APO Group 2, Section F

PGDM Marketing 2022-24

IMT Ghaziabad

Group Members:
Sarthak Khosla
Tanishk Gangrade
Vishesh Mehra
Sakshi Anand
Saket Khandel
Jasneet Singh Baid
Shefali Malhotra
 EXECUTIVE SUMMARY

The paper is a detailed analysis of the marketing plan report of Kentucky Fried Chicken

(KFC). The report is divided into eight major sections to make the readers understand the

company effectively.

The first section is the introduction to KFC and provides the history of its growth of KFC.

KFC’s founder is Colonel Sanders, with the secret of eleven special spices in the 1930s. The

second section is about problem identification. KFC's main problem is losing its brand value.

The third section discusses KFC’s marketing strategy and tactics, which includes 4P’s Strategy

(Product, Price, Place, and Promotion); and target market (Geographic, Demographic,

Psychographic, and Behavioral segmentation). Thus, the readers could have an overview of how

KFC set up its operations and target customers. The fourth section concerns KFC’s competitive

advantages, which are adopting preferences depending on geographic segmentation to its menus

and positive practices in Corporate Social Responsibility (CSR); and significant challenges. The

company resources and experience section will provide more strengths and weaknesses of KFC.

Environmental Analysis is the largest part of the report, including Porter’s five forces and

PESTEL analyses, providing details about external factors that impact KFC's operations and

development. The last two sections are the alternatives to solve the problem stated in the

second section: Market Penetration, Product Development, Market Development, and

Diversification; and some recommendations to help KFC improve and increase its revenue an
 TABLE OF CONTENTS

COMPANY INTRODUCTION....................................................................................................1

PROBLEM AND OBJECTIVE IDENTIFICATION................................................................2

MARKETING STRATEGY AND MIX

 4P’s Strategy.......................................................................................................................3
 Target Market....................................................................................................................4

COMPETITIVE ADVANTAGES/DISADVANTAGES............................................................5

COMPANY RESOURCES...........................................................................................................7

ENVIRONMENTAL ANALYSIS

 PORTER`s five forces Analysis........................................................................................8

 PESTEL Analysis...............................................................................................................9

ALTERNATIVE STRATEGIES................................................................................................12
RECOMMENDED MARKETING STRATEGY.....................................................................14
REFERENCES.............................................................................................................................15
 COMPANY INTRODUCTION

Kentucky Fried Chicken (KFC) is one of the most well-known fast-food chains globally. In the

early 1930s, Harland Sanders, in the Southern America, was small franchising. Colonel Sanders

has become a famous character throughout many KFC restaurants worldwide. The essential

elements of KFC’s global success are quality service and cleanliness (QSC). Food, Fun, and

Festivity are what KFC is about. As the market leader in the fried chicken segment, KFC has

provided great chicken meals for the Chicken Loving since its inception.

In 1986, PepsiCo acquired KFC and operated approximately 6,600 locations in 55 countries and

territories. In 1997, PepsiCo made its division by launching Pizza Hut, Taco Bell, and KFC and

named Tricon Global Restaurants. Only one entity now managed all operations, and most office

operations, such as data processing, payroll, and account payable, were combined. Tricon Global

Restaurants later changed the name to Yum! Brands by PepsiCo. Yum! Brand company is

known as the world's largest restaurant company in system restaurants.

Thanks to perfecting the secret recipe of eleven herbs and spices in 1939, KFC enjoys a long

way with thousands of restaurants globally; and has maintained its brand for the last 60 years by

being “The Chicken Experts.” However, KFC still has faced the need to renew its restaurant

buildings and faced a significant challenge from its competition from Burger King and

McDonald’s.
 PROBLEM IDENTIFICATION

 The graph above represents the brand value of the most valuable quick-service

restaurant brands worldwide in 2020, putting KFC in third place.

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 The second graph represents the average sales per unit in the world from 2006 to 2019. In

2019, KFC accounted an average sale per unit is 1,996 thousand U.S. dollars, which was

smaller than 2018.

MARKETING STRATEGY AND TACTICS

Segmentation

 Geographic Segmentation: KFC has international restaurants, and its menus vary

depending on people's geographic tastes. For example, KFC offers poutine on the menu

in Canada since poutine is a well-known Canadian dish. Besides that, in Islamic

countries, most KFC restaurants prepare foods that follow halal guidelines. In Asian

countries, rice cannot be missed on KFC’s menu.

 Demographic Segmentation: The market is divided into various groups based on age,

family size, and income. Although the target age range is 6 to 65, KFC concentrates

most on young age groups. KFC offers its menu for family size rather than individuals.

Family meals are typically served at a lower and better price. In the beginning, KFC

focused on the upper class, but after that, it introduced and offered economic meals that

created attraction to the middle class. The price is still considered as high for the lower

levels.

 Psychographic Segmentation: Target customers need to be in a specific lifestyle

segment to enjoy excellent quality and tasty fried chicken products. Thus, KFC is

towards people who want luxury and are passionate about the brand. KFC has been
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 described as a sign of individual taste and successfully created the image of the number

one fried chicken in the customer’s mind.

 Behavioral Segmentation: KFC defines the behavioral variables as taste

conscious, quality-conscious, class-conscious, and a combination of price and

quality.

The target market is all of the above segments due to KFC's broad product

portfolio and global presence.

Marketing Tactics (4 Ps)

 Product: KFC is the most well-known fast-food joint, especially in burgers. KFC stands

for fried chicken, but it has challenged the operated fast food market of hamburgers.

KFC's original product is fried chicken nuggets from eleven secret seasoning spices.

Other popular products of KFC are home-style sides, buttermilk biscuits, and Extra

Crispy Chicken. In 1990, KFC diversified its menu and offered products from chicken

such as Chicken Fillet Burgers, wraps, salads, desserts, and beverages. Its offers have

been optimized depending on specific geography and demand, including over 300

different menus across different locations worldwide. For example, KFC’s menu focuses

on Chicken and Rice Bowls in the Vietnamese market. Most of KFC’s drinks are from

PepsiCo, but there are still some exceptions in some specific areas.

 Price: KFC’s menu is offered at affordable prices with inventive strategies to compete in

different markets. The prices are higher for young people in urban and semi-urban
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 locations that reflect the upper or middle classes. Then prices will reduce gradually in

the areas of lower-income groups. KFC’s price is comparable with its bundles, and

combos pricing is less than the combined price of individual products. This pricing

strategy is effective for sensitive markets such as India.

 Place: KFC opened the first restaurant in Utah in 1952. After that, the founder of KFC

realized the importance of franchising and established international locations in Canada,

the UK, Mexico, and Jamaica in the 1960s. KFC’s headquarter is in Louisville,

Kentucky, and its presence is in 125 countries worldwide with over 20,500 restaurants.

KFC was also the first Western Restaurant to open in China in 1987 and keeps operating

well there. Special offers are launched depending on geography, such as promotional

offers during Chinese New Year in China, Vietnam, and other Asian countries.

 Promotion: KFC developed its website and presence through social networking such as

Facebook, Instagram, Twitter, and YouTube. Mass media is also applied, such as print

and broadcast media. KFC’s advertising is usually seen in newspapers and magazines

that include KFC special offers and prices. KFC also uses billboards and hoardings on

highways for advertisements. Besides that, headings like “Finger Lickin Good, "

"Nobody Does Chicken Like KFC, " and " So Good " always stick with KFC’s

promotional activities.

COMPETITIVE ADVANTAGES/DISADVANTAGES

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KFC’s strategy is to concentrate on international franchising by dominating the global

market. Focusing on creating meals that could meet customers' continuously changing

preferences in the market it serves helps KFC capture the global QSR market. Also, KFC

establishes an alliance with its local suppliers for the raw materials, which has helped

strengthen KFC’s brand to the community, a competitive advantage. The

penetration of American culture and food into the global market gave KFC a competitive

advantage where its rivals could miss out on this strategy. For a company to achieve a

competitive advantage against its competitors, it must deeply understand the circumstances and

strengths of the competition. KFC also effectively leverages corporate social responsibility to

maintain its competitive advantage. KFC has a good history of generosity inspired by its founder

Colonel Harland Sanders. More specifically, KFC has donated funds to assist more than 4500

students and KFC employees in going to college. The company has contributed $17 million to

that, which came from its franchisees and KFC Corporation.

However, more work must be done for companies in the ever-changing business world. KFC

still serve their food in paper buckets and a Styrofoam box for side dishes. Packaging could be

replaced by biodegradable products that are more environmentally friendly. It could be a plus for

KFC’s corporate social responsibility as more consumers are concerned about the environment.

Besides that, nowadays, in the business dynamics, the company should deliver value to the

customer’s experience as it is a key in the customer’s decision in choosing a specific brand over

another. KFC can develop innovative ways such as encouragement to the customer can

implement to improve customer satisfaction. Lastly, the belief in increasing minimum wages is

the challenge that most QSR restaurants face that is not only for KFC. The alternative for this

6
could be an affordable robotic arm to replace basic tasks done by a human.

COMPANY RESOURCES

A well-known and beloved company like KFC will have many strengths, such as its international

presence, unique menu offers, and a secret that has not been exposed to the internet. A well-

known brand is of the strengths of KFC. With more than 150,000 locations in 120 countries,

KFC is an internationally recognized brand equity. Especially in many countries, KFC

significantly impacts their “non-meat menu options.” The second strength is a powerful

establishment standing behind the KFC brand. Besides KFC, Taco Bell and Pizza Hut are also

managed by the same corporation, Yum! Brands. Yum! Brands have many fast-food restaurants;

the corporation is powerful in influencing, contributing power, and resources to improve and

develop KFC’s operations. KFC is one of the pioneers in building non-meat options for

developing markets. Many people are excited and enjoying KFC’s vegetarian offers, especially

vegetarians and vegans. While many corporations are failed to recognize this concern, it has

allowed KFC to lead in this sector. KFC also has a trading secret that only a few selected people

know. 11 herbs and spices original recipe is still a mystery to the public as Colonel Sanders has

locked the recipe away in a vault.

Despite its excellent reputation, KFC still faces challenges, primarily serving a high-fast menu

and a questionable franchise system. It is not surprising when one KFC location has higher

reviews than another because KFC follows a franchising system. Thus, it is easy to have

mistakes in operation, production, and poorly consistent management, which could impact its

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brand equity.

ENVIRONMENTAL ANALYSIS

PORTER`s five forces

 Competitive Rivalry- High: We can say that the fast-food industry is the most

competitive sector. Thus, KFC is facing intense competition in this industry, especially

McDonald’s, the leader in the global market. KFC has a differentiation strategy for its

primary products; most common dishes such as fries, beverage drinks, sides, and salads

are available in every fast-food restaurant nowadays.

 Threat of New Entrants- Medium: Fast-industry requires a significant investment

level in marketing and business product development before entering the industry. As

the existing brands, such as McDonald’s and KFC, have built their brand images

strongly and a vast customer base, most customers will prefer those brands over the

others. Moreover, the ability to ensure the product’s taste and incredibly global customer

service has increased the industry's entry barriers.

 Bargaining Power of Suppliers- Low: The leading suppliers of KFC's raw materials

are chicken, soft drinks, and potatoes, and many suppliers are ready to accept KFC's

terms and supply raw materials. However, because of lacking product differentiation

and being unable to provide a large order while there are many suppliers, the suppliers’
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 power is not big enough against KFC and is limited in raising their prices. In 2004,

KFC ended a contract with one of its chicken suppliers because of crude slaughtering.

 Bargaining Power of Buyers-High: KFC’s buyers are people who walk into the

restaurant almost every day. So, these customers have a list of choices to go such as

McDonald’s, Subway, Pizza Hut, RFC, In-and-Out…Therefore, KFC could not increase

its prices or force customers to buy its products at high prices. If KFC increases its costs

significantly higher than its competitors, customers will simply switch to another brand

with affordable prices.

 Threat of Substitutes- High: Many restaurants offer similar or better products than

KFC. One of them that could be mentioned here is Popeye’s Louisiana Kitchen, which

has become the most substantial substitute for KFC as Popeye has added several other

sides, such as rice and mashed potatoes, to its menu. Moreover, in many countries

where KFC operates, KFC has to face a vital substitution by local restaurants like

Arabic Fried Chicken in the Middle East. To improve this, KFC has offered free Wi-fi

options at the restaurant and introduced a breakfast menu.

PESTEL Analysis

 Political factors: It is not always that KFC uses an abbreviation of its original name.

Since “fried chicken” became a negative thought in people's minds, the company decided

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 to change what was necessary for the brand’s image. Unlike McDonald’s or Burger

King, KFC is the only restaurant that has the name unhealthy food. KFC dropped the

“fried” without having to change its name and image entirely. It has a positive impact on

psychology. Although offering the same high-calorie chicken, removing the “fried” word

from consumers’ minds cause them to forget the connection between its

products and unhealthiness. Over the last several years, KFC has been affected by

political drama. On the official Twitter page, KFC has tweeted status that mocked

McDonald’s Mascot while parodying President Donald Trump’s tweet about the

“bigger and more powerful” nuclear button than North Korea. It is considered harmless

humor but perhaps not suitable for its brand. Also, in May 2019, Tennessee Democrat,

Rep. Steve Cohen, mocked Attorney General William Barr by giving out a giant bucket

of KFC chicken during a hearing, negatively affecting KFC’s reputation.

 Economic factors: Yum! Brands, which own KFC, Pizza Hut, Taco Bell, and similar

fast-food restaurants, are struggling in the Chinese market as their profits decline.

While more people are concerned about health-conscious, most of KFC’s menus still

follow the form of fried chicken, making those consumers not have many choices when

they eat at KFC. However, KFC has recognized that and created vegan items to meet

vegan and dieting consumers' needs. For example, KFC has started experimenting with

fried chicken sandwiches; doughnuts will cover the fried chicken instead of buns. KFC

also created two fried chicken options for vegans: boneless wings and vegan nuggets.

As a result, it was successful in both the economic and social sectors.

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 Social factors: The fast-food industry faces social issues related to negative feelings

about the brands. Many are concerned about mistreatment in minimum wages for

workers or about many live animals being injected with hormones and having to

contain more fat than usual. Thus, organizations such as PETA have condemned the

mistreatment of those animals and boycotted companies that apply this unethical action.

 Technological Factors: Being different from other fast-food restaurants, KFC has

adopted the newest technology for employees. KFC believed that customer service might

improve if the employees’ environment improved. Researching how tech-savvy younger

employees are is considered a relatively normal move. KFC will apply new workplace

technology forms, such as voice-activated exams for trainees. A KFC restaurant in

Australia has developed employee communication through social media. It encourages

employees to ask questions and share opinions. Besides that, KFC also offers advanced

technology for delivering and ordering. Customers can now order their meals before

reaching the cashier, which makes the whole process faster and more convenient for

consumers. This option has benefited KFC restaurants in Australia, which accounted for

98% of locations applied to the “click-and-collect” feature and proved a 20% increase in

profits.

 Environmental factors: KFC’s paper supplier has affected the personal opinions of the

brand. Usually, the paper companies relate to issues such as deforestation, which

significantly influences the planet. It also impacted the endangerment of wildlife on the

brink of extinction.
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  Legal factors: KFC has operations in over 120 outlets worldwide. To maintain its

consistency among the locations, the company must follow the laws seriously in each

area, including filling the amount of taxes accurately, following labor laws, and

providing all the updated information. If KFC fails to follow any legalities, it could find

itself in court or even close the business.

ALTERNATIVE GROWTH STRATEGIES

Market Penetration (existing products and existing markets): Market penetration happens

when an organization enters or penetrates a market with existing products. The most effective

way to achieve this goal is to gain back competitors’ customers, which accounted for a part of

their market share. Another way is to attract non-users of KFC’s products or persuade current

customers to consume more of KFC’s products through advertising and other promotions. As

social media is rapidly developing nowadays, Facebook, Twitter, Instagram, and YouTube are

the most effective ways to get more people, not only in the U.S. but also worldwide, to know

about KFC. KFC should invest more in social media while still maintaining advertising on TV,

print, and billboard to get attraction from people who have been isolated from IT. However,

because of the high speech of spreading information on social media, KFC should be more

careful in selecting the advertisement's appropriate content to satisfy the maximum number of

viewers. The obvious example is KFC’s political drama with McDonald’s and President Donald

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Trump on Twitter. Market penetration is the least risky way for a company to grow.

Product Development (new product and existing market): With demand for existing

products, KFC could start developing other products that serve the same market. Although the

new products are not considered unique for the market, they are new products for the company,

creating new thoughts for consumers about the brand. For example, KFC has introduced fresh

burgers while still within the fast-food industry. Usually, when a company makes new products,

it will gain new customers for the new product. Thus, developing and introducing a new

product can be necessary for the company to stay competitive. However, KFC needs

outstanding research before the same. More investment in advertising for further development

needs to focus on as it will attract potential customers to make them go to the restaurant to try a

new product. It could be costly and high risk if the new product could not meet the

expectation of customers.

Market Development (existing product and new market): An existing product could be

adjusted and targeted to different customer segments to gain more revenue. The market does not

need to be unique, but the market must be new for the company. Back to KFC, non-meat

products of KFC could target people with obesity disease besides vegans. However, it could fail

if the company targets an existing product to the wrong target group of customers.

Diversification (new market, new product)., KFC could add to its menu new products or a

new restaurant serving steak and wine like other luxury restaurants under the KFC brand. It will
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help KFC diversify its risks and gain more customers in the new industry. However, it will be

costly as the company must start with a new product with no experience or unique recipes. A

new operational way and restaurant structure will be needed as more investment costs. This

alternative is also the riskiest.

RECOMMENDED MARKETING STRATEGY

 Research and development of frozen products that sell in supermarkets and

groceries: KFC can also develop frozen instant meals and sell them in the supermarket

and groceries. The best example is Starbucks, its product, such as ground coffee, instant

coffee bottles, K-cups, and creamers, have been sold in supermarkets and convenience

stores. KFC can do the same way to earn more revenue. Many people do not have time

to drive out to eat because of the fuel cost, although they like KFC's flavor. It will be

great to buy KFC frozen products and have more time choices to enjoy KFC products.

 Coordinating with those companies whose target is also young people and doing a

series of coordinated promotions: KFC can coordinate with toy companies to produce

exclusive toys that kids’ meals will accompany. Besides, KFC could coordinate with

Hollywood to promote upcoming movies and KFC products. It delivers a message that

people can watch their favorite movies at home with enjoyment of KFC’s products.

 R&D more kinds of food made without increasing-price material: Commodities

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prices keep going up in these years, such as corn, which increases the cost of chicken and

directly reduces KFC’s gross profit. To catch up with this problem, KFC should

introduce more products not made from those increasing-price materials. For example,

KFC can offer vegetable meals such as salad and soup, accompanied by a promotional

message of a healthy diet. KFC can set up the price for these products higher than typical

food, and from there, can make up for the loss of increasing cost.

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