The Company
Pizza, Oh! is a successful Canadian chain of pizza outlets operating throughout Canada and the United States. Unlike other similar outlets, it has avoided positioning itself as a “fast food”-type restaurant. Instead, it emphasizes four elements: Superior food quality; excellent service; a posh, yet not “in-your-face” environment, suitable for adult upscale patrons aged roughly between 25 and 50; and pricing that is at least 20 percent higher than at other pizza restaurants.
Among other features, the chain’s restaurants feature nicely done wood-burning exposed-brick pizza ovens which are visible by all patrons no matter where they sit. This way, patrons can observe the making of the product – complete with a view of the burning wood base in the oven when the doors open and close, and of the pizza makers as they roll out the product on a bench and then give it its distinct shape by tossing it into the air, before the raw pizza is placed in the oven using long-handled and fire-resistant wooden shovels. The entire setup is intended to add an element of “made right here for you,” and a feel of authenticity and exclusivity, to the customer’s dining experience. In some ways, the company's approach is reminiscent of the one used by Stimorol, the Denmark-based chewing gum, which introduced its products to New York City using a rather provocative slogan: "At last – chewing gum for the rich".
Although children are, of course, allowed in, and suitable amenities for them are provided (e.g., booster- and high-chairs), the general environment and prices at Pizza, Oh!’s outlets don’t encourage their presence and there is no separate children’s menu. As a result, few parents bring their children along. The relative absence of children, coupled with subdued lighting, the “oven” experience, and other elements of the company's setup all contribute to the chain’s “for adults” image.
International Expansion
The company is now considering overseas expansion. It has decided to use a two-tiered entry mode approach: In each country, there will be a fully owned sales and marketing office, on the one hand, and independently owned franchised outlets, on the other. This is done to achieve rapid international expansion, through the franchises, while maintaining close control of each country’s operation, by having local corporate representation. The company's local offices abroad would not have to be major operations – even a small office with a couple of managers and staff would be enough to signal to the franchisees and others that Pizza, Oh! was not an "absentee landlord" but, rather, that it was "here" and truly involved with the local market.
Pizza, Oh! wants to approach international expansion systematically. It wants to avoid the mistakes made by other companies when they first internationalized. A key element of this approach is deciding from the start whether a standardized or customized strategy will be used in each country concerning product and promotion.
A customized strategy would call for different menus, types of locations, architectural and atmospheric design of outlets, and promotional strategies in each market, all designed to suit local tastes. The company’s basic strategy would remain intact in terms of the quality, service, and upscale environment and pricing, but the way it would be expressed in each market would differ so that it matches each country’s unique local characteristics.
A standardized strategy would call for selecting one or more key features that make the company and its products different from others, and then implementing it worldwide without change. Company executives think that, if a standardized approach were to be chosen, it could take one of three main forms:
Presenting a “Canadian” image internationally. This might involve, for instance, emphasizing the company’s Canadian origin; using Canadian back bacon (which is known as “back bacon” in Canada but as “Canadian bacon” abroad, where it is considered a special delicacy), and emphasizing the use of this culinary specialty; using other Canadian products and ingredients where possible, ranging from Canadian cheeses to Canadian meat products, including bison and caribou, and even to the possibility of serving Ice Wine; and generally decorating the outlets so that they portray a sophisticated and yet very Canadian image, including “clean nature,” “honesty and integrity,” and so on. The company that while its overall positioning and characteristics were not common in most of the world, and so they might suffice for establishing its competitive advantage in many countries, wood-burning brick ovens and upscale pizza outlets were common throughout Europe – and so a Canadian image might provide that extra je ne sais quoi needed to make Pizza, Oh! competitive in that very important market as well.
Presenting a “neutral” image insofar as the chain’s origin is concerned, that is, appearing as a “global” company, and letting success ride, instead, on the company’s unique combination of the features outlined above (quality, service, posh environment, high prices, all leading to an overall “adult” orientation). This, the company's managers felt, would be ok for most markets beyond Europe, and as for Europe, they might consider other measures, such as stronger advertising and more careful location selection (e.g., perhaps starting from smaller provincial markets, where competition would be less, and move to major urban centres only after the company was firmly established in a country) that would help to make them more competitive.
Regardless of whether the image would be Canadian or global, the degree of standardization could vary – some strategic and execution elements might be standardized while others would be allowed to vary across markets. Pizza, Oh! executives felt that, for example, it might be possible to standardize the “excellent service” and/or “high quality, high price” component, while developing unique promotional approaches in each market. Or, conversely, advertising could be standardized but prices might be kept at lower levels in markets that are less-well developed than North America.
A particular issue that gave company executives migraine-force headaches was the firm’s brand name. This had been developed when the company was first founded many years earlier, at which time its marketing approach was closer to that which we normally see in other outlets of this type—a more casual restaurant, welcoming to kids and reasonably priced, which was well-expressed in the name’s playful nature. But, spurred by the need to face growing competitive challenges in North America, a few years later the company switched to its current, more upscale strategy. The new approach seemed to be a winning formula, notwithstanding that, fearing the loss of clientele if they made a complete break with the company’s past, the marketing managers at the time shied away from also changing the company name. Since the company continued to do well afterwards, North American customers seemed to have accepted the somewhat awkward combination of a playful name attached to an upscale dining experience.
But with the coming expansion overseas, and with the benefit of hindsight, the current managers felt they had to reconsider the brand name once again. They saw three options here. One would be to keep the current brand and expand it globally, acting on the belief that this is the whole idea behind “globalization” and that building on a proven name would help the expansion. A second would be the reverse – grab the opportunity of overseas expansion to change the name in North America as well. After all, successful as it had been shown to be, it still didn’t match the new strategy – and many companies had shown that if a brand name change is handled carefully, the repercussions on existing markets are minimal (the switch from Datsun to Nissan was often brought up as an example in discussions on this issue). Lastly, the third option was to go with two brand names – leaving the existing one for North America but developing a new and different one for overseas (or even, in an extreme case, different names for different markets; after all, even Nestlé, the global food and beverage giant, uses this approach for some of its products). This would enable the company to “correct the initial error” of maintaining a playful name for an upscale brand, insofar as overseas markets were concerned, while also maintaining the existing name in North America, since customers here didn’t seem to mind.
Mission:
Your mission is to prepare a Briefing Note recommending the operationalization of the brand name to be used for the overseas expansion.
Sample Solution