Marketing Analysis of KFC - Essay Example

Running Head: KFC Marketing Analysis Report and Section # of This paper will look into one of the largest fast-food chains in the world, Kentucky Fried Chicken (KFC). The report will look into the marketing strategy of the fast food chain in detail shedding a light on it being market-oriented, its segmentation, marketing mix, the environment and other different aspects. Introduction Kentucky Fried Chicken (KFC), incorporated in 1955 is one of the world’s largest international fast-foot chains that have about 150,500 franchises in over a 100 countries. It offers a vast variety of fast-food meals including the scrumptious Colonels trademark fried chicken in both the Original Recipe and Extra Tasty Crispy varieties along with great varieties of chicken sandwiches, mashed potatoes and gravy, chicken pot pies, crispy chicken strips and potato wedges. The menu differs from country to country according to the tastes, culture, want and demands of the people. KFC owns and operates around 20% of the restaurants itself while the rest have been lent out around the world as franchises. Based in Kentucky, KFC makes more than half its profits from international franchises and its largest division is in China having about 2250 outlets. KFC is division of the global fast-food franchiser YUM which is the world’s largest restaurant companies in terms of system restaurants. (Etzel, Walker, Walker & Stanton, 2000). Is KFC market-oriented? First, what needs to be understood is what a market-oriented approach is. Market-oriented companies focus on the customer needs and have an eye on market opportunities. They strive to understand the problems and needs of their customers and give them what they want. Hence, they tend to be highly market-driven as their products and services are greatly aligned with the market expectations and what they want. KFC is a huge international chain which truly works on the principle on being market-oriented. Their true spirit of being market-driven can be observed from their initial mission statement which rightly stated “To sell food in a fast, friendly environment that appeals to pride conscious, health minded consumers” (www.kfc.com). The aim of KFC from inception has been to cater to the needs of its customers who tend to have less time on their hands in the rapid pace lives of today and wish to resort to quick and healthy fast food means of fulfilling their appetite. However, their statement has now evolved to become “The Association of Kentucky Fried Chicken Franchisees, Inc. is united to protect, promote and advance the mutual interests of all member franchisees and the Kentucky Fried Chicken system." (www.akfcf.com) KFC’s objectives also shed a light on their spirit to be market-driven. Their objectives of product development, increase in menu variety, provide healthy food and a fast and quick service, focus on quality and even introduce dessert menu is all indicative of their positive approach to being market-oriented. It is this dedication towards their work that has earned them the title of being the Chicken Experts for over more than 60 years. And hence, they proudly say at KFC “We do chicken right.” KFC’s market driven nature is explained by their varying menus according to the preferences, tastes and cultures of the people in the individual countries where KFC has its franchises. E.g. the menu in Malaysia holds popcorn chicken, Kentucky Nuggets, Cheezy Wedges which differs from the menu offered in India which includes Veg Thali, Chana Snaker, Chicken Thali and Veg Fingers. The menu extremely reflects the culture, tastes and desires of the people. Even the names derived such as Veg Thali and Chana Thali are very cultural and country-specific as we can see from the menu in India. The effect that this has is that people feel more at ease with these international chains as they get the impression that KFC is giving them what they really want and in the way the want so it makes a huge positive preference for KFC in the different countries. KFC’s menu is not just chicken specific but they have greatly diversified their menu to include vegetables, desserts, ice-creams, salads, rice, drinks and other miscellaneous items like corn on the cob and coleslaw. Their menu also has variations according to their target market such as individual meals for one or two persons, family meals for larger number of people, value meals such as Sub-60 in the Pakistani market for economical and budget-constrained people and chicky meal for children. Their salads such as the Garden salad is focused towards health and diet conscious young adults while their drinks range have offerings including hot milo, tea and coffee mainly for winters while having carbonated drinks and orange juices for hot sunny weathers. KFC has catered to different sorts of customers through their different modes of offering meals. For those who want have time and want to spend time in a great fast-food mood In a good ambiance can have their meals in the large dining and sitting area of KFC. For those who want to just pick the food and leave, there is the drive through window while for those who which to stay at home but want to have KFC can always order for it and have it delivered within an half hour frame. KFC’s market oriented spirit is also judged by their initiative to go international to follow their domestic customers who left United States, which is the origin of KFC and dispersed in different countries around the world. This shows how committed they are to retaining their current customers to the extent of taking their operations worldwide so as not to loose their current customers and to gain new ones in the process. KFC truly recognizes its social responsibility which is again driven by their market driven and market oriented approach. It identifies where opportunities lie in the market and make full use of it to benefit itself and its customers as well. Colonel’s Scholars is the scholarship program that KFC offers to high-school seniors who want to attend public- in state college or university. This way they acknowledge the importance of education and provide a means to the less privileged to take forward their dreams, aspirations and ambitions. KFC also extends out to those people who have a special love for animals and given them a chance to become part of the Animal Welfare Program dedicated to taking steps for the humane treatment with animals and the extinction of endangered species. Social Diversity is yet another of their social programs that aims to bring together people from different countries, backgrounds and arenas and create a huge pool of diversified employee base for KFC. It is these programs and activities that show how much a company is attached to its customers and how it wants to engage them with its happenings. This also gives a chance to people to learn more about the company and have a personal relationship with them (Akra Pulse, 2009). For KFC, the most important three Cs are the Company, Competitors and the Customers. This is indeed a great way of seeing how committed KFC is to its customers. KFC strives to keep these three Cs aligned in a way that they keep KFC’s goals focused towards the customers by tackling all competitor moves and staying ahead of them in all ways. It is KFC policy to offer food to customers in less than 3 minutes which is a great time-saver for the target market especially during the lunch hours when its is usually the school or college students or office people who have to make a quick meal and run back to attend to their work or education related activities. KFC’s quality management program is also sincerely attentive towards understanding customers’ expectations, defining product specifications and then ensuring the development of the product according to the customer specifications. KFC puts a great deal of time and effort into identifying what customers really want and then they put resources to achieve that expectation. In 2001, KFC held a test program in Oklahoma, whereby the main aim was to reduce the service time in the drive-through window operation to ease the queuing up of cars and the time delay that occurs, which is sometimes a deterrent fro some customers to not queue up behind long lines of cars. The test program was well-organized in a number of KFC restaurants which proved extremely successful as they reduced service times by more than half which also improved their labor productivity and consequently improved their sales and customer transactions. This test program then served as a benchmark for all the rest of the KFC outlets which also then focused on reducing the service times and giving a more raped service to the customers. This shows that KFC recognizes the importance of what customers want and then ensures that quality is raised through all achievable means. KFC’s quality management also looks out for extremely high levels of customer service in an effort to ensure that their customer’s problems, queries or issues are intricately handled but in a fast manner to allow for quick response times. They have friendly and customer-centric people in the front office who deal with customer queries and problems in an understanding and gentle manner so as not to offend or frustrate the customer irrespective of whether how annoying the query may be or who may be at fault. Complementary meals or items are given to customers who have had to face any sort of a trouble by the company. In the light of all that has been stated above, the conclusion that we derive is that KFC truly realizes the importance of being customer-centric, especially in the hard competitive times today. KFC faces great competition from its major rivals which include McDonalds, Burger King, Pizza Hut; Popeye’s Chicken and may local fast food chains in different countries. In the face of such market saturation, it is inevitable that companies are extremely customer-oriented and this has sincerely been pursued by KFC as its main strategy from the beginning. Even though there are some inadequacies with customers complaining of delays in receiving orders or delivery and unclean windows at drive through as times, KFC does show through its strategies, menus, target markets, its customer service and consistent quality that it is striving hard to gain more customers and improving its service levels to all achievable expectations of its market. It is this commitment towards the customers and their likings that KFC has won several awards over its lifetime such as “Marketing Excellence Award” for the Asia Pacific region in 1991; Grand prize in “International Potato Championship” held by the U.S potato board and received the “Best specialty” prize for being most creative in marketing the potato products in 1997. Marketing Strategy KFC’s one of the most important and major decisions was to go international and cater to the foreign markets. It has over 150,500 franchises around the world at the moment. The major reasons why it took itself international was to cater to the larger international market as there was a great potential market waiting for them abroad, to follow a lot of their domestic customers who went to different counties, a great saturation of the fast-food market in the US, to take advantage of the bandwagon effect, the technological advantage and the comparative advantage (Hodgetts & Chamberlain, 2006) that offered new possibilities for KFC. This was a great marketing business initiative that they took as they gained a huge market appreciation from around the world on which they capitalized further and gained the spot the third largest food-chain restaurant in the world. KFC has rightly understood their market and have expanded its retail units and franchises to all around the world. It has developed units and opened restaurants in numerous public areas apart from the regular restaurants in places such as Shopping mall food courts, universities, airports, stadiums, mobile units, office buildings, amusement parks, hospitals and even cinemas. Marketing Environment Currently, there has been a boom of fast-food restaurants around the world so KFC faces great competition from many companies local and international. It is hence extremely important for KFC to keep improving its services and keep up to the expectations of its customers. KFC initially faced a challenge in 1990s due to its inability to come up with product innovation and suffered a declining market share. However, it started expanding its menu later in the 1990s and opened up new outlets and stared off with newer marketing strategies to combat the falling market share (Lee, 2007). Popeye has remained one of the toughest rivals for KFC in the United States. However, comparing the sales of KFC and Popeye, it turns out that KFC makes six times the turnover than Popeye. KFC has a huge market share in the US which was estimated to be around 46% of the fast-food market in the US. However, it is quite strange that KFC does not have the highest average sales per outlet which is actually being enjoyed by another rival Chicken Fill-A which has a sale per outlet 4% more than KFC. KFC has had a history of underperforming against the industry targets. Looking at the 7% benchmark growth rate in sales turnover between 1994 and 1999, KFC’s growth rate was a much lower 4%. Alternatively looking at the sales per unit, where the benchmark was to be 4% and 3%, KFC had growth rates of 3% and 1% (Akra Pulse, 2009). KFC has progressed tremendously in China where it is the most recognized international brand. It has huge plans for further expansion into China and the opening of more and more outlets and restaurants there considering the overwhelming response by the local people there. It is the leading fast-food chain in China which has even let down their own local fast-food companies by having over 2250 units there and accounting for around 86% of the total YUM presence in the country (Hanna, 2001). KFC’s target market KFC’s target market ranges from different age groups in an effort to have something for everyone. They target children through their deals like chicky meals, the chicky meal toy, children’s birthday programs and celebrations and even through their adored mascot of the chicky itself. KFC targets school, college and university students through their individual deals and economic value deals that also tend to cater to the budget constrained market sectors. KFC targets whole families by having family deals for them or through coming up with great new offers and newer deals like buy one deal and get another free. They tend to target health conscious young people seeking nutritional food with their salads, juices, sugar-free carbonated drinks and oil-free chicken (Fast food linked to child obesity, 2003). They target office people who are in a rush and want to just grab food at times through their drive-through window facilities. Their target market is also illustrated through the sitting arrangement in their restaurants which has a sitting place of two, three or for whole families as well as special areas where children can enjoy or sit. It has segmented its market geographically by having restaurants around the world in even within countries. E.g. in North India, chicken is mostly sold while in South India, it is the vegetable meals. It has also segmented demographically by targeting people aged between 6-65 for both males and females, any family size and from middle to upper class. It has also physiologically target the market by giving the impression that people who are ambitious and authoritarian dine at KFC (Foundation, 2006). Marketing Mix Product and positioning: KFC’s specialty has been fried chicken with its original herb recipe. However, it has great variations and varying menus according to the tastes, preferences and wants of people in different regions. KFC has rightly positioned itself as the market leader in fried chicken. It is the third largest fast-food chain in the world and has occupied the first place as the leader in fried chicken. Continuous improvement and focus on healthy, fresh and quick food has been its aim which it consistently upgrades to maintain a position in the minds of customers. Price: Income is the crucial factor for KFC. Initially they targeted the upper class only but now they are introducing various economic and value deals that significantly target the middle class and are also now focusing towards the lower class. In urban areas, KFC has thrived more as compared to sub-urban areas. Initially their pricing strategy had been skimming when they had entered the market as the early pioneers in fast-food chains but now they have moved to more competitive pricing to stay on board relative to the array of competitors in the market today. It also implements cost-based pricing inclusive of government taxes and excise duty as well as all the costs of KFC. Placement: KFC has many units and restaurants around each region as well as free home delivery service and the drive through window service. It has usually located itself in urban and sub-urban regions close to places such as schools, colleges, shopping malls, hospitals etc. moreover, is found in food courts in malls, in airports, mobile units and other public areas. It primarily uses the push strategy to create awareness, be different and be attractive. KFC has the first level channels in the order of manufacturers, retailers and customers. (Abc News, 2009) Promotion: KFC uses various forms of promotion such as advertising which uses its smiling colonel logo in magazines, newspapers, online, on radio and television. Its jingle of finger likin good has been greatly popular among all age groups. KFC does sales promotion through its deals, coupons, premiums, entertainment and vouchers. KFC engages in sponsorship deals as well such as sponsoring the Australian Cricket team as the logo of KFC can be seen on their shirts. It also engages in public relations through many of its social programs. It also promotes its offerings through discounts, bundled packages and various attractive new deals (All Business, 2009). References Lewis, J. (Aug 2008). Improving morale and motivating employees. Hudson Valley Business Journal , 9. Hodgetts, D., & Chamberlain, K. (2006). Developing a Critical Media Research Agenda for Health Psychology. (AN 20290783). Journal of Health Psychology , 317-327. Lee, J. C. (2007). Rave Marketers. Orange County Business Journal , 2-32. Akara Pulse (2009), KFC Corporation, Retrieved on December 5, 2009 from http://pulse.alacra.com/analyst-comments/KFC_Corporation-C1009331 Uday M. Apte, Charles Reynolds. (2001). Quality Management at Kentucky Fried Chicken. Operations Research and Management Sciences Journal, 15-20. All business (2009), Positioning: KFC Tries New Chicken Tack, Retrieved on December 5, 2009 from http://www.allbusiness.com/marketing-advertising/branding-brand-development/4687105-1.html Abc News (2009), KFC to Honor Oprahs Free Chicken Coupons, Retrieved on December 5, 2009 from http://abcnews.go.com/Business/story?id=7527626&page=1 MSNBC (2009), Don’t tell the colonel! KFC recipe may be out, Retrieved on December 5, 2009 from http://www.msnbc.msn.com/id/32027188 Business First (2009), KFC takes heat over grilled chicken promo, Retrieved on December 5, 2009 from http://louisville.bizjournals.com/louisville/stories/2009/05/04/daily56.html Read More