A PROJECT REPORT ON“STRATEGIES TO INCREASE REVENUE OF KFC
SUMMER TRAINING REPORT ON STRATEGIES TO INCREASE REVENUE OF KFC(SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DIPLOMA IN MANAGEMENT-IB) SUBMITTED BY: SOUMYA KUMAR PGDM-IB 2010-2012 ROLL NO: MIB201018 INDUSTRY GUIDE TANIA SINHA MANAGEMENT SUPERVISOR OGILVY & MATHER PVT. LTD. SUBMITTED TO:APEEJAY INSTITUTE OF TECHNOLOGY & SCHOOL OF MANAGEMENT,GREATER NOIDA
CERTIFICATE OF ORIGINThis is to certify that Mr.Soumya Kumar a student of PGDM-IB, Apeejay Institute ofTechnology & Management, Greater Noida has worked in Ogilvy & Mather under the ableguidance and supervision of Ms Tania Sinha.The period for which he was on training was for 8 weeks, starting from 1st May 2011 to 30thJune2010. This Summer Internship report has the requisite standard for the partial fulfillment of thePost Graduate Degree in Management. To the best of our knowledge no part of this report hasbeen reproduced from any other report and the contents are based on original research. TANIA SINHA (INDUSTRY GUIDE)
ACKNOWLEDGEMENTI express my sincere gratitude to my industry guide Tania sinha, Management Supervisor,Ogilvy & Mather Pvt Ltd for his able guidance, continuous support and co-operation throughoutmy project, without which the present work would not have been possible.I would also like to thank my entire team of colleagues at Ogilvy & Mather Pvt. Ltd, for theconstant support and help in the successful completion of my project.Also, I am thankful to my faculty guide Ms. Aprajita Das Gupta of my institute for her continuedguidance and invaluable encouragement. SOUMYA KUMAR (STUDENT)
TABLE OF CONTENTS1. EXECUTIVE SUMMARY2. OBJECTIVE3. METHODOLOGY4. LITERATURE REVIEW5. RESEARCH METHOLOGY6. SWOT7. ABOUT THE COMPANY8. MARKETING STRATEGY9. SWOT ANALYSIS10.OTHER STRATEGIES11.FINDINGS12.CONCLUSION13.BIBLIOGRAPHY14.QUESTIONNAIRE15.RECOMMENDATIONS16.SYNOPSIS
EXECUTIVE SUMMARYThe report basically presents the strategies to determine the opportunities for KFC in the fastfood sector. The report gives an insight about the strategies and measures KFC needs to adopt forenhancing its revenue in food and beverage sector.KFC IS synonymous with chicken. It has to be because chicken is its flagship product.. Thevegetarian menu in India came about when KFC found the country had about 35 per centvegetarians, and in metros such as Delhi and Mumbai, almost 50 per cent. The non-vegetarian isthe obvious target customer because, India have over 70 per cent non-vegetarians. But she alsoobserves that chicken is KFCs strength. KFCs vegetarian menu is almost exclusive to India andis the most extensive. Most countries either do not have a vegetarian menu, and some which do,have a burger at the most. "Contrary to affecting chicken sales, the presence of a vegetarianmenu has made the brand more relevant to a wider cross-section of the consumer society.Industry analysis is guide to know the profitability of the fast food industry by as assists us inIndustries are different from each other and to understand the working of industry it is necessaryto first solve the complex economic issues. Industry analysis not only helps to assess a particularindustry and its performance but also provides with important information about few industry‘saspect. Moreover, the industrial analysis assists in identifying the core factors affectingperformances in vertical trading relationships and horizontal competitive relationships. Here thehorizontal competitive relationship refers to the set of distinct businesses the firms compete in.Industrial analysis facilitates the determination of how changes in the business environmentaffect the industry‘s performance. In addition to this, it identifies opportunities and threats in thebusiness landscape.The investigation exhibits information on several spheres of GLOBAL FAST FOODINDUSTRIES and has used the industrial analysis in order to have in depth knowledge of theindustry. This report also contains factors that affect the profits of an industry.Market research is the format which enables KFC to identify this key information. Accurateresearch is essential in creating the right mix to win customers loyalty.In all its market KFC faces competition from other businesses. Additionally economic, legal andtechnological changes, social factors retail environment and many other elements affect KFCsuccess in the market.Market research identifies these factors and anticipates how they will affect people‘s willingness
to buy. As the economy and social attitudes change, so do buying patterns. KFC needs to identifywhether the number of target customers is growing or shrinking and whether their buying habitswill change in the future.Market research considers everything that affect buying decisions. These buying decisions canoften be affected by wider factors than just the products itself. Psychological factors areimportant, e.g. what image does the product give or how the consumer feels when purchasing it .There are a limited number of customers in the market. To build long-term business it is essentialto retain people once they have become customers. For example a parent with two children mightvisit and visits KFC to give the children a treat. Children want to visits as it is fun place to eat. Abusiness customer visits KFC during the work day as service is quick the food taste is great andcan be eaten in the car without affecting a busy work schedule. These examples represent just afew of KFCs possible customer‘s profile. Each has different reasons to come to kfcUsing this type of information KFC can tailor communication to the needs of specific groups. Itis to the needs of specific group. It is their needs that determine the type of products and servicesoffered, prices charged, promotionsCreated and where restaurants are located. To meet the needs of the key market it is important toanalyses the internal marketing strengths the organization.Strengths and weaknesses must be identified, so that a marketing strategy which is right for thebusiness can be decided upon.KFC learnt very early the high demand for vegetarian products inIndia..We respect the Indian law and our guidelines completely adhere to them. KFCs brandstandard products are their strength throughout the world, KFC works around the core and givesconsumers products with a familiar taste, especially "important in a country like India that ishome to such distinct and different food habits". KFCs challenge, is to manage a brands marketwith the right degree of flexibility so as to be strong in different and varied product markets.
OBJECTIVEThe motive of this project is to generate the idea of sustainable competitive growth throughwhich various plans of increasing food and beverage REVENUE which can be put into action bymeans of analysis of market potential.PURPOSE OF THE STUDYPurpose of making project is to understand the basic fundamentals of foods and beverageindustry and to understand the formulation and execution of strategies to sustain and maximizethe profit of the restaurant and the strategy to increase the sale in food and beverage sector. Profit Maximization ensuring growth of company for long term benefit. Brand Building. Enhance Customer Experience. Establishing global standards of product quality and service excellence. Market Tapping. Maximizing promotion
METHODOLOGYBy collecting data through various sources: 1. Concerned PR Agencies. Our organization (KFC) has hired OGILVY agency for arranging for media coverage, press reviews, etc. 2. Marketing Team. 3. Guest Feedback Forms. The restaurant’s marketing team keeps track of guest feedback and calls guests for their comments/suggestions if they seem disappointed in the comment cards. 4. E-MarketingPlans for increasing restaurant revenue can help a local restaurant make more profit andoffer better servicesTo increase food and beverage revenue of an organization marketing has to be done whichincludes 4 tools or 4 P‘s. These include:-1. Product-includes quality, taste, brand of the product2. Place-place includes the channel of distribution like franchisees in case of restaurant like KFC3. Promotion-one of the key aspect of the modern marketing is promotion of the servicesbrought about through sales promotion and advertising methods. The tools includes offers,discounts, direct promotions etc and the advertising of the product so that the potential customerhas all the information about the product4. Price-the tools under pricing includes prices, discounts, terms of payments etc.Literature Review Of Fast Food IndustryWith today‘s hectic lifestyles, timesaving products are increasingly in demand. Perhaps one ofthe most obvious examples is fast food. Today the demand for the, hectic lifestyles, timesavingproducts are increasing. Obliviously one of the example is Fast Food Industry. The rate ofgrowth in consumer expenditures on fast food has led most other segments of the food-away-from home market for much of the last two decades. Since 1982, there is growth rate inconsumer spending at fast food. The consumers spent at fast food outlets grew at an annuallyproportion of away-from-home food expenditures on fast food also increased.
Everyone eats Fast Food even knowing that it is not healthy for them. Reasons are because ofspeed, convenience and price. However, fast food has many hidden costs, including the highprice of bad health. Not to mention the fact that for such cheap food, youre actually beingovercharged by a big amount. So the real reason is not price, but convenience. You can get muchcheaper food by cooking for yourself, but you are not always at home to do the cooking, or youdo not always feel like cooking.Now People want quick and convenient meals they do not want to spend a lot of time preparingmeals, traveling to pick up meals or waiting for meals in restaurants. That result, consumers relyon fast food. Knowing this fast food providers are coming up with new ways to market theirproducts that save time for consumers. The rapid rate at which the fast food industry continues toadd outlets is as much a reflection of consumer demand for convenience as it is a reflection ofdemand for fast food itself.Industry Analysis of the Fast Food Industry:1. A few of the chief economic and business characteristics of the global fast-food industry are asfollows: In the market growth rate the expected food sales is predicted to increase by $208billion by 2020 with us already being at $800 billion by 2001. Under entry barriers for the fast-food industry the main concerns would be the entry costs, location, capital cost, and licensing.For a business to have success they must have the right location. Under exit barriers there areland leasing, building leases, capital cost.2. Some of the driving forces include the quality of the food, price of the food, and the nutritionalvalue. Some of the consumers that are playing an important role in fast food are womenemployed outside the home, two-earned households, higher income, and smaller size of thefamily. Increased food spending driven by population growth is just one way consumers willshape the future of the US food system.3. Five forces:a. Rivalry among competitors- in the fast-food industry its who can get the food out the fastest.b. New entrants- the competition is increasing due to not having many entry barriers.c. Substitute products- there are many choices in the fast food industry leaving consumers withso many different choices. Therefore each individual fast-food restaurants needs to differentiatetheir product so people will want to come back for their product. For example what is it aboutPopeyes chicken vs. KFCs?d. Suppliers and buyers- in the fast-food industry if the buyers arent satisfied with the suppliersthan they can easily switch their suppliers leaving the suppliers with a disadvantage. Also ifsuppliers cannot offer something unique that only restaurants can get form them, then they haveno power to keep that restaurants business.4. A few factors that are critical to success in the fast-food industry, they are timeliness of thefood, quality of the food, quantity of the food, and the price of the food .
RESEARCH METHODOLOGYThe information required for conducting the study would be based on questionnaire. Thequestions are designed to know the customer perception about KFC. The analysis would bebased on primary data collected through questionnaires and information obtained throughinternet and journals regarding the revival marketing strategy adopted by KFC in India.RESEARCH DESIGN- DESCRIPTIVEThe research design would be descriptive in nature as I have to find out the underlyingperceptions and behavior of consumers.RESEARCH APPROACH- QUESTIONNAIREThe questionnaire asked from respondents is basically of objective type. It is supported by bothopen and close ended questions.The questionnaire method is used to know the consumer behavior and perception. The questionsare intended to know the underlying factors that affect perception towards KFC in India.RESEARCH METHODOLOGY- SURVEY METHODFor achieving the objectives of study, survey was conducted. For conducting the survey aquestionnaire was made. The respondents were duly asked to fill questionnaires regarding theirperception, likings, and preferences regarding KFC.Method of Data Collection:Primary Data:The primary data for the project is collected through questionnaire filled by the respondents.Secondary Data:The secondary data used in the project has been collected from Marketing and advertisingagency for KFC-Ogilvy, articles, websites & Books.
SAMPLING TECHNIQUE – RANDOM SAMPLINGSample size- 60Statistical tools- MS-excelFAST FOOD INDUSTRYIntroductionFast food is the term given to food that can be prepared and served very quickly. While anymeal with low preparation time can be considered to be fast food, typically the term refers tofood sold in a restaurant or store with low quality preparation and served to the customer in apackaged form for take-out/take-away.Outlets may be stands or kiosks, which may provide no shelter or seating, or fast food restaurants(also known as quick service restaurants). Franchise operations which are part of restaurantchains have standardized foodstuffs shipped to each restaurant from central locations.The capital requirements involved in opening up a fast food restaurant are relatively low.Restaurants with much higher sit-in ratios, where customers tend to sit and have their ordersbrought to them in a seemingly more upscale atmosphere may be known in some areas as fastcasual restaurants.HistoryThe concept of ready-cooked food for sale is closely connected with urban development. InAncient Rome cities had street stands that sold bread and wine. A fixture of East Asian cities isthe noodle shop. Flatbread and falafel are today ubiquitous in the Middle East. Popular Indianfast food dishes include vada pav, panipuri and dahi vada. In the French-speaking nations ofWest Africa, roadside stands in and around the larger cities continue to sell—as they have donefor generations—a range of ready-to-eat, char-grilled meat sticks known locally as brochettes.
The Start of Fast Food CultureThe concept of fast food pops up during 1920s.The 1950s first witnessed their rapidproliferation. Several factors that contributed to this explosive growth in 50‘s were:(1) America‘s love affair with the automobiles.(2) The construction of a major new highway system.(3) The development of sub-urban communities.(4) The baby boom subsequent to world war second.―Fast-food chains initially catered to automobile owners in suburbia.On the goFast food outlets are take-away or take-out providers, often with a "drive-through" service whichallows customers to order and pick up food from their cars; but most also have a seating area inwhich customers can eat the food on the premises. People eat there more than five times a weekand often, one or more of those five times is at a fast food restaurant.Nearly from its inception, fast food has been designed to be eaten "on the go", often does notrequire traditional cutlery, and is eaten as a finger food. Common menu items at fast food outletsinclude fish and chips, sandwiches, pitas, hamburgers, fried chicken, French fries, chickennuggets, tacos, pizza, hot dogs, and ice cream, although many fast food restaurants offer "slower"foods like chili, mashed potatoes, and salads.VariantsAlthough fast food often brings to mind traditional American fast food such as hamburgers andfries, there are many other forms of fast food that enjoy widespread popularity in the West.Chinese takeaways/takeout restaurants are particularly popular. They normally offer a widevariety of Asian food which has normally been fried. Most options are some form of noodles,rice, or meat.Sushi has seen rapidly rising popularity in recent times. A form of fast food created in Japan.sushi is normally cold sticky rice served with raw fish.Pizza is a common fast food category inthe United States, with chains such as Dominos Pizza, Sbarro and Pizza Hut. Menus are more
limited and standardized than in traditional pizzerias, and pizza delivery, often with a timecommitment, is offered.Fish and chip shops are a form of fast food popular in the United Kingdom, Australia and NewZealand. Fish is battered and then deep fried.The Dutch have their own types of fast food. ADutch fast food meal often consists of a portion of French fries .BusinessIn the United States alone, consumers spent about US$110 billion on fast food in 2000 (whichincreased from US$6 billion in 1970). The National Restaurant Association forecasted that fastfood restaurants in the U.S. would reach US$142 billion in sales in 2006, a 5% increase over2005. In comparison, the full-service restaurant segment of the food industry is expected togenerate $173 billion in sales.Jobs and labor issuesToday, more than 10 million workers are employed in the areas of food preparation and foodservicing including fast food in the world.Employees are the backbone of the fast food industry. Proper training is crucial to the orderlyand quick service customers expect. Yet, employee turnover can be as high as 200% per year.With such a turnover, owner-operators of franchise and non-franchise restaurants have thedaunting task of constantly training an entirely new workforce. Policies and procedures need tobe explained to each new employee.GlobalizationIn 2009 the global fast food market grew by 4.8% and reached a value of 102.4 billion and avolume of 80.3 billion transactions. In India alone the fast food industry is growing by 40% ayear. McDonalds is located in 120 countries and on 6 continents and operates over 31,000restaurants worldwide.
KFC is located in 85 countries. Subway has 29,186 restaurants located in 86 countries, Pizza Hutis located in 26 countries, Taco Bell has 278 restaurants located in 12 countries besides theUnited States.Health issueTran‘s fats which are commonly found in fast food have been shown in many tests to have anegative health effect on the body.The fast food consumption has been shown to increase calorie intake, promote weight gain, andelevate risk for diabetes. The Centers for Disease Control and Prevention ranked obesity as thenumber one health threat for Americans in 2009. It is the second leading cause of preventabledeath in the United States and results in 400,000 deaths each year.FAST FOOD INDUSTRY IN INDIAINDIA – EMERGING MARKET FOR GLOBAL PLAYERSThe percentage share held by foodservice of total consumer expenditure on food has increasedfrom a very low base to stand at 2.6% in 2001. Eating at home remains very much ingrained inIndian culture and changes in eating habits are very slow moving with barriers to eating outentrenched in certain sectors of Indian society.. The growth in nuclear families, particularly inurban India, exposure to global media and Western cuisine and an increasing number of womenjoining the workforce have had an impact on eating out trends.FACTS AND FIGURESFast food is one of the world‘s largest growing food type. India‘s fast food industry is growingby 40% a year and is expected to generate a billion dollars in sales by 2010.The multinationalsegment of Indian fast food industry is up to Rs. 6 billion, a figure expected to zoom to Rs.1OObillion by 2010 By 2005, the value of Indian dairy products is expected to be Rs.1, 00,000million. In last 6 years, foreign investment in this sector stood at Rs. 3600 million which is aboutone-fourth of total investment made in this sector. Because of the availability of raw material forfast food, Global chains are flooding into the country.
MARKET SIZE & MAJOR PLAYERS a) Dominated by McDonalds having as many as 150 outlets. b) Domino‘s pizza is present in around 100 locations. c) Pizza hut is also catching up and it has planned to establish 125 outlets at the end of d) Subways have established around 40 outlets. e) Nirulas is established at Delhi and Noida only. However, it claims to cater 50,000 guests every day.Major players in fast food are: MCDONALDS KFC PIZZA HUT DOMINOS PIZZA. COFFEE DAY BARISTA.The main reason behind the success of the multinational chains is their expertise in productdevelopment, sourcing practices, quality standards, service levels and standardized operatingprocedures in their restaurants, a strength that they have developed over years of experiencearound the world. The home grown chains have in the past few years of competition with theMNCs, learnt a few things but there is still a lot of scope for improvement.REASON FOR EMERGENCEGender Roles: gender roles are now changing. Females have started working outside. So, theyhave no time for their home and cooking food. Fast food is an easy way out because these can beprepared easily.Customer Sophistication and Confidence: consumers are becoming more sophisticated now.They do not want to prepare food and spend their time and energy in house hold works. They arebuilding their confidence more on ‗ready to eat and easy to serve‘ kind of foods
Paucity of Time: people have no time for cooking. Because of emergence of working womenand also number of other entertainment items. Most of the time either people work or want toenjoy with their family.Double Income Group: emergence of double income group leads to increase in disposableincome. Now people have more disposable income so they can spend easily in fast food andother activities.Working Women: working women have no time for cooking, and if they have then also theydon‘t want to cook. Because they want to come out of the traditionally defined gender roles.They do not want to confine themselves to household work and upbringing of children‘s.Large population: India being a second largest country in terms of population possesses largepotential market for all the products/services. This results into entry of large number of fast foodplayers in the country.Relaxation in rules and regulations: with the economic liberalization of 1991, most of thetariff and non tariff barriers from the Indian boundaries are either removed or minimized. Thishelped significantly the MNC‘s to enter in the country.Menu diversification: increase in consumption of pizzas, burgers and other type of fast foods.CHALLENGES FOR THE INDUSTRYSocial and cultural implications of Indians switching to western breakfast food: Generally,Hindus avoid all foods that are believed to inhibit physical and spiritual development. Eatingmeat is not explicitly prohibited, but many Hindus are vegetarian because they adhere to theconcept of ahimsa. Those seeking spiritual unity may avoid garlic and onions. The concept ofpurity influences Hindu food practices. Products from cows (e.g., milk, yogurt, ghee-clarifiedbutter) are considered pure. Pure foods can improve the purity of impure foods when they areprepared together. Some foods, such as beef or alcohol, are innately polluted and can never bemade pure. But now, Indians are switching to fast food that contain all those things that areconsidered impure or against there beliefs. Some traditional and fundamentalist are against thistransformation of food habit and number of times they provoke their counterparts to revoltagainst such foods. And that is what happened when McDonald‘s decided to enter thecomplexity of Indian business landscape, counting only on its “fast food global formula”,without any apparent previous cultural training.
Emphasis on the usage of bio-degradable products: Glasses, silverware, plates and clothnapkins are never provided with fast food. Instead, paper plates and napkins, polyurethanecontainers, plastic cups and tableware, drinking cartons or PET (polyethylene terephthalate)bottles are used, and these are all disposable. Many of these items are tossed in the garbageinstead of being recycled, or even worse, merely thrown on the ground. This burdens natureunnecessarily and squanders raw materials. In order to reduce soil and water pollution,government now emphasis more on the usage of bio-degradable products.Retrenchment of employees: Most of new industries will be capital intensive and may drivelocal competitors, which have more workers, out of business.Profit repatriation: Repatriation of profits is another area of concern for Indian economy. Aswhen multinational enters the any countries, people and government hope that it will increase theemployment rate and result in economic growth. However, with the multinational operation, hostcountry experiences these benefits for a short time period. In long run neither employmentincreases (because of capital intensive nature of MNC‘s) nor it increases the GDP or GNPbecause whatever MNC‘s earn they repatriate that profit back to their home country.PROBLEMS OF INDUSTRYEnvironmental friendly products cost high: government is legislating laws in order to keepcheck on the fast food industry and it is emphasizing more on the usage of bio-degradable andenvironment friendly products. But associated with this issue is the problem that fast food playerfaces - the cost associated with the environment friendly product. They cost much higher than thenormal products that companies uses for packaging or wrapping their products.Balance between societal expectation and companies economic objectives: To balance a society‘sexpectation regarding environment with the economic burden of protecting the environment. Thus,one can see that one side pushes for higher standards and other side tries to beat the standardback, thereby making it a arm wrestling and mind boggling exercise.Health related issues: obesity: I. Studies have shown that a typical fast food has very high density and food with high density causes people to eat more then they usually need.
II. Low calories food: Emphasis is now more on low calorie food. In this line McDonald has a plan to introduce all white meat chicken Mcnuugget with less fat and fewer calories.TRENDS IN INDIAN MARKETMarketing to childrens: fast food outlets in India target children‘s as their major customers.They introduce varieties of things that will attract the children‘s attention and by targetingchildren‘s they automatically target their parents because Children‘s are always accompanied bytheir parents.Low level customer commitment: Because of the large number of food retail outlets and alsobecause of the tendency of customer to switch from one product to other, this industry faces lowlevel customer commitment.Value added technology services: There is continuous improvement in the technology as far asfast food market in India is considered. The reason behind that is food is a perishable item and inorder to ensure that it remain fresh for a longer period of time. Earlier, Indian people prefereating at home but now with the change in trend there is also need for improvement and upgradation of technology in food sector.Attracting different segments of the market: Fast food outlets are introducing varieties ofproducts in order to cater the demands of each and every segment of the market. They areintroducing all categories of product so that people of all age, sex, class, income group etc cancome and become a customer of their food line.The success of fast foods arose from the changes in our living conditions: 1. Many women or both parents now work 2. There are increased numbers of single-parent households 3. Long distances to school and work are common 4. Usually, lunch times are short 5. Theres often not enough time or opportunity to shop carefully for groceries, or to cook and eat with ones family. Especially on weekdays, fast food outside the home is the only solution.
Kentucky Fried Chicken (KFC)About the CompanyKFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken, is a chain offast food restaurants based in Louisville, Kentucky. KFC is a brand and operating segment,called a "concept" of Yum! Brands since 1997 when that company was spun off from PepsiCo asTricon Global Restaurants Inc. The restaurants are known as Poulet Frit Kentucky or PFK inthe province of Quebec in Canada. In France, however, the chain is known as KFC.KFC primarily sells chicken in form of pieces, wraps, salads and sandwiches. While its primaryfocus is fried chicken, KFC also offers a line of roasted chicken products, side dishes anddesserts. Outside North America, KFC offers beef based products such as hamburgers or kebabs,pork based products such as ribs and other regional fare.The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952,though the idea of KFCs fried chicken actually goes back to 1930. The company adopted theabbreviated form of its name in 1991. Starting in April 2007, the company began using itsoriginal name, Kentucky Fried Chicken, for its signage, packaging and advertisements in theUnited States as part of a new corporate re-branding program newer and remodeled restaurantswill have the new logo and name while older stores will continue to use the 1980s signage.Additionally, Yum! Continues to use the abbreviated name freely in its advertising.ProductsThe famous paper bucket that KFC uses for its larger sized orders of chicken and has come tosignify the company was originally created by Wendys restaurants founder Dave Thomas.Thomas was originally a franchisee of the original Kentucky Fried Chicken and operated severaloutlets in the Columbus, Ohio area. His reasoning behind using the paper packaging was that ithelped keep the chicken crispy by wicking away excess moisture. Thomas was also responsiblefor the creation of the famous rotating bucket sign that came to be used at most KFC locations inthe US.
Menu itemsKFCs specialty is fried chicken served in various forms. KFCs primary product is pressure-friedpieces of chicken made with original recipe. The other chicken offering, extra crispy, is madeusing a garlic marinade and double dipping the chicken in flour before deep frying in a standardindustrial kitchen type machine.Kentucky Grilled Chicken - This marinated grilled chicken is targeted towards health-consciouscustomers. It features marinated breasts, thighs, drumsticks, and wings that are coated with theOriginal Recipe seasonings before being grilled. It has less fat, calories, and sodium than theOriginal Recipe fried chicken. Introduced in April 2009.Discontinued productsThe Colonels Rotisserie Gold – This product was introduced in the 1990s as a response to theBoston Market chains roasted chicken products, and a healthier mindset of the general publicavoiding fried food. Purportedly made from a "lost" Col. Sanders recipe, it was sold as a wholeroaster or a half bird.Tender Roast Chicken – This product was an off-shoot of The Colonels Rotisserie Gold.Instead of whole and half birds, customers were given quarter roasted chicken pieces. For a time,customers could request chicken "original", "Extra Tasty Crispy", or "Tender Roast".Smokey Chipotle – Introduced in April 2008. The chicken was dipped in chipotle sauce thendoubled breaded and fried. It has been discontinued since August 2008.Nutritional valueKFC formerly used partially hydrogenated oil in its fried foods. This oil contains relatively highlevels of trans fat, which increases the risk of heart disease. The Center for Science in the PublicInterest (CSPI) filed a court case against KFC, with the aim of making it use other types of oilsor make sure customers know about Trans fat content immediately before they buy food.In October 2006, KFC announced that it would begin frying its chicken in trans fat-free oil. Thiswould also apply to their potato wedges and other fried foods, however, the biscuits.
AdvertisingOne of KFCs latest advertisements is a commercial advertising its "wicked crunch box meal".The commercial features a fictional black metal band called "Hellvetica" performing live, thelead singer then swallows fire. The commercial then shows the lead singer at a KFC eating the"wicked crunch box meal" and saying "Oh man that is hot".In 2007, the original, non-acronymic Kentucky Fried Chicken name was resurrected and began toreappear on company marketing literature and food packaging, as well as some restaurantsignage.KFC Business StrategyKFC fast-food chains are currently under the restaurant division of PepsiCo Incorporated. Somemajor threats include the changing attitudes of society toward healthier eating habits, KFC hasmore than 11000 outlets located in 80 countries. In marketing, KFC restaurants are not restrictedfrom locating within close proximity of other KFC restaurants. There are two alternativestrategies for KFC. The first strategy involves keeping PepsiCo beverage division and snackfoods division together, and a divestiture of PepsiCo restaurant division; selling Taco Bell, PizzaHut, and KFC.Present SituationThe organization is currently structured with two divisions under PepsiCo. David Novak ispresident of KFC. John Hill is Chief Financial Officer and Colin Moore is the head of Marketing.Peter Waller is head of franchising while Olden Lee is head of Human Resources. KFC is part ofthe two PepsiCo divisions, which are PepsiCo Worldwide Restaurants and PepsiCo RestaurantsInternational. Both of these divisions of PepsiCo are based in Dallas.StrengthsStrengths can be found internally in a company and can be used to the company‘s advantage.The strengths identified are as follows:
1. KFCs secret recipe.The secret recipe has long been a source of advertising, and allowed KFC to set itself apart. Also,KFC was the first chain to enter the fast-food industry, just before McDonalds, which opened itsfirst store a year later, and the "secret recipe" was the initial home replacement strategy.2. Name recognition and reputation.KFCs early entrance into the fast-food industry in 1954 allowed KFC to develop strong brandname recognition and a strong foothold in the industry. The Colonel is KFCs original owner anda very recognizable figure, both in the U.S. and internationally, in their new logo. In fact, in thefourth annual Logo Value Survey, done by The Schechter Group, the KFC logo was the only onewhich significantly enhance the brands image .3. PepsiCos success with the management of fast food chains. PepsiCo acquired Pizza Hut in1977, and Taco Bell in 1978. PepsiCo used many of the same promotional strategies that it hasused to market soft drinks and snack food. By the time PepsiCo bought KFC in 1986, thecompany already dominated two of the four largest and fastest-growing segments of the fast foodindustry.4. Traditional employee loyalty."KFCs culture was built largely on Colonel Sanders laid back approach to management"(Wright, p.433). Before the acquisition of KFC by PepsiCo, employees at KFC enjoyed goodbenefits, a pension, and could receive help with other non-income needs. This kind of "personal"human resources management makes for a loyal workforce.5. Improving operating efficiencies by reducing overhead and other operating costs candirectly affect operating profit.Due to the strong competition in the US, the fast-food chains are reluctant to raise prices toincrease profit. Many of the chains are turning to operating efficiencies to increase profit. Formany companies, operating efficiencies are achieved through improvements in customer service,cleaner restaurants, faster and friendlier service, and continued high-quality products.
WeaknessesWeaknesses are also found internally like strengths. Weaknesses, however, can limit acompany‘s potential. The weaknesses for KFC are identified as follows:1. The many sales of KFC lead to a confusing corporate direction.Between 1971 and 1986, KFC was sold three times. The first two sales, to Heublein, Inc and toR.J. Reynolds, left the company largely autonomous. It wasnt until the sale to PepsiCo in 1986that changes in top management started to take place. These changes happened almostimmediately after the sale.2. KFC has a long time to market with new products.Because of the nature of the chicken segment of the fast food industry, innovation was never aprimary strategy for KFC. However, during the late 1980s, other fast food chains, such asMcDonalds, began to offer chicken as aMenu option. During this time, McDonalds had already introduced the McChicken while KFCwas still testing its own chicken sandwich. This delay significantly increased the cost ofdeveloping consumer awareness for the KFC sandwich.3. Conflicting cultures of KFC and Pepsi Co.While KFCs culture was largely based on the Colonels laid back approach to management,while PepsiCos culture is more of a "fast track" attitude. Employees do not have the same levelof job security that they enjoyed before the PepsiCo acquisition
ProblemsThrough an analysis of the strengths, weaknesses, opportunities, and threats of KFC, thefollowing potential problem areas were identified:1. No defined target market.The advertising campaign of KFC does not specifically appeal to any segment. It does not appearto have a consistent long-term approach. The U.S. has enormous changes in its demographics.Single-person households have increased from 12% in 1970 to 25% in 1995. With this kind ofdramatic change, KFC does not have a proper approach to its target market.2. Health Conscious Consumers.There has been a trend toward an increasingly healthy diet in America. This put KFC at anextreme disadvantage due to its fried product offering.3. Increased Start Up Costs.Prime locations have increased in cost due to limited room for expansion. New technology hasincreased efficiencies, but resulted in greater increased start up costs. Restaurant and equipmentpackages range from $500,000 to $1,000,000.Achievements:KFC is one of the most renowned world gastronomic brand names. Kentucky Fried Chickenproducts are currently offered in 80 countries worldwide and in more than 11,000 restaurantswhich are visited on a daily basis by almost 8 million customers. Globally, KFC employsapproximately 290,000 people, Worldwide, a new KFC restaurant is opened almost every day.In 2004 the ―KFC Excellent‖ range - three types of salad (Caesar, Garden and Mandarin)obtained the prize for ―Worldwide Best Practice Award 2004‖ in the category of best productand best marketing campaign and its implementation in the restaurants. This prize is distributedeach year by YUM Restaurants International. According to the ratings for ―Most expensiveworld brands 2004‖ conducted by the American weekly ‗Business Week‘, KFC was positioned54th place; currently valued at 5.1 billion USD
COMPANY PROFILEKFC Corporation, based in Louisville, Kentucky, is the worlds most popular chicken restaurantchain, specializing in Original Recipe®, Extra Crispy™, Twister® and Colonels Crispy Strips®chicken with home-style sides.Every day, nearly eight million customers are served around the world. KFCs menu includesOriginal Recipe® chicken -- made with the same great taste Colonel Harland Sanders createdmore than a half-century ago. Customers around the globe also enjoy more than 300 otherproducts -- from a Chunky Chicken Pot Pie in the United States to a salmon sandwich in Japan.KFC has more than 11,000 restaurants in more than 80 countries and territories around theworld. And in quite a few U.S. cities, KFC is teaming up with sister restaurants, A&W, All-American Food™, Long John Silvers, Taco Bell and Pizza Hut, selling products from thepopular chains in one convenient location.KFC is part of Yum! Brands, Inc., which is the worlds largest restaurant system with over32,500 KFC, A&W All-American Food, Taco Bell, Long John Silvers and Pizza Hut restaurantsin more than 100 countries and territories.
KFC HISTORY-AT-A-GLANCE9/9/1890Harland Sanders is born just outside Henryville, Indiana.1900-1924Harland Sanders holds a variety of jobs including: farm hand, streetcar conductor, army privatein Cuba, blacksmiths helper, rail yard fireman, insurance salesman, tire salesman and servicestation operator for Standard Oil.1930In the midst of the depression, Harland Sanders opens his first restaurant in the small front roomof a gas station in Corbin, Kentucky. Sanders serves as station operator, chief cook and cashierand names the dining area "Sanders Court & Café."1936Kentucky Governor Ruby Laffoon makes Harland Sanders an honorary Kentucky Colonel inrecognition of his contributions to the states cuisine.1937The Sanders Court & Café adds a motel and expands the restaurant to 142 seats.1939The Sanders Court & Café is first listed in Duncan Hines "Adventures in Good Eating." Firedestroys The Sanders Court & Café, but it is rebuilt and reopened. The pressure cooker isintroduced. Soon thereafter Colonel Sanders begins using it to fry his chicken to give customersfresh chicken,faster.1940Birthdate of the Original Recipe1949Sanders marries Claudia Price.1952The Colonel begins actively franchising his chicken business by traveling from town to town andcooking batches of chicken for restaurant owners and employees.The Colonel awards Pete Harman of Salt Lake City with the first KFC franchise. A handshakeagreement stipulates a payment of a nickel to Sanders for each chicken sold.1955An interstate highway is built to bypass Corbin, Kentucky. Sanders sells the service station onthe same day that he receives his first social security check for $105. After paying debts owed,he is virtually broke. He decides to go on the road to sell his Secret Recipe to restaurants.1957
Kentucky Fried Chicken first sold in buckets1960The Colonels hard work on the road begins to pay off and there are 190 KFC franchisees and400 franchise units in the U.S. and Canada1964Kentucky Fried Chicken has more than 600 franchised outlets in the United States, Canada andthe first overseas outlet, in England.Sanders sells his interest in the U.S. company for $2 million to a group of investors headed byJohn Y. Brown Jr., future governor of Kentucky. The Colonel remains a public spokesman forthe company.1965Colonel Sanders receives the Horatio Alger Award from the American Schools and CollegesAssociation.1966The Kentucky Fried Chicken Corporation goes public.1969The Kentucky Fried Chicken Corporation is listed on the New York Stock Exchange.1971More than 3,500 franchised and company-owned restaurants are in worldwide operation whenHeublein Inc. acquires KFC Corporation.1976An independent survey ranks the Colonel as the worlds second most recognizable celebrity.1977Colonel Sanders speaks before a U.S. Congressional Committee on Aging.1979KFC cooks up 2.7 billion pieces of chicken. There are approximately 6,000 KFC restaurantsworldwide with sales of more than $2 billion.12/16/1980Colonel Harland Sanders, who came to symbolize quality in the food industry, dies after beingstricken with leukemia. Flags on all Kentucky state buildings fly at half-staff for four days.1982Kentucky Fried Chicken becomes a subsidiary of R.J. Reynolds Industries, Inc. (now RJRNabisco, Inc.) when Heublein, Inc. is acquired by Reynolds.1986PepsiCo, Inc. acquires KFC from RJR Nabisco, Inc.1997
PepsiCo, Inc. announces the spin-off of its quick service restaurants - KFC, Taco Bell and PizzaHut - into Tricon Global Restaurants, Inc.2002Tricon Global Restaurants, Inc., the worlds largest restaurant company, changes its corporatename to YUM! Brands, Inc. In addition to KFC, the company owns A&W® All-AmericanFood® Restaurants, Long John Silvers®, Pizza Hut® and Taco Bell® restaurants.2006More than a billion of the Colonels "finger lickin good" chicken dinners are served annually inmore than 80 countries and territories around the world. OUR COMPANY’S VISION , MISSION AND GOALOUR MISSIONTo put a yum !!! On a billion of faces..OUR VISIONTo be the number one restaurant company in the subcontinentOUR GOALDouble our business over the next three yearsGROWTHNumber one restaurant company profitable in 2010Foundation – 420 stores by 2010Accelerate – 1000 stores by 20152009 KEY PRIORITESBuild awarenessDelight customersBroaden menuDrive valuePROFITABILITYUrgently drive marginsProfitable salesDrive effeciencesCost savings
DEVELOPMENTBrand building assetsBuild storesCAPABILITYCareer developmentSkill developmentGrow with right partnersOUR PASSIONPut a YUM!! On people‘s faces around the world… that special eating experience that makesyou smile and creates life- long customers.OUR FOUNDING TRUTHSPEOPLE‘S CAPABILITY FIRST…Satisfied customers and profitability followRESPOND TO THE VOICE OF THE CUSTOMER…Not just listenTHE RGM IS OUR NUMBER 1 LEADER…Not senior managementRUN EACH RESTAURANT LIKE ITS OUR ONLY ONE…Avoid the trap of averagesRECOGNITION SHOWS YOU CARE…People leave when you don‘tGREAT OPERATIONS AND MARKETING INNOVATION DRIVE SALES….No finger pointingOPERATION DISCIPLINE THROUGH PROCESS AND STANDARDS…Consistency- not ― program of the month‖FRANCHISES ARE VITAL ASSETS…Operate as one system not two.
KFC IN INDIAForeign fast food companies were allowed to enter India during the early 1990s, thanks to theeconomic liberalization policy of the Government of India .One of the first fast foodmultinationals to set foot in India was Kentucky Fried Chicken (KFC), owned by PepsiCo. KFCreceived permission to open 30 new outlets across the country. It chose Bangalore as its launchpad because the city had a substantial upper middle class population, with a trend of familieseating out. Also, it was considered India‘s fast growing metropolis in the 1990.The Bangaloreoutlet was opened in June 1995. Apart from Bangalore, PepsiCo planned to open 60 KFC outletsin the country over the next seven years. However, KFC became embroiled in variouscontroversies even before it started full-fledged business in India.
KFC, INDIA MENUNon – Vegetarian HOT AND CRISPY - BONELESS CHICKENBUCKET BUCKET variety bucket
GAME BOX GAME BOXTOASTED TWISTER ZINGER BURGER
KFC is the world‘s No.1 Chicken QSR and has industry leading stature across many countrieslike UK, Australia, South Africa, China, USA, Malaysia and many more. KFC is the largestbrand of Yum Restaurants, a company that owns other leading brands like Pizza Hut, Taco Bell,A&W and Long John Silver. Renowned worldwide for it‘s finger licking good food, KFC offersits signature products in India too! KFC has introduced many offerings for its growing customerbase in India while staying rooted in the taste legacy of Colonel Harland Sander‘s secret recipe.Its signature dishes include the ―crispy outside, juicy inside‖ Hot and Crispy Chicken, flavorfuland juicy Original Recipe chicken, the spicy, juicy & crunchy Zinger Burger, Toasted Twister,Chicken Bucket and a host of beverages and desserts. For the vegetarians in India, KFC also hasgreat tasting vegetarian offerings that include the Veggie Burger, Veggie Snacker and Veg Ricemeals. In India, KFC is growing rapidly . MARKETING STRATEGYKFC as a BrandKFC is one of the best-known brands worldwide Doing Integrated assignment we study howKFC continually aims to build its brand by listening to its customers also identifies the variousstages in the marketing process.Branding develops a personality for an organization, product or service. Brand Image representshow consumers view the organization.Branding only works when behaves and presents itself in a consistent way, Marketingcommunication methods, such as advertising and promotion, are used to created colors, designand image which gives a recognizable face .At KFC this is represented by its familiar logo-Colonel Harland Sanders is shedding his white suit jacket for a red cook.Marketing involves identifying customers needs and requirements and meeting these needs inbetter way then its competitors. In this way a company creates loyal customers.The stating point is to find out who are potential customers are-not everyone will want what KFChas to offer. The people KFC identifies as likely customers are known as key audiences.Having identified its key audiences a company has to ensure a marketing mix that created thatappeals specifically to those people. The marketing mix is a term used to describe the four mainmarketing tools(4Ps):
1.Product2.Price3.Place4.PromotionUsing that detailed information about its customers. KFCs marketing department can determine:1. What products are well received?2. What prices consumer willing to pay?3. What T.V. Programs, newspapers and advertising consumer read or view?4. What restaurants are visited?Market research is the format which enables KFC to identify this key information. Accurateresearch is essential in creating the right mix to win customers loyalty.In all its market KFC faces competition from other businesses. Additionally economic, legal andtechnological changes, social factors retail environment and many other elements affect KFCsuccess in the market.Market research identifies these factors and anticipates how they will affect people‘s willingnessto buy. As the economy and social attitudes change, so do buying patterns. KFC needs to identifywhether the number of target customers is growing or shrinking and whether their buying habitswill change in the future.Market research considers everything that affect buying decisions. These buying decisions canoften be affected by wider factors than just the products itself. Psychological factors areimportant, e.g. what image does the product give or how the consumer feels when purchasing it .MEETING THE NEEDS OF KEY AUDIENCEThere are a limited number of customers in the market. To build long-term business it is essentialto retain people once they have become customers. For example a parent with two children mightvisit and visits KFC to give the children a treat. Children want to visits as it is fun place to eat. Abusiness customer visits KFC during the work day as service is quick the food taste is great andcan be eaten in the car without affecting a busy work schedule. These examples represent just afew of KFCs possible customer‘s profile. Each has different reasons to come KFC.Using this type of information KFC can tailor communication to the needs of specific groups. Itis to the needs of specific group. It is their needs that determine the type of products and services
offered, prices charged, promotionsCreated and where restaurants are located. To meet the needs of the key market it is important toanalyses the internal marketing strengths the organization.Strengths and weaknesses must be identified, so that a marketing strategy which is right for thebusiness can be decided upon.The analysis will include the:1. Company‘s products and how appropriate they are for the future2. Quality of employees and how well trained they are to these additional psychological factorsare significantly offer the best service to important to the customer. They can be even morecustomers important than the products‘ physical benefits.3. Systems and how well they function in providing customer satisfaction e.g. marketingdatabases and restaurant systems.4. Financial resources available for marketing.The business can then determine what it needs to do in identify different typesof customers. For example:A parent with two children might visit Visits KFC to give the children treat.A children wants to visit KFC As it is a fun place to eatA business customerVisits KFC during the work day as service is quick,the food taste is great can be eaten in the carwithout affecting busy work schedule.Teenager visits KFC The Rupee saver menu is affordable and there is Internet access in somerestaurant. These examples represent just a few of KFC possible customer profiles each hasdifferent reasons to come KFC. Using this type of information KFC can tailor communication tothe needs of specific groups. It is their needs that determine the type of products and services
offered, prices charged, promotions created and where restaurants are located. To meet the needsof the key market it is important to analyze the internal marketing strengths and weaknesses mustbe identified, so that a marketing strategy which is right for the business can be decided upon.The analysis will include the:• Company‘s products and how appropriate they are for the future• Quality of employees and how well trained they are to these additional psychological factorsare significantly offer the best service to important to the customer. They can be even morecustomers important than the products‘ physical benefits.• Systems and how well they function in providing customer satisfaction example marketingdatabase• Financial resources available for marketingOnce the strengths and weaknesses are determined, they are combined with the opportunities andthreats in the market place. This is known as SWOT analysis (Strengths, Weaknesses,Opportunities, and Threats). The business can then determine what it needs to do in order toincrease its chances of marketing successfully. SWOT ANALYSISSTRENGTHS(INTERNAL)The brand detailed market research to create the right marketing mix. Goodwill and reputation: The company certainly has earned a good name and reputation by its previous products and services in the market. It is even more recognised in other markets outside India, where the company is among the leading fast food giants. The brand is recognised and trusted in India for its quality products, price, and customer service. It therefore has a good head start and enjoys a good chance of becoming a leader in Indian fast food industry. Employee Loyalty: Employee Loyalty is one of the major strengths of KFC. The turnover rate in the company is amongst the lowest in the industry.
Customer Loyalty: Despite gain by Boston Market and Chick-fill A, KFC customer base remained loyal to the KFC brand because of its unique taste. KFC has continued to dominate the dinner and take out segment of the Industry. Ranks highest among all chicken restaurant chains for its convenience and menu variety. It generates $1B revenue each year.WEAKNESSES (INTERNAL)KFC has been for around long time therefore they have to keep innovating. KFC was losing market share as other Chicken chain increased sales at a faster rate. KFC share of Chicken Segment sales fell from 71 percent 1999 to less than 56 percent in 2009 , a 10 -years drop of 15 percent. Huge competition in this segment. India is still mostly a vegetarian dominated cultured society. South India is especially very much so. This may reduce the market share of the company. KFC has not yet invested much on R&D, and innovating new products for Indian Markets. This may lead to failure of their products as they are not in line with the Indian mind set, people taste and preferences and their likes and dislikes. This may prove fatal for the company.OPPORTUNITIES Growth of 18-24 age demographic Should start with breakfast menu More drive through stores. Strong home delivery medium. Build up a customer base Increase in U.S. median income International beef scare from mad-cow
Home Meal Replacement Market will exceed an estimated $577 billion by 2020 Targeting to growing ethnic markets – Asian American and Hispanic New Leadership Domestic markets Updating restaurants Balanced menu Customer focus Increase delivery serviceTHREATS Increasing number of retail chains Rated 83 out of 100 in terms of competitiveness Increasing wage rates directly affect menu prices 85% annual employee turnover for fast food market Health Trend away from fried foods Changing customer demandsWhat is Marketing?• Marketing as a Managerial FunctionMarketing as a managerial activity involves analyzing the market opportunities, planning themarketing activities, implementing marketing plans and setting control mechanisms in such away that organizational objectives are accomplished at the minimum cost.In other words, marketing is:a) Understanding consumer needsb) Environment scanning and market opportunity analysisc) Development of a competitive marketing plan and strategy that an organization is able tosatisfy not only the consumers needs but also achieve its own objectives
d) Implementation of the marketing plan and development of tactical plans to overcomeproblems at the market placee) Development of control mechanismsThis perspective implies that in order to achieve competitive advantage, a firm needs to scan itsexternal environment to spot market opportunities. Its marketing mix needs to fit the localmarket dynamics. Further, in order to ensure a high rate of customer acquisition and retention,firm‘s marketing mix has to be customer centric. Marketing management, therefore, is a criticalfunction especially in highly competitive markets. It can provide the much needed competitiveadvantage to an enterprise, irrespective of its size and product marketing.MARKETING TOOLSThe marketer‘s task is to build a marketing program or plan to achieve the company‘s desiredobjectives. The marketing program consists of numerous decisions on the mix of marketing toolsto use. The marketing mix is the set of marketing tools the firm uses to pursue its marketingobjectives in the target market. These tools are classified into four broad groups that are calledthe four Ps of marketing: product, price, place, and promotion.The particular marketing variables under each P are shown in the figure. marketing-mixdecisions must be made for influencing the trade channels as well as the final consumers. Thefollowing figure shows the company preparing an offering mix of products, services, and prices,and utilizing a promotion mix of sales promotion, advertising, sales force, public relations, directmail, telemarketing, and Internet to reach the trade channels and the target customers.
At this point the marketing mix is put together:1. ProductAnything that can be offered to a market to satisfy a want or need. KFCs specialty is friedchicken served in various forms. KFCs primary product is pressure-fried pieces of chicken madewith the original recipe. The other chicken offering, extra crispy, is made using a garlic marinadeand double dipping the chicken in flour before deep frying in a standard industrial kitchen typemachine. It is important thing to remember when offering menu items to customers is that theyhave a choice, they have a huge number of ways of spending their money and places to spend it.Therefore, KFCs places considerable emphasis on developing a menu which customers want.Market research establishes exactly what this is.However customer‘s requirements change over time. What is fashionable and attractive todaymay be discarded tomorrow. Marketing continuously monitors customer‘s preferences. In orderto meet these changes KFC has introduced and phased out old ones. And will continue to do so.Care is taken not to adversely affect the sale of one choice by introducing another choice whichwill cannibalize the sale from the existing one ( trade off).KFC knows that items on its menuwill vary in popularity. Their ability to generate profits will vary at different points in their lifecycle. Products go through a life cycle which is illustrated below: The type of marketing takenand amount invested will be different, depending upon the stage product is reached. For examplelaunching a new product involves automatically television and other advertising support. At anytime company will have a portfolio of products each is in different stage of its life cycle. Some ofKFCs option growing tremendously but some Halal products is in its maturity stage.
SEGMENTATIONGeographic segmentation:KFC has outlets internationally and sells its products according to geographic needs of thecustomer. In India KFC focuses how geographically its customers demand different products. Innorth India Chicken is the main selling product, while in the south the Veg. items sell more thanthe chicken.Demographic SegmentationIn demographic segmentation, the market is divided into groups based on an age, gender, familysize, income, occupation, religion, race and nationality. KFC divides the market on demographicbasis in this way: • Age is between 6-65. • Gender is both males and females. • Family size is 1-2, 3-4, 5+ • Income is Rs 10,000 n above.Psychographic segmentationDividing a market into different groups based on social class, lifestyle, or personalitycharacteristics is called psychographic segmentation.KFC divides market on the basis of psychographic variables like Social class- Upper and Middle class. Lifestyle is not specific. Personality is ambitious and authoritarian2. PricePrice is the any amount of money that customers have to pay while purchasing the product. Morebroadly, price is the sum of all the values that consumers exchange for benefits of having orusing the product or services. The customer‘s perception of value is an important determinant ofthe price charged. Customers draw their own mental picture of what a product is worth. Aproduct is more than a physical item, it also has psychological connotations for the customer.The danger of using low price as a marketing tool is that the customer may feel that quality isbeing compromised. It is important when deciding on price to be fully aware of the brands andintegrity. A further consequence of price reduction is that competitors match prices resulting inno extra demand . This means the profit margin has been reduced without increasing sales.
Demographic FactorsAge: Generally there is no age limit focus by the KFC. The target and focus is on each and everyindividual in a society. KFC finds its largest demographic in the young of any society.Gender: Both male and females are focused by KFC, gender does not play any role here.Household Size: This plays a vital role in the demographic factor of the KFC. Generally theytarget whole families rather than single persons. This being the reason for their Family Mealswhich are basically bundled items served at a nominally cheaper rate.Economic FactorIncome: Income is an important key factor for KFC. This factor decides which class is to betargeted. In the early rise of KFC they focused on the upper class but slowly are introducingeconomy meals that attract the lower to middle classes.Consumption Behavior: It estimates the behavior of people, their liking and disliking towardsthe pricing of the products.
Pricing StrategyMarket skimming: KFC globally enters the market using market skimming. Their products arepriced high and target the middle to upper class people. Gradually they trickle down the pricesfocusing on the middle to lower class people to penetrate both sides of the market.CompetitionWe can compare the price of their products with McDonald, Dominoes and Pizza Hut. If thecompetitor provides the same product at a lower price then the organization usually lowers theprice of its product too. In the case of KFC, Fried Chicken is its main selling point and controls amonopoly over the Indian fast food market (only with fried chicken). It prices its burgers, Frenchfries and soft beverages with relation to its competitors. • Cost Based; KFC price their product keeping different points in view. They adopt the cost base price strategy. Pricing of the product includes the govt. tax and excise duty and then comes the final stage of determine the price of their product. The products are bit high priced according the market segment and it is also comparable to the standard of their product. In the cost based method we include the variable and fixed cost.
The firm can change its price, sales force size, and advertising expenditures in the short run. Itcan develop new products and modify its distribution channels only in the long run. Thus thefirm typically makes fewer period-to-period marketing-mix changes in the short run than thenumber of marketing-mix decision variables might suggest.Note that the four Ps represent the sellers‘ view of the marketing tools available for influencingbuyers. From a buyer‘s point of view, each marketing tool is designed to deliver a customerbenefit. Also the sellers‘ four Ps correspond to the customers‘ four Cs.FourPs Four Cs Product Customer solution Price Customer cost Place Convenience
Promotion CommunicationPromotion means communicating with Individuals, groups, or organizations to directly orindirectly facilitate exchanges by informing and persuading one or more audiences to accept anorganization‘s products.A variety of organizations spend considerable resources on promotion. Marketers indirectlyfacilitate exchanges by focusing information about company activities and products on interestgroups (such as environmental and consumer groups), current and potential investors, regulatoryagencies, and society in general. Some marketers use cause-related marketing, which linkspurchase of their products to philanthropic efforts for a particular cause favored by their targetmarket. Marketers also sponsor special events, often leading to news coverage and positivepromotion of an organization and its brands.From this wider perspective, promotion plays a comprehensive communication role. Somepromotional activities help a company justify its existence and maintain positive healthyrelationships between itself and various groups. Although companies can direct a single type ofcommunication—such as an advertisement—toward numerous audiences, marketers often designa communication precisely for a specific target market. A firm frequently communicates severaldifferent messages concurrently, each to a different group.For maximum benefit from promotional efforts, marketers strive to properly plan, implement,coordinate, and control communications. Effectively promotional activities are based oninformation about customers and the marketing environment, often obtained from anorganization‘s marketing information system. How successfully marketers use promotions tomaintain positive relationships demand largely on the quantity and quality of information anorganization receives. Because promotion‘s basic role is communication, we should analyzewhat communication is and how the communication process workPROMOTION AND THE COMMUNICATION PROCESSCommunication can be viewed as the transmission of information. For communication to takeplace, both the sender and receiver of information must share some common ground. They mustshare a common understanding of the symbols, words, and pictures used to transmit information.
Thus communication is defined as a sharing of meaning. Implicit in this definition is the notionof transmission of information because sharing necessitates transmission. As the figure belowshows, communication begins with a source. A source is a person, group, or organization with ameaning it intends and attempts to share with an audience. A source could be a salespersonwishing to communicate a sales message or an organization wanting to send a message tothousands of customers through an advertisement. A receiver is the individual, group, ororganization that decodes a coded message, and an audience is two or more receivers.To transmit meaning, a source must convert the meaning into a series of signs representing ideasor concepts. This is called the coding process, or encoding. When coding meaning into amessage, a source must consider certain characteristics of the receiver or audience. To sharemeaning, the source should use signs that are familiar to the receiver or audience. Marketers whounderstand this realize how important it is to know their target market and to make sure that anadvertisement, for example, uses a language that the target market understands.To share a coded meaning with the receiver or audience, a source selects and uses a medium oftransmission. A medium of transmission carries the coded message from the source to thereceiver or audience. When a source chooses an inappropriate medium of transmission, severalproblems may arise. A coded message may reach some receivers, but not the right ones. Codedmessages may also reach intended receivers in incomplete form because the intensity of thetransmission is weak.In decoding process, signs are covered into concepts and ideas. Seldom does a receiver decodeexactly the same meaning that a source coded. When the result of decoding is different fromwhat was coded, noise exists. Noise is anything that reduces the clarity and accuracy of thecommunication; it has many sources and may affect any or all parts of the communicationprocess. Noise sometimes arises within the medium of transmission itself. Noise also occurswhen a source uses signs that are unfamiliar to the receiver or that have a different meaning fromthe one intended. Noise also may originate in the receiver. A receiver may be unaware of a codedmessage when perceptual processes block it out.
The receiver‘s response to a message is feedback to the source. The source usually expects andnormally receives feedback, although perhaps not immediately. During feedback, the receiver oraudience is the source of a message directed toward the original source, which then becomes areceiver. Feedback is coded, sent through a medium of transmission, and decoded by thereceiver, the source of the original communication. Thus communication is a circular process.During face-to-face communication, such as a personal selling situation or product sampling,verbal and nonverbal feedback can be immediate. Instant feedback lets communicators adjustmessages quickly to improve the effectiveness of their communication. For example, when asalesperson realizes through the feedback that a consumer does not understand a salespresentation, the salesperson adapts the presentation to make it more meaningful to the customer.When mass communication such as advertising is used, feedback is often slow and difficult torecognize. Advertisers obtain feedback in the form of changes in sales volume or in consumers‘attitudes and awareness levels. FLOW CHART OF HOW TO GO ABOUT DECIDING & EVALUATING PROMOTIONAL MIXResearch StageStrategic StageProduct Life-Cycle StagePromotional tools vary in cost effectiveness at different stages of the product life cycle - In the Introduction/Infancy stage, advertising and publicity have the highest cost effectiveness, followed by personal selling to gain distribution coverage and sales promotion to induce trial. - In the Growth stage, all the tools can be toned down because demand has its own momentum through word of mouth. - In the Maturity stage, sales promotion, advertising and personal selling all grow more important in that order.
- In the Decline stage, sales promotion continues strong, advertising and publicity are reduced and sales people give the product only minimal attention. As we can see, Sales Promotion in specific is very important over the various stages of the Product Life Cycle.Promotional objectives differ considerably from one organization to another and withinorganizations over time. Large organizations with multiple promotional programs operatingsimultaneously may have quite varied promotional objectives. Let‘s have detailed look at someof the promotional objectives:Create awarenessA considerable amount of promotion is directed at creating awareness. For an organizationintroducing a new product, new brand, or brand extension, making customers aware is crucial toinitiating the product adoption process. A marketer that has invested heavily in productdevelopment strives to create product awareness quickly in order to generate revenues to offsetthe high costs of product development and introduction.Stimulate DemandWhen an organization is the first to introduce an innovative product, it tries to stimulate primarydemand—demand for a product category rather than for a specific brand of product—throughpioneer promotion. Pioneer promotion informs potential customers about the product: what it is,what it does, how it can be used, and where it can be purchased. Because pioneer promotion isused in the introductory stage of the product life cycle, which means that there no competingbrands, it neither emphasizes brand names nor compares brand. Primary demand stimulation isnot just for new products. At times an industry trade association, rather than a single firm, usespromotional efforts to stimulate primary demand.To build selective demand, which is demand for a specific brand, a marketer employspromotional efforts on the strengths and benefits of a specific brand. Building selective demandrequires promotional efforts that single out attributes important to potential buyers and thespecific attributes of the brand. Promotional techniques are sometimes used to stimulate selectivedemand by differentiating the product from competing brand in the minds of potential buyers.Stimulating selective demand by increasing the number of product uses is sometimes
accomplishes through advertising campaigns, as well as through free samples, coupons, andconsumer contests and sweepstakes. Promotion for large package sizes or multiple-productpackages are directed at increasing consumption, which in turn can stimulate demand.Encourage Product TrialWhen attempting to move customers through the product adoption process, marketer may besuccessful at creating awareness and interest, but then a significant proportion of customers stallduring the evaluation stage. Thus certain types of promotion, such as free samples, coupons, testdrive or limited free-use offers, contests, and games, are employed to encourage product trial.Identify ProspectsCertain types of promotional efforts are directed at identifying customers who are interested inthe firm‘s product and are most likely to buy. A marketer may utilize a magazine advertisementwith a direct response information form, requesting the reader to complete and mail the form toreceive additional information. Customers who fill out information blanks or call theorganization usually have higher interest in the product, which makes them possible salesprospects.Retain Loyal customersClearly, maintaining long-term customer relationships is a major goal of most marketers, becausesuch relationships are quite valuable. Promotional efforts directed at customer retention can helpan organization control its costs because the costs of retaining customers are usuallyconsiderably lower than those of acquiring new ones. Frequent user programs, such as relied onby airlines, hotels, aim at rewarding loyal customers and encouraging them to remain loyal.Combat Competitive Promotional EffortsAt times a marketer‘s objective in using promotion is to offset or lessen the effect of acompetitor‘s promotional program. This type of promotional activity does not necessarilyincrease the organization‘s sales or market share, but it may prevent a sales or market share loss.
A combative promotional objective is used most often by firms in extremely competitiveconsumer products markets, such as fast-food industry.For example, a local departmental store may mail out coupons, redeemable only on Tuesdaysand Wednesdays, to residents living within a two-mile radius of the store for the purchase ofcommon items such as milk, bread, or eggs. To offset the effects of these coupons, a competingstore could advertise in the newspaper that it will accept any store‘s coupons on any day of theweek.REDUCE SALES FLUCTUATIONSDemand for many products varies from one month to another because of factors such as climate,holidays, and seasons. A business, however, can‘t operate at peak efficiency when sales fluctuaterapidly. When promotional techniques reduce fluctuations, a manager can use the firm‘sresources more efficiently.Promotional techniques are often designed to stimulate sale during sales slumps. For example,advertisements promoting price reduction of lawn care equipment can increase sales during falland winter months. During peak season periods, a marketer may refrain from advertising toprevent over-stimulating sales to the point that the firm cannot handle all the demand.A pizza outlet might distribute coupons that are valid only Monday through Thursday becauseFriday though Sunday the restaurant is extremely busy.3. PromotionPromotion is the method used to inform and educate the chosen target audience about theorganization and its products. Using all the resources of promotion: • Advertising • Sales Promotion • Public Relations • Events and Experiences • Coupons, Discounts and Bundled packages • An organization finds most of its meanings and survival through promotion.
At KFC, Promotion is the main tool to bring all chicken lovers attention towards its deliciousone-of-a-kind product, the Fried Chicken.The promotions aspect of the marketing mix covers all marketing communications. The methodsinclude advertising, sometimes known as ‗above the line‘ activity. Advertisements conducted onT.V., Radio, news paper, on website, etc.What distinguishes advertising from other marketing communications is that media owners arepaid before the advertiser can take space in the medium. Other promotional methods includesales promotions, telemarketing, exhibitions, seminars, loyalty schemes door drops,demonstrations, etc. The skill in marketing communications is to develop a campaign which usesseveral of these methods in a way that provides the most effective results.For example, TV advertising makes people aware of a food item and press advertising providesmore detail. This may be supported by in store promotions to get people to try the product and acollect able promotional device to encourage them to keep buying the item support each otherand do not confuse customers. A thorough understanding of what the brand represents is the keyto a consistent message the purpose of most marketing communications is to move the targetaudience to some type of action. This may be to buy the product, visit a restaurant, andrecommend the choice to a friend or increase, purchase of the menu item. Key Objective ofadvertisement is to make people aware of an item feel positive about it and remember it.The more KFC knows about the people it is serving the more it is able to communicate messageswhich appeal to them. Messages should gain customers‘ attention and keep their interest. Thenext stage is to get them to want what is offered. Showing the benefits which they will obtain bytaking action are usually sufficient, the right message must be targeted to the right audience.For example, to reach a single professional woman with income above a certain level, it may bebetter to take an advertisement in Cosmopolitan than Woman Era. To advertise to mothers withchildren, it may be more effective to take advertising space in cinemas during Disney films.
The right media depends on who the viewers, readers or listeners are and how closely theyresemble the target audience.TARGET MARKETThe process of evaluating each market segment its attractiveness and selecting two or moresegments. As the outlets of KFC are in posh area and prices are too high (overhead expenses-rent, air-conditioning, employees), so KFC targets upper and middle classes. Target marketdepends upon size and growth rate of population, Company resources and structuralattractiveness of market segment.MARKET POSITIONINGFor a product to occupy a clear, distinctive and desirable place relative to Competing products inthe minds of target consumer. In KFC feedback is taken from the customer in order to know thecustomer demands and then improvements are made in products. KFC focuses on pure andfresh food in order to create a distinct and clear position in the minds of customers KFC has astrong brand name and they are leading the market in fried chicken .KFC uses its attributes toPosition its Product(Fried Chicken)ADVERTISINGThe logo of the smiling Colonel is probably one of the most recognized faces in the world andinstantly brings the image of fried chicken to one‘s mind. KFC and its new company jingle,―finger lickin good‖ is a frequent announcement on televisions, billboards, flyers and radio.employees wearing casual dresses shows a very casual n free kind of an enviornment, and tee-shirts says that I m a student of lickonomics which means finger lickin good. The concept ofshowing a normal customer deeply involved in devouring his piece of chicken usually turns onthe drool factory in everybody‘s mouth and makes them rush to the nearest KFC. In India wherechicken lovers are plenty abound these ads featuring normal people connect instantly and createa rush at their outlets. Using the following methods KFC spreads its message of finger lickinggood chicken.
Using Reminder advertisements KFC stimulates repeat purchases of its products. The companyanthem ―finger linkin good‖ is just a wake up call to the consumer to remind them how goodthey felt the last time they ate KFC chicken.SALES PROMOTION • KFC uses the following tools to further enhance its sales. • Premiums • Exhibits • Coupons • EntertainmentAll KFC outlets offer its customers with various forms of incentives to buy its Chicken. Usingcoupons that one can acquire after spending a particular amount over a period of fixed time,customers can enjoy the benefits of free meals or free add-ons. Additionally they provide mealvouchers and exciting offers in their print ads, which the customer must cut and bring along.SALES PROMOTIONThe various sales promotion technique essential are –Word of mouth publicityWe have understood that customers obtain lot of their information from personal or informalsources. In the view of this , those who have already experienced the services have an importantrole to play in the future promotion of the services. Customer satisfaction and word of mouthpublicity go hand in hand. One satisfied customer relates the good experience to three to four
acquaintances while an unsatisfied customer usually tells six to seven customers about it. Thus,the goodwill is difficult to earn and relatively easy to lose.4. PlacePlace in the marketing mix, is not just about the physical location or distribution points forproducts. It encompasses the management of range of processes involved in bringing products tothe end consumer.In Delhi KFC has open its shop where middle and higher class family, teenagers will come andenjoy the food. TARGET AREAS ―Free home Delivery‖ strategy – They provide free home delivery to offices & homes (selected stores) Accessibility – Resulting in several outlets to cater to the needs of people in & around the city. Hectic lifestyle – Due to the hectic lifestyle of office goings individuals the fast food concept saves time of preparing food and gives the customer a full meal quickly. Economically convenient – The pricing appeals to the many classes of a society. 1.TARGET MARKET 1. Location Hectic lifestyle of individuals – giving them more time at work and less stress about waiting for food. Commercialization of urban and sub-urban markets leading to more mid-sector people that find high-end eating joints very to expensive. Mid-sector people are always looking for change which KFC provides in their range of fast food. Quality conscious – people in urban areas are more conscious about the quality of food than rural areas. Urban areas are more populated therefore they help with attracting higher revenues 2. Placement of outletsDue to KFC placing itself close to schools, colleges, cinemas and markets which are mostlypopulated by the young and those who are in a hurry, KFC enjoys a large number of footfallsevery day.
3 ChannelsKFC believes in first level channels in the order given below: Manufacturers Retailers ConsumersCHANNEL PROCESSKFC works on the flow of good operation techniques i.e.Good Operating Manager leads to – Good Team Selection Good Targets Good Services Good Revenues through the following internal strategies: Training Incentive based targets Recognition for good work Performance based bonus Employee benefits to keep them motivated PromotionFor the current Indian market for fast food, it is not difficult for a fast food restaurant to enter themarket. However, it would be extremely difficult to take over already running major fast foodchains dominancy in India or even make a significant amount of profit. While there are enoughpeople in urban India for any restaurant to survive, KFC holds the first-mover advantage into thenon-veg food specialty food segment that gives them free reputation. Customers, especiallychildren who are used to going to KFC as a treat or reward from their parents or grandparents,are not going to want to go to other restaurants they‘ve never heard of. The brand name isalready established. Also, there is already a large variety in the numerous western-style diningplaces in India, such asMcDonald‘s, Pizza Hut, Dominos and Subway, and any new fast-food entrants would just bepresenting something very similar to what‘s already there. While small
Neighborhood restaurants generally have low barriers to entry, these are the barriers to entry forsimilar restaurant businesses to enter the fast-food chain market.BUYER/SUPPLIER BARGAINING POWERThe customers of KFC, especially as individual buyers, have almost no bargaining powerbecause if only one customer threatens to no longer eat at KFC, the store is not going to lower itsprice because the cost of losing one customer is not very great. The suppliers, like the buyers,have very little bargaining power.In terms of food, KFC, upon its move into India, urged many of its U.S. suppliers to also extendbranches into India. KFC also began helping local suppliers by giving them technologicalsupport to improve their products. This is a brilliant strategy because the supplies that KFCwould otherwise need to import from theU.S. can now be obtained domestically, and if the U.S. suppliers decide to raise their prices, KFCcan easily switch to the local suppliers. This gives us a brilliant strategy. With this strategy, KFCcreated competition among its suppliers, lowering the supplier bargaining power. In terms ofhuman resources, labor cost is extremely low because the supply of non-skilled workers greatexceeds the demand for them. With so little buyer and supplier bargaining powers, KFC is ableto have a very tight control over its prices and expenditures.SUBSTITUTES AND COMPLEMENTSAs mentioned above, there are a few major competitors in the fast-food industry in India forKFC, namely McDonald‘s, Pizza Hut, Dominos and Subway. The substitute products, in thiscase, would be burgers, pizza, and sandwiches. Though they are competitors, their primaryproducts differ greatly from each other, in that they sell, chicken, burgers and fries, pizzas, andsandwiches, respectively. Traditional Indian dining, home-cooked meals, and grocery storeswith ready-to-eat foods are also substitutes, as families could choose any one of these over fastfood for a meal. These substitutes are definitely considered healthy as compared to the fast foodchains. Even foods from street vendors count as substitute goods.While other fast foods serve as substitute to KFC, they can also serve as complements for fastfoods as a whole. If the general price of fast foods goes up, KFC‘s price rises as well, and thesame can be said of the quantity sold of these products, which make them complements to each
other. KFC also sets up stores located near popular tourist attractions, so tickets to these touristspots are also complementary goods because the more people tour these attractions, the morecustomers KFC will get.RIVALRYUnlike what one would expect, KFC has little rivalry with similar fast-food chains in India. Theprimary reason is that their core products are different, as in they sell different kinds of fast foodswith very different tastes and styles. For example, if KFC raised its price for chicken by a smallamount, Indian chicken lovers who may not be as accepting to pizzas (many Indian peoplestrongly dislike the taste of cheese) are not going to switch to Pizza Hut just because the price forKFC increased. In addition to that, these restaurants have such different target customers that thefluctuation of price for one restaurant is not going to affect the others. For example, a full mealat KFC ranges about Rs. 150, whereas a full meal at Pizza Hut can cost over Rs. 300. Thedrastic difference in price assures no price competition between these restaurants.SPECIAL MARKETING MIX ELEMENTS FOR SERVICESPeople element is important because almost all services are delivered through one human beingto another so the recruitment ,training of the employees are important. People need to becontinuously motivated to ensure continued performance.Team work is very important as all sections in a restaurant need to coordinate with each other todo a great salesRecognition of people or employees doing good job is essential which is a vital part in ourrestaurant.Some other points under people are :- Recruitment- the recruitment of people are essential and crucial for they are the major elements of personal contact.
Training- the potential employees need to be trained to carry out their duties ,also learn about people skills emphasizing on customer centricity and sensitivity to customer demands. Motivation- the employees need to be continuously motivated to ensure continued performance. This may be in the form of internal evaluation and awards or rewards to encourage the employees.OUR CULTURE HELPS US INCREASE F&B REVENUE-Our culture includes:-How we win together principles- (HWWT)2Which includes – Believe in all people-we trust in positive intentions and believe everyone has the potential to make a difference. We actively seek diversity in others to expand our thinking and make the best decision. We coach and support every individual to grow to their full capability. We are customer maniacs- Customers rule. Every customer sees it, f eels it, and knows it in every restaurant. We make sure we have great RGM‘s who build great teams.100% champs with a yes attitude is the expectation. Go for breakthrough- we begin by asking ourselves , ―what can I do now to get breakthrough results in my piece of yum?!!!‖ our intentionality drives step change thinking. We imagine how big something can be and work future-back ,going full out with positive energy and personal accountability to make it happen. Build know how- we grow by being avid learners ,pursuing knowledge and best practices inside and outside the company.we seek truth over harmony every step of the way. We consistently drive outstanding execution by scaling our learnings into process and tools around what matters most. Breakthroughs come when we get people with knowledge thinking creatively. Teamwork - We discuss the undiscussable , always promoting healthy debate and healthy decisions. Our relationships allow us to ask the earth of each other. We make specific verbal contracts to get big things done with urgency and excellance.