Domino's Pizza Entering Foreign Markets

AtlantisUniversity

24 Apr 201410:11

Summary

TLDRMoving into foreign markets can be challenging if you don't get local input. Domino's faced issues when they expected other cultures to adapt to their methods but learned to adapt themselves. In England, marketing confusion arose from language differences, while in Japan, pepperoni was initially misunderstood. Domino's adapted menus with regional preferences, like spicy chicken in India. Expansion included understanding cultural nuances and developing master franchises, such as in Mexico, where the brand thrived despite economic challenges. Consistency, local partnerships, and adapting to local customs have driven Domino's global growth, making it a leader in the delivery pizza business across over 50 markets.

Takeaways

🌐 Expanding into foreign markets requires adapting to local cultures rather than expecting them to change for the business.
📞 Marketing slogans can have different meanings across cultures, as seen with Domino's 'One call does it all' slogan, which was misunderstood in the UK.
🍕 Domino's has steadily expanded internationally since 1983, reaching over 50 markets with over 3,000 stores outside the US by 2006.
🏆 Domino's aims to be the leader in the delivery pizza business, not just the pizza business, in every market it enters.
🇯🇵 Cultural adaptations are crucial, as seen in Japan, where there was no word for 'pepperoni,' leading to misunderstandings until it became the top pizza topping.
🌍 Domino's menu adapts to local tastes, with unique toppings like squid, tuna, sweet corn, and lamb in various countries.
🎯 Consistency in operations is emphasized across all Domino's stores worldwide, ensuring a similar experience regardless of location.
🧑‍💼 The company seeks franchisees with operational capabilities, not just financial resources, and provides extensive training and support.
💡 Innovative strategies like adjusting pricing in Mexico during an economic downturn helped Domino's become the top restaurant chain in the country.
🤝 Community engagement, such as feeding children in orphanages, has been a part of Domino's strategy to establish a positive brand image in different markets.

Q & A

What key mistake did Domino’s initially make when expanding to the UK market?
-Domino’s initially used the U.S. marketing slogan 'One call does it all,' not realizing that in the UK, 'a call' meant a personal visit, confusing customers who thought they had to physically go to the store.
When did Domino’s begin its international expansion, and what was the first market they entered?
-Domino’s began its international expansion in 1983, with the first store opened in Winnipeg, Canada.
What unique challenges did Domino’s face when entering the Japanese market?
-In Japan, there was no word for 'pepperoni,' which led to confusion as customers thought it referred to a small pepper, causing returned pizzas. Eventually, 'pepperoni' became the number one topping in Japan, with the Japanese word for it simply becoming 'pepperoni.'
How does Domino’s Pizza ensure brand consistency across different international markets?
-Domino’s maintains brand consistency by operating stores in a uniform manner worldwide. For instance, the storefronts, internal operations, and even the way pizzas are made are similar across different countries.
How does Domino’s Pizza adapt to cultural differences in different countries?
-Domino’s adapts its menu and operations to align with local cultures. For example, they replaced pepperoni with spicy chicken in India due to Hindu reverence for cows, and in the Philippines, they select store locations based on Feng Shui principles.
What was Domino’s international growth strategy after 1985?
-After 1985, Domino’s growth accelerated through the sale of master franchises in countries like Mexico, England, and Australia, allowing large public companies to run the operations in those regions.
What role does local marketing play in Domino’s international expansion?
-Local marketing is crucial, especially in smaller countries where Domino’s doesn’t have the budget for television advertising. They rely heavily on print and other cost-effective marketing techniques tailored to the region.
What innovative strategies helped Domino’s thrive in the Mexican market?
-Domino’s in Mexico grew significantly by lowering prices during an economic downturn and positioning pizza as an affordable family meal. Additionally, they created innovative marketing strategies like setting up stores in high-traffic areas like subway stations.
How does Domino’s support its franchisees globally?
-Domino’s supports franchisees through commissaries delivering supplies twice a week, providing regular training and consulting visits, and helping with administrative tasks such as marketing and accounting.
What is Domino’s core strategy for success, both domestically and internationally?
-Domino’s core strategy focuses on convenience and offering a great product. This approach, combined with adapting to local markets while maintaining operational consistency, has been key to its global success.

Outlines

00:00

📈 Adapting to Local Cultures in International Expansion

This paragraph highlights the challenges Domino's Pizza faced when entering foreign markets due to cultural misunderstandings. The company's initial strategy of using its U.S. marketing slogans failed in countries like England, where 'a call' meant an in-person visit, confusing the locals. Domino's international expansion began in 1983 in Canada, and by 2006, it had over 3,000 stores worldwide. The company's focus is on leading the pizza delivery business globally by maintaining operational consistency across markets, despite cultural variations. They learned that adapting to local preferences was crucial for success, as seen in Japan, where the misunderstanding of 'pepperoni' led to adjustments.

05:00

🌎 Global Expansion through Master Franchises

Domino's international growth accelerated with the introduction of master franchises in 1985. Large public companies, like those in Mexico, England, and Australia, played key roles in expanding the brand. Domino's Ann Arbor headquarters also serves as a global training hub, where managers from around the world learn how to operate stores. The company's enthusiastic culture is reflected in training events, where employees are motivated through shared goals. Mexico stands out as a strong market, with innovative master franchisee Alberto Tirado introducing the concept of franchising. His leadership in Mexico led to creative solutions, such as lowering pizza prices during economic downturns and implementing large-scale community initiatives like feeding children in orphanages.

Mindmap

Keywords

💡Foreign Markets

Foreign markets refer to international markets outside the domestic region where a company expands its operations. The video highlights the challenges Domino’s faced when entering different foreign markets, such as the UK and Japan, where cultural differences affected the company's marketing strategies and product reception.

💡Cultural Adaptation

Cultural adaptation involves adjusting business strategies to align with the local culture of a foreign market. Domino’s learned this lesson after realizing that using their U.S. marketing slogans, like 'one call does it all,' in the UK led to confusion because a 'call' meant something different locally. Adaptation to local customs, like using spicy chicken in India instead of pepperoni, helped the company succeed.

💡Master Franchise

A master franchise is a type of franchise where a company grants the rights to an individual or entity to own and operate franchises in a particular region or country. Domino’s began using master franchises in 1985, which helped expand its operations in markets like Mexico, England, and Australia, with local partners driving growth.

💡Marketing Strategy

Marketing strategy refers to the overall plan a business uses to promote its products to target customers. The video emphasizes Domino's use of consistent global branding while also tailoring its marketing efforts to local preferences. For example, in markets where TV advertising was too expensive, Domino's relied on local store marketing using print media.

💡Localization

Localization is the process of adapting a product or service to meet the needs of a specific market or region. Domino's localized its menu in various countries by offering region-specific toppings such as squid, tuna, and sweet corn in Asia. In India, pepperoni was replaced with spicy chicken to respect Hindu cultural practices.

💡Franchise Support

Franchise support involves providing guidance and resources to franchisees to ensure their success. Domino's offers extensive support to its franchisees, including regular store visits, training, and help with marketing and administration. For instance, Mexican franchisees receive a full year of advertising included in the 5% franchise fee.

💡Consistency

Consistency in business refers to maintaining the same quality and operational standards across different locations. Domino's emphasizes operational consistency worldwide, ensuring that stores in Latin America, Europe, and Asia maintain the same look, feel, and procedures as U.S. stores, ensuring brand reliability.

💡Pepperoni

Pepperoni is a popular pizza topping made from cured meat. In the video, the challenge Domino’s faced in Japan illustrates the importance of localization. Initially, there was no Japanese word for pepperoni, and people misunderstood it as a type of pepper. Over time, pepperoni became the most popular pizza topping in Japan, showing how tastes can be influenced and adapted.

💡Training

Training refers to the preparation and education provided to franchisees and staff to maintain business standards. At Domino’s, franchisees are trained in a dedicated store at the Michigan headquarters, learning the core operational strategies. This ensures that they understand how to run their stores efficiently and in line with company expectations.

💡Community Engagement

Community engagement is a strategy businesses use to interact with and give back to the communities they serve. Domino’s in Mexico, for example, participates in charitable activities by donating pizzas to children in orphanages, a gesture that strengthens the company's local presence and reputation.

Highlights

Domino's initially struggled to adapt to foreign cultures, realizing after significant costs that local adaptation was crucial for success.

In England, Domino's failed to understand that 'a call' referred to a personal visit, causing confusion with their 'One call does it all' slogan.

Domino's international expansion began in 1983 with a store in Winnipeg, Canada, and by 1995, they had opened their 1,000th international store.

Domino's set a goal to be the leader in the 'delivery pizza' business globally, focusing not just on pizza, but on delivery excellence.

Domino's operates in over 50 markets, with a consistent store design and operational structure worldwide, from Latin America to Japan.

In Japan, Domino's initially faced challenges with the word 'pepperoni,' as it had no Japanese equivalent. Customers thought it referred to a small pepper, but 20 years later, pepperoni became the number one topping in Japan.

Menu adaptations around the world include squid, tuna, sweet corn, and lamb in various markets, with pepperoni replaced by spicy chicken in India to respect cultural preferences.

In the Philippines, Domino's selects store locations based on feng shui principles to ensure prosperity, while the UAE requires special maps due to the complex street naming system.

Marketing approaches differ based on the market; smaller countries may rely on local print marketing rather than TV due to cost-effectiveness.

Domino's looks for franchise operators who can adhere to corporate guidelines, with a significant focus on training. Managers from around the world are trained in their Ann Arbor headquarters.

In Mexico, Domino's master franchisee Alberto Tirado played a key role in educating the market on the franchise concept, as it was still new in the country.

Domino's Mexico's innovative strategies include operating a commissary that delivers twice weekly to stores across the country, from Tijuana to Cancun.

After Mexico's economic collapse, Domino's successfully shifted its strategy by lowering prices and targeting families, leading to Domino's becoming the number one restaurant chain in the country.

Domino's in Mexico has successfully implemented initiatives like serving 20,000 pizza slices in subway stations and hosting events to feed children in orphanages across the country.

The master franchise model, introduced in 1985, allowed Domino's to expand quickly into markets like Mexico, England, and Australia, partnering with large companies for growth.