Domino's Pizza: A Case Study in Organizational Evolution
Dominos Pizza is a prominent player in international and domestic out-of-home pizza marketplaces with operations in over 9,300 locations in over 65 countries. Dominos is only second to Pizza Hut in the pizza market and leads in the pizza delivery segment. However, in recent years, Dominos has faced consumer hostility, which has resulted in a 16.3% drop in domestic revenue (2005-2009) (Hitt, Ireland, & Hoskisson, 2013). In 2009, Dominos Pizza faced widespread criticisms for being flavorless and possessing the taste and consistency of a cardboard.
Dominos Pizzas customers were increasingly losing faith in the brand, leading to a significant decline in domestic sales. In response, Dominos run a risky marketing campaign called Oh yes we did (Hitt, Ireland, & Hoskisson, 2013). The marketing campaign bluntly and publicly acknowledged shortcomings of the previous recipe with the description that Dominos pizza tastes like cardboard (Hitt, Ireland, & Hoskisson, 2013). Dominos Pizzas risky marketing plan was a smart and successful move since it led to a 14.3% increase in sales and a significant revenue jump (Hitt, Ireland, & Hoskisson, 2013).
In addition to increasing sales, the campaign helped to regain lost customers and attract new customers. It is evident that Dominos took the right decision for revitalizing its brand, recipe, and operations. In order to sustain the momentum, Dominos must find ways to expand its market share by improving mobile and online experience and ensuring continued innovation and reformulation of its products.
Competition in the pizza industry hinges on several factors such as service, location, price, delivery time, and product quality. Although Dominos now enjoys an efficient distribution system that enables Dominos to deliver pizza at a break-neck pace, Dominos pizzas had a poor reputation for inferior quality in the past. Indeed, most of the Dominos pizza ingredients were frozen, canned, and pre-made to reduce costs and facilitate quick assembly of pizzas. The 2009 crisis triggered by consumers complaints against Dominos low-quality pizza threatened Dominos corporate image. Dominos was bold to face the crisis despite possible consequences of reacting to it such as increasing further awareness of the problem. Interestingly, Dominos chose unconventional media channels such as YouTube to address complaints raised by consumers.
Dominos also broadened its menu offering by introducing items such as Oven Baked Sandwiches, BreadBowl Pastas, and Chocolate Lava Crunch Cakes (Hitt, Ireland, & Hoskisson, 2013). Additional menu items have attracted new customers and put Dominos head-to-head with its competitors. Dominos has also succeeded in implementing an efficient system for ordering and delivery processes without compromising its new diversity and higher standards of food.
Use of an Acquisition Strategy to Deliver Strategic Competitiveness
Growth strategies seek to increase sales profit and market share falls into various types, including strategic alliance, merger, diversification, and internal growth. Dominos can utilize horizontal acquisition to enhance its market power by exploiting revenue-based synergies and cost-based synergies (Harrison & John, 2014). Dominos should pursue leverage strategies to attain a competitive advantage by using its strategically important resources within existing and new markets at a pace that aligns with the market change. Domino's CEO, Patrick Doyle, must focus on building or acquiring resources that the company deems valuable, exceptional, hard to imitate, and non-substitutable (Peng, 2009).
Overall, Dominos has managed to remain competitive by sustaining growth and high demand. Dominos has successfully revamped its brand from an entity serving mediocre food to an entity that is well-received by both critics and consumers. The radical turnaround has been an outcome of an extensive effort to overhaul Dominos products and its processes by introducing new recipes and radically enhancing the online and mobile technology infrastructure. Presently, the domestic pizza market remains heavily saturated, but international marketing remains vibrant owing to rising incomes and increasing appetites for pizza.
Hence, Dominos must continue working on the development of more conscious menu items and new products such as salads. In addition, Dominos should institute solid plans, including horizontal acquisition, to expand internationally and reinforce its market share.