SWOT Analysis of Pezzo Pizza Company Strategy

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Pezzo Pizza was founded in 2012 in Singapore by Mr Chiang Zhan Xiang, the founder and owner of the Pezzo Pizza. He started first kiosk at ION Orchard in December 2012 (Pezzo hungry for a slice of regional, China pies. 2015). However, Pezzo pizza was founded after 3 years to Malaysia in 2015. Pezzo is operating pizza kiosks in the malls. This is a very special model of Pezzo Pizza. They are Food and Beverage industry which selling many different kind of pizza. Every pizza of Pezzo has its own unique character and taste. Pezzo is selling the pizza by the slice and they made the pizza fresh daily on the spot with affordable pricing for customers.

Besides that, Pezzo was about living life exuberantly with its Carnival theme encouraging to have fun and food together. According to (Pezzo Multi-unit Franchise Opportunity n.d) stated that the vision of Pezzo was to provide its highly reachable locations and perfect services to connect with their customer. Pezzo has provided great-tasting and value-for-money pizza. From the articles of (Promising Franchisor of the Year, n.d.) stated that the pizza crafters take the high satisfaction in tossing, garnishing, and baking the pizzas fresh daily with the finest ingredients on the market for hungry on-the-go customers.

Pezzo is selected as Small Medium Enterprise (SME) which located in Malaysia. There were many outlet in Malaysia either in West Malaysia or East Malaysia. Small Medium Enterprise (SME) has few criteria in different category such as medium, small and micro. The different category also has the different criteria of SME. For Pezzo, it has under the services and other sectors of SME. The criteria for services and other sectors was the sales turnover of the firm do not more than RM20 million or the number of the full-time employees do not more than 75 (SME Definitions. n.d.).

According to the Pezzo pizza Malaysia expands, (2016) stated that pizza business was expanded very fast. There were more than 40 franchised Pezzo outlets in Sarawak, and more than half of them in Kuching, 2 outlets in Kota Kinabalu,Sabah. (Pezzo pizza Malaysia expands, 2016) founded that Pezzo Pizza has expanded as generating average sales of RM2 million. Pezzo also meet the criteria of number of employees which less than 75. According to the Working at Pezzo Pizza Sdn Bhd company profile and information: JobStreet.com Malaysia. (n.d.), has stated that the Pezzo company size was 1-50 employees and do not more than 75. Therefore, Pezzo has fulfilled the criteria of SME and become the SME in Malaysia. From the (Pezzo pizza Malaysia expands, 2016) stated that the director Teo said that too attractive for the franchisees business because of its low capital outlet, simple procedures and fast returns.

Main Products and Competitors

Main Products

Pezzo is selling the Pizza by the slice or by the whole pizza which measuring 14 inches per pan compared to the other pizza operators which only have 12 inches in every kiosks in the malls (Customer-friendly kiosk for pizza lovers, 1969). There were 15 exciting flavors available at all of the Kiosks Islandwide such as BBQ Bonanza, Big Daddy, Cheesy Cheese and more.There were also up to 6 flavors in a pan (A Carnival of Fun and Flavours, n.d.). Besides that, Pezzo is targeted mass market (Pezzo Multi-unit Franchise Opportunity, n.d.). Mass market is a general public market which consisting the consumers from various age group lifestyles and preferences (Bhasin, H., Hamid. 2017). Pezzo is selling the products which is variety and convenient to their customers to buy it. This is because they make it convenient for the customer to eat it anytime by selling the pizza in slice. Therefore, Pezzo also targeted in mass market which produced in large quantities of goods for everyone who willing to buy it. Pezzo also came out with many different kind of pizza to attract their customers. Moreover, Pezzo also used social media to advertise their products by having the promotion methods. For example, Pezzo came out with new favourite of pizza which is Sambal favourite of pizza.

Competitors

There were several competitors in pizza business in Malaysia which included direct competitors and indirect competitors. Direct competitor is targeted the same industry and similar products as your company (Traynor, D 2019). In pizza industry, there were some of the competitors which are Pizza Hut, and Domino Pizza. There are the direct competitors of Pezzo Company. Pizza Hut is one of the competitors of Pezzo. Pizza hut have very popular brand name and high brand loyalty of the company (Pizza Hut SWOT Analysis: Competitors USP, n.d.). The price of the products of Pizza hut are average, and cheaper than Pezzo pizza. This is because Pezzo is selling the pizza by slides mostly but Pizza Hut is selling by one whole pizza which is 6 inch. 9 inch and 12 inch of pizza. Pizza Hut also used social media strategy to get customers to visit the restaurants, instead of strictly ordering online (Pizza Hut SWOT Analysis: Competitors USP, n.d.).

Besides that, Domino pizza also another competitors in pizza industry. Domino pizza is also one of the popular brand name of the company. Domino has very strong brand equity is using heavy advertising and marketing campaigns (Dominos SWOT Analysis: Competitors USP, n.d.). As the price of the domino pizza is cheaper than Pizza Hut and Pezzo Pizza. For domino pizza have also used social media as direct marketing tools is to create the faster conversion rated to increase e-commerce sales.

Other than that, indirect competitors are the two difference job that the competitors want to do, but the job are competing with each other (Traynor, D 2019). The indirect competitors of Pezzo can be McDonalds and KFC. Both are in the fast food category but they were selling different kind of products to their customers. For McDonalds, they were focusing in selling different kind of favourite burger to target their customers. For example, Mcd Chicken, Filet-o-fish burger and more. In KFC, they were selling fried chicken and some snacks as their products. Both are not selling the same products- Pizza in the market, but they are same category which is fast food market in the world. Thus, the customer also can easily switch to other fast food as their choices.

Porter’s Five Forces of Competitive Model

The Pezzo Pizza have analyzed the Porter’s Five Forces in Pizza industry. It’s a tool of conducting the market analysis in the Pizza industry.

Threat of New Entrance

Threat of new entrance may bring additional production capacity. It can attract new entrants in profitable markets. In Pizza industry, it has the moderate level of threat of new entrant (Adamkasi. 2019). By setting up a new pizza restaurant, the company have to decide on finances to get a restaurant on rent, hire employees, and also invest in marketing to advertise their products. However, they also created barriers to entry in managing chain of franchises. The new entrants has faced the large pushing to keep their profitability by offering the price and quantity to attract the consumers (Adamkasi. 2019). Besides that, the threat of new entrants in pizza industry is also related to achieve the economies of scale. This was just in case the restaurant able to form in long term supply contract (Adamkasi. 2019).

Bargaining power of suppliers

According to Porter’s Five Forces of Competitive Position Analysis, (2013) stated that supplier power is on how easy for the suppliers to drive up prices which related to the number of suppliers of each essential input, uniqueness of their products, the cost of switching from one suppliers to another. In the pizza industry, the raw materials is acquired for making pizza through those suppliers who hold considerable degree of bargaining power (Adamkasi. 2019). They have the limited power for the price of raw materials in the smaller restaurant. For example, one of the raw materials of pizza- Cheese. Cheese is the most important ingredient in making the pizza. Hence, they were making the highest area of expenditure in this raw materials for manufacturing of pizza. In the case of international pizza franchise, the supplier have the low bargaining power of comparative. But, for the local and small set ups, the supplier can be charged a price that leaves the higher level of profits for them. Therefore, the suppliers in pizza industry can viewed as a moderate level of bargaining power (Adamkasi. 2019).

Bargaining power of buyers

Customers are the important for targeting in Pizza industry. Pizza industry is targeted the customers with different age-group, and the customers’ preferences in consuming the fast food especially Pizza. The customers are seeking for the pizza based on the quality conscious with the affordable price of the pizza (Adamkasi. 2019). By changing the restaurant to another does not mean a high cost. As the low cost can makes the customers switch easily by influencing the price of the menu. As the results showed, pizza restaurant cannot set the high price in order to maintain their customers (Adamkasi. 2019). However, some customers still continue to purchase the pizza compared to the competitors due to the brand image of the restaurant. Therefore, the buyers have the high bargaining power in pizza industry.

Threat of substitute products

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The substitute products is quite high in pizza industry (Adamkasi. 2019). There are many fast food available in the market such as burgers, toaster, sandwiches and more. There are also offering many substitutes options to the customers in the range of fast food. In order to reduce the threat for substitute products, pizza business need to be innovation to attract their customers (Adamkasi. 2019). For example, they came out with the new favourite of the pizza or came out with an addition of dairy free pizza for the customers. Those can attract their customer’s attention.

Intensity of rivalry among competitors

In pizza industry, there were many competitors in the market. Some of the international franchises in the pizza industry such as Pizza hut, Domino Pizza, Papa John and more. Each of them were using the promotional offers and new recipe to increase the market share become higher. The pizza restaurant is focused on the quality of the products and the services provided to customers which is bring more convenience to their customers (Adamkasi. 2019). Therefore, it was very high competitive rivalry in the pizza industry.

SWOT Analysis

Strength

Pezzo pizza is the hygienic food and quick service in the market. Pezzo pizza is selling the pizza by slide to make sure bring more convenience for the customers. Pezzo pizza also provided a good advertising and marketing of their products and brand to everyone to share the information and promotion through social media such as Facebook, Instagram and more. They have attracted many customers by using the promotion methods. For example, customers who buy 3 slides only RM21.90; original price for per slide is around RM7 to RM8.50 per slide (A Carnival of Fun and Flavours. n.d.).

Furthermore, the first outlet has opened in Singapore since 2012. After 3 years, they has expanded to Malaysia either in West Malaysia or East Malaysia. Pezzo pizza has opened 300 Pezzo’s stores across Southeast Asia by year 2019. They also opened an average of one retail store per month with 25 outlets operating in Singapore in year 2014, and operated 51 outlets by end year 2015 across Singapore, Malaysia and China. Therefore, Pezzo has opened many outlets to many country very successfully and fast in few years.

Other than that, Pezzo pizza chosen to operate well in the food-kiosk format. It is something that Pezzo wanted to work in very comfortable doing and starting a new brand using the food-kiosk model (Pezzo hungry for a slice of regional, China pies. 2015). Food Kiosk was quite famous in US. Thus, Pezzo also wanted to be food-kiosk experts and able to manage few more brands as up to 6 or more.

Weaknesses

Pezzo pizza also have their weakness in their company. Pezzo is lack of an organic pizzas, which is very limited in the target market. Organic products are very attractive to some customers those are health conscious people. They need to taking care of their own health. As we know pizza consider as one of the fast food, and it unhealthy to eat too much. It can caused a person become obesity due to the high fat and high calorie food.

Other than that, Pezzo has provided delivery services in Miri city. So, the customers can have their Sugarbun meals and Pezzo pizza at home or office without going out (SUGARBUN PEZZO Miri City Now with Delivery Service! n.d.). But, the delivery services still not able to delivery at West Malaysia (SUGARBUN PEZZO Miri City Now with Delivery Service! n.d.). In West Malaysia, Pezzo only allowed to delivery Pezzo pizza by using the application of food delivery services such as food panda, Grab foods and more. Pezzo pizza has provided the limited delivery services to their customers in certain location. They also did not have their own delivery vehicles to deliver pizza to their customers.

Opportunity

Pezzo has explored to many outlets around the Southeast Asia such as Singapore, Malaysia, China and more. As we know the fast food industry was quite increasing nowadays. It’s because to bring fast and convenient services for the customers. Besides that, Pezzo has created different kind of flavor in different country based on the culture of that country. For example, Pezzo have offered the Sambal pizza in Malaysia due to the culture of Malaysia. Therefore, Pezzo have to make changes on the meals based on the culture of different country.

Threat

Currently, competitors were on of the threat that faced by the Pezzo. There were too many competitors in F&B industry or pizza industry. In pizza industry, there were some of the international franchises such as Pizza Hut and Domino Pizza become the competitors of Pezzo. Pizza Hut and Domino Pizza have very strong brand positioning to the customers. However, Pezzo has the limited products and services to grab customers’ attention in the market.

Porter’s Generic Strategy

Pezzo has applied differentiation strategy to their products and services in pizza industry. Differentiation is making your products and services different and be innovation from others competitors in its industry. It’s typically involved features, functionality, supports and the brand image of the customer’s value. According to (Porter’s Generic Competitive strategies, n.d) defined as a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers in the differentiation strategic. The competitive scope is targeted on the board market and the target customers will understand the product value. The products is more expensive which has compared with other competitors products in this differentiation strategy. For example, Pezzo pizza has targeted mass marketing and the price of the pizza is quite expensive around RM7 to RM 8.50 per slides but it can bring convenient to the one-go-customers on the market. This is because Pezzo is selling the pizza by slides and bring fast services and make fresh pizza on the spot. Thus, the customers can purchase and eat anytime.

As compared with our direct competitors which are Pizza Hut and Domino pizza. Pezzo has the unique products to bring in the quality of the products into the market to attract their customer’ attention. According to (Customer-friendly kiosk for pizza lovers, 1969) stated that the largest sides of pizza in Pezzo is 14-inch per pan compared with the standard size of 12 inch in the market. This is one of the uniqueness for Pezzo Pizza which came out with the different crush size of the pizza in the market. Therefore, Pezzo has created the products that different from the competitors with the affordable price for the customers.

Recommendation

Firstly, Pezzo pizza can provide a self-driving delivery services for their customers. This can help to build company brand image and customer satisfaction of the products. Any feedback or comment from the customers can directly send to them easily through website ordering. Self-diving delivery might be the faster way to deliver to the customers. Its can build brand positioning too. So that the customers can know the company by seeing on the road when the driver in delivering foods to the customers. Food delivery can also provide the foods to the customers whenever or wherever you want it. It’s also can bring convenient to the customers. By ordering through the Pezzo website, the customers can know what promotion the company are offering is. During the delivery services, Pezzo can come out with the combo sets or bundles sets as their promotion methods. Hence, the customers can purchase the products easily though online and they will purchase more.

Besides that, I suggest that Pezzo can focus in cost leadership in pizza industry as their generic strategic. Cost leadership is focused on the relationship of the demand and the supplier in the price increase. Cost leadership also forced the suppliers to hold down their prices. This is to improve the level of efficiency and the cost reduction to target the customers. The competitive advantage of cost leadership is low-cost leader. It’s operates with the margins that greater than the competitors. The competitive scope is broad target in the market. Furthermore, Pezzo can targeting on the broad target area in the market with the lower price of the products to their customers. Hence, Pezzo also can targeting everybody who are willing to purchase it with lower price set up on their products and services. They also can increase their demand by slowing down the price of pizza. Other than that, cost leadership also meet the relationship with the potential entrant. The efficient of cost leadership is very high through the economies of scales.

Lastly, Pezzo can come out with the brand-new products which is targeting the vegetarian audiences. Vegetarian also can be the target audience of Pezzo. For example, Pezzo could come out the new pizza such as Vegetarian pizza or whole wheat pizza. For whole wheat pizza, they can target the customers who are health conscious people. It’s also can combine with the vegetarian ingredient such as vegetables, tomatoes, Onion and more. Those healthy ingredient to attract the customers. This is because they can eat better by consuming the Pizza. Therefore, Pezzo can come out with something new such as the changes of the crush size, favour of the customers, the new target audience’s preferences and so on. This can help to gain the market share of the company and help to build more strength for the company.

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