Da Vinci’s Pizza Case Study

BACKGROUND OF THE COMPANY (2009)

History

It all started with the Lee brothers’ love for pizza. Pizza had always been the family’s favorite and treating themselves to such a delicious snack was slowly becoming a habit. It was only natural that they eventually made pizzas that catered to their need.

They went to try on various ingredients keeping in mind the flavor and texture that suit their taste. The Lee brothers thought that instead of the customary red sauce, the pizza was to have white sauce. The first white sauce pizzas were cooked for the family to enjoy. Pizzas of different styles and toppings were made and eventually, guests were served as well. The white sauce pizzas became such a success that hobby turned into business. Having always preferred the white sauce to the traditional tomato sauce, they decided to incorporate the savory taste on their pizzas. The first ever white sauce pizzas were available to Cebu customers last June 2003. Like any new company, it had a shaky start but as word got out, more and more people were lining up. In fact the pizzas became so famous that it had won an award on October 2005, April 2006 and August 2006 for Most Outstanding Pizza Parlor in Metro Cebu (non-mall based category).

As young boys, the Lee brothers were huge fans of the hit comic series, Teenage Mutant Ninja Turtles. This gave them inspiration of a comical idea to name the venture after one of their favorite childhood character, Leonardo of Ninja Turtle. Also, art was something they wanted to feature in their restaurant so they opted for “Da Vinci”, stylish yet sophisticated.

After four years of serving the community, Da Vinci’s Pizza now has five branches total all over Cebu, Jones, Mandaue, Mactan, I.T Park Lahug and Pasco Arcenas Banawa.

Existing Market Situation

The company’s existing markets are those in the class B and C, who enjoy eating white sauce pizzas and the traditional tomato sauce pizzas. It caters specifically to teenagers (together with friends), families, professionals (e.g. Call Center Agents) and the like. Da Vinci’s Pizza caters to walk in customers, accepts orders for home and office deliveries.

The products offered by Da Vinci’s Pizza are generally white sauce and tomato sauce pizzas. They also have a variety of drinks; from sodas, iced teas and alcoholic beverages. The concepts of most of the company’s pizzas are related to art, from the name and designs of each pizza to the interior design its restaurants or outlets.

Da Vinci’s Pizza only has one uniform family size, 12” in diameter with ten slices. They only offer thin pizza crust with different choices of toppings. The weight of the pizza depends on the kind and the number of topping in a pizza. Customers can choose from their famous white sauce pizza, tomato sauced pizza and even the toppings in Da Vinci’s Pizzas “paint a pizza”. The color also depends on the ingredients used and how well it is cooked. It is served hot in a metal plate or in an octagon shaped box for deliveries.

The prices of the pizzas offered at Da Vinci’s Pizza ranges from 188 to 254 pesos. Some drinks like a 1.5 liter of sodas is for 65 pesos and 40 pesos for bottomless iced teas. This price is consistent in all of its 5 branches.

Da Vinci’s Pizza is into wholesaling, manufacturing and retailing which is the type of primary participants they are into. They employ the Corporate Vertical Marketing System where in their channel situation integrates successive stages of production and has an organization that gains control of distribution under single ownership.

At present Da Vinci’s Pizza is into promotional activities. They have radio ad with their jingle, which can be heard at WRock and Y101. They also do advertising in newspapers when there is a new product available and a newly opened branch. They have flyers with their product offerings and contact details. They also have posters and tarpaulins found in their branches. Da Vinci’s Pizza also has their own website that features their pizzas, the company history and as well their contact details. They also advertise in yellow pages. The company is also into tie-ins and also does sponsorships on selected events and concerts. These strategies are employed to encourage consumers into buying their pizzas.

SWOT ANALYSIS

Strength

Their Financial and Management divisions are fundamentally strong. The financial condition of the company is healthy since the start of operations. They never had any financial assistance from financial institutions. Moreover, in so far as management is concerned it does have a strong and good relationship with their employees and staffs.

They are the sole providers of white sauced pizza catering to their identified market. Prices of each pizza are reasonable for the consumers to enjoy.

Da Vinci’s pizza can command in their suppliers. They don’t merely depend only on one supplier. If the other supplier don’t have stocks or cannot meet the delivery time given, Da Vinci’s Pizza will not have any problems because they have another option or a back up supplier.

Da Vinci’s Pizza Corporation doesn’t have any intermediaries; they act as the manufacturer at the same time the wholesaler and retailer of their product. The company controls their overall business system from suppliers to final consumers. Da Vinci’s Pizza’s type of organizational arrangement for distribution is a corporate vertical marketing system. Da Vinci’s Pizza chose this kind of structure for them to perform distribution functions efficiently. This kind of structure offers the advantage of channel control. Distribution activities of Da Vinci’s Pizza is coordinated and integrated, resulting in efficient functioning of distribution activities with minimal overlaps duplication of effort. It also provides Da Vinci’s Pizza a continuous performance and control over their marketing function.

At present, the trend when it comes to doing business is using modern high technology. Da Vinci’s Pizza is using an oven, to cook pizzas in a fraction of a time. They also have freezers where they store their perishable ingredients and other goods. They also have telephones, fax machines and cash registers to enable them to provide fast services. They also have their own websites for people who are into surfing the net and for wide reach to its market.

They have several Value Adding Processes which serves as an advantage over their competitions, they are as follows:

Free delivery of goods from suppliers to commissary

With that, there would be no additional expense for Da Vinci’s, resulting to cheaper price for every pizza.

Fresh goods delivered by suppliers to Da Vinci’s commissary

Usually Da Vinci’s Pizza would order their supplies 3 times a week, like their meat and vegetables products and ones a week for their dry goods like soft drinks, canned goods and so on. They don’t stock their ingredients for a long time; they just order enough for every weeks demand or for sufficient for a month or two. This is to maintain the freshness of each product being served.

Cleanliness of vehicles used to transport supplies and freshly stored goods in well cleaned facility used by the commissary

In the process of transporting the supplies from the supplier to the commissary as well as from the commissary to each 5 branches, the vehicles and the ingredients are well cleaned. Regarding the storage of supplies in the commissary, meat and vegetable products are stored in refrigerators to maintain its freshness and cleanliness. While for dry goods, they are positioned in well cleaned and cool dry place.

Free delivery from commissary to the 5 branches

The commissary has their own van, so after the ingredients are divided according to the orders of each branches, they are delivered free of charge.

Fast service

Although the pizzas of Da Vinci’s are made to order, they can serve their pizzas as fast as 15 minutes after it is ordered. When it comes to home or office deliveries, they can deliver your pizzas right in front your doorsteps for a fraction 30 minutes.

Accommodating Employees

At Da Vinci’s Pizzas, you are served by well trained and accommodating employees. Each employee is obliged to attend 10 days of training before they are accepted. They are oriented to always put a smile in their face and to always remember that customers are always right.

Accepts up to 3: 00 am of home and office deliveries

Also, Da Vinci’s Pizzas offers a good and unique service wherein they serve and deliver pizzas until 2:00 o’clock in the morning.

Reasonable and Affordable Prices

Da Vinci’s Pizzas offer reasonable and affordable pizzas, which is not heavy in the pocket. They make sure that their prices are affordable for the masses without sacrificing taste and quality. To maintain this they make sure that they get supplies at low prices but of good quality.

Weakness

One of their weaknesses is in their production; Da Vinci’s Pizza still can’t meet the demands of pizza for their customers, even if they already have five branches in Cebu. Another weakness of the Da Vinci’s Pizza is in marketing, as of the moment they do have radio ads, but still they need help and assistance in the marketing aspect.

Da Vinci’s Pizzas unfortunately doesn’t have any substitute products. They do have other offerings but these are products that they do not manufacture, like sodas and junk food. Da Vinci’s Pizza is in the process of developing other products to offer to its consumers. So as of now they are still concentrating on their pizzas and making a name for their company.

Opportunities

At present Da Vinci’s Pizza is serving any walk- in customers and accepts deliveries within designated places in Cebu Province. Their target markets are people ages 13 to 30. They have already a number of loyal customers that come and go to their five branches. Basically their target markets are young professionals (e.g. Call Center Agents), teens (with friends) and families. The demand for Da Vinci’s Pizza is high enough for the company to expand or create more outlets to fully utilize the opportunity.

Since the company employs the world wide web as one of its marketing channels, they could use this medium to target more customers. They may also use the website to study the probability of setting up outlets beyond Cebu City.

Threats

In Terms of actual values or social norms, it has already changed in the course of time. Major impact on individual preferences for product and the way in which those products are distributed have been focus for some customers. That is one of the things that the Da Vinci’s Pizza is trying to capture, through a trend in giving towards customers demand and giving them all convenience in satisfying their hunger such as home deliveries and fast services. Da Vinci offers very affordable pizzas, to answer the nature of people always wanting things at lower price. The company must be vigilant for any development or shift on this particular aspect.

In regards to economic environment, Da Vinci’s made it to the point that their pizzas are affordable without sacrificing quality and taste. They make sure that whether their target market has less disposable income, they can still afford to buy their pizzas. They are aware of what is happening in the economy. They know that changes in economic conditions have significant impact to them and their market. There are even tendencies that when the price of their raw materials increases, they have no choice but also to increase the prices of their pizzas. This sends a signal to the company to always be aware of changes on economic variables.

When it comes to a global perspective, Da Vinci’s Pizza has a number of competitors that has already captured a bigger market in the local industry and as well as the international scene, namely Pizza Hut, Greenwich, and Shakey’s, among others. These competitors have gone a long way when it comes to their revenues and share in the market as well as their gross profit margin. With regards with the changes in the global environment such as oil increase, peso dollar rate and terrorism, Da Vinci’s Pizza is sometimes directly affected with these kinds of occurrences. It is vital for the company to protect its competitive advantage and maintain the innovativeness in generating more types pf pizzas. This method will retain customer reception of their product.

Da Vinci’s Pizzas unfortunately doesn’t have any substitute products. They do have other offerings but these are products that they do not manufacture, like sodas and junk food. The company is aware of this kind of threat to them because majority of their competitors have substitute products.

RECOMMENDATIONS

The company should maintain to be adaptive to its dynamic environment. Flexibility is pivotal at this point of time and in order for this to happen, the company should modify some parts of its channel structure at best and improve on channels that give them an edge over competition at the very least. We’ve observed that the demand for their pizzas are rapidly increasing, the company can exploit this opportunity through expanding existing outlets or adding more chain restaurants.

The common concern is on their delivery, it would be wise to add motorcycles per branch so that delay can be avoided when pizzas are delivered to customers. In this way, they can not only meet the demands of customers but also retain their loyalty because of the firm’s fast quality service.

Since the company only accepts payments by cash, maybe the company could look into the possibility of accepting payments through credit cards. Consumers nowadays are going towards credit cards rather than bringing cash.

Since Da Vinci’s Pizza don’t spend much for advertising, one simple and cheap way to do advertising is to have a uniformed motorcycle with a logo of the company in order for the people to recognize them. Create a map that would help the delivery man to locate the place faster for them to deliver the pizzas at lesser time.

In four years of operation, they achieve a high demand but right now Da Vinci’s Pizza is not yet that flexible in terms of their channel distribution to meet the demand of the customers. They need to put up an additional branch to meet the demand of their customers.

Lastly, the company must maintain its constant interaction to customers as a means to evaluate their wants. This will serve as an avenue for the company to generate types of pizzas that are relevant to consumers’ taste or preferences.