Current Marketing Practices of KFC

3319 words (13 pages) Essay in Marketing

18/05/17 Marketing Reference this

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A comprehensive marketing program was executed by KFC whereby large number of promotions throughout the year was created. It is intended to let customers always discover something exciting in KFC through various channels. For example: TV advertisement, newspaper advertisement and Facebook so that customer is well informed about the latest updates (KFC Annual Report, 2011). Beside, KFC also came out with a new marketing strategy which has a brand new tagline “So Good”, with the objective of making customers to be overjoyed with the services and food of KFC.

1.0.3 Market Segmentation, Targeting and Positioning

Market segmentation refers to a marketing strategy that divides a wide target market into subgroups of buyers which has similar needs and uses for the related goods and service (Wise Geek, 2003). KFC focuses on geographic segmentation to target its customers. As KFC restaurants would target areas in urban cities and semi- urban cities which comprise high population density. Therefore, products offering are based on geographic segmentation as different country has different culture.

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Next, KFC uses socio demographic segmentation to target customers. In general there is no age limit focus by KFC as food products of KFC targets every age group customers. For gender, KFC’s target will be both males and females (scribd, 2011). However, KFC focuses on all social class in the society as the products are considerably affordable for people.

KFC uses behavioral segmentation to target on customers. As during occasions like Hari Raya it develops a need for people to eat out during festivals. Therefore, KFC focuses on customers by introducing KFC Celebration Bucket in order to target customers. KFC is using their benefits to target customers. As customers get benefits from KFC products based on the high quality ingredients used and affordable pricing of KFC value meals.

Generally, KFC is targeting on individuals, families, teens and kids (KFC Holdings, 2011) (Appendix 1).

Positioning refers as the company’s image and offerings are designed to occupy distinguish placement in the customer’s mind (Kotler, P. and Keller, K.L., 2006). KFC has been position in people’s mind with its strong brand name and being the market leader in original recipe of Fried Chicken which their chicken is juicy yet finger licking good.

1.1 Current marketing mix

Marketing mix defines as marketing tools which consist of product, price, place and promotion which a company combines producing the response which they desire on the target market (Kotler, P. and Keller, K.L., 2006).

The products of KFC comprises of Fried Chicken serve in various forms, burgers, desserts and side dishes. However, KFC is currently implementing product strategies through introducing more new products in their menu. Among the two new products introduced are KFC Zinger Double Down is a new innovation type of “bunless” burger which consists of two sides of meat replacing the usual bun which has the meat in between. This extends the burger variants of KFC. Next, KFC a.m Multigrain is a new product introduced recently which is a more balance and nutritious breakfast for the consumer. Thus, with these new products innovations, KFC could increase their market share.

The price strategy which KFC is currently adopting is geographical pricing. As menu prices is set differently in each country. For example: KFC Malaysia snack plate is priced at RM 5.95 while snack plate in Singapore is priced at SGD 6.40. Generally, for new products they use market penetration pricing. KFC sets their price slightly lower as compared to their competitors in order to entice customers away from their competitors. With this strategy it gives customer the awareness and urge to buy in view of their low pricing as compared to other competitors. Example: KFC Zinger Double Down set priced at RM 9.95 with includes two pieces of meat while McDonald Spicy Mc Deluxe Burger set at RM 9.45 with includes only one piece of meat.

For place KFC is currently operating globally primarily in US with the largest franchises, follow by China, Japan, UK, Canada, South Africa and Malaysia (Wikipedia, 2012). Therefore, in Malaysia the distribution channels are QSR Brands Corporation which franchises Ayamas Breeder and Life sauce factory are suppliers for KFC while KFC is the retailer selling direct to customers in restaurants mainly placed in major shopping complexes, PETRONAS Petrol Stations, Highway rest areas, airports and high streets located in all major cities in Malaysia. However, KFC’s widespread and accessible restaurants which located in major cities in Malaysia enables them to reach to their target market efficiently.

For promotion wise, KFC has executed through various advertising. KFC uses mass media to advertise new products and promotions such as television and internet advertisements. For example: Facebook.

Subsequently, KFC uses direct marketing by distributing flyers throughout housing areas which consist of cut out discount coupon for products to get immediate response from consumers.

Next, KFC also uses sales promotion whereby KFC recently is organizing contest like count the bucket and win for purchases above RM 25 whereby customers could win prizes such as luxury car and local car. Furthermore, KFC uses sales promotion by introducing “KFC Snax” loyalty card especially for teens whereby members could get instant rewards, earn points when making any purchases in any KFC restaurants. Thus, it is able to create brand loyalty among teens and induce them for more frequent visits.

2.0 Marketing Plan for “Chicken Rice Burger”

2.1 Background

Kentucky Fried Chicken (KFC) is one of the stables of Yum! Brands, Inc. It is the world biggest fast food chain operating in 105 countries with more than 5200 restaurants in US and 15000 units around the world which mainly sells chickens as the core menu.

KFC manage to enter Malaysia fast food market in 1973. In Malaysia, KFC have become the most popular fast food chain which has 539 outlets nationwide (KFC Holding Berhad, 2011). The mission of KFC is to maximize profitability, improve the value of shareholder and provide sustainable growth year after year (KFC Holding Berhad, 2011).

The core competencies of KFC is the original recipes of the fried chicken which consist of eleven herbs and spices which enables them to differentiate their products from other rivals.

2.2 Situational Analysis

2.2.1 Industry Analysis

The culture of eating fast food has become a trend in the world. In Malaysia, fast food industry is seen to be growing due to the changes of lifestyles. However, fast food industry is believed to be generally recession proof as this industry does not suffer much as compare to other sectors because consumers will invariably choose to eat cheaper fast food over restaurant choices (Franchise Help, 2012). According to research done by AC Nielsen Company, 98% to 99% of Asian people consume fast foods. Therefore, fast food firms have to adapt accordingly to the market needs.

2.2.2 Market Needs

Looking at the latest modern lifestyles, it is essential for fast food firms to know the needs of customers who are looking for healthier choice food and convenient food. Due to the increase of obesity rate, many fast food firms offer healthy food products in order to accommodate the health conscious consumers.

Therefore, fast food industry has to adapt to changes according to the needs of the consumers as nowadays hectic lifestyles leads to people looking at convenient food. As research has shown that 79% of people age 17-25 is the target market for fast food industry as they are the people who just enter the workforce gaining financial independence and they are the people who are willing to spend on fast food meals (Schroder, M. and McEachern, M.G., 2005).Due to their hectic lifestyles, choosing fast food as their main meals is seen increasing due to tight work schedules as choosing fast food options gives them quick meal and enables them to save time as fast food restaurants usually located in strategic areas in the city.

However, for dual income families which have no time to cook for themselves and their families also tend to choose fast food meals as their options as fast food restaurants provides good ambience, tasty food, affordable pricing and convenience.

2.2.3 Market Trend

Market trend towards fast food has become the part and parcel of society’s lifestyle. Therefore, fast food firms need to adjust according to market trend as consumers of today are getting more budget conscious and price sensitive. Therefore, when any fast food firms come out with reasonable pricing meals, they will be able to gain market share.

2.2.4 Competitor Analysis

The food industry which consists of Quick Service or fast food restaurant has been thriving for years. Fast food industry dominates 72.8% of the whole food industry revenues as fast food firms aim to achieve their market niche in the fast growing economy of Asians countries (Wikidot.com, 2011). This leads to creating intense competitions among fast food players in order to capture market share. There are many competitors in the fast food industry which include KFC, McDonalds, Popeyes, Marrybrown and others.

Henceforth, the strongest competitor KFC is facing now is from McDonalds which operate 33,500 outlets over 119 countries. McDonalds is the major competitor as both product pricing and product variety looks similar. Locally in Malaysia, KFC also encounter close competition with chains like Popeyes, Marrybrown and others (Appendix 2).

2.2.5 SWOT Analysis

The strength of KFC is having strong international brand recognition. This strong branding has enabled the company to hold 50% of the market share in the fast food industry.

The weakness of KFC is slow in product innovation. As KFC is still focusing on their core product chicken, they do not promote healthier alternatives such as fish, beef and shrimp products.

The opportunities for KFC is to expand the coverage reach of their delivery service in order to cater the needs of the customers who require home delivery. When the delivery service is extended to cover more areas, KFC will be able to capture a bigger market share of delivery services resulting in an increase in revenue.

The threat to KFC is that customers demand is shifting towards fresh and healthy food. Therefore, health conscious customers will tend to avoid fast food products that are usually fried items.

Details of the SWOT analysis refer to Appendix 3.

3.0 Market / Product Focus

3.1 Marketing and Products Objective

Marketing objectives for KFC introducing a new product is to remind and give awareness to the consumers on the existence of company’s new product. Besides, the objective is to be the market leader in introducing a new type of burgers which are not available in Malaysia while also increasing the revenues of KFC. Furthermore, the objectives are to attain a stable increase in market penetration.

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The product objective for “Chicken Rice Burger” is to provide consumers with food that is a healthier option with reasonably low calories. However, the product objective is attempted to shift away from standardized menu to a localized menu in order to cater to the local palates as rice is staple food in Asians countries.

3.2 Target Market

For socio demographic segmentation this product would target customers of the age 12 and above. For gender, both male and female customers of all social class in the society are targeted as this product is considered reasonable for the people.

For geographical segmentation, this product will be targeting in all KFC restaurants in Malaysia located in urban cities and semi-urban cities. However, this product is not available for worldwide restaurants as different country have different culture.

Rice is seen as a principle food in Asian countries. Therefore, this new product is targeted at rice lover people such as teenager, individuals/working adults and health conscious people.

Therefore, targeting teenagers as they are the segments that have the urge to try new food and leading an active lifestyle which needs rice as a source of energy.

Next, targeting the individuals /working adults are equally important as they are the people who are in the working force which lacking in time for their lunch. Hence, with the new product it enables them to satisfy their need of eating rice in a quick way yet healthy diet.

Subsequently, this new product also focuses in targeting health conscious people. As usually health conscious people will not choose to eat fast food. Hence, with the new innovations of rice burger with lower calories will attract the segment of consumers. For example: The weight of rice burger of 223 grams has 378 calories as compared to KFC Zinger Burger having the weight of 180 grams with 550 calories (Taipei Times, 2005).

3.3 Points of difference

Points of differences refer to the benefits consumer link with a brand, which they could not find similar with competitive brand (Kotler, P. and Keller, K.L., 2006). The points of difference for this product are low calories burgers which rice replacing the traditional patty. Additionally, competitors in Malaysia have not introduced this product in the market. Therefore, it is a good opportunity for KFC to increase market share from this product.

3.4 Positioning

For the new product, KFC will position itself as the first fast food chain in Malaysia introducing rice burger which is healthier alternative food yet gives the source of energy to the consumers. Henceforth, with the strong product attributes it will position in consumers mind that KFC serve the best rice burgers in town.

4.0 Strategy and Implementation

4.1 Product description and packaging

In the product strategies aspect, Chicken Rice Burger will be introduced. This product is made using the premium grains of fragrant white rice which press the rice into patties and the rice patties are then toasted to golden for perfection. Therefore, between the toasted rice burgers chicken meat, fresh lettuce and cabbage will be sandwiched. The toppings will include mayonnaise inside the rice burger and toasted sesame seeds on the top of the rice burger (Resnik, A., 2010) (Appendix 4).

For packaging, Chicken Rice Burger will be using box packaging. The box packaging design enables to roll out a creative and unique horizontal zip on the packaging whereby giving convenience for the customers holding it (EBSCO Host, 2012). Therefore, the box packaging is printed on with product name and photo to depict the product inside.

4.2 Pricing

In the aspect of price, the Chicken Rice Burger will be priced at RM 4.99. Therefore, the pricing strategies for this product will be using market penetration method. KFC priced this rice burger slightly lower than competitor’s traditional buns patties in order to increase market share for this product. However, this approach is used to draw customers away from competitors as it gives customer awareness of new product innovation as the product suits local palates and is a healthier fast food options.

4.3 Place

KFC uses indirect channel in distributing, as product ingredients comes from QSR Brands Corporations which they act as the suppliers for KFC. Follow by KFC acting as a retailer selling to the customers in 455 restaurants in Peninsular Malaysia and 84 restaurants in East Malaysia. The restaurants are mainly located in major shopping complexes, PETRONAS Petrol Stations, Highway rest areas and high streets in order to reach to the customers efficiently.

For promotion, KFC will use public relation to introduce the new product to the public whereby holding press conference at the KFC Headquarters. With the press release, readers will be introduced to this the new launched product under KFC reliable brand name. Next, KFC will get influential spokesperson and roadshows to promote the new product to the public.

Besides, also use sales promotions to stimulate buying actions, whereby giving special discounts coupons off RM 1 off during 12pm-3pm to boost up sales and introduce dinner deals like add on RM 2.00 for a drink and a fries.

Subsequently, using advertising method to reach to larger audience whereby using broadcast like television and radio to promote their new product so that they aware of the new product. Besides, to advertise in the newspaper and magazines regarding the new product by KFC that can efficiently reach to larger audience. Furthermore, KFC will use the current most effective tool in advertising through social networking websites like Facebook, twitter and their own KFC home page to promote the new product to the technology savvy consumers.

5.0 Financial Data and Projection

5.1 Expected Revenue

The new product will be forecast at 8 million units to be sold throughout the 529 outlets in Malaysia after hitting the market in a year. Therefore, the expected revenue for this product is RM 39,920,000 million. The projected forecast is based on analysis from the sales unit of McDonalds rice burger Taiwan, which they have successfully achieved 5million units sold in the first six months of launching (Taipei Times, 2005).

5.2 Expected Market Share

The new product is estimated to increase by 0.8 % of the market share based on KFC market share of 35% in 2011 (QSR Brands Bhd, 2012). The 0.8% increase of market share is achievable in view of the product unique selling point ie healthy burger with low calories (Appendix 4). Furthermore, there is no competition from competitors as similar product is not available in the Malaysian market.

6.0 Implementation Plan

6.1 Gantt Chart

KFC promoted their new product through various promotional mixed. Therefore, the promotion strategies will be shown in the Gantt chart stating how KFC run the numerous promotion activities throughout the one year. (Refer to details of Gantt chart shown in Appendix 5).

6.2 Promotion schedule

The cost effectiveness of communication tools also vary at different stage of the product life cycle. An effective promotion schedule dictates how the promotion method is being implemented. In the introductory stage, press conference, spokesperson, roadshows and advertising are important roles in creating awareness to the public. Discount coupons will be used when the market is satisfied with the new product, as it enters the growth stage when sales are still increasing. In the maturity stage, advertising on television is important to remind the consumers on the new product when sales begin to indicate slowdown. In the decline stage, KFC needs to initiate new ideas such as lunch and dinner value meals to stimulate demands as there is slowdown in sales. Thus, with an effective promotion schedule it will give success to the new product (Refer to appendix 6 for details of the promotion schedule).

7.0 Risk analysis

The expected risk associated with the new product is the degree of uncertainty of acceptance level of the product from consumers even though it proved successful in McDonalds Taiwan., after spending a substantial amount of promotion costs. On the other hand when the product is widely accepted by the consumers, competitors will invariably jump into the bandwagon of starting similar rice burger concept at a lower price.

Higher allocation of funds may be required for additional promotions if the take up of sales is slower than as expected. This additional costs incurred will affect the expected increase in revenues.

8.0 Conclusion

In view of the KFC’s current marketing mix and marketing practices, KFC is suggested to shift itself to be one of the fast food chains who offer more variety of healthy food in order to achieve their objectives of increasing revenues. Therefore, with the strong marketing efforts on the new healthy product implementation it gives consumers to shift away from their perception that KFC is usually serving unhealthy food. Thus, with the adoption of the new marketing plan, KFC is able to penetrate higher market share in the industry.

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