Pizza Wars

PRICING AND PROMOTIONAL WARS

Domino's sold a 12” Pizza for Rs 265. (Refer Table III for price range). Commented Pankaj Batra (Batra), Manager (Marketing), Tricon International said, “Indians are value-sensitive, not price-sensitive. We need to offer comeback value to our customer.” The high price was attributed to the high quality of ingredients used. For instance, Domino's sourced its Peperoni and Jalapeno needs from Australia and Spain respectively. However, with competition increasing from Pizza Hut, Domino's introduced price cuts, discounts and freebies to attract the customers. In 1998, Domino's introduced the Pizza Mania scheme where it offered a large pizza for Rs.129/-. The demand was overwhelming and the company sold close to 5000 pizzas in the first week of its launch.

During late 1998, both Domino's and Pizza Hut were trying to lure the customers with discount coupons by issuing such coupons through several schemes. Said an analyst, “Even then, the prices are too high. Globally, fast food chains only succeed when they bring their prices down to the same level as the street food.” However, both Domino's and Pizza Hut were concentrating more on data base marketing and below-the-line activities and special offers.

TABLE III - PIZZA PRICE COMPARISON

Company	Price Range (Rs)
Domino's	39-265
PizzaHut	75-350

Domino's was spending 50% of its total marketing budget on special offers and discounts along with delivered direct mailers and pizza training classes. Domino's also had a tie-up with Discovery Channel under which the channel advertised its pizzas while Domino's put the channel's name on its mailers. Domino's conducted Pizza making classes for school students. In 1998, it offered a clock to all its customers who had bought Rs.15,000 worth of pizzas throughout the year. Said a company official, “Database marketing is an important part of our strategy. We have a special cell analyzing our database to look for repeat and loyal customers.”

	Continued....


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