pizza wars: understanding consumer preferences

8/13/2019 Pizza Wars: Understanding Consumer Preferences

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PIZZA WARSUNDERSTANDING CONSUMER PREFERENCES

SUBMITTED TO:

PROF. VIKAS MEHRA

SUBMITTED BY:

DIXIT KAUSHAL

DIVYA VERMA

SHOBHIT BHATNAGAR

ADVANCED MARKETING MANAGEMENT

SML 615


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ACKNOWLEDGMENT

We would like to thank Prof. Vikas Mehrafor including a market research project

in our course and enabling in us a better sense of the significance for market

research in regard to all marketing activities or efforts of any firm.

We would also like to thank all the people who would helped us during the

pretesting of the questionnaire by giving us their insights and opinions to help us

develop a better questionnaire. Finally we would like to express our gratitude

towards all our respondents we immensely appreciate their time and effort.

DIXIT KAUSHAL

DIVYA VERMA

SHOBHIT BHATNAGAR


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ABSTRACT

Until 1996, Pizza in India was synonymous only a bready dough base slathered with some

ketchup. Since 1996, there was a proliferation of 'high-priced branded' pizzas in the market,

with the entry of international pizza chains. Due to rapid entry of these chains, evolving tastes

and preferences of the consumers and also the higher spending power has led to a boom in the

quick service restaurant industry. The consumers prefer one outlet over another on the basis of

several attributes that all the players in the industry try to perform as best as they can and in

line with their strategy. However there is ambiguity on the various factors which influence this

choice.

The purpose of the study was to estimate the significance of various factors which influence the

choice of pizza outlets by young Indian consumers. The study applies multivariate statistical

tools to estimate importance of various factors affecting the choice of pizza outlets. In addition

the consumer patterns and impact of various factors and rating of multiple attributes is also

undertaken for Dominos and Pizza Hut.

The findings indicate that consumers decision regarding pizza outlets is influenced by three key

factors which are product dimension, service delivery dimension and quality dimension. The

two main pizza outlets differ significantly on the key attributes that are used to rate pizza and

other fast food restaurants. Furthermore more consumers prefer Dominos over Pizza Hut but

interestingly more consumers consider Pizza Hut to be excellent in comparison to Dominos. The

managerial implications of the findings are that providers need to focus on quality and variety

of foods besides other service parameters.

KEY WORDS: QSR, Pizza Segment, India, Perception, Factor Analysis


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TABLE OF CONTENTS

ACKNOWLEDGMENT ....................................................................................................................... 2

ABSTRACT ........................................................................................................................................ 3

TABLE OF CONTENTS ....................................................................................................................... 4

LIST OF TABLES ................................................................................................................................ 6

LIST OF FIGURES .............................................................................................................................. 6

1. INTRODUCTION .............................................................................................................. 7

1.1. BACKGROUND .................................................................................................................. 7

1.2. PROBLEM DISCUSSION ..................................................................................................... 8

1.3. OUTLINE OF THE REPORT ................................................................................................. 9

2. LITERATURE REVIEW .................................................................................................... 10

2.1. INDUSTRY OVERVIEW ..................................................................................................... 10

2.2. PIZZA SEGMENT .............................................................................................................. 11

2.3. FACTORS INFLUENCING DECISION MAKING .................................................................. 20

3. METHODOLOGY ........................................................................................................... 22

3.1. OBJECTIVES OF THE RESEARCH ...................................................................................... 22

3.2. RESEARCH PURPOSE ....................................................................................................... 223.3. RESEARCH APPROACH .................................................................................................... 23

3.4. DATA COLLECTION METHOD .......................................................................................... 23

3.5. SAMPLE SELECTION ........................................................................................................ 24

3.6. ANALYSIS OF DATA ......................................................................................................... 24

4. DATA PRESENTATION ................................................................................................... 25

4.1. OVERVIEW ...................................................................................................................... 25

4.2. PREFERENCES ................................................................................................................. 30

5. ANALYSIS ..................................................................................................................... 36

5.1. FACTOR ANALYSIS .......................................................................................................... 37

5.2. COMPARATIVE ANALYSIS ............................................................................................... 39

6. FINDINGS AND CONCLUSIONS ...................................................................................... 41

6.1. KEY FINDINGS ................................................................................................................. 41


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6.2. CONCLUSION .................................................................................................................. 42

6.3. IMPLICATIONS ................................................................................................................ 42

6.4. LIMITATIONS OF THE STUDY .......................................................................................... 42

7. REFERENCES ................................................................................................................. 43

8. APPENDIX ............................................................................Error! Bookmark not defined.


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LIST OF TABLES

Table 2-1: Segments of The Indian Restaurant Industry .............................................................. 10

Table 5-1: Frequency Distribution (Reasons of having pizza & Frequency of having pizza) ........ 36Table 5-2: Rating of Attributes of Pizza outlets for choosing eating point ................................... 37

Table 5-3: KMO and Bartlett's Test ............................................................................................... 38

Table 5-4: Factor Analysis ............................................................................................................. 38

Table 5-5: Comparative Rating of Dominos & Pizza Hut .............................................................. 39

LIST OF FIGURES

Figure 1-1: Outline of the Report .................................................................................................... 9

Figure 2-1: Size and Growth of Industry Segments ...................................................................... 11

Figure 4-1: Gender of The Respondents ....................................................................................... 25

Figure 4-2: Age & Frequency of Respondents .............................................................................. 26

Figure 4-3: Living Status of the Respondents ............................................................................... 27

Figure 4-4: Education Level ........................................................................................................... 28

Figure 4-5: Occupation .................................................................................................................. 28

Figure 4-6: Monthly Household Income ....................................................................................... 29Figure 4-7: Leisure Activities ......................................................................................................... 30

Figure 4-8: Favorite Pizza Outlet ................................................................................................... 31

Figure 4-9: Preferred Mode of Buying a Pizza .............................................................................. 32

Figure 4-10: Importance Of Factors Regarding Eating Out ........................................................... 33

Figure 4-11: Reasons For Eating Pizza ........................................................................................... 34

Figure 4-12: Rating for Pizza Outlets ............................................................................................ 35


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1. INTRODUCTION

1.1.BACKGROUNDFood sector is one of the largest sectors in India in terms of production, growth, consumption,

and export. Indian food industry currently stands at Rs 247,680 crore (US$ 39.71 billion) and is

expected to touch Rs 408,040 crore (US$ 65.41 billion) by 2018, registering a growth of 11 per

cent, according to a report titled 'India Food Service Report 2013' by National Restaurant

Association of India (NRAI). The restaurant industry can be broadly categorized into

unorganized and unorganized sector.

Quick service restaurants also known as fast food restaurants, are defines as food

establishments that have limited service and menu items. Such restaurants rely on a narrow

menu, catering to extremely price sensitive consumers. QSR falls under organized sector

category and are characterized as having consumer demands for foods served quickly and at

the right temperature, accurate orders and clean locations.

Indian QSR Industry is emerging very rapidly and it is a reflection of the change in the lifestyle,

food habits and consumption pattern of the population. The incidence of Dining out, ordering

from home as well as takeaways is rising creating an opportunity to cater to a wide mass of

population. What was the domain of upper class, singles or forced bachelors, has percolated to

all echelons of society. Although largely an urban phenomenon, the pattern is also emerging in

rural. The reasons are areas having better road connectivity, increased vehicle ownership and

rise in income levels in rural area. In a country with more than a billion people, opportunities in

India are abound. This has led to a rapid growth of the QSR industry. However, simultaneously,

it has also created a canvass that has many failures and carcass. Several outlets have been

closed, a large number are struggling, and still a large number are just about surviving. There

are a lot who are successful, but, more importantly, there is almost complete absence of

national chains, except of two cafes, threefour international chains and a few regional chains.


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demographics and entry of new entrants there is no clear set of factors direct a consumer s

decision in regard to pizza related decisions.

The purpose of the study is to solve the aforementioned problem by collecting data to

understand consumers preferences and the factors which govern those preferences.

1.3.OUTLINE OF THE REPORTThe report consists of six key chapters, the first chapter provides an insight to what the report

is about and also discusses the problem and identifies the purpose of the study. The second

chapter draws on the existing literature on the restaurant industry specifically the pizza

segment and its key players. This section also identifies the various factors which have a role in

the consumer decision making process related to eating out. The third chapter the key

objectives and the methodology used to realize those objectives. The chapter also details about

the data collection methods and highlights the various statistical tools used for data analysis.

The fourth chapter uses graphs and tables to give a descriptive view of the collected data.

Chapter fifth details about the analysis of the collected data and describes the use of factor

analysis to identify key factors which influence consumer decision making process. The lastchapter details the key finding and conclusions of the study and discusses the implications and

limitations of the study.

FIGURE 1-1:OUTLINE OF THE REPORT


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2.LITERATURE REVIEW

2.1. INDUSTRY OVERVIEWThe Indian restaurant is one of the most exciting sectors in the Indian consumer market. Several

factors such as nuclearization of families, lack of time, etc. are driving increasing out-of-home

food consumption. The trend takes a new meaning when a large proportion of population is

young and very receptive to new ideas, products and services. In 2011, Indias GDP reached Rs.

91.7 trillion, per capita disposable income was Rs. 61,591 and per capita spending was Rs.

44,462. According to Smergers1, the industry is currently worth about Rs. 75,000 Crores and it is

growing at an annual rate of 7 per cent. The industry can be broadly segregated into two

segments viz. organized and unorganized, the country has about 1.5 million eating outlets and

only 3,000 of them form the organized segment. The organized segment of the restaurant

industry, at approximately Rs. 10,500 Crores, forms 14% of the industry whereas the

unorganized segment constitutes about 86% of the industry or about Rs. 64,500 Crores. The

size of the industry is expected to be Rs. 62,500 crores by 2015. The organized segment due to

the huge investments in the industry is expected to reach about Rs. 22,000 Crores by 2017. The

Indian restaurant industry can be broadly categorized into five major segments:

TABLE 2-1:SEGMENTS OF THE INDIAN RESTAURANT INDUSTRY

Segment Brand

Quick Service Restaurants Dominos, KFC, Pizza Hut

Casual Dining Restaurants Yo! China, Sagar Ratna, Haldirams

Cafs Caf Coffee Day, Costa Coffee, Starbucks

Fine Dining Restaurants Mainland China, Sahib Sindh Sultan, Cooper Chimney

Pubs, Bars, Clubs & Lounges Hard Rock Caf, TGIF, Underdoggs

1SMergers Website (http://www.smergers.com/industry-watch/indian-restaurant-industry/)
http://www.smergers.com/industry-watch/indian-restaurant-industry/http://www.smergers.com/industry-watch/indian-restaurant-industry/http://www.smergers.com/industry-watch/indian-restaurant-industry/


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remain underpenetrated. Adding to this opportunity is the Indian consumers' changing food

consumption habits. Factors playing into the popularity of pizza and the quick-service

segment in general in India include increasing disposable incomes, faster lifestyles, and

greater exposure to various global cuisines and a favorable response from younger generations.

A RNCOS report estimates that the Indian organized pizza market will surge at a CAGR of more

than 27 percent during 2012-2015. Much of that growth will come in tier II and III cities, where

the educated middle class population is becoming more sophisticated with their food

consumption.

There has been plenty of activity in the Indian market recently from major U.S. players.

Domino's announced its plans to double its India footprint while marking the 400th store

opening there. The chain's growth is in partnership with master franchisee Jubilant Food works

Ltd. Also, Yum! Brands created a separate India Division to focus on the growth of its concepts,

including Pizza Hut. Shortly after, the company announced major expansion plans in India, from

about 130 Pizza Hut locations to 250 by 2015. Pizza Hut is eyeing tier II and III cities specifically.

The casual dining chain has had a presence in India for 15 years. Its product offerings will be

expanded as it grows throughout the country, and a nationwide marketing and advertising

campaign also recently launched to complement the expansion.

1. PIZZA HUTPizza Hut entered India in 1996, and opened its first restaurant in Bangalore. Since then it has

captured a dominant and significant share of the pizza market and has maintained an

impressive growth rate of over 40 per cent per annum. Yum! has invested about US$ 25 million

in India so far; this is over and above investments made by franchisees. Yum! Brands Inc is the

owner of the Pizza Hut chain worldwide. A Fortune 300 company, Yum! Brands own Kentucky

Fried Chicken, Pizza Hut, Taco Bell, A&W and Long John Silvers restaurants worldwide.

The market size of the pizza segment is around US$ 87 million and currently growing at the rate

of 15 per cent to 17 per cent per annum. According to Pizza Hut sources, most of their outlets


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are financially successful, encouraging further expansion. In India, the average investment for

each outlet is US$ 275,000-335,000 and is borne by the franchisee.

Pizza Hut is on a big expansion spree in India. It plans to almost double the number outlets in

the country by 2015. The expansion will mostly happen in tier II and tier III cities. Pizza Hut,

which has completed 15 years of operations in India, currently operates 131 outlets in the

country. The dining chain is also bulking up its menu. Soon, it will add 15 different pizzas to its

menu, inspired from regional cuisines and flavors from around the country. The company will

also launch a nationwide campaign to commemorate its 15 years of operations in the country;

theyalso plan to take this count of 131 to 250 by 2015. The expansion would also happen in tier

II and tier III markets. At the same time, a new range of 15 different pizzas would be rolled out

at stores across the country which is inspired from regional cuisines and flavors from around the

country.

PIZZA HUT: SWOT ANALYSIS

Strengths:

Part of the largest restaurant chain in the world- Through pizza hut being the largestrestaurant chain in the world, this obviously means they dominate their market, and can

invest in new products, e.g. new pizzas.

Over 20,000 franchises around the world- they have a wide spread all over the world Innovative range of pizzas under one roof- they offer a variety of options which attracts

the pizza lovers most towards pizza hut.

Food attracts people of various ranges from young to old- it offers a variety of optionswhich attracts all age groups

Sound financial situation and international turnover- it has a huge market segment,attracting more customers meaning a higher percentage in sales, which may lead to

greater profits.

Pizza Hut sits on top of global full-service restaurant tree


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Weakness:

Loyal customers are feeling that the satisfaction of the pizzas is declining- Loyalcustomers are feeling that the satisfaction of the pizzas is declining. This may lead to low

customer satisfaction and a reduction in customers and credibility in the market, this

may lead to customers converting to main competitors such as dominos pizza.

Threat:

Rising competition undermines Pizza Hut as consumers go for greater convenience- thiswill lower the amount of sales consumed by Pizza Hut as these sales are going to smaller

companies who are charging less.

Rising cheese costs threaten margins- cheese is essential to the business as it is there primary good, there for they are unable to go without it, this may lead to Pizza Hut eventually buying goods from abroad or buying cheaper brands Threat from Dominospizza, also from McDonalds who have tried to introduce a new

meal that is a Pizza called: Pizza McPuff

Opportunities: New Pizzas with different crust sizes and flavors- Pizza Hut can introduce new Pizzas

with different crust sizes and flavours. This may attract new customers with new tastes

and this may increase their sales.

Pizza Hut expands Indian market menu and looks to old favorite to bolster sales Pizza Hut targets upscale products and a downscale consumer base- Pizza Hut has

targeted upscale products and a downscale consumer base; this will attract customers

who are more willing to buy these Pizzas

2. DOMINOSJubilant FoodWorks Limited (the company) & its subsidiary operates Dominos Pizza brand with

the exclusive rights for India, Nepal, Bangladesh and Sri Lanka. As of 30th June 2013, Dominos


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Pizza India operates 602 stores in India located in 26 States and Union Territories, covering 128

cities across the Country. According to India Retail Report 2009, Dominos Pizza is the largest

Pizza chain in India and the fastest growing multinational fast food chain between 2006-2007

and 2008-2009 in terms of number of stores. As per the Euro monitor Report 2013, Dominos

Pizza is largest organised Pizza chain in India with 67% market share.

Over the period since 1996, Dominos Pizza has remained focused on delivering great tasting

Pizzas & sides, superior quality, exceptional customer service and value for money offerings. It

has endeavored to establish a reputation for being a home delivery specialist capable of

delivering pizzas within 30 minutes or FREE to a community of loyal customers from all its

stores around the country.

Dominos Pizza vision is focused on Exceptional people on a mission to be the best pizza

delivery Company in the world! It is committed to bringing fun, happiness and convenience to

lives of its consumers by delivering delicious pizzas to their doorstep.

Dominos Pizza India constantly strives to develop products that suit the tastes of its customers

and hence delighting them. It believes strongly in the strategy of Think global and act local.

Thus, time and again it has been innovating with delicious new products such as crusts,

toppings and flavors suitable to the taste buds of Indian Consumers. Its initiatives such as Fun

Meal and Pizza Mania have been extremely popular with customers looking for an affordable

and value for money meal option.

India is likely to become the second largest market for DominosPizza Inc. in the next few years,

as it seeks to add more outlets in the country. In the past two quarters, growth in stores that

have been in existence for at least a year has slowed for the countrys largest pizza chain,

reflecting a larger dip in consumer sentiment that has slowed discretionary spending. Same-

store sales growth slipped significantly in the first quarter of 2013-14 to 6.3% from 22.3% in the

same three months last year.


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DOMINOS: SWOT ANALYSIS

Strengths:

Dominos have strong service facilities like 30 mins NAHI TO FREE (otherwise FREE):dominos were the first to start the trend of 30 minutes otherwise free

Low price menu: In India Dominos is trying to attract the middle class and lower middleclass people who are interested to spend their money on pizza but in low price. Variety

of Pizzas: Dominos Pizza has a lot of varieties like vegetarian and non-vegetarian. In

vegetarian lots of pizzas are available as well as non-vegetarian too.

Quality of Pizzas: the quality of Dominos Pizza is also very good. More outlets- Even in smaller towns: dominos have its outlets even in the smaller towns

its popularity and pizzas are not limited to big cities but small cities also due to which

people know it more whether from a metro city or from small city.

Quick service at outlets: the service at the outlets of dominos is very fast and customersdont have to wait for long for their order which makes the brand even better because

low price along with good service as a very rare combination.

Excellent offers: The Dominos pizza franchise constantly keeps on inventing waysthrough which it can make a greater impact on the fast food market.

They are strong presence in the market as a brand name: they have a very strongpresence in the market and through its long presence in the market and continuous

loyalty toward the customer

Weakness:

Dominos just has delivery outlet but does not have an eating outlet, where theconsumers could enjoy themselves. This has provided pizza hut with a competitive edge

over Dominos

They dont have dine-in facility: they dont have the dine in facility in their outlets thatgives its competitors advantage over it and because its main competitor pizza hut have

this facility and dominos is facing the main competition from pizza hut.


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Outlets lack space: the outlets lack space which creates the problem of limited sittingspace for customers and sometimes customers have to wait for the seats to be vacant

for them.

Ambience not up to expectations: it is not so successful in creating an environmentwhich reflects its brand and reputation as dominos being a brand should come up with a

different idea which influences the customer.

No option for birthday parties and corporate lunches: instead of being such a big brandin the fast food industry dominos lack the facility of birthday parties or meetings which

is a very big weakness as its competitor pizza hut is very good at all these things.

Opportunities:

New restaurant at busy places: it should open its new restaurants at busy and crowdedplaces where it can attract more customers.

Capturing the new customer through low price menu: it offers a low price menu which isan advantage to it and it should take the proper benefit out of it growing fast food

market-scope for expansion.

Bigger outlets: it should increase the size of its outlets as its outlets all being smallerthan the competitors hence giving less space for customers to sit and enjoy the meal.

Take away counters: it should include take away counters to its outlets so that peoplefeel more comfortable and easy to bring back

Threats:

From their competitors: it is facing a very tough competition from the existingcompetitor pizza hut as pizza hut have some of the better facilities with it is regarded

better than dominos and hence really affects the market of it distributing the

consumers.


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Pizza huts main competitive advantage over dominos is dine-in facility: the maincompetitor pizza hut has a unique dine in facility that makes it different and much

better than dominos.

Emergence of Papa Johns and other new entrants in the market are coming as a bigthreat for Dominos as it is facing a hyper competition situation from pizza hut and it this

scenario a new entrant can make the situation worse and make it loose market.

Better quality and variety of competitors: dominos being a low price pizza seller than itscompetitors that gives it an advantage but at the same time the difference in quality can

be seen and that makes the difference.

No take away counters for pizzas: doesnt have any take away counters which in turnharms its own market and the consumers coming to it

3. OTHER PLAYERSPizza Hut and Dominos clearly hold the major market share in pizza segment of QSR industry.

Some other pizza outlets trying to gain a market share in this competitive environment are

Papa Johns, Pizza Square and Chicago Pizza etc.

3.1. Papa JohnsPapa John's, the world's third-largest pizza company with close to 3,000 outlets in 22 countries,

is the latest entrant in the Rs 2-bn Indian pizza market. Om Pizza Eats India, master franchise in

north India for the US-based pizza chain, opened the first Papa John's store in Noida on Tuesday

as part of its 100-store development agreement over 11 years. Om Pizza Eats already operates

a Papa John's outlet in Gurgaon as a test store. It is also considering three other sites to open

new stores, with plans to open five stores out of the planned 100 in '06. In a market where

Pizza Hut and Dominoes have established their presence, Papa John's International CEO Nigel

Travis said he's confident the US-based pizza chain's USP of 'better ingredients, better pizza' will

help it make its mark. As to why the pizza chain was focusing on only the Northern region, given

the pizza consumption pattern in India.


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3.2. Chicago pizzaChicago's Pizza is fast growing take- away pizza chain in Delhi-NCR regionChicago Pizza is the

first Indian pizzeria to develop the concept of selling huge single slice pizza. Customers have the

choice of ordering individual slices of pizza with the flexibility of customizing their slice with anassortment of fabulous tasting toppings. This is a great idea for families or large groups with

divergent topping tastes as each member gets to choose as many slices of whatever topping

type they wanted, whilst being economical. It is a unique idea that offers slices of pizzas freshly

assembled and cooked, served hot with the convenience of having it on the spot, takeaways

and home deliveries. The concept focuses on great taste, diversity of products and convenient

delivery, distinguishing it against all other pizza convenient delivery, concepts. Another great

innovation of the pizzeria is the localization of the menu to suit local tastes, adaption to Indianpalate has been its forte for success. Along with great tasting pizza slices, the menu also offers

Pastas, Panini, Sandwiches, Beverages and is in the process of adding salads, low calories food

options, cake slices, in order to cater to a more diverse clientele.

3.3. Pizza CornerPizza Corner is an international franchise of pizzeria chains that offers a wide range of pizzas,

pastas and side dishes from chicken wings to salads. Pizza Corner was established in 1996 by

Global Franchise Architects India Pvt Ltd. (GFA). This winning idea is one among the several

supported by GFA, a builder of specialty retail Quick Service Restaurants since 1996. Its current

portfolio consists of four self-created, unique, distinctive brands: Pizza Corner, Cream and

Fudge, Donut Baker and Coffee World. Its service formats include: large dine-in restaurants,

delivery outlets, express dine-ins, and express kiosks. Pizza Corner, which has 60 outlets in

South India and Kolkata, has been growing at 20-25 per cent in the last couple of years. It is

scouting for master franchisees in the north and west.


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2.3. FACTORS INFLUENCING DECISION MAKINGAccording to the findings of the recent online survey from AC Nielson, India being at the

seventh place, is among the top ten markets for weekly fast food consumption among thecountries of Asia-Pacific region. Over 70 per cent of urban Indians consume food from take-

away restaurants once a month or more frequently. Survey indicates that Pizza Hut is the most

preferred fast food outlet in India. Identifying the drivers for preference of one-brand over

another, the survey results indicate that Indians (66 per cent) are amongst the consumers who

consider hygiene and cleanliness their most important criterion for selection. A total of 24 per

cent of Indians use the quality of service as a decision making criterion to purchase a fast food

brands offering and 22 per cent rely on their perception of whether a take-away brand offers

them healthy food options. In Indian context, there is high concern towards health in twenty-

first century. There are health related articles in daily newspapers, and health shows on

television. There are special health related magazines that are now very popular. Health related

articles do mention to consume more fruits, vegetables, water and to consume less or nil of

junk food including fast food being high on fat and calories. The food habits of youngsters are

influenced by many factors such as environment at home, educational environment, availability

and accessibility to fast food providers, and social environment in their surroundings. In

addition, emergence of traits of independence in their eating habits, nutritional education,

divergence of food preferences at home and at fast food outlets and ambience of place for

socializing affects their visit and liking of fast food outlets.

There can be many factors which contribute to decision making for a pizza outlet for a

consumer. Some of them are as follows:

Hygiene conditions, hygiene conditions in and around the kitchen of an outlet, eating areasplay an important role in decision making of a consumer. Hygiene factors of an eating outlet

include personal hygiene; cleanliness of equipment, surfaces and premises; and the

temperature control of food, these all are of paramount importance.


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Location of restaurant, the accessibility and reach of an outlet is also important for aconsumer. The outlets should be opened at strategic locations where the footfall is

expected to be maximum.

Value for money, consumers always look out for options in menu which are value for moneymeals.

Variety of the menu, consumers want a host of options when dining out and the restaurantoffering the most number of varied options tend to be favored by a consumer. However

there are such consumers as well which get put-off by too many choices, thus a company or

operator needs to focus on managing the choices that it offers.

Speed of service, consumers today are weary of waiting too much for their food and thusthe speed at which a restaurant serves the food influences the consumers overallexperience and affects repeat purchase as well as word of mouth.

Politeness of staff, consumers tend rate the quality of a restaurant on the impression theyform of the staff. The staff in a restaurant is the one of the key dimensions of a service

based business which counters intangibility and thus polite and courteous staff influences a

customers decision making.

Offers and schemes, many operators offer schemes based on season or to promote a newoffering. Many consumers take into account these offers to make their decision.


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3.METHODOLOGY

3.1. OBJECTIVES OF THE RESEARCHThe key objectives of the study can be stated as follows:

The research seeks to estimate importance of various factors affecting the choice ofpizza outlets by young Indian consumer.

To identify the factors affecting the choice of consumers (Indian youth) for specific fastfood category viz. pizza.

To study the consumption pattern towards fast foods particularly with respect to thefrequency of visits and choice of fast food outlets.

To identify the impact of several factors regarding eating out on consumer purchasedecision.

To study consumer perception about two popular pizza outlets in National CapitalRegion (NCR), New Delhi.

3.2. RESEARCH PURPOSEAccording to Yin (1994), research can be classified into one of the following three different

purposes:

i. Exploratory research, aims to formulate and define a problem, often expressed as ahypothesis.

ii. Descriptive research, used when the problem is relatively clear and structured.iii. Causal research, employed to analyze causes and effect relationships.

In this study, the purpose was exploratory as it aims to collect as much as information as

possible about a specific problem. And also as in an exploratory research the researcher gains a


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better understanding of the research area (Reynolds, 1971), the study was conducted to get a

better insight into the quick service restaurant industry.

3.3. RESEARCH APPROACHThe research approach refers to the chosen way of treating and analyzing the selected data and

is generally classified as either quantitative or qualitative. A quantitative approach is formalized

and structured and the results are measurable and presentable in figures. Whereas a

qualitative approach draws conclusion from non-quantifiable data.

In this study, the approach was quantitative as quantifiable data was used for exploratory

analysis with an aim to gain better understanding into consumer preferences.

3.4. DATA COLLECTION METHODData were collected from three sources:

i.

Students of ITM University

3

, Gurgaon (email)ii. Customers/shoppers at Ansal Plaza mall4, Gurgaon (on the spot)iii. Friends & family (email and on the spot)

Due care has been taken to reduce possible biases in selecting the young customers for the

purpose of data collection by way of asking few questions to them in relation with their eating

habits and demographic profile. The questionnaire had the following dimensions:

Demographics of the respondent such as age, qualification and status; Factors affecting selection of pizza outlets;

3Approximate total number of students = 30004Chosen because it has both the key pizza outlets viz. Dominos and Pizza Hut


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Comparisons between fast food outlets on various parameters such as service, speed,price, hygiene, variety, and ambience etc.;

The respondents, especially those who were filing the questionnaire online were also asked to

indicate whether they ate pizza or not so as to judge whether or not they would qualify for the

survey.

3.5. SAMPLE SELECTIONSample of the study consisted of youth segment in the age group of 18 to 29 years.

Convenience samples were drawn from Gurgaon & NCR region. However convenience samplesinclude only one dimension that is easy access to the sample units otherwise it was random

selection of individuals from customers at the pizza outlets and a large number of email

questionnaire to all ITM University students. This segment of population was selected due to

their adoption of modern lifestyle pattern inclined towards eating outside and socializing with

friends.

Since this was an exploratory study a sample of 125 was thought to be appropriate however

due to limited resources and time a total of 108 responses could be collected. Out of 108

respondents 98 were valid as some of respondents were above the age of 29 years or did not

consumer pizza or there was missing data.

3.6. ANALYSIS OF DATA

The data were subject to statistical analysis such as descriptive statistical analysis andfrequency distribution. This analysis was however only applicable to categorical data, for scaled

data, analysis was conducted by testing mean difference using t-test, and carrying out factor

analysis. To make comparisons of ratings, t-test was applied to mean scores of two major pizza

outlets that are Dominos and Pizza Hut.


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4.DATA PRESENTATION

4.1. OVERVIEWFrom the data for all the valid respondents 59.18% were males whereas 40.82% were females,

indicating a male dominance in the dataset.

FIGURE 4-1:GENDER OF THE RESPONDENTS

The average age of the respondents was about 21.55 years, maximum respondents i.e. 18 were

of 22 years of age. The median age of the respondents was 23.5 years, indicating a fairly young

sample.

40.82%

59.18%

Female Male


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FIGURE 4-3:LIVING STATUS OF THE RESPONDENTS

The education level indicated that about 31 respondents had finished school and according to

further analysis 30 of them were currently students as well. About 40% total respondents hadcompleted under-graduation. In regard to occupation maximum respondents 81 were students.

1.02% 5.10%

33.67%

60.20%

Living in Joint Family

Married / Living with Partner

Single & Living Alone / Sharing with Friends

Single & Living at Home with Parents


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FIGURE 4-4:EDUCATION LEVEL

FIGURE 4-5:OCCUPATION

1

27

31

39

PhD

Post-Graduate

School

Undergraduate

1

1

1

5

9

81

Business

Other

Self Employed

Professional

Private Service

Student


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The income of the respondents was also of interest to the survey and about 60% of the

respondents indicated their monthly household income to be above INR 50,000 per month.

FIGURE 4-6:MONTHLY HOUSEHOLD INCOME

Among the leisure activities, the most favorite activities were watching movies and spending

time with friends whereas visiting historical places was the lowest among the leisure activities.

Eating out was the third most chosen activity by the respondents.

6.12%3.06%

5.10%

8.16%

10.20%

59.18%

8.16%

Less Than Rs. 10,000 Rs. 10,001 Rs. 20,000

Rs. 20,001 Rs. 30,000 Rs. 30,001 Rs. 40,000

Rs. 40,001 Rs. 50,000 More Than Rs. 50,000

Rather Not Say


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FIGURE 4-7:LEISURE ACTIVITIES

4.2. PREFERENCESAs to the most favorite pizza outlet maximum i.e. about 54% respondents chose Dominos as

their favorite and Pizza hut came in next with 39% people choosing it as their favorite outlet.

Pizza Vito the newest entrant in the pizza segment was not chosen by any of the respondents as

their favorite outlet and only two people chose Papa Johns. Five people chose to give their own

favorite outlet and from that Chicago Pizza was favored by three. As the results for Papa Johns,

etc. were very miniscule they are clubbed together as Others.

1

3

4

8

8

11

13

15

17

18

0 2 4 6 8 10 12 14 16 18 20

Other

Visting historical places

Playing indoor sports

Going for long drive

Playing outdoor sports

Watching TV

Spending time with family/relatives

Eating out

Spending time with friends

Watching movies


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FIGURE 4-8:FAVORITE PIZZA OUTLET

To understand how majority of people prefer to consume their pizzas the respondents were

asked to give their preference in regard to whether they like to get their pizza home deliveredor they like to dine-in at the outlet or pick up their order from the outlet. Majority of people viz.

about 54% indicated that they like to use home delivery when they want to have a pizza and

about 33% respondents chose to dine-in at the outlet.

54.08%40.82%

5.10%

Dominos Pizza Hut Others


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FIGURE 4-9:PREFERRED MODE OF BUYING A PIZZA

To measure the importance of key components of eating out question regarding the

importance of hygiene conditions, variety of the menu, politeness of the staff, among other

were asked. The following graph summarizes the outcomes from all the respondents.

54.08%

33.67%

8.16%3.06% 1.02%

Home delivery Dine - in No preference

Pick up / Take out Can't say


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FIGURE 4-10:IMPORTANCE OF FACTORS REGARDING EATING OUT

Hygiene conditions at a restaurant are the most important factor for about 80% of the

respondents followed by value for money (71.3% or 77). About 10 people consider offers &schemes as the least important factor also location and ambience is least important for about 7

people. The respondents were also asked to indicate their key reasons for eating a pizza and

more than one reason was acceptable.

79.59%

32.65% 27.55%

68.37%57.14%

66.33%55.10%

43.88%

20.41%

60.20% 66.33%

30.61%

37.76%

31.63%

43.88%47.96%

0.00%7.14% 6.12% 1.02% 5.10% 2.04% 1.02% 8.16%

Hygiene

Conditions

Location of

the

Restaurant

Interior /

Ambience

of theRestaurant

Value for

Money

Variety of

the Menu

Speed of

Service

Politeness

of Staff

Offers and

Schemes

Most Important Important Least Important


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FIGURE 4-11:REASONS FOR EATING PIZZA

Most of the respondents chose to eat something different than usual as their key reason for

consuming pizza. The second most chosen reason was for a party or get-together. This alsoaligns with the general consumption patterns of fast food as observed in others studies. The

graph below indicates what the respondents opine about the different pizza outlets in the

immediate geographic region.

11

17

28

42

0 5 10 15 20 25 30 35 40 45

As a complete meal

As a snack

For a get-together / party

To eat something different (than usual)


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FIGURE 4-12:RATING FOR PIZZA OUTLETS

Maximum number of respondents considers Pizza hut to be excellent. Interestingly about 46%

of the respondents were unable to comment on Pizza Vito indicating that either they had notheard of it or they had heard of it but not yet visited it or they had visited but have not been

able to form an opinion about it, either way it indicates a gap in the companys communication

strategy.

41.84% 42.86%

9.18%

1.02%

44.90% 44.90%

27.55%

9.18%11.22%

9.18%

34.69% 33.67%

0.00% 1.02%

4.08% 4.08%0.00%

1.02%

0.00%

6.12%

2.04%1.02%

24.49%

45.92%

Dominos Pizza Hut Papa John's Pizza Vito

Excellent Good Ok Bad Poor Can't say


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5.ANALYSIS

Behavior of consumers with respect to reasons of having a pizza and the frequency of having a

pizza. The frequency distribution shown in the table below indicates that the most common

reason for having a pizza is to eat something different than usual and also about 71% people

have pizza 13 times a month.

TABLE 5-1:FREQUENCY DISTRIBUTION (REASONS OF HAVING PIZZA &FREQUENCY OF HAVING PIZZA)

Reason for having a pizza

Total

As a

complete

meal

As a

snack

For a get-

together

/ party

To eat

something

different

(than

usual)

No. of

times (in

one

month)

1 - 3 Frequency 7 11 22 30 70

% 7.1% 11.2% 22.4% 30.6% 71.4%

4 - 6 Frequency 2 5 4 9 20

% 2.0% 5.1% 4.1% 9.2% 20.4%

7 - 10 Frequency 1 1 1 3 6

% 1.0% 1.0% 1.0% 3.1% 6.1%

More

than 10

Frequency 1 0 1 0 2

% 1.0% 0.0% 1.0% 0.0% 2.0%

Maximum number of people chose having pizza to have something different than usual. Out of

all the respondents two persons chose having pizza more than 10 times a month, this group

(1%) highlights the big spender on pizzas. The reason for having pizza for these individuals was

as a complete meal and to have something different than usual.


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Some other inferences drawn from the data are that for each individuals favorite pizza outlet it

was observed from the data that about 60% of the respondents considered promotional offers

significant in making a purchase decision. About 60% people also indicated that they regularly

eat pizza at outlets others than their favorite outlet. On the promotional front, about 70% of

the respondent were able to recall an advertisement about their favorite outlet. Also among

the respondents 30% indicated that they do not eat any other type of fast food expect for pizza,

suggesting that about 1/3rdof the sample has high affinity towards pizza.

5.1. FACTOR ANALYSISWith a view to identify major attributes for choosing pizza outlets, data were collected on seven

key attributes of pizza outlets. These are:

i. Quality ii. Promotionaliii. Variety iv. Combosv. Price vi. Hygiene

vii. Service

Data were collected using 5 point Likert type scale regarding each outlet. For the purpose of

ranking mean scores along with standard error and mode values are were calculated, these are

presented in the table below.

TABLE 5-2:RATING OF ATTRIBUTES OF PIZZA OUTLETS FOR CHOOSING EATING POINT

Rating Scores (Mean Standard Error) Mode

Quality 3.96 0.032 4

Variety 3.88 0.033 4

Price 3.55 0.068 4

Service 3.52 0.068 4


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Promotions 3.54 0.071 4

Combos 3.59 0.058 4

Hygiene 3.86 0.038 4

The most frequent response for each of the attribute was Important (4) indicated by the mode

of each attribute, this suggests that for maximum number of people each of these attribute is

Important.

The data were also subjected to factor analysis, the Kaiser-Meyer-Olkin (or KMO) or the

measure of sampling adequacy was calculated at 0.628 and the chi-square value of Bartletts

test for Sphericity is 126.676 with 21 degrees of freedom and significance value of 0.000.

TABLE 5-3:KMO AND BARTLETT'S TEST

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .628

Bartlett's Test of Sphericity

Approx. Chi-Square 126.676

df 21

Sig. .000

Based on factor analysis three factors/components emerged to explain 69.261% of variation as

shown in the table below. The total variance explained by component 1 was 33.188%, followed

by component 2 with 21.493% and then 14.580% by component 3.

TABLE 5-4:FACTOR ANALYSIS

Component1 2 3

Quality .441 .728 -.118

Variety .219 -.139 .927

Price .631 -.355 -.060


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Service .705 .295 .249

Promotions .655 -.539 -.132

Combos .683 -.342 -.248

Hygiene .538 .578 -.062Total Variance Explained (%) 33.188 21.493 14.580

Cumulative Variance Explained (%) 33.188 54.681 69.261

The proportion of variance in each variable/attribute is not same as, the factor loading indicates

that Price, Service, Promotions and Combos correlate or load high on factor 1 indicating a

product dimension. Factor/component 2 is high on Quality and Hygiene suggesting a quality

dimension.Variety and Hygiene loads high on factor 3 indicating a service delivery dimension.

5.2. COMPARATIVE ANALYSISTo perform a comparative analysis of the major two pizza outlets which are Dominos and Pizza

Hut, comparative rating was done on the data regarding these specific outlets. The results are

tabulated below with mean and standard error and the mode is indicated in the bracket.

TABLE 5-5:COMPARATIVE RATING OF DOMINOS &PIZZA HUT

Dominos Pizza Hut t-values Sig. (2-tailed)

Quality 3.94 0.057 (4) 3.98 0.025 (4) 116.753 .000

Variety 3.89 0.044 (4) 3.88 0.053 (4) 115.292 .000

Price 3.75 0.060 (4) 3.33 0.131 (4) 51.699 .000

Service 3.45 0.106 (4) 3.60 0.086 (4) 49.468 .000

Promotions 3.66 0.089 (4) 3.50 0.107 (4) 52.217 .000

Combos 3.72 0.062 (4) 3.53 0.088 (4) 69.245 .000

Hygiene 3.77 0.064 (4) 3.95 0.035 (4) 95.531 .000


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The t-value shows that the mean value for each variable for Dominos and Pizza Hut differs

significantly (as significance < 0.05). This concludes that there is a statistically significant

difference in the score for each of the variables between the two outlets. As evident both the

outlet score high on quality, however there is a high statically significant difference in the

means as indicated by the t-values. It is also apparent that people consider Dominos to be more

pocket friendly than Pizza hut as Dominos scores better on the price variable. Pizza hut on the

other hand is better in terms of hygiene as compared to Dominos. In regard to offering combos,

etc. Dominos scores better than Pizza Hut and in terms of better promotions both the outlets

do equally well. On the basis of service quality and staff Pizza Hut fares better than Dominos.

Both the outlets have equal scores on variety offered in their menus.


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6.FINDINGS AND CONCLUSIONS

6.1. KEY FINDINGSThe study led to some very essential findings regarding consumer preferences and also

highlighted the key factors which influence these preferences. The study also highlighted the

ratings of the two most prominent players in the Indian pizza segment. Following are the key

findings of the study:

Dominos is preferred by more number of people as compared to Pizza Hut but thedifference is rather low and due to the different dining formats used by both the outletsthis difference can be further explained. However more people consider Pizza Hut to be

excellent overall in comparison to Dominos.

Hygiene conditions is the most important factor for people while visiting a pizza outlet.Value for money and speed of service are also important for consumers which is in line

with a customers expectation from a fast food outlet.

Most people prefer to consume pizza by home delivery most probably because it ismore convenient than dining-in. The most influential reason for having pizza for

maximum is to eat something different than usual as having a pizza gives a consumer a

change from their everyday meals.

Using factor analysis on basis of attributes product dimension, quality dimension andservice delivery dimension were identified which influence a consumers behavior

towards a pizza outlet.

Using comparative analysis it was found that Dominos and Pizza Hut rate quite high butdifferently on key attributes of pizza outlets. Pizza Hut is rated higher on quality and

hygiene whereas Dominos is higher than Pizza Hut on affordability and the schemes and

combos offered.


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6.2. CONCLUSIONConsumer acceptance of food served by pizza outlets is critically important for the future

growth of fast food outlets in any economy. Though the rating of pizza outlets attributes understudy based on mean score is very high but still consumers eat pizza from outlets to eat

something different than usual so as to experience a change. Comparison of Dominos and Pizza

Hut indicates a clear difference in their mean score of their attributes and each outlet has its

own strong footing on different attributes. Based on the analysis and results, we can say that

with more and more acceptability of pizza outlets, changes in life style and competition among

the outlets with respect to product (or food) quality, price and service are most essential.

6.3. IMPLICATIONSThe study highlights multiple managerial implications for the pizza outlets, the most important

being that consumer preferences are influenced by three key dimensions (product dimension,

service delivery dimension and quality dimension). This objectifies that pizza outlets should

focus on the quality and variety of food besides other service parameters. Study clearly shows

that consumers eat pizza primarily to experience something different than usual therefore the

operators need to focus on providing variety of options to their intended customers. This is an

important parameter to drive sustainable growth.

6.4. LIMITATIONS OF THE STUDY The responses were collected on the basis of convenience sampling however the sample

used aptly represents the key demographic for pizza outlets.

Due to time constraint further statistically models could not be build and only limitedanalysis could be performed.


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7.REFERENCES

Books and Journals:

1. Yin. R K (1993). Applications of Case Study Research. Thousand Oaks, CA: Sage PublicationsInc.

2. Yin. R K (1994). Case Study Research Design and Methods. (2nded.) Thousand Oaks, CA:Sage Publications Inc.

3. Goyal A., Singh N P (2007). Consumer perception about fast food in India: an exploratorystudy. British Food Journal, Vol. 109, No. 2

4. Sinha. P K (2012). Indian QSR Industry Opportunities and Strategies to Harness Them.Unpublished.

Reports:

DEssence, Quick Service Restaurants in India, 2011 Jubilant FoodWorks,Annual Report, 2012 National Restaurant Association of India (NRAI), India Food Services, 2013 RNCOS, Indian Pizza Market Analysis, 2012

Websites: Times of India website, accessed in October 2013, SMergers website, accessed in November 2013, Economist Intelligence Unit website, accessed in November 2013,

Other resources:

R Core Team (2013). R: A language and environment for statistical computing. R Foundationfor Statistical Computing, Vienna, Austria. URL http://www.R-project.org/.

IBM SPSS Statistics, Version 19 Microsoft Office 2013


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8.QUESTIONNAIRE

pizza wars: understanding consumer preferences

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