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The Domino's Effect
Domino’s Pizza (DPZ) has undergone some fairly dramatic changes over the past few quarters, including management adjustments, a shift in marketing efforts, and a revamped product line. Whether these moves will benefit the company over the long haul is unknown at this time. However, the buzz surrounding the shift in attitude at Domino’s has caught the attention of many, which is a good thing in this brand-driven retail business.
The most noticeable difference of late has been the company’s self portrayal in its advertising campaign. Domino’s management is being featured frequently and prominently in TV ads and other Internet-based media venues, such as YouTube. The purpose of this move is to garner credibility from a budget-conscious and recession-burdened consumer base. Domino’s is undoubtedly in need of improved public relations, following the nightmare that transpired after footage of a few disgruntled employees tainting food products was leaked to the public. At the same time, the company is using a timely change in management (CEO David Brandon is leaving in March and will be replaced by USA President J. Patrick Doyle) to convey a defining attitude adjustment. In addition, Domino’s is attempting to garner sympathy and trust from its audience, citing common negative stereotypes frequently proliferated about its food products and how these issues actually hit home with Domino’s employees.
In recent ads, management has taken the risk of showing footage of customers openly proclaiming how poor Domino’s food products taste, comparing the pizza dough to cardboard and its sauce to ketchup. This is all part of a broader strategy, albeit an aggressive one, to convince consumers that product quality has improved. Specifically, the company claims to have enhanced the taste of its sauce, and has added new cheese and crust features. Domino’s has also launched a taste test comparing its new pizza with that of competitors such as Pizza Hut, owned by Yum Brands (YUM), and Papa John’s (PZZA). With improved products and a more honest approach towards the consumer, Domino’s hopes to get a leg up on the competition this way.
While the ad campaign represents a change for Domino’s, it is not uncommon in the food industry for companies to compete on taste and quality. Recently, Dunkin Donuts used a similar marketing venture to grab market share from Starbucks (SBUX). Through the years, Burger King (BKC) has battled McDonald’s (MCD) on the quality of its product offerings, too. This strategy has had varying degrees of success and it remains to be seen if Domino’s can increase its already significant market presence domestically through this particular tactic.
The new campaign also has to be taken into consideration the company’s prior ventures. If there is one thing that Domino’s is good at serving up, it is marketing. Recent promotions, such as the pasta bowl and sandwich options, have provided a significant spark to sales over the past couple of years. Meanwhile, it also has a well-executed online platform that makes the Internet-based food ordering process convenient and reliable. The online method enables the purchaser to check on the status of his/her food within the delivery process, adding a source of comfort to the consumer. In the past, marketing initiatives targeting the company’s reliability and speed have been fairly successful in increasing Domino’s brand awareness domestically. It will be interesting to see if this approach to advertising adds incrementally to the business, or if Domino’s would be better off investing elsewhere, such as its growing international business.