Introduction
The report aims to conduct a detailed formal marketing analysis and evaluation of Domino’s Pizza’s operations in India. The analysis method will be based on assessing recent academic literature on the country’s current economic and political changes. In other words, key macroeconomic variables include economic growth, GDP, fast food market share, geopolitics, energy crisis, and the War in Ukraine. The key findings indicate that Domino’s Pizza has the strongest positioning in India, but it needs to upscale its dominance by capitalizing on the emerging market of health-conscious consumers. The implications include addressing the company’s size and operations-related weaknesses to dominate the health food market.
Domino’s Pizza India
The report’s coverage is vital because it provides an extensive and comprehensive analysis of market dynamics in one of the world’s largest emerging international markets – India. The endeavor is undertaken to provide a strong recommendation and justification for Domino’s Pizza’s future direction in health-conscious food trends. The planned structure will include a company overview, country analysis, competition analysis, and strategic market advice. Domino’s Pizza should modify its marketing approach to incorporate strategies that cater to a health-conscious Indian consumer base.
Company Overview
Domino’s Pizza is a U.S.-based multinational fast-food restaurant chain primarily selling pizza-related food products. Its international presence is massive. It entered the Indian market in 1996 and experienced rapid growth due to the popularity of pizza among local consumers (Pradhan, 2022). There are more than 1200 company outlets across the major cities of India, indicating a significant market penetration (Veeresh et al., 2021). India is essentially Domino’s Pizza’s most significant international market, just as big as its domestic one.
Country Analysis
Understanding India’s international market significance for Domino’s Pizza is crucial in critically re-evaluating the perspective from two macro-environmental factors: economic and political variables. In terms of economy, India is demographically one of the largest nations in the world, marginally behind China. The country is classified as a developing economy because of its massive potential for growth and industrialization.
The gross domestic product (GDP) for India in 2021 was $ 3,173 billion. However, the GDP per capita was only $ 2,960 due to a large population of 1.4 billion, as shown in Figure 1 below (Udemba et al., 2022). The key sectors contributing to India’s GDP include agriculture, construction, manufacturing, mining, public administration, and utilities (Udemba et al., 2022). The national unemployment rate is 8.3%, with a labor force participation rate of 47.3% (Udemba et al., 2022). Thus, India is a substantial and critical market for Domino’s Pizza.
The annual GDP growth rate for India is available in Figure 2 below. The chart shows that GDP growth was relatively stable for decades, similar to the trade balance, but the COVID-19 pandemic led to significant losses. However, the Indian economy is quickly recovering from its effects and emerging even stronger than before due to geopolitical shifts. It is pretty difficult to prove whether or not trade barriers became the drivers of the recovery.
India is one of the most protectionist among large economies. The country implemented the trade barrier to avoid unemployment and shutdowns of domestic businesses, which are short-term political gains (Selby, 2017). Other reasons for the trade barriers belong to the national security realm because of geopolitical pressure by three major superpowers: China, Russia, and the United States.
If one country is allowed to heavily involved in the Indian economy, this would have a ripple effect on the political and economic relationships with the others. (Selby, 2017). The barriers include testing, standards, certification, labeling, import licensing, export and domestic subsidies, anti-dumping, procurement, and service barriers (Rahman, 2019). Therefore, the most relevant reasons for implementing trade barriers are political, geopolitical, and protectionist in nature.
In the realm of politics, India is a politically stable nation with robust institutions for a large and diverse population. The country is an imperfect democracy with a historical caste system that continues to have an impact to this day (Lolayekar & Mukhopadhyay, 2020). However, more importantly, India has a neutral and advantageous geopolitical stance, especially under the current global tensions centered around the war in Ukraine.
Despite tensions with China, India is a flexible and adaptable geopolitical player (Lolayekar & Mukhopadhyay, 2020). Even though the energy crisis affects many nations worldwide, India has secured favorable oil and gas deals with heavily sanctioned Russia (Bildirici, Genc, and Castanho, 2022). At the same time, India was able to maintain relationships with its Western partners as well. Therefore, its economy and political environment are stable and reliable, with no substantial disruptive threats awaiting Domino’s Pizza’s bottom-line operations.
Moreover, pizza has become well-integrated into India’s food environment and culture. Thus, Domino’s Pizza’s position in the fast-food industry is well-solidified since it serves the population’s preferred product (Nagaraj, 2021). However, an emerging trend of health-conscious consumption in the Indian food market presents a significant opportunity for Domino’s Pizza.
The political forces behind such a shift have been key factors since the head of the Ministry of Health and Family Welfare of India initiated the change (Nagaraj, 2021). It is estimated that the market for health food will reach $30 billion by 2026, which means Domino’s Pizza must capitalize on the opportunity by offering healthy options for the growing consumer base (Bhushan, 2022). Domino’s Pizza is a strong multinational company with a large customer base across various demographics, accessible through its extensive network of franchises.
By accounting for all these factors, one can safely state that the war in Ukraine, the global energy crisis, or geopolitical and internal instabilities do not impact Domino’s Pizza’s continuous viability in the market. In addition to this, India has a growing economy with the largest population, which favors the company’s main product. Politically, India has no hostility against multinational corporations, such as Domino’s Pizza, since its protectionist measures are focused on trade with foreign nations. It does not hinder or restrict the operations of intentional corporations within its economy. Thus, marketing efforts can be allocated to further strengthen the company’s position.
Competition Analysis
Domino’s Pizza’s top competitors in India are the same as in the United States. The country’s fast-food industry is dominated by popular American chains, such as McDonald’s, Pizza Hut, KFC, Taco Bell, and Burger King (Harshitha, 2020). The local competition is insignificant since it is primarily limited to small businesses and street food vendors. Evidence suggests that more than 72% of the pizza market is supplied by Domino’s Pizza (Veeresh et al., 2021). Thus, there is no threat of new entrants, which could falter the company’s strong position in the Indian market.
A local company that could qualify as a competitor would be Haldiram’s, which mainly focuses on sweets and snacks rather than fast food (Ahmed et al., 2020). Therefore, the analysis of competitors must include Pizza Hut as the top rival. Burger chains can be excluded from the analysis due to the massive popularity of pizza as a food choice and a staple product for both Pizza Hut and Domino’s Pizza. The subsequent competition analysis will focus on these two American companies.
Pizza Hut has a significantly smaller market share than Domino’s Pizza in India’s pizza market. This results from fully capitalizing and maximizing its first-mover advantage (Harshitha, 2020). Domino’s Pizza outcompetes its main rival on almost all fronts. Its current competitive advantage results from the efficiency of production and distribution networks, brand loyalty, network effect, and economies of scale.
An in-depth analysis of Domino’s Pizza reveals that the company could utilize its internal strengths to tap into the shifting health preferences of the public, accompanied by the willingness to pay premium prices. The company can develop its market by providing investors a lower royalty percentage of 3.5%, which means an incentive will exist (White, 2022). Such an approach will enable the widespread opening of stores internationally in the following years.
Backward integration can also become critical for the strategy of a company, which improves revenue and profitability in the long term through the purchase of expensive equipment. Domino’s Pizza has internal capabilities to appropriately respond to an increasingly health-conscious consumer base, which is a threat under the current conditions. The company can boost its product development to provide a diversified selection to its customers with trendy and healthy options included.
Strategic Market Advice
Domino’s Pizza should conduct a horizontal integration with other competitive and promising chains because it is a plausible way to boost its market share and revenues and further capitalize on its economies of scale. Since Domino’s Pizza’s current weakness is its image as an unhealthy food provider, it needs to change the public perception by ensuring that some of its products contain healthy options. Moreover, the company should optimize its business analytics methods and database system to properly distribute its massive resources among regions (Bhushan, 2022). To minimize the effects of Domino’s Pizza’s external threats and internal weaknesses, the company should improve its cleanliness training among its staff and avoid being scrutinized by the media and public. To prevent late response, a company of such a large size and limited responsiveness should always monitor current and forecast future consumer preferences.
References
Ahmed, J. U. et al. (2020) ‘Haldiram’s in India‘, Journal of Operations and Strategic Planning, 3(2), pp. 1–9.
Bhushan, R. (2022) ‘India to become a $30 billion market for health food by 2026: Avendus‘, The Economic Times: Industry.
Bildirici, M. E., Genc, S. Y., and Castanho, R. A. (2022) ‘Environmental pollution, terrorism, and mortality rate in China, India, and Türkiye‘, Sustainability, 14(19), p. 12649.
ET Online. (2022) ‘India’s GDP to slow from 8.3% in 2021 to 7.7% in 2022: Moody’s‘, The Economic Times: News.
Harshitha Y. S. (2020) ‘Youth buying behavior of fast food in Mysuru with special reference to Domino’s Pizza’, Journal of Composition Theory, 8(2), pp. 1103- 1112.
Lolayekar, A. P., and Mukhopadhyay, P. (2020) ‘Understanding growth convergence in India (1981–2010): Looking beyond the usual suspects’, PLoS ONE, 15 (6), p. e0233549.
Nagaraj, S. (2021) ‘Role of consumer health consciousness, food safety & attitude on organic food purchase in emerging market: A serial mediation model’, Journal of Retailing and Consumer Services, 59, p. 102423.
Pradhan, S. (2022) ‘Domino’s Pizza India: growing offline presence in an online world?‘, Emerald Emerging Markets Case Studies, 12(4), pp. 1-11.
Rahman, M. M. (2019) ‘How India faces trade protections? An analysis of trade barriers.’, Studies in Comprehensive Regional Strategies, 1, pp. 47-80.
Selby, J. (2017) ‘Data localization laws: Trade barriers or legitimate responses to cybersecurity risks, or both?‘, International Journal of Law and Information Technology, 25(3), pp. 213–232.
Udemba, E. N. et al. (2022) ‘Economic performance of India amidst high CO2 emissions‘, Sustainable Production and Consumption, 27, pp. 52-60.
Veeresh, W. K. et al. (2021) ‘An icon of pizzas: Dominos in India – a case study.’, Aweshkar Research Journal, 28(2), pp. 86-99.
White, J. (2022) ‘Domino’s Pizza case ‘encouraging’ for MNEs expanding into India‘, International Tax Review, 1, p. 1-8.