IN JAPAN, DOMINO’S
RECASTS PIZZA AS A MEAL
FOR SPECIAL OCCASIONS
Domino’s quirky marketing campaigns and inventive pies are paying off with individual store
sales 50% higher than the average US shop
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K
enji Ikeda walks into a
conference room toting a pink,
heart-shaped pizza box in one
hand. In the other is a pizza box
that looks like the moon.
Ikeda is executive VP-marketing for
Domino’s Pizza in Japan—a country that to
Americans may as well be the moon when
it comes to pizza. In the US, pizza is the
epitome of casual—frequently mentioned
in the same breath as beer and football. In
Japan, it’s a more upscale affair. Christmas
Eve, the most popular day of the year to
share a pie with family and friends, is big
business for Domino’s, with sales three to
four times that of a normal Saturday.
“Kentucky Fried Chicken was the
tradition in Japan. People would get
together to eat fried chicken and Christmas
cake—it was a common thing,” Ikeda
told Ad Age, through a translator, at the
company’s Tokyo headquarters. “So we
started driving people to order pizza. Now,
people perceive [Christmas Eve] as an
occasion to buy fried chicken, get pizza
delivered and then eat Christmas cake.”
Pizza doesn’t have much of a history in
Japan, with Domino’s entering the market
in 1985. The chain has just 15% market
penetration in its delivery areas, and the
average Japanese pizza eater indulges only
four times a year. Domino’s ranks No. 3 in
the country, behind domestic chain PizzaLa and Pizza Hut, in revenue and number
of locations. But Domino’s execs expect to
beat Pizza Hut on revenue this year.
To compete and cultivate a pizzaloving culture, Domino’s Japan is working
to create more occasions to enjoy it. On
Valentine’s Day, it delivered heart-shaped
pizzas in pink boxes with the message: “Be
careful. This pizza and you two are really
hot. Don’t get burned!”
Working with ad agencies ADK and
Hakuhodo, Domino’s has also adopted a
zany marketing style devoid of TV spots.
“TV commercials don’t have the same
impact as before,” Ikeda said, adding that
the company hasn’t purchased TV ads in
five years. “Internet and social media are
getting so big.”
Rather than spending on commercials,
“we’re trying to create news-like topics that
people talk about,” he said. “If the topic is
hot and fun, people will spread it for us.”
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The toppings alone deserve a shoutout. Japanese pizzas come with toppings
that pepperoni-loving Americans couldn’t
fathom. Domino’s has sold a $50 pie
featuring foie gras. And a recent $50
offering was the “Prestige Quattro” with a
different topping on each quarter: classic
margherita, snow crab and shrimp gratin,
Mangalitsa pork with Bordeaux sauce, and
beef stew with fresh mozzarella.
“The gourmet pizza outlets in America
have nothing on our Japanese delivery
menu,” said Scott K. Oelkers, presidentCEO of Domino’s Pizza Japan and an
American.
Japanese consumers value aesthetics,
so presentation is also key. Patrons
expect every slice to have precisely the
same amount of toppings, which must be
uniformly spaced and arranged. Shrimp,
for example, are angled with the tails
pointing the same way.
Ikeda, 54, joined Domino’s 24 years
ago as a store manager in Tokyo and
rose through the ranks. He solidified his
marketing reputation in 2010, helping
Domino’s Japan gain worldwide attention
with a “25 Surprises” campaign to
celebrate its 25th anniversary.
One promotion in particular received
heavy media coverage. The chain offered
2.5 million yen (about $31,000 at the time)
for one hour’s work at a Domino’s store. In
all, about 12,000 people applied.
The lucky winner was a rural
housewife who had never eaten delivery
pizza. She flew to a remote island in
a small Cessna to deliver pizzas to
schoolchildren also new to pizza. She
donated her “wages” to charity.
“All we did was post it on a monster.
com-equivalent site,” Oelkers said. “Here’s
this job, you get paid 2.5 million yen for an
hour of work, please apply. The budget on
this deal was extremely small. It just went
viral in Japan and around the world.”
Domino’s announced last summer
that it would build the first-ever pizza
store on the moon. The chain worked
with space agency JAXA (the Japanese
equivalent of NASA), Honda and other
high-profile companies to detail plans for
the construction, including an engineer’s
presentation and funding breakdown
for the lunar outpost. (Total price tag for
Domino’s pizza joint on the moon: $21
billion.) “We wanted to come up with
something that no others would think
of,” Ikeda said. Honda engineers even
designed a “moon scooter,” said Oelkers.
Messrs Oelkers and Ikeda declined to
disclose the marketing budget of Domino’s
Japan but said the stores spend the same
percentage of sales on media as US stores.
According to Domino’s annual report,
there are 4,907 stores in the US, which
contribute 5.5% of sales to fund national
marketing campaigns. With just 210
locations in Japan, the total budget is small
for such an expensive media market—
hence the emphasis on creative stunts and
digital marketing. The offbeat strategy
appears to be paying off. Individual-store
sales are almost 50% higher than the
average US store, and same-store sales
have been up three years in a row, Oelkers
said.
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Having taken Domino’s Pizza to market leader position, Harneet Singh Rajpal, VP Marketing,
Domino’s Pizza India, now looks at expanding the brand’s reach to new cities and countries
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Q] It was reported that Domino’s wanted to
dominate the pizza market with 80 new stores
in 2011-12. Where are you today?
Yes, we are on track, plan to open 85+ stores in
this financial year. In our Q3 results, we declared
that we have 439 stores across 100 cities in the
country.
Q] What is the size of the Indian pizza market?
What is the marketshare that Domino’s enjoys?
India’s pizza market is worth around Rs 1,300
-1,400 crore as per Euromonitor data last year,
out of the Rs 8,000 crore organized food sector in
India. Domino’s has over 54% share of the pizza
market, and 70% share if you look at the organized
home delivery space.
Q] Pizzas changed the eating habits of the
common Indian, and we witnessed a ‘pizza
revolution’ in India, so to say. Where does
Domino’s fare in this scenario?
In 1996, we launched our first store in New
Delhi, and became the first QSR (Quick Service
Restaurant) chain to enter India. There was no
concept of pizzas in India, for one, and we were
nowhere near to delivering made-to-order fresh
pizzas. We brought in pizzas exactly in the form
that the world ate it. Our task was to educate
consumers, build awareness and induce trial.
What helped immensely was that the pizza has
ingredients that exist in the Indian diet. But it was
in a different format, shape and presentation. We
managed to establish a connect.
Q] You moved from a ‘Hungry kya’
positioning to ‘30mins or Free’
positioning. How did the transition
to ‘Khushiyon ki Home Delivery’
happen?
Initially our positioning was
‘Hungry Kaya’ and by 2003 -2004,
we were established in 22 cities. At
this point, we decided to highlight
the ‘home delivery’ factor. We
championed the culture of home
delivery and our
our campaign was ’30
mins or Free’ to show that
pizzas were
delivered in
less than 30
minutes. This changed the pizza scenario from
a ‘freshness’ tag to a time-bound one too. It was
not a marketing gimmick, but a scientifically
designed process. Our ad campaign evolved after
we systematically and scientifically mapped the
whole process. We found that it took around 1517 minutes to make and pack a pizza order for
delivery. Then it took 7-8 minutes of drive time to
deliver them. We still kept around 7-8 minutes as
buffer, keeping in mind traffic problems. People
thought it was just a publicity stunt. In fact,
delivery orders per day touched a new high after
this! Also, putting a 30-minute time span actually
ensured an unwritten commitment that our pizzas
would be delivered hot and fresh.
In 2008, we realized it was time to connect
with people on an emotional level and we went
to the consumer and found out that the ‘delivery’
factor helps to lighten the mood, bring joy
and happiness. The essence of the brand was
the promise of shared joy. In 30 minutes, the
Domino’s pizza not only brought joy, but a lot of
sharing and bonding also while eating it. Hence
the new positioning. When the consumer evolves,
the brand also evolves.
Q] Who are your target consumers? How would
you describe them?
Out target consumer is broad-based and
could be a kid to or a 40-year-old. But we focus
on the 15-35
1
years age group, male/female living
urban, semi-urban areas who connect on a
in urban
psychological level. So, Domino’s is a natural fit
psycholo
here. If you
y look at the demographics, it comprises
students, young working adults and the young
students
married. About 50 % are with family and friends
pizzas. And, while 54% of
while consuming
co
is under 25 years, it keeps
Indian population
p
the brand
bran very young. We connect equally well
with those
tho who are married, to those who are in
college or even guys who have passed out from
and who have entered working life…this
college an
helps the
th brand to talk to a larger audience.
Q] Ther
There is this ‘junk’ and ‘unhealthy’
connotation
attached to food like pizzas.
connotat
Let me demystify this concept. Globally,
food which
whi is ‘fried’ is typically considered
‘unhealthy’. Pizzas have wheat, cheese (a milk
‘unhealt
product), tomatoes and veggies on top. There
product)
pr
is nothing
nothi unhealthy about them... anything in
excess is
i not good, like excess of cheese, etc. We
also have
hav the whole wheat pizza, which has thin
crust an
and is healthy. None of our products have
any taste
tast enhancers and are made of natural
ingred
edie
ed
ingredients
and are trans fat-free. In India, pizza
consum
consumption is three to five times a year, which
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is nothing compared to the US, where it is 10 to 15
times a year.
Tier II, III) across the country. We believe there are
many more cities that we can move into.
Q] Your current ad campaign promotes
the Three Cheese Pizza, which is gaining in
popularity.
We use three different types of cheeses in this
pizza - cheddar, mozarella, gouda - designed to
give a new experience to the consumer. Every
December, we launch something high on taste, that
can add indulgence and warmth to the winter. Our
ad communication features the angel and the idea
was to create clutter-breaking communication. The
response was fantastic. In a brand track study, our
ad recalled very high, plus the brand is doing well.
Q] For Domino’s the non-pizza category has
been a revenue-generating avenue. At least 80%
of your orders include side orders...
It is a full experience – a full meal that you can
get at Domino’s. Yes, 80% of orders include some
side dishes like Nutty Choco Lava Cake, Chicken
Wings, Garlic Breadsticks, Butterscotch Mousse
Cake and others that go well with pizza.
Q] What do you see as trends in the food sector,
with particular reference to the world of pizzas?
One learning is that food fatigue is very high.
If you look at food globally, variety is the highest
in Indian food. We are foodies and we want choice
and we want to experiment. This is what has
helped us launch three to four products every
year. Everytime we launch a new product, the
consumer gets a new reason to come back to us.
As to how far we have gone in Indianization, we
believe in Indianizing the palate for our kind of
food. Our menu here has cottage cheese (‘paneer’)
which is not seen in Domino’s offerings in other
countries, and we have Barbeque Chicken, Spicy
Chicken, Kheema pizza, etc., tweaked to the Indian
taste. Our food is standard across the country. So,
what you get in Patna is as good as what you get in
Guwahati or Delhi or Mumbai.
Q] What are the marketing spends that
Domino’s looks at?
Around 4-5% of our revenue goes into our
marketing spends. We are not averse to looking at a
higher percentage.
Q] In the QSR space, what are the key marketing/
advertising trends?
The QSR space has been growing at 2530%. It’s already got many new players, as it
promises aggressive growth. And, the increasing
consumption of the country also adds to this.
Q] What are you plans to expand to new areas?
We opened our first store in Sri Lanka in May
2011; in Bangladesh we are exploring the market;
in Nepal we have not started anything yet. As far as
Tier II and Tier III towns go, we are now present in
100 cities (10 in metros and mini metros and 90 in
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Q] How active is Domino’s in the digital media?
We launched our online ordering system in
April 2011, and it is a huge success, and we have
won many awards too. On Facebook, we have
some 1 million fans; we were ranked 17th in the
Most Engaging Fan Page on Facebook and so
on. We try to shape and also understand the
personality of the fans, whom we usually refer
to as the ‘Dominicons’. We have a thriving social
media presence and a high degree of engagement
with consumers. We are investing in digital
marketing to make people try this and enjoy the
convenience of this platform.
Q] Is Domino’s pricing policy affordable for the
target segment?
Our pricing today is most value-for-money for
the brand (Brandtrack data shows that). The price
for pizzas starts at Rs 39, and it is a whole meal.
Pizza Mania range, which is higher priced, is shared
by people. So, if you divide the cost per head, you
can see that the pizza is value-for-money.
Q] Are you moving into the beverages category?
No. Coke is our international beverage partner;
in fact Coke and Sprite go well with our pizzas.
Q] With high competition from other players,
how do you ensure customer loyalty?
We have 54% marketshare and we are the
leader in the organised pizza category. People find
our delivery standards much better. Check our
presence in 100 countries and we have the widest
footprint. At least 70% of our customers are repeat
purchasers every month. This loyalty makes us
market leaders. The DNA of the brand is ‘delivery’.
Our stores have a seating area too, so ‘dine in’ plus
‘home delivery’. Earlier it was 65% home delivery
but today it is 50%, with ‘dine in’ capturing the
other 50%. Customer loyalty is actually very high.
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