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KFC established itself as a quality provider of chicken made fast food. This statement entails that market the strategies related to value chain management. one of the premier fast food chains all around the world. KFC Corporation is without doubts. Therefore we will critically analyse the value proposition of KFC by comparing it with McDonald. preferences. whose products customers are going to 3|Page . Customer Value Value creation for retaining customers becomes important when the organization actually start to implement marketing strategies. keeping in view the customers’ preferences and their choice (Holbrook 1999). Introduction Creating value for customers require an organization to base its strategies on customers’ production. pricing. In this term paper. targeting and positioning of the products and services should be done. KFC was founded in 1930 in Kentucky and its first official franchise was launched in 1952 in Utah. it is tried to understand the customer perceived value of KFC. Having its headquarters in Louisville. Value creation delivers a message to the customer base that the organizations.000 restaurants all around the globe in strive to serve a customer base of over 12 millions in 109 countries (KFC Corporation. segmentation. Till that time.1. conditions. Now. KFC has become the most popular fast food brand for producing quality and delicious fresh chicken based food. In the light of this analysis we will generate the new value proposition and implement it.1. Kentucky. 2011). KFC holds around 15. 1.
Founded in 1952. thinks for them and produce products which are better for them 1999).S. KFC feeds an average of 8 million people a day worldwide. Hence. for this reason.000 restaurants. we must be dedicating to providing excellent service and delighting customers ( KCF Download Reports. fries.use. The American brand is present in approximately 100 countries worldwide including 79% of its tens of thousands of retail outlets are operated by franchise. the company Kentucky Fried Chicken is now one of the fast food chains popular in the world and belongs to the large group Yum! Brands Inc. To maintain and enhance our position as the leading WQSR (Western Quick Service Restaurant) good value. friendly service at clean and convenient locations. As a subsidiary. KFC is the undisputed leader in the fast food whose main base of its dishes is the fried chicken of course. innovative chicken based products through consistently providing a pleasant dining experience with fast. as well as Taco Bell and Pizza Hut. fried chicken has been opted to define the value addition systems of KFC. referring to the literal translation: Kentucky Fried Chicken which is known by its famous slogan "Finger lickin good!" KFC is now present around the globe through its 14. At all times. a drink and a salad of white 4|Page . If earlier the typical menu consisted of fried chicken pieces. According to statistics provided on the official website of the brand. This name is sometimes represented by the acronym KFC in some countries. Kentucky. (Holbrook KFC’s fried has been the most successful product that the company has introduced in market since its inaugural. the headquarters of the brand of fried chicken is located in the U.000 employees. 2011). city of Louisville. with a workforce currently reaching over 75. KFC or Kentucky Fried Chicken is among the big names in the world of fast food.
KFC's decided to grow even more. such accompaniments include red beans in sauce. since early 1968 expansion 5|Page . on March 2. fries. 1. It was from Ray Kroc organize the KFC's Systems. KFC's also known that the growth strategy was essential and when Burger Chef Burger King and widened as they were about to catch up. tying for the first time the pace of expansion of KFC's. KFC's has always tried to differentiate their products from other competitors. Kentucky Fried Chicken or Chicken Delight.2. pies and beans dish. service. tomato mozzarella salad.cabbage. In North America.. so it quickly became the industry leader. But the threat of Burger Chef was even greater. In some European countries. 1998). white rice and fried peppers or cut into sticks and stuffed with herbs (Webber. it is now diversified across countries. which uses a technology similar attempt to address the same type of customers. When KFC's began to take their first steps there were no fast food restaurants. not just to differentiate them is through price but through good quality. 1955 when other companies were already in the business and KFC's was beginning to lose its advantage over other companies such as Burger King. the hamburgers (Brown. 2003). corn. the company currently offers mashed potatoes. originality and innovation. The Competition KFC's competition consists of all companies operating in the fast food industry. In 1967 Burger King had established himself as the expansion program to reach 100 new jobs per year. Inc. Kroc was then in a more competitive market.
The closest competitors to KFCs are: Pizza Hut McDonald’s 6|Page . Kentucky Fried Chicken. But apart from the competition relating to products.program had shortened the distance between it and KFC's declined to less than 100 seats. but offer products.. but in reality these new restaurants are not direct competitors of KFC's because they cannot ever come to their position in the short term. Just keep in mind that the market for hamburgers does not provide barriers to entry. That was how KFC's regained its hegemony in the fast food business at a critical period in the competitive positions were established on the market long term (Ulrich. 2003). That's when Burger Chef and Burger King began to lose the pace of growth compared to KFC's to the present day. anyone can sell hamburgers. from 100 to 500 a year. whether home delivery pizza is KFC's has Automac.. Pans and Company.). etc. Baguetterie (boccata. different from those offered by KFC's and although they are competitors do not pose the same threat Burger King. KFC's decided to challenge the competition by risky expansion program and what he wanted was to increase the openings of chain restaurants. since KFC's is a brand entrenched in the market (Hollensen. Brock bank. Telepizza. There are numerous fast food outlets but few offers a menu as varied as KFC's and almost no growth is based on the sale of hamburgers. in part.. If you are looking for quality is found in KFC's and that is understood by all consumers. Burger Chef.. For example. We have pizza (Pizza Hut. working in the same sector.). Pizza World. 2005). competition is also referred to the services the company offers.
7|Page . sandwiches and tacos: Burger King Taco Bell Wendy's Hardee's Subway For 1996 KFC's was already 35% of market share in the business chain sandwiches and tacos.37 billion dollars over its nearest competitor Burger King. Burger King Baskin-Robbins Wendy's Domino's Pizza TCBY Dayry queen Dunkin Donuts Taco Bell Arby's Subway Within the branch sell hamburgers. And its sales amounted to 16.
1. which help to make a business successful. 2. Organisation must be ready for competitive organisations they must make sure that any rival competitions do not take advantage by offering lower price or goods which are of the same quality. The Four P’s of Marketing Marketing is about understanding the customer and ensuring that products are meeting existing and potential customer needs. Marketing is a process of determining what customers needs and want. Of example a business company will still have products services and ideas to sell and will still deliver to customers through some means of distribution.Product (goods and service) Price (value pf the product) Place (distribution of product) and Promotion (aware the people for product) this leads onto strategic thinking segmenting and targeting which can earn a competitive advantage. 8|Page . The basics of marketing that still exist. although it is difficult to enter the KFC's sector experience and business model proposed. New Competitors The world is becoming increasingly common to hear of new franchise chains. The four P’s. and then planning how customer requirements and needs can be obtained and then the implementing of the plans can be carried out. Marketing is a series of tactics. these franchises are becoming more competitive and you will Share market subtracting the users of fast food. There is mounting members which generate greater competition in the business model of fast food.3.
9|Page .The diagram above shows the analysis of the four P’s of a marketing mix of KFC 2. The other chicken offering. extra crispy.1. KFC’s primary product is pressure fried pieces of chicken made with the original recipe. KFC’s specialty is fried chicken served in various forms. is made using garlic marinade and double dipping the chicken in flour before deep frying in a standard industrial kitchen type machine. Product Product is anything that can be offered to a market to satisfy a want or need.
2. This includes: Free home delivery strategy.4. Place Place includes the target are that KFC is going to cover.2.they provide free home delivery to offices and homes (select countries) Accessibility resulting in several outlets to cater to the needs of people in and around the city Hectic lifestyle – due to the hectic lifestyle of office going individuals the fast food concepts saves time of preparing food and gives the customer a full meal quickly Economically convenient.2. 10 | P a g e . 2. Promotion Promotion is the method used to inform and educate the chosen target audience about the organisation and its products.the pricing appeals to the many classes of the society. Price Price is any amount of money that customers have to pay while purchasing the product.3. More broadly. Using all the resources of promotion. price is the sum of all the values that consumers exchange for benefits of having it.
Author. Target Market The process of evaluating each market segment’s attractiveness and selecting two or more market segments. the fried chicken. promotion is the main tool to bring all chicken lovers attention towards its delicious one of a kind product. so KFC targets upper and middle classes.ADVERTISING SALES PROMOTION PROMOTION EVENT & EXPERIENCE PUBLIC RELATION COUPONS & DISCOUNTS (Source. As the outlets of KFC are in posh area and prices are too high (overhead expenses rent. 2011) At KFC. and air conditioning employees). 3. Target market depends upon size and growth rate of 11 | P a g e .
Demographic segmentation In demographic segmentation the market is divided into groups based on the age. Psychographic segmentation Dividing a market into different groups based on social class lifestyle or personality characteristics is called psychographic segmentation.3. religious. KFC divides market on the basis of psychographic variables like. Market Segmentation KFC market segmentation is based on three vital segments that give the key advantage in the success of the chain. segment. gender. occupation. company resources and structural attractiveness of market 4. Chicken is the main selling product. 4. race and nationality. Geographic segmentation KFC has outlets internationally and sells its products according to geographic needs of the customer. 4. 12 | P a g e . These include the following: 4.2.population.1. income. family size. KFC focuses how geographically its customers demand different products.
KFC believes in first level channels in the order given below: Manufactures Retailers Consumers Following is the process on which KFC based its channel in order to give edge to other food chain retailers.1. 13 | P a g e . 5. “Good Operating Managerleads to “Good Team Selection-Good services-Good targets –Good revenues through the following internal strategies. Channels In order to remain competitive. Training Incentive based targets Recognition for good work Performance based bonus Employee benefits to keep them motivated Promotion. Channel process KFC works on the flow of good operation techniques i. Social class – upper and middle class Lifestyle is not specific Personality is ambitious and authoritarian 5.e.
suppliers.6. All these methods are detailed in special books. lower costs. 2006). The company employs extremely rigid system operations. Keller. KFC's will only be effective to the extent that succeeds in establishing a partnership with their employees (Endomarketing). speed up service and deliver greater value to customers (Kotler. There are specific rules to do everything from set the distance between the wall and the refrigerator and the exact temperature that should fry the potatoes. KFC'S Value Chain KFC's monitor’s product quality and service through ongoing customer surveys and devotes much effort to improve methods of production of hamburgers in order to simplify operations. to provide an exceptionally high value for the customer. 14 | P a g e . franchisees.
The initial investments of a franchisee BFL is a minimum of $ 51. Once exercised the purchase option. KFC's has two types of contracts with its franchisees: Conventional and BFL If the franchise the franchisee buys conventional cooking equipment.. KFC's is successful because it has a system of corporate standards and individual opportunity and the franchisee is integrated at the same values and expectations clear and shared. etc. and have 3 years to exercise. whose reputation and experience are recognized around the world. Franchising They have ambitious plans to expand its franchising program. 8. 66% of its restaurants are franchised (Lancaster. KFC's Franchise system conceived as a genuine partnership between an independent contractor and the Company.7. Reynolds. 2005). in the formula "Business Facility Lease" (BFL) KFC's assume the cost of this equipment and leases it to the franchisee. and to maintain the standards required by KFC. KFC uses the PUSH strategy to help them create 15 | P a g e .000. with which the franchisee provides full support for consolidation. Strategies Used Given the competitive nature of fast food joints. decoration. which must come from own resources. signs. the duration of the contract is extended for a total of 20 years. This contract gives the franchisee an option to purchase such equipment..
It offers customers the same product with many options." He says that "KFC's vision of global industry dominate the food service. The global dominance means setting the performance standard for customer satisfaction while increasing market share and profits with its strategies of convenience. value and execution. Generic Competitive Strategies KFC's applies the same competitive strategy in all countries: be the first in the market and establish your brand as soon as possible through intense advertising. 16 | P a g e .3.2. Awareness Be different Sound attractive 8. 8. Their products are priced high and target the middle to upper class people. Strategies For "Global Domination" KFC in his 1995 annual report proudly announces its "strategy for global domination.1. Pricing Strategy Marketing skimming: KFC globally enters the market using market skimming. Gradually they trickle down the prices focusing on the middle to lower class people to penetrate both sides of the market. 8. so we are talking about a wide differentiation strategy.
17 | P a g e .7. in addition to this the search for improved inventory time is constant (Darden. the measurement variables are time care and a smile to the customer. We introduce a new strategy for the smile to the customer. 8. The maintenance of the environment strategy and inform the knowledge of the nutritional capacity of the food is still part of the strategy. and choosing the talented. Social Responsibility Strategy As can be seen to assume an active role in society is part of maintaining the strategy. Operational Strategies It continues to maintain the tolerances and specifications approach with a more stringent approach.8. the newly appointed CEO is not American. 8. 220.127.116.11. The workplace diversity remains part of what promotes the corporation. marketing makes further concentrated in each of the premises which serves the niche market of KFC's. Growth Strategies For growth is the strengthening technique in mitigating risky business Franchising generating a win-win relationship with them. Sales Promotion Strategies Finger lickin Good summarizes all this in addition to continuing use of Colonel Sanders KFC. it still maintains the projection of happiness and interest to children. in fact. 2002).
2005). KFC staff employed. Customer service training is provided further KFC (Hollensen. because it not only provides a channel for cost standards to cost-effective. but the new menu and the restaurant cannot. and can compare their sales outlets and other shops with shop space ratio. KFC financial management procedures. in recent years it has been revised according to local tastes and preferences. Productivity therefore can be set as a benchmark. Competitive Advantage of KFC in the Industry KFC's major competitive benefits over its competitors are the constant innovation and consistent focus. Kentucky through the development of quality assurance laboratories around the world. and improve the standards of business is to continuously look for innovative ways to improve efficiency. While it is true. KFC is very favorable to the operation of standard KFC.000 outlets also encourages innovation. Outlets desire to reduce fees to their interests in the use of cost and no value innovation can export any harm to others to implement the program as efficiently as possible. involving the ongoing product reviews and on-site inspection of facilities suppliers offer improved products. plans in the form of customer service is very effective cost and time. 1998). Standardization of more than 15. Brockbank. Defective region can easily be evaluated (Ulrich.9. as well as sales targets. cannot change the past by buyers preference. Perhaps the major obstacle to Kentucky is its stringent standards. Kentucky has built a 18 | P a g e . can provide new and exciting changes in diet and consumers to respond more effectively (Webber. KFC provides a unified food menu. 2003). but lack of experience of management and training company based on their strong product.
If consumers respond to other rapid assessment of nutritional chain is not good considering the details of the other stores in the commodity markets new and very fast. 19 | P a g e . 1998). KFC has the largest and fastest growing revenue numbers and testament of its better brand image. the bargaining power of suppliers. because it is an agent of American culture. the degree of rivalry among competitors in the same industry. the components Kentucky rank in other countries sign. However. of course. With incomes and revenues. Porter’s five force industry competitions for the KFC include the threat of new entrants. Other companies can imitate KFC operational schemes but they cannot contend the invincible and resilient emblem image of KFC (Brown. As far as this is concerned a strong competitive force can be regarded as a threat because it would drastically reduce the profit of an organization (Webber. Competitive Forces Model In strategic performance management. the more limited companies raise prices and earn greater profits. Moreover. 2003).lasting symbol of the image. only relying on its emblem resembles Kentucky to sell. the competitive forces model argues that the stronger these forces are within an industrial setting. 10. KFC report is based on its brand image and the historical development index. the bargaining power of buyers and the threats of substitute’s products. the taste of their food.
it is to a certain extent feeble as the threat of the new entrant is tough to set up a sequence of series of the food industry. snacks. The extent to which new entrants can enter an industry exerts a significant influence on the degree to which companies may act to earn above average in terms of bottom line.10. In addition. 10. 20 | P a g e .2. Firms within the same industrial like Subway are competing amongst themselves. Threat of New Entrants No specific technology and low investment to enter the market. home delivery meals at home. Threat of Substitutes Sandwiches. There is a somewhat swapping cost that is lower producing it is simpler for clientele to move from retail industry to other associated products.1. when new entrants enter the industry they tend to take extra effort in order to take full control of the industry. But the environment (changing habits) Current mitigates these threats. Substitute’s limits potential returns on an industry by placing a ceiling on the prices companies charge. KFC is also having problems relating to the risk for potential new entrants in the industry. moreover. Multinationals are "protected" by their reputations and geographic presence. traditional restaurants are all interchangeable products for food from fast-food restaurant. it should be documented that the substitute product to a certain extent very improbable than persons will be spending only on the food business industry and not anything else. The risk of substitute product and services is strong.
if suppliers are weak then Blockbuster KFC can force down their prices and demand higher raw material quality. But multinationals also provide McDonalds (Coca Cola for soft drinks. the negotiating supremacy of the suppliers is feeble (Barnes. Clients Bargaining Power of Customers The bargaining power of customers is low since they can only be of influence. 2009). The pricing policy KFC’s defined very meticulous in terms of each country. water DANONE yogurt). KFC is also facing issues that are related to the bargaining power of the suppliers.3. 2002). Its bargaining power with suppliers is undoubtedly a major force of KFC. Bargaining Power of Suppliers KFC has almost absolute power over its suppliers it manages to be "affiliates. Conversely when buyers are weak like in case of the KFC a company can raise its prices and declare higher profits. It may be more important when consumer association. compete is considered as extraordinarily strong (Darden. which further weakened the bargaining power of customers. moreover. Buyers are seen as competitive threats when they are in a position to demand lower prices or better products.4. The reorganization of the supply chain of McDonald's France is working closely with its suppliers. 21 | P a g e . Suppliers can be viewed as threats when they are able to force up the price for the supplies or reduce quality or quantity of the products though.10. The bargaining power of buyers within the industry where Blockbuster Inc. 10. Pinder. The group is a key client sees some exclusive agro-food sector.
Economic Context There is great economic disparity in where this company operates since. makes not give the right to determine the economic level. The level of competitiveness in the McDonald's remains at the forefront of fast-food companies around the world.1. leading global phenomena hybrids recontextualized (Lancaster.11. 11. and has a great worldwide recognition.3. and tends to worsen over time. as a fast food company. Analysis of the External Environment 11. 11. end up having more facilities. Socio-Cultural Context There is a big trend towards an aging population where McDonald's is located. 2005). usually located in places of transit and recreation. it also makes great investments.2. Politico-Legal Context This company has a great political stability. Reynolds. affordable. 22 | P a g e . since the rate of birth rate is low. the average life expectancy is increasingly high. And also generates increased employment rate in the region. The context cultural has an impact on how local cultural forms absorbs global transforms and adapts to its reality.
Swot Analysis 12. with several stores throughout the world 12. financing problems and possible training problems by managers and supervisors for instance like the retail industry.11. 23 | P a g e . insider problems.4. poor track record. Strength For the business strategy strengths are the key forces for a company as it identifies and help the organizations to move towards the goals and objectives that were previously set by the management which ultimately affect the overall efficiency of the organization like Blockbuster Inc.2. 12.1. Weaknesses These can be in the form of no clear management styles. poor image. research and development issue. competitive disadvantage. Technological Context Regarding its technological context this company works with machines highly specialized and requires large quantities since it is a franchising and is not located in one place but.
competitive pressures. Recommendations It is clear that KFC's has focused its strategy to position the brand to assure customers greater security franchise to invest in the business. new entrants. 13. these are factors or the elements that the KFC should concentrate on as they are considered as the core factors which guide an organisation in moving towards the goals which ultimately affect the efficiency and effectiveness of the organisation. the strategic shift Bell has focused in this direction.3. Opportunities In addition. adverse demographic changes. changing customers’ tastes. 24 | P a g e . research. the threats to KFC could be in the form of government policies.12. 12. and from the strategic point of view has decided to compete with local customers where there is capacity to capture market. is keeping the majority of their items. Threats What makes an organisation to be strong is to identify possible threats within its operational base in strategic business management. You can comment on the context of the overall strategy with respect to previous years has been successful. recession.4. from the perspective of the strategic business management. growing bargaining power of suppliers and customers. As can be seen from the strategic standpoint KFC's has made changes in the menu locally.
C. Secret recipe: why KFC is still cooking' after 50 years. Ill. H. W. P. Marketing management: A relationship approach. Lancaster. User-driven competitive intelligence crafting the value proposition. Tex. (2006). L.. Houston. K. & Keller.. Irving. S. Kentucky Fried Chicken four P’s of marketing mix [Online] Available at: <http://www. & Reynolds. Hollensen. Boston.. New York: Wiley.: Tapestry Press. M.: Harvard Business School Press. Brown.: American Productivity & Quality Centre. D. Blake. Essex: Pearson Education Limited. Chicago. London: Kogan Page. (2005). (2001). Divide and conquer: target your customers through market segmentation. Darden. (2002). Schaefer. (2003). (2009). (2005). Tex.: Heinemann Library. 25 | P a g e . Ulrich. D. (1998). P. B. Fast-food restaurant. The HR value proposition.com/doc/19080033/Kentucky-Fried-Chicken-KFC-MarketingMix-four-Ps> [Accessed 14 Nonember 2011] Barnes. Upper Saddle River. Management of marketing. M.. (2003).Bibliography Anonymous. Creating & delivering your value proposition: managing customer experience for profit. G. L. 2011. H. & Brockbank. Marketing management. Webber.scribd. Mass. & Pinder.. NJ:Prentice Hall International. Kotler. New York: Elsevier Butterworth-Heinemann.
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