Braun and Latham (2014, 136), business is all about reviews and ensuring that customers are happy with Vegan Pizza. The views of the customers might assist to enhance the quality of Vegan Pizza since customers know what they need. Most of the features that will be added to the product will be based on customers’ requests. However, successful businesses stay current on the market. For example, there has been increasing demand for vegetable products across the markets. Thus, Pizza Hut should align the operations involved in the production of Vegan Pizza with the needs of the customers. Business needs to know how the market is doing to measure success.

Financial Obligations and Projections

Start-up Funding

Vegan Pizza will be owned by Pizza Hut, which is an already established business. The product will be launched at the headquarter in Plano, Texas in the United States before rolling it out across the other major markets globally. Pizza Hut will contribute $363,000 and $137,000 will be secured through bank loan. Pizza Hut does