Kentucky Fried Chicken: Promotional and Pricing Strategies - Term Paper Example

?Running Head: Four Ps Four Ps [Institute’s Four Ps Introduction As of today, Kentucky Fried Chicken (KFC) is one of the most influential global brands. With a history spread over eight decades, from Colonel Sander’s original idea of fried chicken with its own secret recipe to KFC’s franchised business model under YUM brands in 2011, the company has gone on to play an important role in shaping the global fast food industry. As of 2011, KFC has its presence in more than 110 countries all over the world, most of which are franchised business (Lamb, Hair & McDaniel, 2011). This paper is an attempt to explore the marketing mix that is product, price, place, and promotion strategies used by KFC. Discussion Marketing Mix Following is the perceived marketing mix (Perreault et al, 2010) of KFC. Product As the name suggests the product of KFC is chicken, more especially fried chicken with the secret recipe of Colonel Sanders (Pride & Ferrell, 2010). The recipe is still a trade secret and only two unnamed senior executives of the company have had access to that complete recipe which is written by pencil on a piece of paper and signed by Colonel Sanders. The company has different varieties of chicken and its menu goes on to include “fried chicken, grilled chicken, chicken sandwiches, chicken burgers, zingers, nuggets, popcorn chicken, fillers, barbecued chicken and others” (Pride & Ferrell, 2010). KFC also offers various deserts, fries, cole slaw, salad, and other ingredients. Furthermore, lately, KFC has also diversified into fish offerings, although, they make up almost negligible portion of the total revenues and sales. Quite clearly, the focus of the company has been on increasing the depth of the product line but not on increasing the width of their product lines (Pride & Ferrell, 2010). It is almost impossible to avoid the discussion of branding strategies while discussing the product mix of KFC. It has been almost three decades since the death of Colonel Sanders yet their picture remains as the heart of KFC’s branding. Rather than changing their names and logos in every country, KFC, like other global companies, decided to go with one brand name and trademark logo of Colonel Sanders so that customers could associate global values with KFC and feel that being with KFC adds them to a huge network of people all over the world (Lamb, Hair & McDaniel, 2011). At the same time, KFC is also following the co branding strategy. Before being a part of YUM! Brands, PepsiCo owned KFC and since then the company has cobranded with Pepsi. Another reason for the same would be the fact that KFC’s biggest competitor, McDonalds joined hands with Pepsi’s biggest competitor, Coca Cola. Both KFC and Pepsi had common objectives and regardless of the country in which KFC is operating, only the beverages of Pepsi are offered to the customers of KFC. KFC’s packaging is also an important aspect of its product strategy. KFC’s current style of packaging emerged during the 1980s when it was a part of Wendy’s. The packaging does not only add value to the overall offering but at the same time it also helps in ensuring that the nutritional value of the product remains intact. Furthermore, the colorful packaging of KFC products also ensures that customers could develop a strong brand recall in the future (Pickton, & Masterson, 2010). KFC claims and takes great pride in the fact that their products are safe for health and suitable for people from all age groups. Every customer that has been to a KFC outlet will know that the company promotes the fact it cooks the chicken in the highest quality vegetable oil well over 170 C in order to make it fit and healthy for human consumption (Mueller, 2010). Price It appears that KFC uses the cost based pricing strategy in different countries. This is true because the prices of KFC in different countries differ greatly. While deciding on a price in any particular country, KFC would consider cost of importing raw materials, government duties, taxes, cost of production in that country, commission for the franchiser, in case if there is any, and required profit for the company (Lamb, Hair & McDaniel, 2011). Regardless of the fact that in what region of the world KFC is operating in, the company has always followed an aggressive discounting and price-cutting. Around every holiday season, whether it is Christmas, Halloween, Eid, Dilwali, or any other occasion, KFC would come up with attractive deals for its customers. In fact, the company, over the years, has mastered the art of using these deals and price cuts as a viable promotional tool as well (Pride & Ferrell, 2010). Interestingly, KFC has also followed price-skimming strategy in many countries such as India, Pakistan and other Middle Eastern countries. KFC entered in the market by presenting itself as a brand only for the upper middle class, upper class, and the luxury-seeking people and asked for higher premiums for its product. The marketing efforts and distribution efforts were such that customers could clearly associate the high price charged by KFC because of KFC targeting a specific segment of market (Lamb, Hair & McDaniel, 2011). They would only open the outlets in the posh areas of big urban cities and place their billboards in those areas. However, after a few months, KFC would open outlets in other areas of those cities, areas with greater population of middle class and lower middle class people while decreasing the prices down by a little bit. This would allow a huge population of middle class and lower middle class people to enjoy the previously perceived food of upper class. However, the problem with such an approach is that it will always ends up alienating a significant portion of the upper class customers, which were ready to pay a premium price for KFC (Pickton, & Masterson, 2010). Place It is evident that KFC has always followed a “pull strategy” where it uses its massive advertising and promotional efforts to pull the customers towards its outlets and franchises. It is also important to note that since there are not any wholesalers, retailers or distributors present in the marketing channel of KFC, the employees hired by the company go on to assume great importance because they directly deal with the customers and represent the company. KFC itself and its franchisers have long been dedicated to employing the most talented employees and training them to utmost possible levels so that they could take up the challenges of everyday work (Pride & Ferrell, 2010). Like other fast-food chains, KFC is well aware of the fact that most of its customers choose KFC because it is “fast food” and it compliments their busy lives. Therefore, KFC tries to place itself on the busiest locations of the metropolitan cities, near shopping centers, trade centers, schools, colleges, cinemas, play centers, sports grounds, central hub for offices, food streets and others. One will have great trouble in finding KFC outlets in suburbs and rural areas because that is not exactly the target market of the KFC. Furthermore, like other fast food chains, KFC pays great deal of attention while building its outlets. Regardless of the fact that the outlet has been franchised or is being managed by KFC themselves, the company has ensured that its outlet could provide cool and comfortable environment where customers could sit back and relax for a while if they want to do. In most outlets, a statue of Colonel Sanders welcomes the guests. Inside the outlets, one will find red and white as the predominant colors since KFC associates itself with these colors in all its promotions (Mueller, 2010). Another aspect of their distribution strategy would be of the free delivery system that has been in place in KFC for many years but in selected countries. With creating an aggressive system of free home delivery, KFC gets a chance to decrease many of its fixed costs, which are associated with customers occupying the restaurants and outlets for long periods. Home deliveries help greatly in peak seasons when there is immense rush on outlets (Lamb, Hair & McDaniel, 2011). Promotion Without any doubts, considering the competitive environment of the global fast food industry, no company can survive in the market with proper promotional activities. Furthermore, as mentioned earlier that KFC follows a pull strategy which furthers amplifies the importance of its promotional activities. According to its theory, the marketing communications mix contains six modes of communication, which are advertising, sales promotion, events and experiences, public relations and publicity, direct marketing and personal selling (Kurtz, 2011). Direct marketing and personal selling do not apply to KFC as such but it appears that KFC knows how to get the best possible mileage out of rest of these communication modes. KFC has long been promoting its tagline of “finger licking good” chicken. Now most of their advertisements centers around these taglines, which help customers, recall their previous experiences at KFC (Lamb, Hair & McDaniel, 2011). Furthermore, the company actively uses billboards, display signs, posters, symbols, logs, and others to convey its messages regarding the recent offerings, deals, and discounts. Under the umbrella of sales promotions, KFC has been extremely active in arranging contests, games, lotteries, gifts and others for children within their chicky fun areas. KFC’s sponsorship of cricket bash T20 cricket tournament in Australia was one example of their use of sporting events as their promotional tools. Furthermore, in various regions, KFC would go on to endorse, sponsor or form partnerships with many entertainment events, sporting events, causes, festivals and others (Mueller, 2010). KFC also uses its CSR activities in various countries, especially, South Asian and African countries to promote its message of sincerity and commitment to its customers. KFC has collected and donated millions of dollars for various causes and relief funds. From Breast Cancer awareness programs to hunger relief funds, from providing aid to flood victims to donating in diabetes research program, KFC has been spot on to use the public relations activities for its own promotion as well (Pickton, & Masterson, 2010). References Kurtz, D. L. (2011). Contemporary Marketing. Cengage Learning. Lamb, C. W., Hair, J. F., & McDaniel, C. (2011). Essentials of Marketing. Cengage Learning. Mueller, B. (2010). Dynamics of International Advertising: Theoretical and Practical Perspectives. Peter Lang. Perreault, Jr., William, J. C., and McCarthy, J. (2010). Basic Marketing: A Marketing Strategy Planning Approach. 17th ed. McGraw-Hill. Pickton, D., & Masterson, R. (2010). Marketing: An Introduction. SAGE Publications Ltd. Pride, W. M., & Ferrell, O. C. (2010). Foundations of Marketing. Cengage Learning. Read More