Case Study 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…
Should Papa John’s prices exceed this reasonable range - perhaps in the event that they cannot continue staving off ingredient cost volatility as well as they have to this point - then even their most loyal customers will turn to other brands or substitute foods of higher quality which warrant a higher price. The essential point is that price still does play a significant role in Papa John’s reputation - sure they make high-quality pizza, and sure it costs a little more than Domino’s, but that price premium is commensurate with its greater quality, and it strikes the right balance between affordability and quality. However, the value this reputation provides in allowing for higher prices - while it does exist, and thus leads one to conclude that reputation is a source of sustained competitive advantage - does indeed have its constraints. It creates value, but only until reaching a price ceiling which is lower for this product category than for premium products in most other product categories.
Regarding Papa John’s other, interrelated bases of differentiation - timing of introduction and distribution channels - it is evident that these were merely temporary sources of competitive advantage along a base which has given way to competitive parity. Every other pizza chain (and pretty much