Aims
The aim of this paper is to study and analyse the marketing
strategy of Pizza Hut’s operations in China.
Objective
The objectives of this paper are multi
pronged.
On one hand the paper will attempt a
thorough analysis of the modus operandi of the organisation; delving into its
operations handling in the field of food, store and advertisement. On the other
hand the paper will also attempt a comparison between the closest rivals of the
Yum brand in China that is, KFC and McDonald’s. Lastly, the project will
summarise the reasons for the growth and success of the fast food brand in the
Chinese market.
Rationale
This section analyses the rationale behind
attempting this research paper.
How it started
Pizza Hut started its first restaurant in
Beijing in 1990; by the year end 2011 the company operated more than 560 stores
in over 130 Chinese cities, employing 45000 people. This only indicates the
momentum the company has gathered over the years and makes it rather
interesting to study the reasons behind its success.
Setup orientation at Pizza Hut
In over 20 years of Pizza Hut’s operation in the Chinese market,
the company has held a broader view regarding its expansion plans. Unlike many
transnational firms which focus solely on the populous and prominent cities for
their revenue and expansion plans, Pizza Hut has kept in mind the importance of
being present in the less popular coastal regions, the north east and north west
provinces. This is to tap the growing economic and financial potency of these
markets; with increasing purchasing power of the average consumer in the
smaller towns and cities, Pizza Hut wants to exploit a first mover’s advantage
by positioning itself as a status and quality symbol among the fast growing
middle class.
Another key point enumerated under the setup and expansion policy
of Pizza Hut is that of environment protection. The growing rate of catering
enterprises (estimated at around 4000 in a typical urbanized area) is leading
to various kinds of pollution. The primary agents being waste water, waste
edible oil, food waste, high electricity consumption, bad odor and noise, are
by products of operations of a typical restaurant. By cutting on such wasteful
and polluting processes and installing green technologies in its various
locations, Pizza Hut wants to minimize its carbon footprint and behave as a
socially responsible corporate citizen, one who cares about its customer’s
holistic well being.
The opportunity presented by the Chinese Market
The sheer size of the Chinese market has
presented a unique opportunity to international brands attempting to foray or
already operating in the market. Pizza Hut for instance, has divided the market
into four segments in order to differentiate on the basis of sales volume or
potency of these markets in terms of purchasing power and population (and other
demographic criterion).
The
primary level (of high sales volume cities) covers Shanghai, Beijing and Guangzhou. The second
level encompasses Nanjing,
hangzhou, hefei, jinan and wuhan. Xuzhou, changzhou, wenzhou, jinhua, huzhou, the hulunbuir,
TongLiao, jiaxing, chenzhou belong to the third level; Yuyao and Changshu belong
to the fourth and the last level. The logic behind such a division has already been explained above; that
is, gaining a first mover’s advantage in a growing market (medium and small
sized cities) while simultaneously strengthening base in the big cities.
Literature Review
The study of various academic works and
articles, essays and publications freely available over the internet has
revealed some intriguing and interesting facts about Pizza Hut’s operations in
China. Many prominent business analysts and researchers have observed that Yum
foods has paid a careful attention to its segmenting targeting and positioning
strategy in order to penetrate and dominate the Chinese market. Also it has
carefully articulated the market’s perception of the brand, providing the
restaurant chain with an edge over its competitors.
Robert J. Kauffman, Hsiangchu Lai, and
Chao-Tsung Ho part 1, in their works have pointed out that Pizza Hut (among the
various trends it has exploited) has utilised the growing popularity of
e-promotion to reach its target customers by way of social networking, online
advertisements as well as group buying
discounts websites.
Adding to this the marketing managers have
carefully reviewed the Chinese economy to study growth trends in the country
and strategically positioned themselves in the booming markets of the medium
and small towns and cities of China.
Segmentation, Targeting and Positioning
The fast food brand has a strategic STP
policy in the Chinese market. The growing middle class and the recent growth in
the economy has raised the average standard of living in the country; this has
prompted the company to choose the market segment catering to the Chinese
middle class.
Specifically, the brand targets corporate
workers, teenagers (couples and singletons) and well as the middle class
nuclear families as these have the purchasing power, the potency and aspiration
to upgrade their lifestyles to fit into an international one.
Hence the brand attempts at positioning
itself as a restaurant which is a means of status upgradation and a symbol of
international lifestyle to the Chinese middle class in the process of becoming
affluent.
Markets’s Perception
The segmentation, targeting and positioning
strategy of the brand managers at Pizza Hut is carefully determined to
articulate the brand’s perception by the target market.
Various market analysts have pointed out
that Pizza Hut restaurant formats are specifically laid out in a comfortable
and cozy manner in order to build an aspirational high society image of the
restaurant, the experience and memory of which motivates a consumer to visit
again in order to associate with a particular type of lifestyle perceived as
upmarket by the larger society.
Research Methodology
Philosophy
The basic motivation or philosophy behind
conducting this research paper is to deduce an analysis from the data gathered.
The primary motivation for the researcher is the lack of information or
structured data about the subject under study; especially since the region
under study has been out of limelight for a long time with reference to
permeation by international businesses. Hence it can be said that this research
paper is a product of deductive research stemming from an initial inductive
research.
The researcher will utilise a combination
of primary and secondary data to conduct the analysis in this research paper.
One of the primary advantages of this approach is that, primary data can be
sourced according to the exact requirements and needs of the study. Additionaly
one will also utilise a qualitative and quantitative approach to help shape a
well informed opinion on the topic.
Information required
One of the primary tasks at hand for the
researcher before commencing investigation and analysis, is to determine the
information required to conduct the research. This will encompass determining
the organisations, people and the region under the purview of the study.
Enlisted below are the major components of the information required by the
researcher:
1.
Information regarding the corporate culture at Pizza
Hut.
2.
To study whether the culture actualizes into corporate
operations.
3.
To gather data about the operations of Pizza Hut on the
field.
4.
To gather information about the marketing program of
the brand.
5.
To gather information from consumers or public at large
about their perception of the brand and its marketing program.
6.
To study the employees view of the organization culture
and operations.
7. To
know the management’s view and plans for future course of action.
8. To
study the competitor, its market and its strategies.
Data Collection techniques
Questionnaire and its Strengths and Weaknesses
One of the primary tools used in this
research paper is questionnaires and surveys. Since it’s a quantitative method
it is used to provide the perspective of a larger population base. Also, a huge
part of the Chinese population especially the middle/working class (the
corporate employee and the Chinese teenager) do not have the time to
participate in activities such as focus group discussions or telephonic
interviews hence using a questionnaire to gather the opinion of such a
population is the only feasible option. Given the impersonal nature of a
questionnaire the respondent will also hesitate less in answering to personal
questions.
The time frame for conducting research
through questionnaires will be between 2-3 months; the questionnaire will
contain 11 questions in the 1st part, 2 questions in the 2nd
part and 5 questions in the 3rd part. The number of respondents to
be targeted by this method will be over 100 people. The survey will contain
general questions about the product under study, the perception of the
organisations and certain questions used to determine the consumer’s buying
behaviour.
Since the researcher cannot influence the
intentions of the respondent and given that most respondents will be casual
while attempting this method, the quality of data collected by surveys will be
affected. However, the basic consensus gathered from questionnaires can be used
as a base for conducting telephonic interviews.
Some of the strengths of this research
method are; this method can be moulded to the exact requirements of the study,
the data gathered will be represent a consensus of a large population mass.
Since the method of collecting data is impersonal, respondents wouldn’t
hesitate while answering personal questions. Also, this is a very direct and
fast method for data collection where one can simply pass on the questionnaire
to a prospect and collect an immediate response. However, this method is not
without its weaknesses. One of the prime failings of this method is that since
it is gathered from a population which is in a haste, the survey is robbed of
quality time that one needs to devote to make a proper statement of one’s
perspective. Also, the questionnaire may suffer from the researcher’s personal
biases which may influence the quality of questions or the structure of the
questionnaire itself thereby influencing the respondents opinion. Lastly, the
researcher may fail to register the responses of individuals who do not meet
the researcher in person (to be a part of the study).
Telephone Interview
The researcher intends to use the data
distilled out of the questionnaires to conduct telephonic interviews. This is a
qualitative method the purpose of which is to mitigate the barriers presented
by physical distances. The researcher intends to reach out to various
managerial employees, consumer groups and researchers to conduct detailed
discussions and interviews about their perception and opinions of the
organisation under consideration.
The main advantages of this method are that
being a qualitative method it can focus on specific issues and attempt to get a
detailed information of those. Also, the participants in such an activity would
have already expressed intention to wilfully participate and contribute quality
time and well formed opinion to the issue. The researcher can freely discuss
all aspects of the issue and can even include new topics that come to his mind
on the spot.
However, the method lacks in the area of
cost – wherein the researcher will have to shell out some money to conduct the
interview over a phone call; also all barriers akin to the telephonic device
such as bad sound quality, lack of a face-to-face conversation and the like
will also affect the research process. Also, again the researcher can influence
the respondent’s views by bringing in his/her own biases to the table. Lastly,
since the interview may not be structured it can lead into an unfruitful
direction too.
Secondary data
The second data gathering tool, the
researcher will use is the information available in various publications,
research papers, articles and websites. This is to ease the task at hand by
minimising effort in collecting data that is already present in one of the
above mentioned source. This will provide the researcher with additional back
up needed to support the limited resources to conduct the primary data
gathering.
Sample Selection
The researcher will select the sample
population close to the target population of the brand under study. Among such
a population the researcher will use probability sampling; in order to randomly
select research subject (avoiding biases present in selecting a pre determined
group of people).
Methods and Analysis Linked to Objectives
The subject of this paper is to study the
marketing strategy of Pizza Hut in China and its objectives; hence this is the
direction in which all the quantitative and qualitative research will head. It
is understood that various new frontiers and dimensions may be discovered in
the course of this study however all information gathered during the analysis will
be utilised in determining the marketing strategy and the organisation’s
objectives regarding the same.
Research Limitations and Ethical Considerations
Research Limitations
The most significant limitations of this
research would arise from the quality of the data gathered by the
questionnaire; lack of availability of a wide array of individuals to conduct
qualitative interviews and the limited perspective provided by the secondary
data utilised. Enumerated below are some of the major limitations of the
research paper.
Sample Limitations
There is a major limitation regarding
sample collection. Only limited number of people can be approached physically
to participate in surveys. This limits a holistic perspective which could have
been provided by interviewing people from different regions. Also, only limited
number of people can be interviewed telephonically, given the expense and the
researcher’s limited resources.
Implementations Limitations
The second major limitation is that the
researcher may fail to gather quality response from casual respondents to a
questionnaire. Also, the researcher may find it difficult to find people
willing enough to contribute a major portion of time to telephonic interviews.
Lastly the researcher may fail in gathering updated sources of secondary
information since there have not been many researcher interested in this
particular area of study until now.
Data Analysis Limitations
Improperly answered surveys (for example
some questions being left unanswered by some respondents) and the lack of
quantifiability of certain information may pose a problem in data analysis.
Also, the sheer volume of data needed to be analysed may pose the dangers of
committing mistake and consuming way more time than estimated.
Ethical Considerations
Some of the ethical considerations that a
researcher will keep in mind while conducting the study (so as to respect the
rules of research and conduct a proper unbiased research) are:
Unbiased
The researcher will keep an unbiased
approach while conducting the research; keeping a neutral stand while
conducting any activity under the research process.
Non-Influencing
The researcher will not influence or shape
the opinion of the participants in such a process; and will try to get the most
out of the respondent in terms of his/her personal ideas, opinions and
judgements.
Environment
The researcher will be environmentally
conscious while conducting the research. He/She will ensure that the activity
does not lead to the deterioration of the environment. Hence, efforts will be
made to prevent waste of paper, minimising litter, reducing unnecessary
vehicular use and the like in order to minimise the carbon footprint of the
research.
Skewing
The researcher will prevent the analysis
from skewing in a particular direction. This will ensure an objective and
unbiased distillation of data collected.
Project Plan
The project plan is laid out in stages.
-The first month will be devoted in reading
all background and associated secondary data in order to develop the key points
to conduct the research on and a basic understanding of the subject matter.
-Next 1-2 months will be devoted to
collecting primary data in form of questionnaires and interviews.
-Another week to fortnight will be invested
in distilling an analysis out of the data gathered and writing a structure
report to detail the analysis.
Understanding of Reflective Model
Graham Gibbs is an Oxford University professor who introduced
his cycle for reflection in his 1988 work "Learning By Doing: A Guide to
Teaching and Learning Methods." The method is largely used by healthcare
professionals in order to reflect or reassess their actions. This method is
essentially learning by doing and then pondering over what has been already
done.
Its strengths lie in the idea that one reassesses or analyses
his/her own actions in order to better one’s approach in the future.
However, the method lacks in the aspect that it is not
progressive and rather has a retrospective outlook towards situations and
actions. It can often lead to being stuck in a rut or a cyclical thought process.
Analysis
of research choices
The researcher’s choice of the subject of study has been influenced by
factors more than one:
1. One of the primary
motivations comes from the fact that the researcher hails from China and has
been an employee of the restaurant chain. Thus, the researcher has a background
in the corporate culture and operations of the organizations.
2. The researcher is
specially intrigued by the success of the brand in the Chinese society (China
being his/her motherland) and recognises the brand’s initiatives in localizing
and adapting to local tastes.
3. The researcher also
finds it interesting how the pizza chain is beating the competition of the
likes of KFC and McDonald’s by following a unique approach in capitalizing on a
first mover’s advantage in now small but growing markets.
4. The researcher’s
familiarity with the Chinese situation, and the organization itself is an
encouragement and will help the researcher in getting access to key personnel
running the show hence contributing to the quality of the study.
Developmental Research Plan
The researcher is determined to commit all
his efforts in direction of achieving the objectives of this proposed research
paper. One of the primary tasks to be achieved is to go through all published
material in order to gain a basic understanding of the subject matter. Post
this the researcher will conduct primary and secondary research and the aim
will be to draw a link between the quantitative and qualitative aspects of the
research process.
Post gathering of data the researcher will
set out on analysing the data using a neutral stand point to make an unbiased
analysis of the situation and present recommendations on the basis of this
analysis.
Conclusion
Summing up, it maybe stated that the
researcher is making a bold attempt by the way of the research paper to study a
situation/topic which has been ignored by a mass of researchers. He/She will
also attempt to gather a holistic view to the subject thus encompassing varied
view points in the study.
It can be concluded that if one sticks to
the plan laid out the researcher may unravel many interesting observations and
analysis about a business that is operating in a very unique and potent
environment thus, helping the world understand the dynamics of operating in
that particular part of the world.
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