Papa John's Case Study Essays

1575 Words Feb 16th, 2013 7 Pages
Introduction
The Papa John’s case provides a classic example of a company that entered a highly saturated and mature market and was able to enjoy immense growth and success due to its creative product differentiation strategy. The company’s motto has been consistent from the day the first restaurant was opened: Superior ingredients and a superior product from its competitors. John Schnatter took the basic concept of product differentiation and positioning to new heights as he created a strong global brand, which had an unprecedented track record of success and customer loyalty over its competitor’s pizza products.

This case analysis will examine the company’s initial meteoric growth, leveling performance in recent years while
…show more content…
Buyers: While the original strategy was to offer only high-quality pizza, customer preferences began to shift gradually which required expanded menu options for items to complement pizza such as desserts and other creative menu items. Declining sales in the quick-service and sit-down restaurant dining increased the propensity for people to cook more meals at home as well.

Substitutes: The quality of substitutes for pizza (frozen pizza and other cheaper alternative brands) had also evolved to a point to which the additional price for consumers to pay a premium for Papa John’s pizza pies was being questioned.

Volatility in pricing of key Ingredients: The volatility in the price of cheese is mentioned in the case as a key factor that caused major problems for Papa John’s as it contributed to as much as 40% of a location’s ingredient costs.
Papa John’s Strategy: Differentiation via Product over Price

As mentioned earlier, the pizza market was already a mature market at the time Papa John’s opened its first store in Indiana in 1985. In such conditions where competition is fierce, most entrants choose to compete on price in order to achieve growth and capture market share. From the beginning, Papa John’s chose to compete on quality, customer service, and creative marketing -- a stark contrast with its competition that were largely differentiating on price.

Papa John’s strategy spanned