Case Study Papa John's International, Inc. Twenty-First Century Growth Challenges

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Case 2: Papa John’s International, Inc.: Twenty-First Century Growth Challenges 1) What is your assessment of Papa John’s differentiation strategy? On what bases does the company differentiate? There are a number of bases on which Papa John’s differentiates itself, many of which are interrelated. First and foremost is Papa John’s offering of a higher-quality pizza, which not only allows them to differentiate on the basis of a product feature (i.e. the high quality ingredients used in the pizza), but, even more importantly, on the basis of reputation. While most other pizza chains have their sights set on more of a cost-leader/low-price strategy, and make an less genuine statement of quality, Papa John’s entire organizational culture is…show more content…
However, the underpinning of this reputation - the product feature of high quality ingredients - is not nearly as sustainable, as it is not too costly for Papa John’s rivals of comparable size to ultimately imitate. In fact, Domino’s and Pizza Hut have demonstrated a shift towards higher-quality ingredients in recent years, and so this point of differentiation is no longer as rare as it once was. However, it will take many more years of making pizzas of similarly high quality for either to actually cement the same reputation as Papa John’s, and reputation does remain a very sustainable base of differentiation. However, it is worth considering at which price point the value of this reputation begins to diminish, given the nature of the product category itself. Papa John’s is, after all, a fast food pizza chain, and price does play a significant role in the fast food market. Obviously, part of the value of having a differentiated product is the ability to command premium prices for it, and to easily pass increased costs on to a customer base which is relatively price-insensitive. However, the question here is what price ceiling exists on fast food pizza, regardless of its quality. Papa John’s may have a reputation for the highest-quality fast food pizza, and loyal customers may be willing to pay more for this high-quality fast food pizza than a lower-quality fast food pizza, but the

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