Papa John’s Analysis
The case study is dedicated to pizza restaurant Papa John’s. Product differentiation for Papa John’s focuses on flavor innovation, real and authentic products, meal customization, and making products that are tailored to fit the needs of certain demographic groups. Papa John’s bases of product differentiation include quality, cost-leader strategy, pursuit for superior ingredients, company reputation, focus on specific channels of distribution, guarantee of convenience and value. The attributes of products are nutritional value and quality ingredients. To ensure that it succeeds on its market, the company has its timing for the products, often going for certain ingredients at certain times. The ingredients are chosen at such times because of high demand. Papa John’s is located in the USA and presented in more than 29 countries across the globe. The locations are the areas where, as the company beliefs, its products will be in high demand, but there are also other regions with a potential being a profitable market for Papa John’s. The main issue between the company and its customers was the spamming incident that resulted in a law suit. This unfortunate incident may have created a bad picture of the company, but the customer service department has been very active in engaging customers, thereby restoring their confidence in the company. The threats to Papa John’s include entry of competition, suppliers, rivalry, buyers, and substitutes, and it must overcome them through differentiation.
Question 1. Comparison for Papa John’s, Little Caesars, and Domino Prices for a Large Pepperoni Pizza
This table in appendix 1 shows that Little Caesar’s charges the lowest price for large Pepperoni at $6, while Domino’s Pepperoni pizza is the most expensive one, sold at $15.99. However, the difference in price between Domino’s and Papa John’s is $0.99 (Papa John’s International, Inc, n.d.b).
Question 2. Assessment of Papa John’s Differentiation Strategy
One of the strategies that Papa John’s could consider in its product differentiation is flavor innovation. It is notable that this strategy is advisable for consideration of many restaurateurs. Consumers, who order a pizza with an innovative flavor and enjoy it, are highly likely to re-order it again (Papa John’s International, Inc., n.d.c). It is no doubt that new flavors will influence the choices of Papa John’s customers who will feel that they receive unique products.
The second strategy of product differentiation is to convince the customers that Papa John’s pizzas are real and authentic. Diners will always want menus that thoroughly describe and list all ingredients. Customers also may want to know where the dishes and ingredients that they consume come from and how they are prepared. Therefore, Papa John’s will tell its customers how and why they use authentic recipes, whether the ingredients are local or imported, and explain how they are unique, which will differentiate the company from its competitors.
Finally, product differentiation will consider Papa John’s need for meal customization as well as demographic tailoring. The needs of specific subsets, such as Millennials and ethnic groups with their food preferences, will be considered. Even though there will be more than one differentiator, the message will not be muddled. The differentiators will be communicated through the menu, d?cor, and staff.
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Bases of Product Differentiation at Papa John’s
Papa John’s differentiates itself on a number of bases. First, the restaurant guarantees the quality of pizzas it produces. This gives Papa John’s a differentiation advantage with respect to the future of its products since it uses qualitative ingredients being utilized in its pizzas, which also brings the company appropriate reputation. Other pizza restaurants focus on cost-leader or low-price strategy while focusing less on quality. On the other hand, Papa John’s organizational culture is to focus on the pursuit for better ingredients and better pizza (Papa John’s International, Inc., n.d.c). The commitment to producing quality pizza endears it to customers, resulting in high customer satisfaction ratings.
The adoption of mobile and online ordering technologies has enabled the restaurant to differentiate itself on the basis of the timing of introduction as well as distribution channels. The restaurant was the first pizza chain to promote internet and text-based ordering. As a consequence, it generated tremendous revenues because it became a pioneer in using the channels that had not been tapped yet. Similarly, Papa John’s forms a part of the larger fast food industry; therefore, consumers are able to search for pizza conveniently through this chain (Papa John’s International, Inc., n.d.c). The value of this kind of distribution system lies on the ease, with which accessibility has been made for the restaurant’s products.
Question 3. Sustainability of Papa John’s Product: An Assessment Based on a VRIO Analysis
Papa John’s most sustainable base for differentiation strategy is its reputation based on a number various aspects as described below:
The attributes of the offered products include quality, nutritional value, and excellent ingredients. Quality is at the core of Papa John’s products. The group does not use cheap or processed ingredients; instead, it invests in the production of ingredients that it uses to ensure that products offered to customers are of high quality. From its signature as well as toppings to the fresh dough and the box, the group delivers more, which ensures that its quality is always perfect. The group also guarantees quality to a pizza that is ordered and purchased directly from the restaurant (Papa John’s International, Inc., n.d.c). Among the quality aspects, which are considered, one should mention skimpy toppings, temperature, undercooked or overcooked pizza, damaged pizza, and wrong toppings or pizza. The ingredients are tailored to suit customers’ nutritional needs and preferences.
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Papa John’s pizzas come in sleek new boxes that are available for a limited time only. These boxes are designed specifically to deliver pizza in style. At the same time, the boxes also feature exteriors that are full color tops with the image of pies on top. Moreover, Papa John’s has removed a number of possibly harmful ingredients from its entire menu, including flavor enhancers and preservatives cellulose as well as high fructose corn syrup among others. In addition, the group recently announced that it remove antibiotics from its chicken poppers and toppings as well as additional ingredients (Papa John’s International, Inc., n.d.a). The handcrafted pan pizza is made from fresh and never-frozen dough that does not contain artificial preservatives. Instead, the crust comprises simple ingredients such as flour and virgin olive oil.
Papa John’s products include traditional hand-tossed pizza with ingredients such as fresh dough, cheese, pizza sauce, thin crust option, and pan sauce. Moreover, these ingredients are unique, and their use results in the complexity of these products. For instance, for making Thin Crust Option pizza, the company uses unbleached wheat, soy bean, malted barley, water, yeast, oil, cultured whey, distilled vinegar, extra virgin olive oil, soy, milk, soy lecithin, and dextrose. Fresh Pan Dough has unbleached wheat flour, soy bean, extra virgin olive oil, canola oil, yeast, and salt. Pan Sauce pizza contains fresh vine-ripened tomatoes, spices, sunflower oil, citric acid, virgin olive oil, and sugar (Papa John’s International, Inc., n.d.a). Thus, the ingredients used in these pizzas portray the products as uniquely complex.
Timing of Product Introduction
The group has committed to producing high quality pizza and delivering it to customers in a timely manner. Therefore, it is appropriate to note that the timing of the introduction of the Papa John’s pizzas depend on market demand and availability of the specific ingredients. There are also permanent products and limited time products depending on the amount of sales that such products can generate.
Locations, Current Markets, and New Market Opportunities
Papa John’s pizza restaurants are spread globally in such countries as China, India, Malaysia, Philippines, Singapore, Bolivia, Guatemala, Mexico, Nicaragua, Panama, Peru, Puerto Rico, Trinidad & Tobago, Venezuela, Azerbaijan, Belarus, Cyprus, France, Ireland, the Netherlands, Russia, Spain, Turkey, and the United Kingdom. Other locations include Bahrain, Egypt, Erbil, Israel, Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, Tunisia, and the United Arab Emirates. Even though the Papa John’s pizza brand has a near global presence, there are new market opportunities in other countries such as Australia, Scandinavian countries, and Sub-Saharan Africa.
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Relationship Between Papa John’s and Its Customers
Papa John’s has previously been accused of spamming its customers with short messages regardless of their consent. The group is reported to have violated state and federal law with the text message blasts when it sent the messages to customers. Claimants argued that they had received up to 16 message in a row, and some of the messages were even sent in the middle of the night. Such actions create a bad relationship between the group and its customers.
The group’s catering department can customize the menu to meet individual needs of customers. Notably, Papa John’s has unveiled a customizable pizza ordering App for Apple television. Papa John’s customizable pizza ordering platform was the first platform to be initiated (Bhasin, 2017). The platform allows customers to choose how to build their pizza by selecting or topping from past or saved orders.
Papa John’s relies on both print and digital channels for the promotion of its products on local and international markets. Print materials that the company uses to promote are flyers, ads, and newspaper as well as in-store marketing. On the other hand, digital channels that the company utilizes incorporate social media, search-engine, mobile marketing, emails, as well as SMS text. Furthermore, the company is involved in sponsoring community events such as sporting events as well as school programs, which has been helpful in creating brand awareness. All these strategies have been very essential in marketing the company to its consumers.
The company is reputed for the overall quality of its products, service quality as well as in meeting customer expectations among pizza restaurants (Bhasin, 2017). At the same time, the company has a reputation of an incredibly strong corporate leader. The company recognizes that its customers require better taste, thus delivering it by using better ingredients, which results in delicious products of excellent quality.
Links Within and Between Papa John’s Restaurants and with Other Firms/industries
Product mix. Papa John’s Pizza is a chain of fast food restaurants that delivers and carryout pizza. The pizzas are available in small, medium, and extra-large options. Aside from pizza as the main product offered, the company also offers chicken wings, desert items, poppers, breadsticks, and cheese sticks as well as canned and bottled beverages. The company’s popular pizzas are found in veg and non-veg categories. Classic veg has Say Cheese Single and Margherita while Papa’s Favorites Veg category has Garden Special, Paneer Tandoori, and Spicy Pepper Roast. Further, Heritage Veg contains Simply Veggie, and Farm Fresh as well as Veg Curry Pizza. Others are exotic non-veg, heritage Non-veg, and Classic non-veg (Bhasin, 2017).
Distribution channels. Papa John’s has more 3,000 facilities in the USA as well as in more than 29 countries in other parts of the world. Quality remains the guiding principle in the company. An existing efficient delivery system helps in ensuring that its customers keep returning. The robust and flexible network of distribution is helpful in restocking while the distribution centers also ensure that supply keeps flowing to and from the restaurants.
Service and support. The company has a service and support center that deals with customers’ concerns. The centers also take opinions on the ideas that can be helpful in product and service offers. The company’s support uses different platforms to communicate with customers, including Twitter, Facebook, and phone calls. Papa John’s support operates daily from 8:00 am to 10:30 pm (Papa John’s International, Inc, n.d.b).
The Value of Product Differentiation
Product differentiation is helpful to Papa John’s because it creates distinctiveness. Customers are able to identify and go for the company’s products, particularly on the pizza market, where there is stiff challenge from other competitors. Identifying with specific products can be valuable in increasing market share and sales volume.
Question 4. Recommendation for Papa John’s to Achieve Its Goals
The company should keep providing quality products using unique ingredients. This strategy is vital if Papa John’s intends to remain profitable and highly valued on the pizza market. The first recommendation is that the company should consider investing in such regions as Australia and Sub-Saharan Africa where there are market opportunities. Secondly, the company should consider making pizzas that are cost-effective so that many customers can afford its products. Finally, the company should consider pizzas that uniquely target children and youth whose populations continue to soar globally.
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Question 5. Whether Papa John’s Should Consider Vertical Integration
Papa John’s should not consider vertical integration; instead, it should opt for backward integration. This option would work well if the group supports corporate-level strategy for its businesses. Backward integration would be helpful for the company because it would allow it focus more on the production of its high-quality ingredients. This kind of integration will enable the group to combat price volatility for its products by going further to produce its own ingredients rather than relying on other companies’ supplies. This strategy would result in a consistent flow of ingredients needed for production.
Question 6. Whether the Company Should Consider a Merger or Acquisition
Papa John’s should consider acquiring Little Caesar’s. This acquisition would enable the group to benefit from this company’s already existing markets. Furthermore, Papa John’s can combine quality production with cheap pricing as Little Caesar’s focus is currently on offering high quality products at low costs. The other benefit that would accrue from the acquisition will be the chance to enjoy the economies of scale, which would eventually benefit consumers.
Question 7. Why Papa John’s Should Consider Diversifying Its Products
As can be seen from Appendix 2, the group should consider diversifying its products because it operates on a market that is characterized by high risks from all dimensions. Firstly, there is the threat of entry of other products into this market. Threats of new entrant are based on how easily other new businesses will enter the existing market competition. The company’s threats of new entrants are imminent, considering that is never hard to enter the pizza market (Bhasin, 2017). Pizza restaurants are relatively inexpensive to open and enter compared to other businesses. As a consequence, pizza franchises as well as family owned pizza restaurants are opened all the time, especially by those who can afford the needed capital.
Secondly, the restaurant must consider the threat of rivalry in order to diversify its products. Threats of rivalry depend on the competition that exists among pizza businesses. The company is faced with high rivalry due to a high number of competitors in pizza franchises and local restaurants. Thus, Papa John’s competitors are Pizza Hut, Domino’s Pizza, Little Caesar’s, KFC, McDonald’s, Subway, and Taco Bell. There are also family owned pizza bistros that present certain competition to the company (Bhasin, 2017). However, Papa John’s has tried to differentiate itself with fresh ingredients for better pizzas.
Thirdly, there exists a threat of buyers for its current products. Often, the bargaining power of buyers depends on the choices that customers have while seeking a good deal. In the case of Papa John’s, buyers have a higher bargaining power because they can purchase from numerous competitors. There are other places where customers can buy pizza if Papa John’s sets high prices. However, the company boasts of offering high quality pizza, which differentiates it from its competitors. Moreover, the ingredients used in its pizzas are considered fresh. Importantly, the company conducts various promotions for its food selections to attract more customers.
At the same time, there is a threat of substitute goods for Papa John’s products. The threat of substitution depends on the existence of other alternatives to pizza. In this case, Papa John’s threat of substitutes remains high because customers can buy pizzas from competitors. Moreover, customers can buy frozen pizza. However, each unique ingredient that Papa John’s uses helps in the differentiation of its products from the alternatives.
Finally, one should not forget about a threat of suppliers. The company’s power of suppliers is high because it only buys its ingredients from quality Control Center in New Jersey (Bhasin, 2017). The company has not authorized the utilization or purchasing of any additional ingredient from another source. Identifying a special supplier for the ingredients has helped in differentiating Papa John’s from other companies.
Product Differentiation and Environmental Opportunities
The company can ensure that its products always remain environmentally friendly. For instance, the boxes as well as the processes that are used to produce the ingredients are such areas where the company can help promote environmental sustainability. The differentiation of products in line with sustainable environmental requirements can help Papa John’s pizzas be different from those of its competitors.
Product Differentiation and Sustained Competitive Advantage
Product differentiation is crucial in maintaining competitive market advantage. Papa John’s can always ensure that it continually produces high quality products that will set it apart from the rivals (Bhasin, 2017). Customers will always want to associate with the quality products that the company produces while avoiding the inferior products from competitors.
Rare Bases of Product Differentiation
The rare base of product differentiation that is evident with the pizzas of Papa John’s is its unique ingredients. Thus, the company uses such ingredients that its competitors have not offered in their pizzas. Thus, customers always want to buy Papa John’s pizzas because of these unique ingredients (Papa John’s International, Inc., n.d.a).
|The Imitability of Product Differentiation
|Bases of Product Differentiation
|Better product quality
|Lowest cost within the industry
|Better service quality
|Lowest cost within the industry
Question 8. Whether the Company Should Diversify Its Product Offerings by Acquiring Another Food Chain
The company should not acquire another food company; instead, it should continue partnering with such companies as Nestle on its dessert items. Apparently, partnering with another food company will enable Papa John’s to free its resources and focus on maintaining the quality of its pizza. Entering into exclusive deals with a company such as Nestle will enable Papa John’s to continue benefitting from the repute of its partner.
Strategic Option Analysis Implementing Product Differentiation and Recommendation
Papa John’s will need to consider dynamic and structured processes in order to run this business in the future. Structured processes will incorporate putting orders for customers, material supplies, making payroll for employees, performing daily inventories, and dealing with dough management. On the other hand, dynamic processes will have to deal with the issues regarding weather and traffic when making deliveries. Similarly, social networking is another dynamic process that needs to be considered.
Papa John’s Pizza has been a successful business that operates in the USA and in other regions of the world. The success of this company has been based on its ability to produce high quality pizza products and on the use of unique ingredients. However, the company’s products have always been more expensive than those of its competitors have. Therefore, the company must differentiate its products continually, try to be cost effective, and start focusing on pizzas that are specific to children as they constitute a significant number of the global population. Other strategies that Papa John’s Pizza can implement include partnering with other companies such as Nestle on some of their specific items. Moreover, the company will also need to put in place structured processes if it is to remain competitive. With all these recommendations, it is evident that Papa John’s will continue being competitive.
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