KFC

PROJECT REPORT ON KFC

Submitted to:

Subm itted by : roohi jaiswal , hina shaikh, pragya dhakar arpitaghosh, pratyasha patil, priyank b.sanghvi (core b,mba I ST YEAR )

CONTENTS

An overview of food industry About KFC ,History,mission, aims Business strategy Present situation Achievements Situational analysis & target market Competetive analysis Economic analysis of market Factors affecting KFC Swot analysis Marketing mix & 4p`s Data interpretation Breakeven analysis

Launch of new product Implementation control Summary References

An overview of food industry

The food industry is a complex, global collective of diverse businesses that together

supply much of the food energy consumed by the world population. Only subsistence

farmers, those who survive on what they grow, can be considered outside of the scope

of the modern food industry.

The food industry includes:

Regulation : local, regional, national and international rules and regulations for

food production and sale, including food quality and food safety, and

industry lobbying activities

Education : academic, vocational, consultancy

Research and development : food technology

Financial services  insurance, credit

Manufacturing : agrichemicals, seed, farm machinery and supplies,

agricultural construction, etc.

Agriculture : raising of crops and livestock, seafood

Food processing : preparation of fresh products for market, manufacture of

prepared food products

Marketing : promotion of generic products (e.g. milk board), new products, public

opinion, through advertising, packaging, public relations, etc.

Wholesale  and distribution: warehousing, transportation, logistics.

Industry size Processed food sales worldwide are approximately US$3.2 trillion (2004).

In the U.S., consumers spend approximately US$1 trillion annually on food, or nearly 10 percent of the Gross Domestic Product (GDP). Over 16.5 million people are employed in the food industry.

Food industry technologies

Sophisticated technologies define modern food production. They include many areas. Agricultural machinery, originally led by the tractor, has practically eliminated human labor in many areas of production.

Biotechnology is driving much change, in areas as diverse as agrochemicals, plant breeding and food processing. Many other areas of technology are also involved, to the point where it is hard to find an area that does not have a direct impact on the food industry.

Computer technology is also a central force, with computer networks and specialized software providing the support infrastructure to allow global movement of the myriad components involved.

Some facts about Indian food industry :

India is the world's second largest producer of food next to China, and has the potential of being the biggest with the food and agricultural sector. The total food production in India is likely to double in the next ten years .

Dairy and Food Processing, Specialty Processing, Packaging, Frozen Food/Refrigeration and Thermo Processing.

Fruits & Vegetables, Fisheries, Milk & Milk Products, Meat & Poultry, Packaged/Convenience Foods, Alcoholic Beverages & Soft Drinks and Grains are important sub-sectors of the food processing industry

INTRODUCTION TO KFC

Fast food chains are amongst the most rapidly globalising businesses in the world. Kentucky Fried Chicken popularly known as KFC started its Indian operations in Bangalore, 1995. KFC at that time was on a worldwide expansion spree, with India being its next market for setting up a string of outlets.

This Project will broadly look into the entry of KFC in India and its success and failures of their internationalization process. A booming Indian economy and millions of the population hungry for consumerism meant that KFC could expand rapidly into the market to beat their competitors to the punch and capitalise on such a promising opportunity.

Research Focus

This research focuses on the marketing strategies of KFC and the changing behaviour of consumers towards KFC. This research focuses on the 4Ps of the marketing.

Rationale

The reason for choosing KFC as my topic is simply because it is one of the biggest fast-food giants in the market today. KFC has become synonymous to spicy and crunchy chicken. Everybody loves it and desires for it.

Objectives

To study the evolution of KFC and its introduction into India

To find out the marketing strategy of KFC

The service quality prevailing in KFC

To find out the service quality of KFC in various other areas and find out the deficiency.

To launch a new product , create its executive summary ,study its financial projections and to analyze its implementation control.

To understand the behaviour and attitudes of consumers of KFC

Biases and Prejudices

KFC is an international brand and hence it is expensive

KFC is considered as junk food and unhealthy

PETA issues affecting costumers

Significance of the Research

Research on KFC has helped us to understand the fast food industry that’s been dominating over the years. KFC has been in India for a long time now and this research helped us know the reasons for its survival. Although there are lot of fast food restaurants in India like McDonalds, Subway, Dominos, Pizza hut, etc. KFC has its own large consumer group.

OVERVIEW OF THE COMPANY

KFC Corporation, based in Louisville, Kentucky, is the world’s mostpopular chicken restaurant chain, specializing in Original Recipe ®, Extra Crispy TM, and Colonel’s Crispy Strips® chicken with home style sides and five new freshly made sandwiches. Every day, nearly eight million customers are served around the world. KFC’s menu everywhere includes Original Recipe® chicken—made with the same great taste Colonel Harland Sanders created more than a half-century ago. Customers around the globe also enjoy more than 300 other products—from a Chunky Chicken Pot Pie in the United States to a salmon sandwich in Japan.

KFC continues reaching out to customers with home delivery in more than 300 restaurants in the United States and several other countries. And in quite a few U.S. cities, KFC is teaming up with other restaurants, Taco Bell and Pizza Hut, selling nearly fifty years ago; Colonel Sanders invented what is now called “home meal replacement” – selling complete meals to harried, time-strapped families. He called it, “Sunday Dinner, Seven Days a Week.”

Today, the Colonel’s spirit and heritage are reflected in KFC’s brand Identity– the logo features Colonel Harland Sanders, one of the best recognized icons in the world.

KFC specialized in chicken and they say,

“No body’s cooking like KFC today and we are the chicken experts”

“There is no competitor for spicy chicken which is made by KFC”

KFC History

Way back in 1930’s Colonel Harland Sanders got some distinguished Kentucky folks lickin’ their fingers. It’s been in fashion since then!

Colonel Harland Sanders, founder of the original Kentucky Fried Chicken, was born on September 9, 1890.When he was six, his father died and his mother was forced to go to work while young Sanders took care of his three year old sibling. This meant he had to do much of the family cooking. By the time he was seven, Harland Sanders was a master of a range of regional dishes.

After a series of jobs, in the mid 1930s at the age of forty, Colonel Sanders bought a service station, motel and cafe at Corbin, a town in Kentucky about 25 miles from the Tennessee border. It is here that Sanders began experimenting with different seasonings to flavour his chicken which travellers loved and for which he soon became famous.

During the next nine years he developed his secret recipe of 11 herbs and spices and the basic cooking technique which is still used today. Sander's fame grew. He sold his chicken on the highway! But when the highway was removed, he sold up and travelled the United States by car, cooking chicken for restaurant owners and their employees. If the reaction was favourable Sanders entered into a handshake agreement on a deal which stipulated a payment to him of a nickel for each chicken the restaurant sold.

By 1964, from that humble beginning, Colonel Harland Sanders had 600 franchise outlets for his chicken across the United States and Canada. Later that year, Colonel Sanders sold his interest in the United States operations for $2 million. The 65-year-old gentleman had started a worldwide empire using his $105 social security cheque. Sadly, Colonel Harland Sanders passed away on December 16th, 1980 aged 90.

His legacy lives on with KFC restaurants all over the world. KFC now stretches worldwide with more than 13,000 restaurants in more than 80 countries and territories around the world serving up the Colonel’s Original Recipe. It is a $13 billion brand based out of Kentucky and is the leading QSR around the world which is based in

Louisville, Kentucky. Yum! Brands own 5 brands, out of which KFC is the largest brand within the Yum! Portfolio, founded by Colonel Harland Sanders in the year 1938.

KFC IN INDIA

Foreign fast food companies were allowed to enter India during the early 1990s due to the economic liberalization policy of the Indian Government. KFC was among the first fast food multinationals to enter India.

On receiving permission to open 30 new outlets across the country, KFC opened its first fast-food outlet in Bangalore in June 1995. Bangalore was chosen as the launch pad because it had a substantial upper middle class population, with a trend of families eating out. It was considered India's fastest growing metropolis in the 1990

KFC is the world’s No.1 Chicken QSR and has industry leading stature across many countries like UK, Australia, South Africa, China, USA, Malaysia and many more. KFC is the largest brand of Yum Restaurants, a company that owns other leading brands like Pizza Hut, Taco Bell, A&W and Long John Silver. Renowned worldwide for it’s finger licking good food, KFC offers its signature products in India too! KFC has introduced many offerings for its growing customer base in India while staying rooted in the taste legacy of Colonel Harland Sander’s secret recipe. Its signature dishes include the “crispy outside, juicy inside” Hot and Crispy Chicken, flavourful and juicy Original Recipe chicken, the spicy, juicy & crunchy Zinger Burger, Toasted Twister, Chicken Bucket and a host of beverages and desserts. For the vegetarians in India, KFC also has great tasting vegetarian offerings that include the Veggie Burger, Veggie Snacker and Veg Rice meals. In India, KFC is growing rapidly and today has presence in 13 cities with close to 72 restaurants.

Mission Statement

“Recognition: we find reasons to celebrate the achievement of others and have fun doing it, “is right up there with “Customer Focus” and “Belief in People”. Recognition is everybody’s responsibility,” says Chicago restaurant manager Adonis Chapel. He

explains since KFC started encouraging informal recognition, things have really changed. “You keep employees longer, they are happier, they work better for you.”

Vision Statement

 "The Association of Kentucky Fried Chicken Franchisees, Inc. is united to protect, promote and advance the mutual interests of all member franchisees and the Kentucky Fried Chicken system."

Aims and Objectives

Build an organization dedicated to excellence. Consistently deliver superior quality and value in our products and services. Maintain a commitment to innovation for continuous improvement and grow, striving

always to be the leader in the market place changes.

Generate consistently superior financial returns and benefits our owner and employees.

To establish in India KFC’s position as leading WQSR (Western Quick Service Restaurant) chain, serving good value by providing innovative chicken-based products and consistently, providing a pleasant dining experience, with fast friendly, in a clean and convenient location. At all times we must be dedicated to providing excellent and delighting customers.

The aims and objectives of KFC are not only to sell chicken to make money and make a profit, they are to expand as a business whether that’s to be a worldwide business or just to open up a few more restaurants around the country to provide a better service/faster service/better customer service to beat competitors/rivals such as McDonalds, Burger King, etc.

KFC aims 100 outlets by 2010 to invest Rs 200 - 300 crore:

Kentucky Fried Chicken (KFC), the leading brand of US-based Yum Brands Inc., is eyeing 100 KFC outlets across the country by 2010, for which it will invest round Rs 200-300 crore.

Currently, the company has 34 outlets in nine cities, which include Pune, Chandigarh and Ludhiana, besides the metro cities. The company plans to increase its outlets count to 50 by this year end.

The company is also focusing on vegetarian food items to increase sales. This year, it will introduce 15-20 new chicken items, most of which will have a vegetarian counterpart.Globally KFC contributes around $12 billion to Yum! Restaurants, which had a sale of around $30 billion, last fiscal.

Values of KFC

Focus all our resources to our restaurants operation because that is where we serve our customers.

Reward and respect the contributions of each individual at KFC. Expand and update training with time and be the best we can be and more. Be open, honest and direct in our dealings with one and other. Commit ourselves to the highest standard to the personal and professional

integrity at all times. Encourage new and innovative ideas because these are the key to our

competitive growth. Reward result and not simple efforts. Dedicate ourselves to continuous growth in sales, profit and size of organization. Work as a team.

PHILOSOPHY OF KFC

The CHAMPS Program

CHAMPS stands for our belief that the most important thing each of us can do is to focus on the customer. It stands for our commitment to provide the best food and best experience for the best value. CHAMPS stand for the six universal areas of customer expectation common to all cultures and all restaurants concepts.

THE CHAMPS :

These are:

Cleanliness Hospitality Accuracy Maintenance of Facilities Product Quality Speed of Service

CHAMPS is the philosophy to ensure that the customer has the consistent quality experience in every restaurant, everyday, on every occasions and you will be playing role in delivering CHAMPS to our customers.

Products

The famous paper bucket that KFC uses for its larger sized orders of chicken andhas come to signify the company was originally created by Wendy's restaurantsfounder Dave Thomas. Thomas was originally a franchisee of the originalKentucky Fried Chicken and operated several outlets in the Columbus, Ohio area.His reasoning behind using the paper packaging was that it helped keep thechicken crispy by wicking away

excess moisture. Thomas was also responsiblefor the creation of the famous rotating bucket sign that came to be used at mostKFC locations in the US.

Menu items

KFC's specialty is fried chicken served in various forms. KFC's primary product isoffering, extra crispy, is made using a garlic marinade and double dipping the

chicken in flour before deep frying in a standard industrial kitchen type machine.

Kentucky Grilled Chicken - This marinated grilled chicken is targeted towardshealth-conscious customers. It features marinated breasts, thighs, drumsticks,and wings that are coated with the Original Recipe seasonings before beinggrilled. It has less fat, calories, and sodium than the Original Recipe fried chicken.Introduced in april 2009.

Discontinued products

The Colonel's Rotisserie Gold – This product was introduced in the 1990s as aresponse to the Boston Market chain's roasted chicken products, and a healthiermindset of the general public avoiding fried food. Purportedly made from a "lost"Col. Sanders recipe, it was sold as a whole roaster or a half bird.[28]

Tender Roast Chicken – This product was an off-shoot of 'The Colonel's RotisserieGold'. Instead of whole and half birds, customers were given quarter roastedchicken pieces. For a time, customers could request chicken "original", "ExtraTasty Crispy", or "Tender Roast".

Smokey Chipotle – Introduced in April 2008. The chicken was dipped in chipotlesauce then doubled breaded and fried. It has been discontinued since August 2008

Nutritional value

KFC formerly used partially hydrogenated oil in its fried foods. This oilcontains relatively high levels of trans fat, which increases the risk ofheart disease. The Center for Science in the Public Interest (CSPI) filed acourt case against KFC, with the aim of making it use other types of oils ormake sure customers know about Trans fat content immediately beforethey buy food.

In October 2006, KFC announced that it would begin frying its chicken in transfat-free oil. This would also apply to their potato wedges and other fried foods,however the biscuits.

Advertising:

One of the KFC`s latest advertisements is a commmericial advertising its “wicked crunch box meal” .The commercial features a fictional black metal band called “ Helvetica”., performing live, the lead singer then swallows fire.The commercial then shows the lead singer at a KFC eating “wicked crunch box meal”. And saying “ oh man that is hot”

.

KFC business Strategy:

KFC fast food chains are currently under the restaurant division of pepsico incorporated. Some major threats include the changing attitudes of Society towards healthier eating habbits., KFc has more than 9800 outlets located in 77 countries. In marketing, KFC restaurants are not

restricted in locating within close proximity of other KFC restaurants. There are two alternative strategies for KFC. The first strategy involves keeping pepsico beverage division and snack foods division together.

PRESENT SITUATION:

The organization is currently structured with two divisions under pepsico.

David Novak is president of KFC. John hill is chief financial officer and Colin moore is the head of marketing. Peter waller is the head of franchising , while olden lee is the head of Human resources. KFc ia a part of the two pepsico divisions, which are pepsico worldwide restaurants, and

Pepsico restaurants International. Both of these divisions of pepsico are based in Dallas.

REASON FOR EMERGENCE:

Gender Roles: gender roles are now changing. Females have startedworking outside. So, they have no time for their home and cooking food. Fastfood is an easy way out because these can be prepared easily.

Customer Sophistication and Confidence: consumers are becomingmore sophisticated now. They do not want to prepare food and spend theirtime and energy in house hold works. They are building theirconfidence more on ready to eat and easy to serve kind of foods.

ACHIEVEMENTS:

KFC is one of the most renowned world gastronomic brand names.Kentucky Fried Chicken products are currently offered in 80 countriesworldwide and in more than 11,000 restaurants which are visited on adaily basis by almost 8 million customers. Globally, KFC employs approximately 290,000 people, Worldwide, a new KFC restaurant isopened almost every day.In 2004 the “KFC Excellent” range - three types of salad (Caesar, Gardenand Mandarin) obtained the prize for “Worldwide Best Practice Award2004” in the category of best product and best marketing campaign andi ts implementation in the restaurants. This prize is distributed each yearby YUM Restaurants International.According to the ratings for “Mostexpensive world brands 2004” conducted by the American weekly‘Business Week’, KFC was positioned 54th place; currently valued at 5.1 BILLION USD.

Situational Analysis

PORTER’S FIVE –FORCES ANALYSIS OF KFC

Entry of New Competitors

For the current Indian market for fast food, it is not difficult for a fast food restaurant to enter the market. However, it would be extremely difficult to take over already running major fast food chains' dominancy in India or even make a significant amount of profit. While there are enough people in urban India for any restaurant to survive, KFC holds the first-mover advantage into the 'non-vegetarian food specialty food segment' that gives them free reputation. Customers, especially children who are used to going to KFC as a treat or reward from their parents or grandparents, are not going to want to go to other restaurants they’ve never heard of. The brand name is already established. Also, there is already a large variety in the numerous western-style dining places in India, such as McDonald’s, Pizza Hut, Domino's and Subway, and any new fast-food entrants would just be presenting something very similar to what’s already there. While

small Neighbourhood restaurants generally have low barriers to entry, these are the barriers to entry for similar restaurant businesses to enter the fast-food chain market.

Buyer/Supplier Bargaining Power

The customers of KFC, especially as individual buyers, have almost no bargaining power because if only one customer threatens to no longer eat at KFC, the store is not going to lower its price because the cost of losing one customer is not very great. The suppliers, like the buyers, have very little bargaining power.In terms of food, KFC, upon its move into India, urged many of its U.S. suppliers to also extend branches into India. KFC also began helping local suppliers by giving them technological support to improve their products. This is a brilliant strategy because the supplies that KFC would otherwise need to import from the U.S. can now be obtained domestically, and if the U.S. suppliers decide to raise their prices, KFC can easily switch to the local suppliers. This gives us a brilliant strategy. With this strategy, KFC created competition among its suppliers, lowering the supplier bargaining power. In terms of human resources, labour cost is extremely low because the supply of non-skilled workers great exceeds the demand for them. With so little buyer and supplier bargaining powers, KFC is able to have a very tight control over its prices and expenditures.

Substitutes and Complements

As mentioned above, there are a few major competitors in the fast-food industry in India for KFC, namely McDonald’s, Pizza Hut, Domino's and Subway. The substitute products, in this case, would be burgers, pizza, and sandwiches. Though they are competitors, their primary products differ greatly from each other, in that they sell, chicken, burgers and fries, pizzas, and sandwiches, respectively. Traditional Indian dining, home-cooked meals, and grocery stores with ready-to-eat foods are also substitutes, as families could choose any one of these over fast food for a meal. These substitutes are definitely considered healthy as compared to the fast food chains. Even foods from street vendors count as substitute goods.While other fast foods serve as substitute to KFC, they can also serve as complements for fast foods as a whole. If the general price of fast foods goes up. KFC’s price rises as well, and the same can be said of the quantity sold of these products, which make them complements.

to each other. KFC also sets up stores located near popular tourist attractions, so tickets to these tourist spots are also complementary goods because the more people tour these attractions, the more customers KFC will get.

Rivalry

Unlike what one would expect, KFC has little rivalry with similar fast-food chains inIndia. The primary reason is that their core products are different, as in they sell different kinds of fast foods with very different tastes and styles. For example, if KFC raised its price for chicken by a small amount, Indian chicken lovers who may not be as accepting to pizzas (many Indian people strongly dislike the taste of cheese) are not going to switch to Pizza Hut just because the price for KFC increased. In addition to that, these restaurants have such different target customers that the fluctuation of price for one restaurant is not going to affect the others. For example, a full meal at KFC ranges about Rs. 100, whereas a full meal at Pizza Hut can cost over Rs. 300. The drastic difference in price assures no price competition between these restaurants.

TARGET MARKET

Segmentation

KFC has divided the market of India into distinct groups of customers with different demands, tastes and behaviour who require separate products or marketing mix.

In India the niche marketing is being used for particular classes of people.

They have made segments of the market on the following bases. Demographical Behaviour Geographical

By using these three bases they segmented the market as under.

DEMOGRAPHICAL BASISIn demographics their first segment is consisted of the income factor i.e. high income, average income and low income.

Upper middle class Middle Family – Full nest

BEHAVIOUR

In behavioural aspect they segmented the market on the basis of quality, taste and price. Following are the different possible segments in this regard.

Taste conscious Quality conscious Class conscious Combination of price and quality

GEOGRAPHICAL BASISOn the basis of the geographical factor we have divided our market in three main segments.

Urban areas Sub urban areas

Profile criteria:

1. Gender: KFC is for each gender both male and female.

2. Income: Everyone can use the KFC service both upper and middle class.

3. Age: age limitation for using this product is above 15

4. Occupation: By profession also everyone can use this product means businessmen, students, workers and others.

5. Education: It needs no education and needs only taste buds to easily enjoy this product.

6. Family life cycle: KFC is suitable in every stage of life like single, married couple and also those who have children can use this product.

7. Lifestyle: This product is used in every level of social class like upper, middle class.

8. Attitude: When the customers once buy this product after that they can use the product continuously.

9. Purchasing decision: Often KFC changes the purchasing decision of customers because of its good attributes.

10. Geographic region: Geographically KFC is used in every part of the country as well as all over the world.

TARGET MARKET FOR FAST FOOD

After evaluation of various segments, KFC has decided to target the market of Urbanand Sub-urban Areas of India.

Product usage

People are educated and they want variety in their diet. Normally people of rural areas don’t take fast food. On the other hand people of Urban areas take fast food. Income of the people of urban areas is normally high and they can afford to purchase

such products, which are slightly higher in price as compared to prevailing prices of local food in the market.

People of Urban Areas are more quality conscious than the people of Rural Areas. In Urban Area there lived people from every walk of life and profit generation is easier

than in Rural Areas. Population density is higher in Urban Areas as compared to Rural Areas, so the Customers are more in Urban Areas.

Product positioningCustomer perceives this product as a unique product.

AttitudesThe attitude of the public is very good people like our this new product like others.

Purchasing process : Many people come from home to eat this, and some make impulse decision as they see it.

Competitive analysis

MARKET SIZE & MAJOR PLAYERs

A) Dominated by McDonalds having as many as 75 outletS.

B) Domino’s pizza is present in around 100 locations

C) Pizza hut is also catching up and it has planned to establish 125 outlets at the end of 2005.

D) Subways have established around 40 outlets.

E) Nirulas is established at Delhi and Noida only. However, it claims cater, 50,0000 guests everyday.

CompetitorsYou cannot enjoy the business without competitors. No organization can afford to ignore their competitors. It is very important for a marketing manager to monitor the activities of their competitors, what they are doing? KFC adopted such sort of strategy that there is no competitor for spicy chicken, which is made by KFC.KFC beats its competitors through the revising marketing strategy at every movement but the main competitor of KFC is McDonalds

COMPETITIVE ADVANTAGE

KFC

McDonalds

Spicy ProductsIndians like spicy products instead of boiled food

Burgers and French Fries

Chicken Thali and Zinger Big Mac

Chicken is eaten by most communities Beef is banned in India

Local Staff and Highly Qualified because local staff can better dealwith the customers

Its Staff consist of simple Graduates andgive them training

KFC uses Top to Bottom and Bottom toTop Approach in Management.

McDonalds Uses Top To BottomApproach.

Fast food is one of the world’s largest growing food type. India’s fast foodindustry is growing by 40% a year and is expected to generate a billiondollars in sales by 2005.The multinational segment of Indian fast food industry is up to Rs. 6 billion, a figure expected to zoom to Rs.70 billion by 2005. By 2005, the value of Indian dairy products is expected to be Rs.1,00,000 million. In last 6 years, foreign investment in this sector stood at Rs.3600 million which is about one-fourth of total investment made in thissector. Because of the availability of raw material for fast food, Global chainsare flooding into the country.

Economic Analysis of Market

A market in this context refers to a number of all actual and potential buyers of a product. These buyers have a need to satisfy their needs through exchange. These needs make up the demand for particular products and services. Several components must be considered, as all these components have a direct or indirect impact on KFC’s success. Changes in the below described components over the last couple of years have led to big changes in people’s attitudes towards healthy food. It explains why Australians today want to eat healthy and nutritious-rich food in order to keep themselves healthy and that KFC must adjust their range of product and their company image to appeal to these new expectations, people have.

KFC operates in a larger macro environment of forces that creates opportunities, but also threats. (Kotler et al 2003). A company such as KFC usually cannot influence trends in the macro environment, as they affect people and organisations on a larger scale. However, KFC has to carefully examine macro environmental trends and must create competitive responses to such trends. There are six major macro environmental forces KFC has to take into account.

Micro environment

The microenvironment consists of all forces that are close to KFC, and on which KFC has an impact. They directly affect KFC’s ability to serve its customers. Three major components influence KFC’s micro environment:

Competitors

Because the fast food market in India is highly competitive, KFC faces a wide number of direct and indirect competitors. KFC’s main competitors are fast food chains such as McDonald’s and Domino’s, which are already well established throughout India.McDonalds’s in particular is a direct competitor, as they have already successfully introduced their Salads plus line, which directly targets ‘healthy food’ conscious Indians. But, there are a number of other competitors that is also focusing on ‘chicken’ types products. All this competition makes it quite difficult for KFC to maintain or even broaden their customer base. However, with the introduction of a new and healthy product range, KFC can differentiate itself from most competitors and will gain a competitive advantage.

Customers

KFC’s customer market consists solely of the consumer market. KFC’s products are bought by individuals (males, females, singles, and families). Therefore, the product range KFC offer should appeal to as many people within this consumer market as possible, to ensure that the maximum amount of products can be sold. The characteristics of these individuals and a segmentation of them are discussed later in this report.

Factors affecting KFC

Political:The operations of KFC are affected by the government policies on the regulations of fast food operation. Currently government are controlling the marketing of fast food restaurant because of health concern such as cardiovascular and cholesterol issue and obesity among the young and children in the country. Governments also control the license given for open the fast food restaurant and other business regulation need to follow such as for a franchise business. Good relationship with government in giving mutual benefits such as employment and tax is a must for the company to succeed in any foreign market.

Economic:Though for last 1 year there was economic slowdown all across the globe but the sales of KFC and other fast food chains did not slow down to that extent that of other sectors in. The GDP (Purchasing Power Parity) is estimated at 2.965 trillion U.S. dollars in the year 2010. The GDP- per Capita (PPP) was 2700 U.S. dollars as estimated in 2008. The GDP- real growth rate in 2007 was 8.7%. India has the third highest GDP in terms of purchasing power parity just ahead Japan and behind U.S. and China. Foreign direct investment rose in the fiscal year ended March 31 2007 to about $16 billion from just $5.5 billion a year earlier. There is a continuous growth in per capita income; India’s per capita income is expected to reach 1000 dollars by the end of 2007-08 from 797 dollars in 2006-07. This will lead to higher buying power in the Hands of the Indian consumers. So taking into considerations the economic factors of India KFC is safe. The only danger to it will be if there is a terrorist attack in India and the victim is KFC.

Socio cultural:India is the second most populous nation in the world with an approximate population of over 1.1billion people. This population is divided in the following age structure: 0-14 years – 31.8%, 15-64 years – 63.1% and 65 years and above – 5.1%. There has also been a continuous increase in the consumption of fast food in India. The social trend

toward fast good consumption is changing and India has seen an increase of 90% fast food consumption from the year 2002- 2007. This increase is far greater than the increase in the BRIC nations of Brazil (20 per cent), Russia (50 per cent) and China (almost 60 per cent). Thus this shows a positive trend for fast food industries in India.

Technological:The Indian fast food Industry is heating up with a lot of foreign players entering the Indian market. The technological knowhow and expertise will also enter the Indian market with an increase in competition. With the lower rates and increase technology the fast food counters are attracting youth by giving them attractive deals. For e.g. KFC and Domino’s pizza. For a fast food restaurant, technology does not give a very high impact on the company and it is not a significant macro environment variables. However KFC should be looking to competitors innovation and improve itself in term of integrating technology in managing its operation. For example in inventory system, supply chain management system to manage its supply, easy payment and ordering systems for its customers and wireless internet technology. Implementation of technology can make the management more effective and cost saving in the long term. This will also make customer happy if cost savings results in price reduction or promotional campaign discount which will benefits them from time to time.

Environmental:As one of world largest consumer of beef, potatoes and chicken, KFC always had been critics for world environmentalist. This is because high consumption of beef causing the green house effect by methane gasses coming from the cow’s ranch. Large-scale plantation has effect the environment and lots of green forest opening for plantation activities. Vegetarian environmentalist criticizes the fast-food giant for cruelty to animals and slaughtering. In America, once KFC want to introduce whale burger causing uproar because whales are endangered species. Before using paper packaging, KFC once had been criticized for being insensitive to pollution because of using ne based packaging for its food products. Imagine millions of people purchase from fast food operator and how is the impact to world environment by throwing away those hard to recycle packaging. Our world is getting concern on environment issue and business operating here should not just care for profit, but careful usage of world resources for sustainable development and care for environment safety and health for our future generation. Critics and concern from all public or activist should be review and support if necessary to ensure we play our social responsibility better.

Summary of current situation

SWOT analysis mean strength, weakness, opportunities and threats and the SWOT analysis of KFC are:

STRENGTHS

: GOOD WILL AND REPUTATION : The Company certainly has earned a good name and reputation by its previous products and services in the market. It is even more recognised in other markets outside India, where the company is among the leading fast food giants. The brand is recognised and trusted in India for its quality products, price, and customer service. It therefore has a good head start and enjoys a good chance of becoming a leader in Indian fast food industry.

Employee Loyalty: Employee Loyalty is one of the major strengths of KFC. The turnover rate in the company is amongst the lowest in the industry.

: Despite gain by Boston Market and Chick-fill A, KFC customer base remained loyal to Customer Loyalty the KFC brand because of its unique taste. KFC has continued to dominate the dinner and take out segment of the Industry.

Ranks highest among all chicken restaurant chains for its convenience and menu variety. It generates $1B revenue each year.

WEAKNESSES

KFC was losing market share as other Chicken chain increased sales at a faster rate.

KFC share of Chicken Segment sales fell from 71 percent in1999, to less than 56 percent in 2009, a 10 years drop of 15 percent.

There is huge competition in this segment. India is still mostly a vegetarian dominated cultured society. South India is

especially very much so. This may reduce the market share of the company. KFC has not yet invested much on R&D, and innovating new products for Indian

Markets. This may lead to failure of their products as they are not in line with the Indian mind set, peoples taste and preferences and their likes and dislikes. This may prove fatal for the company.

OPPURTUNITIES

New Markets: Globalisation has opened doors for new markets for the company. As the developed markets are mostly saturated, the developing countries like India and China promises a good market and generation of demand in the future. With more than 70% of the markets in India being unexplored and un organised, KFC has a good scope of expanding its operations in the country.

Cross Culture : Generally there is a good acceptance of American culture of fast food in India. People are opening up to fast foods more regularly in their daily lives and not just keeping it a once in a month affair. Thus Indian mindset is fast changing.

Large Youth population: India has a very large share of youth population a compared to other countries. More than 60% of the population is under the age of 30yrs. As the young generation are more open to fast foods and demand it more, this is good news for the company.

New variety: Company can also come up with new variety in the menu like Pizzas, garlic breads to attract more customers.

THREATS

Competition: Competitor companies like McDonalds are fast catching up with the market. McDonald’s with sales of more than 19 billion in 1999, accounted for 15 percent of the sales of the nation’s top 100 restaurant chains.

Organisations like PETA People for Ethnic Treatment for animals have given a bad name to the company which may prove disastrous to the image of the firm. Currently, KFC is under massive attacks from animal organisations, questioning the way KFC’s suppliers are threatening the chicken, before they got slaughtered. Anti-KFC campaigns, such as the one from PETA are affecting KFC’s brand image in a negative way and result in direct dollar losses, as less people are consuming KFC chicken

Saturated US Market: Now KFC cannot rely on just its home market to generate sales. As the US markets are already saturated and leave no or little scope for growth, company necessarily needs to look at offshore foreign markets to generate sales and keep up the profits.

MARKETING STRATEGIES OF KFC

There are different strategies adopted by KFC for different events. They market their products on different events and in different activities as they are helping SOS village.According to KFC, kids become the future permanents customers and we know very well that without any marketing strategy no marketing program and no product is successful because we depend upon customers, customer not depend on us.

KFC is following Niche Marketing and Societal Marketing techniques. KFC possess a western culture because some of the Indian people are also

following that culture. KFC are moving from Divisional Level to the District level by opening branches KFC open their outlets on reachable places. KFC menu consists of more than 30 products. KFC gives more priority to Family.

MARKETING Mix

The marketing mix is generally accepted as the use and specification of the ‘four Ps’ describing the strategic position of a product in the market place.

Product (goods and service) Price (value of the product) Promotion (aware the people for product) Place (distribution of product

Marketing mix at KFC

The marketing mix of KFC consists of 4Ps. It contains everything KFC do it to influence the demand for their products.

1. PRODUCT: A product is anything that can be offered to a market that might satisfy a want or need.

KFC product planning

KFC product is classified as consumer product as it has no intermediates. KFC offers specialty goods. The stock turnover of KFC is high. Price and quality of the product is always compared. KFC’s product includes Goods (Burgers, Chicken Meals etc) Services (cleanliness, quick service, parties)

KFC product line

Veg ZingerVeggie Snacker Veg Rice and StripsVeg Strips with SalsaCorn on the cobColeslawKrushersGame BoxToastedZing Kong BoxBoneless Chicken MealChicken Zinger burgerChicken DelightsBucket ChickenChicken Rice MealChicken SnackerHot wingsDessertsOriginal Recipe

Chicken ThaliSoft Drinks

BRAND:There are three brands of the KFC:1) Taco bell2) Pizza Hut3) Long john silvers

KFC has introduced a new product “Veg Zinger”. It is new in the market and hasn’t been launched in all the outlets. Their tagline for this new product is “Living on the Veg”. KFC is trying so hard to convince people that it is not 100% non-veg; but also 100% veg.

Product mix strategy

The product mix strategies are in relation to:

Competitors:KFC has a head-on competition with McDonalds. Wherever they place their products; KFC goes there as well.

Attributes:The brand of KFC is so strong that it is the attribute itself.

Place and Quantity:KFC products are based on high quality and prices.

Brand of KFC

Brand Name: KFCColour: Red and whiteSymbol: Colonel Harland Sander’s picture and KFC written with it.Master Brand: The brand itself is so dominant, that it immediately comes in mind.

KFC's brand identity -- the logo features Colonel Harland Sanders, one of the best recognized icons in the world.

KFC is trademarked registered brand. It is distinctive, adaptable to addition to product line. It suggests something about product. It is legally protected and registered The brand equity is very high as the value added by brand to the product effects

the product selling. KFC is marketing the entire output under products own brand

PACKAGING

The packaging for KFC products is chosen according to performance against three key criteria:

Heat RetentionMoisture removalGrease absorption

The packaging material and carton design are all adapted to maximise performance against these three criteria.

Recycled PaperKFC’s clamshells and chicken boxes contain as much recycled material as it is legally allowed. By law they are required to have virgin fibre board in any part of the packaging that is in contact with food. Any virgin fibre comes from board suppliers who use pulp bought from managed forest in Scandinavia. This ensures that any wood cut for paper production is replaced with new plantings.

Environmental concernsOver and above ensuring KFC’s packaging is supplied via recycled or renewable resources; KFC are enthusiastically complying with the new environmental directives on recovery and recycling of packaging waste.

Conclusion KFC has made a separate brand image in India. KFC Pakistan does serve the vegetarians. Product line is very vast. They study the behaviour of the Indian customers. KFC has specific product features. Offers delicious and quality product. Specialization in fried chicken. Charging extra for side dishes. Quality, cleanliness, and service. Product quality assurance.

PRICE

Price is the any amount of money that customers have to pay while purchasing the product. More broadly, price is the sum of all the values that consumers exchange for benefits of having or using the product or services

Price strategies of KFCIn introduction stage KFC entered the market using market-skimming strategy. Their products were high price and targeted only upper class. Gradually they trickle down focusing on the middle class to penetrate the market. Also KFC follows one price strategy. Price is determined according to the rates of the raw materials and policies of the Govt. The political and legal forces often affect the policies of KFC and eventually results in change of prices that is due to imposing of taxes.

Price competitionWe can compare the price of KFC products with McDonald, Dominoes and Pizza Hut. If the competitor provides the same product at a lower price than the organization usually lowers the price of its product too. In the case of KFC, Fried Chicken is its main selling point and controls a monopoly over the Pakistan fast food market. It-prices its burgers, French fries and soft drinks.

Cost Based pricing KFC prices their product keeping different points in view. They adopt the cost base price strategy. Pricing of the product includes the govt. tax and excise duty and then comes the

final stage of determine the price of their product. The products are bit high priced according the market segment and it is also

comparable to the standard of their product. In the cost based method we include the variable and fixed cost.

Calculation of the price under Cost Based Pricing Strategy

Total Pounds of Chicken Served in KFC Restaurant Annually = 1.914 Billion

Total KFC Chicken Pieces Sold Annually = 5.89 Billion

Total Retail Sales = $8.9 Billion

Sales Price of per Chicken Piece = Total Retail Sales / chicken Pieces sold = $8.9 Billion / $5.89Billion =$1.51 we assume that Fixed Cost is = $6000000000

Variable Cost = $675000000

Profit Margin is Or Mark Up = $225000000(25% of Sales) per unit variable cost = $675000000 / 5890000000 = $0.115

Unit Cost = Variable Cost + Fixed Cost / Chicken pieces Sold= 0.115 + 6000000000 / 5890000000= 0.115 + 1.02= $1.135Now suppose manufacturer wants to earn 25% mark up on sale. The manufacturer mark up price is calculated:

Mark Up Price = Unit Cost / (1 – Desired Return on Sales)=1.135 / (1-.25)= 1.135 / 0.75= $1.51

KFC charge high prices. Offers different coupons. Concept of discount is lacking in KFC India. KFC has targeted the upper class people. Service charges are also high. No clear policy for discount and coupons. The employees are trained not to suggest the discounts. KFC sells their experiences on high rates. High revenue due to best strategies.

PLACE

This refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Placement, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.

KFC distributionKFC has only one channel of distribution i.e. direct where the goods are transferred to the consumer directly. KFC has no middlemen.

Distribution of goods and servicesKFC does distribution of consumer goods directly to the consumer.

Target areas

Accessibility – Resulting in several outlets to cater to the needs of people in & around the city.Hectic lifestyle – Due to the hectic lifestyle of office goings individuals the fast food concept saves time of preparing food and gives the customer a full meal quickly.Commercialization of urban and sub-urban markets leading to more mid-sector people that find high-end eating joints too expensive. Mid-sector people are always looking for change which KFC provides in their range of fast food.Quality conscious – people in urban areas are more conscious about the quality of food than rural areas.Urban areas are more populated therefore they help with attracting higher revenues.

Placement of outletsDue to KFC placing itself close to schools, colleges, cinemas and markets which are mostly populated by the young and those who are in a hurry, KFC enjoys a large number of footfalls every day.

CHANNEL PROCESS

KFC works on the flow of good operation techniques i.e. “Good Operating Manager→ leads to “Good Team Selection →Good Services → Good Targets → Good Revenues through the following internal strategies:

Training Incentive based targets Recognition for good work Performance based bonus Employee benefits to keep them motivated Promotion

Vertical marketing system

KFC has corporate vertical marketing system because it is centrally owned by its subsidiary Yum Brands. KFC is affected by the geographic distribution (they have few outlets then its competitor McDonald’s). The unit value of the items is comparatively lower then McDonald’s. KFC has a well-equipped sitting area for the customers and a Chicky play area for the kids.

Conclusion

KFC deals in internal market. Target only city areas KFC has well equipped sitting. KFC has no intermediaries. Well trained staff with expert supervisors. Seeking customer’s response for quality. KFC has no entertainment in some franchises. Quality conscious people are the main target of KFC.

Promotion:

Promotion is the method used to inform and educate the chosen target audience about the organization and its products. Using all the resources of promotion

KFC promotion strategy

The logo features Colonel Harland Sanders that is one of the best logo in the world has created its name as a standard in the market. The logo of the smiling Colonel is

probably one of the most recognized faces in the world and instantly brings the image of fried chicken to one’s mind. Today the Colonel’s Spirit and heritage are reflected in KFC’s brand identity.

KFC promotion sources Advertising Sales Promotion Public Relations Events and Experiences Coupons, Discounts and Bundled packages

An organization finds most of its meanings and survival through promotion. At KFC, Promotion is the main tool to bring all chicken lovers attention towards its delicious one of- a-kind.

Advertising

KFC by its advertisements derives the desire in the customer to come and enjoy healthy food in their favourite restaurant.

They spend 2% of its profits on advertisement and use print media and most recently doing televised marketing to promote it products.

Their advertising media involve: Newspapers, Pamphlets, Billboards and Television. KFC does both the primary demand advertising (“Become a Chicken Fanatic”) and the selective

Demand advertising (e.g. “Zinger Meal”). KFC does institutional advertising to stimulate demand. When KFC offers new

products then it does product advertising. KFC’s ad’s act as counteracts which means to drive the customer to KFC i.e. it

uses pull advertising strategy. KFC has put big hoardings on the busy areas of India and have an effective

advertisement campaign on the media in order to MOTIVATE its customers. The colours used in advertising are Red, White and blue which itself is

recognition for the brand.

Figure 5 – Print Ad

Sales promotionFor the sales promotion KFC introduced their goods like watches, keychain and so on to the customers.

Figure 6 - Merchandise

Data Analysis

The data we received is as follows:-We did a survey on KFC on people with age group of mostly 20-25yrs.Mostly all were open to non-veg food, and following were the results. As seen below KFC has shown a good report on all the micro factors that we considered.

How close is the nearest KFC outlet from your house?

Would you like to order at home or Dine in?

Data interpretation -

It is clear from the above report that a high number of people actually like to order from their home or workplace rather than coming. This may be due to more convenience, time shortage or just not willing to come and dine. Certainly the home delivery market is huge and KFC can take well advantage of the situation. Thus it would be in the best interest of the company to start the service as soon as possible and capitalise on the opportunity. KFC expects a rise in the orders by at least 20% by starting this service.

Therefore, to conclude we would say that KFC should definitely have a home delivery service.

FINANCIAL PROJECTION

Particulars Total cost

Advertising (3 insertions TOI, DNA) 21,00,000/-

Brouchers 100 10,000/-

Promotional visits 3,000/-

Seminar 7,000/-

Total 21,20,000/-

Schedule of advertisement

News paper Dates Total expenses

Times of india 2 th /16 th /30th NOVEMBER 2010

17,00,000/-

DNA 8 th /22 nd NOVEMBER 2010 and

6 th NOV 2010

4,00,000/-

Seminar 2 nd NOV 2010 7,000/-

Visits to Malls 3,000/-

Brouchers 10,000/-

Total 21,20,000/-

IMPLEMENTATION CONTROL

IMPLEMENTATION CONTROL

RETURN ON INVESTMENT

Particulars Numbers Unit price Revenue

Broucher and

admission form

100 100 10,000/-

Estimated admissions 50 75,000 37,50,000/-

Total Revenue 37,60,000/-

Conclusion

After our research of KFC, I come to conclusion that KFC has a good product as far as chicken items are concerned. But they have to increase other varieties to attract the customers. And they must targets the children, as McDonald’s targeting by making a play land because children are the main source and important ones to push their parents to go to their favourite restaurants. And one more aspect for KFC is that it must also reduce their prices to compete their competitors like McDonald,

Crisps Pins and Pizza Hut. The largest threat KFC is faced with is the restaurant industry as a whole. The consumer continues to have many choices when it comes to fast food restaurants. KFC struggles are much do to the inability to bring new products to the market quickly and its innovation of new products. KFC fell behind the market in new products and was copying other fast food chains to stay competitive.

SUMMARY

KFC is one of the most known fast food chains in the world started in the early 1930’s by kernel sanders.

· Food, fun and festivity, this is what KFC is all about.

KFC has more than 11,000 restaurants in more than 80 countries and territories around the world.

KFC first time came to Pakistan in 1997 and was the title of being the market leader in its industry.

The marketing mix of KFC consists of 4Ps. It contains everything KFC do it to influence the demand for their products.

KFC was launched here as an innovative product.

KFC has a head-on competition with McDonalds

The brand of KFC is so strong that it is the attribute itself.

KFC introduced itself, has grown and now it is at maturity stage for the last ten years in India.

Their products have high price and targeted only upper class.

Total KFC Chicken Pieces Sold Annually = 5.89 Billion

Profit Margin is Or Mark Up = $225000000

KFC has only one channel of distribution (direct)

KFC by its advertisements derives the desire in the customer to come and enjoy healthy food in their favourite restaurant.

They spend 2% of its profits on advertisement.

KFC has a good product as far as chicken items are concerned.

REFERNCES