International Marketing Strategy for Domino's Pizza

This document discusses the international marketing strategy for Domino's Pizza, including market entry choice, market research, brand positioning, and marketing mix strategy.

Title of work Assessment 2
Module title and code International Marketing Strategy
Tutor
Number of words 3000
J Number
Student Number
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Contents
1. Introduction to the organization.....................................................................................................3
1.1 Justification of this choice.....................................................................................................3
1.2 Market entry choice and market entry method.......................................................................3
1.3 Market research.....................................................................................................................6
1.4 Brand positioning in the host country....................................................................................8
1.5 Marketing mix (4 Ps) strategy................................................................................................9
1.6 International marketing strategy............................................................................................9
2. Designing and planning the international marketing strategy..........................................................10
2.1 Market entry choice and market entry method...........................................................................10
2.2 Market research.........................................................................................................................11
2.3 Brand positioning in the host country........................................................................................15
2.4 Marketing mix (4Ps or 7Ps) strategy..........................................................................................16
Product strategy...............................................................................................................................16
Price strategy...................................................................................................................................16
Place Strategy..................................................................................................................................16
Promotion Strategy..........................................................................................................................16
2.4.1 Discussion using Marketing Strategy models.....................................................................16
2.5 Cultural issues to be considered.................................................................................................18
2.6 Possible market barriers, their risks, and mitigations.................................................................18
2.7 Recommendations.....................................................................................................................19
3. Conclusion.......................................................................................................................................19
References...........................................................................................................................................20
Appendices..........................................................................................................................................25
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1. Introduction to the organization
Domino’s, founded in the 1960s by Tom Monaghan, is renowned for the guiding principles
of exceptional people embarking on a mission to be the world leaders in pizza making
(Domino's, Inc, n.d.). The positive energy summed up with great customer service helped the
company’s accelerated growth to operate in 85 countries with more than 16,000 stores
(Domino's, 2018).
Domino’s perspective of a clear vision and strong missions generated further growth; in fact,
they are amongst the top five of online transactions competing directly with big names like
Apple and Amazon (Domino's, 2018).
Due to this growth, the return in Domino’s shares listed in The New York Stock Exchange
surpassed that of Apple and Google in 2017 (Capgemini Consulting, 2017).
1.1 Justification of this choice
Domino’s started operating in Malta in 2017 whereby Famalco Group partnered with
Domino’s regional franchisee for South East Europe (Domino's dives into island nation of
Malta, 2017).
This research will concern the possibility of entering a new market in another country,
namely, Florence in Italy. Florence is the eighth largest city, in population, in Italy and
attracted over 10 million tourists in 2017 (Florence, 2019). This idea emerged due to fact that
Domino’s success and steadfast growth in Malta, Famalco Group could expand strategically
their operations and enter a market where an American product could attract another
customer segment (Forbes, 2019).
1.2 Market entry choice and market entry method
Product Life Cycle
The product life cycle is a cycle through which all the products goes through from the initial
stage of introduction to the final stage that is withdrawal or eventual demise. The product life
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cycle is comprised of 4 stages, each with different characteristics (Kotler, et. al., 2018). The
Domino’s Pizza also has its life cycle as presented below:
Introduction Stage – The introduction stage of the life cycle is one of the most expensive
stages as the business launches its product in the market which requires a huge investment.
The size of the market for the product is small, which means sales are low, although they will
be increasing. Domino’s pizza was introduced in the year 1960 in America (Shenkar, Luo, &
Chi, 2014).
Growth Stage – The growth stage is majorly classified through increasing growth in profits
and sales, and because the business could benefit from the economies of scale in the
manufacturing, the profit margins, and the entire profit amount will increase. Domino’s Pizza
has become one of the leading pizza chains in the world due to its extended operations at
different locations. The business is regularly growing with its new pizza’s and additional
services (Tiago, &Veríssimo, 2014).
Maturity Stage – At the maturity stage, the business is established strongly in the market and
the business aims to maintain its share in the market. Domino’s Pizza is presently dealing
with huge competition from the key players in the market that are Pizza Hut, Mr. Bean, etc.
Hence, the company is putting maximum efforts to maintain its market share in the Malta
market and adopting different strategies to cover new markets (Gillespie, & Riddle, 2015).
Decline Stage –At the decline stage, the product of the business starts shrinking due to
market saturation. The Domino’s Pizza market in Malta is presently attaining the saturation
point due to which it has to expand its operations in different countries. In order to take entry
in the new market that is Italy, the company has to perform the market research with the help
of the PESTLE Analysis tool (Jarach, 2017).
Figure 1: Pestle Analysis
4

Element Identified Factors in Florence, Italy Business Impact
Political Unstable Political Environment
Corruption
Lack of strong policies related to trade
Instability of the business and
increasing cost of business (Vellas,
2016).
Economic High GDP
Developed Infrastructure
The youth employment rate is 21.5%
and the economic inference
It can lead to corruptions and other
communal immoralities (Ryan, 2016).
Social Italy has over 200 million of individual
that is higher than the Malta country.
The population of Italy is adequate in
terms of influencing the shareholders
(Baker &Saren, 2016).
There are wider market opportunities.
Technology Italians are more techno-savvy.
Although laptop as well as, computers
are quiet remain premium products for
some individuals yet, the application of
Smartphones has filled the gap
(Cavusgil, et. al., 2014).
It can have a positive impact on the
business in terms of ordering the foods
through online channels.
Legal The income tax in Italy is 43% while
VAT is 22%.
It can adversely impact on the business
(Skarmeas, Zeriti, & Baltas, 2016).
Environment Restricted policies related to animal
protection, quality hazardous, as well
as, environmental safety.
It impacts on the commercial,
residential, as well as, industrial sectors
individually (Butković, Bošković, &
Katavić, 2014).
Figure 2: Porter five force model
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Factors Description
The threat of new entrants (High) The new key market participants in the food
sector create innovation in products as well
as, the ways for performing the practices
(Corazza, et. al., 2014).
Bargaining power of the suppliers
(Moderate)
The bargaining power of suppliers in the
food sector uses conveying power to decline
higher rates from Dominos company
(Papadopoulos, & Heslop, 2014).
Bargaining power of the buyers (high) It is addressed that purchasers are generally
demanding high. They are also interested in
terms of purchasing the best choice by
paying the minimum rates of prospects
(Rowley, 2016).
The threat of substitute products (High) The profitability related to Dominos
company can suffer in the Italian market as
new products with services are kept on
attaining similar needs of consumers in
diverse manners (Jean, et. al., 2016).
Rivalry among the prevailing competitors
(High)
The key market participants between
prevailing players of the food industry of
Italy are insightful. This could drive for
diminishing the overall profitability for the
1.3 Market research
Branding hits the requirement for belonging as well as, associated with Maslow’s hierarchy
of needs. Timing is significant and generally, a product is targeted at the time of Valentine,
Easter, and Xmas. A consumer develops brands, not corporations. It is an essential marketing
element that could not be avoided. Customers provide brand value by creating expectations as
well as, perceptions towards those brands. Dominos improve the added value by providing
consistent brand experiences which, a consumer can develop faith (Bowie, Buttle, Brookes,
& Mariussen, 2016).
`
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Maslow’s Hierarchy of Needs
In the year of 1943, Maslow has developed a Maslow’s hierarchy of needs that could be
categorized into five human needs as well as, it is ranked in a hierarchy way:
Physiological
The initial need for people is to survive factors such as food as well as, water. It is also
considered as a physiological requirement.
Safety
The second phase entails the safety requirements and it is things that provide us a sense for
security in all aspect related to the lives of customers. It involves health, job and family
(Larkins, et. al., 2015).
Love and Belonging
This is the third level for hierarchical that involves the loves as well as, belonging
requirements. These are requirements of human-associated with family, friendships as well
as, associations.
Esteem
The next level in the hierarchy model is related to esteem requirements such as respect, self-
esteem, personal attainment, respect of and by others, as well as, self-esteem. For example,
the need for belonging and love, as well as, need for esteem is very emotional with happens
in both subconscious as well as, cognizant minds (Proctor, 2014).
Self-actualization
At the top of the hierarchy, there is a requirement for self-actualization that is illustrated as
personal growth as well as, realizing full individual potentials. In this requirement, Maslow
demonstrated that an individual is always making efforts for satisfying but few attainments. It
is very subjective as well as, highly customized (Griffith, & Rubera, 2014).
3 approaches of C3’s:
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Cost based pricing –
Dominos would be focused on its internal costs as well as, making efforts for managing its
expenses to be competent to produce at minimum rates such as inexpensive suppliers.
Customer-based pricing –
It is a highly used strategy where Dominos needs to influence their insight on value. It has
also a requirement to win consumer trust by giving attractive offers. There are some
strategies related to pricing such as penetration pricing, and skimming pricing. In penetration
pricing, Dominos go into the market with low rate while it gets the trust as well as, increase
slowly like foods (Tedlow, & Jones, 2014).
In addition to this, skimming pricing demonstrated that Dominos needs to go with higher
rates as well as, initiate for declining the rate as soon as something new product will come out
i.e. healthy burger. Along with this, competitors based pricing strategy is highly risky as the
company is benchmarking itself with rivalry but Dominos do not know the exact cost of key
market participants (Martínez, 2015).
Figure 3: A snapshot of the forecasted market of food service in Italy
(Sources: Morder Intelligence, 2019).
1.4 Brand positioning in the host country
Dominos offers the freshest pizza as they do to initiate making pizza until order placing at the
door of consumers. This product has attributed the dominos to make it unique against its
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rivalry as they own a high amount of local stores that support them in keeping high-quality
standard related to pizza. The potential desirable advantageous that they provide is that they
can offer pizza that is fresh as well as, delivered within 30 minutes. It should not be entailed
as products attributes as compared to services that are accompanying the products (Martin, &
Javalgi, 2016).
1.5 Marketing mix (4 Ps) strategy
Product
Dominos focuses on providing a wider choice of products and services. It aids in obtaining
products and services.
Price
Dominos emphasizes an affordable pricing strategy where, it provides the products and
services to customers at the affordable rates (Gnizy, & Shoham, 2014).
Place
It uses retailing channels in terms of selling the products and services to the end consumers.
Promotion
Dominos uses different promotion channels to promote the products and services such as
social media, sales promotions, SEO, and Google Adwords (Kiráľová, & Pavlíčeka, 2015).
1.6 International marketing strategy
Global Strategy
The company can utilize the global strategy where a company has a requirement to not to
make any transformation in products. Along with this, it can initiate the same local products
in the global marketplace. When a corporation adopts the international strategy then they
require not making any transformations in products (Sinha, & Sheth, 2018).
Transnational Strategy
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The transnational strategy is a combination of a multi-domestic approach as well as, global
strategy. It is the middle group among international approach and multi-domestic approach.
In this, the company will try to create a balance among desire of global and local consumers
(Atwal, & Williams, 2017).
2. Designing and planning the international marketing strategy
Dominos can internationally practice the marketing that indicates the growth opportunities
for the company in upcoming times. It has required obtaining information earlier than the
investment decision in the global marketplace. This company can face the economic as well
as, political factors. When expanding the company across the border of the firm then it should
emphasize economic factor as exchange rate factors are highly affected the company. Hence,
Dominos would enlarge the business where they address the comparative high exchange rate.
The expansion in Italy would lead to creating higher profitability (Usui, 2014).
2.1 Market entry choice and market entry method
Green Field Investment
In this mode of entry, international corporations develop new services and a new job in that
specific nation. The company who implement the green field investment mode of entry would
get advantages such as tax break to develop the government of specific company (Ananda,
Hernández-García, & Lamberti, 2016).
Franchising system
Franchising system is a key tool where franchisees compensate feeds with royalties to
franchiser in terms of exchange associated with the right to become an owner. They have also
the right to practice the trademarks, as well as, trades for its products with services as well as,
business structure and developments. The main benefit of utilizing the international
franchising technique is low cost, low political uncertainty, and permits the synchronized
opportunity into the different country at the international level (Cui, Walsh, & Zou, 2014).
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Market entry choice
Franchisor generally provides the training to franchisee in terms of operating their business
model. Along with this, franchises have a higher probability of getting success rather than the
start-up the ventures. Moreover, franchises may address it easier with respect to offering
finance to the franchise. It could be also inexpensive in terms of buying the franchise rather
than starting own business in the same sectors (Shaltoni, 2016).
2.2 Market research
M.O.S.T analysis
Mission statement
• Keeping high values related to the global chain of pizza delivery as well as, offer the
experience with respect to admirable products as well as, better consumer services.
• Trade a wider range of pizza and have more fun (Baker, & Hart, 2016).
Objectives
• Serve individuals as per their expectations
• Produce superior products and services
• Assesses, organizes as well as, shares the significant products and services
• Think big as well as, grow.
Figure 4: Strategy: Swot analysis
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Strengths
Innovation in products as well as, better
performance
A higher extent of consumer satisfaction
Strong distribution network
Record of involving complimentary
companies (Lovelock, & Patterson, 2015).
Weaknesses
Inappropriate financial planning
Infeasible forecasting of demand
The minimum investment in the context of
research and development (Schwarzl, &
Grabowska, 2015).
Opportunities
New technology
New taxation policy
Minimum inflation rate
Healthy lifestyle trends in consumer behavior
(Akgün, Keskin, & Ayar, 2014).
Threats
Unavailability of proficient employees
The gaining strength related to local
distributions
Variation in the currencies (Quelch, 2017).
Tactics
Figure 5: BCG Matrix in the Marketing strategy of Dominos
Dominos considers both non-Veg as well as, Veg pizza in its menu with a choice of different
topping to select from. Although they provide both vegs with non-veg, the veg menu is
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highly trendy. Therefore, it falls under the Star in the BCG matrix. In addition, Dominos is
almost exclusion the market share of Pizza from Pizza Hut, as well as, non-veg pizza falls
under the cash cow for Dominos as veg pizza has a high local rivalry. However, there is less
rivalry related to non-veg pizzas (Jeuring, 2016).
Figure 6: Mckinsey 7 c’s
(Sources: Sillani, & Nassivera, 2015).
Figure 7: Balance scorecard
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(Sources: Chiu, Tzeng, & Li, 2014).
Figure 8: Consumer behaviour model
(Sources: Franco, et. al., 2014).
As per the consumer behavior model, the decision making of consumers would assess the
effective procedures of purchase. Hence, it is significant to market the products in order to
create it demonstrating as well as, convincing sufficient as well as, provides the right post
buy services. The concerned franchise has to involve the culture earlier than penetrating into
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another nation as well as, values with symbolism illustrates what is satisfactory or not
(Sillani, & Nassivera, 2015).
By considering the STP model, Dominos can assess its market segment, therefore penetrating
into the market, with a reasonable product of superior quality. It accomplishes the basic
physiological requirements. It also creates the business sense in terms of targeting the
millennial being the key customer base as they are technology addicted (Quelch, 2017).
Figure 9: Segmentation, Targeting and positioning model
(Sources: Jeuring, 2016).
Dominos has competitive benefits with respect to niche market even though; targeting
segment of dominos is moderately small. It is also profitable with respect to price, product
line as well as, distinct technology. In addition, dominos can design another outlet in
Florence in which, there is growth predicted in the segment of cooking (Jeuring, 2016).
2.3 Brand positioning in the host country
The unique selling position that can be used by Dominos in Italy is to satisfy the basic
requirement of an individual who has craving within 30 minutes. It would also focus on
offering the relishing as well as, delicious pizza with the great accompaniment (Baker, &
Hart, 2016).
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2.4 Marketing mix (4Ps or 7Ps) strategy
Product strategy
Dominos would launch the product by considering the distinct design as well as, signatures
such as healthy burger. This product would be also endorsed by renowned celebrities, and
sportspersons (Baker, & Hart, 2016).
Price strategy
Dominos would use economical pricing strategy as it would aid in attracting the bulk of
customers. As per this strategy, the company would provide products at the affordable rates
by keeping the quality of products (Baker, & Hart, 2016).
Place Strategy
Dominos would have opened different stores in Italy. Therefore, it would practice online
websites as well as, business to customer approach to delivering their products with services
to bulk of consumers (Baker, & Hart, 2016).
Promotion Strategy
Dominos would endorse their products via social media such as Twitter, Facebook as well as,
YouTube. Thus, it would be advantageous in terms of influencing the high amount of
consumers (Quelch, 2017).
2.4.1 Discussion using Marketing Strategy models
Figure 10: Ansoff Matrix
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(Sources: Quelch, 2017).
Dominos will use franchising mode for penetrating into the Italian market with making a
partnership with Famalco Group who is local as it would aid in increasing the familiarity with
the Italian culture as well as, food industry. Market development was entry mode since Italy
is a new market as well as, Dominos has brought over its existing products (Schwarzl, &
Grabowska, 2015).
Figure 11: Porter's Generic Strategies
(Source: Baker, & Hart, 2016).
As per the above table, Dominos will adopt the integration of cost leadership as well as,
differentiation strategies. It would focus on cost-effective pricing; the attractive and
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distinctive ambiance of stores, and easy ordering system. This would differentiate the
Dominos from other key market participants. Through investing considerably into
technology, Dominos can reach out to the bulk of consumers. But, the market can still be
associatively narrow since only some age-group could be included as a tech-savvy (Baker, &
Hart, 2016).
2.5 Cultural issues to be considered
Language-
Dominos can face language barriers in terms of dealing in a global market i.e. Italy. Hence,
clear communication is essential and that could be only considered when expatriate learns the
language of Italy and then provide training to employees of the company with respect to
language (Schwarzl, & Grabowska, 2015).
Consumer Interest
Another barrier that could be faced by Dominos in Italy is local and market trends. This could
be avoided by using effective global marketing together with, when the consumer does not
want the product then it will not sell (Akgün, Keskin, & Ayar, 2014).
2.6 Possible market barriers, their risks, and mitigations
Dominos can hire effective employees as it is one of risk that could be dealt with through the
company when expanding the company in Italy. The company should also provide lucrative
packages so that they would be competent to grab the employees with high competencies.
Another risk can create when executing a promotional activity. In such a manner, the
company may not be competent to interact or share the right message to consumers (Quelch,
2017).
2.7 Recommendations
As per the above analysis, it can be concluded that there is a requirement for enhancement at
some positions. Although, Dominos is performing highly effective in the Malta market yet, it
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can be suggested that company should consider healthy burger in their products list that
contains wheat bread or white bread with soya Tikki and green veggies. Since, this healthy
burger would attract the consumers those are focusing on healthy products (Jeuring, 2016).
Another concern was related to increased salary and it is the fact that the corporation is
influenced because of such facts. But, at the same time, the whole fast food industry is
influenced by this concern. Hence, it can be suggested that Dominos should offer hike
compensation or hire workforces from overseas nations (Lovelock, & Patterson, 2015).
3. Conclusion
From the above interpretation, it can be concluded that Dominos is making plans to expand
its business from Malta to Italy with the partnership with Famalco Group. For this, it uses a
different global marketing strategy as it would aid to get competitive advantages. It can be
concluded that Dominos will use franchise entry mode strategy in terms of penetrating into
Italy market. Along with this, different global marketing strategies would be used to get
succeed in the international market such as Ansoff strategy, balanced scorecard, Porter's
generic strategy, PESTLE, SWOT and STP model.
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Appendices
Element Identified Factors in
Florence, Italy
Business Impact
Political Unstable Political
Environment
Corruption
Lack of strong policies
related to trade
Instability of the business
and increasing cost of
business (Vellas, 2016).
Economic High GDP
Developed Infrastructure
The youth employment rate
is 21.5% and the economic
inference
It can lead to corruptions and
other communal immoralities
(Ryan, 2016).
Social Italy has over 200 million of
individual that is higher than
the Malta country.
The population of Italy is
adequate in terms of
influencing the shareholders
(Baker &Saren, 2016).
There are wider market
opportunities.
Technology Italians are more techno-
savvy. Although laptop as
well as, computers are quiet
remain premium products for
some individuals yet, the
application of Smartphones
has filled the gap (Cavusgil,
et. al., 2014).
It can have a positive impact
on the business in terms of
ordering the foods through
online channels.
Legal The income tax in Italy is
43% while VAT is 22%.
It can adversely impact on
the business (Skarmeas,
Zeriti, & Baltas, 2016).
Environment Restricted policies related to
animal protection, quality
hazardous, as well as,
environmental safety.
It impacts on the commercial,
residential, as well as,
industrial sectors individually
(Butković, Bošković, &
Katavić, 2014).
Porter five force model
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Factors Description
The threat of new entrants (High) The new key market participants in the food
sector create innovation in products as well
as, the ways for performing the practices
(Corazza, et. al., 2014).
Bargaining power of the suppliers
(Moderate)
The bargaining power of suppliers in the
food sector uses conveying power to decline
higher rates from Dominos company
(Papadopoulos, & Heslop, 2014).
Bargaining power of the buyers (high) It is addressed that purchasers are generally
demanding high. They are also interested in
terms of purchasing the best choice by
paying the minimum rates of prospects
(Rowley, 2016).
The threat of substitute products (High) The profitability related to Dominos
company can suffer in the Italian market as
new products with services are kept on
attaining similar needs of consumers in
diverse manners (Jean, et. al., 2016).
Rivalry among the prevailing competitors
(High)
The key market participants between
prevailing players of the food industry of
Italy are insightful. This could drive for
diminishing the overall profitability for the
company (Hoppner, & Griffith, 2015).
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Swot analysis
Strengths
Innovation in products as well as, better
performance
A higher extent of consumer satisfaction
Strong distribution network
Record of involving complimentary
companies (Lovelock, & Patterson, 2015).
Weaknesses
Inappropriate financial planning
Infeasible forecasting of demand
The minimum investment in the context of
research and development (Schwarzl, &
Grabowska, 2015).
Opportunities
New technology
New taxation policy
Minimum inflation rate
Healthy lifestyle trends in consumer behavior
(Akgün, Keskin, & Ayar, 2014).
Threats
Unavailability of proficient employees
The gaining strength related to local
distributions
Variation in the currencies (Quelch, 2017).
BCG Matrix in the Marketing strategy of Dominos
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