Marketing Principles: Market Analysis of Domino's Australia

This report provides a comprehensive marketing analysis of Domino's Australia, examining the pizza industry's current trends, including growth and profitability. It employs a PESTEL analysis to evaluate the macro-environment and assesses the competitive landscape, comparing Domino's strengths and weaknesses against key competitors like Pizza Hut and Eagle Boys. The report outlines major market segments, identifying primary and secondary target markets based on demographics and lifestyle, and discusses the level of consumer involvement in decision-making processes. Furthermore, the analysis incorporates marketing principles such as segmentation, targeting, and positioning to provide a strategic overview of Domino's approach within the Australian market.

MARKETING PRINCIPLES –
MARKET SEGMENTS AND DECISION
MAKING

CONTENTS
1. INTRODUCTION...............................................................................................................................1
2. INDUSTRY ANALYSIS AND MARKET TRENDS.........................................................................1
Growth.....................................................................................................................................................1
Profitability..............................................................................................................................................2
3. PESTEL ANALYSIS..........................................................................................................................2
4. COMPETITOR ANALYSIS...............................................................................................................4
5. MARKET SEGMENTATION ANALYSIS........................................................................................5
Market conditions of Australia and market segments..............................................................................5
Market Targeting.....................................................................................................................................5
6. INVOLVEMENT OF PRIMARY SEGMENT IN TERMS OF DECISION MAKING......................6
7. PERCEPTUAL OR POSITIONING MAP..........................................................................................6
8. CONCLUSION...................................................................................................................................7
9. REFERENCES....................................................................................................................................8

1. INTRODUCTION
Talking in relation with the market segmentation, it is crucial and vital principle both in
the domestic as well as global markets. In the present scenario, organizations are increasingly
stepping towards the international market and thus, it becomes quite essential to analyze the
concept and facets of segmentation in global context (Jobber, 1995). Thus, the current research
report aims at determining the market segmentation variants in the international scenario and will
demonstrate its importance by making use of Domino’s Australia. The company was founded in
the year 1960 and is being recognized as the leader in pizza delivery operating network. They
have their franchisee business in many parts of the world. The vision of the Domino’s elucidates
a company with a team of extra-ordinary people who are engaged in delivering pizza in the
world. In addition to this, they have pioneered the pizza delivery business and now they are
operating in more than 60 international markets. Pertaining to this, the research report will
analyze the current trends in terms of growth, profitability, and macro-environment of Domino’s
in the Australian market. Furthermore, the nature of competition prevailing in the market will
also be evaluated by considering various techniques (Keane, 2015). The later part of the report
will evaluate the key aspects of marketing such as segmentation, targeting positioning and
organization’s approach towards STP will be assessed.
2. INDUSTRY ANALYSIS AND MARKET TRENDS
Growth
For Australian’s, Pizza is being regarded as the one of the most sought-after fresh and
easy meal solutions. The pizza offered by Domino’s includes standardized ingredients like
vegetables, dough, meat and all are freshly made as soon as the orders are placed. Throwing light
towards the functioning of the Domino’s enterprise, they work within the quick service pizza
restaurant and are well identified for their handmade pizza products, sandwiches and cheesy
crusts (Pizza Industry Analysis 2018 - Cost & Trends, 2018). Other than this, the company is
also pioneering in fast delivery of pizza and has adopted several methods in order to have fast
delivery of pizza to their ultimate consumers. Adoption of these innovative methods has
impacted the whole industry and influenced the other industries as well such as “A better Box”,
“Spoodle, Domino’s Profiles”, “Pizza Tracker”, “Builder” etc. in addition to this, the solid
distribution system of the firm has allowed their retailers to pay attention on making and
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transporting pizzas. Furthermore, for alleviating the stores from extensive hour of producing
dough as well as to prepare cheese and toppings, Domino’s has significantly generated a central
distribution and dough industrialized system. The supply chain services (SCS) of the firm has
supported dominos by sustaining delicious pizza by supplying high quality ingredients all
throughout the world. Other than this, in the year 2008, they have launched an option of baked
sandwiches and toasts and thus, they are not just a pizza restaurant anymore (Gary and Philip,
2005). Subsequently in the year 2009 and 2010, dominos’ has launched desserts options like
Pasta and Choco lava cakes. Further, in the year 2011, they have refurbished their menu and
included modern recipes for chicken wings and bread side bites.
Profitability
Irrespective of the greater price points, customers have willingly involved healthier and
pleasure seeking eating options. Regardless of the increasing waistline of the country, demand
for fat-free as well as low-calorie options has been quite astonishing. Many reports have
encountered that the industry will grow because of the innovation in the product (Domino's Pizza
profit rises 28.7 per cent, 2016). Furthermore, the industry revenue is projected to grow at the
annual rate of 3.2 percent in the coming five years. Talking in relation with the profitability
aspects of the company, the share price of the enterprise has doubled in the past 12 months and it
is expected that it will climb to 600% in the coming years. In May 2015, the share price of
Domino’s was $41.64 and the stock is currently trading between $300-325. Thus, it can be said
that share price of the company has propelled the value of the company to $3.3 billion. The
weekly turnover of Domino’s is about £17,000 and in respect of delivering pizza, it closes
around 1000 pizzas per week. In 2009, the sales of nearly 68 stores of Domino’s were more than
£ 1 million (Rogers, 1995).
3. PESTEL ANALYSIS
Seeking help through PESTEL analysis framework, the overall market environment of
the company or project i.e. market growth, risk, decline etc., can be understood. In addition to
this, this analysis is considered as a key part of strategic, business as well as marketing planning
(Philip and Lane, 2009). It includes elements such as political, economic, social, technological,
environmental and legal. PESTEL analysis of Domino’s within Australian market is as follows:
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 Political – The Australian political environment is quite stable and this benefits to the
companies right from the bottom line. The government of Australia supports trading and
business and this in turn offers numerous opportunities to new beginners and growth
prospects to the existing business. Furthermore, the government has virtuous relationship
with the UK and USA government (PESTLE Analysis of Australia 2012, 2012). In
addition to this, the workforce available in the market of Australia is well-educated,
skillful and multi-lingual. However, the current government is controlling the market of
fast food restaurants. This is because of the rising health concern of people in Australia.
 Economical – Speaking about the properties in Australia, the prices are relatively high as
compared with the income level of the people. This in turn increases the demand for
rental properties. Further, the cost related to energy, fuel and gas is also rising which
significantly affects the business concern. Due to changes in the import demand from the
overseas nations, the value of Australian food exports is declining (Poiesz, 1993). Since
the early 1990’s, the main objective of the Australian monetary policy framework is
targeting the inflation because if the government will control inflation than they will be
able to preserve the value of money. Additionally, the current inflation rate is 2.08
percent.
 Social – This is regarded as the important factor because changing trends may impact the
demand of the products and willingness of individuals to work. The population of
Australia is 22 million and diversity in culture and lifestyle can be seed remarkably.
People are becoming more concern about the health and chose twice before choosing
products and services for them. Furthermore, it is an agriculture nation.
 Technological – Throwing light towards the research and development, the strong
business performance of Australia in the recent years was mainly due to record of
innovation and long lasting commitment in relation with research and development
(Hoch and Loewenstein, 1991). Further, all these activities aspire to increase the
productivity, build new markets and boost the international competitiveness.
Furthermore, the research and development activities are supported by the Australian
government through direct funding and offering vital tax concessions in order to
encourage investment related to private sector. The country has also great technology in
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terms of communication. In this era, online ordering is also proving great and internet has
taken over the place of communication.
 Environmental – This factor includes weather and climatic changes. A slight change in
climate may influence several industries such as farming, traveling and insurance.
Australia has a business friendly environment and time zone is also favorable (Rubin,
1978). In addition to this, the government of Australia has also announced its plan in
relation with the clean energy so as to help Australia in meeting the environmental and
economic challenge in future and compete in the low-pollution world.
 Legal – These factors relate with the legal environment in which the firm operates.
Organizations actions are mainly affected by various laws such as age discrimination,
minimum wages, disability discrimination, requirements related to recycle etc. the
changes in the legal aspects influences the costs of the firms. Any company operating in
Australia must have license to work and operate (Shenton, 2004).
4. COMPETITOR ANALYSIS
In order to ascertain the nature of competition within the industry and to evaluate the
organization place in the industry, it is very important to carry out competitor’s analysis of
Domino’s. The level of profit being earned in this industry and the level of entry barriers both
helps in determining the attractiveness of the industry for a new entrant (Allan and et.al., 2001).
There are many big players in the market and there market share is also high such as Pizza hut
has 29 percent share, Eagle boys has 17 percent share, Domino’s Pizza has 46 percent share and
others have 7 percent share in the overall market. The existing players have string brand
identification and thus, it becomes difficult for the new company to cater with them especially in
terms of distribution channel. In addition this, the government discourse in regards with quick
service restaurant and to help the people of Australia in improving their poor dietary habits has
made difficult for new company to enter an succeed with the existence of such government
policies (Stapp, 2011).
Rivalry among the industry is quite high. There are many brands in the market such as
Pizza hut, eagle boys, McDonalds, Subway, KFC that are offering quick services to the people.
All these brands face intense competition from each other. However, by making use of
advertisement and promotions, companies can differentiate their products and services. For
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instance, Domino’s pizza has initiated iPhone application for online ordering, which was proved
as a big success to the company (Balogh, 2014).
5. MARKET SEGMENTATION ANALYSIS
Due to rising pace of globalization and technology, the world has become a small global
village. Many companies are surpassing the domestic boundaries and entering into an unknown
market in order to seek better opportunities (Sally and Lyndon, 1996). However, operating
business at the international platform is not an easy task and in fact, it is very challenging. Thus,
it becomes vital for the firms to understand the market and consumer. Segmentation plays a
crucial role in preparing the firm to foray into unknown market.
Market conditions of Australia and market segments
Comprehending the market conditions of Australia, since 1945, near about 6.5 million
migrants have settled in the nation. Further, the government of Australia has strong and good
relationship with UK and USA, which can help the firm to expand their trade and business. In
addition to this, the population of the nation is 21 million. Thus, it can be said that the
demographic segmentation of the Domino’s will be culturally diverse (Balogh, 2014). In order to
response with such diversities, company has added several variations in their basic pizza like
hand tossed, thin crusts, cheese burst etc. furthermore, Domino’s has segmented their market on
the basis of their lifestyle and religion i.e.
 Lifestyle – They have segmented their market according to lifestyle in which they offered
different menu that suits to everybody, ability of the customers to customize pizza and
culturally diverse.
 Religion – As per the religion they have options of Halal meat and vegetarian.
Market Targeting
Since the market segment of Dominos is very wide, it is significant to decide the target
market so as to foster more purchase of the company’s products and services (Barrie and
Furnham, 1992). With the proper targeting strategy company will determine the group who are
more likely to visit store regularly and frequently.
 Primary target group – The major target group of Domino’s are people under 30 years of
age. Further, people who are working and those who have constrain of time or running
short of time are the primary target group.
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 Secondary target group – On the other hand, the secondary target group are the families
and people between age group of 30 to 50 years.
6. INVOLVEMENT OF PRIMARY SEGMENT IN TERMS OF DECISION
MAKING
The primary target group of customers of Domino’s can force down prices or can demand
quality products and services due to change in the lifestyle such as increasing awareness about
the health and diet (Sathye, 1999). Furthermore, customers became more sensitive about the
prices when they are purchasing undifferentiated products in the market. All these influence the
decision making of the company in relation with the type of products being offered at the stores.
In addition to this, the business of the dominos is also affected by the presence of substitute in
the markets i.e. quite medium. For instance, if there is slight increase in the prices of pizza, the
customer will switch to frozen pizza from the supermarket or can go for cheaper options like
hamburgers, fried chicken etc. Other than this, due to increasing awareness regarding health and
hygiene by the government, people of Australia are now adopting healthier diet, which might
compel them to go for healthier substitutes (David and Amanda, 2005). Thus, it can be said that
target market has a great involvement in the decision making process of dominos.
7. PERCEPTUAL OR POSITIONING MAP
Positioning is nothing but communicating the overall value preposition to the market.
Since the primary target market of Domino’s is people under 30 years of age with cultural
diversities the company positioned themselves as a customer focused firm. They offer cultural
specific product mix in order to succeed in non-traditional markets. In this regards, they have
evolved their menu and included pizza, sandwiches, chicken wings, salads and desserts (Balogh,
2014). Furthermore, Domino’s adopts competitive pricing strategy. Moreover, taking advantage
of the working people and individuals who have time constraints, the organization positioned
themselves as convenience firm. In this regard, they have touted, “Hot pizza delivered to your
door in 30 minutes or it’s free. Thus, seeking help of this positioning map, company can identify
the needs and demands of the target group and can help them in building more effective
marketing strategy.
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8. CONCLUSION
Thus, to conclude it can be said that, over the past few years, the pizza restaurants and
takeaway industry has evolved at a tremendous speed and it will continue to alter in coming
years as well. Pizzas will remain popular among the Australians and the consumer appetites and
wallets have been increasingly placed to the test.
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9. REFERENCES
Books and journals
Allan, C., Bamber, G., Gould, A. and Timo, N., 2001. Good Job or Bad Job? Fast Food
Employment in Australia. Employment Relations in the New Economy. pp.138-145.
Barrie, G. and Furnham, A., 1992. Consumer profiles: An introduction to psychographics.
London: Routledge.
David, P. and Amanda, B., 2005. Identifying target audiences and profiling target markets.
2nded. Amanda.
Gary, A. and Philip, K., 2005. Marketing: An Introduction Upper Saddle River. 7thed. N.J:
Prentice Hall.
Hoch, S.J. and Loewenstein, G.F., 1991. Time inconsistent preferences and consumer self-
Control. Journal of Consumer Research, 17(4), pp.492-508.
Jobber, D., 1995. Principles and practice of marketing. London: McGraw - Hill.
Philip, K. and Lane, K.K., 2009. Marketing Management. 13thed. Pearson Education
International.
Poiesz, T.B.C., 1993. The changing context of consumer psychology. Journal of Economic
Psychology, 14, pp.495-506.
Rogers. E.M., 1995. Diffusion of Innovations. London : Free press, cop.
Rubin, P., 1978. The theory of the firm and the structure of the franchise contract. Journal of
Law and Economics, 21, pp.223-33.
Sally, D. and Lyndon, S., 1996. The market segmentation workbook: Target marketing for
marketing managers. London: Routledge.
Sathye, M., 1999. Adoption of Internet Banking by Australian Consumers: An Empirical
Investigation. International Journal of Bank Marketing, 17 (7), pp.324-334.
Shenton, A.K., 2004, Strategies for ensuring trustworthiness in qualitative research projects.
Education for Information, (22), pp.63-75.
Stapp, T., 2011. Fastest-growing Franchises. Entrepreneur, pp.90-98.
Online references
Balogh, S., 2014. Woolworths and Coles unite on trading. The Australian. [Online]. Available
through: <http://www.theaustralian.com.au/national-affairs/policy/woolworths-and-coles-
unite-on-trading/storyfn59noo3-1226931112552#>. [Accessed on 9thApril 2018].
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Domino's Pizza profit rises 28.7 per cent. 2016. [Online]. Available through:
<http://www.afr.com/business/retail/dominos-pizza-profit-rises-287-per-cent-20160815-
gqt1vy>. [Accessed on 9thApril 2018].
Keane, A., 2015. Domino’s Pizza Australia’s investors are enjoying real profits — but for how
long? [Online]. Available through:
<http://www.news.com.au/finance/money/investing/dominos-pizza-australias-investors-are-
enjoying-real-profits--but-for-how-long/news-story/8f563d7d4cf79543978cf4d2ec5cb10e >.
[Accessed on 9thApril 2018].
PESTLE Analysis of Australia 2012. 2012. [Online]. Available through:
<http://www.lucintel.com/pestle-of-australia-2012.aspx>. [Accessed on 9thApril 2018].
Pizza Industry Analysis 2018 - Cost & Trends. 2018. [Online]. Available through:
<https://www.franchisehelp.com/industry-reports/pizza-industry-analysis-2018-cost-trends/>.
[Accessed on 9thApril 2018].
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