ASSESSMENT OF PAPA JOHN’S 1
Assessmentof Papa John’s
Assessment of Papa John’s
The increasing costs of ingredients have forced pizzerias toreconsider their production processes. For example, the prices ofmilk used in making cheese increased by 27.3% in 2010 and 9.2% in2011. During the period 2007-2012, the prices of wheat rose by 3.4%every year. Consequently, the profit margins declined. In 2012, itwas estimated that the profit margin of each pizzeria was 6.4% ofsales. Granted, Papa John’s Pizza could consider raising its pricesso as to cover the increase in operational expenses. Nevertheless,the price sensitivity of consumers reduces the effectiveness ofraising pizza prices.
Consumers have manifested an increased demand for healthier and morenutritional items. In fact, seven out of ten consumers prefer to eathealthier menu items. Additionally, two-thirds of pizzeria operatorshad noted that their clients preferred to have nutritional contentand healthier items on their menus. Consequently, Papa John’s Pizzamust develop particular strategies to address the new trend. Forexample, the company should post nutritional content of their pizzason their official website. Also, the firm must include a caloriecounter to inform consumers of the cumulative nutritional value oftheir orders. Furthermore, salad bars need to be offered along withsit-down dining. Adding low-carbohydrate and gluten-free items on themenu serves to cut down on trans-fat. Unhealthy crusts and toppingsshould be reduced while increasing the percentage of organic,whole-meat, locally-grown products.
The advanced use of technology has propelled the popularity of socialmedia and online ordering systems. The company should use socialmedia platforms to interact with clients and provide them anopportunity to offer reviews and suggestions. Such feedback helps thecompany to plan their future operations. Also, using social media canhelp to reach more customers. Marketing campaigns, promotions, andgames are enhanced through social media platforms. Besides, PapaJohn’s Pizza can be forced to use emails and texts to informclients of the latest promotions and specials. The firm would alsoconsider modifying their ordering systems to enable consumers totrack online orders. Additional apps can be developed for systemsother than iPhone and Android. Consequently, the company will beforced to increase the number of digital orders.
KeyIndustry Pressures (KIPs)
Emergingnew Internet capabilities and applications
The proliferation of the internet has heightened the use of socialmedia and mobile platforms to communicate and market products. Firmswith advanced forms of technology have gained a competitiveadvantage. Also, new entrants with established technologicalplatforms pose a potent threat. Tech-savvy buyers and suppliers willalso prefer to conduct business with pizzerias that embracetechnology. However, internet capabilities will have minimal impacton the threat of substitutes.
Changesin cost and efficiency
The increased cost of ingredients will guarantee the survival andsuperiority of new and current firms, respectively. Buyers will alsohave the opportunity to select the most price-friendly pizzas.Suppliers of the cheapest ingredients or those with more substantivediscounts will be preferred. Besides, cheaper substitutes offered bydepartment stores and quick-service other firms will experiencehigher sales.
Changingsocietal concerns, attitudes, and lifestyles
The increased pursuit of healthier and more nutritional items willlead buyers to make preferred choices. Moreover, healthiersubstitutes may experience higher sales. Pizzerias with morenutritional products will also have increased opportunity to enterthe market. Existing pizzerias will have enhanced competition as theyendeavor to produce healthier menu items. Additionally, suppliers ofsalads and other healthy foods will have more clients.
KeySuccess Factors (KSFs) & Three Approaches
The key success factors that support Papa John’s Pizza concernmarketing, distribution, and technology. Additionally, the fivegeneric competitive strategies involve focused differentiation,focused low-cost provider, best-cost provider, low-cost provider, andbroad differentiation. Based on the industry life-cycle, Papa John`sPizza has attained maturity. The emphasis on product design is lowsince pizzas are mostly standard. However, the company faces intensecompetition. Having many units in 34 countries has also contributedto moderate market growth. Papa John`s Pizza has adopted the globalstrategy as it seeks to enhance its international presence. Thecompany has pursued franchising opportunities so as to ensure lowinvestment risk and minimal ownership and control.
The company should stick to their current strategy and genericobjectives. Papa John’s Pizza aims to topple Pizza Hut and Domino’sand hence increase its sales revenues and market share. The SWOTanalysis provides a framework through which threats and weaknessescan be minimized while opportunities and strengths are maximized. Asthe third largest pizza chain, Papa John’s Pizza could seekconvenient store locations and offer dine-in options so as to matchup to its competitors. However, various factors need to be retainedin fulfillment of its strategy and generic objectives. For example,it is critical to provide high-quality pizzas that use bestingredients. Convenient ordering systems must also be combined withresponsive customer service to increase brand loyalty. Extensivemarketing campaigns should also be used to increase the globalpresence. In this regard, franchising would also help to lowerstartup costs and increase business opportunities. Formulating adevelopment incentive plan can lead to reducing royalty fees, waivingfranchise fees, and increasing credit on first orders.