marketing sumathy final

8/9/2019 Marketing Sumathy Final

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Executive summary

KFC Corporation, based in Louisville, Kentucky, is the worlds most popular chicken

restaurant chain, specializing in Original Recipe , Extra Crispy TM, and Colonels Crispy

Strips chicken with home style sides and five new freshly made sandwiches. Every day,

nearly eight million customers are served around the world. KFCs menu everywhere

includes Original Recipe chickenmade 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 productsfrom 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 Colonels spirit and heritage are reflected in KFCs brand identity the logo features

Colonel Harland Sanders, one of the best recognized icons in the world.

KFC specialized in chicken and they says,

No bodys cooking like KFC today and we are the chicken experts

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


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MARKETING STRATERGIES WITH REFERENCE TO KENTUCKY FRIED

CHICKEN

Introduction

KFC History

KFC is an internationally renowned fast food industry in the world. They have the main

ambition to increase & maintain the quality in fast food industry. Their aim is to capture the

fast food market. Basically they want to provide their products to anyone that is why they

expanding their branches in all over the world. They want to increase their profit through

giving maximum satisfaction & other better facilities to people that they want. Now after

catching such a marvelous position in the International Market, KFC is introducing a new

item Boneless Fried Chicken, with even more attractive and charming taste.

KFC India

KFC is the worlds 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 its 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 Sanders secret recipe. Its signature dishes include the crispy outside, juicy

inside Hot and Crispy Chicken, flavorful and juicy Original Recipe chicken, the spicy, juicy


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& 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 Veggie Rice meals. In India, KFC is growing

rapidly and today has presence in 11 cities with close to 50 restaurants.

Values of KFC

Focus all our resources to our restaurants operation because that is where we serveour 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 atall times.

Encourage new and innovative ideas because these are the key to our competitivegrowth.

Reward result and not simple efforts.

Dedicate ourselves to continuous growth in sales, profit and size of organization.

Work as a team.

Current target market

Segmentation

KFC has divided the market of India into distinct groups of customers with different

demands, tastes and behavior who require separate products or marketing mix.


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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

Behavior

Geographical

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

DEMOGRAPHICAL BASIS

In demographics their first segment is consisted of the income factor i.e.

High income, average income and low income.

BEHAVIOR

In behavioral 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


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GEOGRAPHICAL BASIS

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

Urban areas

Sub urban areas

Porters five Forces Model

Porter's five forces is a framework for the industry analysis and business strategy

development developed by Michael E. Porter ofHarvard Business School in 1979. It uses

concepts developing, Industrial Organization (IO) economics to derive five forces that

determine the competitive intensity and therefore attractiveness of a market. Attractiveness in

this context refers to the overall industry profitability. An "unattractive" industry is one

where the combination of forces acts to drive down overall profitability. A very unattractive

industry would be one approaching "pure competition".
http://en.wikipedia.org/wiki/Michael_Porterhttp://en.wikipedia.org/wiki/Harvard_Business_Schoolhttp://en.wikipedia.org/wiki/1979http://en.wikipedia.org/wiki/Industrial_organizationhttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Michael_Porterhttp://en.wikipedia.org/wiki/Harvard_Business_Schoolhttp://en.wikipedia.org/wiki/1979http://en.wikipedia.org/wiki/Industrial_organizationhttp://en.wikipedia.org/wiki/Market


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Three of Porter's five forces refer to competition from external sources. The remainder are

internal threats. It is useful to use Porter's five forces in conjunction with SWOT analysis

(Strengths, Weaknesses, Opportunities, and Threats).

Porter referred to these forces as the micro environment, to contrast it with the more general

term macro environment. They consist of those forces close to a company that affect its

ability to serve its customers and make a profit. A change in any of the forces normally,

requires a business unit to re-assess the marketplace given the overall change in industry

information. The overall industry attractiveness does not imply that every firm in the industry

will return the same profitability. Firms are able to apply their core competencies, business

model or network to achieve a profit above the industry average. A clear example of this is

the airline industry. As an industry, profitability is low and yet individual companies, by

applying unique business models, have been able to make a return in excess of the industry

average.

Porter's five forces include - three forces from 'horizontal' competition: threat of substitute

products, the threat of established rivals, and the threat of new entrants; and two forces from

'vertical' competition: the bargaining power of suppliers and the bargaining power of

customers.

This five forces analysis, is just one part of the complete Porter strategic models. The other

elements are the value chain and the generic strategies
http://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/Marketing#Marketing_environmenthttp://en.wikipedia.org/wiki/Environmental_scanninghttp://en.wikipedia.org/wiki/Companyhttp://en.wikipedia.org/wiki/Profit_(economics)http://en.wikipedia.org/wiki/Marketplacehttp://en.wikipedia.org/wiki/Industry_informationhttp://en.wikipedia.org/wiki/Industry_informationhttp://en.wikipedia.org/wiki/Firmhttp://en.wikipedia.org/wiki/Firmshttp://en.wikipedia.org/wiki/Core_competencieshttp://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Value_chainhttp://en.wikipedia.org/wiki/Porter_generic_strategieshttp://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/Marketing#Marketing_environmenthttp://en.wikipedia.org/wiki/Environmental_scanninghttp://en.wikipedia.org/wiki/Companyhttp://en.wikipedia.org/wiki/Profit_(economics)http://en.wikipedia.org/wiki/Marketplacehttp://en.wikipedia.org/wiki/Industry_informationhttp://en.wikipedia.org/wiki/Industry_informationhttp://en.wikipedia.org/wiki/Firmhttp://en.wikipedia.org/wiki/Firmshttp://en.wikipedia.org/wiki/Core_competencieshttp://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/Business_modelhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Value_chainhttp://en.wikipedia.org/wiki/Porter_generic_strategies


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Entry

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-veg 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 theyve 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 McDonalds, Pizza Hut, Domino's

and Subway, and any new fast-food entrants would just be presenting something very similar

to whats already there. While small Neighborhood 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


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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, labor 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 McDonalds, 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, KFCs 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.


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Rivalry

Unlike what one would expect, KFC has little rivalry with similar fast-food chains in India.

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.

Competitive analysis

Competitors

You cannot enjoy the business without competitors. No organization can afford to ignore

there competitors. It is very important for a marketing managers to monitor the activities of

there 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 are Mc

Donald


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KFC McDonalds

Spicy Products

Indian people like spicy products instead of

boiled food

Burger and French Fries

Arabian Rice and Zinger Burger Big Mac

Free Delivery Charges for home delivery

Chicken is eaten by every community Beef is banned in some community

Local Staffand Highly Qualified because

local staff can better deal

with the customers

Its Staff consist of simple Graduates andgive them training

KFC uses Top to Bottom and Bottom toTop Approach inManagement.

McDonalds Uses Top To BottomApproach.

KFC is Co branding with Walls No such Case


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SWOT analysis mean strength, weakness, opportunities and threats and the SWOT

analysis of KFC

Strength

Goodwill 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.

n Customer Loyalty: Despite gain by Boston Market and Chick-fill A,

KFC customer base remained loyal to 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

W e a k n e s s e s


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n KFC was losing market share as other Chicken chain increased sales at

a faster rate.

n KFC share of Chicken Segment sales fell from 71 percent 1999 , to less

than 56 percent in 2009 , a 10 -years drop of 15 percent.

n Huge competition in this segment.

n 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.

O P P U R T U N I T I E S

n 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.

n 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.


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n 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 a 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

n Competition: Competitor companies like McDonalds are fast catching up with the

market.McDonalds with sales of more than 19 billion in 1999, accounted for 15 percent

of the sales of the nations top 100 restaurant chains.

n 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 KFCs

suppliers are threatening the chicken, before they got slaughtered. Anti-KFC campaigns,

such as the one from PETA are affecting KFCs brand image in a negative way and result

in direct dollar losses, as less people are consuming KFC chicken


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n 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.

Conclusion and Recommendation

Based on the analysis, we can conclude that they should start by solving their internal issues

such as management and restaurant menu before thinking about expanding. They should

work on the management issues to create a good atmosphere where employees are happy to

work in. I certainly do not believe that by treating employees poorly, a company can be

successful. They also need to make sure that their restaurants offer a diversified menu,

provide their customers with quality food, excellent service and restaurant cleanliness. KFC

should always listen to their customers and try to follow the new trends on the market in

order to fully satisfy their customers. Otherwise, competitors will satisfy them and will

eventually outperform you as Boston did with its grilled chicken. Even though, KFC seems

to have an emotional attachment to their original recipe that made their success, they

definitely need to move on and develop new products that customers want in order to

increase their financial performance and value. We have seen that Boston and Popeyes are

stealing customers away from KFC because they understood what customers wanted and

started offering healthier items. KFC should certainly do the same and enhance their menu.


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Concerning their expansion strategy, KFC should start by closing a few non-profitable stores

in the US that are currently drowning money from KFC. This will allow KFC to get the cash

necessary to invest in new markets, which offer more growth potential. We have seen that the

US market is not as attractive as it used to be, it has become saturated and certainly does not

appear to have a bright future ahead. There is also the competition in the US that makes it

really hard to compete in, whereas in other foreign markets that are quasi untouched as I will

discuss more in detail later. KFC has to select countries based on their attractiveness and

make sure that they can provide above-average returns, which will be discussed more in

detail in the intermediate term. Concerning investing internationally, extremely attractive

countries that can provide above-average returns are regions that have chicken as traditional

dish such as Asia and Latin America. Those regions should certainly be prioritized while

developing an international expansion.

While they start attacking those new markets, they should keep in mind to focus locally even

though they go international in order to overcome certain barriers such as language, law and

a good understanding of needs. Targeting new countries usually work better if you adapt to

the local market. They need to stay close to their mission (provide customers with quality

food, excellent service and restaurant cleanliness) and make sure to know how to achieve

their long-term objectives. They also have to keep innovating and coming up with new items

regularly. Remember that even though, they come up with similar products, customers are

most likely going to try them.

They also have to follow the trend and go hand in hand with customers to satisfy their

changing needs, as we have previously discussed with the current healthier food trend. They


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also want to keep an excellent image by treating employees fairly and keeping a good control

over franchises to make sure they follow the companys procedures.

References

Cahill, T. (1995), How the Irish Saved Civilization, Doubleday, New York, NY.

Chittister, J. (1992), The Rule of Benedict: Insight for the Ages, Crossroads, New York, NY.

Fayol, H. (1949), General and Industrial Management (C. Storrs, trans.), Sir Isaac PitmanandSons, London (original work published 1916).

Moss, D.C. (1957), Of Cell and Cloister, The Bruce Publishing Company, Milwaukee, WI.

Wren, D.A. (1994), The Evolution of Management Thought (4th ed.), John Wiley & Sons,New York, NY.

Koo, L.C. (1997), Improving quality service through balanced scorecard, The 2ndInternationalConference on Quality and Reliability, Transactions of Nanjing University ofAeronauticsand Astronautics, China (TNUAA), Vol. 15 No. 1, pp. 147-53.

Kotler, P. (1999), Boards should tune in to corporate marketing programs, Directorship,Vol. 25 No. 7, pp. 12-16.

marketing sumathy final

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