Pizza sales are up, but that market share will stay the same
Tom Dougherty, CEO – Stealing Share
15 February 2012
The major chains will just keep fighting over price
The pizza chains never fail to amaze me. And I don’t mean that in a positive way. This is a highly competitive market that really doesn’t get it. Although reports are that pizza sales are up industry wide, consumers are still choosing on price, location, speed of service and pizza variety, according to a report from market research firm Mintel.
That is, everything but what drives individual preference: brand, emotional triggers and self-reflections of the consumer.
“With that model, it won’t be long until the chains start offering a pizza for a buck.”
The pizza sales report predicts that the industry will see modest gains over the next few years – representing a cheap way to feed a family in a down economy – but plateau in 2016.
That might be, but the report recommends pizza chains keep the cost of their pizzas the same through those years or otherwise they will see drops. Why? Because consumers are only choosing on price.
Is that anyway to steal market share? Of course not. That’s why my prediction is that, while pizza sales will rise, the changes in market share between the chains will remain the same.
No one has given consumers to choose their pizza beyond the table stakes – what you must have to be even in the market – that everyone has. They are battling over price, which is always a losing game in the long run.
My prediction is that pizza chains are going to find themselves becoming exceedingly lost. They will continue to offer low-price deals in which margins start shrinking. They’ll add more locations to meet the convenience factor and find themselves with very expensive billboards, like the situation the banking industry is struggling with now.
Moreover, they will fight to make up margins with other menu items, such as salads. When they market those items more aggressively, they’ll find themselves competing with more meaningful brands in other categories.
Don’t take the good news of the industry as a whole the wrong way. The first one that builds a brand that is a self-reflection of the target audience and is markedly different than the competition will soon dominate the category.
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