MKT 465 : Strategic Brand Management KFC :
Doing Chicken Right in the U.S. Fast- Food Industry
Brand Plan Based on Case KFC :
Doing Chicken Right in the U.S. Fast- Food Industry
Submitted To HONDOKER GALIB BIN K HONDOKER MOHIUDDIN (KGM)
Lecturer
School of Business
Submitted By MOHAMMED MAHIB ULLAH 030 [SEC- 1 ]
ID # 073 267
TONMOY MITRA TAPOS 030 [SEC- 1 ] RIFAT IQBAL 235 530 Page073 Content
ID # 073 028 ID #
[SEC- 1 ]
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KFC FACTS
3
Defining the Problem
4
Environmentt Analysis Environmen
4
Positioning/ Core Route
6
SWOT Analysis
7
IMC Tools
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IMC Plan
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Monitoring & Tracking Tools
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Contingency Plan
10
KFC Facts
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KFC is based in Louisville, Kentucky, and is the world’s most popular chicken restaurant chain. 1952, Col. Sanders started franchising his recipe door to door financed by his $105.00 SS Check • 1964, Col Sanders had more than 600 franchised outlets in the US and Canada. • 1964, Sold his interest in his company for $2 million to a group of investors. • 1966, KFC went public • 1969, Listed on the NYSE • 1971, KFC was acquired by Heublein Inc. for $285 million. • 1982, Heublein & KFC Inc. was acquired by RJ Reynolds • 1986, RJ Reynolds & KFC, was acquired by PepsiCo, Inc. $840 million. • More than 9,000 outlets [1994] • 63 countries and territories around the world [1994]
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Defining the problem After After PepsiC PepsiCo o acquir acquired ed KFC RJR Nabisc Nabisco, o, KFC faced faced some some diffic difficult ult parentparentsubsidiary relationship. They follow different types of organizational culture than KFC.KFC’s strategy was longer relationship with employees and behave like a family member but PepsiCo depends more on performance if don’t do well they don’t hesitate to sack their employees. Employees were always in a threatening position from where it was tough to provide better service. Another problem was decentralization .PepsiCo decision making process was decentralized so that problem was created from different level and lack of coordination was occurred. KFC’s offerings were relatively limited before PepsiCo purchased them, after PepsiCo purchased them, they came up wider variety of food where some were ere not not su succ cce essfu ssfull .Tha .Thatt mean means s they they had had a prob proble lem m with their offerings .They did not differentiated their offerings for different targe argetted segm egment ents .The .They y were not as fast as their competitors to build restaurants, means they had problem in delivery channels. They were only in fried chicken market this is also a proble problem m so their their compet competito itorr were were gett gettin ing g advan advanta tage ge in non non frie fried d chic chicke ken. n. Heal Health th issu issue e was was anoth another er problem.
Franchising problem was that they were not maintaining distance that they maintained between franchiser and their own outlets .They did not able to deal with franchiser uniformly.
Environment Analysis The There re are are cert certai ain n forc forces es,, insi inside de and and outs outsid ide e an orga organi niza zati tion on that that affe affect ct marke arketi ting ng manag anage ement’ ent’s s abi ability ity to bui build and and maint aintai ain n su suc ccess cessfu full
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relationships with target customers. Like all other companies, KFC also has such su ch forc forces es aro around und it; marke arketi ting ng envi nvironm ronmen entt is made ade up of Micr Micro o environment and Macro environment.
Micro Environment Company KFC is the multinational company that has chain of fast food restaurants all over the world. In world it has 9033outlets out of which, 5120are based in us, KFC KFC is grow growin ing g rapi rapidl dly, y, by havi having ng thei theirr stro strong ng rela relati tion onsh ship ip with with thei theirr custo custome mers rs and and the the trus trustt whic which h they they have have deve develo lope ped, d, in the the past past year years, s, employees are the main assets of the company, and so they are very much concer concerned ned.. The compan company y has very very organi organized zed check check and balanc balance e system system,, which is used for the evaluation of the employee and the individual outlet as well.
Suppliers As they are in food industry suppliers have a great impact on their service. They try to ensure better quality. Customer They are the base for any business KFC think more about consumer and try to provide food according to consumer demand. Competitors Their competitors are 1. Mc Dona Donald ld’s ’s 2. Bost Boston on chic chicke ken n 3. Church’s and Popeyes 4. Chick-fil-A
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Employees Employees are asset for the organization so if they are not satisfied there is some problem and we see here is service problem because they failed to maintain good relation with employees.
The Macro Environmental Forces These are not controlled by the company and are environmental forces. Demographic Factor It designed food according to taste of population .They influence consumer to visi visitt thei theirr stor store e by givi giving ng sp spec ecif ific ic offe offer. r. They They try try to gain gain comp compet etit itiv ive e advantage by creating point of difference. Technological factor In this case we don’t see any major implication of technological factor. Political Factors Political factor is that they were sued because of not following contracts they have a good relation with government they can avoid these or can minimize this kind of negative affect. Cultural Factors KFC KFC is alw always ays conc concer erne ned d abou aboutt the the cult cultur ure e and and ethi ethica call valu value es of the the community. They serve food that goes with US culture. They takes care of ethical and moral value of this community
Positioning/ Core Route To positioning positioning in market market KFC first segmented the market based on geograph aphy demography and psychograph. They have store in differ different ent geograp geographic hic locati location on in U S. In demographic segm segmen enttati ation, on, the the marke arkett is divided into groups based on an age, gender, family size, income, race race and nation nationali ality. ty. Dividi Dividing ng a marke arkett into nto diff diffe erent rent gro groups ups
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base based d on soci social al clas class, s, life lifest styl yle, e, or pers person onal alit ity y char charac acte teri rist stic ics s is call called ed psychog psychograph raphic ic segme segmentat ntation ion.. KFC target targets s upper upper and middle middle class. class. Target Target market depends upon size and growth rate of population, Company resources and structural structural attract attractivene iveness ss of market market segment. segment. For a product product to occupy occupy a clear, distinctive and desirable place relative to “Competing products in the minds of target consumer.” KFC focuses on pure and fresh food in order to create a distinct and clear position in the minds of customers. KFC has a strong brand name and they are leading the market in fried chicken. They provide better value for consumer in exchange of price.
SWOT Analysis Strength •
KFC is a Market leader: World’s largest chicken restaurant chain and third largest fast-food chain. •
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KFC had refocused refocused international international strategies strategies to grow its company and franchise franchise restaurant base all over the world. Find Find,, motiv otivat ate, e, and ret retain ain hard hard--work workiing and and entrepreneurial managers and franchisees around
the globe.
Weakness •
•
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Management Shift of Year 1986 when KFC was acquired by PepsiCo from RJR Industries. Sweeping changes into the culture was initiated by the new management- this brings about demoralization to old KFC employees and even franchisees. KFC’s leadership in the US market was so extensive that it had fewer opport opportuni unitie ties s to expand expand its US restaura restaurant nt base, base, which which was growing growing at about 0.8% per year. There was widespread discontent among the franchisees, some of whom felt the new owners did not understand the chicken business and were not providing leadership expected from a franchisor.
Opportunity •
Overseas expansion with the rapid economic.
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International Appeal to American products.
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Demographic trends (demand for food eaten outside of the home.
Threats •
Saturated fast food industry in U.S. market
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Consumer health food trend
Heal Health thie ier, r, swif swift, t, sophi sophist stic icat ated ed and chea cheap p alte alterna rnati tive ves. s. Prom Promin inen entt exam exampl ples es incl includ ude e McDo McDonal nalds ds and and the the newe newerr entr entran antt to the the fast fast food food market, Subway. •
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Home-cooked image of Boston Chicken
IMC Tools IMC is the method used to inform and educate the chosen target audience about the organization and its products. Using all the tools of IMC: •
Advertising
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Sales Promotion
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Public Relations
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Events and Experiences
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Coupons, Discounts
At KFC, IMC is the main tool to brin bring g all all chic chicke ken n love lovers rs attention towards its delicious oneone-of of-a -a-k -kin ind d prod produc uct, t, the the Fried Chicken
IMC Plan Advertising The logo of the smiling Colonel is probably one of the most recognized faces in the world and instantly brings the image of fried chicken to one’s mind.
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KFC KFC and and its its new new comp company any jing jingle le,, “fin “finge gerr lici liciki kin n good good” ” is a freq freque uent nt announcement on televisions, billboards, flyers and radio. The concept of showing a normal customer deeply involved in devouring his piece of chicken usually turns on the drool factory in everybody’s mouth and makes them rush to the nearest KFC. Using the following methods KFC spreads its message of finger licking good chicken. Using Reminder advertisements KFC stimulates repeat purchases of its products. The company anthem “finger lickin’ good” is just a wakeup call to the consumer to remind them how good they felt the last time they ate KFC chicken. Sponsorship is another tool to strengthen s trengthen an organizations image.
Sales Promotion KFC KFC us uses es the the foll follow owin ing g tool tools s to further enhance its sales. •
Premiums
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Exhibits
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Coupons
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Entertainment
Using coupons that one can acquire after spending a particular amount over a period of fixed time, customers can enjoy the benefits of free meals or free add-ons. Additionally they provide meal vouchers and exciting offers in their print ads, which the customer must cut and bring along.
Events Spon Sponso sori ring ng event vents s in schoo choolls, col college ege or tournament can be a good strategy for KFC.
spo sp orts rts
Monitoring & Tracking Tools
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After owned by PepsiCo KFC works on the flow of good operation techniques i.e. “Good Operating Manager→ leads to “Good “Good Team Selection Selection →Good Services → Good Targets → Good Revenues through the following internal strategies: •
Training
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Incentive based targets
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Recognition for good work
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Performance based bonus
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Employee benefits to keep them motivated
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Promotion
Contingency Plan Short-term:
First, First, they need to have a clear vision, vision, solve the internal issues and get some cash in order to make sure that they are strong as a company and read ready y to comp compet ete e inte intern rnat atio iona nall lly y befo before re goin going g ahea ahead d with with thei theirr expansion project.
Create a great working atmosphere
Develop a healthier menu
Get some cash from selling unprofitable restaurants
Evaluate countries based on attractiveness
Based on the analysis, we can conclude that they should start by solving their internal issues such as management and restaurant menu before thinking about expanding.
The They y sh sho ould uld work ork on the the manag anage ement ent issue ssues s to cre create ate a goo good atmosphere where employees are happy to work in.
They also need to make sure that their restaurants offer a diversified menu, provide their customers with quality food, excellent service and restaurant cleanliness.
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KFC should always listen to their customers and try to follow the new trends on the market in order to fully satisfy their customers. Otherwise, compet competito itors rs will will satisf satisfy y them them and will will eventu eventuall ally y outper outperfor form m you as Boston did with its grilled chicken.
Even Even though though,, KFC seems to have an emotio emotional nal attach attachmen mentt to their their original recipe that made their success, they definitely need to move on and develop new products that customers want in order to increase their financial performance and value. We have seen that Boston and Pope Popeye ye’s ’s are are ste steali aling custo stomers mers away away from from KFC KFC bec because ause they hey understood what customers wanted and started offering healthier items. KFC should certainly do the same and enhance their menu.
Concerning their expansion strategy, KFC should start by closing a few non-profitable stores in the US that are currently drowning money from KFC. This will allow KFC to get the cash necessary to invest in new markets, which offer more growth potential. We have seen that the US market is not as attractive as it used to be , it has become saturated and certainly does not appear to have a bright future ahead. KFC has to select countries based on their attractiveness and make sure that they can provid provide e aboveabove-ave average rage return returns, s, which which will will be dis discus cussed sed more more in detail in the intermediate term.
Long Term
KFC need to keep an eye and be aware of new technology in order to improv improve e their their produc productiv tivity ity and be able able to compet compete e more more effici efficient ently ly because even though they may have a competitive advantage now, they can be sure that they will eventually be challenged.
Sti Stick to thei heir cleanliness
Keep control over franchises
Come up with new items regularly
Keep an eye on possible mergers & acquisitions
Be aware of new technology to stay efficient and competitive
miss missiion;
quality quality
food-ex food-excel cellen lentt
servic service e
restau restauran rantt
They need to stay close to their mission (provide customers with quality food, excellent service and restaurant cleanliness) and make sure to know how to achieve their long-term objectives. They also have to keep
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innovating and coming up with new items regularly. Remember that even though, they come up with similar products, customers are most likely going to try them.
They also have to follow the trend and go hand in hand with customers to satisfy their changing needs, as we have previously discussed with the current healthier food trend. They also want to keep an excellent image by treating employees fairly and keeping a good control over franchises to make sure they follow the company’s procedures.
Concerning the American market, they should always keep an eye at competitors and see if possible mergers or acquisitions could be made. McDonald’s has been faster than KFC when they acquired Boston, which could have really helped KFC regain its loss market share and reduce competition. They also have to keep working on their lowcost cost/d /dif iffe fere rent ntia iati tion on stra strate tegy gy by bett better er taki taking ng adva advant ntag age e of thei theirr compet competiti itive ve forces forces such such as econom economies ies of scales scales,, bargai bargainin ning g power, power, image/brand worldwide recognition.
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