How many slices can there be in the Australian pizza market?

The administrators have been called in and Eagle boys look to be going the same way as Masters with the company facing being sold off to the highest bidder. So in the competitive pizza market what went so wrong for Eagle boys and what can we learn from it?

Current Market Data

The graph in Figure 1 shows the steady decline in consumer purchases from Eagle Boys of -61% between 2012 to 2016 with a corresponding rise in sales for Dominos and the new-entrant gourmet options, Crust Pizza and Pizza Capers. As identified by Angela Smith, the defection from Eagle Boys to Dominos has been driven by the increasing use of technology by competitors to streamline the ordering, pickup and delivery process. This will have required significant investment in IT by Dominos but by providing an easy ordering and delivery process, they captured a large portion of the pizza consumer market that was not brand loyal. The Roy Morgan research also highlighted the average Eagle Boys customer was disloyal with over a third also eating Dominos during the research sample period.

Graph 1.png

Figure 1. Source: Roy Morgan Single Source (Australia), April 2011-March 2016, average 12-month sample=17,843. Base: Australians 14+. NB: Crust Pizza and Pizza Capers measured from July 2012

An article published by Jason Murphy takes a different view of the market with the finger firmly pointed in the direction of the local, independently owned pizza outlets as the reason for Eagle Boys demise. Although the information source is not identified, Jason claims over 55% of the pizza market is taken by the independent stores with 25% assigned to Dominos and all other pizza brands fighting over the remaining 20%

Graph 2.png

Figure 2: Pizza market share, Source: News.com.au

 

What went wrong

So with the pizza market in flux and conflicting views over the reason for Eagle Boys failure, can consumer behaviour research provide some insight into what has happened to Eagle Boys and predict how the fast food pizza market will evolve in the future?

Maslows hierarchy of needs can be applied to this market at multiple levels as there is more than one driver in play depending on the consumers situation when they are making their purchasing decision. In the first instance there is a basic need of food for sustenance, so the product offering by any of the pizza companies needs to be considered safe to eat and more recently as a relatively healthy meal option in comparison to other fast food. Eagle Boys branding and advertising did not promote any benefits or distinguishing features of their product over their pizza market or other fast food competitors. While it is not unusual in the fast food market to gloss over the health aspects, as very few fast food chains can claim their products to be a healthy, this is an area where Eagle Boys could have had a strong point of difference with consumers.

Secondly, the higher level drivers of acceptance and respect of themselves and by others will also be taken into consideration when consumers make their buying decisions. This is a much stronger driver in the pizza market and one where Eagle Boys appear to have been lacking a clear message to assist consumers. Dominos have become a market leader in the chain pizza market by offering a consistent, easy to access product at a low price by using technology to connect with consumers. Once the consumer has registered with the Dominos service during their first online purchase they are provided with targeted marketing to assist with repeat purchases and reinforce their brand loyalty and purchasing decisions when looking for a consistent, low cost pizza option.

Where to next?

Where neither Eagle Boys or Dominos are successful is the craft or boutique pizza portion of the market that is by far the largest segment according to data from news.com.au.  At the first stage of the Purchase Process as outlined in Marketing Management  (Iacobucci, 2012), the consumer has decided they want to purchase food rather than cooking for themselves and quickly decides on a shortlist of potential brands and food options available from their evoked set.

With modern technology the consumer is now able to search for and order pizzas from multiple independent vendors in their local area rather than having to purchase from a big brand name such as Dominos or Eagle boys. This has been to the disadvantage of the larger brands and is a great example of where technology is allowing independent retailers to compete with much larger, branded companies. With a growing demand from consumers for a tailored product offering and personalised service offered by independent businesses, it is likely that this segment will continue to grow and leave generic pizza brands as a poor second choice only to be used when the consumer in unfamiliar locations.

Author: Andrew Kingstone 215477263

Links:

19/07/16,  Retail Biz. Eagle Boys in voluntary administration,

http://www.retailbiz.com.au/2016/07/19/article/Eagle-Boys-in-voluntary-administration/JUETQHZAVX

27/07/16, Roy Morgan Research, By Angela Smith. The Domino’s effect, or why Eagle Boys stopped soaring

http://www.roymorgan.com/findings/6907-dominos-effect-or-why-eagle-boys-stopped-soaring-201607270911

21/07/16, News.com.au, Jason Murphy. All hail the local pizza joint, the real reason for Eagle Boys’ demise

http://www.news.com.au/finance/business/retail/all-hail-the-local-pizza-joint-the-real-reason-for-eagle-boys-demise/news-story/2bae41afbbcdc14efee5962f4897551f

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