KFC is a major quick portion restaurant (QSR) offering over 12 million customers on a daily basis through its 21, 400 restaurants in 109 countries. This project views the marketing strategy that KFC implements. Ahead of that, the assignment gives an launch about KFC, its establishment and history. Throughout the years, KFC has lost a big number of their market talk about to other healthier junk food restaurants due to the fact that consumers have become more health mindful. In response to the consumer's demands, KFC introduced a healthier product that is principally targeted at health mindful people.
KFC faced a variety of issues and problems in 1994. Still the world's most significant chicken string and third major fast food string, it sustained to grow at a healthy rate worldwide. It also continued to regulate one-half of most chicken string sales in the U. S. and possessed one of the world's most recognized brands. In addition, its new rotisserie poultry and buffet have been tremendously successful in those market segments where that they had been unveiled. However, while leads for continued growth internationally were smart, continued progress within the domestic market segments was threatened by a number of industry and societal movements. Competition from sandwich chains and new poultry chains, as well as consumer demand for a wider variance of menu offerings, forced KFC to reanalyze its product strategy. At exactly the same time, KFC and other fast-food competitors were forced to improve product offerings and to provide their product faster and with better service to consumers who progressively more demanded greater value for their money.
Furthermore, the task provides an information into the organizational reason for KFC. Current strategies and advice include the research of the strategies that KFC is using to develop and keep maintaining its market share.
KFC Corporation actually known as Kentucky Fried Poultry was founded by Harland Sanders in Louisville, Kentucky was managed by PepsiCo, Inc in 1986. KFC is the world's most popular and third greatest fast food poultry programmer and franchiser. KFC is internationally well-known for its Original Recipe fried chicken breast. It has 5200 units in US out of which 60 percent are franchised. KFC established fact because of its fried chicken breast and has 15, 000 outlets on the globe so that it is globally popular. Company participates in many jv operations as well and always will try to determine alternative venues to increase market show to get better position in the competitive fast food market and set up a steady position. KFC is an integral part of Yum! Brands, Inc. which is world's major restaurant company possessing revenues of $11 billion. KFC is area of the two PepsiCo divisions, that happen to be PepsiCo Worldwide Restaurants and PepsiCo Restaurants International both located in Dallas. David Novak is the leader of KFC. KFC restaurants are situated in 109 countries and territories across the world and will serve 12 million customer everyday creating sales of almost $10 million per 12 months. KFC can provide work to more than 24, 000 people internationally. (Jain, 2009)
KFC is dedicated for customer satisfaction giving them excellent quality of food and best services beyond par quality and cost effective for the money that they spend. KFC is convinced in providing both customer and contemporary society by continuous improvements. The main mission of KFC is to sell food in fast and friendly environment and also to create as leading WQSR (american quick service restaurant) chain serving value and innovative chicken established products. (KFC Positioning, 2007)
KFC is all about food, fun and festivity. KFC provides ultimate rooster foods every bite brings a YUM on customers face. The perspective of KFC is usually to be the leading integrated fast food restaurant delivering consistent quality products and excellent customer centered services globally.
C : Sanitation is retained all times
H : KFC is often hospitable and courteous by any means times
A : Orders are considered accurately
M : Keep up with the best standards
P : Products are of the best quality
S: Service is very speedy at KFC.
Marketing strategies of KFC is based on Product quality. KFC uses push technique for marketing to build awareness and be different. KFC targets young generation on the market segment because they are more vigorous and prefer more eating dinner out at the fast food restaurants. It focuses on early single segment this is the upper class. It offers combo dishes as focused on Area of interest marketing.
KFC is most renewed brand in poultry with 50% market talk about giving troublesome competition for companies like Hen planet, Mc Donald's, Dixie or the new admittance in junk food market. The primary theory for evaluating market development rate is the merchandise life routine. The BCG considers the life span levels of products and indicates their influence on the business's financial data.
Placing products in the BCG matrix leads to 4 categories in a profile of a company.
Boneless ChickenC:\Documents and Settings\hetal\Desktop\000 (2). jpg
Source: http://www. mrdashboard. com/BCG_Matrix. html
1. Personalities = high development, high market share.
The superstar product of the company is its crispy Boneless Rooster. It has a high market share and brings in high revenue. But it also has high developmental expenditure involved. The income therefore is generally not so high brought in by the product. This product is CASH NEUTRAL for the firm. The company is intending causeing this to be product a cow as well, by lowering the costs.
2. Cash Cows = low growth, high market share
KFC's Fowl Bucket is the most successful product of the company. It gets the highest market share amongst the rest of the products. It includes good demand on the market and brings in huge sales earnings. The development and other expenditures are also low and so this product is a CASH SURPLUS for the company.
3. Canines = low progress, low market share
KFC's Veg Thali comes under this category. Although company possessed launched the product much earlier, it has still didn't become a success. As KFC is well known more for its non-veg food, this also results low demand because of this item. It includes a low market share and although low on expenditure (as company will not spend on its advertising), it generally does not generate much earnings as demand is low. The merchandise is mainly CASH Natural.
4. Question Marks = high development, low market share
Currently KFC have launched a fresh product in the market. They also have tried to come into the beverages market by introducing its new make of shakes called KRUSHERS. Since it is a reasonably new product it comes in the group of the Question Make in the BCG Matrix. It includes a low market share thus brings low income. KFC is advertising too much to popularize the product so there is a lot of expenditure on it. The product is singularly not bringing any profits and is a cash drain for the company. Company may decide to completely remove this product from the market if it does not do well soon and start bringing in income.
"Marketing combine is the group of controllable tactical marketing tools, product, price, place campaign that the firms blend to create the response it desires in the mark market"
KFC 4 P's
Source: http://www. marketingindianbiz. com
McDonald's Corporation- the McDonald's Firm is the world's greatest quick service restaurant chain. You will find over 30, 000 McDonald's restaurants in more than 100 countries portion an average of 50 million people daily. From humble origins in 1955, the first McDonald's franchise restaurant in Des Plaines, Illinois, USA required in US$366. 12 on its first day of business. (Arches, 2010)
Popeye's Fowl and Biscuits-sometimes called Popeye's Louisiana Kitchen or Popeye's Hen & Seafood; also known as just Popeye's is a string of fried hen fast food restaurants, owned or operated since 1993 by the Sandy Springs, Georgia-based AFC Businesses, which was formerly America's Favorite Hen Company. Matching to an organization press release dated June 29, 2007, Popeye's is the second-largest "quick-service fowl restaurant group, assessed by amount of units", with more than 1, 800 restaurants in more than 40 claims. (Cajun, 2010)
A brief assessment between McDonald's and KFC and Popeye's rooster is as follows:-
Arabian rice and zinger burger
Big Macintosh personal computer and People from france fries
Charges for delivery
Chicken consumed by every community
Beef prohibited by some community
Mixed social people
Top to bottom approach
Bottom up approach
KFC cobranded with walls
No such case
PORTER's FIVE FORCES
http://www. emeraldinsight. com/fig/12_10_1016_S1048-4736_07_00007-0. png
Source: emeraldinsight. com
Threat Of Entry
In the existing competitive junk food restaurants it isn't difficult to go into but major difficulty is to take over already present restaurants, KFC keeps the advantage in non veg section of the market. KFC has generated its brand in a well manner and offers good stability and is well-known for its secret formula and fried chicken breast so entry of some new small restaurant would be looked at as low hurdle and won't have an impact on KFC much.
Buyer/Supplier Bargaining Power
For specific customer there is absolutely no bargaining ability as specific customer won't influence KFC because for one customer KFC won't change its price and the same does apply for suppliers. KFC helps provider by its latest solutions and providing them with innovative ideas to enhance their products. So the suppliers are available domestically and KFC can depend upon the neighborhood suppliers in case there is emergency. Such as Mexico the labor is unskilled place of people so labor cost is low. Hence the customer and distributor have hardly any bargaining electric power and KFC can control prices and expenditures quickly.
Substitutes and Complement
The major competitors of KFC are McDonald's, Pizza Hut, Domino's and Subway. Although they are in competition being in the same fast food industry however they are having different key products. KFC have decided to choose perfect tourist places in like manner increase sales in the great competition. Many ready to consume food can be replacement for KFC however the basic price and variety that KFC offers keeps customer stay with it. Mexico's small restaurant holds and complement the food industry along with KFC a example is Taco bell.
KFC has very negligible rivalry in the market as it has got its own market position and brand name and the primary products are incredibly different. The target customer is also very different and dependent on the fried poultry and wide range of food stuff proposed by KFC. Just upsurge in price won't switch its customer.
http://img224. imageshack. us/img224/9120/competetiv1cp7. png
Source: biz-development. com
Being in fast food industry KFC is regulated by government policies because of health issues. The license and franchisee business is also controlled by administration therefore KFC has preserved good relation with government by giving ample of work and paying regular taxes which is supportive for KFC to gain success in the competitive international market.
The economy internationally was very poor in this past year but KFC had not been much afflicted. The estimated GDP was 3 trillion US dollars. KFC offers potential financial capacity.
There is a continue increase in inclination of individuals towards junk food industry which assists with increasing the sales. The interpersonal and social aspect is of great importance and impacts a great deal of market show. The positive trend in KFC can be seen by examining the upsurge in sales in BRIC branches of KFC. India proved 90%, Brazil exhibited 20%, Russia exhibited 50% and china confirmed 60%.
Lot of international players is stepping into the Mexican market thus warming up the fast food industry in Mexico. The developed technology is supplying better compete in the economical prices and large selection of variety in food products is biggest middle of appeal for youth portion in the market because they are given various combo meals and other price keeping deals.
KFC combines technology in managing overall businesses and increasing the profit. Implementation of new technology in KFC is so that it is less expensive and better customer satisfaction, price lowering and many promotional promotions.
KFC is usually criticized from economical perspective we it is worlds greatest beef and chicken breast consumer that causes green house impact so vegetarian environment people criticize KFC for slaughtering and being cruel to animals. Along with it the newspaper used for packaging foods by KFC is not friendly to the environment. Therefore KFC has signed up with many environmental campaigns and have helped in keeping environment clean. KFC has started out dog welfare program and another is product packaging and environment program that do humane treatment with pets or animals and keep matter for environment.
KFC's secret formula.
Name recognition and reputation.
PepsiCo's success with management of fast food chains.
Traditional employee loyalty.
Improving operating efficiencies by lowering over head and other operating costs can straight affect operating revenue.
1. The many sales of KFC lead to a difficult corporate path.
2. KFC has a long time to advertise with services.
3. Conflicting ethnicities of KFC and Pepsi Co.
4. Turnover in top management.
5. Recent contractual disputes with franchisees in america.
The Mexican market, which offers a huge customer base, less competition, and close closeness to the united states.
Peso devaluation has made it less expensive for all of us to buy belongings in Mexico.
"Dual branding" really helps to appeal to the wider customer basic and provide higher profit.
New franchise laws in Mexico give junk food chains the chance to increase their restaurant bases.
New distribution programs give a significant expansion opportunity.
1. Saturation of the united states market.
2. Increasing competition and growing sales of substitute products.
3. Changing tastes of consumers.
4. Hurdles associated with expansion in Mexico.
No defined target market.
KFC lacked long term approach and had not been sure about the mark market portion as the advertising campaign had not been specific for just about any market segment there have been extreme changes in demographic factors of each market but KFC did not considered those factors.
Saturation of the U. S. Market.
Due to increased competition and quickly growing fast food chains usage of restaurant is currently extremely swift and easy. Now they are produced at convent places like international airports etc which are often approachable.
Health Conscious Consumers.
With the increase in health consciousness among people. Now all in America want to have a healthy diet thereby preventing fried products that was the greatest downside for KFC as it offers fried hen both healthy and calorie gaining.
Increased Start Up Costs.
Now KFC required the excellent locations for its location that are costly and therefore expenses were increased exponentially. Because of putting into action new technology efficiencies are increased but costs also have risen.
Low success and risky of doing business in Mexico.
The significant problem in Mexico market is highly unskilled labor that gave very little stability in the market. Employees had a strong cultural tendencies that was willing towards punctuality, absenteeism and job retention. So to teach the employees high amount of money was spending overall impact was low profit margin and high expenses.
KFC's ability to extend its distribution foundation was tied to an on-going feud using its franchisees. From the mid -1980's, KFC's franchisees have been permitted to operate with little disturbance from kick management. This "hands -off "approach could be traced back again to the 1950's when Harland sanders sold his first franchise, and resulted mainly from the colonel's lack of interest in franchise affairs. over time, franchise independence became a deeply rooted part of KFC's commercial culture. When PepsiCo received KFC in 1986, one of its first rung on the ladder was to renegotiate a fresh contract which would give it more control over franchises menu offerings and procedures, allowed it to close unprofitable franchises, and allowed it to dominate franchises which were poorly managed. Such activities were considered critical to improving product and service regularity and enhancing KFC's QSCV (quality, service, cleanliness, value) image.
The last agreement between KFC and its own KFC's franchisees, prior to KFC's acquisition by Pepsi co, was negotiated in 1976. This contract stipulated that KFC would not build any KFC unit within 1. 5 kilometers of an existing franchise including Mexican market. The 1976 deal also gave franchises electric power over provider sourcing and the right of automated contract renewal. The brand new contract would get rid of the 1. 5 mile security zone, eliminate automatic agreement renewal, and increase PepsiCo's control over distributor sourcing in the Mexican market as well. In Dec 1993, KFC guaranteed that they might adhere to the 1. 5 mile limit for seven weeks and Kyle Craig privately pledged never to open new full service restaurants, home delivery, or take-out devices within 1. 5 kilometers of an existing franchise.
1. Re-franchise all company owned or operated Mexican units into franchises
Low risk and increased cash flow.
Less administrative costs
New legislation promoting franchises and safeguarding patents and technology in Mexico.
2. Completely divest KFC of Mexican operations
This substitute includes canceling all franchises and providing off all company devices in Mexico.
Eliminate risk in foreign markets.
Reduced currency rate visibility in Mexico
Protects brand integrity
Increased cash flow/capital for other investments
save operational and administrative expenses
Forgoing potential revenue from the 2nd largest international market (Mexico is second behind Australia)
Ill will from franchises and Mexico consumers
3. Leave Mexico as is and increase other foreign markets.
Focus investment on most powerful growing portion in Australia
Less political and financial hazards in other overseas markets
Still maintain a minimal occurrence in Mexico for further growth in the foreseeable future when stableness is greater
Still have never mitigated risk in Mexico
Forgoing potential progress at profitable market
Still have brand exposure
Still have to service Mexico items without increased market of scale.
After examining KFC closely, I've produce some advice for KFC to
Gain a better market show.
The KFC Grilled Poultry is a great idea to gain more market show. Many
individuals, including myself, avoid eating KFC because of health and calorie
count issues. I would recommend that KFC should expose this new KFC product in vegetarian. In my opinion, this new product would attract new customers resulting in an increased market talk about and increasing revenue.
KFC should decrease their prices to be able to gain consumers from all the school segments. This could be achieved by launching a cheaper food to target the lower classes.
KFC should also include more vegetarian foods to target the vegetarian consumers.
The quality of the product should be the major matter of the management. Special good care should get to make sure that the grade of the product late during the night remains constant.
KFC should introduce more outlet options such as department stores, universities, carnivals etc to increase their market share in quickly growing markets
KFC is having a very good atmosphere for its staff to work and the organization culture is also good to cope with but there may be little problem with the management conditions that should be solved. The food quality and services made available from KFC are great. KFC always retains presenting new variety of chicken breast and edible products that helps in continuous improvement and progress in the income. Today's generation is very health mindful and prone to hypertension was thinking what if KFC offers or add fresh produced products such as vegetables & fruits in their menu it can increase their sales as even vegetarian people can enter KFC and can enjoy the wonderful ambient. In terms of 4 P's KFC does remarkably excellent.
Product- KFC in conditions of product does well it just need little improvement in their Hot menu that ought to be more strong and new innovative foods should be put into address local preference as well to increase market share.
Price- KFC as compared to other fast food restaurants is affordable but to entice the customers KFC should bring in discount packages for many age ranges and membership greeting card should provided extra credit factors.
Placement-KFC should have more shops at excellent commercial areas to target prospects and increase market show in addition KFC can think of experiencing mobile outlets.
Promotion-KFC is market image with large customer equity it should give attention to gaining sturdy market department by managing and running various advertisement campaigns. KFC can also use the brand promoters for various promotional promotions.
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