Customer Relationship Marketing of Kentucky Fried Chicken Restaurants - Case Study Example

Customer Relationship Marketing Summary Kentucky Fried Chicken (KFC) is a chain of fast food restaurants operating globally and was established by Harland Sanders in 1952 and it one of the most popular fast food restaurants worldwide. In order to maintain its customers, KFC has several loyalty programs. Customer loyalty is important to the KFC since there are numerous competitors selling similar products and hence the satisfaction of the customers is one of the KFC’s goals in order to develop customer loyalty. KFC has several customer loyalty programs and they include KFC Club, which is a loyalty program which provides the participants with the likelihood of winning a bonus. Basically, KFC club members get a loyalty club card which provides them with a unique discount that is eligible within all KFC restaurants within Bulgarian. Another loyalty program within KFC is The NEW My KFC Card Program which is designed for the organization to show how it values its customer’s loyalty and as a way of appreciating the customer’s loyal support. This program rewards the customers each time they make a purchase at a KFC. The loyalty programs at KFC have been successful because they aim at the valuable customer segment and discourage the customers who are less helpful to the company. However, the focus of the loyalty and relationship marketing should primarily focus on establishing lasting relationships with the existing and also new customers and enhancing organizational performance through customer loyalty and hence KFC should consider launching more loyalty programs with economic packages. Customer Relationship Marketing Explore CLRM with the company you currently work for: Kentucky Fried Chicken (KFC) Introduction KFC is one of the most popular fast food restaurants worldwide. In order to maintain its customers, KFC has several loyalty programs which are essential because customer loyalty and marketing orientation play a significant role in an organization’s performance. An example of KFC loyalty programs is the KFC Club which is a loyalty program that offers participants an opportunity to win bonus. Members of the KFC Club get a loyalty club card that gives them a unique discount applicable to all KFC restaurants within Bulgarian (Suprihanti 2011). There are several factors that affect the loyalty of the customers and among them are marketing mix, for instance price, place, promotion as well as services (Brennan 2008). Background information Kentucky Fried Chicken (KFC) is a chain of fast food restaurants operating globally and was established by Harland Sanders in 1952, although the idea of Kentucky Fried Chicken dates back to 1930. The company took up an abbreviated form of its name within 1999 but on April 2007, the company started utilizing its primary name, Kentucky Fried Chicken, for its signage, packaging as well as in adverts as an element of a new corporate re-branding program; newer and revised restaurants adopts the name whereas the older restaurants continue to utilize the 1980s signage. In addition, the company still uses the abbreviated name freely within its advertisements (Suprihanti 2011). Sanders, the founder of Kentucky Fried Chicken was born and raised in Indiana. He went through numerous professions and he first served his friend chicken within 1930 at his own gas station at North Corbin Kentucky. The designated dining segment was named Sanders Court & Café and was extremely successful such that within 1935 Kentucky Governor awarded Sanders an honorary title in acknowledgement of his contribution to the state’s cuisine. In 1936 Sanders expanded the restaurant to 142 seats in addition to a motel he purchased across the street. During the chicken preparation, Sanders too about half an hour which was too long and hence in 1939 he changed the cooking process for the fried chicken and used pressure fryer which resulted into a highly reduced cooking time comparable to deep frying. In 1940, Sanders invented the original recipe for KFC. In general, the Sanders Court & Café served traveler and mostly those travelling to Florida and hence he eventually sold his property there are travelled to United States to trade chicken to restaurant owners (Suprihanti 2011). Sanders joined with Pete Harman to open the first Kentucky Fried Chicken business within 1952. In early 1060s, Kentucky Fried Chicken was selling within over six hundred franchised outlets within US and Canada as well. In 1964 Sanders sold the entire Kentucky Fried Chicken franchising operation for $2million and since then the chain has been traded three more times. Within 2001, KFC began texts within Texas and also engaged a consultant for developing a breakfast menu. Since then, KFC has expanded globally and has invested heavily on retaining its customers and attracting new customers. Kentucky Fried Chicken concentrates on enhancing its value to promote custom food offering and the creation of new items on their menu which are offered at cheaper prices. Additionally, Kentucky Fried Chicken has focused on improving the health value of their products for instance, providing grilled chicken products in their menu which is perceived as healthier than fried chicken products. KFC has also developed various marketing strategies which are focused on marketing its products and this includes advertising the company and its products through the internet and on social networks as well (Walker 2002). Significance of Customer Loyalty and Relationship Marketing The sustainability of an organization is determined by the loyalty of its customers. Within the international world, the loyalty of the customers is important since there are numerous competitors selling similar products and hence the satisfaction of the customers is the goal of an organization to develop customer loyalty. When customers are satisfied, they will come back to buy the organization’s products and also recommend to other customers regarding the organization’s product. As a result, good service is one of the most vital things that satisfy the customers apart from the product, the price, the price as well as the promotion (Blois 2003). Marketing strategy refers to the set goals, polices and regulations that guide the organization’s marketing effort-its level, mix in addition to allocation, partially independently and partially in responding to changing environmental and competitive state. Satisfying the customer is the organization’s objective to sustain within the global period. This is because the satisfied and loyal customers open up chances of getting new customers. Generally, maintaining previous customers is more profitable than changed new customer since the cost of getting a new customer can be five times more that the cost of maintaining the preceding customer. This implies that maintaining the previous customer is equivalent to maintaining the organization’s sustainability. In order to acquire a loyal customer, a marketer has to perform their marketing strategies (Anastasia & Tjiptono 2000). In general, the customer loyalty implies that the loyalty of a person to the product and the services as well. The customer’s loyalty is evidence and the follow up of customer satisfaction after utilizing the products and utilizing the services provided by the organization, also to maintain becoming the organization’s customer. According to Tjiptono & Anastasia (2000), customer satisfaction mean as post bought assessment while perception to the product and services performance that is selected might accomplish or might provide more expectant with before being bought. In case the insight to the performance does not match, the satisfaction will not occur. Loyalty is a sign that the customer will always be a customer in a given company and that the customer has a positive opinion of the organization. Each customer had varying basics to the loyalty and hence the loyalty depends on the customer’s objectivity. The customer’s loyalty is indicated by recommending the organization’s products or services to other customers and maintaining the consumption of the product or obtaining the services constantly (Brennan 2008). KFC has an advantage because it can leverage its brand image for the marketing of the present products and also for the future products and services. Establishing and building relationships with the customers is a major component to winning the market share battle with competitors to gain customer loyalty. Relationship Marketing takes place when an organization makes a conscious effort of interacting with customers regularly and hence giving them a reason to retain their link with the organization with time. It is vital to note that a good relationship marketing strategy should be founded on gaining the customer’s trust and retaining the trust (Jasfar 2002). This can be achieved if the organization maintains effective communication with the customers they are doing the business with for the primary purpose of satisfying the needs of the customers. If the needs of the customers are being satisfied by offering them with high quality foods, serving them timely, providing them with high quality services and employing appealing loyalty programs, they customers will automatically get satisfied and they are likely to keep on buying the firm’s products or services (Ahmad & Buttle 2002). KFC Loyalty Programs KFC Club KFC Club is a loyalty program which provides the participants with the likelihood of winning a bonus. Basically, KFC club members get a loyalty club card which provides them with a unique discount that is eligible within all KFC restaurants within Bulgarian. Depending on the accumulated bonus; the members of KFC Club get Silver, Gold or Platinum Club Card. Basically, the Silver KFC Club Card offers a five percent discount within KFC restaurant within Bulgaria to the owner, for each time the customer buys, within the phase of three successive months of the precise quarterly (Hernawa 2009). On the other hand, the Golden KFC Club Card offers a ten percent discount within KFC restaurant within Bulgaria to the owner, for each time the customer buys, within the phase of three successive months of the precise quarterly. In general, KFC Club is a way of KFC organization to show their gratitude and appreciate all KFC customers for the zeal and the love they have for Kentucky Fried Chicken. The only thing needed for one to become a KFC Club Card Member is filling in a blank within each KFC restaurants. After that everything depends on the visits of the customers to the KFC restaurants and their eagerness to reach their bonuses. It is very easy for the customer who enroll in KFC Club Card membership to reach their bonuses; with each five leva spent within KFC restaurants, a customer will receive one point. The customer is only required to enjoy KFC Original taste regularly (Hernawa 2009). In addition, for a customer to get silver or a golden KFC club card, with each time a customer fills in a special KFC Club Card Blank, one gets a card. Each customer is supposed to have only one card. The card identifies the number of times the customer visits, and buys at KFC as well as all bonuses. Accordingly, the golden or silver category is acquired when the total amount of all bonuses in the time of three successive months of precise quarterly. The customer is required to have twenty points for the previous quarterly for him/her to get a Silver KFC Club Card. On the other hand, the customer requires forty points for the preceding quarterly. There are many benefits that come with the silver and golden KFC Club Card to the loyal customers; Silver KFC Club Card awards a customer with a five percent allowance with each purchase a customer makes within every KFC restaurant within Bulgaria, within the period of three successive months of the precise quarterly. The Golden KFC Club Card awards a customer an allowance of ten percent. However, a KFC Club Card does not warrant the owner to utilize discounts on the KFC delivery service (Suprihanti 2011). For the loyalty bonus scores, during the end of each quarterly each and every score on the cards is registered. For the customer to maintain equivalent discount within the next quarterly the owner of the card has to realize a sufficient volume score. In silver KFC Club Card, the volume is supposed to be twenty scores while for the Golden KFC Club Card the volume is supposed to be forty scores. If the volume score within the card is not adequate the owner is provided with two alternatives: one, the customer can maintain the same discount from the prior quarterly or secondly the customer can forfeit the right of utilizing discount for the subsequent three months. The verification of the card’s bonus score can be verified by registering with the website specifically meant for KFC Card membership and the information regarding the volume score is revived each month (Suprihanti 2011). Essentially, the loyalty as well as the visits to KFC restaurants is the one definite way of the customers maintaining their membership club level. This program ensures and builds customer loyalty to the organization by rewarding the most loyal customers since the number of visits is what determines the number of points the customer gets as well as the status of the membership. Therefore, the customers are only required to embrace each opportunity to utilize their KFC Club Cards and give it everything it offers them (Suprihanti 2011). The NEW My KFC Card Program This loyalty program is designed for the organization to show how it values its customer’s loyalty and as a way of appreciating the customer’s loyal support. This program rewards the customers each time they make a purchase at a KFC using their “My KFC Card. There are numerous benefits that come with the NEW My KFC Card program and they include: Five percent of the customer’s total bill gets loaded in the customer’s card Special VIP offers Monthly E-Newsletter informing the customer regarding the current and the new occurrences at KFC stores For the customers to obtain the cards, they are only required to visit a KFC store and get their cards and become members of the My KFC Card Program. Basically, the uptake of the KFC my card program has been so successful. So many customers have signed up to the program and the number of visits to KFC outlets has increased tremendously. In addition, there has been implementation of mobile communication strategies. KFC has been able to carry out direct communication with the target market through SMS with directly quantifiable outcomes. Furthermore, through this loyalty program, the company has managed to segment and target its offers basing on what the customers spends and what they buy. Accordingly, KFC is in a position to reallocate its LSM spend and to directly quantify its return on investment (Hernawa 2009). Fundamentally, KFC develops the loyalty programs basing on the information collected during the marketing research. The information includes the customer’s interest and hence the programs are designed to capture the customers’ interests. The key interest rate is then created on the product marketing and the progressive groups are targeted to stimulate the club membership. Usually, club members create greater significance and lower the cost of increased spending power (Hernawa, 2009). Foundation of KFC loyalty programs Since a loyalty program is a marketing program that is devised to create customer loyalty through offering incentives to profitable customers, loyalty programs at KFC are based on the following: Customers might want more involving relationships with products that they buy from the company A percentage of the customers indicate a tendency to be loyal There is a possibility of reinforcing the customers’ loyalty by using the loyalty program (Lindgreen &Wynstra 2005). As a result, the loyalty programs at KFC have accelerated the loyalty life cycle and have encouraged the first or second customers to act like the organization’s most profitable 10th-year customer. These customers are the ones who turn to be business builders through purchasing more, paying premium prices and bringing in new customers through recommending them to buy from the company. In general, the KFC loyalty programs have increase customers’ loyalty through creation of switching costs and increasing the operational profit by avoiding price competition. More over, the loyalty programs have solved oversupply problems within the company because of seasonality demand. For instance, in case KFC experience price wars during seasons of low demand, introduction of the loyalty programs rewarding the customers with bonuses to the loyal customers during the low-demand seasons can assist in dealing with the problems of oversupply. This does not raise the marginal expenditure of managing a loyalty program. Furthermore, development of database technology in the loyalty programs has assisted KFC in indentifying its loyal customers and rewarding the correct customers (Hernawa 2009). Still, the loyalty programs are important through illustrating the members within the loyalty program tend to ignore or discount a negative assessment of the organization visa-avis the competition. The loyalty programs at KFC have been successful because they aim at the valuable customer segment and discourage the customers who are less helpful to the company. For that reason, the loyalty programs at KFC have become self-correcting as well as independently correcting programs (Hernawa 2009). According to Jones (2005) customer’s value perception is an essential provision for the development of brand loyalty through the loyalty program. This means that the customers are supposed to perceive the loyalty program as valuable. There are five aspects of the loyalty program that establish the worth of a loyalty program and they include: Cash value of redemption rewards Various choices of the rewards which is the redemption choice The inspirational reward’s value which is the inspirational value The professed probability of accomplishing rewards which is the relevance The scheme’s simplicity of utilization, which is the convenience Accordingly, the loyalty programs offered at KFC possess all the above mentioned attributes and hence the company’s loyalty programs are valuable (Walker 2002). Conclusion Loyalty and relationship marketing integrates the revolutionary method of developing brands whereas simultaneously carrying out up to date market research. This is why KFC has invested in various loyalty programs in order to build relationship with its customers and hence retain them and at the same time attract new customers who are recommended by the loyal customers. All customers want to be appreciated and heard and such customers reward the organizations that show interest in establishing strong customer relationships. KFC uses the customers’ data to progress and develop with the marketplace and hence enable KFC to build loyalty of its products to the customers and increase market share tremendously. In general, the strength of the customer relationship loyalty program lies within the company’s capacity to contain and seek customers’ feedback. In a nut shell, with loyalty and relationship marketing, KFC is saving its finances through marketing solely to customers who have a likelihood of responding, increase revenues through making relevant offers to the customers who require, want and can afford the company’s products as well as creating higher loyalty, retention, referral, spending rates and proceeds through establishing and developing relationships with its best customers. Recommendation Loyalty programs at KFC have so far been successful as illustrated by the large number of participants and the high number of customers who are seeking to enroll in the company’s loyalty programs. The reason behind the success of these loyalty programs is the fact that KFC has appropriately designed the loyalty programs and the loyalty programs particularly target the correct segment of the customers. The focus of the loyalty and relationship marketing should primarily focus on establishing lasting relationships with the existing and also new customers and enhancing organizational performance through customer loyalty and retention as well. As a result, some recommendations for improving the satisfaction of the customers and customer loyalty are through improvement of promotion largely through: Instigating economic packages Improvement of the tangible services Conducting comprehensive research before launching loyalty programs KFC should employ loyalty programs that are specific to particular customer segment Set up loyalty programs that can be accessed through the internet Bibliography Anastasia D, & Tjiptono, 2000, Principle and Marketing Dynamics, J & J learning, Yogyakarta. Ahmad, R, & Buttle, F., 2002, Customer retention management: a reflection of theory and practice’, Marketing Intelligence& Planning, Vol. 20/3. Lindgreen, A, &Wynstra, F., 2005, Value in business markets: What do we know? Where are we going, Industrial Marketing Management, Vol. 34/7. Blois, K., 2003, Using value equations to analyse exchanges, Marketing Intelligence and Planning, Vol. 21/1. Brennan, R., 2008, Contemporary Strategic Marketing, Palgrave Macmillan, China. Jones, M., 2005, ‘The relationship between employees’ perceptions of organizational climate and customer retention rates in a major UK retail bank’, Journal of Strategic Marketing, Vol. 10: 93–113. Hernawa, F., 2009, Analysis of Customer Satisfaction Position and its Influenced Factors (Case Study at Kentucky Chicken Restaurant, Griffin Jill, Yogyakarta. Jasfar, F., 2002, Siasat Business Journal, Economic Faculty, Indonesia Islamic University, Yogyakarta. Suprihanti, A., 2011, The Effect of Services to Customer’s Loyalty (Case Study of Kentucky Chicken Restaurant at Galleria Mall), Agribusiness Department Agriculture Faculty of UPN, Yogyakarta. Walker, J., 2002, The restaurant: From concept to operation, John Wiley & Sons, New Jersey. Read More