Domino's direct marketing campaign | IMC 616

Kaitlyn Reeves

December 23, 2013

Domino’s Pizza

I M C 6 1 6 | W E E K 9 A S S I G N M E N T

Image courtesy of Microsoft.

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Kaitlyn Reeves | Domino’s Pizza

Introduction

Domino’s, an Ann Arbor, MI-based national pizza chain, is considered the expert in pizza

delivery. Being the best in pizza delivery is not enough for Domino’s, as the company is looking

to expand its current carryout business and increase sales and market share.

In order to develop the best strategies with which to grow its carryout business, it is

necessary to conduct a few in-depth tests, and Domino’s has selected Columbus, Ohio – home of

The Ohio State University – as its test market. Domino’s has identified two primary target

audiences it wishes to test: the first being 18 to 24 year olds, and the second being households

with children.

The test period will last three months with hopes that the results will be positive and

prove sustainable in the long run. Domino’s will employ a variety of tests and channels, such as

newspaper ads, mobile coupons, online banner ads, social media ads, and direct mail postcards.

In addition to these tests, Domino’s is also seeking to once again add Groupon to its marketing

mix.

These tests, all significantly measurable, will determine which pricing strategies work

best, as well as which channels produce the best response rate. With adequate testing, Domino’s

is sure to gain substantial insight on how best to grow its carryout business.

Test group 1: 18 to 24 year olds

The United Kingdom-based market research group Mintel reports that 21% of 18 to 24

year olds purchase pizza more than three times per month (Sauber, Marold, and Anderson, 2011,

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p. 301). This portion of the test will be targeted to college students within the 18- to 24-age range

who are also students at The Ohio State University located in Columbus, Ohio. College students

are often living on tight budgets but prefer quick or ready-to-eat foods, like fast food and

delivery options, rather than cooking meals.

Test 1: ¼ page color newspaper ads in The Lantern, 12 week run

With a daily circulation of 15,000 issues and a daily student readership of 20,000, Ohio

State’s student newspaper, The Lantern, is an ideal advertising choice for Domino’s to target the

18 to 24 year old demographic (“Readership,” 2013). Domino’s can utilize The Lantern’s print

edition, which is printed four days per week with a total of 64 issues printed in the Spring

semester, to test a new carryout-only special (“Publication calendar,” 2013).

Little Caesars, a competitor of Domino’s, has been hailed as the world’s largest carryout

pizza chain (Skid, 2009). Little Caesars offers three large pizzas available every day at a flat

price and are always available with no waiting. These pizzas, appropriately dubbed “Hot-N-

Ready,” are a go-to for broke college students. The original Hot-N-Ready pizzas are pepperoni

and cheese and each cost only $5, with no quantity limit. Earlier in 2013, Little Caesars added its

DEEP!DEEP! Dish Detroit-style pizza for $8, available every day from 4pm to 8pm (Abbey-

Lambertz, 2013). Because Domino’s is looking to grow its carryout business, borrowing from

Little Caesars Hot-N-Ready model makes sense. Domino’s also offers a better-tasting and

higher-quality pizza than Little Caesars does and by offering a daily carryout special, Domino’s

allows budget-conscious consumers a better tasting pizza that is available with minimal waiting.

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Domino’s new carryout special will be similar to Little Caesars’s Hot-N-Ready.

Domino’s will offer its large hand-tossed pepperoni and cheese pizzas for $6, available for

carryout only and are excluded from online ordering. These pizzas will be available upon walk-

in, with no waiting or calling ahead, allowing the customer the ability to purchase on impulse.

In order to entice college students to purchase Domino’s carryout pizzas for $6 over

Little Caesars $5 Hot-N-Ready pizzas, Domino’s will offer students a free order of breadsticks

with purchase of a $6 carryout pizza. The offer will be presented as a coupon and run as an

advertisement in the printed edition of The Lantern. In order for students to redeem this offer,

they must present the coupon at the time of purchase, which will then allow Domino’s to track

the success of the promotion (i.e., the redemption rate of coupons). The ads will run once per

week for 12 weeks (three months). The size of the ads will be a quarter of a page, and also

printed in color to stand out on the page. As noted in The Lantern’s Media Kit, quarter-page ads

running for 12 weeks cost $315 each ($10 per column inch) plus an additional $75 per ad for

color printing (“Display advertising,” 2013). The total cost of advertising for this test will be

$4,680.

Test 2: Facebook ads

Facebook ads present a great opportunity for Domino’s to penetrate the 18 to 24 year old

age group. According to research from Pew Internet, 86% of 18 to 29 year olds use Facebook,

making Facebook the most-used social network in 2012 (Duggan and Brenner, 2013). In

addition, half of all 18 to 24 year old Facebook users log onto Facebook when they wake up

(Noyes, 2013).

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Facebook ads offer high segmentation opportunities for Domino’s. Using Facebook’s ad

creator, Domino’s can create ads with the objective of generating website conversions and then

target these ads by selecting age, location (down to city and state or even ZIP code), education of

target (anyone, high school, in college, or college grad), and even further narrow the audience by

college and graduation year, if desired. Domino’s can easily define the target as 18 to 24 year

olds who live in Columbus, Ohio, and are currently in college at Ohio State. The results of the

campaign are measurable through Facebook’s Ad Manager.

Domino’s can use Facebook ads to promote special carryout deals and encourage online

ordering. For this test, Domino’s will advertise a large hand-tossed pizza with up to three

toppings for only $7.99 plus a free 2-liter of soda with purchase, carryout only. Domino’s will

also create another offer advertising only the large three-topping pizza at $7.99 as a control offer.

Both offers will only be valid for carryout orders placed online. The ads will appear in the News

Feed and/or right-hand column of the target’s Facebook, and the target will be able to click on

the ad and be taken directly to Domino’s secure online ordering system. The ads will run

simultaneously for a period of 12 weeks. Domino’s has the option of setting a daily budget or

lifetime budget, and automatically optimizing bidding or setting a manual bid per conversion.

With a daily budget of $50 per campaign, Domino’s would spend no more than $8,400 ($4,200

per ad) over the course of 12 weeks.

This test will determine if students are more likely to order if they are offered a free item

with purchase or whether the standard offer of a large three-topping pizza for $7.99 is incentive

enough to place an online order for carryout.

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Test 3: Mobile coupons through SMS and MMS messaging

The third and final test for the 18 to 24 year old group is mobile coupons. Mobile

marketing is becoming increasingly more popular, and mobile coupons fall into this category.

Mobile coupons offer marketers an effective way to track consumers and the ability to micro-

target audiences. Redemption rates for mobile coupons are up to 20 percent or higher, with some

companies claiming that redemption rates from mobile coupons are eight times greater than e-

mailed offers (Spiller and Baier, 2012, p. 233). With 97 percent of 18 to 29 year olds owning a

cell phone (80 percent of which own smartphones), Domino’s has an opportunity for tremendous

reach within the target audience (Brenner, 2013).

Because double opt-in is the standard for mobile marketing, the trick for Domino’s is to

advertise in areas where students are likely to see the ad and decide to opt-in to receive

promotional texts from Domino’s. To encourage students to sign up for Domino’s mobile

coupons, Domino’s will advertise on the buses operated by the Campus Area Bus Service

(CABS). CABS transports more than 26,000 riders per day, which includes commuter students,

dorm students, and international students (“Advertise with us,” n.d.).

After students have opted-in and confirmed their mobile subscription with Domino’s, the

student will receive a maximum of two messages per month and the two messages will not be

sent in the same week. The mobile coupon test will run for a total of 12 weeks and students will

receive coupons good only for carryout orders. After the initial test, if results are positive,

Domino’s can expand its mobile coupon offerings to both carryout and delivery.

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During this 12-week test, Domino’s will offer a $5 off coupon on any carryout order of

$20 or more. The mobile coupon will contain a promotional code that can be entered online or

presented in-store upon payment. Half of the test group will receive a SMS or MMS message

with a $5 off $20 coupon that is valid for that day only while the other half of the test group will

have the same coupon that is valid for one week. By varying the expiration dates of the offers,

Domino’s can determine whether creating a sense of urgency is effective or whether coupons

with a longer redemption period have a better redemption rate.

Test group 2: Households with children

Another segment of interest to Domino’s, as identified by Mintel, is households with

children. According to Mintel, 20% of households with children purchase pizza three or more

times per month; these households with children are also more likely to purchase pizza from a

chain as opposed to an independent pizza restaurant (Sauber, et al, 2011, p. 301).

Test 1: Direct mail postcards

In order to directly target households with children, Domino’s will send postcards to

homes identified as households with children. The postcards will be sent to targeted homes

within the Columbus, Ohio area, based on ZIP code. The postcards will also contain a

personalized URL (PURL) to easily track which households are taking advantage of the offer.

This promotion will run for 12 weeks.

The postcard mailings will position Domino’s as the perfect meal solution for a family of

picky eaters. Oftentimes, families want different meals for dinner, yet no one wants to cook two

or more different meals in one night, nor do they want to order from multiple fast food or takeout

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restaurants. Domino’s offers pizza, pasta, wings, and sandwiches, along with desserts and

appetizers such as breadsticks and Parmesan bites; therefore, Domino’s is the perfect choice for

families with picky eaters or those with differing opinions on what to have for dinner.

Many dine-in restaurants are offering four-course meals for two people, which include an

appetizer, two entrées, and dessert. Domino’s can borrow from this idea and offer a complete

family meal by offering families a meal combination including an appetizer, main course of

pizza, pasta, or sandwich, and a choice of dessert for a total price of $20 (taxes not included),

carryout only. This deal will not apply to Domino’s full menu, but a limited choice of items.

Appetizers choices will be regular breadsticks or stuffed cheesy bread; entrées will consist of two

choices from a selection of medium one-topping hand-tossed pizzas, oven-baked sandwiches,

and/or pasta bowls; and dessert choices will be Cinna Stix or Chocolate Lava Crunch Cake.

Customers can order online or over the phone and there is no promotional code needed to

obtain this offer. However, if ordering by phone, the customer must indicate he or she wishes to

order from the family meal deal menu. When ordering online, the PURL on the postcard will

take the customer directly to the family meal deal menu where the customer can select the

combination of items to order.

Test 2: Online advertising on Ticketmaster

Ohio State has approximately 102,000 tickets available for purchase per football game;

42,000 of these tickets go to President’s Club, Buckeye Club, and alumni season ticket holders,

with 12,000 available to visiting fans and others (Rowland, 2013). This is a great opportunity for

Domino’s to make an impression on households with children through online advertisements.

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Because Ohio State uses Ticketmaster for its ticket sales, Domino’s will place advertisements on

Ticketmaster.com to target households with children who attend Ohio State games.

Ads can be targeted by market and genre (sports, arts & theatre, music, family), and the

genres can be micro-targeted to men, families, tweens/young adults, or urbanites (“Consumer

profile, n.d.). Ads For Domino’s test will be targeted by location to include the Columbus, Ohio

area, and further targeted to the Sports genre, with a focus on families. Ticketmaster offers a

variety of ad sizes, with costs per thousand ranging from $10 to $15 (“Ticketmaster.com,” 2013).

For this test, Domino’s will offer a carryout promotion through its online ads. The offer

will promote Domino’s as an easy game day meal for families and offer customers two medium

one-topping hand-tossed pizzas for $9.99 with a free two-liter of soda with purchase. The offer

will be valid on carryout orders placed online only with use of promotional code “GOBUCKS”

at checkout. The promotion will run for a total of 12 weeks.

Test 3: Newspaper ads in the Families section of the Weekender

The Columbus Dispatch has a daily circulation of nearly 136,000 (Doctor, 2013). Every

Thursday, the Dispatch runs a special Weekender section, including a section targeted to

families. For a period of 12 weeks with one ad per week, Domino’s will place ads in the Families

section of the Weekender to appeal to the segment of households with children. The ad type is a

subsection banner and spans 16% of the page; the ad will be printed in color for increased impact

(“Dispatch Media Group,” 2012).

This advertisement will encourage households with children to make Domino’s a part of

their weekend meal plan by placing orders online or via phone. The ad will offer a special

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weekend carryout-only deal of two medium two-topping pizzas for $9.99 plus a free two-liter of

soda. The offer will be valid for one month after publication date and the customer must mention

promotional code “WEEKENDER” over the phone before ordering or online at checkout to

receive the deal.

This promotional code is specific to the newspaper ads and will allow Domino’s to track

the results of the promotion based on redemption rate. It will also reveal whether households

with children are more likely to order online or by calling their local Domino’s store.

Customer information

Domino’s collects a variety of information about its customers through its website,

Dominos.com. Even just locating a store requires the potential customer to indicate whether the

order is for delivery, carryout, or simply a location search; then the customer must choose what

type of address he or she is at (house, apartment, business, school campus/military base, hotel,

dormitory, or other). After choosing the type of address, the customer must then fill in the

required fields, depending on address type; for most address types, city, state, and ZIP codes are

the minimum fields required, but for apartments, hotels, and dorms, customers must enter an

apartment number or room number. For the school campus or military base option, customers are

required to enter state, select the campus or base (e.g., Ohio State University), and finally the

dorm or building, with the optional field for a room number also available.

Site visitors have the option to create a Pizza Profile for speedier ordering. Domino’s

requires Pizza Profile creators to submit first and last name, e-mail, address, and phone number.

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After the initial profile is created, customers can add optional information, such as an alternate

phone number and birth date, address information, and can save credit card information.

Because Domino’s can obtain so much information from those who create Pizza Profiles

or order online, Domino’s has the opportunity to increase sales and market share in a number of

ways.

By analyzing customer data and identifying repeat purchasers, Domino’s can reward its

best customers by offering special discounts tailored to this segment. Another option is for

Domino’s to create a rewards program to encourage repeat purchases and increase sales.

Rewards program members will spend money in order to reach a certain reward level, and if the

customer is a mere five or 10 points away from a free order of Cinna Stix, he or she may add an

order of breadsticks simply to qualify for a free dessert.

Another opportunity for Domino’s to increase sales by using customer data is the ability

to cross-sell additional items or up-sell to a premium item. Domino’s can analyze purchase

history of its customers and determine which items to cross- or up-sell. For example, a customer

who frequently orders the Pacific Veggie Pizza may be interested in trying the Mediterranean

Veggie Oven-Baked Sandwich. Or a customer who frequently orders a cheese pizza may be a

good person to target to add extra cheese for an additional cost.

Because Domino’s gains valuable geographic data from its customers (sometimes even

multiple addresses from the same customer), it has the opportunity to grow overall market share

by identifying markets in which Domino’s is doing well, and other markets in which Domino’s

has room to grow or improve. If Domino’s notices it is doing poorly in a market segment,

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Domino’s has the opportunity to look at its competitors in that specific area and make

adjustments. For example, is a local pizzeria offering a delivery option to an apartment complex,

when a Domino’s store in the same area does not offer delivery to that same apartment complex?

Domino’s can also use its customer-collected data to increase sales by offering specials

tailored to geographic locations. Taking Columbus, Ohio for example, Domino’s can identify

which pizzas are the most ordered in the region and offer those pizzas in a special game day

promotion to appeal to Ohio State fans. Another option for increasing market share is for

Domino’s to send direct mail to households within a certain market in which Domino’s wishes to

expand.

For Domino’s to obtain rich customer data from carryout buyers, the best way is to

encourage customers to order online (as Domino’s recent campaigns have been doing). However,

Domino’s can obtain a phone number, name, and track order history through customers placing

orders by phone. Domino’s database should be able to merge customer profiles together if

necessary, for example if a customer makes a phone order on a landline and then a week later

places an order from a cell phone. Based on this scenario, Domino’s now has two phone numbers

for one customer, as well as order history and purchase frequency, and can begin analyzing this

data. Domino’s mobile app obtains information on whether the order is for delivery or carryout

and allows the customer to sign in or go to the pizza tracker. In order to use the pizza tracker, the

customer must input a phone number. Also, the Domino’s app requests access to the user’s

current location.

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Groupon promotion

For Domino’s to properly utilize Groupon, it must have an effective strategy in place.

Groupon may be better suited for Domino’s when promoting a new store opening or introducing

a new menu item. For a Groupon venture to be a success, Domino’s needs to make sure it is

prepared to handle an influx of new customers by determining the number of discounted units

available and capping it at that (Groupon allows merchants to limit the number of deals

available) and Domino’s should make sure its employees are properly trained to turn bargain

hunters into repeat purchasers (Amato, 2011). Other best practices for Groupon success include

offering a discount on an item that is interesting, but not one that is a bestseller (as the demand

for a bestseller already exists), and breaking up the discount to encourage repeat visits (Kearns,

n.d.).

Keeping the above tips in mind, Domino’s will use Groupon to offer customers a

carryout special of one large three-topping pizza plus an order of breadsticks for only $7.99 and

a $5 Domino’s e-gift card valid on a future purchase. The offer is only valid on carryout orders

placed online and after customers redeem the initial deal $7.99 deal, the $5 e-gift card will be e-

mailed to them to encourage a future purchase. Because the online ordering system already

suggests additional items to purchase, such as drinks or desserts, Domino’s is also capitalizing on

the opportunity to recoup some of the money lost by offering the Groupon deal.

The Groupon deal will be limited to 250 deals in the Columbus, Ohio area and will be

available for purchase on Groupon for a period of four weeks, allowing the remaining eight

weeks of the three-month test period open for redemption of the deal. Domino’s will be able to

determine how many of the offers were purchased versus how many were actually redeemed,

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and Domino’s can track gift card redemption as well to determine if customers are returning for

another purchase. If the Groupon deal is a success (i.e., creating repeat customers instead of just

one-time buyers), Domino’s can make the decision to expand the deal into other regions.

Conclusion

Through a combination of various carryout-only promotions and marketing channels,

Domino’s will be able to effectively measure results from each test and determine the long-term

potential of each test. If results prove to be sustainable, Domino’s will successfully grow its

carryout business and may one day become the number one pizza chain in the world.

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References:

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Advertise with us. (n.d.) Campus Area Bus Service. Available for download from http://ttm.osu.edu/advertise-on-cabs

Amato, J. (2011 Aug 2). 3 tips for running a successful daily deal promotion. Mashable. Retrieved December 23, 2013, from http://mashable.com/2011/08/02/daily-deal-business-success/

Brenner, J. (2013 Sep 18). Pew Internet: mobile. Pew Internet & American Life Project. Retrieved December 22, 2013, from http://pewinternet.org/Commentary/2012/February/Pew-Internet-Mobile.aspx

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Noyes, D. (2013 Nov 20). The top 20 valuable Facebook statistics. Zephoria. Retrieved December 22, 2013, from http://zephoria.com/social-media/top-15-valuable-facebook-statistics/

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Rowland, K. (2013 Jan 22). Ohio State mulling substantial football ticket price hikes, introduction of premium game pricing. Eleven Warriors. Retrieved December 22, 2013, from http://www.elevenwarriors.com/2013/01/18921/ohio-state-mulling-football-ticket-price-hikes-introduction-of-premium-game-pricing

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Ticketmaster.com. (n.d.). Ticketmaster. Retrieved December 22, 2013, from http://www.ticketmaster.com/media/ticketmastercom.html