Dominos Pizza - Growth & Strategy (Part 3) - Smart Marketing

Few businesses or brands invest as much as Dominos in marketing.

Four and a half per cent of the turnover of each Dominos franchise store goes into a fund used for national marketing of the Dominos brand. In 2010 the business is expected to spend around £40million on marketing, a figure bigger than the top-line revenue of many of their rivals. The marketing fund is used to develop high-profile communications such as the sponsorship of Britain’s Got Talent, The Simpsons and the X-Factor.

Television advertising remains the drug of choice for most fast-food businesses although Dominos has also joined the flood of companies seeking to establish and build an effective social media presence through Facebook, Four Square and other social network sites. A case in point is that a Domino’s iPhone app already delivers 3-4% of online sales.

Price discrimination has been successful for the business. The Two for Tuesday promotion has been so effective that Dominos now sells as much pizza on a Tuesday (traditionally the quietest night of the week) as it does on a Saturday. Price discounting mid week help to smooth the pronounced ups and downs of daily sales during a normal week.  Two for Tuesday generates extra revenue and grows volumes – all helpful to franchisees with large fixed overhead costs.

Dominos is also targeting core groups of consumers. They have sponsored the setting up of Pizza Societies at numerous universities in the UK (how long before the idea takes root in schools?). And this is a business fully aware of the importance of changing demographics. Pizza eating is less popular among people aged 55 and over, but younger generations have become used to the Dominos model and as this group ages, the commercial opportunities are sizeable.

And because forty per cent of their business comes over the internet, Dominos has built up a terrifically valuable database of location-specific customers – a mine of information that can be used to great effect when promoting special offers, new products and reinforcing brand awareness. Put simply, Dominos knows where you live and the ever-expanding size of their customer database has great commercial value. Since 2007,

Since January 2007, an additional 3million new customers have ordered from Dominos – here is a business that understands a business truism, namely that the cost of selling to an existing customer is always lower than searching for a new one! Incidentally, the average customer orders from Dominos once every 34 days – are you a more or less frequent customers?

There are many businesses that are successful because they focus in a single-minded way on identifying a model that works for them and then concentrating on carrying it out extremely well. Don’t expect Dominos to diversify into exotic areas! They are happy to allow competitors to grow the market for pizza delivery and then use their undoubted muscle to take a growing slice of it.

For a business founded fifty years ago in Michigan whose distinctive 3 dots on their logo marked an early ambition to run just three stores, Dominos hasn’t done too badly! It has a justifiable claim to be the most profitable pizza delivery company in the world.

Marketing case study: the Swiss Army knife [24 May 2012]
Revision Presentation - Measuring and Increasing Profit [17 May 2012]
Revision Presentation - Calculating and Measuring Profit [13 May 2012]
Brand Logos (there’s an app for that) [20 Apr 2012]
Takeover and merger integration: lessons from the experts (GE Capital) [9 Mar 2012]
Barriers to entry for business expansion to Brazil [23 Feb 2012]
Leadership in a multinational business - what leadership style works best? [30 Jan 2012]
Leadership - Tough decisions to turn Starbucks around [29 Jan 2012]
Strategy Lessons from the Tesco Downfall [15 Jan 2012]
The cost of recruitment [3 Jan 2012]
Online marketing at children [19 Dec 2011]
Empty Shelves at Sainsbury’s - You Decide! [27 Nov 2011]
The Rise and Fall and Rise of Gerald Ratner [27 Nov 2011]
Cut price cup cake deal goes wrong…... [22 Nov 2011]
Who do you think should be named Brand of the Year 2011? [22 Nov 2011]
Nationwide gets “Streetwise” with it’s marketing [17 Nov 2011]
Developing Exam Skills - BUSS3 [8 Nov 2011]
Two brilliant videos to illustrate market segmentation [6 Nov 2011]
Unilever hit by rising costs [6 Nov 2011]
How PepsiCo are trying to control diseconomies of scale [18 Oct 2011]
Car Wars - VW v Greenpeace [17 Oct 2011]
Revision Quiz - Costs, Revenues and Profits [12 Oct 2011]
Revision Quiz - Business Costs [12 Oct 2011]
De-layering: do firms need middle managers? [5 Oct 2011]
Profits dive and put pressure on liquidity - the Distress Monitor [29 Sep 2011]
How Mattel & Hot Wheels ‘activated boys of all ages’ [19 Sep 2011]
Revision Presentation - Risks and Rewards to Enterprise [7 Sep 2011]
Revision Presentation - Adding Value [7 Sep 2011]
The puzzle of rising profits [5 Sep 2011]
Beware of the Kunming’s Rotten Apple [21 Jul 2011]
Some graphics for the product life cycle and social media. [14 Jul 2011]
Where there’s muck there’s brass [6 Jul 2011]
Chanel No 5 at 90 [29 May 2011]
An end to outsourcing? [18 May 2011]
Tesco’s overseas strategy: next steps [10 May 2011]
The tattoo - advertising for life! [9 May 2011]
Using Chucklevision to Teach Business [8 May 2011]
Marketing meets Sources of Finance! [20 Mar 2011]
Partners in profit - the JLP way [10 Mar 2011]
Nestle - using branding & productivity to overcome commodity price increases [17 Feb 2011]
Introducing a new kind of business organisation - the benefit corporation [17 Feb 2011]
CSR - What is “Creating Shared Value”? [16 Feb 2011]
Michael Porter - Shared Value and the Limitations of CSR [15 Feb 2011]
Technology in business - RFID takes on the counterfeiters [6 Feb 2011]
CSR - The Classic Milton Friedman Clip [5 Feb 2011]
The Year of Corporate Philanthropy [31 Jan 2011]
An idea that’s a lot of hot air…. [11 Jan 2011]
Q&A - What is “profit quality”? [7 Jan 2011]
The coffee chain formerly known as Starbucks [6 Jan 2011]
Back to Back - Teaching Communication [4 Jan 2011]
Promotional tactics on social media under scrutiny [13 Dec 2010]
Marketing strategy: North Face aims to become the “Nike of outdoors” [12 Dec 2010]
Pots of gold - great video resource [8 Dec 2010]
Dominos Pizza - Growth & Strategy (Part 2) - Innovation, Service and Smart Operations [26 Nov 2010]
Dominos Pizza - Growth & Strategy (Part 1) - Driving Competitive Advantage [26 Nov 2010]
Cash flow Clue-doh! The Mystery is Revealed… [2 Nov 2010]
Profits up at Amazon - but so are costs [22 Oct 2010]
Strategy - The Challenges Facing Nokia [21 Oct 2010]
tutor2u on Smarta - An Interview with Jim [18 Oct 2010]
Google, Profits and Diversification [16 Oct 2010]
Gap’s new logo lasts…one week [12 Oct 2010]
Rationalising & Redeployment at Alliance Boots [9 Oct 2010]
Google on the changing face of advertising [8 Oct 2010]
The business cost of labour turnover [7 Oct 2010]
Who ate all the pies? [17 Sep 2010]
Would you stand for it? [14 Sep 2010]
Insights into the Ice Cream Market [11 Sep 2010]
Adding value…to the humble toilet roll [2 Sep 2010]
The links between Physics and Marketing [29 Aug 2010]
Inflation and profit margins - lessons from the market [27 Aug 2010]
Retail strategy - the turnaround challenge at Argos [27 Aug 2010]
Lesson Worksheet - Adding Value [10 Aug 2010]
Lesson Worksheet - Gross Profit Basics [5 Aug 2010]
The FT and Online Paywalls - a Winning Strategy? [30 Jul 2010]
Tyrrells Entrepreneur Does it Again - with Vodka! [14 Jul 2010]
Tracking the popularity of global brands on social networks [13 Jul 2010]
The Caffe Nero Loyalty Scheme - Simple and Effective [13 Jul 2010]
BUSS4 Recession Strategies - The Crucial Role of the Business Model [6 Jun 2010]
Long Product Life Cycles - Grocery Brands Stand the Test of Time [26 May 2010]
Strategy Case Study - Vauxhall/Opel restructuring [24 May 2010]
Strategy Case Study - Sugar on the Way Out? [23 May 2010]
British vodka beats the world! [19 May 2010]
Profit seeking paradoxes in an oblique world [15 May 2010]
The dangers of focus on one product [9 May 2010]
Marketing at Jaguar - Presentation to Download [2 Apr 2010]
A business that really takes acquisitions and disposals seriously [27 Mar 2010]
Marketing in a recession: more focus on brand advertising and product enhancements [20 Feb 2010]
Top ten brand values [18 Feb 2010]
Are these really Britain’s most disliked brands? [17 Feb 2010]
Branded coffee shops prove resilient to the UK recession [17 Feb 2010]
Can Greggs Become the Skoda of Pies? [16 Feb 2010]
The Museum of Brands - well worth a visit [14 Feb 2010]
Contingency planning failure leads to customer service disaster [12 Feb 2010]
Business priorities in a recession [1 Feb 2010]
Flexible working thrives in the recession [1 Feb 2010]
Revision Presentation - Profit and Cash [30 Jan 2010]
Revision Presentation - Improving Profit [30 Jan 2010]
Teaching strategy - Starbucks revisited [24 Jan 2010]
Product, pricing and profitability in a changing market [20 Jan 2010]
Revision Presentation - Introduction to Communication [17 Jan 2010]

BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!