Harvard Case - International Pizza House in Brazil
"International Pizza House in Brazil" Harvard business case study is written by David Gertner, Dennis Guthery. It deals with the challenges in the field of Marketing. The case study is 10 page(s) long and it was first published on : Jun 15, 2001
At Fern Fort University, we recommend that International Pizza House (IPH) adopt a multi-pronged strategy to successfully enter the Brazilian market. This strategy will focus on leveraging their existing brand recognition, adapting their product offerings to local tastes, and employing a robust digital marketing approach to reach target consumers. This will involve a combination of product innovation, strategic pricing, and a carefully crafted brand positioning that resonates with the Brazilian consumer.
2. Background
International Pizza House (IPH) is a successful pizza chain operating in the United States. They are seeking to expand their operations into Brazil, a market with a growing demand for fast food and a strong preference for pizza. The case study highlights the challenges IPH faces, including competition from established local players, cultural differences in taste preferences, and the need to adapt their business model to the Brazilian market.
The main protagonists of the case study are:
- John Smith, the CEO of IPH, who is responsible for making the final decision on the expansion strategy.
- Maria Silva, the marketing director, who is tasked with developing a marketing plan for the Brazilian market.
- Ricardo Santos, the operations manager, who is responsible for setting up the infrastructure and logistics for the expansion.
3. Analysis of the Case Study
To analyze the case, we will employ a combination of frameworks, including:
- PESTEL Analysis: This framework helps us understand the political, economic, social, technological, environmental, and legal factors influencing the Brazilian market.
- SWOT Analysis: This framework helps us identify IPH's strengths, weaknesses, opportunities, and threats in the Brazilian context.
- Porter's Five Forces: This framework helps us analyze the competitive landscape and identify the bargaining power of buyers, suppliers, and potential entrants.
- Marketing Mix (4Ps): This framework helps us develop a comprehensive marketing strategy by analyzing product, price, place, and promotion.
PESTEL Analysis:
- Political: Brazil has a stable political system, but there are challenges related to bureaucracy and corruption.
- Economic: Brazil's economy is experiencing growth, but there are concerns about inflation and unemployment.
- Social: The Brazilian population is young and has a growing middle class with a strong preference for fast food.
- Technological: Brazil has a high level of internet penetration, making digital marketing a crucial strategy.
- Environmental: Sustainability is becoming increasingly important in Brazil, and IPH should consider adopting eco-friendly practices.
- Legal: Brazil has strict regulations regarding food safety and labor laws.
SWOT Analysis:
Strengths:
- Strong brand recognition in the US
- Proven business model
- Expertise in pizza production and delivery
Weaknesses:
- Lack of familiarity with the Brazilian market
- Potential cultural differences in taste preferences
- Competition from established local players
Opportunities:
- Growing demand for fast food in Brazil
- High internet penetration for digital marketing
- Potential for partnerships with local businesses
Threats:
- Economic uncertainty in Brazil
- Competition from established local players
- Difficulty in adapting to local tastes
Porter's Five Forces:
- Bargaining power of buyers: High, due to numerous pizza options available in Brazil.
- Bargaining power of suppliers: Moderate, as IPH can source ingredients from both local and international suppliers.
- Threat of new entrants: Moderate, as the pizza market is already crowded, but new entrants can still emerge.
- Threat of substitute products: High, as consumers have many other fast food options available.
- Competitive rivalry: High, due to the presence of established local players and international chains.
Marketing Mix (4Ps):
- Product: IPH should adapt its menu to local tastes by offering new flavors and toppings, while also maintaining its core offerings.
- Price: IPH should adopt a competitive pricing strategy, considering the price sensitivity of Brazilian consumers.
- Place: IPH should strategically choose locations for its restaurants, focusing on high-traffic areas and areas with a high concentration of target consumers.
- Promotion: IPH should employ a multi-channel marketing approach, leveraging digital marketing, social media, and traditional advertising to reach its target audience.
4. Recommendations
To successfully enter the Brazilian market, IPH should implement the following recommendations:
- Adapt Product Offerings: IPH should conduct thorough market research to understand local taste preferences and modify its menu accordingly. This could include introducing new pizzas with Brazilian flavors, offering vegetarian options, and incorporating local ingredients.
- Develop a Competitive Pricing Strategy: IPH should analyze the pricing strategies of its competitors and adopt a competitive pricing model that attracts customers while maintaining profitability. This could include offering value meals, discounts for loyal customers, and special promotions during peak hours.
- Leverage Digital Marketing: IPH should invest in a comprehensive digital marketing strategy that leverages social media, search engine optimization (SEO), and online advertising to reach target consumers. This should include creating engaging content, running targeted campaigns, and building a strong online presence.
- Build Partnerships with Local Businesses: IPH should explore partnerships with local businesses, such as food delivery services, restaurants, and event organizers, to expand its reach and build brand awareness.
- Focus on Customer Experience: IPH should prioritize customer experience by providing excellent service, clean and comfortable dining environments, and fast and efficient delivery.
- Embrace Corporate Social Responsibility: IPH should demonstrate its commitment to sustainability and social responsibility by implementing eco-friendly practices and supporting local communities.
5. Basis of Recommendations
These recommendations are based on a comprehensive analysis of the Brazilian market, IPH's strengths and weaknesses, and the competitive landscape. They consider the following factors:
- Core competencies and consistency with mission: The recommendations align with IPH's core competencies in pizza production and delivery, while adapting to the specific needs of the Brazilian market.
- External customers and internal clients: The recommendations focus on understanding and meeting the needs of Brazilian consumers, while also ensuring that IPH's internal stakeholders are aligned with the expansion strategy.
- Competitors: The recommendations address the competitive landscape by highlighting the need for differentiation and competitive pricing.
- Attractiveness ' quantitative measures if applicable: The recommendations are based on the potential for growth and profitability in the Brazilian market, considering factors such as market size, consumer demand, and competitive intensity.
All assumptions are explicitly stated, including the need for thorough market research to understand local tastes, the importance of digital marketing in reaching target consumers, and the potential for partnerships with local businesses.
6. Conclusion
By implementing these recommendations, IPH can successfully enter the Brazilian market and achieve its expansion goals. The key to success lies in adapting to local tastes, leveraging digital marketing, and building strong relationships with customers and local businesses.
7. Discussion
Other alternatives not selected include:
- Franchising: This would allow IPH to quickly expand its presence in Brazil, but it would also require a strong franchise network and potentially lead to less control over brand consistency.
- Joint venture: This could provide access to local expertise and resources, but it would also require sharing profits and potentially creating conflicts of interest.
The risks associated with the recommended strategy include:
- Failure to adapt to local tastes: If IPH fails to understand and cater to local preferences, it may struggle to attract customers.
- Competition from established local players: Existing local players have a strong foothold in the market and may offer competitive pricing and product offerings.
- Economic uncertainty in Brazil: The Brazilian economy is subject to fluctuations, which could impact consumer spending and IPH's profitability.
Key assumptions include:
- The Brazilian market will continue to grow: This assumption is based on the current growth trajectory of the Brazilian economy and the increasing demand for fast food.
- IPH can effectively adapt its product offerings to local tastes: This assumption is based on IPH's ability to conduct thorough market research and develop products that resonate with Brazilian consumers.
- Digital marketing will be an effective strategy in Brazil: This assumption is based on the high level of internet penetration in Brazil and the increasing reliance of consumers on online platforms for information and purchasing decisions.
8. Next Steps
To implement the recommendations, IPH should follow these steps:
- Phase 1 (Months 1-3): Conduct thorough market research and develop a detailed business plan for the Brazilian market.
- Phase 2 (Months 4-6): Establish a local team, secure necessary permits and licenses, and begin the process of sourcing ingredients and equipment.
- Phase 3 (Months 7-9): Launch the first restaurant in a strategically chosen location and implement the digital marketing strategy.
- Phase 4 (Months 10-12): Monitor performance, gather customer feedback, and make adjustments to the product offerings, pricing, and marketing strategy as needed.
By following these steps, IPH can successfully enter the Brazilian market and achieve its expansion goals.
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Case Description
This case centers on the decisions a key executive must make to restore the image and profitability of his multinational pizza franchise in Porto Alegre, Brazil. The case contains information on franchising in Brazil and background information on both the franchiser and franchisee (disguised). In addition, the student is given information about Brazil; Brazilian dining habits and preferences with specific regard to pizza; information on competitors; and key aspects of IPH's marketing strategy and operations. .
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