Marketing Pizza Hut in Nigeria Essay

Executive SummaryThe de esteemd- nutrition effort has been io eat of the about successful industries even with the economical meltd feature that occurred in 2008 its success is due to the congenator low cost of its products and pizza pie chanty is an example. Established in the joined earths in 1958 by devil brothers, the fraternity has since grown from being local anaesthetic ph nonpareilr to an international company with all everyplace 11,000 units in the United States and across the realness. The company has branded its image and name for being one the take pizza making eaterys in the knowledge do crucial. Despite its presence internationally the company is still yet to dominate Africa, although, Africa is developing kingdom with a lot environmental risk in certain neck of the woodss much or less countries ar taking measures to save such risks with outlets in the Northern and Southern Africa the company can expand in other areas.The qualified location allow be Nigeria located on the westerlyern align of Africa. Nigeria being the most inhabit res publica in Africa is region with abundant resources, oil and gas are the major source of income with culture next suit. The pastoral has a wide range dissimilar cultural background each(prenominal) exhibiting ones own delegacy life, further the sphere is united as one nation with side being the official language. Although, the country is known to be environmentally risky region, the government is adopting a new repair that will benefit the nation and encourage Foreign Direct Investment. For pizza Hut, franchising its restaurant to suchlocation will increase its strength and presence in the African region with other countries potential to follow the path.History pizza pie Hut was started in the city of Wichita, Kansas in the United States in 1958. It was dickens brothers Dan and Frank Carney while studying in college in Wichita, Kansas were approached by a family friend w ith the impression of disruption a pizza store. Being inspired with the idea, they borrowed an amount of six hundred dollars from their mother and procured some succor hand equipments and hired a small building on a busy lap in their hometown. Thus became the start of the of the greatest pizza name in the world. The company in integratedd by and by a year and its initial franchise began in Topeka. (Entrepreneur Media, Inc., 2013)Background Overview pizza pie Hut is an American bowed stringed instrument of restaurants and international franchise that offers miscellaneous typesetters cases of Pizzas along with a variety of side dishes and desserts. Pizza Hut began franchising around 1959. Pizza Hut otherwise known as Pizza 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 around 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 go along 10 franchises for 2013. (Entrepreneur Media, Inc., 2013)PurposeThe purpose of this report would be to make use of the study and results to prepare a merchandising report incorporating Pizza Hut, Inc., in Nigeria, Africa in run to disclose a merchandise audit, intent and strategy and in addition use the permit material and subjects related to entering the Nigerian food market. at that place would hitherto be a portion of concerns and reasons that would involve the company while shifting and familiarizing to the new location. even due to high cost of these fast food brands, many people still cannot afford it. thusly reason suitable prices are to be varied in order to compete in these types of challenging markets. dobriny Overview NIGERIANigeria also known as the Giant of Africa is the most inhabited country in Africa. Nigeria was colonized by the British and got her independence on October 1st 1960. The country is a fe deral constitutional republic, with 36 states and a Federal Capital Territory, Abuja. There are over 250 culturalals groups in Nigeria, which the absolute majority being Hausa, Yoruba and Igbo. After the countrys independence the country had a civil war that led to the formation of military administration during the 70s till 1999, which saw the beginning of a democratic regime.Culture and ReligionWith a population of over 160 million people living in Nigeria, projected figures shows that the religious demographic indicate that 50% of the population are Muslims, 40% Christians and 10% practice their indigenous belief (CIA World Fact book). In Nigerian society religion run a shipway a major enjoyment in peoples way of life Islam is of majority in the Northern region, which is dominated by the Hausas while Christianity is in the Southern region. The Yorubas welcome hold of a more diverse religion and those in the middle-belt practice their own indigenous belief. Throughout the c ountry religion is a means for social mobility, providing means of incorporation into barter and political circles as intimately as educational arranging (Library of Congress).Politics and GovernmentThe Constitution of Nigeria shows that the country is a sovereign state, whose citizens are bounded together by a Federal arrangement. The stolones 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 legal system both at Federal level and State level. The president appoints members of the Supreme Court subject to confirmation by the Senate. There multiple political parties in Nigeria of which three are very strong, Peoples Democratic Party (PDP), All Nigeria Peoples Party (ANPP), and alliance Congress (AC) the PDP has been ruling the country for over a decade. (Nigeria GOVERNMENT AND POLITICS).Legal SystemThe legal system in Nigeria is a combination of statutory law, English common law, accustomed 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).EconomyNigeria being an oil-rich nation has been faced with heavy political instability, corruption, myopic infrastructure, and poor management, but in 2008 started economic reforms. gross domestic product (Purchasing Power Parity) = $ 455.5 billion (2012 est.) Compared to the rest of the world = 31GDP (PPP) 2011 = $ 428.4 billionGDP (Real Growth 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 delivery of Nigeria slowed down in 2012 as shown above the oil heavens continues to be the major contribution of the regions revenue with a growth rate of 8% compared to -0.35% in the non-oil sector. sparing activities are mostly denominated by Agriculture, gas and oil sectors in Nigeria. Though the economic reform looks strong there are still challenges the country ask to face. There is a high unemployment that locomote from 21% in 2010 to 24% in 2011. Another downside to the economy is the security challenges arising from religious or ethnic conflicts, costs swaind with environmental detailors, and the slow global economic growth and the sovereign debt crisis in the Euro region.DemographicsPopulationhttp//www.indexmundi.com/nigeria/age_structure.htmlworld fact bookThe above population pyramid shows a structure of a countries population, population Is distributed on the swimming axis, which is divided by male on the left and females on the right. The X-axis indicates population and the Y-axis has distinguished age groups.Economic statisticsThe economy in Ni geria is a mixed economy with developing market sectors (legal, finance, communication, transport, entertainment). Nigeria is ranked 36th in scathe of GDP as of 2013. Due to the resilience witnessed in 2012, the economy of Nigeria is expected to grow cursorily 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 sodding(a) oil, natural gas and wholesale products. Economy in Nigeria is the largest in West Africa and top three in Africa.Personal 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 pe r capita will steady grow.Foreign investmentBefore the exporting of oil, agriculture was one of the largest fr go throughs in the countries earnings. A key for hold unlike investments in Nigeria is the oil and gas sector. Other foreign investment opportunities such as telecommunications, electricity, received estate, food and beverage, consumer goods, health care and tourism.Working conditionsWorking 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 affect the standard of living in Nigeria. Technological psychoanalysisInfrastructure in Nigeria is weak it is one of the main problems that affect the growth of the country. undependable electricity, water resource, road, transport consecrate pulled back the growth of Nigeria in the p revious years. In recent developments the country has public private partnership, investors and international companies moving into these regions for a better prospect and can revive the economy.Market AuditThe ProductWhen considering the market audit and competitive market analysis for any business, there are four factors to consider fundamentally. These four factors are product, price, promotion, and slipment. Pizza Hut is a fast food restaurant chain that domiciliates the dine-in and take-away religious services for fast food customers. The other external and internal environmental motor such as the cultural, legal and political also has the greater impact on the product availability, its sales, marketing and reputation. The legal forces are unbiased 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 K ing, dominos, and Italian Pizza are most puff up renowned names in providing the high quality fast food products in these markets and are employ the high standard advertising and promotional strategies thus the competition is challenging. The understanding of recent advertising, trends, promotions and marketing ways 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 significant 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 sig nificant 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 several 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 firms to join the Nigerian market. The legal system of Nigeria is a combination 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 position in terms of GDP as of 2013. The agricultural industry of Nigeria significantly supported 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 (Trading 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 grease ones palms even in regular intervals. While the poor wages of most of the people, late payments and strikes can lots make critical situations in the country.Figure GDP Per CapitaThe technological advancement is growing rapidly in Nigeria and it is a most important advantage for MNCs. The online markets are majorly playing important role in bringing buyers and sellers closer. People now prefer to use online platforms for placing orders and making purchases. Thus theonline promotional strategy and also television receiver and physical ad banners would be supporterful for Pizza Hut if implemented. some(prenominal) other products are also getting rapid fame among people such as MacDonalds and Italian Pizza. The introduction of several upright schemes and promotions such as coupons, gifts, weekend packages and midnight offers would be remunerationable and would also help Pizza Hut to get rapid repute and vast customer circle.Market sizeThe market size of the host country describes the demand and supply 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 generate the strong and ever personnel casualty demand for international products specifically the fast food products. The increasing rate of urbanization and positive economic sentinel 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 joint in Lagos. They offer both dine in and home delivery services. Their motto is to spread delight around Lagos. Products and PricesDominos main offering may be pizza but a wide variety of side orders is also offered by the fast food joint. The price list of their popular products is as follows sensationalistic Feast broiled chicken breast,mushrooms and sweet corn.Medium 2,000Large 2,900Hot Pepperoni FeastExtra beef pepperoni,red chillies & supererogatorymozzarella cheeseMedium 2,000Large 2,900Hot VeggieOnion, green pepper,banana, red chillies& tomatoesMedium 2,000Large 2,900BBQ ChickenGrilled chicken breast, Onions & BBQ sauce.Medium 2,300Large 3,200BBQ Philly SteakPhilly steak, Beef topping, Onions & BBQ sauceMedium 2,300Large 3,200Meal Deals and side orders are also offered. The joint also serves Cold Stone Ice creamPromotion and advertisingDominos pizza uses different channels of advertisement and promotion. Billboards and hoardings are used to promote supernumerary deals and discounts. 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. Apart from these international fast food chains, many local fast food joints are open in Lagos. These overwhelm Marios Pizza and fast foodSweet SensationMama CassGhana HighThese fast food chains offer a wide range of discount deals and competitiveprices. price 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 determined a price strategy, pricing objectives must be set. These include sure profit maximizationCurrent revenue maximizationMaximize quantityMaximize profit marginQuality leadership incomplete cost recoverySurvivalStatus quoSince Pizza Hut will be introducing its products in Lagos for the first-year 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 exhaust Pricing whereby the company prices its products high. This offers profit maximisation. By adopting this strategy the company assumes the stance of serving a recession market. Penetration Pricing whereby products are priced low to maximise quantity and ease into the market. Since, the luff market for Pizza hut is price sensitive and highly 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 mete out and cater to a greater market. Pricing MethodsSeveral pricing methods may be employed to satisfy the pricing objectives of the company. These methods vary from product to product. Some companies may use different and modernistic pricing methods that bett er satisfy the needs of both the customer and the company. Traditionally used pricing methods include Cost-plus pricing based on production cost plus a certain profit margin Target-return pricing based on a pose 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 give the sacksThe list price is normally discounted for the distribution channel. This may be through with(p) in the following ways Quantity discountCumulative quantity discountSeasonal DiscountCash discountTrade discountPromotional discountPizza hut could offer the following price discounts to its customers Quantity discounts whereby customers buying in greater quantities could be offered special deals and discounts Promotional discounts special promotions could be used to boost sales marketing P lanMarketing 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 constitutional analysis of their firms SWOT 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(prenominal) company in Nigeria, in order to reduce unforeseen risk. A franchise is an agreement 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 quickly growi ng 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 cuisine that is more appropriate to the native palate rather than aninternational cuisine Finding the right partner to sell the rights great power be quite daunting but Devyani International Limited an Indian based company with functioning 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 (Business 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 tote up food e xpenditure in Nigeria as of 2010.IMAPs Food & Beverage Industry Global musical theme 2010Total Food ExpenditurePercentage of Total Expenditure (%)Beverages/Tobacco2.73Meat12.88Fish15.22 diary5.61Breads/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 ensure the objective are detail 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 frame and schedules for achievements or completion. To achieve the SMART approach, Pizza Hut will have to train the management of its franchisee on how to operate and manage the busi ness 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 with wide range of cultures but each culture share common trait in its region.Promotion MixPromotion is the method used to create sentiency about a product or service to customers a fir m offers (Small Business Development). Once 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 passing learning tothe general public. It is a form of communication used to impel 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 quote from tooshie 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 unequal-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 kind 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 recommendation to others due their satisfaction with the company (Small Business Development).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 argue 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 abbreviationConclusionOnce 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. Even 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 technology 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 continuous 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 operable at http//www.entrepreneur.com/franchises/pizzahutinc/282696-0.html. Accessed 04 November 13.Oliver Joy and Tatiana 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 are na . ONLINE Available at http//photos.state.gov/libraries/nigeria/487468/pdfs/Retail.pdf. Accessed12 November 13.ATKearney. 2013. 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