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)

1|Section B; Group 5

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.

2|Section B; Group 5

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

40
35
30
25
20
15
10
5
0
McDonalds
Corp.

Yum Brands
Doctor's
Nirulas Corner Dunkin Brands Unilever Group Kamaths
Inc.
Associates Inc. House Ltd
Inc.
Ourtimes Ice
Cream
2011

2012

2013

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

40
35
30
25
20
15
10
5
0
McDonalds

KFC

Subway

Nirula's
2011

3|Section B; Group 5

Baskin
Robbins
2012

2013

Swirl's

Natural

Marrybrown

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

20

15

10

0
Asian

Burger

Chicken

Ice Cream

Latin American Middle Eastern

-5
Forecasted % CAGR

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
PRODUCT
Physical
features
Quality level
Accessories
Packaging

Product line

Branding

KFC

good Fried Chicken

McDonalds

Healthy Submarine
sandwiches
High
High
High
Happy Meal toys
Big
buckets, Reusable trays, paper Reusable trays, paper
Reusable trays, paper packaging
packaging
packaging
pressure-fried pieces Essentially Burgers
Submarine
of chicken made with
sandwiches, Salads
the original recipe
Kentucky
Fries Quick Service, happy Health Low carry Fat
Chicken Old original Price Menu, Ronald food
recipe
Mc Donald

4|Section B; Group 5

Burgers

Subway

Criteria
PLACE
Outlet Location

Channel
Accessibility
PROMOTION
Advertising

PRICE
Flexibility
Price Strategy
Price Level
PEOPLE
Employee

Customer

KFC

McDonalds

Subway

Multiple outlet in
cities across India
essentially
metros
and tier 2 cities
1st level Channel
High

Multiple outlet in
cities across India
essentially
metros
and tier 2 cities
1st level Channel
High

Multiple outlet in
cities across India
essentially
metros
and tier 2 cities
1st level Channel
High

OOH, in store, TV, OOH, in store , TV, OOH, in store, TV,

print
print
print

High, Combo Deal, High, Combo Deal, High, Combo Deal,

special offers
special offers
special offers
Cost Based
Cost Based
Cost Based
Low- Medium
Low- Medium
Medium

Training
Incentive
based
targets
Recognition for good
work
Performance based
bonus
Employee benefits to
keep them motivated
Upper and Middle
class

Training
Incentive
targets

Training
based Incentive
targets

based

All income classes, Upper and Middle

targeted
towards class
youth

PHYSICAL EVIDENCE
Name , logo, tag line Name , logo ,tag line Name , logo ,tag line
Signage
Uniform with name Uniform with name Uniform with name
Employee Dress
tags
tags
tags
PROCESS
Flow of activity

Order, Preparation, Order, Preparation, Order, Preparation,

self service
self service
self service
Low
High
Level of customer Low
Involvement
5|Section B; Group 5

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.
6|Section B; Group 5

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.
7|Section B; Group 5

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
8|Section B; Group 5

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

9|Section B; Group 5

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

Focused attention on the customer

11 | S e c t i o n B ; G r o u p 5

Order Delivery

Call out customers name on order completion

Repeat and confirm order

Offer condiments

End Order Delivery invariably with a Thank You

Focused attention on the customer

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.

12 | S e c t i o n B ; G r o u p 5

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.

13 | S e c t i o n B ; G r o u p 5

KFC Specials, Lunch Meals, Rice Meals and Box Meals are examples of the mixed
bundle pricing as followed by KFC.

14 | S e c t i o n B ; G r o u p 5

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

15 | S e c t i o n B ; G r o u p 5

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.

16 | S e c t i o n B ; G r o u p 5

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.

17 | S e c t i o n B ; G r o u p 5

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/19080033kentuckyfriedchickenkfcmarketingmixfourps-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-digitalpresence-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_kfcindia-colonel-harland-sanders-vegetarian-food

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