I think that I made the right choice in my primary and secondary research. I used questionnaires for my primary research and found out that the data was reliable.
What are stakeholders?
Stakeholders are individuals or groups who have a stake or interest in running an organisation. Stakeholders have some control over decisions on how an organisation competes in a marketplace. The organisation also determines the stakeholders. Stakeholders put in money and service towards the organisation to make it more successful. A stakeholder in an organisation includes employees, suppliers, creditors, public, and consumers.
Pizza Hut has two shareholders Tricon and Whitbread, which help to sort out financial problems. Pizza Hut must have a good relationship with its stakeholders such as the public, customers and suppliers for it to do well in the market.
I have decided that the stakeholders in my product will be suppliers because I will need to have a lot of supplies for my product like toppings and cheese. Suppliers will help to make the product more successful because it will assure that my product will not make much loss. My other stakeholders will be customers and the public because they will be the ones that will buy the product. Not all stakeholders want the same thing.
Other stakeholders will be managers, employees, Trade unions and shareholders.
When an organisation is aware that customers choose to spend money on a product therefore a good reputation must be established. Organisations depend on stakeholders every stakeholder has its own objectives for example the suppliers may want a regular customer which will always be willing to buy. Business partners may want simply more profit and the environment may involve concerns on packaging and how to minimise waste. If the relationship between the stakeholders is strong this will help the stakeholders to achieve its objectives.
PEST ANALYSIS OF MY PRODUCT
SWOT ANALYSIS OF PIZZA HUT
My product has much strength the wide variety of pizzas will over come other pizza shops that may not offer as many pizzas. There is a big weakness with my product with non-halal meat therefore there is an opportunity for halal meat to be introduced.
Links between my SWOT and PEST analysis
There are some links that I have noticed relating to my SWOT and PEST analysis. I found out that if there is inflation in economy Pizza Hut will receive more income and this will mean that my product could be improved, in this case my pizza can be adapted to suit Muslims who are only allowed to eat halal meat. There is a link between social and weakness
Marketing Penetration
Marketing penetration is the marketing strategy that increases sale figures of a product without changing the product in any way like adding extra features or modifying specification. Marketing Penetration helps make organisations improve in the markets and it is also cost effective because there will be less use of money.
New Product Development
New product development marketing strategy can be a product that replaces an old product, opens up a new market and broadens an existing market. An example of a product that has replaced its old product can be a product such as toothpaste where the old product only focused on whitening but the new product fights plaque whitens teeth etc. A product that has opened a new market is Lynx who established deodorant for men and now have products in other new markets. Nike has broadened its market into almost every sport.
When new products go through these stages there is a decrease in the rate of ideas.
Ideas Screening of Ideas Marketing analysis Product development Testing Launch
Enter New Markets
Entering new markets is when a new product or an existing product targets a new market. Different markets will want different products and therefore the product may benefit from this strategy. Usually it is when products go international and sell to other countries, this includes Exporting.
Diversification
Diversification is when an organisation that specialises in selling a specific product for example a clothes company and then develop its interest into a more better market industry like food snacks. This way the organisation will benefit from being stuck in a slow growing market industry to a more fast selling and successful business.
I have decided that I will use the marketing penetration strategy because it is good conjunction with price penetration. I think that marketing penetration will make the product sell good without really losing out on money. There will be a level of risk that may concern Pizza Hut if this pizza does well in the market other pizzas that are sold by pizza hut may not sell that well.
Ansoff’s Matrix
Ansoff’s Matrix focuses on an organisation’s present and potential products and markets including customers. This strategy considers ways to grow through existing products and new products, and in existing markets and new markets, there are four possible product market combinations. Ansoff’s Matrix uses four different growth strategies.
Ansoff’s matrix can be used to help a business make decisions and help to sell a new product. It can be used to improve or sell a new product.
A Product Life Cycle
Product Life Cycle of My Product
A product life cycle shows the journey of a product from development stages to its decline. Most product life cycles are similar, however some products may be different like World Cup 2002 merchandise it was developed quickly its growth grew rapidly but towards the end of the tournament the merchandise declined very rapidly then expired.
Some product life cycles show inconsistency and may have ups and downs.
I think that my product will have a steady growth and it will enjoy a long spell in the maturity and saturation stages because my product will be an innovative pizza and people will want a different taste in pizza and this means that people will purchase my product and it will be popular and will keep my product in the market for a long-time. When my product starts to decline I may have to apply more offers or introduce a new product or change the price. This is because the product will need to make a new approach to the market after it is coming to a decline I may decide to revamp it with stuff crust.
Boston Matrix
Boston Matrix diagram of pizza hut and my product
Stars
Stars are products with high market share and high growth, such as leaders but need a lot of cash investment in order to maintain growth in face of competition, which may offset cash production. Pizza Hut’s stars include well-established pizzas that are doing well in sales such as Stuff Crust these pizzas’s are customer favourites. These pizzas make a lot of money and because of this Pizza Hut invest more.
Cash cows
Cash cows are old stars but enter a low market growth, still generating large amounts of cash but need a relatively lower cash investment. Due to high market shares over a period of years, cash cows enjoy economies of scale and high profit margins. Pizza Hut’s cash cows are side snacks like garlic bread or pizza’s that have declined in sales customers do enjoy eating them although it makes a large amount of cash it does not make as much emphasis as stars. Cash cows make cash to invest in stars and problem children.
Dogs
Dogs have low market shares in a low-growth market and tend to generate either a loss or a relatively low profit. They usually take up more management time than necessary and, unless they can be strategically justified, are candidates for abandonment.
Problem children
Problem children are sometimes called question marks, because with a low share but high growth prospects, considerable investments are needed for initially low returns. Problem children are cash users but can also become potential stars. Management must decide if there should be an investment made in the product or withdrawal it is a risk. My product will fit into this category because it is a problem child it can either make a huge return on investment or can become a waste of money if it is withdrawn due to unsuccessful sales in the market. With a problem child a lot of advertising and promotion is needed to make sure that the product is heading in the right direction. In order to make a problem child sell successfully there must be a lot of advertising and promoting, so that people are aware of the new product and will have an interest in buying it.
Price
Penetration Pricing
Penetration pricing involves the setting of lower, rather than higher prices in order to achieve a large, if not dominant market share. This strategy is most often used by businesses that are willing to enter a new market on a small market share. Penetration pricing is only possible where demand for the product is set to be elastic, demand is price-sensitive this will attract new customers and make existing customers buy more due to the low price. A successful penetration pricing strategy may lead to large sales in the market shares and therefore lower costs. Penetration strategies are often used by businesses that need to use up spare resources. The main disadvantage of implementing a penetration strategy is that competitors will supply a copy of the product and may sell for a lower price cancelling out any price reduction of the original product. A second potential disadvantage is that customers may note the image this may associate when customers buy regarding price with quality.
Price Skimming
Skimming is when a product is approached with little competition in the market and so is charged at a reasonably high price. Success of price-skimming strategy is made from the inelastic demand that enables the high pricing to do well for a short while. After the success of the high pricing, when there is enough profit the product is then lowered in price to attract new target segmentation, this strategy has advantages. The product will require effective development and research which may cost a lot, this will also be the outcome in promoting, advertising however price-skimming will return some of the set up cost. Skimming leaves the option of dividing price into different segmentations that will allow the organisation to get maximum profit from its entire market segmentations.
Cost-plus pricing
Cost-plus pricing is the amount added to a unit for example an organisation produces 400 units of clothing cost of £12,000 the unit cost will be £30. A percentage of the price is added. For example, fashion items are usually marked up by between 100 and 200%. Cost-plus pricing is popular there are many risks that are also involved if the price is set too high the sale will fall short of expectations. Cost-plus pricing shows a production-based approach to the market. Customers’ perceptions are not taken in to account. Cost-Plus pricing is easy to calculate and this method does not need to refer to price elasticity of demand, prices can be varied from the outcome of customers’ response to the product.
Competition-based pricing
Competitive rivalry makes it difficult for customer to decide what product to buy, there maybe a little difference between them. It is down to the pricing and marketing in order for the product to sell well. Both competitors will pay close attention to each other’s product. For example digital camera may cost £49.99 but a rivalry competitor which has a product very similar with all the features the other camera has however maybe a slightly lower in price e.g. £44.99 this will affect the organisation which sells its camera for £49.99 and they may well change the price or offer a better deal.
Price and Value
Customers’ expectations are different when it comes down to price and value. Some customers will want to pay a low price for a reasonably good quality product, other customers maybe willing to pay more for a better quality product. Price and value can eliminate customers from different segments if its not balanced. If a product is sold for a high price you will lose customers but a lower price may indicate that the pricing suggests low quality. Value includes getting more for the same price this will make customers buy.
I have decided that the pricing of my pizza will be lower than an average pizza price from pizza hut. I have chosen penetration-pricing meaning the pizzas will be sold for a low price at first until the product has made an impact on the pizza market.
Normal Pricing for Pizza Hut Pizza’s
Pricing for my pizza
Customers will be aware of the pricing of my pizza product and will want to buy it because it is at a low price and the value of the pizza is better than the normal pizza hut pizzas. If the pizza sales do well there will be a lot of profit made and then when the price is put up customers will still want to buy it.
Customers do not like to pay a lot for a product if it is too high then the product will not see as much, if it is too low then customers may get the wrong impression and think that the quality of the trainers are not good or the price is suspiciously low. Therefore it is important that the price of a product fits into the psychologically right price category.
Promotion
A business cannot attract customers to a product sold without of communicating to customers therefore Promotion is about companies communicating with customers. A business communicates to its customers through a promotional mix that is made up of advertising, sales promotion, direct marketing, personal selling and public relations.
Branding
If a product is branded well and represents a good image it will sell better.
Advertising
Advertising can come in different formats the TV, Newspaper, magazines, Radio, Internet etc. Advertising help a product sell and makes customers aware that such product exists. It costs companies a lot to advertise however to have success in sales advertising must be good. The purpose of advertising is to inform customer about a new product to persuade them to buy the product and to remind the customers where the product can be purchased.
Direct Mail
This is mail that is sent to customer who has signed up for details in such products. Mail may include offers, coupons and special promotional offers that will make the customer buy.
Public Relations
Product relation is when an organisation and the public have a good mutual understanding between them. A business involves many groups from the public; these include employee’s shareholders customers, trade union and the government. Communication must be divided into different categories to ensure that all these public figures get good service, which can help to promote the company.
Sales Promotion
Sales promotion is motivation for customers for the demand of a product. Sales promotion can make sales increase by targeting customers. This is a good promotional strategy only for a short period, if this strategy is used for a long period the product image of the product can be damaged.
Sponsorship
Sponsors are companies who pay a lot of money to help promote their product. For example ITV The Premiership is sponsored by coca cola. Coca Cola are sponsoring the programme and supporting them. Coca Cola in this case are clever they know that thousands of people are watching the premiership and therefore people will watch the coca cola advert. Sponsorships are deals and d not last for very long.
Product presentation
Product presentation is when a new product is given to the public for testing and to find out what people think. Pepsi recently launched their new Drink with hint of lemon there was a presentation offering free samples. People can taste it for free then if the customer likes it will sell.
Direct Selling
This is when a product does not need to be promoted or it is already promoted well enough and is sold straight away.
The Internet
The Internet over the years has become a huge tool in advertising products and services if you click on the Internet there will be adverts banners on web pages attracting customers. Advertising can be combined in different ways such as a website based on computers may have advertising related to computers.
I have decided that to promote my product I will use the Internet, sponsorship and advertising I have chosen these because it is not that expensive and will draw a lot of attention because a lot of people use the internet and a lot of people watch T.V or Support a team.
I have chosen the Internet a lot of people use the Internet I think that my product will benefit from being promoted through the Internet especially on popular websites e.g. goggle and MSN. A pop up banner can be uploaded. Sponsorships can promote my product because a huge audience will view it. If I sponsor a major event such as the world cup my product will be watched by millions of people and will want to buy bullseye. In conjunction with the Internet I will advertise using junk mail sent to people, this would not cost much meaning that pizza hut can use the money saved to invest in other things.
What is e-commerce?
E-commerce is the use of electronic devices such as the Internet, and computer technology to make process of marketing more advanced and quicker. E-commerce is used by most successful businesses and it is less time consuming, cost effective and reliable.
E-commerce enables transactions to be made through the internet, this makes an organisations market larger because it is an alternative access of purchasing and is easier for customers. People use the internet a lot and it will attract online shoppers who will use this service to but the product. E-commerce makes business 24 hours a day because in a shop you can only purchase during opening hours, however the internet is always available and is easy to access.
E-commerce has become very advanced today and now digital television is offering the service of online shopping. It is saving time for customers and organisations and saving money.
E-commerce is an effective way of delivering products because it is reliable and is quick. Customers no longer have to go to the shops to buy a product they can now sit at home in there own comfort and place orders. E-commerce is EDI (electronic data interchange) meaning that it enables organisations to exchange information securely.
Innovation
Innovation is the process in which new products or services are brought to market. Organisations must keep up with competitors to make more profit this means good innovation.
Creativity
Creativity is when products include a unique look, taste or style. Creativity helps to build a companies reputation and show that they are prepared to try new things.
Insight
Insight is when an organisation takes account customers knowledge of a product and evaluates its market position. Insight also measures potential success with identifying problems, and tests alternatives.
These concepts can help a business with product development this can improve products without these concepts a business is unable to introduce new products that can help to make the market share larger.
Innovation can help a product evolve. Most products eventually decline in sales these conventions can help to revamp products.
These concepts can help to change market positions, for example the new mini car is completely revamped from its predecessor it is more modern, it is no longer the small car is use to be. Mini’s are now in a better market position because it has changed its look and has targeted different consumers making the sale a success.
Pizza Hut has had many innovative ideas it has established many pizzas and is a huge seller in the pizza market. Pizza Hut have a good mix of all the three mentioned above and its affect have made Pizza Hut a success.
Place
Place refers to the product, how will the product be distributed to the consumers. The product must get to its destination at the right time this means that decisions have to be made. If a product is sold in an environment where people are willing to spend then the product will sell well. The product must be available for its consumers and must be ready for purchase. There must be easy access for consumers to purchase products. This means that communication between the organisation and consumers must be to a good level. E-commerce is also used to distribute products through the Internet it is fast and makes it easy for consumers. I would deliver my product as quick as possible to maintain good service with customer relations.
My product is a pizza and it will be distributed to customers through both take-away and eat in giving customers more of an option.
Customer Service
Customer services and customer support is the department in an organisation which are constantly making improvements to thrive on customers requirements and what can be improved to make things easier for customers. A company that makes a lot of emphasis on customer service is Tesco “Every little Help”.
Training and motivation is involved in customer service because it is ensuring that customers will be getting good efficient, polite attention. If staff are motivated it will make customers more satisfied.
To support a customer who has bought my product I will make sure that the customer is happy with the product. If there should be a problem there shall be a helpline and there will be refunds and exchange available. If the problem with the product is serious we will offer compensation.
To effectively support a customer who is thinking of buying the product I will give trial pricing or sampling session that will be carried out in public areas. I will provide a mixture of experienced and inexperienced staff in the business because it will show that we are willing to take any one as a member of staff. The employees will be trained to deal with different situation in a good manner and with a clean presentation.
Constraints on marketing activities
There are many constraints, which limit the activities of marketing activities. These constraints protect consumers from organisations they purchase from.
There maybe problems such as: -
- Poor quality services or damaged goods,
- Goods or services which fail to match the descriptions applied to them
- Manufacturers or supplier’s negligence affecting the safety of the product or service
- Breach of contract
- Misleading offers, information, advertising or labelling
- Unfair terms in contract
Problems like these must not occur otherwise there can be complaints and the government can intervene if things get worse.
Ethical Issues
Ethical issues can affect a business because ethical issues are moral rules of what most people in the society accept. Most organisations try to function in an ethical manner. Consumer’s interests are important to organisations therefore potential areas where issues like GM food or contaminated food may seriously affect short-term demand.
Environmental Issues
An environmental issue concerns the wildlife and environment. It can easily affect the reputation of an organisation. Environmental issues are becoming more essential for competitiveness and survival of an organisation. Environmental management have been developed to control the effects on pollution, and there have been reduction in packaging and there has been more of an urge for recycling and energy efficiency in organisations.
Social Issues
Social issues are also important in an organisation social issues can not satisfy all stakeholders however it is an advantage that the organisation will make more goodwill social issues are highlighted in the media. If consumers are not happy with actions of organisations they can form pressure groups and put an organisation under pressure to make changes in something that is opposed.
These issues will affect Pizza Hut in all aspects. Pizza Huts ethical issues will concern its food that is supplied it will have to make sure that there is no GM food included in any of the products ingredients. The ingredients that are used will have to be fresh and at a good standard. Environmental issues will be when Pizza Hut does deliveries it is their responsibility that customers dispose the packaging. That is why most organisations are cutting down on packaging. Pizza Hut use recycled card to make boxes for pizza boxes and they will have to continue to show improvements in a positive way. The media can easily put a business under pressure by making a story about and criticising.
Stakeholders are individuals or groups who have a stake or interest in running an organisation. Stakeholders have some control over decisions on how an organisation competes in a marketplace.
Pressure groups are formal and approach organisations to fight organised campaigns. They have long-term objectives to complete a concern. For example an increase in pollution or traffic.
Pizza Huts stakeholders have to be careful because if for example they want to sell more pizza’s and make more earnings they will need to spend more on ingredients and this may mean using more meat where the requirement of hogs for pepperoni may be high causing pressure groups to move in.
The Trade Descriptions Act
This act ensures that all products or services are not misleading consumers with false information. It is a criminal offence if traders are selling goods with inaccurate description. Therefore it is very important that a product is described accurately. For example a TV is shown one colour in the picture and is not noted colour may vary from picture it is violating the trade description act.
Monopolies and Mergers Act
If a business expands it may become a monopoly and become the only supplier of a product the government makes rules to control the organisation that may have monopoly power in their business. The government therefore intervenes to protect consumers’ interest. Monopoly power may lead to consumers being exploited and with no alternative product or competition to make the quality of the product better or to make prices lower.
The Advertising Standards Authority (ASA)
The ASA is in control over all advertising except that on radio and television. This means that any form of press, outdoor advertising, direct marketing, screen promotions and sales promotions must comply with the ASA. The ASA makes sure that the advertisement is legal and that it is not misleading the consumer. It is not necessary for a company to comply with the ASA.
Pizza Hut will have to comply with all of these constraints. When Pizza Hut sells pizzas the ingredients that are used must be shown. Also the menu and pictures must be accurate customers can not be misled.
Pizza Hut must be careful when sending out leaflets of offers if the picture on a leaflet shows that a pizza is large with a lot of topping it is expected that when a customer goes to Pizza Hut to buy the pizza with same qualities.
