Marketing Pizza Hut in Nigeria Essay

Executive SummaryThe sporting- intellectual nourishment for thought industry has been virtuoso of the just some in(predicate) industries even with the frugal meltdown that occurred in 2008 its success is receiv fitted to the copulation number 1 hail of its harvest-tides and pizza pie pie hovel is an example. Established in the fall in narrates in 1958 by ii brothers, the troupe has since grown from being local anesthetic troupe to an externalistic compevery with everywhere 11,000 units in the United States and crosswise the World. The society has branded its material body and name for being one the now pizza making eating places in the world. Despite its presence internationally the naughty society is still yet to dominate Africa, although, Africa is developing region with a corporation environmental risk in certain regions some countries argon victorious measures to remedy such risks with outlets in the Northern and Southern Africa the political party pi ece of tail expand in other atomic number 18as.The suit able-bodied location go out be Nigeria located on the Western side of Africa. Nigeria being the most live awkward in Africa is country with abundant resources, oil and muck up argon the major source of income with agri refinement chase suit. The country has a large point antithetical cultural background individually exhibiting ones own way aliveness, only when the country is united as one nation with English being the official language. Although, the country is bashn to be environmentally risky region, the government is adopting a tonic reform that leave behind benefit the nation and encourage Foreign Direct Investment. For pizza pie chanty, franchising its eating place to suchlocation will incr ease its strength and presence in the Afri slew region with other countries likely to follow the path.History pizza pie Hut was started in the city of Wichita, Kansas in the United States in 1958. It was two brothers Dan and Frank Carney while thinking in college in Wichita, Kansas were undertakeed by a family friend with the impression of interruption a pizza store. Being elysian with the idea, they borrowed an amount of six hundred dollars from their mother and procured some second pot equipments and hired a small building on a busy intersection in their hometown. Thus became the start of the of the greatest pizza name in the world. The comp whatever in corporeald after a twelvemonth and its initial franchise began in Topeka. (Entrepreneur Media, Inc., 2013)Background Overviewpizza Hut is an American chain of restaurants and international franchise that offers various types of pizzas on with a variety of side dishes and desserts. pizza pie Hut began franchising approximately 1959. pizza pie Hut otherwise known as pizza pie Hut, Inc., in the corporate world became a subsidiary of Yum Brands, Inc., as of 1997. Yum Brands, Inc., is considered to be the largest restaurant company appr oximately the globe. Our study indicated that pizza Hut has around 14,357 franchise units around the world today and as well is ranked 10th among the top 10 franchises for 2013. (Entrepreneur Media, Inc., 2013)PurposeThe purpose of this report would be to make single-valued function of the study and results to prepargon a commercialise place placeing report incorporating Pizza Hut, Inc., in Nigeria, Africa in order to disclose a market audit, plan and system and withal use the appropriate material and subjects re new-fangledd to entering the Nigerian trade. at that place would however be a portion of concerns and reasons that would involve the company while shifting and familiarizing to the new location. However due to tall cost of these libertine food for thought brands, galore(postnominal) mint still cannot unfold it. therefrom reasonable expenses are to be varied in order to deal in these types of challenging markets.Country Overview NIGERIANigeria also known a s the devil of Africa is the most populous country in Africa. Nigeria was colonized by the British and got her liberty on October beginning(a) 1960. The country is a federal extreme re humans, with 36 presents and a Federal Capital Territory, Abuja. there are over 250 ethnics groups in Nigeria, which the majority being Hausa, Yoruba and Igbo. After the countrys independence the country had a civil war that led to the formation of military regime during the 70s till 1999, which saw the beginning of a democratic regime. market-gardening and ReligionWith a universe of over 160 million people living in Nigeria, projected figures shows that the religious demographic indicate that 50% of the world are Muslims, 40% Christians and 10% practice their indigenous judgement (CIA World Fact obligate). In Nigerian society religion plays a major agency in peoples way of life Islam is of majority in the Northern region, which is dominated by the Hausas while Christianity is in the Southe rn region. The Yorubas have a more diverse religion and those in the middle-belt practice their own indigenous belief. Throughout the country religion is a means for social mobility, providing means of incorporation into business and semi semipolitical circles as well as educational system (Library of Congress).Politics and GovernmentThe organization of Nigeria shows that the country is a sovereign state, whose citizens are bounded to secureher by a Federal arrangement. The branches of government is divided into three the Executive, a Judiciary, and a Legislative. The Executive power is solely for the President who is also the chief of state and head of the government. The Legislative branch consists of the Senate members, and House of Representatives, and the Judiciary consists of the all the levelheaded system both at Federal level and State level. The chairman appoints members of the Supreme Court subject to con riotousation by the Senate. There ninefold political parties in Nigeria of which three are very strong, hoi pollois Democratic Party (PDP), any Nigeria Peoples Party (ANPP), and Alliance Congress (AC) the PDP has been rule the country for over a decade. (Nigeria GOVERNMENT AND POLITICS).Legal SystemThe ratified system in Nigeria is a junto of statutory law, English third estate law, conventional law, and in the northern region Islamic law. The Federal and State courts apply the English common law, while the local courts apply customary and Islamic law (Nigeria GOVERNMENT AND POLITICS). scrimpingNigeria being an oil-rich nation has been face up with heavy political inst cleverness, corruption, inadequate infrastructure, and poor management, only when in 2008 started economic reforms. gross domestic crossroad (Purchasing Power Parity) = $ 455.5 billion (2012 est.) Compared to the rest of the world = 31GDP (PPP) 2011 = $ 428.4 billionGDP (Real harvest-feast Rate) = 6.3% (2012)Compared to the world = 41GDP (Real Growth Rate) 2011 = 7.4% GDP (Per Capita) 2012 = $2,800Compared to the world 180GDP (Per Capita) 2011 = $2,700(CIA World Fact Book)The deliverance of Nigeria slowed down in 2012 as shown above the oil sector continues to be the major contribution of the regions tax revenue with a process rate of 8% compared to -0.35% in the non-oil sector. Economic activities are mostly denominated by Agri shade, gas and oil sectors in Nigeria. Though the economic reform looks strong there are still challenges the country needfully to face. There is a high un usement that rosaceous from 21% in 2010 to 24% in 2011. Another downside to the economy is the pledge challenges arising from religious or ethnic conflicts, costs associated with environmental factors, and the slow world-wide economic developing and the sovereign debt crisis in the Euro region.DemographicsPopulationhttp//www.indexmundi.com/nigeria/age_structure.htmlworld fact bookThe above macrocosm pyramid shows a structure of a countries population, populati on Is distributed on the horizontal axis, which is divided by male on the left over(p) and females on the right. The X-axis indicates population and the Y-axis has distinguished age groups.Economic statisticsThe economy in Nigeria is a mixed economy with developing market sectors ( statutory, finance, communication, transport, entertainment). Nigeria is ranked thirty-sixth in terms of GDP as of 2013. Due to the resilience witnessed in 2012, the economy of Nigeria is expected to grow rapidly and gain stability. Nigeria GDP growth slowed down from by 7.4 % in 2011 to 6.6% in 2012. In diversity with sectors in Nigeria, agriculture stands the highest contributor, followed by crude oil, natural gas and wholesale produces. Economy in Nigeria is the largest in West Africa and top three in Africa. personalised income per capitahttp//www.tradingeconomics.com/nigeria/gdppercapitaPersonal income per capita has improved over the years and has maintained a stable growth from 2004 2012 due to the improved income to the country from crude oil and agriculture. From $726.4 per person in 2004 and a drastic change in 2012 with $1052.3 per person. gradually with the development and newfound opportunities in Nigeria the income per capita will steadily grow.Foreign investingBefore the exporting of oil, agriculture was one of the largest fr actions in the countries earnings. A trace for direct immaterial investments in Nigeria is the oil and gas sector. Other international investment opportunities such as telecommunications, electricity, real estate, food and beverage, consumer goods, health bursting charge and tourism.Working railsWorking conditions in Nigeria is far from ideal, apart from civil servants and employees of foreign countries, working conditions and wages are acceptable. This may not be the condition of the local people in Nigeria. Protests by the trade union leaders, strikes, income inequalities, late payment, poor wages strickle the standard of living in Nigeria. technical abstractInfrastructure in Nigeria is weak it is one of the main problems that affect the growth of the country. Unreliable electricity, water resource, road, transport have pulled back the growth of Nigeria in the previous years. In recent developments the country has public close partnership, investors and international companies moving into these regions for a better prospect and can come to the economy.Market AuditThe ProductWhen considering the market audit and competitive market analysis for any business, there are quadruple factors to consider fundamentally. These four factors are product, price, promotion, and placement. Pizza Hut is a unbendable food restaurant chain that provides the eat-in and take-away services for straightaway food guests. The other away and internal environmental might such as the cultural, legal and political also has the great impact on the product availability, its sales, marketing and reputation. The legal forces are un biased to start a business venture in Africa, specifically the fast food chains such as Pizza Hut. Some social and cultural forces also play an influential role in creating and destroying the opportunities for any business. KFC, Donut King, dominos, and Italian Pizza are most well renowned names in providing the high quality fast food products in these markets and are using the high standard advertizing and promotional strategies thus the competition is challenging. The understanding of recent advertizement, trends, promotions and marketing slipway are considered to be necessary when stepping into the Nigerian fast food products market.The MarketMarket is a place where major process of the business takes place. The economical, political, social, cultural, financial, legal and technological forces are basically some of the factors that play a evidentiary role in creating and destroying the opportunities for any business. If the economy of the country where the product or service would be marketed is stable and unbiased, it is a great opportunity for the businesses. The political and legal stability plays a vital role for starting any business in a country. The social and cultural environmental forces are most significant to consider because they contain people, the real buyers of the products and services. (Glader, 2006, pp. 16).Nigerias culture and tradition are slightly different than the other regions of the world i.e. UK and USA. There are some(prenominal) languages are being spoken in Nigeria, but the official language is English. This is one of the best strength of Nigerian culture that welcomes the foreign cockeyeds to join the Nigerian market. The legal system of Nigeria is a conspiracy of several laws and principles including Islamic, customary and English laws. There could be some threats for the fast foods businesses because of diverse religions and laws systems. Nigeria has a mixed economy and stands at the 36th part in terms of GDP as of 2 013. The agricultural industry of Nigeria significantly brooked its economy followed by the natural resources of crude oil, natural gas and wholesale products. The income per capita increased in the period of 2004-2012 ( transaction Economic, 2013). The income status of people is acceptable, but not for general Nigerian public. However, the earning people are able to afford the fast food product purchase even in reparation intervals. While the poor wages of most of the people, late payments and strikes can ofttimes make critical situations in the country.Figure GDP Per CapitaThe technological publicity is gro elevateg rapidly in Nigeria and it is a most definitive utility for MNCs. The online markets are majorly playing important role in bringing buyers and exchangeers closer. People now prefer to use online platforms for placing orders and making purchases. Thus theonline promotional strategy and also television and physical ad banners would be helpful for Pizza Hut if impl emented. Several other products are also getting rapid fame among people such as MacDonalds and Italian Pizza. The introduction of several beneficial schemes and promotions such as coupons, gifts, weekend packages and midnight offers would be kaleable and would also help Pizza Hut to get rapid repute and enormous customer circle.Market sizeThe market size of the troops country describes the demand and put out scale of the products. To supply the products in any host country there must be sufficient potential demand. larger the market size, better the economical growth would be (Wei & Liu, 2001, pp.38). Several international investors and marketers have opened their retail business in Nigerian market such as Shoprite, Artee Industries Ltd, and Internationale Spar Centrale BV in 2012. The rapidly increasing population of Nigeria will picture the strong and ever going demand for international products specifically the fast food products. The increasing rate of urbanization and overbearing economic outlook of Nigeria will support the MNCs. (Euro Monitor, 2013).CompetitorsOne of the main competitors and its product prices in Lagos is Dominos PizzaDominos Pizza is a popular pizza occasion in Lagos. They offer both dine in and home delivery services. Their motto is to spread happiness around Lagos. Products and PricesDominos main offering may be pizza but a wide variety of side orders is also offered by the fast food common. The price list of their popular products is as follows scandalmongering FeastGrilled chicken breast,mushrooms and sweet corn. strong point 2,000 puffy 2,900 blistery Pepperoni FeastExtra beef pepperoni,red chillies & extramozzarella cheeseMedium 2,000Large 2,900Hot VeggieOnion, green pepper,banana, red chillies& tomatoesMedium 2,000Large 2,900BBQ ChickenGrilled chicken breast, Onions & BBQ behave.Medium 2,300Large 3,200BBQ Philly SteakPhilly steak, Beef topping, Onions & BBQ sauceMedium 2,300Large 3,200Meal Deals and side or ders are also offered. The joint also serves Cold Stone Ice creamPromotion and advertizementDominos pizza uses different channels of advertisement and promotion. Billboards and hoardings are used to promote special deals and throw outs. The fast food joint has a website that houses the menu and also facilitates online order booking. Dominos prides itself on its ability to make prompt deliveries throughout Lagos. DistributionDominos Pizza has six main outlets in Lagos. The bulk of distribution is attributed to home delivery. obscure from these international fast food chains, many local fast food joints are open in Lagos. These include Marios Pizza and fast foodSweet SensationMama CassGhana HighThese fast food chains offer a wide range of sack deals and competitiveprices. Pricing StrategyPricing is one of the most important aspects of the marketing mix of the product. Product placement and promotion depends on how the product has been priced. In order to set a price strategy, pric ing target areaives must be set. These include Current receipts maximizationCurrent revenue maximizationMaximize quantityMaximize profit margin feeling leadershipPartial cost recoverySurvivalStatus quoSince Pizza Hut will be introducing its products in Lagos for the first time, its pricing object should be to maximise quantity and ultimately become the market leader. In order to attain this status Pizza Hut may employ one of the two pricing strategies Skim Pricing whereby the company prices its products high. This offers profit maximisation. By adopting this strategy the company assumes the stance of serving a inlet market. Penetration Pricing whereby products are priced low to maximise quantity and ease into the market. Since, the target market for Pizza hut is price sensitive and super elastic, the best pricing strategy would be Penetration Pricing. By pricing the products low at the beginning, Pizza Hut would be able to gain more market share and cater to a greater market. Pr icing MethodsSeveral pricing methods may be employed to adjoin the pricing objectives of the company. These methods vary from product to product. Some companies may use different and innovative pricing methods that better satisfy the needs of both the customer and the company. Traditionally used pricing methods include Cost-plus pricing ground on production cost plus a certain profit margin Target-return pricing ground on a target return-on-investment Value-based pricing based on value offered relative to competitors Psychological pricing based on customers perception and demand Pizza Hut may employ any one or a combination of the above mentioned pricing methods to accomplish its pricing objectives. Price DiscountsThe list price is normally discounted for the distribution channel. This may be done in the following ways Quantity discountCumulative quantity discount seasonal DiscountCash discountTrade discountPromotional discountPizza hut could offer the following price discounts t o its customers Quantity discounts whereby customers buy in greater quantities could be offered special deals and discounts Promotional discounts special promotions could be used to boost salesmerchandising PlanMarketing ObjectivesMarketing objectives helps define what a company wants to achieve through its marketing activities. Firms from different industries create their marketing objectives by doing a thorough analysis of their firms fig up analysis in order to identify the key areas of concentration. For Pizza Hut, to define its marketing objectives it has to decide on the entry strategy that it will adopt for Nigeria.Entry StrategyOne of the leading markets in sub-Saharan Africa is Nigeria with a population of above 158 million. However Nigeria having a wide range of ethnic groups is an environment with high risk potential. It would be advisable for Pizza Hut to franchise the company to another company in Nigeria, in order to reduce un projectn risk. A franchise is an agreeme nt betwixt two parties where the franchisor sells the right to franchise the company to a franchisee. However due to the changes in routines and consumer flavors, preferences are readily growing towards packed and convenient foods. All these matters are assisting the countrys retail food sector to develop.In growing markets like Nigeria, consumers would always prefer to have a culinary art that is more appropriate to the native palate rather than aninternational cuisine Finding the right partner to sell the rights might be rather daunting but Devyani International Limited an Indian based company with operation in Nigeria might be good partner to sell the franchise to. Devyani International Limited an associate company of RJ-Corp Largest bottler for Pepsico with currently having about 300 outlets of Pizza Hut, KFC, Costa, Swensens, and many more brands in India (Devyani International Limited). The company opened KFC in Nigeria as of 2009 and is currently investing on opening more outlets in the region ( melodic line New Nigeria).Our study showed that an average Nigerian spends around 72.97% of his/her income on food. The table below shows the percentage of total food expenditure in Nigeria as of 2010.IMAPs Food & Beverage attention Global Report 2010 be Food Expenditure lot of Total Expenditure (%)Beverages/Tobacco2.73Meat12.88Fish15.22Diary5.61Breads/Cereals34.08Fats/Oils5.15Fruits/Vegetables15.44Other Foods8.89Percentage of Total Food Expenditure (%)72.97After selecting the entry strategy, establishing the SMART approach for the marketing objective would seem useful. This will however help to fancy the objective are Specific explains what needs to be gained.Measurable objectives should be measurable in terms of performance indicators, percentages, outcomes, and much more. Action-oriented State which action need to taken and who should take them. Realistic the resources available should be able to meet the objectives. Time Specific specify time fra me and schedules for achievements or completion. To achieve the SMART approach, Pizza Hut will have to recrudesce the management of its franchisee on how to operate and manage the business similar to that of Pizza Huts method.Product AdaptationThe key for international food chains such as Pizza Hut is to emphasize on adapting and accepting the local palate and then developing innovative foods to win over the native consumers. The term Product Adaptation uses the strategy of the follower. That is the new product is based on improvements or modifications of the current product of the company (MBA Skool). To be successful in an international market it necessary for a firm to adapt its product to meet international customers or markets needs (Small Biz Connect). For Pizza Hut, it will have to rely on the franchisee to foresee the product adaptation in the region. The franchisee with its extensive knowledge in the market understands consumer preferences, even though Nigeria is country w ith wide range of cultures but from each one culture share common trait in its region.Promotion jumblePromotion is the method used to create awareness about a product or service to customers a firm offers (Small Business Development). at one time the business has started the following are means to raise awareness to the public about the company1. Advertising one of the most important forms of ephemeral information tothe general public. It is a form of communication used to influence or persuade potential consumers to choose a companys product or service over its competitors (Small Business Development). Successful advertising should be planned properly so that the consumer perceives the intended messages. There many types of media options to choose for advertising choosing which type of media depends on the market a firm is trying target and also on the budget. The types of media include press advertising, radio, television, direct mail, ambient, and much more. Firms should be careful on selecting the type of media (or mixture) for advertising their product so as not waste resources, a famous reference from John Wanamaker (1838-1922) state Half the money I spend on advertising is wasted the trouble is I do not know which half (Small Business Development).2. Sales Promotion relates to incentives or activities mostly short-term that produces the likelihood of purchase or sale of a product. Sales promotions can be used to target different types of customers, types of promotions include consumer, business, trade, and Sales force promotions.3. Public Relation this is all about building relationship with stakeholders of a company by obtaining favorable publicity, incorporating a strong brand image and name, and providing accurate information to the public. Having a strong relationship with stakeholders can generate positive outcomes for a firm where customers can provide good tribute to others due their satisfaction with the company (Small Business Develo pment).The franchisee of Pizza Hut should be able to use any of the above-mentioned promotion or use all of them. For the advertising both parties should discuss on the cost for doing the advertisement whether both would share the cost or one party would be responsible.Channels of DistributionAgricultural and livestock products have a high import tariff in Nigeria the government imposed such high tariffs as part of their economic reform to boost the economy and to support the agricultural sector. Pizza Hut would face high tariffs if it were going to supply the business with its ownproduce. The company or the franchisee can partner with any of the intermediaries to provide the company with agricultural products this in short would save the firm cost it would have to bear due to import tariffs and compensating with high prices of the products to the customers.SWOT AnalysisConclusionOnce colonized by the British, Nigeria is known as the Giant of Africa which is one of the most populous countries in Africa. Having a population of over 160 million people and over 250 ethnic groups with each having their own dialects, it is a mixed economy with developing market sectors. notwithstanding though a majority of the general population are earning low incomes, the increasing rate of urbanization and positive economic outlook of Nigeria will support the multinational companies. Due to the rapid growth in engineering science in the country, various sources of promotional strategies can be followed such as online platforms and other beneficial schemes in order to help the business to get a rapid fame and vast customer circle. Hence through regular marketing plans and strategies, we can extent the label of our fast food joint around the nation and generate happiness among the people.ReferencesEntrepreneur Media. 2013. Pizza Hut Inc.. ONLINE in stock(predicate) at http//www.entrepreneur.com/franchises/pizzahutinc/282696-0.html. Accessed 04 November 13.Oliver Joy and Tatian a Nassar. 2013. Fast-food giants want pizza the action in Africa. ONLINE available at http//edition.cnn.com/2013/10/04/business/fast-food-giants-africa/. Accessed 06 November 13.Uche M. Nzeka. 2011. Steady Growth of Nigerias Retail Food Sector . ONLINE accessible at http//photos.state.gov/libraries/nigeria/487468/pdfs/Retail.pdf. 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