International Marketing - Companys Rationale behind Internationalisation - Essay Example

?Table of contents Introduction 2 2. Brief history of KFC 2 3. Company’s rationale behind internationalisation 3 4. Mode of entry in different countries 3 5. Marketing mix strategies used KFC 4 5.1Price 4 5.2 Product 4 5.3 Promotion 5 5.4 Place 5 6. Brand positioning and advertising 6 7. Marketing strategies in host countries 6 7.1 Differentiation 7 7.2 Aggressive advertising 7 8. How social and cultural factors impact on target markets internationally 9 9. Factors that influence decision making in development of distribution channels 9 10. Conclusion and findings 10 11. References 11 1. Introduction The marketing concept stipulates that the marketing managers ought to meet, anticipate as well as to satisfy the needs of the customers (Strydom, 2004). Of notable concern is the fact that organizations during the contemporary period operate in global environments and their activities are affected by a wide range of factors. It can be noted that there are major environmental influences that affect global and international markets. As such, this paper seeks to evaluate the factors that impact on Kentucky Fried Chicken (KFC). This organization belongs to the international fast food category. The paper starts by outlining the historical background of the company and the main part will discuss various factors that affect the organization in the environment in which it operates. The paper will also outline some of the strategies that can be implemented in order to improve the effectiveness of the organization. 2. Brief history about KFC Kentucky Fried Chicken (KFC) was founded in 1938 by Colonel Harland Sanders in Kentucky. Sanders’ legacy lives on with KFC operating more than “13,000 restaurants in more than 80 countries and territories around the world serving up the Colonel’s Original Recipe,” (KFC, 2013). KFC mainly specialises in fried chicken which is quite different from the products that are offered by other competitors in the same industry. The founder of the company developed 11 unique recipes using a variety of seasonings to flavour chicken and this has significantly contributed to the success of the company. The company is very popular in different market environments it operates in across the globe. The products offered appeal to the interests of many people and this has helped the company to create a strong base of loyal customers. 3. Company’s rationale behind internationalization KFC is regarded as one of the first fast food industries to go international during the 1950s. The rationale behind the company’s internationalization drive was to attract a substantial number of customers so that it can sustain its operations across the globe. The company also sought to establish itself as a force to reckon with in the fast food industry across the globe. The company was mainly interested in developing its brand so that it can attract as many people as possible across the globe. However, KFC has encountered some challenges in its global operations where it can be seen that the fast food industry is comprised of competition. In order to successfully penetrate the global markets, the company ought to design a careful strategy given that the international market is comprised of competition from other rival competitors like McDonald’s, Wendy’s and Burger King. The company also faces challenges in that it lacks expertise in diversifying its products since it mainly concentrate on chicken. Of notable concern is that fact that the fast food industry is comprised of different segments which include some of the following: family restaurants, sandwich chains, pizza shops, grill as well as chicken chains among other factors. Research has shown that McDonalds dominates in market segments such as burger while KFC dominates in the chicken segment. As such, an effective marketing strategy will help the company to gain a large market share in its operations. 4. Mode of entry in different countries The company used Harland Sanders’ franchising strategy to expand its operations in the international market to become one of the most recognizable brands in the fast food industry across the whole world. The company is registered on the New York stock exchange and it is one of the world’s largest chicken restaurant chains. According to its official website, the company intends to grow through franchising and mergers. The strategy of franchising helps the company to build a large market share as a result of the fact that its products would be sold by different players under the same brand name of the organization (Kotler & Armstrong, 2010). There are many advantages that can be derived from this strategy. More products are likely to be sold through different franchises. This helps the company to generate more revenue. The strategy also helps the local people to market the products offered through their franchises and this helps the company to create a large customer base. 5. Marketing mix strategies used by KFC During the current period, it can be observed that the success of the company mainly depends on the marketing strategy utilised such as the “marketing mix” which refers to a set of marketing tools that work together to affect the market place (Kotler & Armstrong, 2004). This strategy involves tools such as product, price, place and promotion. If carefully implemented, this strategy is very effective since it can significantly contribute to the success of the organization. This part of the paper discusses the marketing mix used by KFC. 5.1 Price This is a very important component of the marketing mix. The customers are mainly influenced to respond to a particular product as a result of its price. In this case, it can be seen that KFC’s pricing strategy is determined by the market forces obtaining in different environments it operates in. Given that the fast food industry is mature and is characterised by stiff competition, it can be seen that KFC cannot randomly increase the prices of different products it offers without scanning the environment first. 5.2 Product KFC offers a variety of products to different customers. However, fried chicken is the major product that has significantly contributed to the popularity of the company. The product is unique in that it is made of unique seasoning flavours that are unmatched by the other competitors in the fast food industry. The strategy of differentiating the product has contributed to the success of the company in its operations. 5.3 Promotion Basically, promotion is a marketing tool that is designed to appeal to the interests of the customers through incentive based strategies (Belch & Belch, 2008). KFC uses this strategy in its operations where it offers price discounts on its products in a bid to attract more customers. The company at times uses gift vouchers in order to attract many customers to buy its products. KFC also uses tools such as public relations, publicity as well as advertising in order to promote its products. Advertising is a very effective promotional tool that is meant to create awareness among the people about the products that are offered by the company. 5.4 Place This refers to the actual distribution channel of the product (Strydom, 2004). KFC uses its own stores and franchises to distribute the product to different people. More details about distribution and advertising strategies that are used by the company are provided below. 6. Brand positioning and advertising strategy KFC brand is distributed through company owned and operated stores in different parts of the globe where it operates. The brand is also distributed to a variety of customers through franchises. The brand is positioned in such a way that it positively appeals to the perceptions of the customers who often view it as better than other similar products offered in the market. KFC uses the strategy of uniqueness in order to attract more customers to its products. This strategy is advantageous in that it helps to attract more customers which help to generate more revenue for the organization. The distribution channels of the product used by the company are conveniently located and the company also has drive through restaurants. In terms of advertising, it can be seen that KFC uses varied advertising channels to promote its products across the whole globe. The company uses television in different areas where it operates since this is a very popular medium in different parts of the globe. The company also uses the internet to advertise its products since this is also very popular among people. Both the positioning and advertising strategies used by KFC are very effective since they have helped the company to gain a large market share. In terms of positioning, the brand is presented as unique and this helps the company to appeal to the interests of many customers. The company also uses advertising to attract many people to its products. However, as noted above, more needs to be done in order to develop the product so that it can appeal to more people across the whole globe. 7. Marketing strategies with respect to host country The fast food industry in the US where the company is based is mature and it can be seen that competition is high. There are other competitors like McDonalds, Burger King and Wendy’s among other players in this particular industry. It can be observed that KFC is a leader in the chicken segment in the fast food industry. KFC mainly uses two strategies in carrying out marketing activities for its products. These include differentiation and aggressive advertising. 7.1 Differentiation KFC uses the strategy of differentiation to market its products to different customers especially in the host country. The product is presented as unique and this strategy is intended to attract as many people as possible. This helps the company to keep pace with the ever changing marketing environment as well as to gain a competitive advantage. The main advantage of differentiation strategy is that it helps the company to appeal to the interests of many people and this in turn will help it to generate more revenue from its operations. Already, the company has a large base comprised of loyal customers. 7.2 Aggressive advertising KFC uses the strategy of aggressive marketing and advertising in order to attract as many customers as possible to buy its products. The organization uses both electronic and print media to advertise its products to different customers across the board. Essentially, advertising is a very effective marketing strategy given that it creates awareness among the customers about the market offering (Kotler & Armstrong, 2010). Through advertising, the customer is also reminded about the existence of the product in the market. This also helps to reinforce the marketers’ message among the consumers about the product. The organization targets consumers from diverse backgrounds and the advertisements are designed in such a way that the company will be in a better position to achieve its desired goals. 8. How social and cultural factors impact target market in an international environment Indeed, it is a noble idea for the organization to go international but there are certain risks and challenges that KFC has to consider in order for it to remain viable in the global environment. All people belong to different social groups that are comprised of unique cultures. The culture of people shapes their behavior as well as their consumption habits in terms of food and other related products. McCarthy & Perreault (1996) posit to the effect that culture shapes the behaviour of the targeted people in many ways. Therefore, it is imperative for the marketers to take note of these factors that shape the behaviour of people so as to be in a better position to attract more buyers to its products. For instance, in Muslim countries, Halal chicken is offered to the customers since this is part of their culture. Therefore, it shapes their behaviour towards the food they consume. In as far as the fast food industry is concerned, it can be seen that people from different international destinations have different tastes with regards to choice of food. There are many social factors that shape the behaviour of people towards the food they consume. For instance, in Latin American and Asian countries, it can be seen that chicken is not their staple food since some of the people in these countries prefer other types of meat such as fish. Therefore, it may be challenging for KFC to penetrate such global markets. In markets where the people do not eat particular foodstuffs, it would be imperative for KFC to embark on thorough market research before venturing in the international market. This will help the company to be in a position to appeal to the interests of many people. 9. Factors that influence the decision in developing distribution channels internationally There are different factors that are taken into consideration in as far as decision making with regards to distribution channel is concerned. First and foremost, the company uses demographic and psychographic segmentation in order to divide the market into groups of people who share the same interests. According to McCarthy & Perreault, (1996), demographic segmentation is the process of segmenting the market according to factors such as age, level of income as well as sex while psychographic segmentation is related to dividing the market into smaller categories of customers who have similar interests and attitudes towards a market offering. Factors such as age and level of income play a significant role in determining the distribution channels of the products offered by KFC. The company also identifies the locations where the products can be distributed to a variety of buyers. KFC restaurants are located in busy shopping malls that are frequented by the targeted customers particularly the young and working class people who are interested in buying fast foods which are convenient. The restaurants are also located in convenient areas that can be easily accessed by the targeted people in different locations. Of late, the company has also adopted the strategy of drive through restaurants, a model that is peculiar to McDonalds’ restaurant. This strategy of distribution is convenient to the motorists who are in a hurry and they are served quickly. The franchises that also use the company’s brand name to distribute their products are also located in convenient places that are easily reached by different people. All the restaurants are carefully designed such that they appeal to many people. 10. Conclusion and findings Over and above, it can be observed that there are many environmental factors that affect the operations of global fast food companies. The consumers in different global markets have different tastes towards different market offerings by different companies in the fast food industry. For instance, aspects such as culture have a bearing on the attitude as well as behaviour of the customers towards the products offered by different companies. As discussed in the case of KFC, it has been observed that the major problem that can impact on the operations of the company is related to its lack of expertise to diversify its market offerings since it is renowned for fried chicken only. Other competitors like McDonald’s, Wendy’s and Burger King offer diversified products and this strategy has helped them to gain a large market share. As such, it has been recommended that from these findings, KFC should embark on a drive to diversify its products so as to be in a position to gain a large market share as well as competitive advantage. The rationale behind this strategy is that the fast food industry is now mature and it is characterised by stiff competition. Therefore, there is every reason for KFC to entrench its market position through diversifying its products so that it can leverage on existing product while attracting more customers through introducing new products. This will give it the opportunity to attract new customers while at the same time retaining the already existing consumers. The other reason for adopting this strategy is that in the event that one product fails, then the company can sustain its operations through aggressive marketing of the other products offered. This will significantly help the company to sustain its operations in the long run which can also contribute to its viability. (2462 words) References Ansoff, HI 1988, New Corporate Strategy, John Wiley and Sons: New York. Belch, GE and Belch, MA, 2008, Advertising and Promotion: An Integrated Marketing Communications Perspective, McGraw-Hill: Boston. Berry T & Wilson, D 2001, On Target: The Book of Marketing plans. How to develop and implement a successful marketing Plan. Palo Alto Software: NY. KFC Home, Viewed 25 December from: . Kotler, P & Armstrong, G 2010, Principles of Marketing, Person: CT. 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