DiGiorno Frozen Pizza: Marketing Strategy and Competitive Analysis, Lecture notes of Marketing

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DiGiorno Situation Analysis

Marketing Objectives Within fiscal year 2010-2011, DiGiorno should achieve a market share of 22.5% (from 21%) in the frozen-pizza category. This represents approximately $572,520,000 of sales. Industry review DiGiorno has had an incredible presence in the market of frozen pizzas, let alone the entire food industry. The brand has been able to maintain this presence because of its strategic positioning among a broader spectrum of food manufacturers. Even during the toughest economical times, DiGiorno has been able to increase sales more than 20%. DiGiorno has been able to do this with its “DiGiornonomics” campaign that expressed a price-value proposition against delivery pizza. DiGiorno released a number of health- conscious products to sway consumer opinion of frozen pizza being unhealthy. In response to subway’s popular five-dollar foot long sub sandwiches, the brand launched DiGiorno Melts last May. For those that love more and more toppings, “ultimate” pizzas have extra topping and even 50% more pepperoni. DiGiorno has increased their presence in social media networks like Facebook and twitter. Jerome Bettis is new spokesperson and has helped DiGiorno dramatically increase Facebook fan base. Marketing mix The product lies in the category of frozen pizza. It comes in many crust sizes (rising crust, thin crust, crispy, garlic bread), toppings (pepperoni, cheese, half and half, supreme, etc) and sizes (full size pizza vs. personal pan). There are also low calorie options and flatbread pizzas. The company’s promotion is limited to four coupon discounts: two for $1.50 off and two for $1.00 off. The importance of the coupon sales

brands to come out and talk about the value proposition of frozen pizza vs. delivery pizza. Previous campaigns DiGiorno was created by Kraft and introduced in the United States in 1996. Previous campaigns for DiGiorno have focused on one key slogan “It’s not delivery, it’s DiGiorno.” For over ten years DiGiorno has made that slogan synonymous with their product. DiGiorno is the “Fresh delivery taste, without the fresh delivery price.” The concept of being able to eat in and get the exact same taste and quality of delivered food is DiGiorno’s entire philosophy. For the DiGiorno’s first advertisement campaign, the slogan was “Fresh delivery taste, without the fresh delivery price”, which later became the current slogan “It’s not delivery, it’s DiGiorno.” Dick Vitale, a sports personality who has starred in many commercials, is DiGiorno’s primary pitchman. There are two running advertisements that target both genders. One ad shows a man wearing a pink tutu to work after losing a bet that he's eating delivered pizza. Another commercial shows a guy dancing around the kitchen eating pizza. His wife is shocked that he would answer the door for delivery wearing boxer shorts and black socks. Each advertisement ends with the slogan “It's not delivery. It's DiGiorno.” The DiGiorno ads are known for their ability to stay simple and stick to the key message, which is that DiGiorno has high-quality, fresh-baked taste that is just like carryout or delivery. DiGiorno also does promotional giveaways. For example in 2001 DiGiorno had specially marked packages of their pizza carry a game code and a toll free number that consumers could call to see if they were potential winners. Prizes included a new

Chrysler PT Cruiser, $1,500 towards a cell phone and service, and a one-year supply of DiGiorno Pizza. This strategy caused DiGiorno to see a greatly increase in sales. The measurable results of DiGiorno’s advertisements have been excellent, especially when they first began in the late 90’s. In 2002 frozen pizza sales were up 6.4% for the first 52 weeks. At this time DiGiorno picked up advertisements on a national scale and was making good revenue. It displaced Tombstone to become the number one choice of frozen pizza. Competitive analysis DiGiorno’s main competitors in the frozen pizza category are Tombstone and Red Baron. The frozen-pizza category makes up for more than $3.2 billion in retail sales in

2008. DiGiorno has been rated highly among frozen pizzas since its introduction with rising crust. Delivery pizzas are another set of competitors. During 2009 DiGiorno tried to push against delivery pizza during the recession by claiming it was much more affordable than delivery but just as good. DiGiorno is aiming not only at the delivery pizzas, but fast food as well. In an effort to compete it has made new products such as flatbread melts and offered pizzas with a wide variety of toppings with the option of 50% more pepperoni. Delivery pizza’s strengths are that its pizza tastes the best, and frozen pizza cannot compete with delivery in regards to taste. A main weakness of delivery pizza is the cost. The base price is more expensive, there is a delivery charge, and consumers are expected to tip the deliverer. DiGiorno’s flatbread is attempting to take on fast food restaurants promotion such as Subway’s five-dollar foot long. Its flatbread is offered at a much lower price of $3.49.

school from August until May. During the summer season, those students may be at home while their mothers work. Many on-the-go mothers purchase microwavable meals for their children to prepare. Food news and scandals can contribute greatly to what consumers choose to eat. During the mad cow scare, many families avoided eating red meat. If a big news story were to caution consumers away from frozen meals or from a particular ingredient that is included in DiGiorno pizza (tomatoes, cheese, wheat), consumers may become more wary about purchasing frozen pizza. Problems and opportunities Strengths:

• Nestle name
• Little seasonal fluctuation (This equals little loss in money flow during the seasons. DiGiorno is a year-round product.) o Highest in January, February and March o August is also high due to back-to-school
• West central region shows a high level of frozen pizza consumption o DiGiorno can spend less money and focus on gaining awareness on the areas that are already show high-consumption. They can focus mainly on repeat, and they know to spend more on frequency in these areas, rather than on reach.
• Grocery account for 96% of frozen pizza sales which tells DiGiorno this is a great area to place the coupon promotions.

• Large families, single men, and teens are major consumers. This tells DiGiorno to use greater frequency and less reach when promoting to these demographics. Weaknesses:
• 85% of US know about DiGiorno yet only 35% prefer it, which is a weakness because this shows 50% of people who have encountered DiGiorno choose otherwise.
• Northeast has the lowest number of buyers/consumers of frozen pizza meaning they will require media time, space and money devoted to the awareness campaign as well as the continuous campaign.
• Consumers are concerned with health over price and may have low perceptions of DiGiorno, which means they require awareness of DiGiorno’s gourmet and healthy pizzas. The health-aware consumers will need to be targeted and will need more frequency and less reach, but changing their perceptions will be the greatest task. Opportunities:
• Due to the economy and interest for nutrition, sales for frozen entrees have gone up
• Prices have been lowered due to the economy
• Convenience
• 50% of cooking is microwaving
• Niche groups o Low carbohydrate

Advertising Objectives DiGiorno has been on the frozen pizza market since 1996 and has spent a significant amount of money on advertising. DiGiorno frozen pizza is past the awareness phase and is moving from no purchase to multiple purchases. DiGiorno is already priced competitively with the other frozen pizzas and controls the market share so we want to encourage the people who already know about DiGiorno to buy some more frequently and increase the positive attitude of it. Target Audience After thorough research we have come to the conclusion that DiGiorno’s primary target audience is adults 25-49 and the secondary target audience is adults 18-24. Men and women both purchase DiGiorno but women who do the shopping, are on a limited budget, live in a major city, and are already inclined to buy frozen pizza are the primary target. College students, both male and female, are another major consumer as well as men who are interested and follow sports, presumably why Dick Vitale is one of their spokespersons. The south and east central regions of the country are among the highest purchasers of DiGiorno frozen pizza with the south having a CDI of 105 and a BDI of 115 and the east central having a CDI of 109 and a BDI of 120. While the west with a CDI of 119 and a BDI of 103 is a great opportunity to invest in since they have above average frozen pizza consumption. Single and married people are virtually equal in their likelihood to consume frozen pizza, as are whites and blacks. The "It's Not Delivery. It's DiGiorno" campaign targeted an audience of adults aged 25 to 54. The tighter focus was on adults 44 and younger with incomes of $40,000 and above that were medium to heavy users of carryout pizza parlors such as Pizza Hut.

Kraft supported the DiGiorno introduction with an $11 million budget, a little more than the $9 million it allocated to its in-house rival Tombstone. Television advertising took place in selected markets around the country during 1996 and the first three quarters of 1997. In the last quarter of 1997, television spots were shown on national networks. Print advertising, which carried into 1998, was focused on general interest and entertainment publications, and included: Entertainment Weekly, Style, People, TV Guide, Rolling Stone, and ESPN Magazine. Men were specifically targeted with ads in Esquire and GQ, and gourmet cooks with ads in Bon Appetite.

networking site in the world, and has the highest adoption rate in social media marketing. Also, the site is free to join. On Facebook, DiGiorno can make groups and put out events so audiences can visibly see and go to events sponsored and hosted by DiGiorno. The company can also give out online coupons and deals that are only available to a person who becomes a fan of DiGiorno or joins the DiGiorno Facebook group. Network television, cable television, and Facebook are all media vehicles that are used or viewed within the home. Because DiGiorno pits itself against delivery pizza companies, and the point of delivery pizza is to eat it at home, it is important to advertise to the target audience in the place where they will consume the product. People eat more when they are watching television, and the more entertained they are, the more they eat.^1

Watching television is a family activity.

Showing the target audience the product while entertaining them with clever DiGiorno commercials will not only encourage them to eat DiGiorno pizza, but also encourage them to eat more than they normally would. 2

(^12) http://www.jurgita.com/articles-id2434.html

http://books.google.com/books?id=mkM9AAAAIAAJ&pg=PA148&lpg=PA148&dq=% 22television+is+a+family+activity%22&source=bl&ots=SpuSePyAKl&sig=EmFhgGMqSL2lY0x3W0gQsvwuZRA&hl=en&ei=w9XYS9OtJoLK8wThxtiaBw&sa=X&oi=book_ result&ct=result&resnum=1&ved=0CAkQ6AEwAA#v=onepage&q=%22television%20i s%20a%20family%20activity%22&f=false

Advertisement on television will reach an entire family during a television program, which means that DiGiorno will be presented to both the buyers and the consumers of the household. A clever or thought-provoking commercial can also cause conversation between the family members about DiGiorno pizza, which will in turn increase the family members’ interest and memory of the product.

Outdoor advertisements have the major advantage of targeting drivers or commuters. Colorful billboards, bus stop ads, and other outdoor vehicles demonstrate the aesthetic appeal of a freshly cooked, hot DiGiorno pizza. These vehicles also have the advantage of advertising where a product can be purchased, and can even be placed right next to a purchasing location. Placing billboards near grocery stores will encourage buyers to pick up a quick and delicious DiGiorno pizza on the way home from work, school, or errands. Since drivers or commuters tend to travel the same path every day, the outdoor vehicles will reinforce the DiGiorno message on a daily basis. With the out-of-home media, we will target the three markets with the highest levels of DiGiorno brand usage– South, East Central and West Central. Those markets make up more than half of the United States and we will also target New York and Baltimore due to their high levels of frozen pizza consumption and large populations. Using outdoor advertising, such as billboards, we will advertise in big cities gain more reach in each specific region. Magazines have the same aesthetic advantage as outdoor and television advertisements. Magazines advertisements are high quality images that show every steamy, delectable detail of a DiGiorno pizza. Magazines also have the reach advantage of re-readability. People browse through magazines at the pharmacy, the grocery store, the Super Walmart – all of which sell DiGiorno pizza on location. Once someone buys a magazine they may take it home and read it again, pass it to a family member in the household, or pass it on to a friend. Several people who all affect each other’s buying and eating habits will see the same magazine advertisement at the cost of only one insert.

Media Objectives High, medium, and low reach/frequency levels are defined below.

Reach Average High 75-95%oftarget 85% Medium 50-75%oftarget 65% Low up to 40-50%oftarget 45%

Frequency Average High 9-10+in4weeks 10 Medium 6-8in4weeks 7 Low 1-5in4weeks 3 Month Reach Frequency July - August 80 – 90% 3 October – November 60 – 70% 5 – 7 January - February 30 – 40% 9 – 10 April - May 80- 90% 3

This flighting pattern above is the best continuity method for DiGiorno. During the first eight weeks, beginning at the start of July 2010, we will aim for a high reach with low frequency (80-90%, 3 respectively). There will then be a four-week drop in advertising. Beginning in October there will be eight weeks where we have a medium reach and a medium frequency (60-70%, 5-7), followed with another four-week drop. The next eight

weeks will begin a low reach, high frequency pattern (30-40%, 9-10) with a four-week drop to follow. This pattern will repeat itself in the following weeks, finishing out the campaign at the end of June 2011. This flighting pattern is designed to reach as many consumers as possible at the beginning of the campaign while keeping cost in mind with a low frequency, and build up the frequency while lessening the reach as the campaign continues. The pulsing method will keep the brand fresh within the consumer’s mind throughout all seasons. The South and East central regions show the highest levels of brand usage, with average levels of frozen pizza category consumption. The West central region appears to be an area of opportunity in terms of its high level of frozen pizza category consumption, trailed by average brand purchase. According to Food & Agricultural Products Center (FSVP), the top 10 metropolitan statistical areas (MSAs) in per capita consumption of frozen pizza are, in order: Des Moines, Minneapolis/St. Paul, Milwaukee, St. Louis, Omaha, Denver, Charlotte, Indianapolis, Chicago and Memphis. The American Frozen Foods Institute (AFFI) found most of the MSAs listed above with New York City, Columbus, Dallas and Baltimore to be the highest frozen pizza consuming markets in the U.S. The high reach at the beginning of the cycle will bring DiGiorno to the front of consumers’ minds, while the low frequency will ensure that consumers do not become bored or annoyed by the campaign at its beginning. Then extra runs of medium frequency and medium reach may not attain as many consumers, but raising the frequency of the advertisements should begin to nudge and poke at the consumer's buying urges. Once the