Services Review | KFC India

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Services Marketing Group Assignment

Sector: Food & Beverages (Quick Service Restaurants)

Company: KFC, India Operations

Section B | Group 5

Lagan Mongia (116)

Naina Agarwal (121)

Sahil Avi Kapoor (136)

Shilpi Srivastav (141)

Shreya Chowdhury (144)

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1. Find information about the industry as a whole (no of players; billings;

contribution to GDP; market size; Key trends; market leader/s; key stakeholders

(customers, bankers, endorsers)

INDUSTRY INFORMATION

Headlines

14% value growth in 2013 for the Indian Fast Food Industry

5% growth in the number of outlets in 2013; Total number reaching 83,173

Multinationals expand the indigenous, Made for India menu offerings

Latin American fast food records the highest growth in 2013, followed by chicken

based fast food

McDonalds remains the Number 1 brand for fast food in India with a 2% value share

overall and a 29.7% share in chained fast food

Expected CAGR of 2%, to reach Rs. 1001.4 Billion in 2018

Trends

Multinational chains such as McDonalds and KFC continue to add increasing number

of Indianized offerings in their menu. Example; McDonalds recently launched the

Masala Grill as well as a range of kebab inspired grilled food items. In fact 70% of the

menu at McDonalds is said to be tweaked to Indian tastes and preferences

Latin American fast food lead by recently launched Taco Bell, recorded 50% current

value growth. This was followed by chicken fast food, mainly driven by KFC,

recorded 36% growth. KFC opened 76 outlets in 2013

Bakery fast food lead by Subway is connecting well with Indian consumers, mainly

driven by the health conscious. Other bakery brands such as Dunkin Donuts also

increased its footprint in India

Ice cream fast food increased phenomenally in popularity. Several high end brands

such as Haagen Dazs and Magnum entered the country. Category leader of ice cream

fast food, Baskin Robins also increased footprint with 100 new outlets, taking its total

count to 630.

Frozen yoghurt is slowly gaining pocket share in the Indian consumers. Main players

in the business include Pinkberry, Red Mango, KiwiKiss, Yoghurt Hub and

Cocoberry.

Competitive Landscape

Fast food is a highly fragmented market in India and McDonalds with a miniscule 2%

value share is the market leader, followed by KFC and Subway.

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Among the Top 8 brands KFC recorded the highest growth in 2013. The brand has

been exceptional with its innovations such as the Tough Guy burger and the Rockin

Burgers.

Franchising remains the most popular business strategy in the industry. New players

include Burger King, which has come in with a franchisee agreement with Everstone.

Companies are mostly looking to launch products in the value for money segment.

KFC was a leader among new launches, offering a hot chicken meal at Rs. 25.

Subway which has initially struggled due to its high cost and pricing, introduced the

toasties.

Chained Fast Food Company Shares (% Sales Value): 2010 13

Chained Fast Food Brand Shares (% Sales Value): 2010 13

0

5

10

15

20

25

30

35

40

McDonaldsCorp.

Yum BrandsInc.

Doctor'sAssociates Inc.

Nirulas CornerHouse Ltd

Dunkin BrandsInc.

Unilever Group KamathsOurtimes Ice

Cream

2011 2012 2013

0

5

10

15

20

25

30

35

40

McDonalds KFC Subway Nirula's BaskinRobbins

Swirl's Natural Marrybrown

2011 2012 2013

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Forecasted Sales Growth in Fast Food (By Category): 2013 - 2018

A1. Identify 7Ps for the chosen company and how it compares across

competitors, elaborate on how challenging it is for the company to formulate the 7Ps

given the extent of its intangibility, inseparability, variability and heterogeneity.

7 PS COMPETITIVE ANALYSES

Criteria KFC McDonalds Subway

PRODUCT

Physical good

features

Fried Chicken Burgers Healthy Submarine

sandwiches

Quality level High High High

Accessories - Happy Meal toys -

Packaging Big buckets,

Reusable trays, paper

packaging


packaging


packaging

Product line pressure-fried pieces

of chicken made with

the original recipe

Essentially Burgers Submarine

sandwiches, Salads

Branding Kentucky Fries

Chicken Old original

recipe

Quick Service, happy

Price Menu, Ronald

Mc Donald

Health Low carry Fat

food

-5

0

5

10

15

20

Asian Burger Chicken Ice Cream Latin American Middle Eastern

Forecasted % CAGR

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Criteria KFC McDonalds Subway

PLACE

Outlet Location Multiple outlet in

cities across India

essentially metros

and tier 2 cities

Multiple outlet in

cities across India

essentially metros

and tier 2 cities

Multiple outlet in

cities across India

essentially metros

and tier 2 cities

Channel 1st level Channel 1st level Channel 1st level Channel

Accessibility High High High

PROMOTION

Advertising OOH, in store, TV,

print

OOH, in store , TV,

print

OOH, in store, TV,

print

PRICE

Flexibility High, Combo Deal,

special offers

High, Combo Deal,

special offers

High, Combo Deal,

special offers

Price Strategy Cost Based Cost Based Cost Based

Price Level Low- Medium Low- Medium Medium

PEOPLE

Employee Training

Incentive based

targets

Recognition for good

work

Performance based

bonus

Employee benefits to

keep them motivated

Training

Incentive based

targets

Training

Incentive based

targets

Customer Upper and Middle

class

All income classes,

targeted towards

youth

Upper and Middle

class

PHYSICAL EVIDENCE

Signage Name , logo, tag line Name , logo ,tag line Name , logo ,tag line

Employee Dress Uniform with name

tags

Uniform with name

tags

Uniform with name

tags

PROCESS

Flow of activity Order, Preparation,

self service

Order, Preparation,

self service

Order, Preparation,

self service

Level of customer

Involvement

Low Low High

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CHALLENGES IN FORMULATING THE 7 Ps

Intangibility

Service cannot be inventoried, as the peaks and lows of order are unpredictable

Not a purely an intangible industry as the final product is tangible

Heterogeneous

Expected Service quality can differ from actual service quality as it depends on many

uncontrollable factors , could vary from outlet to outlet , this includes interaction with

staff and food preparation

Service delivered may not match what has been promoted via external

communications

Inseparability

KFC is highly decentralized as the service has to be delivered directly to the

customer,

Because of which economies of scale due to decentralization doesnt occur.

Employee effects the services final outcome

Variability

Service given to the customers will vary as the quality, training and ability might

differ.

Customer expectation varies which makes it difficult to give them the optimum level

of service as per their individual needs.

A2. Identify the customer segments and how the service is accordingly differentiated

to the benefit of the company and customers

KFC has divided its market into four segments and has taken necessary measure to attract

four segment:

1. Children below 12 years of age: love to get free toys with their meal 2. Young adults between 12 to 25: love their Fried Chicken and burgers within their

budget 3. Families: have affordable mini Bucket Combos, place bulk orders 4. Budget Customers: prefer the A la carte, and real saver Menu

Pricing is done according to the segmentation, so the value perceived is as per the target

market. Service given is of high quality keeping time and efficiency in consideration for the

ease of the customer

Customers benefit from the quick service and take away options. Also, the standardize menu

helps KFC fill the gaps between customer expectation and companys perceived customer expectation. The company gets a lot of traffic because of the ease of ordering and use of

manpower is decreased because of the self service practice.

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A3. Identify the buying behavior of your customer segments. Chart out the

buying process of customers from Identification of need to consumption of service to

post

BUYING PROCESS

A4. How are customer expectations formed? How can your company control

customer expectations? Explain with relevant illustrations.

Customer expectations are formed mainly by the advertisements, communications sent out by

the company which forms expectations regarding the quality of food and level of service

promised and delivered by KFC India.

The other sources of expectations are:

Derived service expectation: It is driven primarily by word-of-mouth

recommendations and reviews given by family member, friends, etc. Also includes

open sources available on the internet, like forums, reviews, and blog posts.

Perceived service alternatives: It is based on the service and product quality

level provided by other market competitors which deliver comparable/similar

services. Example: McDonalds, Subway etc.

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The way KFC markets its range of product offerings, i.e. the advertising and positioning as

well as other integrated communication methods that involve customer interaction, can be

leveraged to reduce the gap between customer expectation and service offered. As a result,

the company can successfully control customer expectations.

Example: The print ad by KFC for its budgeted WOW Menu- where it shows youngsters

drooling over food which the people are eating inside KFC, but they cant have it since they

are out of money. Introduction of the new range starting at Rs.25 which is called the WOW

menu .The youngsters are then seen eating at KFC and saying WOW. It ends with them

saying SO Good.

This forms the expectation with the customer that they can get a high quality- low price KFC

food without any compromise in the taste and quality.

A5. Identify any situation where the company has achieved a service recovery or

has instituted a service recovery program successfully

KFC India has been frequently subjected to complaints and criticism, both online and offline.

KFC India being proactive on the digital platform has been quite successful in handling

consumer complaint and feedback. Being backed by a management that runs international

operations, KFC India has an efficient feedback system, quick action, systemized response

mechanism and zero tolerance policy towards service failure. According to a recent article in

India Today, the manager at KFC Bangalore was caught clicking pictures of a customer

without her permission. The offended customer seized the managers phone and complained

to the mall authorities who did not take any immediate action, post which she complained to

the KFC India Management, who initiated action against the accused manager. The company

spokesperson also issued a statement to the press where they expressed their views of

maintain a zero tolerance policy against any form of misbehaviour or harassment. They said

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that they had investigated the complaint and had taken a strong stand by firing the guilty

manager and made sure that this would set an example across all outlets and emphasize on

their stand against any form of harassment at the workplace.

A6. Identify the service around tangible product offerings of the chosen company if

applicable

KFC India primarily specializes in an array of chicken offerings, customized for the Indian

palate and serves in the food services sector. As a dominant player in the fast food industry,

they have carved a niche positing for themselves and they operate on the franchise model.

Their target audience is the youth, pre teens, families and the budget customer. The

management pays a lot of attention to the cleanliness quality, customer service aspect, food

quality and hygiene, delivery and logistics, and pest control management. With the rise of

quick service restaurants on demand, KFC is also facing stiff competition from McDonalds,

Subway, etc. As the fast food industry is highly competitive, quick and high quality service is

essential to maintain and increase market share.

A7. Identify the hard measures and soft measures that can help identify the

service performance at each stage of customer touch points.

HARD QUALITY MEASURES

KFC defines its quality measures to identify service performance using

The QSC (Quality, Service and Cleanliness) Evaluation

Operations Facility Review

The QSC Evaluation is a rigorous process that includes:

Service Quality

Total Service Time (Time Spent at the Customer Window during Order

Taking + Time Spent in Order Preparation + Time Spent in Order Delivery);

Total Service Time will vary for Take Away, In Restaurant Consumption and

Home Delivery

Attention, Energy, Warmth and Courteousness of Customer Service

Appearance and Professional Appeal of Staff Uniform and other related

Physical Attributes

Accuracy in Order Taking, Preparation and Delivery

Degree of Helpfulness and Assistance while Order Taking; Suggestive Selling

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Product Quality

Product Quality Measures are measured for products across categories - chicken

dishes (hot and saucy chicken, hot and crispy chicken, fiery grilled chicken, hot

wings, chicken strips, chicken popcorn); veg sides (veg strips); burgers; rice bowls;

twisters as well as all beverages.

Temperature of Food at the time of Order Delivery with respect to Standard

Temperature

Absence of any visible short or improper breeding of chicken

Colour, Aroma, Texture and Overall Appearance of delivered food

Food quantity delivered with respect to standard quantity measures

Proper shape, appearance and closing of food containers

Cleanliness

Cleanliness of windows and entrance/ exit doors

Clean and optimally equipped rest rooms

Clean and neat service desks and counters

Clean seating area for customers

Clean and well landscaped exteriors

The Operations Facility Review entails the following:

Product and Process Quality

Each product is evaluated using the following standard measures:

Quality and Freshness of ingredients used

Hygiene maintained in storage and handling of ingredients

Maintenance of consistent cooking procedures as regards to time, hygiene and

temperatures

Hold and waiting times for specific menu items

Facilities

Cleanliness, Neatness, Maintenance of interiors, exteriors and fixtures

Sanitation and Operations

Frequency and Process of cleaning seating areas, service desks, kitchen and

rest rooms

Maintenance and cleaning of equipment used

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Critical Areas of Concern

Presence of rodents or insects

Cross contamination between separate menu items

Sale of rejected and unapproved products

Employees suffering from communicable diseases

SOFT QUALITY MEASURES

Soft Quality Measures for KFC has been developed by Human Touch Consulting and

contains behavioural drivers of business, including customer retention, customer satisfaction,

hospitality, accuracy, service speed and sales volumes.

These measures are explained in detail as follows:

Welcoming and Greeting the Customers

Presence of Team Members in the designated Customer Service Counter

Eye Contact with respective customers

Operate with a friendly smile

Appropriate and warm greeting

Focused attention on the customer

Taking the Customer Order

Offer appropriate enhancements to the meal ordered

Confirm order with the customer

Usage of Please while asking for money and Thank You on receiving the

bill amount

Focused attention on the customer throughout Order Taking process

Completing the Order

Ask for customers name to add onto customer database

Add appropriate friendly comments

End the Order Taking invariably with a Thank You

Use customers name


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Order Delivery

Call out customers name on order completion

Repeat and confirm order

Offer condiments

End Order Delivery invariably with a Thank You


A8. Identify the pricing strategy for one of the product/service offerings in as much

detail as you can with suggestions and recommendations or why you think the

pricing strategy is the best strategy

PRICING STRATEGY

KFC is known to adopt various different types of pricing strategies to cater to different

customer segments at different points of time.

Like it has done around the world in the past, KFC initially adopted the Market Skimming

strategy in India as well.

1. Competitive Pricing

KFC prices its core differentiated products such as fiery grilled chicken and hot & crispy

chicken at a relative premium. At the same time its burgers, French fries and beverages that

compete with other fast food chains are priced at almost the same price points as its

competitors such as McDonalds.

2. Market Skimming

Across the globe, KFC is known to enter markets riding on the High Priced High Quality

tag. Their products, hugely differentiated from the other offerings in the fast food industry

neednt rely on price points to be their core USP. Thus, they target the middle to higher

segment of customers looking for good quality and superior taste. Gradually, as they mature

and build themselves a loyal customer base, KFC is known to trickle down the price to attract

customers from the middle and lower segments as well, and thus managing to penetrate the

entire market dimension.

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The new WOW menu starting at Rs. 35 is an example of KFC trickling down the prices

after having entered with a range of premium, relatively high priced products.

Apart from the aforementioned, KFC utilizes a range of other pricing strategies as well.

3. Optional Pricing

For customers who dont wish to order meals, KFC also offers ample choice of picking menu

items as per their own choice. Theres a wide gap between the lowest priced menu items

(Soft Serve for Rs. 20 and Potato Krisper for Rs. 35) and the highest priced item (8 pc.

Chicken for Rs. 559), thus offering ample options to the customer.

The chicken bucket can also be ordered in a wide range

of variety, such as 2 pcs, 4 pcs, 6 pcs and 8 pcs. Further

options are provided in the menu as add ons.

4. Mixed Bundling Pricing

KFC, just like others in the industry actively utilizes

mixed bundle pricing by selling a wide range of meal

options.

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KFC Specials, Lunch Meals, Rice Meals and Box Meals are examples of the mixed

bundle pricing as followed by KFC.

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A9. Identify use of new media by the company to promote and communicate

service/ product offerings to their respective TG. Do you think the company can attain

better marketing ROI by calibrating investment judiciously across online and offline ad

and marketing spend?

KFC India has been extensively utilizing the digital space and interactive new media tools to

promote its wide range of products. Apart from conventional digital campaigns which most

other brands also use, KFC has used Facebook-Integrated apps, Mobile apps as well as

microsite models to launch as well as promote a variety of new additions to its Indian menu.

It has resorted to aggressively focussing on the digital platform of communication for easy

access to its younger tech-savvy target audience. The high return-on-investment apart from

accurate targeting through social data mining and search engine optimization got KFC to

channelize its resources on social media.

Some examples of KFC Indias innovative usage of new media are:

1. KFC India WOW@25 Digital Campaign A campaign designed to break the myth

about KFC being an expensive brand and reach out to the younger customers who

have budget constraints while eating out. Included a very popular Augmented Reality

app with which a user could scan any currency note on the mobile app or microsite

and check which KFC WOW Menu delights they could purchase using that money .

The app got 35,000 downloads making it the No.1 app in the F&B section on the

AppStore while the site received 1.5 lac hits. Blink Digital, the agency whose

brainchild this campaign was, won the Peoples Voice award at the Webby Awards

2014 for this genius idea.

2. Radio KFC RJ Hunt An attempt to promote KFC along with KFCs inhouse

radio channel, this campaign got 3000 participants from around 30 Indian cities to

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record their voices using the FB app in mock analog radio experience and send in

their entries.

3. Currycature A creative campaign where users selected either male or female

caricature characters and made personalized quirky Indianized versions of them.

4. Krushers Komic An innovative campaign for creating comic strips on a FB app

which included user-integrated snapshots of themselves in a comic story

conceptualized, designed and scripted entirely by the users to spread the Krusher

motto of living in NOW.

5. Design Your Bucket Crowd-sourced designing of the trademark KFC bucket using

inbuilt tools available in the app, this challenge also cashed In on the retirement of

cricket legend Sachin Tendulkar accepting Sachin-themed customized buckets

6. Web Ordering The provision to place an order online, through the KFC site has

helped make KFC a part of the very busy lifestyles of its target customers.

The engagement levels on KFC Indias FB as well as Twitter pages are very high and

interactive maximising its potential to maintain customer interest, announcement of

schemes and discounts as well as promptly address complaints and grievances. But to

make better use of other upcoming new media avenues, they should also focus on

active engagement through their YouTube channel and Instagram portfolio.

The current marketing mix that KFC India has been using has worked well in terms of

ROI because these digital campaigns increased their engagement rate to 3 times the

industry average and put them amongst the top 5 fastest growing social media brands

in India. Hence, it should judiciously invest more in online advertising as opposed to

offline marketing (TVCs, print ads and OOH) to keep up with the changing digital

trends and catch the nerve of its TG to attain better marketing ROIs.

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A10. Identify key investments in the company which have helped improve

service quality. Elaborate each investment conceptually and with approximate

quantitative details wherever possible.

Following the economic liberalization policy in India in the 1990s, KFC seized the

opportunity to foray into the Indian markets thus, becoming the first fast food multinational

to enter the country. It targeted the upper middle class consumers and opened its first outlet in

the city of Bangalore after getting a permit to operate in 30 outlets across the country.

Despite initial opposition regarding non-conformity with Indian food regulations, protests by

PETA and the surrounding debate about procurement and preparation of its chicken offerings

as well as presenting a possible threat to indigenous brands, KFC invested a lot to make its

foothold strong in the Indian fast food market.

They invested heavily in R&D to come out with dishes that suited the Indian taste buds and

were spicy enough for the tandoori chicken loving population. They continue to do so,

launching Indianized offerings like Rice Bowls and Aloo-patty burgers. They even launched

a Paneer-based version of their flagship Zinger Burger to broaden the relevance of KFC and

attract different types of consumers. KFC, despite having strong chicken-based brand equity,

created a special vegetarian menu for the vast majority of Indians who are vegetarian. Also,

since vegetarians are largely averse to eating out in a restaurant that has fried chicken as its

specialty, they launched a recent campaign to ensure they had separate kitchens and

preparation equipments for the vegetarian as well as non-vegetarian products. The campaign

called So Veg, So Good put to rest any apprehensions their loyal customers might have had

regarding violation of their cultural sentiments.

Even though vegetarian items contribute only 10% to the overall revenue, this investment

plays a large role in the overall strategy of KFC India to establish itself in India and provide

best quality service to its customers.

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A11. Identify gap/s in the companys operations and marketing and suggest how your

company can overcome the same using Gaps model of service quality

GAP 1 The Listening Gap

Lack of human interaction Since Indians are more accustomed to the conventional

dining experiences, self service restaurants loose on the human and emotional

connection and convert the eating experience into a transaction. Brands like Starbucks

have tried to overcome this barrier by making their employees interact with the

customers. KFC could adopt a similar mechanism.

GAP 2 Service Design and Standards Gap

Limited delivery compass The outlets are not always systematically placed and

accessible. Care should be taken to strategically maximize reach.

Lack of resources There are times, when not ample staff is available on call to cater

to the customers or the service is very slow. Inter team coordination should be

efficient to avoid any delays.

GAP 3 The Service Performance Gap

Self service The self service concept, where customers have to place the order

themselves, stand in a queue, collect and dispose their order is not very popular with

the middle aged and elderly. KFC should try making the process more customer

friendly, by incorporating some on the queue orders during busy days.

GAP 4 The Communication Gap

Communication gap between customer and the manager during placement of order

There have been instances where the customers may not be able to clearly convey

their order to the KFC employees, who are already always crunched on time and are

not very cooperative. KFC should have ample outlets to manage the crowd at all

stores to avoid overcrowding.

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KFC - NICE TO KNOW

1. KFC was started in Corbin, Kentucky, in 1930 by Colonel Sanders, who was

actually a gas station manager, called Harland Sanders.

2. The first KFC outlet was opened outside a gas station and called Sanders Court &

Cafe.

3. The original secret recipe for KFC chicken was invented in 1940 and is kept in a safe

in Louisville, KY.

4. KFC is consumed by close to 8 million people daily in the US alone.

5. The first ever KFC chicken bucket was sold in 1952.

6. Starting 2007, KFC uses a different type of oil for frying the chicken to remove Trans

- Fat.

7. Yum! Brands Inc owns KFC India.

8. KFCs Rice Bowl is part of a customized Indian menu, launched specially to cater to

the Indian taste palette of rice and chicken curry as a combo.

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REFERENCES

Fast Food in India, Euromonitor International, 20 Oct, 2014

Apte and Reynolds (2001), Quality Management at Kentucky Fried Chicken; Retrieved from

http://www.sba.pdx.edu/faculty/melliep/339/QualityMgmtKFC.pdf

Human Touch Consulting Group (2008), RYG Customer Service Standard at KFC; Retrieved

from http://www.champscast.com/customer_standard.pdf

Zomato (9 Dec. 2014), KFC Noida Menu; Retrieved from

https://www.zomato.com/ncr/kfc-sector-18-noida/menu#tabtop

Bhaven Thakar (2012), KFC Marketing Mix; Retrieved from

http://www.slideshare.net/bhaventhakrar/19080033-

kentuckyfriedchickenkfcmarketingmixfourps-14341524

Marketing91, Marketing Mix of KFC; Retrieved from

http://www.marketing91.com/marketing-mix-kfc/

Blink Solutions, KFC India WOW@25 Digital Campaign; Retrieved from

http://blinksolution.com/projects/kfc-india-wow25-digital-campaign/

Blink Solutions, Augmented Reality KFC App; Retrieved from

http://blinksolution.com/projects/kfc-india-augmented-reality-facebook-app/

Social Samosa, How KFC India boosted its Social Media Presence; Retrieved from

http://www.socialsamosa.com/2014/02/social-media-case-study-kfc-digital-

presence-india/

Social Samosa, Social Media Strategy Review: KFC India; Retrieved from

http://www.socialsamosa.com/2014/05/social-media-strategy-review-kfc-india/

Binoy Prabhakar (The Economic Times, 2012), KFC increasingly putting vegetarian items on

India menu to cater to customers; Retrieved from

http://articles.economictimes.indiatimes.com/2012-09-09/news/33697731_1_kfc-

india-colonel-harland-sanders-vegetarian-food

Documents

Services Review | KFC India