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A look behind Domino’s marketing strategies

A look behind Domino’s marketing strategies

Executives discuss digital marketing, social media as keys to driving sales

Domino’s Pizza said a combination of new digital-marketing technologies and social media, coupled with consistent menu pricing strategies, will help maintain the sales momentum the pizza chain has enjoyed over the past two years.

Executives of the Ann Arbor, Mich.-based chain credited its “new, inspired pizza,” launched at the end of 2009, as the main driver of its same-store sales growth.

However, they also underscored the importance of marketing innovation over that time.

The comments were made Thursday at the parent company’s investor day event by chief executive J. Patrick Doyle and chief marketing officer Russell Weiner.

Driving sales, traffic with digital

The marketing investments Weiner has pushed since joining Domino’s in September 2008 include a mobile-optimized website for online ordering, new audible formats for the chain’s popular Pizza Tracker, smart-phone and table apps for ordering, and the Pizza Hero game for the iPad launched in November.

“We couldn’t do just another ordering app,” Weiner said of Pizza Hero. “It needed to take advantage of interactivity available on an iPad, and we think this really does.”

Watch a demonstration of Pizza Hero; story continues below

Online ordering represents a significant portion of Domino’s sales, and mobile and tablet app ordering also are building momentum, he said. Sales from apps are approaching $140 million per year, or about 5 percent of Domino’s top line.

The brand also has grown its Facebook and Twitter fan base by more than 400 percent in the past 12 months, Weiner added.

Last year, Domino’s integrated social media into its national “Pizza Turnaround” advertising campaign, setting up the Times Square Tracker, which shares all tweets — positive and negative — customers write about Domino’s when they order online.

Weiner said the Times Square Tracker has given Domino’s “a few hundred million mystery shoppers around the country,” and motivated crew members to perform better, reducing service times and driving customer satisfaction scores as a result.

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Take a look at the Times Square Tracker; story continues below

Doyle added that the comments also are factored into store audits used to evaluate company-owned and franchised units.

“They still get the traditional physical audits measuring cleanliness and the condition of the pizzas they deliver, but part of that score now includes the online feedback as well,” Doyle said.

“You can even take it down to who the manager was running a shift that got a lot of comments,” he continued. “The correlation between that and the sales results of the stores is very high.”

Key strategies maintain consistency

For all of the benefits that investing in new technologies has brought, Domino’s plans to keep several key marketing strategies consistent, Weiner and Doyle said.

Beginning in 2010, Domino’s also reformulated its required franchisee contribution to the national marketing fund. Instead of a 6-percent royalty — split between a 4-percent contribution to Domino’s for national ads and 2 percent required to be spent on local and co-op advertisements — the company required a 5.5-percent contribution that funded only national ads. Franchisees could continue to spend additional funds on local ads, Weiner said, but none was required to do so.

The chain’s executives did not disclose any plans to change the contribution rate.

When asked if Domino’s would consider changing its $5.99 price point for national promotions, Weiner replied that the brand could advertise its brand attributes better by keeping its prices consistent.

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“Price is the tie breaker, but if you don’t have the other pieces to your brand, all you have is price,” he said. “If you shout that you have $10 pizza, the next guy shouts about $9 pizza and so on, and that destroys the category. … We’re bigger believers in brand stories. If the price doesn’t stay constant in a 15-second spot, I can’t tell you about all this stuff going on, like our new pizza or new chicken.”

Doyle reiterated that Domino’s has no plans to increase the price of its popular $5.99 medium two-topping pizza introduced in late 2009 with the reformulated pizza. The offer drives the most cash profits for Domino’s domestic stores, he said, even though it occasionally gets some pushback from franchisees concerned with the offer’s lower margins.

“Are franchisees always happy with [the price]?” Doyle said. “When cheese prices spiked last summer, the answer was ‘no, they weren’t.’ They would have liked us to take it up more, and there was a lot of debate with the system, and that continues. We do it to drive maximum dollars, not maximum percentages, to our franchisees.”

He added that national offers, like the two medium, two-topping pizzas for $5.99, comprise between 20 percent and 30 percent of sales for the system.

“So 70 percent to 80 percent of sales will come from local coupons and local menu prices,” Doyle said. “Those the franchisees can control directly.”

Marketing focus on product upgrades

For the near future Domino’s will continue to focus its advertising on new products aligned with the corporate goal of continually improving its offerings, as reflected in current commercials for the chain’s new Stuffed Cheesy Bread, Weiner said.

He added that he would keep the emphasis on the brand and its products, rather than fall back on marketing tie-ins, because he considered that “borrowing equity” from some other brand and not emphasizing Domino’s strengths.

“If you don’t have enough news on your brand to talk about, you need to change the news,” he said.

Domino’s Pizza operates or franchises 9,541 restaurants in the United States and 70 foreign markets.

Contact Mark Brandau at [email protected].
Follow him on Twitter: @Mark_from_NRN

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