Description
Case Study Questions
1. 2. 3. 4. PESTEL Analysis: Identify the key Political, Economic, Social, Technological, Environmental, and Legal
factors shaping Domino’s context across its history and recent initiatives (5 Marks).
SWOT Analysis: Using only the information in this case, list Domino’s Strengths, Weaknesses, Opportunities,
and Threats (5 Marks).
Porter’s Five Forces: Analyze Domino’s industry structure (threat of new entrants, supplier power, buyer
power, threat of substitutes, competitive rivalry). Is the industry attractive? (5 Marks)
Based on all of the above, come up with a list of 5 recommendations that the company should thinkth a list of 5 recommendations that the company should think
about in the future
Course: Principles of Management (MGT101)
The Birth of Domino’s
Domino’s pizza was established at the year 1960 when Tom Monaghan and James Monaghan bought “DomiNick’s”. It
was located at Ypsilanti, Michigan near the north of the United States where it used to be a pizza home delivery store.
However, James Monaghan sold half of his proportion of the business to Tom Monaghan in 1965. In 1967 Domino’s
Pizza began franchising with its first store outside of Michigan opening in 1968 and internationally in 1983. Domino’s
opened its 200th store in 1978, its 1,000th store by 1983, and its 5,000th store in 1989. In 1998, Tom retired from
Domino’s at the age of 61 selling 93% of the company to Bain Capital, Inc. for $1 billion.
As sole owner Tom change the business names into Domino’s Pizza Inc. In 1978, there were more than 200 Domino’s
Pizza store were launched. Domino’s Pizza is eager to expand their business around the globe. A few years later at
1989 Domino’s has extended over 5,000 pizza restaurants worldwide. During 1996, Domino’s Pizza has moving
forward by introductions its web site with domain name ‘www.dominos.com’ and spreads highest sales nearly $2.8
billion. Domino’s Pizza, Inc, activates in trading common stock on the New York Stock Exchange (NYSE) on 2004 as the
acknowledged world leader in pizza delivery. Furthermore, Domino’s is ranked in the top ten in annual listing of great
franchise opportunities in the Entrepreneur magazines. Domino’s Pizza are celebrated its 50th anniversary and the
opening of its 9,000 store worldwide in 2010. Domino’s is recognized as the world’s leading pizza delivery company
dedicated to outstanding the industry in product eminence and operational superiority.
Today, Domino’s has 5,098 stores in the US and over 11,600 stores in over 75 countries. Of the 11,600 stores only 390
are owned by Domino’s with the rest owned by the more than 2,500 franchise owners worldwide. It is the largest
pizza delivery company and the second largest pizza chain in the world.
Figure 1: Countries with Domino’s stores
Supply Chain
In 2014, Domino’s generated $1.9 billion dollars of revenue of which 62% percent was from selling the ingredient to
its franchisees supply chain management [10]. Although most of us think of Domino’s as a pizza company, the
company is dependent on its efficient logistics. Domino’s Supply chain is divided into three main tiers. Tier2 is
comprised of Domino’s key suppliers that ship ingredients to Domino’s distribution centers. Tier 2 includes nine
Leprino’s
foods
cheese
suppliers,
three
Paradise
tomato
sauce
suppliers,
thirty
eight Ardent Mills flour supplier and two Domino’s thin crust bread and veggie supplier center. Tire 2 supplies pizza
ingredients cheese, tomato sauce, flour, thin crust bread to tier1 (Domino’s Distribution centers). Tier1 is comprised
of 16 Domino’s distribution centers that supply all ingredients to each of the stores in the US. Tier1 supplies the pizza
ingredients to Tier 0 (5098 Domino’s stores). Tier 0 takes these ingredients and produce pizza to each of Domino’s
customers.
In order to control the quality standards of its products Domino’s has strict requirements on the ingredients,
assembly, and cooking of its products. To maintain quality standards, the company requires franchise stores to
purchase the dough, cheese, and sauce from its corporate distribution centers. Dough is made at the distribution
centers to further ensure consistency and reduce preparation activities at stores. The distribution center also provide
toppings, equipment and other restaurant consumables like boxes and cleaning supplies franchisees are required to
purchase all these items from the distribution centers.
Figure 2: Domino’s Supply chain tiers
Digital Transformation
Watch this video:
Drone delivery – a dream come true:
Figure 3: Domino’s drone delivery concept.
Domino’s Pizza Marketing Mix
According to Kotler and Armstrong (2013), the system of business actions such as planning, pricing, promoting, and
distributing the product to markets (customers) in achieving the organizational goals is calling as marketing. And this
kind of business activities was also known as a marketing mix which consists of all the important things that the
company should do to control the demand of customers’ needs and preferences when looking for the products.
(Hannagan, 2008).
Product
According to Ferrell (2005), the heart and the core of the marketing mix was product itself. We as a retailer can offer
the customers on how to differentiate our products from competitor by showing them the attributes of symbolic and
experiential of the products. For Domino’s pizza product, besides using the fresh and quality raw materials, there is no
frozen ingredients was used when making the pizza. Thus, it such a special product by creating the unique pizza box in
keeping the pizza hot even after the customers receive the pizza. Both of this strength that develops by Domino’s is
the first competitive advantage of this company. Moreover, the brand name of Domino’s had built the meaning of
fresh, quality product and good service in the customers perception and variety of menu items also had been offered
such as whole wheat crust options, which are not offer by the other competitors like Pizza Hut (Ferrell, 2005).
Price
According to Kotler and Keller (2006), many business firms tend to oppose large mark up in price and small volume
for specialty stores or opposed small mark up in price and large volume for discount stores. Domino’s pizza is good in
handling the price strategy by offering the deals and promotions. For example, if the customer orders for a second
pizza, it will come on 50% discount and the delivery will be free. Coupons are also one of the tools that being use by
the Dominos to lower their product price so that Dominos will create more desirable pizza for the customers (Kotler
and Keller, 2006).
Place
Another name for place is also call as distribution. According to Bowersox and Closs (1996), place is the third element
of the marketing mix and all decision and tools that are needed in making the product and services available to attract
the customer was encompasses in this point. Referring to what have been said by Bowersox and Closs (1996),
merchant houses, open market, institutional houses and direct delivery is one of common platform as a place. The
branch of Domino’s pizza will be located at the place that familiar to the society and easy to see by the people. For
example, the area that is very busy with lot of traffic and people are passing around along that way. Moreover, the
location of the branch also was a good and strategic place for deliveries because that is the top priority services being
offered to the customers. Plus, in every single branch of Domino’s pizza provided a special design facility for their
customers while waiting the order (Bowersox and Closs, 1996).
Promotion
According to Johnson, Scholes, and Whittington (2007), the term of promotion can be seen or can be valued as a way
closing the information gap between would-be sellers and would-be buyers. Website is one of the biggest promotion
tools that had been use by Dominos when develop the strategy of promotion. For example, 50% promotion will be
given for every second order of Domino’s pizza, plus with a free delivery to customers. Furthermore, another
promotion of Dominos is like Family Fun Pack which for a family’s celebrations. All this kind of promotion offered by
Dominos can encourage the customer’s satisfaction toward having meals in Dominos (Johnson, Scholes, and
Whittington, 2007).
Lawsuits
A blind customer (Guillermo Robles) couldn’t use Domino’s website/app with his screen reader, so he sued. Courts
said the ADA (disability law) covers company websites/apps that connect to real stores. On remand, the judge
ordered Domino’s to fix its site/app to meet access standards (WCAG) and awarded Robles $4,000 under California’s
Unruh Act, plus attorneys’ fees. In 2022, the case ended with a settlement. The total amount Domino’s paid in that
settlement was not made public.
What’s happening? Some Domino’s shareholders say the companies misled investors, which hurt the stock price.
They’ve filed class action lawsuits (one in Australia, one in the U.S.) to try to get money back.
Australia (DMP): Echo Law is suing Domino’s Pizza Enterprises Ltd (DMP). They point to a Nov 3, 2021 company
announcement that was followed by about an 18% share price drop.
United States (DPZ): Pomerantz LLP is suing Domino’s Pizza, Inc. (DPZ) on behalf of investors who lost money after
the stock fell following certain company news/events.
Big picture: These cases claim securities fraud/corporate misconduct. They’re trying to recover investors’ losses.
Details are limited because the cases are ongoing.
Pizza Turnaround
So let’s now do back to 2009 and revisit a major repositioning campaign for Domino’s Pizza (in the USA market)
entitled “Pizza Turnaround”. Although, at this time Domino’s was a major fast food chain in the USA market selling
around 1 million pizzas per day, their competitive position (based on product quality) was poor and was weakening.
To improve their position, their turnaround campaign involved a major overhaul of the brand and their pizzas was in
response to customer complaints about the quality of their pizzas, which they had identified from focus groups, social
media sentiment, direct complaints, and various other information sources.
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•
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Unfortunately for Domino’s, the consumer feedback was very harsh and included comments such as:
pizzas taste like cardboard.
The crust is lacking.
Mass produced; boring, bland pizza microwave pizza is far superior.
As you can see, these comments are not just minor complaints – but they go to the core of their pizza product. There
is no product tweaking and minor improvements that could fix these issues. And that’s why Domino’s decided that a
pizza “turnaround” was required (see below videos). Accepting of Customer Criticism One of the interesting aspects
of their re-launch campaign was that they publicized many of their negative comments from their research. Rather
than “hiding” from the negative comments, they embraced them and promised to do better. They even ran ads that
read “our pizza sucks” – a somewhat risky strategy that could have easily damaged the brand.
But it should be noted that this communication messaging was tested and researched before rolling out in the form
that is shown in the two videos below. This embracement of negative customer feedback would be considered a very
open, honest, and authentic response – clearly communicating that the brand is listening and is trying to win back lost
customers. And while we have seen an increase in honesty and transparency from brand’s in more recent times – this
open approach was relatively novel in 2009.
The experiment:
The result
References
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Bowersox, D. J., & Closs, D. J. (1996). Logistical Management: The Integrated Supply Chain Process.
McGraw-Hill.
Ferrell, O. C. (2005). Marketing: The Core. McGraw-Hill/Irwin.
Hannagan, T. (2008). Management: Concepts and Practices (5th ed.). Financial Times Prentice Hall. Johnson,
G., Scholes, K., & Whittington, R. (2007). Exploring Corporate Strategy (8th ed.). Prentice Hall. Kotler, P., &
Armstrong, G. (2013). Principles of Marketing (15th ed.). Pearson.
Kotler, P., & Keller, K. L. (2006). Marketing Management (12th ed.). Pearson Education.
Domino’s Pizza, Inc. (1996–2022). Various company press releases and annual reports.
Bain Capital, Inc. (1998). Domino’s acquisition announcement.
Entrepreneur Magazine. (Year unknown). Top Ten Franchise Opportunities listing.
YouTube (Various years). Domino’s-related videos:
•
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Echo Law (2021). Class action lawsuit press release against Domino’s Pizza Enterprises Ltd (DMP). Pomerantz
LLP (2021). US investor lawsuit against Domino’s Pizza, Inc. (DPZ).
ADA / Robles v. Domino’s Pizza, LLC litigation documents (2022).
Case Study Questions
1.
2.
3.
4.
PESTEL Analysis: Identify the key Political, Economic, Social, Technological, Environmental, and Legal
factors shaping Domino’s context across its history and recent initiatives (5 Marks).
SWOT Analysis: Using only the information in this case, list Domino’s Strengths, Weaknesses, Opportunities,
and Threats (5 Marks).
Porter’s Five Forces: Analyze Domino’s industry structure (threat of new entrants, supplier power, buyer
power, threat of substitutes, competitive rivalry). Is the industry attractive? (5 Marks)
Based on all of the above, come up with a list of 5 recommendations that the company should think
about in the future (5 Marks).
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