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Assignment: Week #9 (Final Paper)
Domino’s Pizza Case Study
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Falling in the highly competitive and highly lucrative quick service restaurant (QSR) industry,
pizza places are able to tap a wide range of audiences as more than 95% of the United States’
population claim to eat this popular meal (Sauber, Marold, Anderson, 2011). Domino’s Pizza has
worked hard in recent years to steal market share away from its competitors while also
strengthening its position and raising awareness of new recipes and offerings to its target
audience. With solid footing on the delivery business, it has much room for growth on the
carryout side. With a $150,000 budget, a number of tests will be put into place to determine
the best direct/interactive tactics to be used to grow its business and boost carryout sales.
Domino’s Pizza is the third largest pizza chain the U.S. Trailing behind Pizza Hut and ahead of
Papa John’s and Little Caesars, the pizza industry is quite segmented. If fact, small independent
retailers make up more than half of total market share, meaning the “Big 4” are all fighting for
less than 50%. But at $33.5 billion, even small increases in market share translate to large
profits (Sauber, Marold, Anderson, 2011).
Domino’s was founded in 1960 by two brothers in Ypsilanti, Michigan who borrowed money to
open their first location. Tom Monaghan eventually came to manage the business and focused
on a small menu with an emphasis on delivery. The company grew and expanded over the next
50 years, opening up corporate owned locations as well as locations through franchisees
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(Sauber, Marold, Anderson, 2011). Today, there are more than 9,000 stores around the world,
with more than 4,000 of them located abroad (Campos, 2013, pg. 1).
One of the most significant criticisms of Domino’s over the years from consumers was the poor
quality in taste of its pizza. Instead of trying to avoid the issue, Domino’s attacked it head on. In
2010, Domino’s underwent a transformation with a campaign dubbed Pizza Turnaround. In a
very public way, it researched, taste-tested and strategically crafted a better and fresher pizza.
(Fera, 2013). The new pizza was also accompanied by a re-branding, one focused on quality
food, a better menu and more transparency, evident in their ultra-active social channels.
According to Adrian Campos of Motley Fool, the result of the campaign was significant.
Domino’s posted a 14.5% increase in revenue in 2010 alone and stock rose 400% in the three
years following the campaign. Between 2000 and 2013, the customer satisfaction index score
increased from 69% to 81% (Campos, 2013).
Domino’s is a leader in delivery orders but sees room to expand with its takeout business. With
an expansive menu, it has displayed mobile and Internet innovation. Based on these perks,
Domino’s Pizza believes it is well-equipped to grow the carryout side of its business. With
$150,000, a number of direct/interactive marketing tactics will be tested over the course of
three months in the Columbus, Ohio area to try and reach two district audiences and raise
levels of carryout sales among these groups. If the test is successful, these initiatives will be
carried out nationwide.
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Direct/Interactive Tests for 18-24 Year Olds
The 18-24 year old audience is highly coveted among many brands. This is the group that is
fresh out of high school, either attending college or working their first full time jobs. Most are
unmarried and are getting settled into their first apartments, dorm rooms, or are still living with
mom and dad while they job search. They do not have much money but tend to be less likely to
save than other demographics (The Social Dynamics, 2009). They have a tendency to be early
adopters and opinion leaders, curating the new trends of today, especially as it relates to
technology, fashion and entertainment. They are generally hard to reach because of their
skepticism against traditional advertising (The Social Dynamics, 2009).
Pizza is a favorite meal of Americans and is eaten by 95% of the population. More importantly,
21% of people ages 18-24 purchase pizza more than three times a month, compared to only 7%
of those over age 65 (Sauber, Marold, Anderson, 2011). This makes for a potentially lucrative
market for Domino’s Pizza. Based on the fact that this group enjoys late night food and are not
always worried about healthy eating choices, this could be a profitable area for Domino’s to
focus. Three tests will be developed to reach this audience including postal inserts, mobile
marketing and in-stream audio ads.
According to the U.S. Census Bureau, there are 19.9 million college students in America, making
up nearly 7% of the population aged 3-years-old and up (US College Student Demographics in
2012, 2013). Since many of the 18-24 year-old audience is enrolled in college, it would be
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worthwhile to do a direct mail test specific to this audience. College students, especially those
living on-campus, enjoy late night orders when studying or partying. To try and encourage take-
out orders from this population, postal inserts will be sent to college dorm mailboxes in the
Columbus, Ohio region. Students at Ohio State University, Columbus State Community College,
Fortis College, DeVry University, Ohio Business College, and Bexley’s Capital University (selected
at random) will be targeted. Postal inserts will be sent to all student mailboxes that live in dorm
rooms. The inserts will boast the menu items that Domino’s has to offer as well as include a
coupon for a free 2-liter soft drink with any carryout order. The number of coupon scans will be
recorded to determine the number of students who took advantage of the offer and measure
the overall test. The total cost would be $30,000, not including the product giveaway.
According to Nielsen, the 18-24 year old audience is the most active when it comes to using
smart phones (Does college play a role in media consumption, 2012). Mobile marketing,
therefore, is a great channel for Domino’s to present offers to this audience. Domino’s already
has been placing heavy emphasis on mobile. “With 35 percent of its $2 billion in global digital
sales coming from mobile and more than 6 million downloads of its mobile application,
Domino’s offers convenient ways for consumers to order via mobile” (Borison, 2013). So it’s
fitting to try and tap the active 18-24 year-old audience through these means. Domino’s will
develop a promotional code that can be entered when a mobile user places a carryout order
from the Domino’s app or mobile site. The #CarryoutColumbus code will offer a free order of
breadstick to anyone using the code for a carryout order. “Keeping information in, and
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executing mobile couponing communications from ‘the cloud’ can help break through these
limitations and broaden interaction options through multiple channels” (Chavie, 2011, pg. 1).
The users will obtain the code from mobile ads that will appear on popular gaming apps like
Subway Surfer, Angry Birds, Fruit Ninja, Yahtzee Addict and Spider Solitaire. 18-24-year-olds will
be targeted through filters within the advertising models of the gaming platforms. This test will
cost $20,000 of the total budget.
In-Stream Audio Ads
Music streaming is widely popular among the younger demographic. Sites like Pandora, Spotify,
TuneIn and Songza boast streaming from both desktop and mobile apps for unlimited hours.
Paid versions are ad free but free versions allow advertisers to place short ads (15-30 seconds)
in between every five songs or so. According to eMarketer, age groups 16-20 and 21-24 are the
heaviest users when it comes to music streaming (With streaming and sharing, 2012). Domino’s
can take advantage with short direct marketing ads during song breaks on these streaming
sites. By creating a unique, easily remembered domain name like carryoutcolumbus.com,
Domino’s can direct users to a mini-site which talks more about its new pizza recipe, its wide
offering, and the ability to get a free 2-liter drink with carryout orders placed through the site.
The mini-site is needed since in-app audio ads are very short and many users are listening while
participating in other activities and cannot always act immediately with a click. The unique and
memorable domain name is a call to action that can provide more info at a later time and can
easily be measured through Google analytics. Both visits and e-commerce transactions from the
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mini-site will be measured. The test will be aimed at users who are 18-24 and live in the
Columbus, Ohio area, reached through users’ profile information. This is a great avenue for
Domino’s to tap the young audience members. “You have a prospect’s complete attention for
15 or 30 seconds – clutter free! Combined with great targeting abilities, in-stream audio
advertising not only offers clutter-free ad space, but you can also ensure that you are reaching
your exact audience and won’t have wasted impressions” (Lechtenberg, 2013, pg. 1). The
budget for this test, including the ads and the development of the mini-site, is $25,000.
Direct/Interactive Tests for Households with Children
Besides those in their late teens and early 20s, another critically important audience for
Domino’s Pizza is households with children. According to Sauber, Marold and Anderson, 20% of
this audience purchases pizza more than three times per month (2011). Domino’s Pizza has
plenty of offerings for an entire family. Buyers can easily purchase pizza, breadsticks, pasta and
a drink to feed a family of four at an affordable cost. According to Nielsen Claritas, households
made up of families make up about 35% of the total U.S. population. This is primarily made up
of the “Winner’s Circle” segment. Nielsen describes these folks as 35- to 54-year-old wealthy
middle aged adults with kids. They shop at Ann Taylor, visit theme parks and watch American
Idol. They are mostly white and live in the suburbs (2013 PRIZM Segmentation System, 2013).
This is a lucrative audience for Domino’s Pizza to tap and grow its takeout business. Three tests
will be created to improve penetration among this group including direct mail, email marketing
and paid search.
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Although the most costly of all the efforts, direct mail can be a tremendous opportunity for
Domino’s Pizza to capture the attention of the target audience. By sending mailers with
coupons to households with children, parents can take advance of the deals and purchase
Domino’s Pizza on a more regular basis. “The Direct Marketing Association (DMA) has found
that direct mail boasts a 4.4% [open] rate, compared to email's average response rate of
0.12%...Depending on how one crunches the numbers, direct mail has a response rate of up to
10 to 30 times that of email — and even higher when compared to online display” (Schiff, 2012,
pg. 1). The creative will focus on a family dinner and feature specials, like a large pizza and 20
wings for $14.99, for those who redeem the coupon during their carryout order. The coupons
will be scanned at the register to help measure the success of the campaign and identify the
amount of conversions from the test. “While the USPS has financial struggles, its service
remains popular and cost-effective. We’re seeing an inverse law of marketing physics – as our
email inboxes fill up, our regular mailboxes are becoming less crowded” (Boyarsky, 2012, pg. 1).
Only households in the greater Columbus, Ohio region will be targeted. Between the creative,
printing and distribution costs, the total spend for this test would be $40,000.
Email is the next effort that will be tested. It’s less intrusive than direct mail and telemarketing
and also much less expensive. In fact, from a return on investment (ROI) standpoint, it’s the
most rewarding direct marketing tactic at $28.50, compared to $7 for direct mail (Schiff, 2012).
It’s also one of the most prolific forms of communication today. Domino’s Pizza can create a
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custom HTML designed email with appetizing creative and a simple message that encourages
families to purchase foods offered at the pizza chain. It will also feature a printable coupon
(housed on the mini-site domain) for users to download and redeem in store when they
carryout. Metrics in the email software’s backend will help to understand the success of the
campaign. Opens, clicks, spam reports, forwards, and coupon downloads will all be measured.
“Specifically, for the adult with children audience, email is a great medium for communication.
77% of consumers stated that email was their preferred way to receive promotional messages.
For adults over the age of 35, email was preferred by roughly 80% over direct mail, text
messages, Facebook, Twitter, mobile apps, LinkedIn or telephone solicitations” (Pluth, 2012, pg.
1). This translates to an ideal platform to reach the parent audience. Three emails over the
three month period will be distributed to head of household members in the Columbus, Ohio
region. The total budget for this effort would be $10,000.
Pay Per Click
Pay-per-click advertising through Google Adwords is a great opportunity to tap audience
members using popular, relevant search terms that are used when exploring on the web. Direct
marketing efforts through paid search will be able to intercept those looking for a pizza place
online in the Columbus, Ohio region. Search terms like “pizza places,” “pizza near me,” “pizza
shops,” or “best pizza around” will only be a few of the keywords being bid upon. According to
a report from DM News: “56% of search engine traffic revenue can be attributed to clicks on
organic links, compared to 44% that can be attributed to clicks on paid search links. However,
paid search did pull ahead in terms of conversion rate and order size. The report cites that paid
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search generated a 35% higher average conversion rate than that of organic search” (Jarnot,
2013, pg. 1). There will be a combination of both search and display advertising. The former are
text based ads that appear on search engine results pages. Ads like “Order Pizza Now” would
direct users to the mini-site where consumers can learn more about the special deals that
Domino’s Pizza has to offer. Similarly, display ads are image based ads found on relevant
websites in the Google Display Network. Display ads typically have lower conversion rates but
are cheaper, which translate to more clicks and impressions. The display image ads would boast
creative around a family meal and again link to the Domino’s Pizza mini-site where visitors
would see special offerings. The mini-site would be mobile optimized since many visitors
coming from paid search ads are using mobile devices. Only users within the Columbus, Ohio
area would be targeted. One of the key advantages of AdWords is the ability to track.
Impressions, clicks, bid levels, costs, and conversions can all be measured to determine the ROI
and value of the campaign. The total cost attributed to the pay-per-click campaign test through
AdWords over the three month period would be $25,000. This brings the total amount for all
tests to a budget of $150,000.
Type of Data Collected from Online Customers
Tailoring targeted messages to customers and prospects is a tremendously effective approach
to marketing. Armed with rich customer data, businesses can speak directly to each customer
rather than mass audiences with generic messages. For Domino’s Pizza, this means developing
specific messages for each of its target audiences including 18-24-year olds and families. This
data includes both contact information for actual communication execution as well as
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geographical and psychographic information to craft the message and design the creative. Data
can include: name, address, phone number, city, state, zipcode, household size, household
income, ethnicity, frequency of pizza purchases and favorite pizza topping. “Never
underestimate the power of your business's database or customer relationship management
(CRM) system. These tools hold valuable information that will help you understand your
customers, better meet their needs, improve your service performance, and expand to other,
underserved customer segments” (Stark, Stewart, 2013, pg. 1). By collecting, categorizing and
interpreting this customer data, Domino’s Pizza can capitalize in a number of ways to develop
better products and execute more strategic marketing efforts to eventually grow sales.
Obtaining Product-Related Feedback
Like any B2C company, Domino’s Pizza is constantly exploring ideas as it relates to product
development. For example, this past week, Domino’s offered its first-ever vegan pizza in its
Israeli market (Chasmar, 2013, pg. 1). By utilizing customer data, Domino’s Pizza can make more
sound decisions regarding potential new products. “Once you know which products are the
most popular, you can promote them more to increase sales. You can place those products on
your shop’s homepage and also feature their image on advertisements…Removing unpopular
products allows you to focus your time and money on products that will get you a better ROI
and increase sales” (Carillo, 2013, pg. 1). Should Domino’s offer breakfast items? Are more
topping choices needed? Should there be healthier options? These are the type of questions
that customer data could assist in answering to ensure higher likelihood of success if/when
added to the menu.
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Identifying Most Popular Time/Day for Purchases
Every quick service restaurant has its peak hours. Dunkin Donuts thrives in the morning, for
example, while Taco Ball leaves its locations open late at night to cater to its “fourthmeal”
audience. It’s important for Domino’s Pizza to collect customer data to better understand when
it’s most popular days and times are for purchases. If Saturday nights are the successful among
18-24 year-olds, then Domino’s will want to send out its postal inserts on Friday to arrive mid-
day on Saturday to wet the college students’ appetites. If 6 p.m. on Friday nights is the biggest
hit among families, perhaps sending the e-newsletter to parents on Thursday afternoons could
draw the most successful open rates and conversions. Testing should be done in all
circumstances, but the customer data could provide direction for developing messaging and
determining when to execute marketing efforts.
Understanding Top Traffic Sources
Google Analytics is a great resource for collecting behavior on websites. With the software,
Domino’s Pizza can track number of visits, time on site, which product pages receive the most
attention, the number of coupon downloads, number of online sales, and more. One of the
most powerful features in Google Analytics is the ability to view traffic sources. “Traffic
sources…reveal great sites to implement or boost advertising. This can also lead you to sites
where your online shop or products have been mentioned or even reviewed. One final
advantage of analyzing traffic sources is that it can also tell you if any marketing campaigns
already in place are effective” (Carrillo, 2013, pg. 1). This customer data would help Domino’s
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Pizza understand what marketing channels led to the most web visits. How are traffic numbers
as it relates to the e-newsletter? How many visitors came from in-stream audio ads? Did PPC
ads draw in a lot of potential customers? Traffic source data from Google Analytics helps to
measure the success of other online and offline campaigns and help dictate where future
efforts should be placed.
Obtaining Emails and Addresses for Direct Marketing Efforts
Much of the marketing tests incorporated within rely heavily on accurate contact information
of current and potential customers. Having up-to-date email and home/college addresses is
critical to ensuring that email and direct mail are delivered successfully to audience members.
This type of customer data is vital to marketing success. Furthermore, individuals should be
segmented based on demographics, geographical and psychographic information. By doing so,
tailored messages can be used in direct and email marketing. “Put simply, list segmentation
targets your communications and increases the relevancy of your messages—resulting in higher
open and click-through rates, enhanced customer loyalty, and increased sales. In email
marketing, the more relevant your campaign is, the better the response and the greater the
conversions” (Christian, 2011, pg. 1).
One of Amazon’s most powerful features is its recommendations system. Common across the
web today, recommendations systems help offer users additional products that they might not
know the company offers, or might not realize they want (yet). It’s a great way for brands to
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cross sell. By using customer data, Domino’s Pizza could offer additional products along with
purchases. You’ve placed a large pizza and wings in your shopping cart? Perhaps you might like
a pasta meal or an antipasto to go with it? Understanding customer buying trends and what
products best pair with other products can help Domino’s Pizza cater to its customers and
maximize sales. It’s a better shopping experience for the customer at the same time.
Obtaining Rich Customer Data from Carryout Buyers
Customer data can serve a variety of needs for Domino’s Pizza, from product development to
more targeted contact info for direct marketing efforts. Obtaining this information can be a
challenge and should be considered on a number of fronts so as to maximize efforts and
generate more thorough data from customers in-store, online, and on social media platforms.
“Figure out what data you already have and what you’d like to have. That covers all of your
software-as-a-service applications (including CRM programs such as Salesforce.com), Excel
spreadsheets, partner information, sales receipts, and any other devices that collect
information” (Belicove, 2013). Three specific ways that Domino’s Pizza can obtain customer
data from carryout buyers include phone, website and through mobile orders.
A large portion of carryout buyers order pizza and meals by phone. A system should be put in
place (tie phone to CRM software on computer) where phone numbers are recorded along with
the specific order placed. The data can then be stored for future communication. For example,
the system can be integrated with the web. If a past customer enters his/her phone number,
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special products can be pitched based on past purchases. Perhaps the customer prefers
breadsticks or a 2-liter Coke with every order. Domino’s website can offer recommended items
based on this buying history. All phone numbers should be recorded and put to use in
outbound marketing efforts. It’s an effort that is non-intrusive too, since customers call the
location to place orders, essentially handing over their data at will.
According to Stephanie Miller of ClickZ: “Any action taken should be captured if it's possible to
capture. This includes data from kiosks, call centers, and mobile apps, as well as web data.
Consider: purchases, product views, shopping basket additions, video views, downloads, help
requests, registrations, comments, forwarding a link, reading/writing a review, searching, and
more” (2013, pg. 1). Online surveys and social media feedback are two great ways to collect
customer data online. Although time consuming from a number crunching perspective, these
real-time, real-life answers are provided at little to no cost and feature authentic responses
from engaged customers. Responses online through these channels can help Domino’s Pizza
better understand the major wins and pitfalls of its products and service. As it relates
specifically to carryout, Domino’s Pizza can propose questions on its social platforms and await
the reactions from fans who are providing free market research. Additionally, other types of
data should also be tracked and captured. This includes data from: online purchases, contact us
forms, and Google Analytics including contact information, feedback, searched keyword or
traffic sources, and more.
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Finally, mobile data through Domino’s Pizza’s mobile application can be used to capture
comprehensive data. Right now, as a user proceeds to complete a transaction via Domino’s
app, he/she must enable location and complete account information to place an order. This
information can be logged to track geographic data, contact information and preferences, as it
relates to Domino’s offering. By joining this data with information from phone and web,
Domino’s Pizza can piece together a thorough data set to assist with efforts. Knowing what
products customers prefer, which customers are loyal and repeat buyers, which geographic
areas tend to eat the most food from Domino’s Pizza, and what times of day are most popular
for carryout orders are only a few predictive conclusions that can be drawn from the results.
Mobile is a growing trend and it is promising that more orders will continue to be placed via
mobile website and mobile app. By capturing this data, Domino’s can encourage large purchase
packages and curate better mobile marketing efforts to past customers.
Groupon is a collective buying site that allows businesses to give away great discounts or deals
once a minimum ceiling of participants is reached. It’s a locally-focused tactic. Many small
businesses have seen successes as a means to get new prospects in the door with the
opportunity to sell them additional goods. For instance, if Joe’s ‘Cup of Joe’ Coffee Shop offered
a $0.25 cup of coffee to the first 100 people who purchase the deal, the hope would be that
those people who come in and buy a donut or muffin to go with the it. “By offering incredible
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discounts that are greater than half-off the original price, these sites offer the potential to
generate hundreds to tens of thousands of sales from new customers within a single day”
(Hunt, 2011, pg. 1). Businesses do not make money from the deal itself (since they are very
steep discounts) but rather from the additional purchases on-site.
Groupon’s group buying model is a risky business. Many experts believe you only attract
“bargain shoppers” and “coupon junkies” rather than building long-lasting loyal customers.
“With Groupon taking a 50% cut of each voucher…the total expense of attaining those sales
from a merchant’s standpoint can be very overwhelming. Depending on the cost of the
voucher, it may not be a cost effective to use group buying sites like Groupon to generate sales”
(Hunt, 2011, pg. 1). Thus, it might be more effective to utilize one of Groupon’s new features –
a digital coupon offering. Although the deals are generally less attractive than the group buying
to consumers, it’s more beneficial to the seller. There’s no minimum ceiling. And there are
higher profit margins. “The online coupon market is worth about $4 billion a year and when in-
store coupons are included, the total addressable market increases to $28 billion…Groupon's
Freebies business lists digital coupons that can be claimed for free. After clicking on the
coupons, shoppers are directed to the website of the brand or retailer and the discount is
automatically applied when they complete the purchase” (Barr, 2013, pg. 1).
Domino’s Pizza should utilize these new digital coupons for testing in the Columbus, Ohio area.
There should be coupons that are offered for free breadsticks to those in the Columbus, Ohio
area. The offering wouldn’t be a dramatic hit for the company since breadsticks are one of its
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most inexpensive items. The advantage is two-fold. The first, the user is directed from Groupon
to Domino’s Pizza’s website where they will download the coupon. Here, Domino’s can raise
awareness of its other offerings. Secondly, it’s rare that someone would purchase just
breadsticks. It’s usually a side dish for a full meal. Thus, the hope would be that the coupon gets
users in the door for carryout purchases of additional products – a large pizza, wings, a drink,
dessert, etc. It could potentially be an effective move that allows Domino’s to grow its carryout
sales. The tactic could be measured by both coupon redemption as well as traffic sources in
Google Analytics from those arriving at the website from Groupon. Sales in the Columbus, Ohio
region should also be tracked during the length of the campaign.
Domino’s Pizza is one of the top pizza retailers in both domestic and international markets.
With an updated, tasty new pizza recipe, a quick and efficient delivery model, and a proactive
business strategy focused on innovative technology, the Michigan-based company has
developed a strong positioning since its inception in 1960. There is still room for growth,
however. By testing a number of direct marketing campaigns and online tactics, Domino’s Pizza
can have a better handle on its 18-24 year old customers as well as its audience of households
with families. By reaching these markets through direct marketing, it can promote its various
menu items and boost takeout sales, potentially stealing market share away from leader Pizza
Hut and independent retailers.
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