ACKNOWLEDGEMENT:All the praise and gratitude are due to Almighty Allah alone, the creature of the universe who created the man in his own image and enjoined upon him to travel on the earth and enter into a profound and analytical study of the universe for spiritual appreciation of Allah’s unity and His attributes as well as for harnessing the material manifestation of the world to the mankind’s profitable utilization. In the first place, therefore we express our utmost thanks to Allah, the Omnipotent and the Omniscient Greater, who has endorsed us with brain and body to partake of His knowledge and accomplish our work in the form of this project.

A project of this nature cannot be completed without active support from different sources. We have been lucky in this respect & received advice and assistance from many directions.

Among our contemporary benefactors, we would like to pay our deepest gratitude and heartiest tribute to our instructor Mr. Jasim Tariq, for his successful guidance and very friendly conduct to complete this work. His kind and friendly behavior can’t be forgotten at all.

We want to pay our foremost gratitude to my family for their moral and financial support and also in the regard of their prayers. God bless them to more progress in future and may Allah give us chance to serve them better.

Finally, we are thankful to our friends for their support and encouragement,

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EXECUTIVE SUMMARY:

This project is based on analysis of marketing strategies of “KFC”.

This project responds to the recommendation of honorable teacher “Mr. Umar Mushtaq”

who is our instructor for “Principles of Marketing”. We are thankful to him for the guidance he

provided us all the way in preparation of this report.

For the preparation of this project we interviewed marketing manager of KFC who

provide ample information about KFC strategies. We also interviewed some customer to know

their perception about KFC. We also looked for their ads & web site so we also used our

personal observation as a source. We consulted different books & journals for the purpose of our

analysis.

KFC fast-food chains are currently under the restaurant division of PepsiCo Incorporated.

PepsiCo is a corporation with three divisions including beverages, snack foods, and restaurants.

PepsiCo is acquired by Yum! Brand Inc, so KFC is part of Yum! Brands, Inc., which is the

world's largest restaurant system with over 32,500 KFC, A&W All-American Food™,Taco Bell,

Long John Silver's and Pizza Hut restaurants in more than 100 countries and territories.

Yum! Brand Inc has franchised KFC in different countries for being global. In Pakistan

Kapola (Pak) ltd. is the franchisee of KFC. First KFC branch in Pakistan is in Karachi Gulshan.

Our project covers all the marketing strategies used by KFC regarding to price, product,

promotion, positioning, market and public relation and finally we analyze the consumer

perception about KFC.Major competitor of KFC in Pakistan is McDonalds other competitors

include Pizza Hut, Café Zouke, Salt’n Paper and cooper and Kettle.

Market strategies deal with the perspective of market to be served. KFC has first in entry

strategy regarding market entry strategy, multi market strategy regarding to market scope

strategy, international market strategy regarding to market geographic strategy. As far as the

level of commitment to the market is concerned they use different approaches in different

perspectives like they are highly committed to customer satisfaction.

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For positioning strategy KFC has positioned their products as high quality and high price

products. Regarding product scope strategy they have multiple products. As for as design

strategy is concerned KFC has standardized products. It has differentiated its products from

others by different and unique taste, packaging and labeling and pricing.

Pricing strategy of KFC is market-skimming pricing because its products enter in the

market with high prices. KFC is the market leader in its original chicken recipe hot and crispy.

Promotional strategy of KFC includes personal selling, advertising and sales promotion. They

give compensation incentives to their employees to improve selling.

As for as advertising strategy is concerned KFC uses print media such as newspapers,

magazines, web pages and outdoor advertising such as billboards etc its vehicle for advertising.

With respect to sales promotion it has made public relation as a tool for promotion. Special

events; birthdays of children are celebrated and are provided with special gifts.

As a matter of customers KFC is rated higher for the attributes: Taste and Cleanliness

than their competitors. One thing is very delighting for KFC, its satisfaction level and in meeting

expectations of customers is rated higher. Whereas for the attributes Friendly Service, Prices and

Atmosphere KFC is as their competitors.

From the strategic analysis of KFC we conclude that KFC, s competitive situation is not

that much intense. It has established an image in customers minds that works as a protection

against competitors. According to its marketing manager 90% of their customers are loyal

customers, so they are doing well to retain & sustain their customers. According to marketing

manager their competent employees are the way to success. They are doing well to sustain their

competent employees in order to get customer satisfaction through employee satisfaction

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HISTORY of KFC:

KFC was founded in 1955 and has grown to one of the largest quick-service restaurant

chains in the world.

KFC has more than 11,000 restaurants in more than 80 countries and territories around the

world. And in quite a few U.S. cities, KFC is teaming up with sister restaurants, A&W, All-

American Food™, Long John Silver's, Taco Bell and Pizza Hut, selling products from the

popular chains in one convenient location.

Over fifty years ago, Colonel Sanders invented what is now called "home meal replacement" --

selling complete meals to busy, time-strapped families. He called it, "Sunday Dinner, Seven

Days a Week."

Today, the Colonel's spirit and heritage are reflected in KFC's brand identity -- the logo features

Colonel Harland Sanders, one of the most-recognized icons in the world.

KFC is part of Yum! Brands, Inc., which is the world's largest restaurant system with over

32,500 KFC, A&W All-American Food™, Taco Bell, Long John Silver's and Pizza Hut

restaurants in more than 100 countries and territories.

KFC IN PAKISTAN

KFC launched its operation in Pakistan in January 1997. They opened their first outlet in

Gulshan Karachi. Until 2004 they have 29 branches in 9 cities of Pakistan. The details of these

cities & branches are:

In Sind total branches of KFC are 19 out of which, there are 18 branches in different areas of

Karachi & 1 in Hyderabad.

In Karachi these are located at:

1. KFC Gulshan

2. KFC Boat Basin

3. KFC 26th Street (Defence)

4. KFC S.M.C.H.S

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5. KFC North Nazimabad

6. KFC Korangi

7. KFC I.I. Chundragar

8. KFC M.A.C.H.S

9. KFC S.I.T.E

10. KFC 3 Talwar

11. KFC Sea View

12. KFC P.I.D.C

13. KFC P.I.D.C

14. KFC Millenium Mall

15. KFC Nursery

16. KFC Xpress

17. KFC Tariq Road

18. KFC Dolmen Mall

In Lahore there are 10 branches. These are located at:

1. Garden Town

2. Cavalry ground

3. Defence phase 1

4. M.M.Alam road.

5. Jail Road.

6. Mall road

7. Johar town

8. Thokar naiz baig

9. Gt road

10. Y block defence

11. Shadman

12. Mughal pura near UET

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KFC has just inaugurated its new branch in Defence Y-Block on August15, 2005 and it is working for opening new branch in Mugal pura near UET.It has also its branches in Rawalpindi, Islamabad, FaisalAbad, Sialkot, Multan & Peshawar and Hyderabad etc.

BUSINESS OBJECTIVES

This can be subdivided into three major components:

1. Mission.

2. Vision

3. Objectives

MISSIONThe corporate mission of KFC is to extend its image of excellence and uniqueness of

product quality and service all over the globe with an obvious intention of attaining a goal of

maximizing profit.

VISIONThe vision of the company is to foresee that real future prospects of long term growth and

adjust itself to the specific cultures of each country they are operating in.

OBJECTIVESGoing in proximity, with the pure goal of an entrepreneur, the ultimate objective is to

maximize the return on investments and thus profit maximization

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MARKETING OBJECTIVE

The marketing objective can be subdivided into following sub-objectives.

To compete effectively in the market by dominating which cannot be achieved by;

Effectively meeting consumers’ expectations and demands.

To increase substantially the market share.

To retain and enhance the goodwill and image of the organization this adds to its loyalty.

The famous 4 p’s decision…. Which will further be discussed in detail in the later part of

the report under relevant topics.

Building awareness and credibility among the consumers is another major marketing

objective of the KFC in a totally new market.

SWOT ANALYSIS OF KFC

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S-Strengths

Employees

Conducive Environment

Tasty good Food

Loyal customers

W-weaknesses

Limited Resources

O-Opportunities

Growing fast food market

T-Threats

New entrants

Prejudice against multinationals

International political scenario

We analyze internal strengths, weaknesses & external opportunities and threats of KFC.we

conclude from this analysis that KFC has enough strengths & opportunities to compete in

growing fast food market. It is also true that KFC is bounded by many weaknesses & threats as

mentioned in above table. Recently IRAQ war was major threat for KFC which played a vital

role in decreasing the sale of KFC.

STRENGTH AND WEAKNESSES OF KFC

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The major strength possessed by KFC’s competitors is their considerably lower prices as

compared to the anticipated and expected skyrocketing prices. Despite of this, they have been

existing in the local market for years, therefore, knowing people’s tastes and whims.

Taking of weaknesses, KFC enjoys an unmatched image recognized worldwide. Since it’s a

franchise, quality consistency is ensured. They are over-confident about their customers being

loyal to them. KFC has its branches only in major cities so it should increase its area network

and should open new branches in other cities of Pakistan.

THE MARKETING ENVIRONMENT:

Macro Environment

Demographic:

Kfc is mainly concentrating on the youth, gender, occupation, income and education of the population. They are most concerned about that how many people are in the age of teen as well as less then 35. Because kfc is a fast food chain,In Pakistan people who are doing jobs,who are students, and it is convenient for them.So, the demographic study is very important for Kfc. Since the population of Pakistan is increasing widely and income and education in the cities are increasing rapidly. So the demography is effecting kfc and most importantly it is not controlled of organization.

Political Forces:

Since Pakistan is by its nature politically unstable country. There was dictatorship more than democracy and constitution was changed and amendment several times which made it difficult for the organization like kfc to grow rapidly and take roots in the society. Since Pakistan is a very religious country, and the people are closely bounded with the people of other Muslim countries. When kfc heavily interested in illegal entity of Israel, most of the Arab and Muslim countries boycotted kfc and Pepsi and other local brands got the chance to take the lead.

Natural Forces:

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Overall natural conditions of country are not favorable like weather of Pakistan helped kfc very much, so the products of kfc are suitable for every one in every seasons. Some natural forces like lack of rain, change in labor lows, fluctuation in the price of fuel. Fluctuation in the utility expanses deficiency of energy (electricity and gas) and unlikely change weather due to global warming are also affecting.

Technological Forces:

This is the age of science and technology, and the latest technology is inevitable in order to grow, sustained and control the production and labor cost. Highly technological advantage is required over the competitors. kfc is having stiff competition with their rival even though coke possess best technology but due to the rapid change in mechanical and electrical devices. And, innovation in the fields of robotics engineering and electronics making it hard to compete with the rivals.

Economic Forces:

The income of the people living in the cities jumped when tremendously but at the same time due to inflation and changed in the buying habits due to the increase in their income. Internationally and nationally economics situation is worse than ever. Pakistan has economical crises dollar is at the lowest point against Euro and Pound. European Union is officially in recession. These economic forces are putting very bad impact on kfc.

Cultural Forces:

The culture of Pakistan is now been changed. Kfc never tried to adjust itself in Pakistan culture. Instead they tried to change the culture of Pakistan and shaped it to the kfc culture. Which is more Pro West now our culture is not completely Islamic and not even completely Western. This setup is helping coco cola to exploit the population through its mass marketing strategy. The generation which was used to have lussi and milk, desi ghee parathas, etc and now these people their children are crazy about carbonated drinks, juices and only fast foods.

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MARKET SEGMENT PROFILE

Let’s have a complete view of how KFC segments its market using all the different

variables.

KFC is interested in attracting diners (segmenting variable: user status) who like eating

out as recreation, as a habit, don’t like home cooked food or they don’t have any one to cook at

home (segmentation variable: attitude). Among those who eat out as a recreation people with

higher income and can afford to dine out frequently (segmentation variable: income). So over all

KFC decides to get people with a high income, positive attitude towards life, and they like to eat

out frequently as a source of recreation. This could be one segment of KFC’s market.

KFC, s management believes 7 Ps rather than 4, product, price, promotion, place, people

(customers), physical evidence (environment) & public of the organization. For them product

promotion & their customers & physical environment are more important & rest of strategies are

to support these core strategies

MARKET SEGMENTATION

Major segments are basically those areas where the demands is higher then the other areas. There are so many people who take this meal weekly and those who take less often are always there as well. KFC has not segmented a lot here in Pakistan. Most of their products are for youth and affordable for most of the population.

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MARKET TARGETINGKFC commercials basically based on young generations, So, the young generation is the target market of KFC because they want to represent KFC with the youth and energy but they also consider about the old people they take then as a co-target market.

MARKET POSITIONING

Fortunately KFC position in the people's mind in Pakistan is not up to its standard. People are often used to say in ignorance that they are having Mc Donald’s.That has to be change in order to get the same reputation which it posses in the world.

PRODUCT

Product is any thing that is offered in the market for sale the product KFC is offering is it

special chicken. Kentucky Fried Chicken is famous for its chicken, which is a blend of 11 herbs

and speices, which gives it the flavor every one is crazy about it.

PRODUCT POSITIONING STRATEGY

Positioning is the act of designing the company’s offer so that it occupies a distinct and valued

poisoned in the target consumer’s need.

Positioning shouldn’t be just a part of your strategy. It should be backbone of your business plan.

Positioning has got its fair share of press in the past few years. But if you actually tried to

achieve a position in the market place; you know that the gulf between theory and practice can

be distressingly wide. In service industry you are not just positioning your products rather your

organization. Beauty is in the eye of beholder and in the case of marketing the beholder is the

customer so the customer is the ultimate judge of what you are presenting.

Six approaches to positioning may be distinguished

1. Positioning by attributes

2. Positioning by price/ quality

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3. Positioning with respect to use and application

4. Positioning by the product user

5. Positioning with respect to product class

6. Positioning with respect to competitors

KFC’S POSITIONING STRATEGIES

KFC promotes a “high quality poison” for its products. It produces high quality products,

charges a high price, distributes through high-class dealers and advertises in English newspapers

with a high circulation. Kentucky Fried Chicken is communicating through physical signs and

ques that people use to judge quality.

For KFC management the image their customers carry in their mind is the most important

factor. That is why for them the product quality, which is almost standardized all of the world

except little differences because of local requirements & the promotion are very critical factors.

They people which are their customer and the physical evidence, the environment customers get

in KFC are the forces that built KFC,s image in the customer mind that is why they are always

trying to bring positive changes in the environment so that every time their customer enter the

KFC, can feel the difference. They think that trough continuous efforts they have developed such

a brand image in their customer’s minds that their customers have become brand loyal. In other

words they have got brand equity.

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PRODUCT SCOPE STRATEGYProduct scope strategy deals with the perspective of the product mix of a company (i.e., the

number of product lines and items in each line). KFC has the following product line and number

of products in each line,

PRODUCT LINE

CHICKEN 1 Piece 5 Pieces

10 Pieces

BURGERS

Mighty Zinger

Zinger Xtreme

Fish Zinger

Zinger Burger

Twister

Col. Chkn. Burger

Spicy Sub

SNACKS & SIDE ORDERS

Nuggets 6 pcs. Nuggets 15 pcs. Regular Fries Large Fries Corn on the Cob Arabian Rice Dinner Roll Hot shots Cheese

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DESSERTS & BEVERAGES

Regular Drink

Scoop of walls

Large Drink

Mineral Water Reg.

Mineral Water Lg.

Coffee

Tea

MEAL DEALS

     

         

   

   

         

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PRODUCT DESIGN STRATEGY

There are three types of product design strategies.

1. Customized product

2. Standard product

3.Standard product with modifications

A business unit may offer a standard or customized design product for each individual customer.

Basic products of KFC are standardized throughout the world. To have a standardized product

the ingredients have to be the same in all the outlets, which is a very difficult job but KFC is

successful in doing so. The ingredients basically consist of healthy chicken, 11 different herbs

and species, cheese, mayonnaise, salad, buns, potatoes for fries etc. Basic secret recipe comes

from the head office in U.S, the rest of the things are obtained from the local market.

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PRODUCT LEVELS AT KFC

CORE PRODUCTS

KFC is providing chicken that is “Finger Licken’Good”, along with a fun a place for the whole

family, to enjoy a thoroughly satisfying eating experience.KFC promises high quality food at a

high quality place, at a relatively high price.

The core product at KFC is an amalgamation of the following points

Hot great tasting chicken meals

Great value for the consumers money

Efficiency and quality

Clean and comfortable restaurant

Service in a friendly and courteous manner

All product served in the KFC outlets in the Pakistan are “Halal”

High quality control measures

CHAMPS, which stands for

C leanliness

H ospitality

A mbience

M aintance

P leasure

S ervice

ACTUAL PRODUCT

Kenchky Fried Chicken is famous for its original recipe, which is a blend of 11 herbs and

spices, which gives it flavor everyone is crazy about.

The Colonel’s original recipe was served in his first resturant in the 50’s and is still

unique to KFC to this day. To prepare the prigonal recipe succulent whole portion of chicken are

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taken and delicately seasoned with Colonel’s secret recipe of eleven herbs and species and is

cooked under pressure. The pressure-cooking results in tender, juicy and irresistible fried

chicken.

The developer of this recipe, the Colonel was always adding one thing or the other to this

recipe, so he came up with the new famous hot and crispy chicken, which was cooked under

pressure to seal in the chicken’s original taste and flavor. crispy on the outside, juicy n’ tender

inside’ the hot and crispy chicken is marinated in especial seasoning and is double breaded to

give it golden brown crunchy crust.

AUGMENTED PRODUCT

KFC has augmented its products by adding take away services, birthday party arrangement for

the children, and special kid’s fun and play area at their outlets.

PRODUCT DIFFERENTIATION STRATEGY

A production can be differentiated due to its features, performance conformance, durability, style

etc.

FEATURES

generate more customer satisfaction per rupees of cost than KFC is likely to retain it.

Features are characteristics that supplement the products basic functioning. Most products can be

used with varying features. Each feature at KFC has an additional chance of capturing the fancy

of additional buyers. For each potential feature, KFC calculate the customers value verses its

cost.

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PERFORMANCE

Performance refers to the level at which the products primary characteristics operate. Buyers of

KFC products normally compare the performance characteristics of different food bands. They

will pay more for better performance as long as the higher price does not exceed the higher

perceived value.

PERSONNAL DIFFERENCIATION

KFC is trying to gain popularity and competitive advantage through hiring and training better

people than their competitors do.

The employees have a special degree of competence, employees of KFC are very courteous.

They are friendly, respectfull and considerate. They are trust worthy and posses a higher

credibility. The floor employees have an essencial training for 14 days and the employees at a

higher level are given training for 20 to 30 days. They are given training to respond quiqly to

customer’s requests and problems. The KFC management makes sure that the floor employees

are given ample training to understand the customer and communicte clearly. The employees

wear a uniform consisting of black trousers, blue shirts and a name plate.

SERVICE DIFFERENTIATION

Sevice is a very important factor for KFC as its actual product consists of not only quality

chicken but also satisfactory service. KFC is providing excellent product sport services but the

range of services is not complete, as it is a self-service restaurant. KFC trains its employees to

give quick and efficient service to the consumers who are standing queues to take their order.

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KFC management tries to answer the inquiries and solve the problems of all its consumer. KFC

trains its employees to give satisfied and productive service.

IMAGE DIFFERENCIATION

KFC promotes a very strong image for their brand, which it has developed over the period of

time through creativity and hard work. This image is communicated through symbols, media,

message, events, atmosphere and personnel.

SYMBOL

The KFC brand logo is designed for instant recognition. KFC has built its brand around the

creator of the KFC recipe, the colonel. KFC promotes a red colored logo “KFC”, as an

abbreviation of Kentucky Fried Chicken.

ATMOSPHERE

The physical space in which KFC delivers its product is a very important image generator for it.

For instant recognition, KFC builds a standard red and yellow

building with the colonel’s stature out side the building.. it has a specific interior design, layout,

color, materials used and furnishing all over the world.

NEW PRODUCT STRATEGY

KFC is trying to increase its market by expanding through discovering and promoting new uses

of the product. The Colonel’s sub is consumed at odd hours and an increasing number of people

are trying it.

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BRAND

A brand name consist of words, letters etc. that’s can be pocalized, for Kantucky Fried Chicken

it is KFC. The brand mark is that part of the brand that appears in the form of the symbol, design

or distinctive color or lettering. The brand mark of KFC is written in red color, which is

recognized instantly. The brand mix is easy to identify goods and services. The KFC brand not

only helps the consumer to recognize it instantly, but is also a source of insurance of standard

food and service. The KFC brand name has helped it to reduce price comparison the consumer

do with other chicken burger available, as it is one of the only the chicken fillet burger available

in Pakistan.

ATTRIBUTES

The positioning strategy of KFC associates itself with the product class and the product attribute.

KFC has two kind of recipe, one is the original recipe and one is the new recipe in which the

chicken is deep fried with the chicken skin on the chicken fillet.

BRAND EQUITY

KFC recognizes that the brand it owns may be more valuable than the physical assets it has, such

as building and equipment. This is its brand equity. It is the value the KFC brand adds to its

product. In the minds of many customers just having the brand name, KFC adds value to the

product. KFC brand adds value to its product through its name awareness.

Substantial brand equity provides many benefits. The KFC brand has become a differentiated

advantage, influencing customers to buy its food products. This brand eqity of KFC gives it an

edge over other firms entering the food industry, as building brand equity is time consuming and

expensive. It creates barrier for the firm, which want to enter the market with the similar product.

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It also helps KFC to expand its product mix and especially to expand its product line. The brand

equity of KFC conveys a favorable impression of the product and increases the likelihood that at

least the consumer is going to try it.

PACKAGING

Even after a product is developed and branded there is a product feature that is critical for a

product, one such product feature is packaging. Packaging consists of all the activities of

designing and producing the container or the wrapper of the product.

KFC container for its burger is a very attractive black thin card box with KFC logo and the name

of the product written on it in white color This square box like container is easy to operate. The

potato chips are available in a glass cum box, made from cardboard. The soft drinks are available

in plastic glasses, which can be covered in case of take away order. The children Chicky Meal is

served in a small children lunch box, made from cardboard with a carrying handle and a lot of

cartoon characters are illustrated on it. The packaging not only keeps the KFC products hot and

in a hygienic state after they are bought, but also is an excellent source of promotion. The

packaging helps to keep the product cleaner and there are less chances of losses from spilling and

spoilage.

KFC packaging helps the consumers to identify their product and thus may prevent substitution

by competitive to identify their products. The packaging of KFC serves as a silent sales person. It

serves as a mean of communicating with the consumers. KFC’s packaging has become its

differentiated advantage, or at least a significant part of it.KFC uses family packaging, which has

similar packages for all products, or packages with a common and clearly noticeable feature.

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LABELING

Labeling is a part of packaging and consist of printed information that describe the product

appearing on with the peckage. The KFC logo used on every packaging, promotion, and

advertinsing material used by Kentucky Fried Chicken, that helps promoting its prioduct to the

consumer. KFC is three alphabet word that appears on every promotional and advertinsing

material along with a very attractive graphing on the Colonel. Whenever there is the Colonel

picture or his statue, it is considered a symbol of quality in the chicken product category of the

international food industry. The Pakistani people considered product of KFC as the best products

available in the market due to its brand name, quality and famous labeling.

PRODUCT SUPPORT SERVICES

The services that augment the product are the product sport services. Although KFC is not

providing full range of services as it is a self-service restaurant but still it is providing more

product sport services than any of its competitors to its customers.

KFC is providing its consumer with take away services, in which the packing is done

accordingly. The soft drinks are packed in plastic glasses with cover, the fried are packed in a

thin cardboard box, the chicken pieces are packed in paper bags and the burgers have their

traditional packing.

KFC is offering the special package for the kids who want to have their birthday party at KFC.

KFC promises a fun filed birthday party for all the friend of the birthday kid. There would be lots

of Yummy chicken and other goodies, music and a specialty decorated exiting kids fun area,

party games and prices, goody bag for every body, special birthday cake, special birthday gift,

special chicky appearance, special birthday boy/girl photograph.

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Prices of products:

CHICKEN 1 Piece Rs. 100 5 Pieces Rs.425

10 Pieces Rs.850

BURGERS

Mighty Zinger Rs.270

Zinger Xtreme Rs.220

Fish Zinger Rs.200

Zinger Burger Rs.200

Twister Rs.170

Col. Chkn. Burger Rs.150

Spicy Sub Rs.110

SNACKS & SIDE ORDERS

Nuggets 6 pcs. Rs.160 Nuggets 15 pcs. Rs.330 Regular Fries Rs.65 Large Fries Rs.80 Corn on the Cob Rs.75 Arabian Rice Rs.80 Dinner Roll Rs.15 Hot shots Rs.175 Cheese Rs.20

DESSERTS & BEVERAGES

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Regular Drink Rs.50

Scoop of walls Rs.60

Large Drink Rs.60

Mineral Water Reg. Rs.50

Mineral Water Lg. Rs.60

Coffee Rs.30

Tea Rs.30

PRICING

Determining what people are willing to pay for something is a very complex business. And

complexity increases when we also have to consider our need to our cost and maximize our

earning. Businesses with an internal perspective typically utilize a variety of cost based pricing,

such as experienced curve pricing, cost absorption pricing ,or other mark up methodology. But a

business that is either market or customer driven will in contrast either look to value in use of the

product to the customers or to the comparative value offered to customers relative to the

competition in setting a market price.

Cost plus pricing advocates wander even further failed when they do not adequately account for

cost. Understanding the role of fixed and variable costs on the average and marginal cost of

production allows at least a rational approach to cost based – pricing.

The pricing objective the KFC management has selected is compatible with the over all goals set

by the company.

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INTERNAL FACTORS EFFECTING PRICING AT KFC

Pricing objectives

Costs

a) PRICING OBJECTIVES

The pricing objectives selected by the KFC management is compatible with the overall goals

set by them.

KFC has two pricing objectives

1. Profit-oriented

2. Sales-oriented

PROFIT-ORIENTED GOAL

In order to attain the profit oriented goal KFC has set, it has to achieve a target return. KFC

has set a target to be achieved in every month of the year, which is different for each year

depending on the external and internal factors. KFC uses a target return on the sales as a

pricing objective for short period of one month. They then add an amount to the cost of the

product, called a mark up, to cover the anticipated operating expenses and provide a desired

profit for the period.

SALES ORIENDTED-GOAL

KFC is not only trying to retain its market share buy is also trying to increase it. With the

entry of McDonalds in the food mar5ket of Pakistan, the competition for KFC has become

very tough, with the response international food chains are receiving, it is evident that other

major food chains are definitely going to enter this lucrative market. In such a situation it is

very important for KFC to retain its market share. KFC is also trying to increase its market

share in order to enjoy the scales of economies and better profits.

b) COSTS

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KFC uses “Full Cost Recovery Pricing” according to their marketing manager they price

their packages on the following formula all cost + Govt taxes + profit margins. So their price

strategy is based on internal perspective rather than market customer or competitor oriented

KFC is not affected by competitor’s prices they set their prices independently based on costs

and profit targets.

EXTERNAL FACTORS AFFECTING THE PRICING AT KFC

a. Market demand

b. Economic conditions and the role of government

a) MARKET DEMAND

costs set the lower limit of the prices and the market demand set its upper limit. There is a huge

market for junk food, like burgers, deep fried chicken etc. in Pakistan. KFC has targeted it self

towards the higher income level and the high middle income level of the of urban areas

population of Pakistan. As being an international food chain, it has huge brand equity and is

already very popular among people.

b. ECONOMIC CONDITIOINS AND THE ROLE OF GOVERNMENT

The economic conditions of Pakistan are not very stable at this particular point of time, but the

government is still encouraging the foreign investors to invest in Pakistan. The economy of the

country is in recession; there is a shortage of goods and high inflation prevails. Pakistan’s rating

as a region for investment has fallen from BB (positive) to CCC (negative) which means that its

status has fallen from a fa9irly safe region to invest to a highly unsafe region to invest. This

situation has offended many investors.

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PRICING APPROACH

In its introduction stage, KFC spent substantial money in seeking consumer acceptance of the

product. For KFC there is very little direct competition, thus the promotional program was

designed to stimulate demand for its products.

PRICING ABOVE COMPETITION

KFC set their prices above the prevailing market level. It is using the pricing above the

competition level strategy because it has a distinctive product and the kfc name has a prestige in

the minds of the people.

EXPECTED PRICE

KFC has priced its products according to the expectations of the consumers. KFC realizes this

fact that the consumers value KFC, consciously or unconsciously as a luxury item, so they have

priced their products accordingly.

MARKET SKIMMING PRICING

KFC’s initial prices for its products were high as compared to the target market’s range of

expected prices. The prices at KFC were set at the high3est possible level that the most interested

consumer would pay for the KFC products.

KFC uses market-skimming prices due to a lot of reasons:

KFC products have distinctive features, which are strongly desired by its consumers

By using this strategy it gets protection from the competitors.

QUANTITY DISCOUNTS

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Quantity discounts are a specialty of KFC. The colonel\s value combos are an example of it. This

strategy is adopted in order to motivate the consumer to buy in large quantities. These

combination meals consisting of several items that collectively cost less than if bought separately

are gaining popularity due to their higher value and less price.

PLACEMENT

Distribution strategies are concerned with the channels a firm may employ to make its goods and

services available to customers. For KFC, the most important activity is to arrange for the sale of

its products. Other activities undertaken in this section of the marketing mix of KFC is storing of

the ingredients, taking them form one place to another, finding right spots for opening new

outlets for KFC etc.

KFC launched its operation in Pakistan in January 1997. They opened their first outlet in gulshan

Karachi. Until 2004 they have 25 branches in 9 cities of Pakistan. The details of these cities &

branches are :

In Sind total branches of KFC are 13 out of which, there are 12 branches in different areas of

Karachi & 1 in Hyderabad.

In Lahore there are 5 branches. These are located at

1.Garden Town 2. Cavalry 3. Defence 4. M.M.Alam road. 5. Jail Road.

It has also its branches in Rawalpindi, Islamabad, FaisalAbad, Sialkot, Multan & Peshawar.

DISTRIBUT8ION CHANNEL

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A distribution channel consists of set of people and firms involved in the transfer of title to a

product, as the product moves from producer to ultimate consumer. The type of distribution

channel KFC uses is called middleman involved in it.

PRODUCER----------- RETAILER-------------------CONSUMER

KFC is using the service-firm-sponsored retailer franchise system. This franchise buys all the

ingredients it uses and fulfils all other requirements of the franchiser. This practice is adopted to

have the product upto the standards of the international KFC chain.

FRANCHISE SYSTEM

Franchise system involves a continuing relationship in which the franchiser that is the parent

company provides the right to use its trademark and management assistance in return for

payments from a franchisee. Which is the owner of an individual business unit. This combination

of franchiser and franchisee is called a franchisee, which is the Artal restaurants international

(Pvt.) Ltd. In Pakistan, a proven method of operating a business, management assistance,

marketing expertise etc. and in turn receives payments and conformance to policies and

standards from the franchisee. The KFC franchiser provides the merchandises, raw materials etc.

as well.

The KFC franchiser provides management assistance prior as well as after opening of the

restaurant including site selection, restaurant lay out guidance, technical and management

training, promotional programs and inventory control systems.

Artal plans to work with the local poultry industry, to introduce know how and to establish

international standards. The Artal group of Belgium has brought KFC to Pakistan in

collaboration with Pepsi Co. and it plans to open 26 more till year 2001.

MARKETING LOGISTICS

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The marketing logistics involve planning, implementing and controlling physical flow of the

finished goods. The major logistic functions include order processing, warehousing, inventory

management and transportation.

ORDER PROCESSING

The orders at KFC are taken from customers in person, who are standing in a queue. These

orders go to the kitchen where it takes hardly 30.45 seconds to deliver it. The amount to be paid

by the consumer as the bull of his order is charged before the order is delivered. Whenever a

KFC outlet is short of its secret recipe, it orders the KFC Karachi head office about it. Every

KFC outlet has to give an approximate estimate about quantity of the secret recipe it would need

in the coming year. This order is processed and then necessary action is taken to fulfill these

orders.

PROMOTION

Promotion is an elements in the marketing mix of an organization that serves to inform, remind

and persuade the market of a product and/ or the organization selling it, in hope of influencing

the recipients feelings, beliefs and behavior.

Two main promotion strategies are examined

1. Promotions mix strategy.

2. Promotion expenditure strategy

PROMOTION MIX STRATEGY

There are three types of promotion strategies

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1. Personal selling

2. Advertising

3. Sales promotion.

4. KFC uses advertising and sales promotion and personal spellings its tools of promotion.

1 PERSONAL SELLING

Personal selling strategies examined are selling strategy and sales motivation and supervision

strategy.

KFC uses sales motivation and supervision strategy because they give compensation and non

financial incentives to their employees to improve selling.

2 ADVERTISING

Media may be defined as those channels through which messages concerning a product or

service are transmitted to the target.

MEDIA SELECTION

KFC uses print media such as newspapers, web pages and outdoors advertising such as

billboards etc its vehicle for advertising.

KFC has chosen the print media advertising for the purpose of its promotion. It advertises on the

front and back page of the famous and well-read newspapers of the country. It only advertises in

English newspapers with a very high circulation such as THE NEWS, DAWN, etc. the

advertisement usually covers a quarter of the page of the newspaper. The advertisement uses an

amalgamation of very bright colors, usually billboards to promote itself.

KFC uses published web pages in which it presents it product for online sale and give

advertisement of its product.

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ADVERTISEMENT COPY STRATEGY

Copy refers to the content of an advertisement. In the advertisement industry the term is

sometime used in the broad sense to include the words, pictures, symbols, color, layout, and

other ingredients of an ad.

The KFC brand logo is designed for instant recognition. KFC has built its brand around the

creator of the KFC recipe, the colonel. KFC promotes a red colored logo “ ”, as an

abbreviation of Kentucky Fried Chicken.

The wording of its messages is like there is fast food then there is KFC.

SALES PROMOTION

Many tools can be used to accomplish sales promotion objectives.

PREMIUMS

Premiums are goods offered either free or at low cost as an incentive to buy a product. In KFC,

premiums are used ranging from pencil case ,kit bags, mobile stands, foot balls, jey chains, T

shirts file cover, mobile case, ludo board game, tissue boxes.

ADVERTISING SPECIALITY

Advertising specialties are useful articles imprinted with an advertiser’s name given as gifts to

consumers. in KFC, plates , bottles, mugs, clocks, T shirts, tissue boxes, footballs, kit bags and

other items are imprinted with its logo and company name. Such items are very effective

reminders. Consumers recall the ‘KFC’ name whenever they use these items.

BUSINESS PROMOTION TOOLS

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Companies spend billions of dollars each year on promotion to industrial customers. These

business promotions are used to generate business leads, stimulate purchases, reward customers,

and motivate sales people.

PUBLIC RELATION TOOLS

Public Relations is another promotion tool- building good relations with the company’s various

publics by obtaining favorable publicity, building up a good corporate image, and handling or

heading off unfavorable rumors, stories and events. Public relations can have a strong impact on

public awareness.

MAJOR PUBLIC RELATION TOOLS USED BY KFC

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A common PR tool used by KFC is special events; birthdays of children are celebrated and are

provided with special gifts. In summer season summer camps are arranged for children. They

also arrange musical programs for children. These events build the company image.

Public relations people of KFC also prepare written materials to reach & influence the

consumers. These materials include brochures & magazines.

After the boycott of multinational products by some groups in the country after the US-IRAQ

war. Magazines are used to change the perception of the consumers about KFC. There was also a

rumor about its chicken. It was said that the chicken is not cut according to the principle of

Islam. This negative image is also rectified through magazines.

Uniforms are also a tool. All employees of KFC are provided with uniform. This uniform is also

a public relation tool.

CONCLUSION

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Analysis we have conducted for KFC, s marketing strategies we have come to the following

conclusions,

KFC, s competitive situation is not that much intense.

It has established an image in customers minds that works as a protection against

competitors.

3- According to its marketing manager 90% of their customers are loyal customers, so

they are doing well to retain & sustain their customers

They have largest market share of fast food industry in Pakistan but in Lahore their

market share is lower as compare to Mc Donald, as Lahore is a big market for fast food

restaurants, there is need to capitalize on this potential. According to their marketing

manager they are planning to open some new branches.

The real strength of the KFC in view point of its management & according to customer

perception lies in its physical environment as its marketing manager stated, “we want that

our customers can feel a good positive change every time when they enter the restaurant”

As KFC, s ultimate goal is customer satisfaction. According to marketing manager their

competent employees are the way to success.

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They are doing well to sustain their competent employees in order to get customer

satisfaction through employee satisfaction.

KFC is a market-oriented organization as it considers both customer needs & competitor

moves. At the same time its approach is proactive rather reactive.

The greatest threat that not only KFC rather all multinationals are facing is of anti

multinational phenomenon right after Iraq war.

CONSUMER QUESTIONAIRE

The purpose of this questionnaire is to explore the consumers’ perceptions about KFC. Please fill each point along with your personal information. Your personal information will not be disclosed to anyone.

Gender: M F Age: yrs Residential Area:

Income Level (Rs. per month): less than 20,000 20,000 to 50,000 50,000 to 80,000 more than 80,000

How many times in a month you, usually, go to any fast food restaurant Once Twice Three Times More than three times

How do you rate KFC in the following areas?

1 2 3 4 5

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ConvenientLocations KFC: Inconvenient

Locations

Wide Range of Meals KFC: Small Range

of Meals

Excellent Taste KFC: Poor

Taste

Very FastService KFC: Very Slow

Service

FriendlyService KFC: Not Friendly

Service

ReasonablePrices KFC: Un-Reasonable

Prices

Clean KFC: NotClean

PleasantAtmosphere KFC: Un-Pleasant

Atmosphere

Your overall satisfaction level:

Satisfied Satisfied Not

To which level do you think that (KFC ‘n’ McD.) meet your expectations:

Excellent Poor

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KFC: 1 2 3 4 5

KFC: 1 2 3 4 5

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