Marketing Strategy of KFC Corporation

8/10/2019 Marketing Strategy of KFC Corporation

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Marketing Strategy of KFC Corporation - December 7th, 2010

KFC Corporation (KFC), founded and also known as Kentucky Fried Chicken, is a chain of

fast food restaurants based in Louisville, Kentucky, in the United States. KFC has been a

brand and operating segment, termed a concept[2] of Yum! Brands since 1997 when that

company was spun off from PepsiCo as Tricon Global Restaurants Inc.

KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus is

fried chicken, KFC also offers a line of grilled and roasted chicken products, side dishes and

desserts. Outside North America, KFC offers beef based products such as hamburgers or

kebabs, pork based products such as ribs and other regional fare.[citation needed]

The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952,

though the idea of KFC's fried chicken actually goes back to 1930. The company adopted the

abbreviated form of its name in 1991.[3] Starting in April 2007, the company began using its

original name, Kentucky Fried Chicken, for its signage, packaging and advertisements in the

U.S. as part of a new corporate re-branding program;[4][5] newer and remodeled restaurants

will 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.

Introduction KFC operates in 74 countries and territories throughout the world. It was

founded in Corbin, Kentucky by Colonel Harland D. Sanders. y 1964, the Colonel decided to

sell the business to two Louisville businessmen. In 1966 they took KFC public and the

company was listed on the New York Stock Exchange. In 1971, Heublein, Inc. acquired

KFC, soon after, conflicts erupted between the Colonel (which was working as a public

relations and goodwill ambassador) and Heublein management over quality control issues

and restaurant cleanliness. In 1977 a "back-to-the-basics" strategy was successfully

implemented. By the time KFC was acquired by PepsiCo in 1986, it had grown to

approximately 6,600 units in 55 countries and territories. Due to strategic reasons, in 1997

PepsiCo spun off its restaurant businesses (Pizza Hut, Taco Bell and KFC) into a new

company called Tricon Global Restaurants, Inc.

Reasons for going overseas Companies moves beyond domestic markets into international

markets for the following reasons: *Potential demand in foreign market *Saturation of

domestic markets *Follow domestic customers that go abroad *Bandwagon effect


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*Comparative advantage - some countries possess unique natural or human resources that

give them an edge when it comes to producing particular products. This factor, for example,

explains South Africa's dominance in diamonds, and the ability of developing countries in

Asia with low wage rates to compete successfully in products assembled by hand.

*Technological advantage - In one country a particular industry, often encouraged by

government and spurred by the efforts of a few firms, develops a technological advantage

over the rest of the world. For example, the United Sates dominated the computer industry for

many years because of technology developed by companies such as IBM, Hewlett-Packard

and Intel Organization structures for International Markets (Modes of Entry) *The mode of

entry affects a company's entire marketing mix Exporting *Export merchant (Indirect)

*Export agent (Direct) *Company sales branches Contracting *Licensing *Franchising

*Contract manufacturing Direct Investment *Joint venture *Strategic alliance *Wholly

owned subsidiaries Criteria for selecting a mode of entry 1.Company's marketing objectives:

- production volume - time scale (long/short term) - coverage of market segaments

2.Company's size 3.Government encouragement or restrictions 4.Product quality

requirements 5.Human resources requirements 6.Market information feedback 7.Learning

curve requirements 8.Risks: political or economic 9.Control needs Mode(s) of entry for KFC

*Franchising/Licensing *wholly owned subsidiary *Joint venture Firstly, KFC's traditional

franchising strategy, which is emphasizing standardization and reducing financial risk, on the

expense of cultural sensitivity and control. Due to China's strict foreign investment laws such

a strategy is not feasible. In addition, KFC will be pioneering in the fast-food field and thus

needs to be highly sensitive to cultural demands. In the past, KFC encountered problems with

aligning corporate planning with franchisee's short-term focus on profitability.

A wholly owned subsidiary represents the second option. Such a strategy relies upon total

control over competitive advantages and ensures complete operational and strategic control.

It also involves high investment expenses with no financial risk sharing. With high levels of

resource commitment and little country-level flexibility and responsiveness, this option is not

recommended.

Recommended market entry strategy: joint venture The essence of a joint venture is the

synergy effect of two different entities merging. Such an international business strategy will

attempt to; solve many logistic problems such as access to good quality chicken and other


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supplies, ease the access to the Chinese market, share risk with a local entity, and finally

serve as a sign of commitment to the host government increasing goodwill. In addition, due

to the complexity of many barriers to entry into China, a potential partner with sufficient

contacts/networks with government agency officials may smoothen the process of setting-up

operations in the nation.

The potential joint-venture partner should be large, well established, provide excellent

distribution channels and have personal network access to government officials. It should

also have modern equipment and a good management record. It is recommended that a

partner is found by backwards integration. In other words, it is a good domestic poultry

supplier. In order to ensure total commitment and balance of power between the two partners,

a 55/45 joint venture, with KFC as the dominant partner should be set-up.

By building on each partner's core competencies, knowledge, and efficiencies, a mutually

beneficial synergy effect could be achieved as a result of joint venture activities. For instance,

the local partner can learn from KFC how to produce a better product at a lower cost and

further expand on its new competitive positioning. KFC, on the other hand, can maintain

quality supply which is detrimental to its success.

A joint venture will also significantly ease the entry to the virgin Chinese market. A new

entrant would find it very difficulty to form local and personal networks between businesses

and government agencies, which are crucial to success and provide access to the local market

and domestic suppliers. In addition, local business customs and laws can be quicker

understood and established ways to cut bureaucratic red-tape can be further utilized. Also, the

local knowledge of culture, language and geography is beneficial for any foreign entrant into

a relatively unknown market.

In order to cope with the significant political risk of investing in China, a local joint venture

partner will share this risk. There is always a risk of domestication measures imposed by the

host government, often leading to major financial losses for the foreign investor. By having a

55/45 joint venture agreement, this risk is potential eliminated, since only 55 percent of

operations are domesticated. If such an unfavorable situation would arise, KFC has clearly

less to loose in such an agreement. In addition, by being the dominant partner, KFC will be

able to ensure cost, quality and strategic control measures.


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The Chinese government may very well find KFC beneficial to the nation, as it is the

pioneering western fast-food outlet. Training the joint venture partner, personnel and other

institutions in the value chain can reduce learning and experience curves. KFC's operations

may also inspire local competitors to increase service and quality of food. It can also help to

create a competitive fast-food industry in China as new competitors respond to KFC's ideas.

Moreover, a joint venture agreement commonly produces goodwill and commitment between

the host government and the foreign investor. In such a relationship, the foreign investor is

not seen as trying to take advantage of the nation for profit purposes, but rather show

willingness to share. Maintaining good relations with the host government is a critical success

factor as government policy impacts intensely upon business activities.

Factors that influence marketing decisions Social and cultural forces *Family *Social

customs and behaviour *Education *Language differences Economic environment

*Infrastructure *Level of economic development *Competition Political and legal forces

*Trade barriers oTariff oImport quota oDumping oLocal-content law oBoycott *Trade

agreements oGATT oWTO oEU oNAFTA oAPEC oASEAN Information gathering

(Marketing Research) Marketing research - the systematic and objective identification,

collection, analysis, and dissemination of information that is undertaken to improve decision

making related to identifying and solving problems (opportunities) in marketing. It is indeed,

has a broad range of applications and plays a crucial role in the marketing decision-making

process.

The task of marketing research is to assess the information needs and provide management

with relevant, accurate, reliable, valid, and current information to aid marketing decision

marking. Company conduct and use marketing research to stay competitive and to avoid high

costs associated with making poor decisions based on unsound information.

Marketing research plays a significant part in the development of marketing plans because it

allows the organization to become less isolated from the key trends and changes, which

surround their product. To continue to be successful, organizations must receive information,

from the researcher that is clear and accurate. It also has to satisfy your pre-determined goal

for your research.


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Steps in international marketing research: 1.define research problem(s) 2.develop a research

design 3.determine information needs 4.collect the data (secondary and primary) 5.analyze

the data and interpret the results 6.report and present the findings of the study Major research

challenges 1.Complexity of research design due to environmental differences 2.lack and

inaccuracy of secondary data 3.time and cost requirements to collect primary data

4.coordination of multicountry research efforts 5.difficulty in establishing comparability

across multi-country studies Primary Research The use of: - *Focus group *Survey methods

for cross-cultural marketing research - Questionnaire - Sampling (unit, size, procedure) -

Contact Methods (mail, phone, personal interview, online survey) *Collecting information

Secondary Research Use of : *Secondary data (data which is already available) *Primary data

(when information is not useful or not exist) *Secondary data sources: government,

Lexis/Nexis, FINDEX, ACNielsen, etc., Problems with secondary data research: *Accuracy

of data *Age of data *Reliability over time *Comparability of data - triangulate - Functional

or conceptual equivalence *Lumping of data *The data may have been collected and

manipulated for a specific use, therefore it may be incomplete, ambiguous or out of context.

*Data may be compiled in different ways in different countries making comparability

difficult. For example, in Germany consumer expenditures are estimated largely on the basis

of turnover tax receipts, in the UK they are measured on tax receipts plus household surveys

and production sources. Similarly with GNP measures, it only reflects average health per

head of population and not how it is dispersed. As seen earlier, bimodalities are normal, thus

introducing bias. GNP may be understated for political reasons and may not reflect education

(i.e. wealth based on minerals). Also infrastructure may reflect channelled funds, say for

tourism, rather than society as a whole - typical of many African countries.

*Data may be corrupted by methodological and interpretive problems, for example,

definitional error, sampling error, section error, non response error, language, social

organizations, trained workers, etc.

*Data may be nonexistent, unreliable or incomplete thus making inter country comparisons

very difficult *Data may be inflated or deflated for political purposes *Data from

documented sources must, therefore, be treated with care and caution Special problems in

international marketing research As well as the difficulties associated with secondary data

described earlier, there are a number of other problems connected with obtaining data in the


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global context. These are as follows: *Multiple markets need to be considered each with

unique characteristics, availability of data and research services *Many markets are small and

do not reflect the cost of obtaining data for such a small potential *Methodological

difficulties may be encountered like nuances of language, interpretation, difficulty of

fieldwork supervision, cheating, data analysis difficulties (lack of computer technology)

*Infrastructure difficulties - lack of telephones, roads, transport, respondent locations and,

*Cultural difficulties - reluctance to talk to strangers, inability to talk to women or children,

legal constraints on data collection/transmission.

*Many of these facets apply more to developing than developed countries. However using a

variety of methods, outlined in the section, a lot of them can be ingeniously overcome

*Whilst the gathering of information in the international context is fraught with difficulties,

without it the marketer would be planning in the dark. The two most important modes of

scanning are surveillance and search, each giving data of a general or specific kind,

invaluable to the strategy formulation process. In all decisions whether to obtain data or not,

costs versus benefits have to be considered carefully SWOT SWOT is a method of analysis

which examines a company's Strengths, Weaknesses, Opportunities and Threats. Often used

as part of the development process for a marketing plan, or to feed the results of a marketing

audit back into a revised plan According to the analysis, there are mainly two weaknesses for

KFC. One of them is financial problem and the other one is that KFC concentrates on only

one single market. For its strength, it has its own unique skill in fried chicken and it has

established a good brand name. However, it is now facing a threat. Nowadays, people are

more concerned with the healthiness in food and their demand for high quality of food is

increasing. Also, it is now under economic crisis. Nevertheless, it still has an opportunity in

its market. It is because KFC is an leader in fried chicken market. (Fried chicken) The early

entry into international markets placed KFC in a strong position to benefit from international

expansion. Most of KFC's international expansion was through franchises, due to the fact that

they were owned and operated by local entrepreneurs with a deep understanding of local

language, culture, customs, law, and marketing characteristics. In larger markets there was a

tendency to build company-owned restaurants. The rationale was that fixed costs could be

spread over a large number of restaurants and lower prices on products could be negotiated.

China was one of the international markets KFC focused on.

Influences in marketing decisions Cultural factors Cultural: the basic beliefs and values


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cherished by a society as a whole and handed down from one generation to the next.

Let us consider how culture influences the marketing decision. Before we go into detail,

should we first consider the elements contributing to the culture context.

The elements of culture: *Language *Religion *Values *Attitudes *Manners and Customs

*Material culture *Aesthetics *Education *Social Institutions Language Language can be

categorized into verbal and non-verbal one. For verbal language, messages can be conveyed

into words, by the ways the words that are spoken. For non-verbal language, it refers to

gesture, body position and eye contact.

A new entrant would find it very difficulty to form local and personal networks between

businesses and government agencies, which are crucial to success and provide access to the

local market and domestic suppliers. In addition, local business customs and laws can be

quicker understood and established ways to cut bureaucratic red-tape can be further utilized.

Also, the local knowledge of culture, language and geography is beneficial for any foreign

entrant into a relatively unknown market.

Religion and Superstition Religion is one of most sensitive elements of a culture.

To appreciate people's buying motives, customs & practices, awareness & understanding of

their religion is often crucial. When marketer has little or no understanding of a religion, it is

easy to offend unintentionally.

In numerous Asian countries, ancient Chinese philosophy of feng shui (wind-water) plays an

important role in design & placement of corporate buildings & retail spaces According to

feng shui, proper placement & arrangement of a man-made structure & its interior objects

will bring good fortune to its residents & visitors.

To avoid conflict against home place's religion is very important.

Religion has an impact on international marketing that is seen in a culture's values and

attitudes toward entrepreneurship, consumption and social organization.


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Values They are enduring moral beliefs shared by members of a society and contributing to

its culture and beliefs of what is "good," "right," and appropriate in behaviour Attitudes For

marketers, a crucial value distinction is a culture's attitude toward change Societies that are

resistant to change are usually less willing to adopt new products or production processes

Local attitudes toward foreign culture will drive product positioning & design decision.

In South Africa, goods with American roots are strongly valued - using as a selling point, the

amount of affect or feeling for or against a stimulus.

KFC uses GM chicken. This arouses a great controversy in many places. In some places,

people think that as long as KFC can give delicious fried chicken, it does not matter what

kind of chicken they are using. On the other hand, some people think that the use of GM

chicken will have great influence on the food chain which is very crucial to the

environmental health and nature development. Take China as an example, the people there do

not have very strong and clear idea on GM food. There is not as many problems that has to be

faced as in other advanced placed in the world.

Different values will influence if the product can be consumed by the market. It will also

determine the marketing segment, like if the selling point has to very verify. Different attitude

will determine the ease of entering the market. According to the above data, the demand and

supply of the host country can be known so what the related produnt decision can be made to

match the demand of the market.

Manners and Customs Potential problem areas for marketers arise from an insufficient

understanding of: *Different ways of thinking *Necessity of saving face *Knowledge &

understanding of the host country *Decision-making process & personal relations

*Allocation of time for negotiations When you understand the customs and manners of the

host country, you can determine what kind of promotion and organization is best for that

country. Also, the attitude will also determine what kind of industry can enter the host

country. For example, if a place likes having home made food, it can tell if a fast food shop or

take away is more suitable.

For example, in China, people there begin to try and accept new and foreign stuff. It is a good

opportunity to enter the market at this moment.


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Managers must be concerned with differences in the ways products are used.

Material culture Results from technology and is directly related to the way a society

organizes its economic activity. It is manifested in the availability and adequacy of the basic

economic, social, financial, cultural convergence, and marketing infrastructures. The basic

economic infrastructure consists of transportation, energy, and communications systems. The

degree of industrialization can provide a marketing segmentation variable.

When KFC first went into the Japanese market in the early 1970's, the company chose to

form a joint venture with a large scale poultry producer with excess capacity. This 50/50 joint

venture served the two partners very well, as KFC was able to ensure a stable supply of

quality supplies to its operations, and the local corporation was able increase efficiencies in

production by selling its excess supply. Furthermore, KFC was able to utilize existing

distribution networks serviced by the partner and at the same time, adhere to exiting rules and

regulations imposed by the Japanese government on foreign direct investment.

Aesthetics Each culture makes a clear statement concerning good taste, as expressed in the

arts and in the particular symbolism of colors, form, and music. What is and what is not

acceptable may very dramatically even in otherwise highly similar markets.

In China, the packing has been well accepted in the worldwide so it can be easily accepted by

the people in China. Moreover, red which is a main color in its package and logo symbolize

wealth and happiness. So it can be well accepted by people in China without much difficult in

establishing a good image.

It will seriously affect how the product is promoted and its design. For example, the original

packing might not be as well as accepted in host country.

The international firms have to take into consideration local tastes and concerns in designing

their facilities. They may have general policy of uniformity in building or office space design,

but local tastes may often warrant modifications. Respecting cultural traditions may also

generate goodwill toward the international marketer.


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Education Education is one of major vehicles to channel culture from one generation to the

next Two facets of education that matter to international marketers include: level & quality of

education.

Education affects employee training, competition for labor and product characteristics -

marketers need to exercise caution such as product labeling, print ads, & survey research. For

KFC in China, it has advantage that it is easy to employ manual labors as there is a large pool

of manual workers suitable for it. As this job does not require a very high education and the

general education is not very high yet, this helps to balance the supply and demand in the

market.

Education in general affects employee training, competition for labor and product

characteristics. Marketers need to exercise caution such as product labeling, print ads, and

survey research. The international marketing manager may also have to be prepared to fight

obstacles in recruiting a suitable sales force or support personnel.

Social Institutions They refer to the positions of men & women in society, family, social

classes, group behavior, & age groups are interpreted differently within every culture.

Each institution has an effect on marketing because each influences behavior, values, &

overall patterns of life The fitting of an organizational culture for internal marketing purposes

to the larger context of a national culture has to be executed with care.

The internationally successful companies all share an important quality: patience. They have

not rushed into situations but rather built their operations carefully by following the most

basic business principles. These principles are to know your adversary, know your audience

and know your customer.

Summary Culture is one of the most challenging elements of the international marketplace.

The most complicated problem in dealing with the cultural environment stem from the fact

that we cannot learn culture - we have to live it. Two schools of thought exist in the business

world on how to deal with cultural diversity. One is that business is business the world

around, following the model of Pepsi and McDonald's. In some cases, globalization is a fact

of life; however, cultural differences are still far from converging.


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The other school proposes that companies must tailor business approaches to individual

cultures. Setting up policies and procedures in each country has been compared to an organ

transplant; the critical question centers on acceptance or rejection. The major challenge to the

international manager is to make sure that rejection is not a result of cultural myopia or even

blindness.

Political/Legal factors Economic factors Appendix Marketing Research Methods Marketing

research plays a significant part in the development of marketing plans because it allows the

organization to become less isolated from the key trends and changes, which surround their

product. To continue to be successful, organizations must receive information, from the

researcher that is clear and accurate. It also has to satisfy your pre-determined goal for your

research.

"Marketing research is the function which links the consumer, customer and the public to the

marketer through information." Market research identifies issues that have a direct effect on

the organization, through the analysis of the results. The results and obtained information

must be collated and presented in a form that is easy to understand. Instead of raw data, you

have a series of graph, charts and tables.

There are three main types of research, diagnostic, descriptive and predictive. Diagnostic

research is used when you need to analyze the effectiveness of an advertising campaign.

Descriptive research is fact finding secondary data. You would use this when you planned to

sample a section of a target audience for a particular product. Predictive research is about

identifying new opportunities in a market place and calculating the effect of marketing

decisions. You would use this if the organization were planning to expand or regenerate their

product.

When conducting research, you have to use a sample of your population. The reason why you

use a sample is because you can't physically research every single person in the country,

unless you are the Government and you are conducting a census. Your sample should consist

of people who fit into the research requirements. Sampling is cost and time effective, which

are extremely important to the organisation that is commissioning the research because they

are anxiously waiting for the results of the research.


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The research data, which has been collected, can be categorized into two main sections,

qualitative research and quantitative research. Usually most research contains particles from

both sections.

Qualitative research is when the information is open to broad interpretations. It is not

concerned with finding statistics, which relate to the product but focuses on the reasons lying

behind certain areas, for example consumer feeling and motivation.

Qualitative research is a more flexible approach as it explores customer behavior, it identifies

and analyses their emotions. This research is usually conducted on small samples because the

finding will be divers and full of 'richness'. This research cannot be generalized as it deals

with complex issues that tend to be unique to the individual, human emotions.

When using Qualitative research, there are several research techniques that you can use. The

techniques must be on a more personal scale, in comparison with quantitative research, as the

research requires that source of information. Primary data is excellent as it is specifically

designed to address the problems identified in the research objectives. Primary data includes

information that is 'first hand', as it is collected directly from the respondent. Examples are

surveys, group discussions, interviews and observations.

Surveys are an excellent form of researching. The survey has been carefully designed to

address your objectives. It can be quick and accurate in pinpointing the information required

because there is no room for distraction. Respondents either chose an answer or make their

own. It is relatively cheap and less time consuming. The results are excellent to interpret,

evaluate and are affectively displayed in several formats.

Group Discussions (Focus Groups) is when six to ten people, who are recruited according to

the pre-determined criteria, exchange experiences, attitudes and beliefs about certain topics. It

is a semi controlled environment and a moderator lead the conversation flow. The whole

discussion is recorded and everyone is informed about the recording, following ethical

guidelines. With a group environment, the respondents are less intimidated because they are

not alone, Observational research is when a person, who satisfies the criteria, is being

observed and recorded. The observer will note the person's body language and behavior and


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will analyze it in order to understand the problem. The observer will either be conducting this

research in a controlled or non-controlled environment. A controlled environment would be a

room with only the observer and subject present. A non-controlled environment would be a

busy street. Most observational research is conducted in controlled environments because

fewer ethics are involved. Ethics are breached when someone is being recorded against their

will or are unaware. High street clothing companies, such as Arcadia, Mark and Spencer's

and Next all carry out observational research. The research is through a 'mystery/test

shopper'. The researcher takes on the role of a customer and rates the staff's performance.

Again I have been involved in an observational research campaign. I was asked to look at

several different types and styles of packaging for "Southern Comfort" whiskey. The

researcher recorded my expressions and feelings towards each packaging idea.

The remaining section from your collected data is quantitative research. This type of research

involves a mass collection of measurable information, which is not open to interpretation.

This type of research can be conducted through the use of telephone interviews, face-to-face

interviews and mail questionnaires. Quantitative research also utilizes secondary data

sources.

The types of secondary data sources are information that has already exists, from an external

body. Government published data, trade press or association files, press articles or report

commissioned by independent authorities or watchdogs. However secondary information is

complicated, it may take a long time to get relevant information that you can use. The

majority of the information may not be relevant to your research. This is an example of low

cost research, most sources are available free of charge to the public.

When using quantitative research the methods differ from qualitative methods. Quantitative

methods tend to be more impersonal, and direct to the point. Telephone interviews are

excellent because the survey 'script' has been designed to combat the issues that the research

is trying to find out. The speed of the interview must be fast and last no longer than ten

minutes. You have to keep the respondent interested in order to get a response.

Individual interviews are another form of research. The process can last up to an hour. During

this hour the researcher is recording your responses and is able to expand on your answers

because a rapport has been built up. This form of research is more common as you see the


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researcher, with their clipboards on most high streets.

Mail questionnaires are a more popular form of research. It involves sending out self-

completion surveys to a population sample. The sample is then supposed to fill them out and

return them to the researcher. With mail questionnaires you can cover a vast amount of your

sample, as you are able to send out thousands of questionnaires. The only problem is that

response rate tends to be low, With the types of research available, I personally believe in

qualitative research because there is a greater need to expand and develop your research. This

is useful because it allows your finding to be more accurate and richer in source. When

conducting research I suggest that you use both types of data. Secondary data will allow you

to build up a background and may even hold some relevant information to your research.

Sources of global information Sources of information include documented sources, human

resources or perceived sources.

Documented sources In recent years there has been an information explosion, especially in

the documented or "secondary" source area. (Primary data collection will be dealt with later).

Various sources of documented data are available including: i) Governments *Central office

of information (UK) *Central Statistical Office (Zimbabwe) *EU documentation centres

*Boards of trade, or Ministry of Commerce ii) International bodies *the UN Statistical

Yearbook *World Bank - general statistics *OECD - general statistics *ITC - Geneva

(information service) iii) Business, trade, professional *Chambers of Commerce *Institute of

Marketing *American Management Association *The Market Research Society iv) Foreign

embassies, trade missions *Commercial newspapers *Financial agencies - Price Waterhouse

*Kompass Register of companies *Economist Intelligence Unit (UK) v) Other *Libraries,

universities, colleges.

There are excellent sources of overseas data, in the horticultural industry, giving information

on markets, prices and produce required for those wishing to sell into Europe. Examples of

these are given below: *International Trade Centre (ITC) Geneva *COLEACP, Paris

*Natural Resource Institute (NRI) UK *GTZ, Germany *CBI, Netherlands *IMPOD,

Sweden *Chambers of commerce *Food and Agriculture Organization of the United Nations

Conclusion This analysis is focused by exploring, through different perspectives, the pros and

cons of KFC investing in China. What can make this region attractive to so many companies?


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First, the size of the market - it has a population of more than 1.6 billion. Second, most

countries are becoming fully functional democracies. Third, most countries are successfully

stabilizing their economies. These factors make investment in this market less risky.

In a competitive market, companies are not only dependent on their strategy but also on the

strategy of their competitors. If the competition is exploring the China market and you aren't,

can't that be risky? For example, if McDonald's invest in the risky market X and KFC doesn't,

two situations may happen. First the investment succeeds, in which case McDonald's gains

the advantage. Second the investment fails, in which case KFC gains the advantage from

McDonald's misfortune. To playing safe, KFC can follow the competition into the new

markets. That way the chance of all loosing or all winning is quite the same.

ABOUT KFC:

Introduction

Kentucky Fried Chicken (KFC)- one of the most known fast food chains in the world started

in the early 1930's by Kernel Sanders in the Southern USA as a small franchise operation.

Colonel Sanders has become a well known personality throughout thousands of KFC

restaurants World wide. Quality, service and cleanliness (QSC) represents the most critical

success factors to KFC's global success.

Food, Fun & Festivity, this is what KFC is all about. Leading the market since its inception,

KFC provides the ultimate chicken meals for the Chicken Loving Nation. Be it Colonel

Sanders secret Original Recipe Chicken or the Hot & Spicy version, every bite brings a YUM

on the face. At KFC we proudly say:

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

World. In 1971, Heublein, Inc. acquired KFC, soon after; conflicts erupted between the

Colonel (which was working as a public relations and goodwill ambassador) and Heublein

management over quality control issues and restaurant

KFC is part of Yum! Brands, Inc., however in the case of Pakistan KFC builds the relation of

Quality Service and cleanliness for Customer.

KFC was acquired by PepsiCo in 1986; it had grown to approximately 6,600 units in 55

countries and territories. Due to strategic reasons, in 1997 PepsiCo spun off its restaurant

businesses (Pizza Hut, Taco Bell and KFC)

Perfecting its secret recipe of 11 herbs and spices in 1939, KFC has come a long way, with

over 10,000 outlets in the world; KFC has maintained its title, for the last 60 years, of being


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The Chicken Experts.

KFC in Pakistan:

Presently KFC is branched out in thirteen cities of Pakistan (Karachi, Lahore, Rawalpindi,

Faisalabad, Multan, Peshawar, Sialkot, Hyderabad, Islamabad, Gujranwala, jehlum, sukkur

and Murree) with 45 outlets nation-wide. Opening the first KFC outlet in Gulshan-e-Iqbal,

Karachi in 1997, and KFC wore the title of being the market leader in its industry. Serving

delicious and hygienic food in a relaxing environment made KFC everyones favorite. Since

then, KFC has been constantly introducing new products and opening new restaurants for its

customers.

In Pakistan totally Chicken buy from Pakistani Poultry Forms, and also this Chicken is 100%

Halal.

Marketing Mix:

Marketing mix consists of 4Ps. It contains everything a firm can do to influence the demand

for its product. The 4Ps are:

PRODUCT

PRICE

PLACE

PROMOTION

These marketing mixes are described in detail as under.

PRODUCT:

Product planning:

Their product is classified as consumer product as it has no intermediates. It also offers

specialty goods. The stock turn over of KFC is relatively high. The prices and quality of the

product is always compared. Their product includes Goods (Burgers, Chicky Meals etc) and

Services (cleanliness, quick service, parties, and meetings).

Product Strategy:

It was launched here as an innovative product. KFC has got one product line but later they

introduced products in the same line to protect their market share. New product ideas are

generated from:

Customer services (comments cards)


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Gallops survey (mystery shoppers)

They have a Quality Assurance department that decides the new product innovation. Q.A.

department prepares screening of new ideas and products feasibility report. This department

does the technical evaluation (whether it is practical to produce the new product or not). The

products are tested externally by offering trials to customers by giving them free samples.

KFC uses telemarketing, print media, billboards and most recently televised marketing for

promotion.

KFC adds a new product in its present assortment based on their competitors, products

adequate demand, the satisfaction of key financial criteria and its compatibility with

environmental standards.

Product Line:

KFC product line includes all chicken based products.

Burgers:

The burger category includes the Zinger Burger, Colonels Chicken Burger, Colonels Fillet

Burger, SUB60 and 80, and Zinger Jr. They have also introduces a Fish zinger burger.

Chicken Pieces:

The chicken involved the product line with different number of chicken pieces like 1 piece, 2

pieces, 5 pieces and 10 pieces chicken.

Combos:

The combo includes the different meal as Chicken Meals, Sandwich Meals and Family

Meals.

Desserts & Beverages:

The desserts and beverages offered by KFC are Fruit Salad, Regular & Large Drink, Regular

& Large Mineral Water, Tea, Scoop of Walls Ice cream and Coffee.

Snacks & Side Orders:

The snacks and side orders served by the KFC are Arabian Rice, 5 & 10 Pieces Hot wings,

Dinner Roll, Regular & Large Fries, Hot Shots, and Corn on the Cob, Hot & Crispy Soup and

the Cole Slaw.

Product Mix strategies:

The product mix strategies are in relation to:

Competitors:


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KFC has a head-on competition with McDonalds so wherever they place their products; KFC

goes there as well. Locally in Pakistan KFC face a close competition with the local brands

like AFC (Al-Baik Fried Chicken), Fried Chicks, Dixy Chicks etc which are producing more

or less the same product as KFC.

Attributes:

The brand KFC is so strong that it is the attribute itself.

Quality:

KFC products are based on high quality and prices.

Product Mix Expansion and Contraction:

KFC keeps on modifying their product through line extension and other methodologies. Line

Extension is being done through introducing new meals offers. The alteration of existing

products is also done and this function is performed by the Quality Assurance department.

The department decides which product should be sold and when (seasonal products as rice

and soups offered in winters). Functional modification is also done by the Q.A. department to

introduce new recipes. Other than expansion contraction is also being dealt with as when the

new deals or offers are not sold as expected, Q.A. department contracts the previous offers

and introduces new offers.

Change in Product Positioning:

KFC products were first offered to upper socio-economic group. Later, introducing

discounted and lower price deals, they are now dealing in masses. So, KFC has traded down.

In doing so KFC has used the same brand name and same high quality product.

Product Branding, Packaging and Labeling:

Brand Name: KFC

Color: Red, white

Symbol: Colonel Harland Sanders picture and KFC written with it.

Master Brand: The brand itself is so dominant, that it immediately comes in mind.

KFC Brand:

KFC's brand identity is the logo featuring Colonel Harland Sanders, one of the best-

recognized icons in the world. It is trade marked registered brand and is distinctive, adaptable


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to addition to product line. It suggests something about product. It is legally protected and

registered.

Brand Equity and Strategy:

The brand equity is very high as the value added by brand to the product effects the product

selling. And the Brand strategy followed is that the KFC is marketing the entire output under

products own brand. Pepsi and Nescafe are the complementary brands associated with KFC.

Packaging Strategy:

KFC makes its own disposable packaging. If they need promotion Pepsi contributes in

improving the packaging quality. KFC does family packaging. They use paper material for

packaging to avoid health hazards and environmental pollution.

Labeling:

KFC does brand labeling. Some of its products also have informational labels such as Halal,

Veggie Burgers and Chicky Meals.

PRICE:

In introduction stage KFC entered the market using market-skimming strategy. Their

products were high price and targeted only upper class. Gradually they trickle down focusing

on the middle class to penetrate the market. Also KFC follows one price strategy. Price is

determined according to the rates of the raw materials and policies of the Govt. The political

and legal forces often affect the policies of KFC and eventually results in change of prices

that is due to imposing of taxes.

PLACE:

Distribution Channel:

KFC has only one channel of distribution i.e. direct where the goods are transferred to the

consumer directly. KFC has no middlemen.

Distribution of Consumer Goods and Services:

KFC does distribution of consumer goods directly to the consumer. It also does distribution

of services to the consumer like parking, sitting, home delivery, etc. KFC does intensive

distribution on its outlets. (All and everything on every outlet).

KFC gets Wheels!

KFC launched its first mobile unit, which took the streets of Karachi by storm. The mobile

unit has been designed to cater to the needs of those who are on the go, and have little time to

stop by at a restaurant. It also provides a unique convenience of enjoying the delicious KFC


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offering anytime, anywhere, thus making fast food truly fast and convenient.

It intends to further develop its mobile network nationwide through more such units.

PROMOTION:

The logo features Colonel Harland Sanders that is one of the best logo in the world has

created its name as a standard in the market. Today the Colonels Spirit and heritage are

reflected in KFCs brand identity.

KFC by its advertisements derives the desire in the customer to come and enjoy healthy food

in their favorite restaurant. They spend 2% of its profits on advertisement. They use print

media and most recently doing televised marketing to promote it products. Their advertising

media involve: Newspapers, Pamphlets, Billboards and Television. KFC does both the

primary demand advertising (Become a Chicken Fanatic) and the selective demand

advertising (e.g. Zinger Meal). In its advertising it give informative messages like Keep

the city Clean. KFC does institutional advertising to stimulate demand. When KFC offers

new products then it does product advertising. KFCs ads act as counteracts which means to

drive the customer to KFC i.e. it uses pull advertising strategy. They also provide wit the key

chains, watches, bags, tee-shirts etc. to its customers with the purchase of different meals as a

part of their promotional activities. They also provide with certain midnight packages,

birthday packages and lot more.

KFC has put big hoardings on the busy areas of Pakistan and have an effective advertisement

campaign on the media in order to motivate its customers. The colors used in advertising are

Red, White and blue which itself is recognition for the brand.

KFC have joint sale promotions with different companies like HP, Philips, Value Meals,

Pepsi-Cola. And most recently with ARY Gold digital and World Call Internet services. Also

KFC Proud Partners are Del Monte, Culligan, Shan and Peek Freans (EBM).

PSO had made a scheme in which PSO had given the coupons of KFC having 10% off. (1

coupon was given after each purchase of 10 liters of petrol)

KFC in its advertisements says;

Nobody does chicken like KFC

We do chicken right

Hence, focuses on product advertising. KFC does mass selling in order to reach its target

market (as it has trickle down). KFC in its ads try to convert people to people who eat boring


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bland fast food over to KFC.

The message conveyed in the ads is recognition for the brand. KFC does competitive

advertisement with its head on competition with McDonalds. Regarding this KFC uses

Pricing below competition strategy.

KFC sponsors many NGOs and other social welfare organizations. They also offer different

deals according to the season and occasions.

KFC as a market leader:

It has covered 80% of the market share in fast food industry KFC has recognition around the

world and has been globally positioned for many years in Pakistan and to capture the market

share in Pakistan adopts champs philosophy.

Strategic Planning is the process of developing and maintaining a strategic fit between the

organizational goals, capabilities and its changing marketing opportunities and is done by

KFC in a well defined manner.

Strategic planning sets the stage for the rest of the planning in the firm. KFC is looking that

how much its current strategies are beneficial for them. Although these are good and

profitable but dynamic changes in environment are requiring identifying the attractive

opportunities.

That is the reason that they are expanding there market size by focusing on sub urban areas

and targeting middle class people by providing them differentiated products at a fair price.

They are opening their new mobile outlets in there potent ional markets. KFC is also going to

increase its sweet dishes to avail the opportunity available for them.

KFC in a Growing Market:

The market of KFC is increasing day by day. Being a food market it is always considered in a

growing market because it increases continually with the population. Their growth is

continuously increasing and if they want to be a leader, they has to develop a strategy which

is predominantly a market expansion strategy and in this way they will not loose their

leadership. It has greatly increased their market share in Pakistan by following different

strategies that may be regarding their products, prices, placement or promotions. They have

been following the strategies for market expansion by targeting the new users of the product,

describing the new uses of the product and by showing them more usage of the product.

Describing the New Uses:

In this method, the new uses of the product are being described. As the motto of KFC says

we do chicken right, here they claims that they are the best in using the chicken correctly. In


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the early days the chicken was simply used in a simple way for cooking, but KFC has

introduced it in a number of ways and described it to the people by launching it as a meal as

well as in the snacks form. They prove them with the best cooked chicken with a great taste.

Instead of the chicken pieces, they also serve chicken nuggets, burgers, hot shots, twisters etc.

many new innovative products are being introduced by KFC that is greatly helpful in

attracting the customers and increasing its market share.

More Usage:

In the advertisement of KFC mostly seen on the bill boards, they have shown in the new

scheme of zinger deal of Rs.290 + 10 and u get zinger + another chicken burger. And in

Ramadan, they launches the deal of Rs. 500 and it says that all you can eat, it gives the

unlimited zinger burgers and chicken pieces. In this way they have greatly increased their

usage of their products.

New Users:

The people who do not eat KFC should be attracted, that may be by attracting the non users

of the product, non users of the brand or the non believers. They are done in the following

ways.

Non users:

The people who do not eat the fast food, they should be attracted like KFC has been attracting

their customers by providing deals with Ufone. If the person is an Ufone user and he is not a

KFC customer, they simply receive a message on their hand set and they jus have to show it

on the KFC and counter and get a free meal. Its a strategy to attract the non users. In a

similar way, distributing deal coupon on specific purchases, in shopping malls may also be

very effective.

Non Users of the Brand:

The non users of KFC can be attracted by describing them the quality features of the product

that they think of trying the product once. In this case promotional activities play an

important role. If the promotions are done in an effective manner, people would definitely try

the product and also lowering the prices may be very effective that people may switch from

other brands to KFC.

Non Believers:

KFC is quite successful in attracting the non users of the product and the brand as well, so it

is not really necessary to hit the non believers. This is because they are the most difficult

people as it is very hard to break their social, religious and cultural believes.


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SWOT ANALYSIS:

The swot analysis includes the strengths, weaknesses, opportunities and threats faced by KFC

in Pakistan. These all are described in detail as under:

Strengths:

It is the oldest and finest in Business having a high Goodwill. It does not have any Core

competitor in chicken serving. They have a large Number of Outlets at prime locations in

Pakistan. They serves variety of items under single menu. They are successful in maintaining

their loyal customers. It has an incentive of being a Multinational Organization e.g.

economies of scale, government incentives etc.

Weaknesses:

Its major weakness id the presence of Multinational competitors in the market e.g.

McDonalds(specialized not in chicken serving but in burgers) and the other weakness faced

by KFC is the imported raw material which usually rise their prime cost.

Opportunities:

The opportunities are the cheap and easy availability of labor. The increase consumption of

fast food has increased the market size of KFC. As the consumer usually prefer All under

one roof, therefore, in order to increase their sales turnover they can increase or add the

served items.

Threats:

The threats faced by KFC are the entrance of many new competitors into the market that may

be local or international brands. And being in Pakistan, there is high political

instability/uncertainty involved.

PEST ANALYSIS:

The Pest Analysis includes the political, economical, socio-culture and technological factors.

These are described in detail as under:

Political Factors:

The political factors includes the government policies as KFC being a foreign company, but

they have to obey the policies of the Government laid by the government of Pakistan, the


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country where the business activities are being carried out. KFC has handled this situation

very tactfully and has obeyed the policies of the Government as prescribe by the government

in order to run this kind of business. The other major factor is the pricing policies. KFC

maintain & design its price policies keeping in view the income & income distribution of the

people living in the country. Thats why all the classes are the target market of KFC. And the

most important factor is the political instability. As in Pakistan, there are political crises faced

by the government, these greatly affect the business of KFC.

Economical Factors:

The economic factors includes the income of the people, KFC is going to target. Income is an

important economical factor of the KFC. This factor decides which class KFC is going to

target. In the early time of KFC, they were focusing on the upper class but they after some

time changed their strategies and started to target the mass market by introducing some

different kinds of meals and offers through which we can say that they target the middle &

the upper level as well. The consumption behavior of the people plays an important role.

KFC also estimated the consumption behavior of the people, their liking and disliking and

make decision accordingly. Payment method is an important factor in the economical factor

of the KFC. They check the behavior of the regarding the payment methods of the people.

They check whether the gives money in the form of cash or plastic money.

Socio-culture Factors:

The Social/Cultural Factors includes the Social Class, as it is discussed earlier that KFC

target all the class including the upper class, upper middle and lower middle class etc.

Although the culture of KFC from where they come is entirely different but they have

adopted the Pakistani culture as they had to serve the people living in Pakistan having

entirely different culture from other areas. And it has not only adopted the Pakistani culture

but also the Religion as well. They offer Halal foods to the customers, which is the symbol

that they adopted the Muslim religion strategies as they had to serve in the Muslim country,

to the Muslim customers.

Technological Factors:

The technological factors include the Pace of change at a fast level.

Pace of change mean rate of change. KFC has strategy to introduce new technology

whenever they think that it is a time to introduce new technology. Research & Development


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is also an important factor in the Technological factor. KFC always support the work of

research & development in order to introduce the new technology. Capital formation means

stock of machinery. KFC has a stock of machinery in order to run its business activities. In

other words KFC has a good amount of Capital Formation.

Recommendations:

KFC is a market leader in providing Fried chicken. As KFC, so it is competing with the

prominent market signs like pizza hut, McDonalds. N its product category, it is doing really

well but they need improvements in their hot menu. They should also make their menu

dynamic, by introducing new meals after certain period of time. New items should be

introduced by varying the taste. They should also try the local desi taste addressing the desi

food lovers, thus it will help to increase their market share.

The prices of KFC are reasonable as compared with other fast food restaurants. But as price

is always a primary concern for the customer, therefore, they should adopt certain strategy to

attract the customers. And it can only be done by lowering the prices. It could be by

introducing some discount packages for families, employees, students or regular customers.

The membership card can be used to provide certain extra value to the customer.

AS far as placement of the products is concerned, it is an important factor, for a company to

increase its market share, by targeting the right customer. KFC needs to have more outlets, at

commercial areas. It will help to target the actual as well as the potential customers. Mobile

outlets may be an effective addition as well.

KFC has large customer equity, but being a market symbol, a company should strive for

having more actual customers. KFC should work for having more solid marketing

departments. They should organize and run the proper advertisement campaign. It would

definitely be an incremental factor for their sales. They can also use the brand promotions.

They can set up the promotional campaigns. All they need is an effective marketing

department to facilitate t he promotional activities.

Conclusion:

KFC is a very strong chain of fast food restaurants with more than 10,000 restaurants all over

the world. KFC is providing employment to 1200 Pakistanis an around 6000 Pakistanis


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dependent on KFC. They are paying Rs. 10 million to government of Pakistan as direct taxes.

95% of its food and packaging material used in KFC produced in Pakistan locally which

sums up to the purchase of 35 million per month. Each new outlet developed by KFC in

Pakistan spends 40 million rupees, thats a massive amount for this industry.

From all of the above detailed discussion about KFC in Pakistan, it is really clear that KFC

and Pakistan are growing together. KFC is doing well in Pakistan and keeps following its

marketing strategies as a market leader and segmenting the market into different variables

and increasing their market share. KFC is leading in Fried Chicken. It gives quality, variety

and fresh meals as of its competitors.

SUBMITTED TO: SUBMITTED BY:

MRS. SHELLY TANYA SHARMA

B.B.A. L.L.B.

V TRIMESTER.

PROJECT OF

INTERNATIONAL BUSINESS


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DECLARATION

I, TANYA SHARMA pursuing BBA LLB (honors) (5th trimester) at Institute of

Technology and Management i.e. ITM University School of Law hereby declare that I

have completed my project on KENTUCKY FRIED CHICKHEN (KFC) in the

academic year of 2011-2012. The information submitted is true and in the best of my

knowledge.

SUBMITTED TO: SUBMITTED BY:

MRS. SHELLY TANYA SHARMA

B.B.A. L.L.B.

5THTRIMESTER.

ACKNOWLEDGMENT

This project report could not have been prepared, without the help and encouragement from

various people. Hence, for the same reason I would like to thank my guide, mentor and of

course my professor Mrs Shelly . It was from her support that I got proper guidelines for

preparing this project. There are many other people I would like to thank on the same line

without which this project would have been nonsense over stilts and the ones who made my

project and the product work for me. All these information is collected from various sites

including the companys site. Which is being the most helpful area from which I have


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gathered the information and completed this project. I thank all for making my project good

enough.

INTRODUCTION

KFC India

KFC is the worlds No.1 Chicken QSR and has industry leading stature across many

countries like UK, Australia, South Africa, China,USA, Malaysia and many more. KFC is the

largest brand of Yum Restaurants, a company that owns other leading brands like Pizza Hut,

Taco Bell, A&W and Long John Silver. Renowned worldwide for its finger licking good

food, KFC offers its signature products in India too! KFC has introduced many offerings for

its growing customer base in India while staying rooted in the taste legacy of Colonel

Harland Sanders secret recipe. Its signature dishes include the crispy outside, juicy inside

Hot and Crispy Chicken, flavorful and 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 has great tasting vegetarian offerings that

include the Veg Zinger and Veggie Snacker . In India, KFC is growing rapidly and today has

presence in 21 cities with close to 107 restaurants.


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HISTORY AND BACKGROUND

KFC History

Way back in 1930s Colonel Harland Sanders got some distinguished Kentucky folks lickin

their fingers. Its been in fashion since then!

Colonel Harland Sanders, founder of the original Kentucky Fried Chicken, was born on

September 9, 1890.When he was six, his father died and his mother was forced to go to work

while young Sanders took care of his three year old sibling. This meant he had to do much of

the family cooking. By the time he was seven, Harland Sanders was a master of a range of

regional dishes.

After a series of jobs, in the mid 1930s at the age of forty, Colonel Sanders bought a service

station, motel and cafe at Corbin, a town in Kentucky about 25 miles from the Tennessee

border. It is here that Sanders began experimenting with different seasonings to flavor his

chicken which travelers loved and for which he soon became famous.

During the next nine years he developed his secret recipe of 11 herbs and spices and the basic

cooking technique which is still used today. Sander's fame grew. He sold his chicken on the

highway! But when the highway was removed, he sold up and traveled the United States by

car, cooking chicken for restaurant owners and their employees. If the reaction was favorable

Sanders entered into a handshake agreement on a deal which stipulated a payment to him of a

nickel for each chicken the restaurant sold.

By 1964, from that humble beginning, Colonel Harland Sanders had 600 franchise outlets for

his chicken across the United States and Canada. Later that year, Colonel Sanders sold his

interest in the United States operations for $2 million. The 65-year-old gentleman had started

a worldwide empire using his $105 social security cheque. Sadly, Colonel Harland Sanders

passed away on December 16th, 1980 aged 90.

His legacy lives on with KFC restaurants all over the world. KFC now stretches worldwide

with more than 13,000 restaurants in more than 80 countries and territories around the world

serving up the Colonels Original Recipe. It is a $13 billion brand based out of Kentucky and

is the leading QSR around the world which is based in Louisville, Kentucky. Yum! Brands

own 5 brands, out of which KFC is the largest brand within the Yum! Portfolio, founded by

Colonel Harland Sanders in the year 1938.


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PROBLEMS FACED IN GLOBAL WORLD

In the latest salvo against fast-food chains, KFC is being sued for frying its chicken in

cooking oils that contain trans fats, which can contribute to heart disease and diabetes. Here's

the skinny on the fat fight:

Why doesn't KFC use a healthier oil? Like most fast-food chains, KFC cooks with partially

hydrogenated vegetable oil, which doesn't turn rancid as quickly as healthier,

nonhydrogenated oils. "Extra crispy" chicken may also taste better when fried in this oil.

"The flavor is crunchier, and you don't get that feeling of fat coating your mouth," says Ted

Labuza, a food scientist at the University of Minnesota. But the oil does have dangerous

trans-fatty acids.

What's so bad about trans fat? It raises one's bad cholesterol, which boosts the risk of

coronary disease. A federal dietary panel has recommended that people consume no more

than 2 g per day.

Is KFC's food really that unhealthy? The company says its products "meet or exceed all

government regulations." But as the Center for Science in the Public Interest, the activist

group behind the lawsuit, points out, a three-piece extra-crispy combo meal contains as muchas 15 g of trans fat--more than a person should ingest in a week.

What are other chains doing? Wendy's plans to eliminate trans fats from its food; the

Cheesecake Factory is doing so already. McDonald's backpedaled on a promise to cut trans

fats and says it's studying alternative oils, as is Burger King.


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PROBLEMS FACED BY KFC IN INDIA

The case highlights the ethical issues involved in Kentucky Fried Chicken's (KFC)

business operations in India. KFC entered India in 1995 and has been in midst of

controversies since then. The regulatory authorities found that KFC's chickens did not

adhere to the Prevention of Food Adulteration Act, 1954. Chickens contained nearly

three times more monosodium glutamate (popularly known as MSG, a flavor enhancing

ingredient) as allowed by the Act. Since the late 1990s, KFC faced severe protests by

People for Ethical Treatment of Animals (PETA), an animal rights protection

organization. PETA accused KFC of cruelty towards chickens and released a video

tape showing the ill-treatment of birds in KFC's poultry farms. However, undeterred by

the protests by PETA and other animal rights organizations, KFC planned a

massive expansion program in India


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RE-ENTRY OF KFC INTO INDIAN MARKET

A case in point is KFC. KFC entered India in 1995, but a controversy surrounding the

levels of MSG in its preparations and subsequent protests from farmers' groups and

animal rights activists spelt trouble for the company. Ultimately, the company had to

shut all but one outlet in the country. Only recently in 2003 it made a quiet re-entry

into the Indian market. Then came up with the strategies and menu that is desirable bythe Indian consumers. And since 2003 it is expanding successfully its business in India.

Mission statement

To be the leader in western style quick service restaurants through friendly service, good

qualit food and clean atmosphere

Goals of KFC

Build an organization dedicated to excellence.

Consistently deliver superior quality and value in our products and services. Maintain acommitment to innovation for continuous improvement and grow, striving always to be the


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leader in the market place changes. Generate consistently superior financial returns and

benefits our owner and employees. To establish in India our position as leading WQSR

(Western Quick Service Restaurant) chain, serving good value. Innovative chicken-based

products. Consistently, providing a pleasant dining experience, with fast friendly, in a clean

and convinient locations. All the times we must dedicated to providing excellent anddelighting customers.

OUTCOME OF CASE STUDY OF KFC IN RESPECT OF SRC

(SELF REFERENCE CRITERION)

KFC has not understood the significance of cultural, economic, regulatory and

ecological issues while establishing business in a country like india

.

KFC has not Appreciated the need for protecting animal rights in developed and

developing countries like India.

They have not understood the importance of ethics in doing business.

They have not examine the reasons for protests of PETA.


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The case highlights the ethical issues involved in Kentucky Fried Chicken's (KFC)

business operations in India. KFC entered India in 1995 and has been in midst of

controversies since then. The regulatory authorities found that KFC's chickens did not

adhere to the Prevention of Food Adulteration Act, 1954. Chickens contained nearly

three times more monosodium glutamate (popularly known as MSG, a flavor enhancingingredient) as allowed by the Act. Since the late 1990s, KFC faced severe protests by

People for Ethical Treatment of Animals (PETA), an animal rights protection

organization. PETA accused KFC of cruelty towards chickens and released a video

tape showing the ill-treatment of birds in KFC's poultry farms.


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STRENGHTS OF KFC

Strengths can be found internally in a company and can be used to the companys advantage.

The strengths identified are as follows:

1. KFC's 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 McDonald's, whichopened its first store a year later, and the "secret recipe" was the initial home replacement

strategy.

2. Name recognition and reputation.

KFC's early entrance into the fast-food industry in 1954 allowed KFC to develop strong

brand name recognition and a strong foothold in the industry. The Colonel is KFC's originalowner and a very recognizable figure, both in the U.S. and internationally, in their new logo.

In fact, in the fourth annual LogoValue Survey, done by The Schecter Group, the KFC logo

was the only one which significantly enhance the brand's image (Logos add1).

3. PepsiCo's success with the management of fast food chains. PepsiCo acquired Pizza Hut in

1977, and Taco Bell in 1978. PepsiCo used many of the same promotional strategies that it

has used to market soft drinks and snack food. By the time PepsiCo bought KFC in 1986, the

company already dominated two of the four largest and fastest-growing segments of the fast

food industry (Wright, p.424-426).

4. Traditional employee loyalty:

"KFC's 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 good

benefits, a pension, and could receive help with other non-income needs. This kind of"personal" human resources management makes for a loyal workforce (Wright, p.434).


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PepsiCo bought KFC in 1986. By the summer of 1990 PepsiCo's own management had

replaced all of the top KFC managers. However, by 1995 most of this new PepsiCo

management had either left the company or been moved to a different division. In addition,

Kyle Craig, who was named president of KFC's US operations in 1990, left in 1994 to join

Boston Market.

5. Recent contractual disputes with franchisees in the United States.

This is also an example of the conflicting cultures of KFC and PepsiCo. KFC's franchisees

had been used to little interference from corporate offices. In 1989, the CEO announced new

contract changes - the first in thirteen years. "The new contract gave PepsiCo management

greater power to take over weak franchises, to relocate restaurants, and to make changes in

existing restaurants" (Wright, p.434). The franchisees protested these changes and the

relationship between the corporate KFC and the franchisees in the United States have beenstrained ever since this announcement.

OPPORTUNITIES TO KFC

New Markets: Globalisation has opened doors for new markets for the company. Asthe developed markets are mostly saturated, the developing countries like India andChina promises a good market and generation of demand in the future. With morethan 70% of the markets in india being unexplored and un organised, KFC has a good

scope of expanding its operations in the country. Cross Culture: Generally there is a good acceptance of American culture of fast food

in India. People are opening up to fast foods more regularly in their daily lives and notjust keeping it a once in a month affair. Thus Indian mindset is fast changing.

Large Youth population: India has a very large share of youth population a comparedto other countries. More than 60% of the population is under the age of 30yrs. As theyoung generation are more open to fast foods and demand it more, this is a good newsfor the company.

New variety: Company can also come up with new variety in the menu likePizzas,garlic breads to attract more customers.

THREATS TO KFC

Competition: Competitor companies like McDonalds are fast catching up with themarket. McDonalds with sales of more than 19 billion in 1999, accounted for 15

percent of the sales of the nations top 100 restaurant chains. Organizations like PETA People for Ethnic Treatment for Animals have given a bad

name to the company which may prove disastrous to the image of the firm. Currently,KFC is under massive attacks from animal organizations, questioning the way KFCs


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suppliers are threatening the chicken, before they got slaughtered. Anti-KFCcampaigns, such as the one from PETA are affecting KFCs brand image in a negativeway and result in direct dollar losses, as less people are consuming KFC chicken.

Saturated US Market: Now KFC cannot rely on just its home market to generatesales. As the US markets are already saturated and leave no or little scope for growth,

company necessarily needs to look at offshore foreign markets to generate sales andkeep up the profits.

PROBLEMS

Through an analysis of the strengths, weaknesses, opportunities, and threats of KFC, the

following 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

appear to have a consistent long-term approach. The U.S. has enormous changes in itsdemographics. Single-person households have increased from 12% in 1970 to 25% in 1995.

With this kind of dramatic change, KFC does not have a proper approach to its target market.

2. Saturation of the U.S. Market.

There has been an increase in the overall number of fast-food chains. Access to restaurants is

now easier due to non-traditional locations, for example in airports and gas stations. Also, the

age of Americans tends to change the frequency of eating out.

3. Health Conscious Consumers.

There has been a trend toward an increasingly healthy diet in America. This put KFC at an

extreme disadvantage due to its fried product offering.

4. Increased Start Up Costs.


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Prime locations have increased in cost due to limited room for expansion. New technology

has increased efficiencies, but resulted in greater increased start up costs. Restaurant and

equipment packages range from $500,000 to $1,000,000.

ENVIRONMENTAL FACTORS AND OPPORTUNITIES

Political

The operations of KFC are affected by the government policies on the regulations of fast food

operation. Currently government are controlling the marketing of fast food restaurant because


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of health concern such as cardiovascular and cholesterol issue and obesity among the young

and children in the country. Governments also control the license given for open the fast food

restaurant and other business regulation need to follow such as for a franchise business. Good

relationship with government in giving mutual benefits such as employment and tax is a must

for the company to succeed in any foreign market.

Economic

Though for last 1 year their was economic slowdown all across the globe but the sales of

KFC and other fast food chains did not slow down to that extent that of other sectors in. The

GDP (Purchasing Power Parity) is estimated at 2.965 trillion U.S. dollars in the year 2010.

The GDP- per Capita (PPP) was 2700 U.S. dollars as estimated in 2008. The GDP- real

growth rate in 2007 was 8.7%. India has the third highest GDP in terms of purchasing power

parity just ahead Japan and behind U.S. and China. Foreign direct investment rose in the

fiscal year ended March 31 2007 to about $16 billion from just $5.5 billion a year earlier.

There is a continuous growth in per capita income; Indias per capita income is expected to

reach 1000 dollars by the end of 2007-08 from 797 dollars in 2006-07. This will lead to

higher buying power in the Hands of the Indian consumers. So taking into considerations the

economic factors of India KFC is safe. The only danger to it will be if there is a terrorist

attack in India and the victim is KFC

Socio Cultural

India is the second most populous nation in the world with an approximate population of over

1.1billion people. This population is divided in the following age structure: 0-14 years 31.8%, 15-64 years 63.1% and 65 years and above 5.1%. There has also been a

continuous increase in the consumption of fast food in India. The social trend toward fast

good consumption is changing and India has seen an increase of 90% fast food consumption

from the year 2002- 2007. This increase is far greater than the increase in the BRIC nations of

Brazil (20 per cent), Russia (50 per cent) and China (almost 60 per cent) Thus this shows a

positive trend for fast food industries in India.


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Technological

The Indian fast food Industry is heating up with a lot of foreign players entering the Indian

market. The technological knowhow and expertise will also enter the Indian market with anincrease in competition. With the lower rates and increase technology the fast food counters

are attracting youth by giving them attractive deals. For e.g. KFC and Dominos pizza. For a

fast food restaurant, technology does not give a very high impact on the company and it is not

a significant macro environment variables. However KFC should be looking to competitors

innovation and improve itself in term of integrating technology in managing its operation. For

example in inventory system, supply chain management system to manage its supply, easy

payment and ordering systems for its customers and wireless internet technology.

Implementation of technology can make the management more effective and cost saving in

the long term. This will also make customer happy if cost savings results in price reduction or

promotional campaign discount which will benefits them from time to time.

Environmental

As one of world largest consumer of beef, potatoes and chicken, KFC always had been critics

for world environmentalist. This is because high consumption of beef causing the green

house effect by methane gasses coming from the cows ranch. Large-scale plantation has

effect the environment and lost of green forest opening for plantation activities. Vegetarian

environmentalist criticizes the fast-food giant for cruelty to animals and slaughtering. In

America, once KFC want to introduce whale burger causing uproar because whales are

endangered species. Before using paper packaging, KFC once had been criticized for being

insensitive to pollution because of using ne based packaging for its food products. Imagine

millions of people purchase from fast food operator and how is the impact to world

environment by throwing away those hard to recycle packaging.

Our world is getting concern on environment issue and business operating here should not

just care for profit, but careful usage of world resources for sustainable development and care

for environment safety and health for our future generation. Critics and concern from all

public or activist should be review and support if necessary to ensure we play our social

responsibility better.

Legal factors


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As a certified fast food operator, there are many regulations and procedures that KFC should

follow. For example is the Halal certification that becomes a concern to Muslim consumers.

KFC should protect its integrity and consumer confidence by ensuring all materials and

process are as claimed or must followed. Other legal requirement that the business owner

should follow as stipulated in laws are such as operating hours, business registration, tax

requirement, labor and employment laws and quality & environment certification (such as

ISO) in which the outlet has been certified. The legal requirement is important because the

offenders will be fined or have their business prohibited from operating which can be

disastrous.

Documents

Marketing Strategy of KFC Corporation