A Report for Dominos Pizza Limited

Introduction

Dominos Pizza Limited currently referred to as Dominos is one of the largest sellers of Pizza in the world. The company is American, and its establishment was in 1960's headquartered at the Farm Office Park of the Dominos located in Ann, Arbor, Michigan. Operations of Dominos are in over 30 countries with the inclusion of Canada having over 2500 outlets. Dominos is chiefly engaged in retail food outlets with a menu of various Pizzas, desserts, and drinks. Examples of pizzas that Dominos sell are chicken and prawn pizzas, traditional pizzas, a pizza mogul, pizza chef as well as crust. Apart from pizzas, Dominos also has side products such as chips, bread dipping sauce, chicken as well as drinks like Mountain Franklin and Coca-cola. The business also offers various kinds of desserts like Mini-Dutch pancakes, and dipping sauce. Dominos has operations in different parts of the world offering food outlet services with a defined market structure, consumer profile, and pricing description as seen in the discussion of this report.

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Market Structure

Dominos operates in a monopolistic kind of a market structure that is characterized by competition from many competitors who sell similar though not identical products. For the case of Dominos, the company competes with competitors to win consumers for the purchase of pizzas (Young & Flowers, 2015). Dominos has several competitors like Little Caesars, Pizza Hut, Papa John's, Jet's pizza, Hungry Howie, and California pizza kitchen. The monopolistic market structure of Dominos has a characteristic no barriers for the entrance of new firms. The market has many pizza shops selling various kinds of fast food like pizza (He, Zha, & Li, 2013). Entry to the market for new firms is easy because of few barriers. On the rank of competition, Dominos is now the largest pizza outlet in the world followed by Pizza Hut and Papa John's.

The differentiated product is another characteristic that defines the market structure in which Dominos operate. Firms involved in fast food outlets like Dominos, Papa John's, Pizza Hut make products that differ from the competitors' in various ways (He et al., 2013). Some of the product differentiation occurs in ways like the location of selling the product, the physical appearance of the product, menu, as well as customer services. Differentiated products in the pizza market lead to a high degree of varieties. Companies are therefore differentiating their product for identification purposes. Competitors will make unique products to cause a slight difference from the competitor. For instance, the products for Dominos have remained distinctive from its competitors through a differentiated menu. Unlike its competitors, Dominos pizzas are extra spicy with a non-stick surface. A distinguished pizza has made the product identification to Dominos in the marketplace. Consumers are in a position to differentiate pizza produced by the Dominos in the marketplace (Bressler, 2012). In most cases, Dominos promotes and advertises its differentiated products to customers as a way of winning consumers in the marketplace.

Also, in a monopolistic competitive market structure in which Dominos operates in, companies offer products that are distinctive. There are various fast food companies with thousands of outlets located in different parts of the world, but their products and services provided to consumers have remained distinctive (Young & Flowers, 2015). In spite of the many fast food outlets, each one of them has remained distinctive in the marketplace. Companies brand their business to distinguish their products and services from those of the competitors. Distinctive products lead to a mini-monopoly situation that brands products and services for a distinction to consumers of pizza (He et al., 2013). As a result, Dominos has distinctively branded itself as the seller of extra spicy and non-stick surface pizzas.

Consumer Profile

Dominos sell its products to different kinds of consumers depending on the menu offered. The first type of consumers that the company sells its products to is the partying individuals that consist mostly of young people. Pizza is one of the chosen meals for partying in celebrations like birthdays and graduations (Bressler, 2012). Dominos free delivery services have attracted many partying consumers to choose its pizza. The company delivers the product to the venue of the party thus making it convenient for customers. At times, when the party has few participants, Dominos hosts such parties in its outlet's locations. Since young people like partying, they have become Dominos man consumers. The other group of consumers that Dominos sells its products is the travelers (Young & Flowers, 2015). The location of Dominos outlets is mostly on major highways and near airports aiming travelers as they opt for fast foods.

The consumer demand in the pizza market has increased in the past one decade. An increase in demand is due to consumer's preference for eating away from home. Pizza market has experienced customer influx as families and friends eat more outside than at home pizza (He et al., 2013). Demand for pizzas is usually very high during weekends and holiday vacations as families and friends are free to go out for dinner. Customer demand for pizzas has also increased because of better customer services like online purchase and free delivery. Consumers located far away from the outlets can purchase online and have their products delivered to them online, a situation that has increased consumer demand (Bressler, 2012). Also, consumer demand is on the flavor and taste of the product as customers prefer flavored and tasty pizzas.

In the pizza industry, consumers are sensitive to prices changed as well as to changes to other factors like location and customer service. First, customers will opt for expensive pizzas as they perceive that the higher the cost, the better the product pizza (He et al., 2013). Customers are willing to pay high for the product with an expectation of better products and services, a situation rendering pizzas as a meal for the rich. Customers are as well sensitive to location as they prefer eating from outlets near them. Though delivery services provided by the company have tried to preclude consumers' sensitivity to location, most of the customers still choose to eat from the nearby outlets (Young & Flowers, 2015). Therefore, companies are locating its outlets in areas having high customer coverage.

Pricing Description

The market structure of the industry affects the price charged by the companies. The upcoming fast food industries have increased competition for customers. As a result, companies are forced to lower its prices as a way of attracting many clients. The outcome has been losses on existing firms that conform to the quality standard (Bressler, 2012). For instance, in 2014, the emergence of Maestro pizza that was sold its product to low price caused Dominos to lower its prices. In the end, Dominos incurred losses. As a way of solving the losses after lowering its products, the company started to compromise quality. The other way in which the market structure affect price in the pizza industry is the location. Prices of Pizzas are different depending on the location of the outlet pizza (He et al., 2013). In high-living standard areas, prices are higher than in low-living areas as a way of attracting customers depending on the consumers' affordability.

The industry of Pizza also experiences the problem of pricing from the effect of competitiveness in the marketplace. There is no equation of quality with price as some competitors invest in promotion and advertisement, but they compromise on the product quality (Bressler, 2012). Firms that invest in quality like Dominos find it hard to compete with branded companies that use intangible aspects like the advertisement. In the end, the pizza industry does not show a direct reflection of the products' quality with pricing. Since pricing is for competitiveness, companies are likely to offer low-quality products for business sustainability.

Conclusion

In spite of challenges facing pricing in the pizza industry, Domino has come up with a clear pricing strategy. The pricing strategy used by Dominos is cost based that focuses on reducing costs while increasing profit (He et al., 2013). Through cost-based pricing strategy, Dominos offers lower quality with the use of mass-purchased ingredients. The company also hired staff at low wages to reduce costs on human resource management. Through cost-based pricing, the company can cater to costs as well as the creation of profits for business sustainability. Also, Dominos uses the cost-based pricing strategy to attract more consumers to its products (Young & Flowers, 2015). Low priced pizzas, especially in low-income areas, will attract many consumers.

References

Bressler, M. S. (2012). How small businesses master the art of competition through superior competitive advantage. Journal of Management and Marketing Research, 11(1), 1-12.

He, W., Zha, S., & Li, L. (2013). Social media competitive analysis and text mining: A case study in the pizza industry. International Journal of Information Management, 33(3), 464-472.

Young, C. L., & Flowers, A. (2015). Fight viral with viral: A case study of Dominos Pizza's crisis communication strategies. Case Studies in Strategic Communication, 1(6), 93-106.