pizza slice

The Pizza Wars

by Jay Zenner on March 4, 2010

What Domino’s can teach us about real estate marketing.

No serious low-carb freak should do it but sometimes nothing but pizza will satisfy.  Since there is a Dominos between my home and my office I sometimes call and order a pizza and pick it up on the way home.

The last time I did this something weird happened.  As I was into my second slice and washing it down with a glass of cold milk my attention was drawn from the magazine article I was reading.  The pizza was really good!

Much better, in fact, than what I had come to expect.  What was going on? The personnel in the store were still the same mumbling and bleary eyed guys I’d seen before making pizzas and walking from the nearby convenience store drinking from paper bags.

Later I noticed that Dominos ads were admitting that there pizza wasn’t that good and were changing the recipe and putting in better ingredients. Then I saw a tiny article on a business page that Dominos’ business had improved since the changes had been made.

All this brought back memories of a particular time.  I was an English major and have no academic marketing background and a good part of my long marketing career in banking was in product development which really means a lot of project management and procedures writing.  When I took my last job in banking as the marketing director of a regional bank I had more responsibility for promotion and pricing than I had ever had before.

Some things are best learned by teaching.

During that time I was asked to teach a marketing course by the local chapter of the BAI or the Bank Administration Institute. This involved introducing marketing concepts to ambitious bank tellers and customer service reps and getting paid a little bit to do it. But it also meant educating myself  about the concept of “the marketing mix” and integrated marketing. The BAI text  book…which is still within reach of this desk… was my introduction to the concept of the 4 Ps of Marketing, Product, Price, Place, and Promotion.

Place, of course, really refers today to the distribution system for a company’s products.

At the time, Dominos was revolutionizing the pizza industry with a very distinct distribution strategy…rapid and reliable home delivery.  For a while they guaranteed delivery within 30 minutes which was a strong strategic commitment until it became abundantly clear that encouraging already hormone stoked, lead footed teenagers to try to beat the clock was not a good idea.

Still, for my students, most of whom assumed that “marketing” was synonymous with “advertising,” it provided a good example of how a company could build its marketing strategy around doing distribution better than anyone else. Dominos pizzas were OK and its prices…not including tips to the delivery guys…were about the same as the other pizza chains.  They probably spent no more than the other chains on advertising either and kept their costs down by not maintaining sit-down restaurants. This worked for years until gradually the other chains adapted and started adding delivery services.

So now things come full circle. A rival chain that promotes “better ingredients, better pizza” is forcing everyone else to adapt.   My experience with Dominos’ improved pizza is one indication that they are shifting to a heavy Product strategy. When I picked up that last pizza I noticed that they also now have sandwiches and “pasta bowls.” I haven’t tried any of this yet…I really like pizza when I veer off the low-carb freeway…but I may in a weak moment.

Does that mean that pizza tycoons have given up on distribution strategies? Not at all. In fact, another big trend in the industry in on-line ordering. You even see some smaller chains going back to sit down stores. Amazing.

I can imagine some product planner way back in the day making a pitch with overhead transparencies (this was way before PowerPoint) to corporate leadership at Dominos to undertake this risky “delivery” strategy.  Delivery of pizza was a Mom and Pop strategy when Sal and Angela’s  kid was home from school in the world of pizza places.

Dominos adopted a  strategy that was thinking outside the (pizza) box, so to speak at the time. Residential real estate is at one of those inflection points when the old models will be turned upside down just like the pizza business was then.

My gut continues to tell me that the large real estate franchise operations will be the last to adapt and that most change will come from small companies and individual agents.

Hobbs/Herder says  “Lesson 1: You are the product; Lesson 2: Market the Product.” Well, OK, you do have to market yourself.  And that may have sufficed before the bubble burst.  But the next parallel to Dominos in real estate will come from companies and/or individuals that realize that with fewer qualified buyers you also have to market real estate…homes, shelter, communities,  not just yourself.

The 4 P’s provide a good framework for taking each listing and developing a marketing plan that will work. Developing and promoting best practices for that is what we are about here.

Writing about food is hard work.  It’s making me hungry…is it lunch time yet?

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