Domino’s Pizza is a famous chain of fast food which has originated in the U.S and is currently serving the customers in different parts of the world. The company has established its fast food outlets in different regions such as America, Europe, Asia Pacific and Middle East (Domino’s Pizza, 2016). Its franchises offer different menu items ranging from pizzas to desserts, however the main competitive area for the company remains its pizzas. The company has been involved in a great deal of innovation, resulting in an update of 70% of its menu items in the past 9 years (Domino’s Pizza, 2015).
Large scale organizations produce different types of products, managing their production through different sub-units. Some of the products gain favorable response from the consumers while some products do not meet the expected performance criterion. Boston Consultant Group has presented a framework that is used to evaluate the different business products and differentiate between the profitable ventures from the non-profitable ones. The following section provides an overview of the BCG Matrix for Dominos.
Cash Cows
The products that have been in the market for some time and captured a significant share in the market are cash cows. These items promote financial growth and sustainability of a company, without requiring the level of investment required by the startup business units. The low investment and high sales combination makes these business units a prime focus for the management in terms of financial support for other products. The earnings gained from cash cows are invested to strengthen the future prospects of other products such as stars and question marks. Even though the industry is experiencing slower growth rate, the high market share makes cash cows an integral part of the business as it helps the firm to generate cash. The pizza segment is the highest revenue generating product for Domino’s making it a cash cow. The use of digital channel for taking the pizza orders has further helped the company to use the cash cow to its advantage (McClean, 2016). Jones (2015) has stated that the company sells approximately 1.5 million pizzas on a daily basis through its franchises in different parts of the world. The high market share of the company in the U.S market is also attributed to the high sales of its pizzas in the market.
Stars
A second category of products is stars which is the emerging items in the product portfolio of an organization. The industry has the potential for growth which makes these business units a target for investment and growth focused activities by the management. The stars can develop into cash cows once the industry has obtained a mature stage. As long as these items retain their position in the category of star, they are on the path of growth in terms of market share and revenues. There are some products at Domino’s which are still growing in terms of their demand and sales. These products have been identified as sandwiches and breads such as garlic bread which have been experiencing gradual increase in their market share and revenues. The sandwich and bread items have been introduced in the menu to tap into the market needs of food items apart from pizza. This decision has been a profitable move by the company as its sales of sandwiches and bread has seen positive trend and the consumers have readily accepted the addition to the menu. The company has faced intense rivalry in the domain of its sandwiches from the other fast food retailers specializing in sandwiches, nevertheless, the target market has made the oven-baked sandwiches a success.
Question Marks
A business manages different products, however all products are not expected to gain same level of success in the market. Some items have an uncertain outlook, making the management analyze the future direction that particular business unit will take and develop a suitable strategy accordingly. The industry is still in the development phase, encouraging the management to have the expectation that the product will be eventually accepted in the market and gain a higher market share in future. Domino’s has added some items to its menu that have not been able to gain a similar positive reception as seen in case of its pizza and sandwich domains. The addition of chicken items such as chicken wings has not created a positive response in the target market. The chicken items are therefore a question mark for the company. The management has acknowledged the possibility of failure of its certain products such as specialty chicken (Faw, 2014). The company has pursued investment in the marketing and production of its specialty chicken items, aiming to increase the market share in this domain. There is risk of failure, however if the product gets successful, the company will be able to further thrive in the fast food industry.
Dogs
The last category in BCG matrix is Dogs which includes all those business units or products that are not profitable for the organization. The company had launched these products in an effort to make an addition to its portfolio, but the expected results were not obtained by the company. The low industry growth and low market share makes it difficult to make the product a significant contributor for the financial earnings of the firm. In some cases products recognized as dogs are able to improve their performance and experience turnaround, however in a significant number of cases the constant loss motivates the management to cease any further investment in this product category. The inclusion of salad in the menu has not been a profitable decision for the company. The consumers have not been able to view Domino’s as a salad offering fast food retailer, thus leading to the salad becoming a dog. According to Fox News (2016), the key problem was that the target market couldn’t associate Pizza brand with salad, leading to negative attitude among the fast food consumers. The product has also faced criticism on the grounds that people are more likely to order an item from the fast food options, rather than ordering a salad late night.
References
Faw, L. (2014, April 14). For Domino’s, ‘Failure Is An Option’. Media Post. Retrieved from https://www.mediapost.com/publications/article/223604/for-dominos-failure-is-an-option.html
Fox News (2016, August 17). Domino’s launches salads nationwide, pizza-loving fans are not happy. Retrieved from http://www.foxnews.com/food-drink/2016/08/17/domino-s-launches-salads-nationwide-pizza-loving-fans-are-not-happy.html
Jones, A. (2015, March 26). Domino’s Pizza: Serving 1.5 million Pies a Day. Market Realist. Retrieved from http://marketrealist.com/2015/03/dominos-pizza-serving-1-5-million-pies-day/
McClean, P. (2016, October 12). Domino’s delivers sales rise but growth slows. Financial Times. Retrieved from https://www.ft.com/content/a821291e-906c-11e6-8df8-d3778b55a923
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