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John Bradley, Eric Friedman, Eric Jeanes, Edward Novotny, Kelly Schuler Arizona State University
Historically, Domino's Pizza has been a strong player in both the domestic US and international out-ofhome pizza marketplaces. With more than 9,300 locations in 65 countries, Domino's is the number two pizza restaurant behind Pizza Hut and number one in the pizza delivery segment with market share numbers approaching 20 percent. 1 (See Exhibit 1 for a ranking of the top 50 pizzeria brands in 2009 by sales.) In recent years, however, Domino's has come under consumer fire and, although masked by international revenue growth of 13.2 percent for the same period, the company posted a 16.3 percent decrease in domestic revenue from year-end 2005 through year-end 2009. While the economic recession could certainly be blamed at least in part for its lagging financial performance, 2 Domino's knew that this dip was more than just an economic indicator. In fact, the news reaching the executive suite indicated that Domino's was suffering from a negative reputation in the marketplace. Central to consumer complaints was that Domino's served low quality pizza with inferior ingredients that lacked taste. Coupled with the fact that consumers continue to become more and more educated about obesity and diet related health concerns and it was clear-Domino's had to act. To stay competitive, Domino's addressed both the taste deficiency complaints and the growing preference for fresh products by introducing a re-formulated pizza recipe in late 2009. To do so and in a move Advertising Age called "one of the riskiest marketing campaigns of all time," Domino's launched the "Oh yes we did" campaign. 3 The campaign quite frankly and very publicly admitted the shortcomings of its previous recipe with TV commercials showing focus group participants on hidden camera complaining that Domino's pizza "tastes
like cardboard." The commercials continue by showing the first dejected and then resolved-to-do-better Domino's test kitchen chefs. Throughout the campaign, Domino's encouraged formerly dissatisfied customers to try their new pizza, even airing "live footage" of test kitchen chefs surprising the same disgruntled focus group participants seen in previous commercials at home to deliver a re-formulated recipe pizza for them to try and, not surprisingly, endorse. 4 With a full money-back guarantee, Domino's hoped to drive sales by recouping lost customers and gaining new customers with their candid and fresh approach. In addition to re-formulating its pizza recipe and in advance of launching its risky advertising campaign, Domino's also began a careful expansion of its menu. In 2008, Domino's launched Oven Baked Sandwiches, effectively growing its customer base and lunchtime revenues .5 The public was introduced in 2009 to BreadBowl Pastas, American Legends pizzas, and Chocolate Lava Crunch Cakes and, in 2011, Domino's delivered boneless chicken and wings and-via the marketing campaign for its newest menu items-"Tate," the secluded chicken chef within a pizza company; (a sympathetic fellow if there ever was one) . As hoped, these additions to its traditional "pizza only" menu brought not only new customers, but new head-to-head competitors as well-most notably, Subway? Its recent challenges aside, Domino's has spent years carving out a significant niche...
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