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Kentucky Fried Chicken, India- Strategy
The document discusses KFC's strategy for the Indian market, analyzing their target market, competitors like McDonald's and Domino's Pizza, and conducting a PESTLE, Porter's Five Forces, and competitive matrix analysis. It finds that KFC lags behind competitors in India due to fewer store locations and a less extensive menu. The document recommends KFC expand its store network and customize its menu to local tastes to better compete in the growing Indian fast food market.
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Kentucky Fried Chicken, India- Strategy
- 1. INDIA STRATEGY TERM PAPERPRESENTATION Presented By: Aparna Priyadarshini MBA 2010,Date: 12th April 2010 Asian Institute of Management,Manila 1
- 2. Company Background KFC Corp,owned by YUM brands is one of the oldest(1952) and most popular chicken and food restaurant in the world. Other restaurants under YUM brands are Taco Bell, Pizza hut, Long John Silver’s and A&W KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of other meat products suiting to local palate. In India they opened in 1995 and are lagging behind in terms of sales and reach vis-à-vis chains like McDonalds and Dominos 2
- 3. Target Market Geography: India Metros and Tier II Cities Demography: Urban people of both genders aged between 15 to 45 years of age. Income Group: A, B and C segment of people. Psychographic: People who have a busy lifestyle and are influenced by western culture An important thing to note is that Indian Fast food market is fundamentally different-Eating at home remains very much ingrained in Indian culture. Fast food joints or QSRs are one of the cheap sources of taking a break from home cooked food and eating out. The growth in nuclear families, particularly in urban India, exposure to global media and Western cuisine and an increasing number of women joining the workforce are responsible for changing this trend. 3
- 4. Data- Strategic Group Data-Competitors Others Mc Donalds 33% 35% Mc Donalds KFC Dominos Pizza Café Coffee Day KFC Dominos Pizza 10% Others 15% Café Coffee Day 7% In India the fast food joints also compete against the other Quick Service Restaurants like Pizza Hut(same company as KFC) and dominos. 4
- 5. PESTLE ANALYSIS Social: Women are Political: India is Economic: An ever moving out of liberally opening growing middle kitchen to offices. doors for class with international fast A lot of Indians increasing food joints purchasing power are veggies, so Positive Positive the menu has to changed Positive Technological: Legal: Franchising Environmental: Enough enabling models available Activists against technologies and working killing of animals available successfully in India like PETA can Positive create trouble Positive Watch Out When KFC came to India in 1995, it had to shut down because of the controversy about their handling of poultry. 5
- 6. PORTER’S FIVE FORCES Verdict: The Threat of new industry is Entrants moderately India is has opened attractive doors for foreign fast food players recently MEDIUM Bargaining power Bargaining power of Suppliers Competitive of Buyers: There are a lot of There are only few Rivalry suppliers available in western fast food joints the market HIGH in India LOW MEDIUM Threat of Substitutes Not a lot of options available MEDIUM 6
- 7. STRATEGIC MAP 1 GAP Domin os Pizza McDonalds Service KFC CCD Number of Outlets Number of outlets and good customer service is a KSF in this industry KFC has to increase its reach and try to move rightwards 7
- 8. STRATEGIC MAP 2 CCD Domino GAP s Pizza KFC Price McDonalds Extensive Menu Both Price and Extensive menu are KSFs in this industry and KFC is weak in both. It should try to move into the GAP zone 8
- 9. STRATEGIC MAP 3 KFC Domino s Pizza McDonalds Operations CCD Extensive Menu As evident from the clutter, operations are thresholds to succeed in this industry whereas Extensive menu i 9
- 10. STRATEGIC MAP 4 McDonalds Domino Number of s Pizza Outlets KFC CCD Quality Standards As evident from the clutter, quality standard is threshold and number of outlets is a KSF 10
- 11. Key Success Factors KSF’s: Location/Number of Outlets Extensive Menu Price Service/Ambience Taste Threshold Factors: Operations Quality Standards 11
- 12. Competitive Matrix Factors Weights McDonalds KFC Domino's Coffee Day Location/No of outlets 35% 9 4 7 4 Extensive Menu 25% 8 5 7 5 Price 15% 8 5 4 4 Service/Ambience 10% 7 7 9 6 Taste 10% 7 8 9 5 Weighted Score 100% 7.75 4.9 6.6 4.35 Market Share 35% 10% 15% 7% •KFC is losing out because of fewer number of outlets. •Given that the market has lot of veggies, extensive menu is very important •KFC’s strength is Taste and it should try to differentiate on this basis. 12
- 13. Future Competitive Matrix Factors Weights McDonalds KFC Domino's Coffee Day Location/No of outlets 35% 9 7 7 4 Extensive Menu 30% 8 7 7 5 Price 10% 8 6 4 4 Taste 10% 7 8 9 5 Service/Ambience 15% 7 7 9 6 Weighted Score 100% 8.1 7 7.2 4.7 Market Share 35% 10% 15% 7% •To grow, KFC has to improve its acceptability by customizing its menu to suit local taste •Price will become less important as almost all players in the industry will be similarly priced 13
- 14. Vision/Mission Statement Mission: TOSELL FOOD IN A FAST, FRIENDLY ENVIRONMENT THAT APPEALS TO PRIDE CONSCIOUS, HEALTH MINDED CONSUMERS Vision: OUR PASSION, AS A RESTAURANT COMPANY, IS TO PUT A YUM ON PEOPLE'S FACES AROUND THE WORLD, SATISFYING CUSTOMERS EVERY TIME THEY EAT OUR FOOD AND DOING IT BETTER THAN ANY OTHER RESTAURANT COMPANY. THE UNIQUE EATING EXPERIENCE AT EACH OF OUR RESTAURANTS MAKE OUR CUSTOMERS SMILE AND INSPIRE THEIR LOYALTY FOR LIFE. TOWARD THAT END, OUR ASSOCIATES AROUND THE WORLD ARE TRAINED TO BE CUSTOMER MANIACS MANIACS.' 14
- 15. Competencies – TheLadder Model Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Competitive Advantage Threshold Competencies Competencies Peripheral Competencies Resources: Resources: Resources •Good tasting recipe •Fried chicken specialist Incompetencies •People •Global Experience •Brand Recognition 15
- 16. Competencies – TheLadder Model Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Competitive Advantage Threshold Competencies Competencies Peripheral Competencies Resources Competencies In- In-competencies •Patented recipes •Good customer Incompetencies Fried chicken service •International specialist footprint •Brand Equity 16
- 17. Competencies – TheLadder Model Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Competitive Advantage Threshold Competencies Competencies Strategic Competencies Peripheral •Patented recipes Competencies Resources •Brand equity •Good Custom Service Incompetencies Peripheral Competencies International Footprint 17
- 18. Competencies – TheLadder Model Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Competitive Advantage Threshold Competencies Competencies Peripheral Distinctive Competencies Competencies Resources •Patented recipes •Brand equity Incompetencies Threshold Competencies •Good customer service 18
- 19. Competencies – TheLadder Model Sustainable Competitive Advantage Distinctive Competencies Strategic Competencies Competitive Advantage Threshold Competencies Competencies Sustainable Competitive Advantage Peripheral •Patented recipe of chicken Competencies Resources Competitive Advantage Incompetencies •Brand Equity 19
- 20. Long Term Objectives StrategicObjectives: Expansion into all major urban cities resulting in market leadership Multi-brand Innovation and becoming a top of the mind brand in fast food industry Market leader in terms of employee welfare and customer satisfaction Financial Objectives: Strong Cash Generation and Returns Increasing the profit margin from 11% to 17% through improved operations and reduced overhead costs 20
- 21. Value Proposition-Triangle Proposition- KSF’s Competencies Extensive Menu/Taste Patented recipes No of Outlets Brand Equity Customer Service Customer centric culture Ensuring superior dining experience by offering a wide range of specialized recipes , wherever you go! 21
- 22. Strengths Weakness W1. High Price S1. Good Taste W2. Image of ‘Fried’ S2. Brand Equity SWOT S3. Global Experience S4. Operations W3. Poor Reach W4. Fewer Items Menu W5. Conflict in mgmt style S5.Trademark Recipes of PepsiCo and S5. Strong Customer Focus Yum Brands • Introduce cheaper items • Introduce new recipes Opportunities suited to local in the menu (W1,W4,O3) O1. Increase outlets • Change the image of KFC taste(S1,S2) O2. Increase in income from fried to • Target the brand of urban Indian ‘healthy’(W2,O3) conscious urban O3. Shift in food • Open up new outlets in population(S2, S3,O2) habits e.g.-Vegetarian Urban locations (W3,O1,O2,O3) • Introduce healthier Threats recipes(T1,S5) • Differentiate as one •Work on the image of a T1. Health conscious proving fastest healthy fast food chain eating habits service(T3,S2,S4) through advertising( T1, W2) T2. Animal Care • Engage is CSR •Develop a strong culture of Activists activities(T2,S3,S2) good service (T3,W5) T3.Intense Competition • Differentiate through good service(S5,T3) 22
- 23. Options Filter Stategic Vision/ Select Options Competencies KSF's Intent Mission Score (Yes/No) Weight 0.3 0.3 0.2 0.2 1 Introduce new recipes suited to local taste(S1,S2) 7 8 8 6 7.3 Yes Target the brand conscious urban population(S2, S3,O2) 7 4 3 4 4.7 No Introduce cheaper items in the menu (W1,W4,O3) 6 7 6 7 6.5 Yes Change the image of KFC from fried to ‘healthy’(W2,O3) 5 6 8 8 6.5 Yes Open up new outlets in Urban locations (W3,O1,O2,O3) 7 7 6 6 6.6 Yes Introduce healthier recipes(T1,S5) 5 8 7 7 6.7 Yes Differentiate as one proving fastest service(T3,S2,S4) 4 5 5 5 4.7 No Engage is CSR activities(T2,S3,S2) 6 7 7 8 6.9 Yes Differentiate through good service(S5,T3) 7 8 7 7 7.3 Yes Work on the image of a healthy fast food chain through advertising( T1, W2) 6 6 7 8 6.6 Yes Develop a strong culture of service and differentiate from competition(T3,W5) 7 8 8 8 7.7 Yes 23
- 24. Recommendations Short Term Introducenew recipes suited to local taste(S1,S2) Introduce cheaper items in the menu (W1,W4,O3) Introduce healthier recipes(T1,S5) Differentiate through good service(S5,T3) Work on the image of a healthy fast food chain through advertising( T1, W2) Long Term Change the image of KFC from fried to ‘healthy’(W2,O3) Open up new outlets in Urban locations (W3,O1,O2,O3) Engage is CSR activities related to animals & environment(T2,S3,S2) Develop a strong culture of good service (T3,W5) 24
- 25. Create Improve reach by The Fast Food Framework Enabling opening up outlets. frameworks Make judicious sourcing decisions Identify Research on food Competitive habits, taste and Advantage preferences Develop robust supply chain Understand Support Drivers Initiatives Identify internal competencies Develop good Iterate and relationship with Start Here and KSFs Understand Refine customers and suppliers Target Market Indulge in brand Develop a culture building exercise. Customize menu. Add of adding value Create trust for to customer delight to the customer product quality & through quick and through high taste great service quality great and quick service Deliver Value 25
- 26.