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Title of the term paper


Developing a marketing plan on Pizza Hut.

Company

Pizza Hut-Bangladesh
Group Name: CREATIVE
We like to satisfy but love to create first

Group Members:

I. D Numbers:

1. Azmir Hasnat....0720153 2. S. M. Riffat Wahid.0610094 3. Badrul Hasan .... 0620224 4. Md. Shahadat Hossain Emon.......0720257 5. Mehedi Jannat....0720395

Letter of Transmittal
19th April 2009 Noorjahan Parvaz Department of Business Administration Independent University, Bangladesh Subject: Submission of Marketing Plan of Pizza Hut. Dear Madam, It is an honor and great pleasure for us to present our marketing plan report on Pizza Hut. During threw process of constricting our assignment on Pizza Hut, we had the chance of experiencing and rediscovering our potential. This marketing plan gave us an opportunity to apply our theoretical expertise, sharpies our views ideas and communication skills and bride them with the real world of practical experience, which will be good start for our future professional career. We hope you will find the term paper presented in an appropriate manner. We deeply appreciate your cooperation. Thanking you and looking forward to receive your cordial approval of your submission. Sincerely Members of group:

1. Azmir Hasnat 2. S. M. Riffat Wahid 3. Badrul Hasan

ID# 0720153 ID# 0610094 ID# 0620224

4. Md. Shahadat Hossain Emon ID# 0720257 5. Mehedi Jannat ID# 0720395

School of business Independent University, Bangladesh

Acknowledgment
The successfully accomplishment of this assignment is the outcome of contribution and involvement of a number of people, specially those who took time share their thoughtful guidance and suggestion to improve the assignment .At the beginning we would like to pay our gratitude to the almighty for giving us ability to work hard under pressure. We have deepest gratitude to our respected course instructor Noorjahan Parvez. We are thankful to her for her continuous support and supervision, suggestion, providing us with valuable information that was very much need for the completion of this marketing plan for a new product. We also thankful to the several employees of Pizza Hut who gave us sufficient information of the company when we demanded to them. Finally, our sincere gratitude goes to our classmates who helped us whenever we needed.

Executive summary:
Pizza Hut, a world famous franchise international fast food chain has been in operation in Bangladesh for more than one year. They have started their operation in Bangladesh at the end of 2003. Since then, they have been able to attract a wide range of customers especially from the elite society. Some of their mouthwatering menus include the famous Pan Pizza- pizza made on a flat pan with delicious toppings of mushrooms, capsicum, beef and bar-b-que chicken. Even though there were several fast-food stores operating in Dhaka city, they in fact focused on a bit of every item. Pizza Hut is the first of its kind to concentrate only on pizza. Introduction of Pizza hut in Bangladesh has generated a fairly tough competition among the reputed and existing fast-food stores in Dhaka city. Our report focuses on the situation analysis of pizza Hut, international competitiveness and a thorough analysis of the marketing strategy in terms of Mission, Marketing Objectives, Financial Objectives, Target Market (s), Strategies, and Marketing Mix which includes price, product, place and promotion. The report also focuses on customer relationship management and offers recommendation to improve customer equity and customer relation. Finally an assessment on Pizza Huts SWOT analysis, five forces of industry competitiveness are provided. In the course of this report, we have discovered that there

are more to learn in the real life business scenario and that it differs from the text book information in several ways.

Table of Contents Index


Contents Page #

01. Introduction--------------------------------------------------------------------------- 07

02.Company Background-----------------------------------------------------------07

03.Pizza Hut in Bangladesh------------------------------------------------------- 08 04.Situation Analysis:


The

Company---------------------------------------------------------------- 10
Existing

products---------------------------------------------------------- 11
New

products---------------------------------------------------------------- 11
Market Summary: The

market------------------------------------------------------------ 12 Market

Demographics--------------------------------------------- 13 Geographic---------------------------------------------------- 13 Demographic------------------------------------------------- 13


Behavior Factors---------------------------------------------

13 Target Market Segmentation------------------------------ 14

and

Market analysis-----------------------------------------------

15 Market Needs--------------------------------------------------------- 16 Market Trends-------------------------------------------------------- 17


Market forecast----------------------------------------------

- 18 Market growth-------------------------------------------------------- 18
SWOT Target market graph----------------------------- 19 growth

analysis------------------------------------------------------------- 19 Strengths---------------------------------------------------------------- 20

7 Weaknesses-----------------------------------------------

------------ 21 Opportunities------------------------------------------------------- 22 Threats------------------------------------------------------------------ 23 Competition------------------------------------------------------------------- 23 Growth and share analysis--------------------------------------- 24 The five forces of industry competitiveness---------------- 24 Total revenue of global competitors--------------------------- 27
Product

Offerings------------------------------------------------------------ 27
Key

to

success----------------------------------------------------------------- 29
Critical

issues------------------------------------------------------------------ 29

05.Marketing Strategy:
Mission----------------------------------------------------------

------------------ 30
Marketing

objectives

and

goals------------------------------------- 30 Financial objectives------------------------------------------------------- 31


Branding

and

Positioning---------------------------------------------- 31 Marketing Mix---------------------------------------------------------------33


Product----------------------------------------------------

---------------- 34 Price----------------------------------------------------------------------- 37 Place----------------------------------------------------------------------- 41 Promotion-------------------------------------------------------------- 42


Customer

Relationship

Management

(CRM)--------------- 44 Ethical and Social Responsibilities------------------------------ 47 Marketing Research------------------------------------------------------48

06.Financial Analysis:
Break-Even

Analysis------------------------------------------------------50 Sales Forecast----------------------------------------------------------------- 79


Expense

Forecast------------------------------------------------------------ 83

07.Conclusion------------------------------------------------------------------------------- 84

08.References---------------------------------------------------------

----------------------- 84

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PIZZA HUT-BANGLADESH
01. Introduction:
The urban community in Bangladesh has always longed for a reputed fast-food chain to be in operation in this country, which add an extra dimension to the city life and would also facilitate a particular segment of the community to hang out in their free time. By opening a franchise store in Dhaka city, Pizza Hut has fulfilled the long-term dream of the city dwellers. They started their operation in Bangladesh at the later part of 2003. In our report, we have talked about the preliminary operation of Pizza Hut in Dhaka and how they have planned their marketing.

02. Company Background:


Pizza Hut started its journey in a busy locality in Wichita, Kansas USA in the year 1958. It was the idea of two college students and also brothers, Dan and Frank Carney who started the business with a capital of $600 borrowed from their mother. 1959 Pizza Hut is incorporated in Kansas and the first franchise unit opened in Topeka, Kansas. In 1971 Pizza Hut became the number one pizza restaurant chain in the world on both sales and number of restaurants. Pizza Hut got their big break in 1977 when PepsiCo by 3000 U.S units, bought them out. The Pizza hut management took a philanthropic effort when they employed 10,000 disabled people in different positions in the organization under the Job Plus program. 1997 On October 6, 1997, Tricon Global Restaurants, Inc. was formed as a result of a spin-off from PepsiCo Inc. of the three restaurant concepts - Pizza Hut, KFC, and Taco Bell. Pizza Hut launched "Totally New Pizzas", a quality initiative putting

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sliced, fresh vegetables and meatier meat toppings on pizzas. Currently they have 12,500 restaurants across 91 countries. Today, they are the highest-flying brand of 'Yum! Restaurants International. The franchises of Pizza Hut are spread all around the world covering major parts of the Northern hemisphere namely USA, Canada, Ireland, U.K and other major European cities. Currently Pizza Hut is the recognized leader in the fast-food business with a global asset of $25 billion. Every year, Pizza Hut uses more than 700 million pounds of flour, 525 million pounds of tomatoes and 700 million pounds of pepperoni. If all those pepperoni slices were laid side by side, they would stretch around the world twice and go to the moon! Their introduction into the subcontinent started when they came to India in 1996. From then onwards, they have been doing very productive business with excellent promotional campaigns.

03. Pizza Hut in Bangladesh:


Pizza Hut moved into Bangladesh with the motto of Think global and act local and their observed marketing activities totally agree with this motto. Pizza Hut started its operation in Bangladesh on the 6th of December 2003 under the banner of Transcom Food and Beverages (LTD) a concern of Transcom group Ltd, with the head operation of Bangladesh, Mr. Akku Chowdhury. Pizza Hut always maintains good quality service. They know what the customer wants and are also aware of the customers desired service. They are also aware of the customer's desired service. That is why the management and the employees are always trying to deliver the service that the customer desires from them. In this way, they believe that they would be able to maintain the topmost position in Bangladesh and thus giving them an upper hand over their competitors.

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The outlet, with a seating capacity of 220 persons, is located on South Avenue, Gulshan 1. Covering an area of 6000 sq ft, it is one of the largest Pizza hut in Indian subcontinent. This is the first of a total of five outlets that they plan to open in the country over the next three years. In all the outlets that they are planning to open, they are relentlessly trying to promote the sense of Family Pizza Place - a perfect outing place for any family. The main mission of Pizza hut Bangladesh is to serve the best pizza to any pizza lovers and also other customers. However, for the sake of proper commercialization, they have focused mainly on the upper middle class and higher-class residents of the Dhaka city. They have also targeted the foreigners residing in Bangladesh as their customers. Starting with this mission, Pizza hut Bangladesh won the excellence award for the year 2004, being the best restaurant all over the subcontinent. The award has been given to Mr. Akku Chowdhury and the whole Pizza Hut team, Bangladesh. The success of Pizza Hut relies heavily on delighting customers by ensuring that all their needs and desires are met in every way. Hence, they give strong importance to their marketing efforts to ensure that Along with customer satisfaction, they make sure, that the business makes money! Therefore, the first task is to understand their consumers from every aspect. In this regard, they have tried to gain a thorough understanding of their competitive environment and continuously strive to develop unique business ideas to make their business a success. Thus, Pizza hut has successfully attained a broad range of loyal customers, to whom pizza has gained extreme popularity. In order to expand this range, their marketing team is involved in developing new products and concepts, all the time.

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Above all, not only do they make GOOD FOOD, they are also famous for providing great service and dining experience, to give their valued customers more reasons, to return.

04. Situation analysis:

The Company: A brief information about the company are given below:
Company Name: Pizza Hut-Bangladesh Company Type: Franchise. Ownership: Transcom Food and Beverages (LTD). Parent brand: Yum! Brands. Industry: Restaurants.

Type of Product: Pizza

Brand Icon: Website: www.pizzahutbd.com

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Existing products:

Pizza Hut-Bangladesh is passionate about making and serving the best pizzas just like its other global franchises. Over the year, Pizza Hut has delighted customers with a variety of innovative pizzas. Pizza Hut sells pizzas in four different sizes: personal (an individual serving), small, medium and large, though most stores have done away with the small size. The menu of Pizza Hut in three branches in Bangladesh which are located at Gulshan, Dhanmondi and Chittagong is same. Existing product of Pizza hut in three branches are given below:
Pan Pizza. Italian Pizza. Thin n Crispy. Stuffed Crust. The Big New Yorker. The Sicilian Pizza. The Hand Tossed Pizza.

New products:

Recent products of Pizza Hut of Bangladesh are given below:


Seafarer: Shrimps, tuna, tomato chunks and mozzarella cheese. A true seafood

lover's blend of tuna and shrimps sauteed with herbs and garlic covered with tomatoes and cheese.
Seafood Symphony: Shrimps and red paprika with mozzarella cheese. Shrimps

sauteed with herbs and garlic topped with red paprika and mozzarella cheese.

15 The Works: Beef pepparoni, chunks of beef, BBQ chicken and chicken topped

with onions, mushrooms, black olives, capsicum and mozzarella cheese.


Beef Supremo: Beef pepperoni topped with beef chunks oozing with mozzarella

cheese; a delight for beef lovers.

Market Summary:

The Market: The market of Pizza hut in Bangladesh is not very competitive in
Bangladesh. The only large one competitor is Dominos which has several outlets in Dhaka. Pizza hut has the large market share as well as the customer share in Bangladesh. This company is not only a local company; it is very wide and big enough to meet their customer needs. It has very few competitors in local market but there are many competitors in global market. Pizza Hut of Bangladesh is considering socially elite people as their target market. Thats why they establish their two outlets in two aristocratic areas in Dhaka which are Dhanmondi and Ghulshan.

Market Demographics: Market demographics generally consist of three


factors. They are listed below- arosacative

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Geographic: Considering geographic target area in Bangladesh,


Pizza Hut targeted Dhanmondi and Ghulshan in Dhaka as the people of these areas are status sensitive. Pizza Hut also targeted Chittagong as they have an outlet there.

Demographic: Pizza Hut of Bangladesh always focuses on


teenagers. They encourage teenagers by offering many discounts and allowance. Pizza Hut also targeted high income and social class and educated people as a demographic segment.

Behavior Factors: Bangladesh is full of occasions. Bangladeshi


people have PAHELA BOISHAK, Valentines Day, Birthday parties, and many celebration parties. So, Pizza Hut of Bangladesh can use of these opportunities. They can deliver quality pizzas to the special occasion. Customers of Pizza Hut are willing to pay a premium for higher quality, tastier Pizzas. There is a value attributed to the more attractive presentation of a salad mix and many more.

Target Market:

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The target market strategy is undifferentiated. It means that they do not target any specific type of customer. Pizza hut started its journey with the focus of serving families mainly but they cater to people of all age group. Most of the male and female come in groups of friends. In fact the management claims that their target customers would be anybody who loves pizzas. Since it is quite impossible to focus on the entire target group, they have limited their attention to the foreigners living close to the diplomatic zone and the teenagers who come from an elite society. However, for the sake of proper commercialization, they have focused mainly on the upper middle class and higher-class residents of the Dhaka city. All the customers are coming both individual and with family or group and many pizzas are also taken out. They have also targeted the foreigners residing in Bangladesh as their customers. Their main focus is on offering a food that is made by fresh ingredient.

The market can be segmented into three target populations:


Individuals: people that dine in by themselves. Families: a group of people, either friends or a group of nuclear relatives dining

together.
Take out: people that prefer to eat Pizza Huts food in their home or at a different

location than the actual restaurant.

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Years

Market Analysis:
2004 Growt h 8% 9% 10% 8.9% 13000 9500 25000 48000 14500 10000 26500 51000 15000 10500 28000 53500 16000 12000 32000 60000 18000 13500 67500 2005 2006 2007 2008 CAGR 8.4% 9.0% 8.9%

Potential Customers Individuals Families Take out Total

36500 10.0%

CAGR of Individuals: {(1800013000) (14) -1}*100=8.4% CAGR of Families: {(135009500) (14) -1}*100=9.0% CAGR of Take out: {(3650025000) (14) -1}*100=10.0% CAGR of Total: {(6750048000) (14) -1}*100=8.9% NOTE: CAGR=Compound Annual Growth Rate.

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Market Needs: Regionally Pizza Hut of


Bangladesh is facing different market needs. As Pizza Hut of Bangladesh is targeting social elite people, they have to provide high quality as the customers needs. On the other hand, Pizza hut also targeted teenagers. The teenagers are always looking for tasty, stylish and delicious product at a minimum price. So, Pizza Hut have to be flexible in quality and price and design of the product. Pizza Hut satisfies socially elite people by delivering different kinds of products with different designs or features with very high quality. But for the teenagers, pizza hut arrange many discounts, allowance and many unique offers. Pizza Hut provides high-quality pizza to their customers. They seek to fulfill the following benefits that are important to their customers.
Selection: A wide choice of different Pizzas and other products with the

flexibility.
Accessibility: In Dhaka, there are two big outlets in getable places and

there is another huge outlet in Chittagong.


Customer service: Pizza Hut provides the customers high qualified

service. They always try to impress their customers with the level of attention of needs.
Competitive pricing: All products are priced competitive to true

substitutes with many discount offers.

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Market Trends: The market trend for Pizza Hut is headed toward a more
sophisticated customer. The restaurant customers today relative to yesterday is more sophisticated in a number of different ways.
Food quality: The preference for high-quality ingredients is increasing as

customers are learning to appreciate the qualitative differences.


Presentation/appearance: As presentation of an element of the cooking

experience becomes more pervasive, customers are learning to appreciate this aspect of the industry.
Health consciousness: Bangladeshis are becoming more aware of their

health, evidenced by the increase in individuals exercising and health club memberships, customers are requesting more healthy alternatives when they eat out. They recognize that an entree can be quite tasty, and reasonably good for you.
Selection: People are demanding a larger selection of foods, they are no

longer accepting a limited menu. The reason for this trend is that within the last couple of years the restaurant offerings have increased, providing customers with new choices. Pizza Hut customers no longer need to accept a limited number of options. With more choices, customers have become more sophisticated.

21 Market Forecast:

40000 35000 30000 25000 20000 15000 10000 5000 0 Individua ls F milies a T k out ae

2004

2005

2006

2007

2008

Market Growth:

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In 2002, the market of Pizza Hut reached at $8 billion dollars. Pizza sales are estimated to grow by at least 10% for the next few years. This growth can be attributed to several different factors. The first factor is an appreciation for health conscious food. While not all pizza is "good for you," particularly the cream based sauces, pizza can be very tasty yet health conscious at the same time. Pizza is seen as a healthy food because of its high percentage of carbohydrates relative to fat. Another variable that is contributing to market growth is an increase in the number of hours their demographic is working. Over the last five years the number of hours spent at work of their archetype customer has significantly increased. As the number of work hours increases, there is a high correlation of people that eat out at restaurants. This is intuitively explained by the fact that with a limited number of hours available each day, people have less time to prepare their meals and eating out is one way to maximize their time.

Target Market Growth

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1 0.00 % 9.50 % 9.00 % 8.50 % 8.00 % 7.50 % Individual F ilies Take out am Individual, F ilies and Take am , out

SWOT Analysis:
SWOT stands for Strengths, weaknesses, opportunities, and threats. SWOT analysis reveals the internal strengths and weaknesses and external potential opportunities and threats of a firm. The SWOT analysis of Pizza Hut will give us the overall profit potential of this firm. Our SWOT analysis has tried to focus on the controllable factors that Pizza Hut has already taken into consideration.

Strengths:

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The brand image of Pizza Hut is presumed to be one of the greatest strength they
possess. The customers of Bangladesh are easily attracted by the brand image of the Pizza Hut.

As a successful international food chain Pizza Hut knows how to blend with the
different cultures across the globe. This is the story behind the international success of this company and considered one of the greatest strengths of Pizza Hut.

The strictness of the procedure to acquire and retain the franchising of Pizza
Hut is one of the strengths of the company. Through this the franchisees will be able to maintain the quality of food and the quality of service thus the customers will get the maximum satisfaction with the touch of international hospitality.

In Bangladesh, the location of Pizza Hut can also be regarded as one of its prime
strengths. Elite members of the society, one of their target audiences, frequently visit Gulshan Avenue and the eye-catching exterior decoration of the franchise makes people to stop for a while and take a look inside. As they move inside, they do not usually leave without having a bite. Also the floor space is another encouraging aspect of it.

An educated and smart group of young energetic employees has added to the
many plus points of Pizza Hut. Their sober behavior and efficient way of handling customers has certainly added value to the franchise.

Pizza Hut has been to be a division of PepsiCo since 1977 and now an integral part
of Tricon. It is the world's largest pizza restaurant as outlined above. It has a good reputation and a good branding. It can raise the profile of the company to gain the

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ability to sell at higher price, to recognize its products through the corporate image and to launch new products more easily.

Pizza Hut also offers a sit-down, conversational type restaurant where families can
take their children for birthday parties for example.

Pizza Hut's broad selection of products also makes it easier for them to market to
different market segments.

Weaknesses:
Globally, Pizza Hut faces one major problem and that is the internal conflict
between the franchisees. Such problems are widespread when there is more than one franchise of the same company in the same country.

The franchising fee of Pizza Hut is very high as the money has to come from
franchisees own pocket. This has an adverse effect on the pricing of its products in Bangladesh which is a quite high comparatively. This high price acts as a barrier of tapping into the full market potential of Bangladeshi consumers.

Due to heavy traffic congestion in Dhaka city and there is only two outlet of Pizza
Hut, it is not possible to deliver hot pizza in 30 minutes. As a result, there is no home delivery service like the other fast food shops for examples Dominos Pizza, Subcity.

Unavailability of quality raw materials in Bangladesh is a big weakness to be


considered which affects the price and quality of the product.

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The initial set up cost is too high to invest for an investor in this country which
increases the risk of the project.

They are yet to develop any specific meals for the children like the other fast-food
chains in Dhaka.

Very weak promotional campaign can also be regarded as one of their major
weaknesses. People expect that such a large multinational franchise would be creative in their promotional approaches. But when their advertisements are very rarely seen in the newspaper and are not aired on the T.V where their main competitor Dominos telecasting ads very frequently.

Opportunities:
The demand for Pizza Hut is here in Bangladesh among the young generation
and this is the best opportunity for Pizza Hut to increase their profitability here and capture a very big market share.

Another opportunity that Pizza Hut can have is introducing a new ordering
online system. Anyone with Internet access can order whatever they wish and get it delivered to their house without even speaking to someone.

The cheap labor cost in Bangladesh acts as a very good opportunity for Pizza
Hut as they can run the business relatively at a lower cost in spite of the huge initial set up cost with high franchising fee.

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Threats:
Pizza Hut's number one threats are from their competitors. Currently, their closest
competitor is Domino's Pizza. Domino's main competitive advantage over Pizza Hut is their price. It is generally lower than Pizza Hut. Also, Domino's was very profitable when they ran the promotional deal of delivering a pizza at home.

Recently created Jamuna Future Park there will be the first outlet of
MacDonald in Bangladesh which is a global competitor of Pizza Hut. So, this can be a big threat for Pizza Hut of Bangladesh.

The other competitors who are considered as threats for Pizza Hut for delivering
quality of food and service and also with the experience of international market includes, KFC, Nandos etc.

Competition
Competition of Pizza Hut is competitive even though they are operating their operation as a market leader of the Pizza market. Their main and direct competitor in Bangladesh is Dominos. Dominos has several outlets throughout the Dhaka. They also provide quality Pizzas at a competitive price. But they have less option regarding the menu comparing with Pizza Hut. Another competitor is pizza corner. It has one outlet in Dhaka. It has low option in terms of menu and low quality comparing with Pizza Hut. Other indirect competitors are Nandos, KFC, BFC, Helvetia, and so on.

Growth and Share Analysis:


Growth and Share

28 Competitors Dominos (Pizza) Pizza Corner (Pizza) Other Average Total Price BDT 165(Min.) BDT 120(Min.) BDT 50(Min.) BDT 111.67 BDT 335.00 Growth Rate 8% 7% 7% 7.33% 22.00% Market Share 20% 15% 30% 21.670% BDT 65.00%

THE FIVE FORCES OF INDUSTRY COMPETITIVENESS

The five forces that determine industry competitiveness are:


BARGAINING POWER OF BUYERS BARGAINING POWER OF SUPPLIERS THE NEW ENTRANTS THE THREAT OF SUBSTITUTES RIVALRY

BARGAINING POWER OF BUYERS:

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All companies when entering into a foreign market predicts the likelihood of maintaining their customers. In the market of Bangladesh, Pizza Hut has a number of competitors, such as Dominos Pizza, Pizza Corner, Wimpy, KFC, Helvetia, Kings Confectionary etc. So to attain a large market share the company is trying to offer competitive prices and carry out extensive promotions. Since Pizza Hut offers a wide variety of items it also helps the shop to attract a larger number of customers, where they can get quality meals for themselves.

BARGAINING POWER OF SUPPLIERS:

All companies when entering into a foreign market looks at the power of the industrys suppliers to see if it can gain a competitive advantage in the market. In this case, the franchiser of Pizza Hut is trying to build up a supply chain that is necessary to maintain production. But till to date the franchiser is fully responsible for supplying the materials to Pizza Hut in Bangladesh.

THE NEW ENTRANTS:

Entry of Pizza Hut in the market of Bangladesh had opened up an opportunity for new firms such as McDonalds, Barista caf, House of Doughnuts, Dunkin Doughnuts entering the industry. Pizza Hut will continuously try to determine the impact they might have on their company. So to deal with such new entrants pizza Hut will keep their prices competitive and high customer loyalty by maintaining the quality of their products. On

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the other hand having a strong brand image and product differentiation Pizza Hut will also act as a threat to the new entrants in the market.

THE THREAT OF SUBSTITUTES:

Pizza Hut is always considering the availability of substitute goods, such as burgers, shawrma, chicken fry etc offered by various international fast food chain, hotels, and restaurant and anticipate the reactions of their customers. So to offset such competitive forces they are trying to keep the prices competitive, which will help them to maintain the existing customers. Their product differentiation is also helping them to avoid the threats of these substitutes.

RIVALRY:

Pizza Hut to maintain competitiveness is examining the rivalries that currently exists between themselves and the competitors and seek to anticipate future changes in this arrangement. There are a number of rivals for Pizza Hut, such as Dominos Pizza, Pizza Corner, Wimpy, KFC, Helvetia, Kings Confectionary etc. Common strategies that Pizza Hut must use to maintain and increase their market strength include: Increasing productivity by training the workers. A trained workforce will mean more efficiency, thus reducing overall costs. Differentiating current goods and services from those of the competition through quality and competitive pricing.

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Providing a spacious homely and calm atmosphere in their store so that customers feel the urge to frequently visit the place.

Revenue of global competitors:

Product Offering:

Pizza Hut provides the perfect mix of great food, great service and great place at a great value to their customers who are looking for a grand experience. They believe in positive intension, and maintain a strong internal environment by developing their competitive work force, which they trust. The latest technological tools along with the best support systems from their franchiser YUM! International is used to ensure easy workflow and to make their restaurants the favorite in the Country. Pizza Hut-Bangladesh is passionate about making and serving the best pizzas just like its other global franchises. And that includes going to any length to make the customers experience with Pizza Hut an enjoyable one. The signature pizza crusts at Pizza Hut are Pan Pizza, Italian Pizza, Thin

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n Crispy, Stuffed Crust, the Big New Yorker, the Sicilian and the Hand Tossed Pizza. Initially, two of these crusts are being served at the new outlet in Dhaka Pan Pizza, which is golden brown and crisp on the outside, and light and fluffy on the inside; the Italian Pizza, made with a traditional Italian sauce, with a thin and crispy crust. Other than pizzas, Pizza Hut also offers a range of Soups, refreshing Beverages, Pasta, Shrimp cocktail, Chicken Calypso, Shrimp and Chicken Mushroom, fresh and crispy fruits and vegetables (and dressings) at the Salad Bar, and delightful Desserts. They produce the food on the basis of order. They try to deliver the production as quickly as possible.

Keys to success:

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Some key points by which Pizza Hut Bangladesh is taking the taste of success are given below:
Cleanliness Hospitality Accuracy Maintenance Product Speed

Critical issues:
Globally, Pizza Hut faces one major problem and that is the internal conflict between the franchisees. Such problems are widespread when there is more than one franchise of the same company in the same country. The franchising fee of Pizza Hut is very high as the money has to come from franchisees own pocket. This has an adverse effect on the pricing of its products in Bangladesh which is a quite high comparatively. Pizza Hut's opportunities are almost endless. Unavailability of quality raw materials in Bangladesh is a big weak spot to be considered which affects the price and quality of the product. Their prime weak point is the lack of home delivery service like the other fast food shops for examples Dominos Pizza. Very weak promotional campaign can also be regarded as one of their major disadvantage. Currently, their closest competitor is Domino's Pizza. In the Jamuna Future Park there is a possibility of opening Dominos Pizza and brand new outlet of MacDonald.

05. Marketing Strategy:

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Mission:
Think Global, Act Local- with this motto Pizza Hut, Bangladesh dedicated its resources and offered excellent service in providing delicious pizzas and at the same time achieving customers satisfaction. Their mission statement is given below: Pizza Hut provides the perfect mix of great food, great service and great place at a great value to our customers who are looking for a grand experience. We believe in positive intension, and maintain a strong internal environment by developing our competitive work force, which we trust. The latest technological tools along with the best support systems from our franchiser YUM! International is used to ensure easy workflow and to make our restaurants the favorite in the Country.

Marketing Objectives and Goals:


The marketing objectives of Pizza Hut of Bangladesh are given below: To hold the number one marketing position in the fast-food industry in Bangladesh. Be recognized chiefly for providing quality products, excellent care and satisfaction to the customer. To increase the number of pizza sales by increasing the number of outlets in Dhaka city as well in other profitable parts of Bangladesh. Successfully open two more outlets in Dhaka city in areas like Uttara and Dhanmondi in the next 2 years and also in Sylhet. To open a kids zone and serve meals specially designed for kids.

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Financial objectives:
The financial objectives of Pizza Hut of Bangladesh are given below:

Increasing gross profit by at least 10% by every year. Pizza Hut plans to roll out another 3 outlets in Bangladesh within next 3 years. Accelerating the internal growth through the development of more innovative product. Increasing growth rate at least 10%. Keeping sufficient amount of money for advertisement in mass media. To gain 70% of the market for pizza industry by 2010. Maximizing long-term return to shareholders while being mindful of their overall

responsibities To achieve a 25% return on capital employed by 2011.

Branding and positioning:


Pizza Hut has been very successful in positioning their brand name in the target customers mind. The only things that Pizza Hut accomplishes while brand positioning is that it has a superior product attribute. They can give a unique taste and experience when one visits Pizza Hut. Pizza Hut positions themselves with strong benefit attribute by giving excellent service within convenient time. The strongest attribute in brand positioning - beliefs and values, does not have so much to do with Pizza Hut. All they can do is make the consumers believe that they are given extra care and importance. Other than that, eating pizza doesnt actually make you feel more important or attractive.

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Pizza Hut was very careful when it selected its name. The name Pizza Hut was named keeping in mind all the crucial aspects needed to name a company in order to be recognized in consumers mind. An important part of branding is that the name itself should by itself inform the consumer about what the company is all about. For this instance anyone can identify that Pizza Hut has something got to do with pizzas. Pizza Hut is easy to pronounce, recognize and remember. The brand name Pizza Hut is distinct from most of its competitors (especially in Bangladesh). Another important thing is that the name should be extendable and Pizza Hut can be easily extended to www.pizzahut.com. The name of a company should be easily translated into foreign languages. In order to avoid any sort of dispute or dissatisfaction when the name is translated giving any vague or indecent meaning is not probably possible with Pizza Hut. Finally, Pizza Hut like it should be is registered and has legal protection. We can say that Pizza Hut gave a lot of thoughts when selecting their name in order to have a positive and long-lasting position in consumers mind. Another important thing that should be noted is that Pizza Hut in its all outlets serves only Pepsi Co beverages. This is another plus point why consumers are likely to remember the brand name Pizza Hut, since Pepsi is a very well recognized brand by itself and almost everybody knows about their product. It is quite easy for Pizza Hut to introduce additional items to their product category under the same brand name, such as new flavors, forms, colors, ingredients, or package sizes. The vast majority of all new-product activity consists of line extension. After having a positive brand positioning in consumers mind Pizza Hut has been quite successful managing their brand. They offer the same quality and gives higher priority to all consumers throughout the world. For all these reasons Pizza Hut has been able to serve so many consumers for such a long time and hopes to do the same in the future.

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Marketing Mix
Pizza Hut marketing mix is comprised of the following approaches to product, pricing, promotion, distributing. The marketing mix concept is regarded as a set of controllable variables at the disposal of marketing management that can be used to influence customers

Product:
Variety Quality Design Features Brand name Packaging Services Target customers Intended positioning

Price:
List price Discounts Allowances Payment period Credit terms

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Promotion:
Advertising Personal selling Sales promotion Public relations

Place:
Channels Coverage Assortments Locations Inventory Transportation Logistics

Pizza Hut has been able to attract a wide range of customers in Bangladesh especially from the elite society. Pizza Hut is the first of its kind to concentrate only on pizza. Our report focuses on the basic marketing research, international competitiveness and a thorough analysis of the marketing strategy in terms of price, product, place and promotion and suggests ways to improve the 4Ps. There objective is compete on quality

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not compete on price. They have achieved this by a quality initiative putting sliced, fresh vegetables and meatier meat toppings on pizzas. Pizza Hut moved into Bangladesh with the motto of Think global and act local and their observed marketing activities totally agree with this motto. Pizza Hut always maintains good quality service. They know what the customer wants and are also aware of the customers desired service. That is why the management and the employees are always trying to deliver the service that the customer desires from them. In this way, they believe that they would be able to maintain the topmost position in Bangladesh and thus giving them an upper hand over their competitors. Pizza Hut-Bangladesh is passionate about making and serving the best pizzas just like its other global franchises. They have focused mainly on the upper middle class and higher-class residents of the Dhaka city.

Product:
The first and the only truly international chain restaurant in Bangladesh, Pizza Hut offers the same great taste, wonderful dining experience and excellent service. Since the majority of the population in Dhaka city is Muslim, it is very important that Pizza Hut serves meals, which are to be accepted by their respectful customers. The Pizza Hut team needs to assure that the food served is HALAL since it really does not matter in other countries whether the food is HALAL or HARAM as long as the foods are hygienic. Pizza Hut is offering different types of product. In planning its marketing offering, the marketer needs to address five product levels. The product they are offering must should have the core benefit, that the service or benefit the consumer is really buying. Pizzas have the core benefit as because they are minimizing the hunger. At the second level, the

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marketer has to turn the core benefit into a basic product. Pizza Hut is offering pizzas that have vegetables and meatier meat toppings and so on. At the third level, the pizza hut marketer is preparing an expected product (a set of attribution and condition buyers normally expect when they purchase the product). Pizza Hut marketer is offering fresh pizza which are made by fresh ingredients. At the forth level the marketer prepares as augmented product that exceeds customer expectation. Anyone can easily differentiate pizzas product from Dominos product. At the fifth level stands the potential product, which encompasses all the possible augmentations and transformations the product or offering might undergo in the future. Pizzas have this opportunity because any time pizza marketers can add different features in the future. The vast array of goods consumers can be classified on the basis of shopping habits. We can distinguish among convenience, shopping, specialty and unsought goods. Shopping goods are goods that the consumer in the process of selection and purchase, characteristically compares on such bases as suitability, quality, price and style. In the process of purchase of pizza consumers can easily compare the product with the competitors based on quality. So pizzas are shopping goods. The product they are offering is tangible.

Product attributes:
Developing a product or service involves defining the benefits that it will offer such as product quality, product feature, product style and design.

Product quality: Ability of a Product to Perform Its


Functions; Includes Level & Consistency. Pizza Hut is offering a certain level of quality all over the world and any one is buying a pizza form Pizza Hut can expect a certain level of consistency of the pizza.

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Product Features: helps to differentiate the Product


from Those of the Competition. Anyone buying a pizza from Pizza Hut can easily differentiate the pizza from Dominos or other competitors.

Product Style & Design: Process of designing a


products style & function. The outlooks of pizzas are its design and if the outlook has the benefit we call it design. The outlook of Pizza Hut has some benefit as though it can attract customers by its delightedness.

Price:
Selecting the pricing objective:
Pizza Hut wants to maximize its market share by product quality leadership. The company first decides where it wants to position its market offering. The clear a firms objectives, the easier it is to set price. Pizza Hut wants to be the leader in the market of the world. Survival was a short run objective for Pizza

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Hut; in the long run, Pizza Hut learned how to add value or face extinction. Maximize current Profit is not the goal of Pizza Hut in the short run. Some company wants to maximize their market share by pricing low. They believe that low price will lead to higher sale and higher sales will lead to lower unit cost and higher long run profit. But Pizza Hut cannot offer lower price because they are offering quality product. Companies unveiling a new technology favor setting high prices to maximize market skimming. Market skimming is where prices start high and are slowly lowered over time. Pizza Hut is using maximizing market skimming strategy. Pizza Hut aim to be the product quality leader in the market. They are offering high level of perceived quality and taste.

Determining Demand:
Each price will lead to a different level of demand and therefore have a different impact on a companys marketing objective. Price sensitivity reflects that in case of increasing or decreasing price, what will be the response of the customers. Customers are very price sensitive in case of specialty product, less price sensitive in case of convenience product. Though pizzas are not specialty product nor convenience product, but shopping product, the marketer has no chance of pricing high. They also can not charge low because they are providing quality product. Most companies make some attempt to measure their demand curves using several different methods. Companies use statistical analysis method to measure their demand. Pizza Huts Pan Pizzas sales in 2010 will be 15000 unites, 2011 sales will be 17000 unites and 2012 sales will be around 19000 unites. Price experiments can be conducted. Pizza Hut gives discount to see the responses of their customers and found that sale increases in the discounted period. Another can be use that is survey. Company can ask customers if the price will increase than what will the customer do? Whether they will purchase the same quantity in case of price increase or not? Marketers need to know how responsive, or elastic, demand would be to a change in price. If demand hardly changes with a small change in price, we say the demand is

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inelastic. If demand changes substantially with the change in price, than we say elastic demand. Pizza Hut can change its price and then measure the elasticity. If demand is inelastic, than they can increase the price of their product. Now we will consider the cost of the company. Pizza Huts cost of the company can be divided into two parts, fixed cost and variable cost. We measure detail those things in the financial part. Fixed cost for 2010 will be 4700000 and variable cost will be 2000,000. Total quantity sale will be 70750. So their average cost will be 6700000/70750 = 94.70 per unit. Now we will consider accumulated production for the Pizza Hut. Accumulated production is total production. The decline in the average cost with accumulated production experience is called the experience curve learning curve. After a long experience, which is gathered from working a long time, they have now experience in making pizzas. They can produce pizzas with lower cost than their competitors. So they can offer pizzas with lower cost than their competitors. Activity based costing tries to identify the real costs associated with serving the each customer. It allocates indirect cost like clerical costs, office expenses, supplies, and so on, to the activities that use them, rather than in some proportion to direct cost. Both variable and overhead costs are tagged back to each customer. Pizza Hut should do their activity based costing correctly. Now we will consider the markup pricing for Pizza Hut. Now we are considering mark up price for Pan Pizza. We assume that the desired return on sales is 45%. Variable cost per unit Fixed cost (30% of unite sale) Expected unite sales The unit cost = variable cost per unit + fixed cost / unite sales = tk. 88 Markup price for Pan Pizza = Unit cost/ (1-desired return on sales) = 88 / (1-.45) = tk.160 tk. 61.6 tk. 396000 15000 unit

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Though Pizza Hut sale directly to its customer, they can sale the product at tk. 180. By using the same technique we calculate the mark up price of Italian pizza is tk. 190, Thin n Crispy is tk. 150, Stuffed Crust Pizza is tk. 160, The Big New York is tk. 160, Soups is tk. 80, refreshing Beverages is tk. 50, scrumptious Pasta is tk. 130, fresh and crispy fruits and vegetables at the Salad Bar is tk 70, delightful Desserts is tk. 45. Perceived value pricing is that the marketer must deliver the value promised by their value proposition, and the customers perceive this value. Pizza Hut using the other marketing-mix elements, such as advertising and sales force, to communicate and enhance perceived value in buyers mind. Perceived value of Pizza Hut is made up of several elements, such as buyers image of product performance, customer support, and softer attributes such as the suppliers reputation, trustworthiness. There are three types of buyers for Pizza Hut, Price buyers, value buyers and loyal buyers. Pizza Hut need different strategies for different buyers. Such as for price buyer Pizza Hut offering striped-down product and reduced services. For value buyers Pizza Hut is keeping innovative new value and aggressively reaffirming their value. For loyal buyers, Pizza Hut is investing in relationship building and customer intimacy. Value pricing is for loyal customer company is charging low price for a high quality offering. Pizza Hut cannot use everyday low pricing and high-low pricing. Because they do not has retailer. They are selling their final product directly to their customer. But, they can keep lower price because they are not bound for that to anybody. In going-rate pricing, the firm bases its price largely on competitors prices. Pizza Hut is following going-rate pricing. They are charging slightly high than their competitors because their image positioning is high in minds of consumer. Auction type pricing is growing more popular, especially with the growth of the internet. One major purpose of auction is to dispose of excess

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inventories or used goods. Pizza Hut needs to be aware of the three major types of auctions and their separate pricing procedure. Currently Pizza Hut is not using this type of pricing. For holding marketing position, Pizza Hut is practicing Psychological Pricing Strategy during promotions and other special occasions. The authority can take steps to offer pizzas at an economy price (e.g. a price range of Tk. 80 to Tk. 100, (excluding the VAT). The ground for recommending this price range is, since Pizza Hut can afford to offer pizzas during sales promotion at Tk.99, therefore it is justifiable to offer pizzas at the above recommended price. The manager informed us that this increases their profit margin by around Tk.40000.

Place:
If Pizza Hut wants to make significant profit out their operation in Bangladesh, like in any other countries it is very important to position it in proper locations. Currently they have their outlet in Gulshan-1, Dhanmondi and Chittagong, which is a very good locations and have access from all parts of the country. The nearby roads and the environment itself are satisfactory. Even though they have these outlets located in a very good locations many people is unwilling to travel all the way from their home to have pizzas because of the distance. So, Pizza Hut are planning to set up 3 more outlets in different suitable position in Dhaka.

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The distribution policy for Pizza Hut is that they distribute their final product to the customer directly. Pizza Huts market coverage is the whole world. They use logistic service level. They bring their ingredients from their supplier through different kind of transportation. They collect their required ingredient from different source. They have only upstream suppliers; they do not use any down-stream channel. They have chosen the most favorable location to available their product to the final customer. They have built long term relationship with their suppliers.

Promotion:
Since the focus has been to develop a product mix, which uploads the tradition of Bangladesh, it would be wise to promote this product through a campaign, which would clearly emphasize on cultural values. Blending the western concept with the local image will be a difficult task and at the same time not a very good approach for marketing. Therefore, if Pizza Hut introduces or launches their new product during any traditional festival that the Bengalis give value would be given higher priority. For instance, rather than launching the product during any time, it would be better if the product is launched on the occasion of Pahela Baishakh. This can add a positive impact and people would really trust to what Pizza hut means saying Think Global, Act Local. Since Pizza Hut does very little promotions on T.V,

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most of the consumers have heard about Pizza Hut mainly through friends and relatives. Our survey showed that 51% of the IUB students have heard of it from word-to-mouth sources and 39% were informed through leaflets. The Pizza Hut authority can take initiatives to air more number of ads on the television and newspapers and also in attractive posters on selected magazines could proved to be the best promotional tools for Pizza Hut. The ads on T.V should be broadcasted in Channels like NTV, Channel I, Channel 1(one), and Bangla vision during the time of 6pm 11pm, which is considered to be the prime time for families. One advertising promotion that Pizza Hut undertakes is, they distribute leaflets hand to hand in front of universities like IUB, NSU, EWU, BRAC and AIUB etc, to attract more and more students. In the month of March in 2008, Pizza hut provided the Shadhinota Offer on the occasion of the Independence Day. Later, they decided to extend the offer till the end of April because of the Bengali New Year coming up. The offer included one personal pan pizza (PPP) for Tk 99 only. Such an offer was also given during the month of Ramadan when customers were allowed to have as much as they can paying Tk 200 only. One of the main focuses of Pizza hut should be home delivery service. This could gain more customers. Promotion can also be done through direct marketing. Customers can be provided special discounts on the Valentines Day, Christmas Day etc. The local authority should keep in pace with all the current trends of the world and try to identify the needs of the younger generation. In order to have a leading position, adapting the ever-changing world is very crucial.

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This is a very important tool for an acclaimed business organization like Pizza Hut operating in a market like Bangladesh. So, Pizza Hut can improve its operations by conducting a rigorous advertisement campaign. This is very important for Pizza Hut as well as we all know that, a big portion of our target customer, the younger generation of this country is well aware of Pizza Hut. So there can be any misconception among the customers about Pizza Hut or about the food of Pizza Hut as they did not get the information from any formal or official sources. So this is a big time for Pizza Hut to stand strong and declare their standing on any issue through their promotion to avoid these misconceptions (if any) among the target customers. This is also an opportunity for Pizza Hut to acquire those customers of this country who are not at all aware of Pizza Hut and that can be done through effective promotion. The promotion plan for Pizza Hut is as follows: Our advertising campaign is for 1 year. We want to divide our advertising into four segments: 1st month intensive advertising with 360 degree approach 2nd month advertising with little less effort 3rd month advertising with minimum effort After 3 months we will run ads on television channels and newspapers randomly to get in touch with our customers. Between this time if there is any occasion and festival or any new offer is introduced then there will be suddenly a lot of TV and news paper ads to get the customers noticed about the offer.

Customer Relationship Management

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One of the main reasons for Pizza Huts success is building close customer relationship. The brand image of Pizza Hut helped it to gain eager consumers but their more than a year journey was successful because of building profitable customer relationships by delivering superior customer value and satisfaction. It is what Pizza Hut calls Customer Mania. Since the promotion and advertisements of Pizza hut are limited, it is only the satisfied customers who spread words about Pizza Huts superior values. The effort and the extent to which Pizza Huts employees undergo to satisfy consumers are given below in some dramatic illustrations. On a rainy night, a couple on their first visit to Pizza Hut was escorted by Amit - one of the employees of Pizza Hut. He then introduced them to the server, Shohug. While serving their food, Shohug somehow found out that it was their first wedding anniversary. He went up to Amit and requested to be released for 5 minutes. He came back drenched to the bone, with a bouquet of flowers in his hand. Shohug along with the team then went up to the couple and wished them. The couple was totally taken aback and on their way out, wrote on the comment card that theyll never forget this visit which had indeed touched their hearts. In yet another busy day at Pizza Hut, Jasim - a server, came up to Akku Chowdhury, the directing manager of Pizza Hut and told him about one of the customer who did not have any local currency (Tk) but only carrying dollars with him. He was not even carrying a credit card. Mr. Akku Chowdhury, went up to Mr. Islam, the customer and found out that he had come with a guest, and would be put in a very awkward position of his guest had to pay. Mr. Akku did not hesitate for even a moment and settled the entire bill from his own pocket. Till now the customer has not come back to refund the money, but at that moment Akku with his instant foresight had saved Mr. Islam from the embarrassment.

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A foreign family came with their child to the Gulshan outlet of Pizza Hut. The child was playing in the childrens zone with his mother. The child started crying out of hunger while the family was eating, as the toddler could not eat the pizza. The mother had forgotten to bring the milk for the child. Akku saw the plight of the child and rushed to the nearest shop and bought a pack of milk. The family was so appreciative of the great concern shown by Akku that they thanked him profusely and acknowledged that they had never seen such service all their life. These are only a handful illustration what Pizza Hut is ready to do to delight the consumers. Serving the consumers within the promised is another of their strengths. Usually Pizza Hut serves the consumer a few minutes before the promised time, which not only satisfies the consumers but also delights them. Pizza Hut goes to the length of satisfying consumers by providing various entertainment and surprise gifts. Standing on the chair, singing and dancing are one of their unusual but frequent ways of wishing a birthday person. Customer Relationship Management simply doesnt stop here. Giving promotional offers during Noboborsho (Bengali New Year), Shadhinata Dibosh (Independence Day) and Ramadan month reflects the franchising companys respect for our culture and impresses upon the mind of the consumer that Pizza Hut is thinking globally and acting locally. All the initiatives and the efforts that Pizza Hut undertook to delight the consumers with outstanding service earned them on January 2004, the 22nd Restaurant Excellence Award in the whole subcontinent. As mentioned before in this report that Pizza Hut does not do any customer segmentation hence they give all consumers equal priority. But it can be recommended that to increase

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consumer equity, Pizza Hut can offer their loyal and regular customers discounts once or twice a year. Though Pizza Hut do send their promotional offers and birthday wishes to their

consumers based on information collected through questionnaires and feedback received from the net, our survey revealed that most of the consumers who dine out at Pizza Hut hardly ever return the questionnaire. Pizza Hut can increase consumers feedback by making loyal consumer of the year through feedback and can offer special promotional offers for the individual and the family. This will not only increase feedback for Pizza Hut to know their consumers better but consumers will be more eager to give feedback and might more frequently dine at Pizza Hut. As Pizza Hut is open from noon to midnight, they have some regular and fixed number of customers at late night. They can offer a free appetizer item with pizzas or other promotional offers starting from 11:00 pm-12:00 am which can increase the number of late night consumers. Though Pizza Hut does an excellent job of satisfying customers but the above suggestions are worth mentioning as it always costs 5 times more to attract a new customer than to keep a current customer happy.

Ethical and Social Responsibilities


To earn customers trust and to stay put in business, it is indispensable that a company should practice ethical and social responsibilities. Pizza Hut imports all its raw materials from abroad but they also keep in mind the religion sensitive people of this country. Therefore, all the raw

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materials purchased are halal and under strict monitoring of the Pizza Huts authorities. Under Pizza Huts code of conduct, they strictly maintain cleanliness and hygiene food and never serve a day-old product items. It is also ethical that Pizza Hut provides a nutritional chart in its website which informs health conscious consumers how much cholesterol and other proteins that they are having. If Pizza Hut includes the ingredients used for their items in the website and have a ingredient chart in their outlet, this would then be a ethical responsibility to inform consumers who might have restriction on consumption of certain ingredient items. Pizza Hut is also going to introduce the online delivery service within the next few months. It is their ethical responsibility to protect consumers private information on the website. Pizza Hut often undertakes social responsibility. As they are the part of the society, Pizza Hut takes part in performing social responsibility. For example, Pizza Hut treated 150 orphans for free in their fast food shop. Pizza Hut already practices green marketing the use of environmental friendly materials such as water based paint and recycled Pizza boxes. Pizza Hut defines its mission statement in broad social terms rather than narrow product terms and focuses their business actions towards socially responsible marketing. Their mission statement includes not only welfare of its consumers and employees satisfaction but also asserts maximization of life quality through improvement in the quality of the environment.

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Marketing Research
Before launching any new product, Pizza Hut conducts extensive research to find out:

What people think about pizzas (what role do they play in people's lives, when do they eat them and so on) What do they like about pizza What do they dislike about pizzas What do they want from pizzas What are the expectations about their food, when they enter into their store.

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This information is collected together and used to create ideas for prototypes. The ideas are tested first, before introducing new items. Once Pizza Hut has perfected the pizza, They LAUNCH! Due to the vast success of our flagship restaurant in Gulshan, and huge demand from their consumers, opening of new stores in different cities are already under way. And from this experience their marketing team has the recognition and understanding of

cultural influences governmental and political influences demographic and lifestyle trends local and national economic trends

06. Financial analysis:


The financial picture of Pizza Hut is quite encouraging. In this s e c t i o n w e w i l l o f f e r a f i n a n c i a l o v e r v i e w of Pizza Hut w h i c h d e a l s about break even analysis, sales forecasts, and expenses forecasts.

Break even analysis


In our projection we are expecting that in fixed asset we will expense 30% of total expense budget and for variable expenses we also expecting that we will expense 70% and contribution margin will be 61.5%. As in first

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year, we will have a total expense of Tk.4745125 and from this, we will spend Tk.1423537.5 in fixed cost and we will spend Tk. 3321587.5 in Variable cost. As we are producing verities product so we calculate B r e a k e v e n f o r e a c h p r o d u c t s .

Break even point of each product:


Break even for Pan Pizza: BEP in Units sales = FC / unit contribution margin = 396000 / 98.4 = 4024.39 units = 4024 units (round up) CM Ratio = Unit CM / Unit Sales Price (P) = 98.4 / 160 = 61.5% BEP in total sales in dollar = FC / CM ratio = 396000 / 61.5% = Tk. 643902

Profit

Tk. 1080000 Tk.0

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Tk. 643902

Tk. 2, 400,000 Sales

Yearly based break even for Pan Pizza Breakeven point = where line intersect with 0s
From that Break-even we can see that in BEP dollar sales is Tk.643902 but our expected sales for 1st year is Tk.2400000 and assume that we will be able to make profit at Tk.1080000 in the 1st year, which will be a great achievement. We expect that profit to grow over time.

For Pan Pizza in year 2010:


FC = TK.396000 VC = Tk.61.6 Sales (15000) (-) VC Contribution margin (-) FC Operation income Total Tk.2,400,000 Tk.924000 Tk.1476000 396000 Tk.1080000 Per unit Tk.160 Tk.61.6 Tk.98.4

For Pan Pizza in year 2011:


FC = TK. 448800 VC = Tk.61.6 Total Per unit

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Sales (17000) (-) VC Contribution margin (-) FC Operation income

Tk. 2720000 Tk.1047200 Tk.1672800 448800 Tk.1224000

Tk.160 Tk.61.6 Tk.98.4

For Pan Pizza in year 2012:


FC = TK.528000 VC = Tk.61.6 Sales (20000) (-) VC Contribution margin (-) FC Operation income Total Tk. 3200000 Tk.1232000 Tk.1968000 528000 Tk.1440000 Per unit Tk.160 Tk.61.6 Tk.98.4

Break even for Italian Pizza:


BEP in Units sales = FC / unit contribution margin = 195937.5 / 116.85 = 1676.83 units

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= 1677 units (round up) CM Ratio = Unit CM / Unit Sales Price (P) = 116.85 / 190 = 61.5% BEP in totals sales dollars = FC / CM ratio = 195937.5 / 61.5% = Tk. 318597.56

Profit

Tk. 534375 Tk.0

Tk. 318597.56 Tk.1187500 Yearly based break even

Sales

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Breakeven point = where line intersect with

From that Break-even we can we can see that in BEP dollar sales is Tk.318598 but our expected sates for 1st year is Tk.1187500 and assume that we will be able to make profit at Tk.534375 in the 1st year for Italian Pizza. We expect that profit to grow over time.

For Italian Pizza in year 2010:


FC = TK.195937.5 VC = Tk.73.15 Sales (6250) (-) VC Contribution margin (-) FC Operation income Total Tk.1187500 Tk.457187.5 Tk.730312.5 195937.5 Tk.534375 Per unit Tk.190 Tk.73.15 Tk.116.85

For Italian Pizza in year 2011:


FC = TK.188100

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VC = Tk.73.15 Sales (6000) (-) VC Contribution margin (-) FC Operation income

Total Tk.1140000 Tk.438900 Tk.701100 188100 Tk.513000

Per unit Tk.190 Tk.73.15 Tk.116.85

For Italian Pizza in year 2012:


FC = TK.282150 VC = Tk.73.15 Sales (9000) (-) VC Contribution margin (-) FC Operation income Total Tk.1710000 Tk.658350 Tk.1051650 282150 Tk.769500 Per unit Tk.190 Tk.73.15 Tk.116.85

Break even for Thin n Crispy:


BEP in Units sales = FC / unit contribution margin = 210375 / 92.25 = 2280.49 units = 2280 units (round up)

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CM Ratio = Unit CM / Unit Sales Price (P) = 92.25 / 150 = 61.5% BEP in totals sales dollars = FC / CM ratio = 210375/ 61.5% = Tk. 342073.17

Profit

Tk. 573750 $0

Tk.342073.1

Tk.1275000

Sales

Yearly based break even Breakeven point = where line intersect with 0s From that Break-even we can we can see that in BEP dollar sales is Tk.342073 but our expected sates for 1st year is Tk.1275000 and assume that we will be able

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to make profit at Tk.573750 in the 1st year for Thin n Crispy. We expect that profit to grow over time.

For Thin n Crispy 2010:


FC = TK.210375 VC = Tk.57.75 Sales (8500) (-) VC Contribution margin (-) FC Operation income Total Tk.1275000 Tk.490875 Tk.784125 210375 Tk.573750 Per unit Tk.150 Tk.57.75 Tk.92.25

For Thin n Crispy 2011:


FC = TK.247500 VC = Tk.57.75 Sales (10000) (-) VC Contribution margin (-) FC Operation income Total Tk.1500000 Tk.577500 Tk.922500 247500 Tk.675000 Per unit Tk.150 Tk.57.75 Tk.92.25

For Thin n Crispy 2012:


FC = TK.371250

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VC = Tk.57.75 Sales (15000) (-) VC Contribution margin (-) FC Operation income

Total Tk.2250000 Tk.866250 Tk.1383750 371250 Tk. 1012500

Per unit Tk.150 Tk.57.75 Tk.92.25

Break even for Stuffed Crust:


BEP in Units sales = FC / unit contribution margin = 132000 / 98.4 = 1341.46units = 1341 units (round up) CM Ratio = Unit CM / Unit Sales Price (P) = 98.4 / 160 = 61.5% BEP in totals sales dollars = FC / CM ratio = 132000 / 61.5% = Tk. 214634.15 Profit

Tk. 576000

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$0

Tk. 214634.15

Tk. 800000 Sales

Yearly based break even Breakeven point = where line intersect with 0s From that Break-even we can we can see that in BEP dollar sales is Tk.214634 but our expected sates for 1st year is Tk.800000 and assume that we will be able to make profit at Tk. 576000 in the 1st year for Stuffed Crust. We expect that profit to grow over time.

For Stuffed Crust in year 2010:


FC = TK.132000 VC = Tk.61.6 Sales (5000) (-) VC Contribution margin (-) FC Operation income Total Tk. 800000 Tk.308000 Tk.492000 132000 Tk.360000 Per unit Tk.160 Tk.61.6 Tk.98.4

For Stuffed Crust in year 2011:

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FC = TK.211200 VC = Tk.61.6 Sales (8000) (-) VC Contribution margin (-) FC Operation income Total Tk. 1280000 Tk.492800 Tk.787200 211200 Tk.576000 Per unit Tk.160 Tk.61.6 Tk.98.4

For Stuffed Crust in year 2012:


FC = TK.264000 VC = Tk.61.6 Sales (10000) (-) VC Contribution margin (-) FC Operation income Total Tk. 1600000 Tk.616000 Tk.984000 264000 Tk.720000 Per unit Tk.160 Tk.61.6 Tk.98.4

Break even for the Big New Yorker:


BEP in Units sales = FC / unit contribution margin = 158400/ 98.4 = 1609.76units = 1610 units (round up)

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CM Ratio = Unit CM / Unit Sales Price (P) = 98.4 / 160 = 61.5% BEP in totals sales dollars = FC / CM ratio = 158400 / 61.5% = Tk. 257560.97 Profit

Tk. 432000 $0

Tk. 257560.97 Tk. 960000 Yearly based break even Breakeven point = where line intersect with 0s

Sales

From that Break-even we can we can see that in BEP dollar sales is Tk. 257560.97 but our expected sates for 1st year is Tk. 960000 and assume that we will be able to make profit at Tk. 432000 in the 1st year for the Big New Yorker. We expect that profit to grow over time.

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For the Big New Yorker in year 2010:


FC = TK.158400 VC = Tk.61.6 Sales (6000) (-) VC Contribution margin (-) FC Operation income Total Tk. 960000 Tk.369600 Tk.590400 158400 Tk.432000 Per unit Tk.160 Tk.61.6 Tk.98.4

For the Big New Yorker in year 2011:


FC = TK.184800 VC = Tk.61.6 Sales (7000) (-) VC Contribution margin (-) FC Total Tk. 1120000 Tk.431200 Tk.688800 184800 Per unit Tk.160 Tk.61.6 Tk.98.4

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Operation income

Tk.504000

For the Big New Yorker in year 2012:


FC = TK.184800 VC = Tk.61.6 Sales (7000) (-) VC Contribution margin (-) FC Operation income Total Tk. 1120000 Tk.431200 Tk.688800 184800 Tk.504000 Per unit Tk.160 Tk.61.6 Tk.98.4

Break even for soup:


BEP in Units sales = FC / unit contribution margin = 105600/ 49.2 = 2146.34units = 2146 units (round up)

CM Ratio = Unit CM / Unit Sales Price (P) = 49.2 / 80

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= 61.5% BEP in totals sales dollars = FC / CM ratio = 105600 / 61.5% = Tk. 171707.31 Profit

Tk. 288000 $0

Tk. 171707.31 Tk. 640000 Yearly based break even Break even point = where line intersect with 0s

Sales

From that Break-even we can we can see that in BEP dollar sales is Tk. 171707.31 but our expected sates for 1st year is Tk. 640000 and assume that we will be able to make profit at Tk. 288000 in the 1st year for the soup. We expect that profit to grow over time.

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For the soup in year 2010:


FC = TK.105600 VC = Tk.30.8 Sales (8000) (-) VC Contribution margin (-) FC Operation income Total Tk. 640000 Tk.246400 Tk.393600 105600 Tk.288000 Per unit Tk.80 Tk.30.8 Tk.49.2

For the soup in year 2011:


FC = TK.118800 VC = Tk.30.8 Sales (9000) (-) VC Contribution margin (-) FC Operation income Total Tk. 720000 Tk.277200 Tk.442800 118800 Tk.324000 Per unit Tk.80 Tk.30.8 Tk.49.2

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For the soup in year 2012:


FC = TK.158400 VC = Tk.30.8 Sales (12000) (-) VC Contribution margin (-) FC Operation income Total Tk. 960000 Tk.2369600 Tk.590400 158400 Tk.432000 Per unit Tk.80 Tk.30.8 Tk.49.2

Break even for refreshing Beverages in year 2010:


BEP in Units sales = FC / unit contribution margin = 33000/ 30.75 = 1073.17units = 1073 units (round up)

CM Ratio = Unit CM / Unit Sales Price (P) = 30.75 / 50 = 61.5% BEP in totals sales dollars = FC / CM ratio

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= 33000 / 61.5% = Tk. 53658.54 Profit

Tk. 90000 $0

Tk. 53658.54 Tk. 200000 Yearly based break even Breakeven point = where line intersect with 0s

Sales

From that Break-even we can we can see that in BEP dollar sales is Tk. 53659 but our expected sates for 1st year is Tk. 200000 and assume that we will be able to make profit at Tk. 90000 in the 1st year for the refreshing Beverages. We expect that profit to grow over time.

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For the refreshing Beverages in year 2010:


FC = TK.33000 VC = Tk.19.25 Sales (4000) (-) VC Contribution margin (-) FC Operation income Total Tk. 200000 Tk.77000 Tk.123000 33000 Tk.90000 Per unit Tk.50 Tk.19.25 Tk.30.75

For the refreshing Beverages in year 2011:


FC = TK.41250 VC = Tk.19.25 Sales (5000) (-) VC Contribution margin (-) FC Operation income Total Tk. 250000 Tk.96250 Tk.153750 41250 Tk.112500 Per unit Tk.50 Tk.19.25 Tk.30.75

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For the refreshing Beverages in year 2012:


FC = TK.66000 VC = Tk.19.25 Sales (8000) (-) VC Contribution margin (-) FC Operation income Total Tk. 400000 Tk.154000 Tk.246000 66000 Tk.180000 Per unit Tk.50 Tk.19.25 Tk.30.75

Break even for scrumptious Pasta:


BEP in Units sales = FC / unit contribution margin = 128700/ 79 = 1609.75units = 1610 units (round up)

CM Ratio = Unit CM / Unit Sales Price (P) = 79.95/ 130 = 61.5% BEP in totals sales dollars = FC / CM ratio

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= 128700 / 61.5% = Tk. 209268.29

Profit

Tk. 351000 $0

Tk. 209268.29 Tk. 780000 Sales Yearly based break even Breakeven point = where line intersect with 0s From that Break-even we can we can see that in BEP dollar sales is Tk. 209268.29 but our expected sates for 1st year is Tk. 780000 and assume that we will be able to make profit at Tk. 351000 in the 1st year for the scrumptious Pasta. We expect that profit to grow over time.

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For the scrumptious Pasta in year 2010:


FC = TK.128700 VC = Tk.50.05 Sales (6000) (-) VC Contribution margin (-) FC Operation income Total Tk. 780000 Tk.300300 Tk.479700 128700 Tk.351000 Per unit Tk.130 Tk.50.05 Tk.79.95

For the scrumptious Pasta in year 2011:


FC = TK.117975 VC = Tk.50.05 Sales (5500) (-) VC Contribution margin (-) FC Operation income Total Tk. 715000 Tk.275275 Tk.439725 117975 Tk.321750 Per unit Tk.130 Tk.50.05 Tk.79.95

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For the scrumptious Pasta in year 2012:


FC = TK.193050 VC = Tk.50.05 Sales (9000) (-) VC Contribution margin (-) FC Operation income Total Tk.1170000 Tk.450450 Tk.719550 193050 Tk.526500 Per unit Tk.130 Tk.50.05 Tk.79.95

Break even for fresh and crispy fruits and vegetables at the Salad Bar:
BEP in Units sales = FC / unit contribution margin = 63525/ 43.05 = 1475.61units = 1476 units (round up)

CM Ratio = Unit CM / Unit Sales Price (P) = 43.05/ 70 = 61.5% BEP in totals sales dollars = FC / CM ratio = 63525 / 61.5%

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= Tk. 103292.68

Profit

Tk. 173250 $0

Tk. 103292.68 Tk. 385000 Sales

Yearly based break even Breakeven point = where line intersect with 0s

From that Break-even we can we can see that in BEP dollar sales is Tk. 103292.68 but our expected sates for 1st year is Tk. 385000and assume that we will be able to make profit at Tk. 173250 in the 1st year for the fresh and crispy fruits and vegetables at the Salad Bar. We expect that profit to grow over time

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For the fresh and crispy fruits and vegetables at the Salad Bar in year 2010:
FC = TK.63525 VC = Tk.26.95 Sales (5500) (-) VC Contribution margin (-) FC Operation income Total Tk. 385000 Tk.148225 Tk.236775 63525 Tk.173250 Per unit Tk.70 Tk.26.95 Tk.43.05

For the fresh and crispy fruits and vegetables at the Salad Bar in year 2011:
FC = TK.69300 VC = Tk.26.95 Sales (6000) (-) VC Contribution margin (-) FC Operation income Total Tk. 420000 Tk.161700 Tk.258300 69300 Tk.189000 Per unit Tk.70 Tk.26.95 Tk.43.05

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For the fresh and crispy fruits and vegetables at the Salad Bar in year 2012:
FC = TK.80850 VC = Tk.26.95 Sales (7000) (-) VC Contribution margin (-) FC Operation income Total Tk. 490000 Tk.188650 Tk.301350 80850 Tk.220500 Per unit Tk.70 Tk.26.95 Tk.43.05

Break even for delightful Desserts:


BEP in Units sales = FC / unit contribution margin = 48262.5/ 27.675 = 1743.90units = 1744 units (round up)

CM Ratio = Unit CM / Unit Sales Price (P) = 27.675/ 45 = 61.5% BEP in totals sales dollars = FC / CM ratio = 48262.5 / 61.5% = Tk. 78475.61

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Profit

Tk. 131625 $0

Tk. 78475.61 Tk. 292500

Sales

Yearly based break even Breakeven point = where line intersect with 0s

From that Break-even we can we can see that in BEP dollar sales is Tk. 78475.61 but our expected sates for 1st year is Tk. 292500 and assume that we will be able to make profit at Tk. 131625 in the 1st year for the fresh and crispy fruits and vegetables at the Salad Bar. We expect that profit to grow over time

For delightful Desserts in year 2010:


FC = TK.48262.5

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VC = Tk.17.325 Sales (6500) (-) VC Contribution margin (-) FC Operation income

Total Tk. 292500 Tk.112612.5 Tk.179887.5 48262.5 Tk.131625

Per unit Tk.45 Tk.17.325 Tk.27.675

For delightful Desserts in year 2011


FC = TK.59400 VC = Tk.17.325 Sales (8000) (-) VC Contribution margin (-) FC Operation income Total Tk. 360000 Tk.138600 Tk.221400 59400 Tk.162000 Per unit Tk.45 Tk.17.325 Tk.27.675

For delightful Desserts in year 2012:


FC = TK.89100 VC = Tk.17.325 Sales (12000) (-) VC Contribution margin (-) FC Operation income Total Tk. 540000 Tk.207900 Tk.332100 89100 Tk.243000 Per unit Tk.45 Tk.17.325 Tk.27.675

Sales forecast

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Unit sales:
Years Pan Pizza Italian Pizza Thin n Crispy Stuffed Crust the Big New Yorker Soups refreshing Beverages scrumptious Pasta fresh and crispy fruits and vegetables at the Salad Bar delightful Desserts Total sales 6500 70750 8000 81500 12000 109000 2010 15000 6250 8500 5000 6000 8000 4000 6000 5500 2011 17000 6000 10000 8000 7000 9000 5000 5500 6000 2012 20000 9000 15000 10000 7000 12000 8000 9000 7000

Unit sales figure:

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Assuming=Series 1=2010, Series 2=2011, Series 3=2012

Unite price:
Years Pan Pizza Italian Pizza Thin n Crispy Stuffed Crust the Big New Yorker, Soups refreshing Beverages scrumptious Pasta fresh and crispy fruits and vegetables at the Salad Bar delightful Desserts Tk.45 Tk. 45 Tk.45 2010 Tk.160 Tk.190 Tk.150 Tk.160 Tk.160 Tk.80 Tk.50 Tk.130 Tk.70 2011 Tk.160 Tk.190 Tk.150 Tk.160 Tk.160 Tk.80 Tk.50 Tk.130 Tk.70 2012 Tk.160 Tk.190 Tk.150 Tk.160 Tk.160 Tk.80 Tk.50 Tk.130 Tk.70

Total Sales:
Years Pan Pizza Italian Pizza Thin n Crispy 2010 Tk.2,400,000 1187500 1275000 2011 Tk.2720000 1140000 1500000 2012 Tk.3200000 1710000 2250000

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Stuffed Crust the Big New Yorker, Soups refreshing Beverages scrumptious Pasta fresh and crispy fruits and vegetables at the Salad Bar delightful Desserts Total sales

800000 960000 640000 200000 780000 385000

1280000 1120000 720000 250000 715000 420000

1600000 1120000 960000 400000 1170000 490000

292500 Tk.8627500

360000 Tk. 10585000

540000 Tk.13440000

Sales forecast:
T h e c o m p a n y s a l e s f o r e c a s t a s s u m e s t h a t i n % of f i x e d c o s t a n d v a r i a b l e c o s t w i l l n o t c h a n g e s b ut t o t a l u n i t o f s a l e s w i l l i n c r e a s e f r o m Tk.8627500 t o Tk. 10585000 i n t h e y e a r 2 0 1 0 t o 2 0 1 1 a n d t h e n s a l e s w i l l i n c r e a s e Tk. 10585000 to Tk.13440000 i n t h e y e a r 2 0 1 1 t o 2012 and cm ratio will remain same. For 2010 the company will internally develop new amount of p r o d u c t a n d i t s v a r i a n c e w h i c h w i l l i n cr e a s e t h e n e w c u s t o m e r g r o u p . T h e f o c u s w i l l b e o n f am i l y , s t u d e n t s , a n d y o u n g p e o p l e . VC

Expense budget
Marketing Expense Budget Production cost Ads/Promotion 2010(thousand) 3321587.5 800000 2011(thousand) 4075225 1000000 2012(thousand) 5174400 1500,000

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Wages & Salaries Others expanses Total Expense Sales (%) Contribution Margin FC VC

300000 323537.3 4745125

300000 446525 5821750

4 7

61.5% 30% of total expanses 70% of total expanses

61.5% 30% of total expanses 70% of total expanses

e 7

FC

Expenses forecast:
The main expense area of pizza hut is advertisement. They spend 1 6 . 8 6 % o f t o t a l e x p e n s e s . E v e r y y e a r t h e m ar k e t i n g b u d g e t o f p i z z a h u t i s i n c r e a s i n g a t a gr e a t d e a l w i t h t h e i n cr e a s e o f s a l e s and revenue.

07. Conclusion:
The overall image that Pizza Hut has brought in Bangladesh is undoubtedly a positive one since there has been no other international fast food chain in Bangladesh. With the

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idea of global thinking along with its application locally has proven to be successful for the company. The profit maximization margin of Pizza Hut is quite remarkable compared to the fast food shops like Dominos Pizza, Subcity, Shawrma Palace and others. They have developed their strong image of being a part of Tricon Global Restaurants and the Yum! International Brand, by developing the services in their only outlet in Dhaka. Their competitive edge has been the excellent service that they provide-something very rarely observed in Bangladesh fast food industry. Their presence has added charisma to the city life and certainly gave the younger people someplace to hang out. Their control method of their operation has certainly helped them to attain one of the top market positions and that too within a year only. The quality and service timing makes it exceptional and its promotional offers during our different cultural occasions undoubtedly makes it more popular among the people. With the online delivery service coming up within a few months, it will be the role model among the fast food shops with its innovative ideas. The policies and strategies that Pizza Hut practices will positively lead them to success. And the recommendation that we have offered throughout the report can make Pizza Hut a unique fast food shop amongst the rest.

08. References:
www.pizzahutbd.com 02. http://www.pizzahut.com/Deals.aspx 03. http://en.wikipedia.org/wiki/Pizza_Hut 04. http://www.pizzahuthawaii.com/ 05. http://www.thefreelibrary.com/Pizza+Hut+BOOK+IT!+Program+and+Harper 1.

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