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Mr. Khurshid Ahmed
Submitted by: Ali Murad MB061077 Rizwan Saleem MB063042 Kaleem Ahsan MBE083005 Asif Mahmood MB063031 Azeem Mahmood MB063046 Khalid Mahmood MB063051 Muhammad Umair MB083050
Muhammad Ali Jinnah University
We dedicate this report to our Parents and respectable Teachers
First of all, we would like to offer our eternal thanks to the Almighty Allah who blessed us with the perseverance and the sprit of hard work to complete this project. We are also grateful to our parents for their patience and belief in us. We offer our respectful gratitude to our Strategic Marketing course supervisor Mr. Khurshid Ahmed for his guidance & encouragement. We would like to thank all of those people specially the Marketing Manager of KFC Mr. Sheikh Sohaib who helped us through our entire Strategic Marketing project.
K FC Group Members
December 21 , 2008 Mohammad Ali Jinnah University
TABLE OF CONTENTS: iv .
EXECUTIVE SUMMARY 1 .
in a clean and convenient location. Innovative chickenbased products.Mission statement: To establish in Pakistan our position as leading WQSR (Western Quick Service Restaurant) chain. Consistently. with fast friendly. providing a pleasant dining experience. At all times we must be dedicated to providing excellent and delighting customers. 2 . serving good value.
Ind. his first job working on a nearby farm for $2 a month. His mother was forced to go to work. operated an Ohio River steamboat ferry. the colonel began cooking for hungry travelers who stopped at his service station in Corbin. Over the next nine year. for a job on a farm in Greenwood. After that he was a railroad fireman. his father died. And colonel sanders. 1890.. More than two billion of the colonel’s “finger lickin’ good” chicken dinners are served annually. Ind.COMPANY OVERVIEW: Colonel Harland sanders. but served folks on his own dining table in the living quarters of his service station. When he was 12. sold tires. studied law by correspondence. first as a 15-year-old streetcar conductor in New Albany. The colonel’s cooking is available in more then 82 countries around the world. and then as a 16-year-old private. He didn’t have a restaurant then. his mother remarried and he left his home near Henryville. As more people started coming just for food. and young Harland had to take care of his three year old brother and baby sister. And not just in America. practiced in justice of the peace court. KY. This meant doing much of the family cooking. When the colonel was six. Ate age 10. By the age of seven. sold insurance. the Kentucky fried chicken business he started has grown to be one of the largest retail food service systems in the world. When he was 40. he moved across the street to a motel and restaurant that seated 142 people. He held a series of jobs over the next few years. Ind. and Operated service station.. soldiering for six months in Cuba. Now. actively began franchising his chicken business at the age of 65. a quick service restaurant pioneer. born September 9. have become a symbol of entrepreneurial spirit. he perfected his secret 3 . he was a master of a score of regional dishes.
blend of 11 herbs and spices and the basic cooking technique that is still used today. 4 .
uplift of the restaurants etc. They have an international brand name to protect so there is strict implementation of quality standards. Since then there was no looking back for KFC as it started to earn profits and grow to other different cities. They have high quality standard and they are in concurrence to those prevailing in other countries.Operations in Pakistan: KFC started its services in 1997 for the first time in Pakistan. KFC officials often visit the outlets without giving prior notice in order to check the conformance to quality standards and procedures. 5 . Food Inspection Teams from Health Ministry visits twice a year to ensure Hygienic Conditions at the Kitchen. vegetables from Monsalwa and they use caned fruit for salads. The machinery is all automated and is in conformance to international standards. Lahore and several more areas. Procurement Issues: All the raw materials like chicken are bought from value chicken. Some profits were used for team making. It was introduced in the Pakistani market by the Artal Group of Belgium and although a late entrant. KFC believes in providing “value for money” to its customers. Moreover. After a through survey and analysis KFC opened its first branch in Garden town Lahore seven years back. Now it has a chain of 26 branches all over Pakistan. it managed to establish several outlets in Karachi. KFC in Pakistan has been shoeing a steady growth and profitability.
Generate consistently superior financial returns and benefits our owner and employees. And KFC has also brought the idea of self-service in Pakistan. All the outlets of KFC in Pakistan present Pakistani food culture. KFC has adapted to the legal and political environment and conditions of Pakistan. The most significant is the way it has changed the eating habits of the local population. KFC has displayed banners that it servers Halal food all over its outlets which represents Pakistani culture. The Pakistani culture has also molded the operations of KFC in Pakistan. KFC has also brought some changes in the culture of Pakistan. People now are aware of unhygienic conditions that prevail in some of local restaurants. Goals of KFC: Build an organization dedicated to excellence. Consistently deliver superior quality and value in our products and services. They also offer families’ deals as the people are very close to their families and like to have food with them. Maintain a commitment to innovation for continuous improvement and grow. Values of KFC: 6 . striving always to be the leader in the market place changes.Performance Overview: KFC has taken advantage of all these excellent investment opportunities that Pakistan offers for franchising and has expanded and penetrated the market a lot.
Commit ourselves to the highest standard to the personal and professional integrity at all times. Reward result and not simple efforts. KFC possess a western culture because some of the Pakistani people are also following that culture. KFC also offer free home delivery. Dedicate ourselves to continuous growth in sales. Encourage new and innovative ideas because these are the key to our competitive growth. Key Strategies of KFC: KFC is following Niche Marketing and Societal Marketing techniques. Be open. Focus all our resources to our restaurants operation because that is where we serve our customers. Reward and respect the contributions of each individual at KFC. Expand and update training with time and be the best we can be and more. Work as a team. 7 . honest and direct in our dealings with one and other. profit and size of organization. KFC are moving from Divisional Level to the District level by opening branches in Jehlum and Gujranwala.
that supervises the performance of counter workers and kitchen workers . and one shift in-charge for each shift. KFC menu consists of more than 30 products. There is one General Manager for Pakistan. KFC gives more priority to Family. The outlet is leaded by the Manager. Organizational Structure: The KFC adopted traditional structure for their outlets that other food chains are following. General Manager (GM) Manager Assistant Manager (I) Assistant Manager (II) Shift In-charge Counter workers Kitchen workers Guards 8 . assisted by two assistant managers. KFC open their outlets on reachable places.
In Pakistan the niche marketing is being used for particular classes of people. race.MARKET SEGMENTATION: KFC has divided the market of Pakistan into distinct groups of customers with different demands. So if we divide the customers according to age we can get better results. occupation and other statistics. density. tastes and behavior who require separate products or marketing mix. They have made segments of the market on the following bases. age. Demographical Basis: Demographic means the study of human population in terms of size. Demographical Behavioral Geographical By using these three bases they segmented the market as under. So KFC have rightly targeted kids and middle age people. It have targeted high and middle income group Behavioral Basis: 9 . gender. Income Income is one of the most important factors in success of KFC. Age People of different ages have different demands and taste of the products. In Pakistan youngsters are more conscious about their diet as compared to elders. location.
taste and price. Taste conscious Quality conscious Class conscious Combination of price and quality Geographical Basis: On the basis of the geographical factor we have divided our market in two main segments. Following are the different possible segments in this regard. Urban areas Sub urban areas 10 .In behavioral aspect they segmented the market on the basis of quality.
The process is well defined in a way that it depicts us the true picture of NPD in the real world. New Product Strategy in KFC: KFC use to create new ideas and make new products at its own. • • • • • The world The market The producer The seller Some combination of above Here is given some of the NPD process elements which KFC uses in the development and launching of new product in the market. New Product is defined as a product new to. KFC use new product development for having a product line extension. New Product Development means creating a new idea and forming a new product to the market.Strategies for new product development A firm can obtain new products by using the following strategies: • Acquisition • New Product Development Acquisition means acquiring the business. product of any other organization that is selling its business. The strategies that are been used in this whole process are been discussed as under: 11 . it does not go for acquisition.
the customers and the competitors. This refers to the development of new concept that better satisfy the market need. KFC use this thing in developing new product in a way that they look for the market. This gives the idea of a new product that will give them competitive advantage in the market over other fast food providers. which eliminates ideas that are inconsistent with the organization’s new-product strategy or are inappropriate for some other reason. addition and reduction in the product. This is the first filter in the product development process. it comes the screening process in which KFC eliminate the less good or in other words less profitable ideas. 2) Idea screening: After generating the idea. 12 .1) Idea generation: This element is based on the idea that by observing the market need and demand. This stage includes the refining of the product. It includes the internal as well as external idea sources as ideas through our conducted research and then the expected customer’s response.
costs. 6) Product development The practical formation of the product for testing purpose is the concept development stage. to have a survey about the concept that how much it is acceptable in the market. sales and profit projections. product quantity. This is basically a test to evaluate a new-product idea. Developing the level of quality. This does not involve the actual formation of product. in this stage.3) Concept development: This includes working on the concept. 5) Business analysis KFC checks out the over all picture of new product concept including the demand. usually before any prototype has been created. This tells about the benefits that product will provide during its life cycle. It refers to the development of the product concept into a physical product • • • • Creation of prototype Marketing strategy Technical production feasibility Final management approvals if needed 13 . so that it can be acceptable in the market. contents of the product and other things are the part of concept development. 4) Concept testing: KFC use to test the concept on out targeted customers by asking questions and get to know that how much the concept is acceptable up to how much percentage. KFC work on the modification in the product concept according to the market trends. KFC gives a tangible form to the concept that can be tested in the market.
7) Test marketing This step includes finally the test marketing. 8) Commercialization Finally. advertising and sales promotion. The stage involves these points as well: • • • Inventory Building Distribution Shipment Customer Advertisement 14 . This refers to limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation. this is the last stage of new product development strategy in KFC. the stage at which the product and marketing program are introduced into more-realistic market settings. KFC promote their product by using advertisement on different media channels. KFC have the need of this stage to know about the product’s feedback from the market. This includes the promotion techniques. the introduction of the product in the market.
tire salesman and service station operator for Standard Oil. 1930 In the midst of the depression. 1937 The Sanders Court & Café adds a motel and expands the restaurant to 142 seats. 15 . 1939 The Sanders Court & Café is first listed in Duncan Hines' "Adventures in Good Eating. 1900-1924 Harland Sanders holds a variety of jobs including: farm hand." 1936 Kentucky Governor Ruby Laffoon makes Harland Sanders an honorary Kentucky Colonel in recognition of his contributions to the state's cuisine. but it is rebuilt and reopened. Sanders serve as station operator." Fire destroys The Sanders Court & Café. Harland Sanders opens his first restaurant in the small front room of a gas station in Corbin. Soon thereafter Colonel Sanders begins using it to fry his chicken to give customers fresh chicken. The pressure cooker is introduced. Kentucky. and army private in Cuba. faster. Harland Sanders is born just outside Henryville. rail yard fireman. Indiana. insurance salesman. blacksmith's helper.History of developing product mix of KFC In 9th September 1980. chief cook and cashier and name the dining area "Sanders Court & Café. streetcar conductor.
16 .1940 Birthdate of the Original Recipe 1949 Sanders marries Claudia Price. 1955 An interstate highway is built to bypass Corbin. he is virtually broke. and Canada. 1964 Kentucky Fried Chicken has more than 600 franchised outlets in the United States. Canada and the first overseas outlet. Sanders sells the service station on the same day that he receives his first social security check for $105. Kentucky. A handshake agreement stipulates a payment of a nickel to Sanders for each chicken sold.S. The Colonel awards Pete Harman of Salt Lake City with the first KFC franchise. After paying debts owed. 1952 The Colonel begins actively franchising his chicken business by traveling from town to town and cooking batches of chicken for restaurant owners and employees. 1957 Kentucky Fried Chicken first sold in buckets 1960 The Colonel's hard work on the road begins to pay off and there are 190 KFC franchisees and 400 franchise units in the U. in England. He decides to go on the road to sell his Secret Recipe to restaurants.
The Colonel remains a public spokesman for the company. 1969 The Kentucky Fried Chicken Corporation is listed on the New York Stock Exchange.Sanders sell his interest in the U..7 billion pieces of chicken. Congressional Committee on Aging.S. 1966 The Kentucky Fried Chicken Corporation goes public. Company for $2 million to a group of investors headed by John Y. There are approximately 6. acquires KFC Corporation. future governor of Kentucky. 1965 Colonel Sanders receives the Horatio Alger Award from the American Schools and Colleges Association. 1976 An independent survey ranks the Colonel as the world's second most recognizable celebrity. 1979 KFC cooks up 2. 12/16/1980 17 . Brown Jr. 1971 More than 3. 1977 Colonel Sanders speaks before a U.000 KFC restaurants worldwide with sales of more than $2 billion.S.500 franchised and company-owned restaurants are in worldwide operation when Heublein Inc.
In addition to KFC. 2002 Tricon Global Restaurants. dies after being stricken with leukemia. changes its corporate name to YUM! Brands.Colonel Harland Sanders. the world's largest restaurant company. the company owns A&W® All-American Food® Restaurants. Inc. who came to symbolize quality in the food industry. Inc.J. Inc. Inc. Long John Silvers®. 18 . acquires KFC from RJR Nabisco. Taco Bell and Pizza Hut . 2007 KFC proudly introduces a new recipe that keeps the Colonel's 11 herbs and spices and finger-lickin' flavor. announces the spin-off of its quick service restaurants KFC.) when Heublein. Inc.into Tricon Global Restaurants. is acquired by Reynolds. Pizza Hut® and Taco Bell® restaurants. but contains Zero Grams of Trans Fat per serving thanks to new cooking oil. 1986 PepsiCo. 2006 More than a billion of the Colonel's "finger lickin' good" chicken dinners are served annually in more than 80 countries and territories around the world. Inc. Inc. Reynolds Industries. Inc.. Inc. 1997 PepsiCo. (now RJR Nabisco. 1982 Kentucky Fried Chicken becomes a subsidiary of R. Flags on all Kentucky state buildings fly at half-staff for four days.
Tasty K&N etc. Product Mix of KFC 19 . As Mc Donald’s has a limited menu and cater to different segments of society e. Though KFC has faced a little competition from local restaurants but their breakeven in terms of revenue has been done and they are planning to expand further to other cities like Islamabad and Peshawar.g. Mc Donald is catering to lower middle society of Pakistan. Chips & Mr. List of Competitors: Macdonald’s Burger King AFC(alnajam fried chicken) PFC(perfect fried chicken) And number of other Pakistani fast foods like Dantey’s and Mr.Competitor and their Product Mix Analysis: KFC does not consider Mc Donald’s are its direct competitors.
Other Products: •Original recipe® chicken •Hot WingsTM pieces •Chunky Chicken pot pie •Colonel’s Crispy Strips® •Original Recipe® Sandwich •Triple Crunch® Sandwich •Extra Tasty CrispyTM chicken •Tender Roast® chicken •Kentucky Nuggest® •Honey BBQ sandwich •Tender Roast® Sandwich •Triple Crunch ®Zinger® sandwich Product Mix of MacDonald’s: 20 .
KFC is Co branding with Walls 21 .Competitive advantage: KFC Spicy Products Pakistani people like spicy products instead of boiled food Arabian Rice and Zinger Burger Free Delivery Chicken is eaten by every community Local Staff and Highly Qualified because local staff can better deal with the customers KFC uses Top to Bottom and Bottom to Top Approach in Management.
flats. Distribution of delivery flyers in residential areas. Personal selling Telemarketing Direct mail Trade fairs and exhibitions Commercial television Newspapers and magazines Radio Cinema Point of sale displays 22 . KFC also known the importance and significance of promotion so they uses the bill boards the major source of advertisement and one of the most important thing that they uses media especially the newspapers to promote their products. and departmental stores. plazas and institutions (as per the plan) Visit offices and business places. you can say that promotion is the key of success. If you promote your product at the right time. In summarize KFC uses these are the strategies to expand their products to gain the competitive edge.Strategies for promotional mix Promotion is one of the necessary plates in any form of business or in other words. Marketing efforts to be taken by the restaurant: Paste delivery posters at petrol pumps. They are also creating awareness among the masses about their existing product range as well they tell us about the future product. colleges. markets. plazas.
9 Billion / $5.89 Billion =$1. Pricing of the product includes the Government taxes and excise duties and then they come at final stage of determine the price of their products. Calculation of the price under Cost Based Pricing Strategy: Total Pounds of Chicken Served in KFC Restaurant Annually = 1.51 We assume that Fixed Cost is = $6000000000 Variable Cost Per Unit Variable Cost = $675000000 = $675000000 / 5890000000 = $ 0.9 Billion Sales Price of per Chicken Piece Pieces sold = $8.115 Unit Cost = Variable Cost + Fixed Cost / Chicken pieces Sold 23 Profit Margin is Or Mark Up = $225000000(25% of Sales) = Total Retail Sales / Chicken .89 Billion Total Retail Sales = $8. Packaging Pricing strategies of KFC KFC during pricing their products keep the different points in the mind like they adopt the cost base price strategy.914 Billion Total KFC Chicken Pieces Sold Annually = 5. KFC prices of products are a bit high according to the market segment and it is also compatible to the stander of their products.
25) = 1.135 / (1-.75 = $1. The manufacturer mark up price is calculated: Mark Up Price = Unit Cost / (1 – Desired Return on Sales) =1.115 + 1.135 Now suppose manufacturer wants to earn 25% mark up on sale.115 + 6000000000 / 5890000000 = 0.135 / 0.02 = $1.= 0.51 24 .
The environmental measure is the Market Growth Rate. and other major fast food chains have dominated the American continent as well as else where. KFC. (De Witt 'et al. The company has changed ownership. the company has undergone lots of changes. The matrix provides a composite picture of the strategic position of each separate business within a company so that the management can determine the strengths and the needs of all sectors of the firm. along with McDonalds. The business strength measure is the business’s Relative Market share. especially in countries with large population. and high development rate. Pizza Hut. BCG Matrix: The market growth rate measures industry attractiveness. The development of the matrix requires the assessment of a business portfolio. KFC using the BCG matrix and SWOT analysis to analyze what is the current position of the company and identify that the company has the potentials to growth in fast food market. which include an organization’s autonomous divisions (activities. KFC. still dominates the chicken fast food industry while has stores in more than 100 countries operating vast profits. In the late 1960s the Boston Consulting Group.2004a) Although. in order to expand its existing product in very promising markets for KFC is very essential. which owns Pizza hut. Nowadays. Taco Bell. or profit centers). a leading management consulting company. and differentiation of the life style of the population around the world. it has taken over from Pepsi and passed over to Tricon.share matrix imposes a two. of building an empire in the fast food market. designed a four-cell matrix known as BCG Growth/Share Matrix. Because for the case of YUM Brand.dimensional analysis on management of Strategic Business Units: a comparative analysis of business strength and an assessment of the environment. due to increased conditions of life. Taco bell and others.BCG Matrix of KFC The need for strategy. The BCG Matrix made a significant contribution to strategic management and continues to be an important strategic tool used by companies today. A&W) are 25 . Since the 1950’s when the founder of KFC had a dream. all SBUs (KFC. The BCG or growth. Long John Silver’s. there is still a lots of room for expansion. This tool was developed to aid companies in the measurement of all their company businesses according to relative market share and market growth.
Question Marks (= high growth. Placing products in the BCG matrix results in 4 categories in a portfolio of a company: 1. Keep profits high. Cash Cows (=low growth. 3. So. Dogs (=low growth. low market share) • Avoid and minimize the number of dogs in a company. The BCG assumes that growth rates ( life cycle stages) affect a firm’s finances. The underlying theory for examining market growth rate is the industry life cycle. high market share) • Use large amounts of cash and are leaders in the business so they should also generate large amounts of cash. KFC Malaysia is under Star position. Stars (=high growth. high market share) • Profits and cash generation should be high. because the rewards will be a cash cow if market share is kept. the referent standard is the industry growth rate measured against the SBUs’ growth rate. investments needed should be low.located in the same fast. 2. • Frequently roughly in balance on net cash flow. However if needed any attempt should be made to hold share. • Beware of expensive ‘turn around plans’. low market share) 26 . 4.food industry. and because of the low growth.
to allow the company to purchase other businesses. cash cow-dog) Under invest in the stars Allow competitors to gain share in a high growth market Over milked the cash cows 27 . The Characteristics of each SBU Type SBU STAR Cash Cow Question Mark Strategy Hold/ Increase Hold Increase/Divest SBU profits High High 0 or Required Investment High Low Very High or Net Cash Flow -or+ High+ High-or+ Disinvest DOG Harvest or Divest Low orDisinvest + The analysis requires that both measures be calculated for each SBU. is included to measure competitive advantage. or to return dividends to stockholders. The KFC is falling on cash cow where a low growth and high market share is. Three Paths to Success (star-cash cow-question mark) Continuously generate cash cows and use the cash throw-up by the cash cows to invest in the question marks that are not self-sustaining Stars need a lot of reinvestments and as the market matures. because high demands and low returns due to low market share • If nothing is done to change the market share. stars will degenerate into cash cows and the process will be repeated. as the growth stops. As for dogs. The funds received from cash cows are often used to help other businesses within the company.• Have the worst cash characteristics of all. investments needed should be low. So the KFC should hold on what it has doing now. The business strength dimension. segment the markets and nurse the dogs to health or manage for cash Over invest in cash cows and under invest in question marks Trade further opportunities for present cash flow Three Paths to Failure (star-question mark-dog. a dog. the profit and cash generation is high and because of low growth. So. relative market share. question marks will simply absorb great amounts of cash and later.
& Crisps Pins They should introduce local dishes They should promote eastern culture Special offers according to circumstances Provision of customer service Extending their business in local areas Low cost in economic recession Latest technology in operations Resources General manager (Assistant Manager KFC) Employees Book of KFC (Focus on Monthly Journal KFC) Internet 28 .Recommendations It must also reduce their prices to compete their competitors like McDonald.
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