The California pizza kitchen has developed what can be described as a largely successful strategy in its quest for a competitive advantage in a market characterized by high levels of competition from other established pizza chains such as Pizza Inn, Pizza Hut and Happy’s pizza and local restaurants and pizzerias. This success has been as a result of a careful evaluation of the operating environment over time which has enabled the pizza chain develop strategies to meet its objective of to extending its leadership position in the restaurant and premium pizza market by selling innovative, high quality pizzas in addition to creative salads, distinctive pastas and related products and by providing exceptional customer service, thereby building a high degree of customer loyalty and brand awareness (California Pizza Kitchen).
California Pizza Kitchen has been very effective in developing strong brand awareness throughout the markets in which it operates(California Pizza Kitchen). The brand name of California Pizza Kitchen is one of the most recognizable brand names in the restaurant and pizza chain business. This high brand awareness has been instrumental in the growth of the company, leading to brand loyalty from its customers and thus enabling growth in terms of revenues and sales. The company’s trading in the New York Stock Exchange since the year 2000 has also served to increase the brand’s visibility in the market (Lacter).
The high brand visibility and customer loyalty has enabled the company develop sustained competitive advantage. The high brand awareness has enabled the company obtain more favorable and cheaper contracts from its suppliers. This results in lower operational costs both in the short run and long run and contributes greatly to increased profitability for the company.
High brand awareness for the company offers a competitive opportunity to the company to experiment and offer new products to customers without necessarily jeopardizing its future operations. The company has been able to take advantage of its high brand awareness to offer new menu items which do not form part of the traditional Californian pizza menu (California Pizza Kitchen). This has enabled the company develop only the best selling menus for its pizzerias and restaurants and thus gain a competitive edge over its competitors.
The high brand awareness for the California Pizza Kitchen has enabled the company easy entry into new international markets. Its reputation, brought about by the global brand visibility enables it to easily venture into new foreign markets, a feat which may be very difficult for its competitors. High brand awareness thus gives the company a competitive advantage over its competitors in venturing into new global markets.
California Pizza Kitchen has developed a unique program intended for children called the CPKids (California Pizza Kitchen). It targets the children market segment and offers menus meant for children with special menu offerings for birthdays and a chef program for school children. This has enabled the restaurant chain use its high brand awareness to gain a competitive advantage over its rivals in the children market segment and has thus contributed to the continued growth of the company.
The company has developed a very effective diversification program, boasting of over 230 locations in 32 states in the United States and operations in other eleven countries (California Pizza Kitchen). This diversification strategy has been key to the success of the pizza chain since it has enabled it to increase its market share both locally and globally and has contributed immensely to the growth in the company’s revenues over time. The geographical diversification has been based on careful evaluation of what each new location was going to offer in terms of market share and customer satisfaction. This strategy has thus taken advantage of the opportunities for growth in both revenues and market share presented by the diversification into new markets both in the United States and globally.
Diversification both locally and globally has offered the company cost incentives since it is able to operate in markets with cheaper costs in terms of inputs and labor (Lacter). Operations in countries like China and India are relatively cheap and this contributes to increasing the overall profitability of the company thus giving it a competitive edge over its competitors in terms of cost savings.
Global diversification of California Pizza Kitchen also offers a competitive edge in terms of differentiation. Since each market offers a different set of customer requirements, the company, in addition to offering its unique California cuisine also offers a differentiated menu most appropriate to the market (California Pizza Kitchen). This differentiation in the global market has enabled the California Pizza kitchen gain a sustained competitive advantage over its rivals while enhancing its reputation in offering its traditional menu of California cuisine (Lacter).
From diversification and a high level of brand awareness, California Pizza Kitchen has developed a sustained competitive advantage over its rivals which has enabled continued growth in sales and profitability by making use of the opportunities and strengths available to it.
California Pizza Kitchen, despite its expansion policy, has been unable to match some of its competitors in geographical diversification both in the United States and in foreign markets. Pizza Inn is an example of one of these competitors, and it has diversified into previously untapped markets in Africa, Asia and South America and has a larger number of outlets in the United States. This presents an unaddressed threat of a stronger and more geographically diversified competition that California Pizza Kitchen needs to look into in order to grow its market share both locally and globally.
To address this threat of geographic diversification, the company needs to evaluate its competitors’ strategies, evaluate their products and choice of locations and then develop better products in more favorable locations in an effort to counter the competition (Iansiti and Levien). It should also endeavor to develop a greater sense of brand awareness and brand loyalty in the new markets by offering the most suitable cuisine in each new market. This will enable the company to address the threat of competition due to lack of geographical diversification. This will also enable the company develop a more national outlook by expanding its operations to a majority, if not all states of the United States.
California Pizza kitchen has not diversified its operations to include new target markets such as college campuses and this is an unaddressed opportunity that the company has not made use of. College students form a lucrative potential market in the pizza and restaurant business and California Pizza Kitchen can take advantage of this opportunity by researching on student eating habits and developing a menu that most appropriately fits them at student friendly prices. This will enable the company tap into a potentially large market and thus improve its long run growth in income and profitability (Iansiti and Levien).
The economic downturn has had adverse effects on many industries, and one of the most threatened markets is the pizza and restaurant industry. California Pizza Kitchen faces a threat of lowered incomes and profitability due to the effects of the economic hardships being experienced. This is because in hard economic times, many individuals prefer eating at home and avoid pizzerias and restaurants which are relatively expensive. To address this threat, the company can offer cheaper prices for the available menus in the restaurant chain in an effort to diffuse the negative effect of the recession. It can also develop cheaper menus to attract more low income customers who would otherwise not patronize the company’s outlets. Consideration should also be made for those California Pizza Kitchen restaurants and pizzerias located in areas with higher percentages of low income earners so as to appropriately adjust prices and menus to suit such neighborhoods. This will enable the company weather the threat posed by the recession successfully.
From the above strategic analysis, California Pizza Kitchen has reconfirmed its vision since its efforts are all geared towards meeting its vision of extending its leadership position in the restaurant and premium pizza market by selling innovative, high quality pizzas in addition to creative salads, distinctive pastas and related products and by providing exceptional customer service, thereby building a high degree of customer loyalty and brand awareness. All the company’s strategic decisions seem to be guided by this vision.
California Pizza Kitchen can take advantage of its high brand awareness to expand into new markets both locally and globally. It can use its reputation to make inroads in markets not previously tapped by its competitors and develop a globally recognizable brand. It can also use its high brand visibility to develop new strategic alliances with other companies, specifically convenience stores and gas companies so as to develop new outlet points by use of these strategic partners’ facilities.
California Pizza Kitchen. 2011. Web. 6 March 2011.
Iansiti, Marco and Levien, Roy. “Strategy for small fish.” Harvard Business School Working Knowledge. 23 August 2004. Web. 6 March 2011.
Lacter, Mark. "Second Helping: How the two guys who founded California Pizza Kitchen kept their unlikely partnership—and their company—alive." The LA magazine. n.p. Aug. 2008. Web. 6 March 2011.