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... orld of the extreme has grabbed the attention of the younger generations. These generations range from the age of 12 to 30. These generations are affectionately referred to as the Y and X generations. For many years marketers ignored this segment and simply stereotyped them as slackers or losers. However, this has not been the case in recent years.
With extreme sports making an entrance into pop culture in the early 90 's, many companies have realized the potential for high returns by targeting this highly diverse segment of the market. In America today, there are 71 million Americans that fall between the ages of 12 and 30, making generations X and Y the two fastest growing segments of society. The overall spending power of this segment is 300 billion dollars a year, with a large percentage of that money spent on non-essential items. The reason for the high amount of spending in this segment has been associated to the times that they have grown up in. Unlike the baby-boomers, there has been no times of risk or economic depression in their lives. This is a generation with a "spend now, pay later" attitude, which has made for high spending averages on a per person basis.
In 1997, The National Longitudinal Survey of Youth, found that the median amount of cash that children receive from their parents for auxiliary spending is $ 50 dollars a week. This kind of spending money that children are given is what Pizza Hut wants to target with the Extreme Pizza. However, children living at home are not the only o! nes to have extra money to burn. A study on the spending habits of college freshmen also indicates a high percentage of money being spent on non-essential items. The results showed that an average of $ 56 is spent monthly on eating out.
This information on this segment of the market, gives Pizza Hut a window to offer a product that will attract these customers who not only have the money to spend on such things as pizza, but who have done so in the past. In the past Pizza Hut has not specifically targeted the younger generations with products. They have created a more generic marketing plan, to attract a wide variety of customers. In order for this marketing strategy to work, Pizza Hut needs to target this one segment of the market. The advertising and promotion needs to be very specific to their needs, in order for the money spent on advertising to be worthwhile.
Many products have failed in this segment because they have tried to treat the segment as one group. This segment is made up of many groups and many individuals. This is part of the reason for society labeling generation X and Y members as loser's and slackers. So with this in mind our advertising campaign must follow the same ideas by realizing that even within this segment there are many other segments. One characteristic of these two generations, that makes them a prime target for our new Extreme pizza, is the amount of time that these age groups spend with friends in groups. With the lack of responsibilities that teenagers have, and the lack of home cooked meals while away at college, pizza is a quick alternative for dinner, and a fun way for friends to eat together.
Pizza has long been targeted to families, because of the convenience that is present when serving pizza to a group. Teenagers and young adults spend quite a bit of time with friends in groups, whether it be in a dorm room or at parties. This gives Pizza Hut an outlet to sell a pizza that will fulfill the needs of this younger generation with a product that is designed just for them. With the total number of Generation X and Y members being so high and the money they spend on non-essential items being as much as it is, this segment could make this product a huge success. However, this is a hard market to target since everyone is so different, but they all have one thing in common, there love for pizza.
The most important factor in making this a success will be to design advertising that is able to attract all of the individual segments of these generations. 7) Marketing Mix A) Product Pizza Hut should offer a new product called "The Extreme" pizza. "The Extreme" is a twenty-inch pizza with twice as much cheese and toppings as Pizza Hut's other pizzas. This new pizza will have many different competitive advantages. The first competitive advantage of "The Extreme" is that it is the largest pizza on the market. No other pizza restaurant offers a twenty-inch pizza. The second competitive advantage is that it has more cheese and toppings than any other pizza on the market. Another competitive advantage is the Pizza Hut brand name.
Pizza Hut has built a brand name that means quality products and services. Since Pizza Hut will be introducing "The Extreme, " customers will automatically think this is a high quality product. The final competitive advantage is that this product will be the first pizza to target America's youth. "The Extreme" pizza will target Generation X and Generation Y or people between the ages of 12 and 30. This market purchases a lot of pizza each year, but very few pizza restaurants actually target them. "The Extreme" will be introduced on Super Bowl Sunday, 2001. During the introduction stage of the product life cycle, Pizza Hut will try to establish a market for the product and persuade early adopters to buy.
During the growth stage, Pizza Hut will try to build sales and develop a preference for the product. Pizza Hut will try to seek differentiation during the maturity stage. "The Extreme" is expected to begin to decline after one year on the market. B) Price In the past, Pizza Hut has successfully used the high / low pricing strategy when setting the retail price of its products. The high / low retail pricing strategy allows Pizza Hut to charge a price that is above the competition, but also promote frequent sales to lower the price below them. The retail price of "The Extreme" pizza should be set at $ 9. 99, which is higher than Pizza Hut's competitors. Several sales promotions and coupons will be used to lower the price below those competitors.
Since both Pizza Hut and the beverage Mountain Dew are Pepsi subsidiaries, bundle pricing will be used. Customers can purchase "The Extreme" for $ 9. 99 and receive a two-liter bottle of Mountain Dew for free. Pizza Hut will be able to sell two products together at a single price to suggest a good value. The high / low pricing strategy has several advantages. First, this pricing strategy will help segment the market. Different groups of customers are willing to pay different prices for the same product.
Pizza Hut can sell "The Extreme" to the customers who will pay the higher price to be the first to buy and also to the bargain hunters. The high / low pricing strategy will also create excitement. Customers will be able to try something new when they purchase "The Extreme" and this exciting experience may bring those customers back to purchase other products. Finally, this strategy will emphasize product and service quality. Pizza Hut sets a high initial price for its products to send a signal to customers that its products are quality and the servic...
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