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History ofDomino’s Pizza
In 1960, Tom Monaghan and his brother, James,purchased "DomiNick's," a pizza store in
Ypsilanti, Michigan. The Monaghan brothers borrowed $900 to buy the store. However,in 1961,
James Monaghan traded his half of the business to his brother in order to buy a used Volkswagen
Beetle. Tom, now the sole owner, renamed the company “Domino’s Pizza, Inc.” in 1965 and the rest
as they say is history.
It was from the very beginning that emphasis was given on an efficient delivery system, since the store
in which Domino’s started was very small and had a limited seating capacity. Tom would hire laid-off
factory workers to drive and deliver pizzas to nearby towns. This early focus on deliveries is what
helped spread the brand name quickly, as they gained a competitive advantage over other pizzerias who
did not offer a delivery service.1
Domino’s till this date stays true to its promise of timely delivery and is a market leader in worldwide
online transactions. As of today Domino’s Pizza is the second largest pizza chain globally with annual
sales of close to 9 Billion Dollars, only behind Pizza hut, who has an annual sale of about 14 Billion
Dollars. Domino’s has close to 12,000 outlets worldwide in 2016 and their growth continues at a rapid
pace.
Case Synopsis
Though the chain continued to grow locally and internationally, all was not well within
Domino’s. By 2009 annual sales had gradually been declining and more and more customers
complained that the pizzas provided were substantially below par.Quick delivery wasn’tthe only aspect
that the customers were looking for, it was clear they were demanding something more, something
better. This, coupled with Pizza Huts growing grip over the market, was a major worry for Domino’s.
Customer complaints mainly included criticism towards the taste,flavour and quality of pizza, they said
that Domino’s pizza felt more like a “cardboard” and that it tasted “wet and flavourless”, it was turning
out that Domino’s was a pizza chain that had forgotten how to make pizzas.
It was after this that the management took notice of the consumer woes and finally began to act on it.
Domino’s initiated the “Pizza turnaround” campaign, which was led by Senior Executive J. Patrick
Doyle and two other senior managers, Russel Weiner and Brandon Solano. The goal of this campaign
was not just to improve the flavour of Domino’s Pizza, but to completely reformulate the flagship
product from the ground up so that it could actually beat competitors in taste tests. This meant
scrapping the 50 years old year,old tried and tested recipe, and starting from scratch. This was
something that Domino’s Had to do.
Much research was conducted into determining the main reason behind Domino’s woeful
performance over the past few years,Lost buyer analysis suggested the main reason behind this was
the menu and the pizza in particular. Much of the research conducted included customer feedback and
findings from focus groups. It was one such focused group session that brought out the brutally honest
and harsh criticism of Domino’s pizza which led to the entire pizza turnaround campaign.
Ultimately the “Pizza turnaround” campaign was a major success. The process of building their
flagship offering as a completely new product had worked. Domino’s with its completely new recipe
was not only delivering quick pizzas, but was also giving its competitors a run for their money in
taste. Blind taste tests results showed that 3 out of 5 people preferred domino’s new pizza over
competitors. The Pizza turnaround also included a 4 min long video on You-tube which showed the
extremely negative comments of customers in one of the focused group sessions.2
1 http://www.econ.ucla.edu/sboard/teaching/tech/dominos.pdf
2 New Products Management/Eleventh Edition by Dr C. Merle Crawford/Concept Testing/Domino’s Casestudy
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1) What Do you think caused the crisis within Domino’s that led to the “Pizza Turnaround”
Campaign?
Over reliance on Delivery Time: Domino’s ticket to fame was its delivery service. Even to this date
Domino’s continues to set benchmarks in the food delivery market. By 2009 Domino’s was the
undisputed leader of the quick pizza delivery market. However, this over emphasis placed on delivery
time rather than meeting customer requirements is what led to Domino’s decline. This was
highlighted particularly in their 2008 failed ad campaign of “You got 30” which stressed only on their
30-minute delivery promise. While many would trust Domino’s for a quick delivery, not many trusted
the quality of their food. The speed culture removed an important component from the pizza
experience- the Human touch3
.
Lack ofevolution in their product offerings: Though in 2009 Domino’s was still recovering from
its successfulintroduction of the oven-baked Sandwich, it wasn’t offering much in the product stream
it was primarily into, Pizza’s. Their pizza recipe had not changed over time and they were consistently
losing out to their competitors such as Pizza hut who kept on bringing in changes into their menus as
customer needs changed from time to time.
2) Comment on howthe NewProduct team used Attribute Analysis to test Various pizza
concepts.
After the “Pizza turnaround” campaign was underway, a New product team was put in place to
rebuild their pizza from scratch. Which included formulation of new crusts, new sauces,new topping,
new cheese etc. How the team went about with this process of making a new pizza keeping in mind
what a customer looks for in a pizza is a classic example of how Attribute Analysis was used in
developing a new product.
The head Chef’s at Domino’s who took the lead in developing the new recipe highlighted 3 major
attributes that needed to be changed in the recipe.
Crust
Sauce
Cheese
These are the core,3 most important attributes that define a pizza and its importance to the new recipe
was unimaginable. All in all, put together they had 3 types of crusts,3 types of sauces and 2 types of
cheese4
,which led to a total combination of 18 pizzas that could be developed as per customer tastes.
All 3 attributes had to work side by side one another to give out the best possible outcome. Keeping
all of these in mind the Head chef’s at Dominos developed a new recipe which was not only
substantially better than their previous offering, but also ahead of their competitors.
The new product team did not only comprise of the head chefs to come out with a new recipe, it also
had individuals from the operations and marketing department who would have to take into
consideration the financial and marketing scenario of the Pizza turnaround campaign. According to
Weiner “The pizza had to be significantly better, but it could not cost more or take longer to make.
There were financials and operational parameters”. The attributes that the Operational and Marketing
departments of the new product development team had to look into were:
Time
Cost
Awareness.
3 http://www.cpbgroup.com/work/dominos/dominos-pizza-turnaround
4 New Products Management/Eleventh Edition by Dr C. Merle Crawford/Concept Testing/Domino’s Casestudy
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The new product team did not only have to look at changing the complete pizza recipe, but it also had
to do so in such a way that did not increase the cost of making the new pizza (who would pay a higher
price for a pizza they perceive to be tasteless) and that it would still be made available for delivery in
30 minutes (hey its Domino’s it has to be 30 minutes). Therefore,the New Product team had to
analyse the key product attributes that needed to be changed as per the customer tastes.
3)Howimportant was this analysis to the team in selling the Pizza Turnaround internally?
J. Patrick Doyle and co did not only have to devise a new strategy with the new product
development team, but they also had the all-important task of convincing the top management at
Domino’s that a change was necessary. As we have seen in previous cases (IQ Meals) that the effort
and hard work of the new product team sometimes go in vain if the top management doesn’t agree to
it. For a new product to be successfully launched there must be cohesion not only among the various
individuals working in the New product development team but across all the levels of management in
the organization.
In case of Domino’s, their findings thorough customer feedbacks and focused groups studies showed
the negative attributes the consumers had attached to their products and that was a spot of bother for
not only for the top management but the organization as a whole. When R&D Personnelwere shown
the customer complaints, they were alarmed and recognized that this time, product development could
not be “business as usual”.
The attribute analysis conducted by the new product development team had more or less identified the
weak links and had done the job of replacing these weak links with more favourable ones. This
approach helped the new product development team sell its concept internally with a green light from
the top management the concept was ready to be pushed into its next phase.
4)What else did the newproduct team do to boost their chances ofsuccess?
The New product development team, that took the lead in the Pizza turnaround campaign, did
not only come up with a new product right from the scratch keeping the timeliness and cost into
consideration, they also came out with a strategy to create awareness about their campaign by making
use of social media in a great way. Domino’s needed to reorient their focus in a way that would bring
a sense of humanity back to the experience and make customers believe that every pizza was made by
a human being with care,love and passion. A major part of the launch campaign was a four and a half
minute promotional “Pizza Turnaround” video, launched on the website www.pizzaturnaround.com5
.
The video showed extremely negative customer comments and clips from the focus groups, then went
into detail on how the company completely redesigned the crust, sauce and toppings. The video
emphasized that some companies might hide customer criticism, but Domino’s acted on it to improve
the product. Executives at Domino’s did acknowledge that it was a risky move to have such negative
talks in their rollout promotional campaign, but they were sure (after much trying and testing) that
their new product would be a success. As a matter of fact, the pizza turnaround campaign was a huge
success and what Domino’s saw after that was a 30% increase in New customers and 65% increase in
repeat purchases which translated to a 14.3% increase in quarterly same-store sales6
,even during the
Economic slump. What Domino’s succeeded in doing here was to appeal and connect to its customers
on an emotional level which turned out to be a feather in the cap for Domino’s.
5 http://pizzaturnaround.com/
6 New Products Management/Eleventh Edition by Dr C. Merle Crawford/Concept Testing/Domino’s Casestudy
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5) What can be learned in general from this case about the use ofanalytical attribute
approaches for concept testing?
Attributes are nothing but features,functions and benefits of the product. The product must satisfy all
of the three mentioned above, to have a chance at succeeding. Attribute analysis is feasible when there
are not a lot of attributes attached to a product (the salsa sauce example). In this case Attribute
analysis played a major role in developing a new product (the pizza). The main attributes to which
customers took specific liking (or disliking) were the crust,sauce and cheese. These are the main
ingredients of a pizza and are pivotal in developing a new pizza. The new product development team
at Domino’s had to specifically keep these 3 attributes in mind with correlation to customer
preference to develop a new product. The attribute analysis in this case helped the new product
development team in devising a strategy to work on the factors on which led to
6)Howcould other concept testing approaches present in this chapter have been used to guide
the newproduct development team? (Recommendations too)
Market Research to support concept testing
The team at Domino’s could have taken the Market Research to support concept testing approach as
an alternative approach to develop their new pizza. They acquired negative customer feedback
through customer complaints and focus group studies. After defining the areas of improvement what
Dominos could have done was do additional market research with their new product and look for
customer preferences in various regions. This would have enabled them to have a much better idea of
customer preferences without having to take the risk of developing a final product.
Prototype Testing
As the name suggests, another approach that Domino’s could have taken was to prototype test their
new products. Since making a new pizza isn’t as expensive as developing a new car, the cost related
to trying out a new pizza and finding out its feasibility wouldn’t have a major monetary impact on
Domino’s. Similar to a trial and error method, the best accepted prototype would have gone a long
way in developing the new pizza.
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Financials7
Financial Statement for Year ending 2009 and Comparison from 2005 - 2009 (To highlight
Domino’s financial status at the beginning ofthe Pizza Turnaround Campaign)
7 http://phx.corporate-ir.net/phoenix.zhtml?c=135383&p=irol-reportsannual
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Financial Statement for year ending 2015 and Comparison from 2011 - 20158
8 http://phx.corporate-ir.net/phoenix.zhtml?c=135383&p=irol-reportsannual
