By exploring KFC’s products, we can find that it has a series of traits. It is a standard production, which adapts its restaurants to local tastes, different cultural and political climates. Basically, KFC has the special recipe for chicken products and that is why KFC known as a chicken specialist all over the world. What’s more, KFC is a kind of fast food, which can provide a quick bite for the person who pays less attention on healthy-diets. Besides, I have to mention that one of KFC’s strength is its focus on family meal, which is a factor that attracts more people who have families.
2. Service
KFC offers customers high consistency from one visit to the next because of its standardized preparation procedures. In America, KFC offers free home delivery service at specific branches in specific cities, KFC provides services to celebrate the birthdays of kids at their home or in KFC restaurants, now KFC also provides services of mobile unit of KFC.
In order to explore a further development, from my perspective, KFC should extend its product line and bring out more new product to fit the customers while at the same time protect its own classic products. What’s more, KFC should take some practical measures to create its brand loyalty of consumers, which is a consistent preference of consumers over all other congeneric products. In addition, KFC should keep its core and supplementary services and develop much more services that match with the local consumers.
Price
KFC’s price positioning
A common meal of KFC is 7 dollars, while currently, in the U.S., the per capita income is 90 dollar a day, which is about 13 times the price of a meal in KFC. So KFC should focus on middle and low-income groups.
KFC's pricing strategy
As a global brand, KFC use multiple price strategy due to different market situation. The price strategies that implement in the U.S. have a big difference with its global strategy.
Currently, KFC’s biggest market share is moving to the immature markets and developing countries. As a result, KFC choose the price skimming as its pricing strategy. Because of its advanced management experience, advance the supply chain, advance technology, and strong financial support. KFC is the top brand and its product is more competitive than other competitors. On this condition, KFC product can attract consumer from middle or higher income level.
However, since the target market changed in the mature markets and developed countries such as U.S., KFC should choose the status quo pricing strategy which stays with the price of competitors. In this area, fast-food is the lower consumer goods and this industry has been very mature. There are full of competitors such as McDonald’s, Burger King, and Subway which have the same homogeneity and their competition is extremely intense. On one hand, each competitor has its own independent and perfect supply chain, so the costs of product can be compressed to a minimum. On the other hand, the service, product quality, and the product categories are all most the same. Differences are not large. Because of these two factors, KFC should lower its price in order to attract consumers from middle and low income levels thus stay in a competitive position.
In addition, Comparing with other competitors, KFC chooses different prices to increase the diversity of product. Since KFC position itself as a fried chicken expert in the fast-food industry. Fried chicken is popular and best product of KFC .In order to increase its differences and consolidate its leading position, KFC pricing its fried chicken with a price higher than any other fast-food competitors. In general, its price is higher about 5%-10% than others, while other product such as hamburgers and beverage prices are basically the same as with the competitor.
KFC face the pressure to raise the price
In recent years, since the using of bio-fuel which made from corn, costs of KFC’s raw material keep getting higher and higher and the cost of human labor is also increasing. However, in order not to drive away its consumer who can only accept a relatively low level price and remain in a competitive position, there is no room for KFC to reduce the cost in its complete supply chain. For this reason, KFC is facing the great pressure to change its price strategy in order to solve the problem.
Promotion
Promotion is the method used to inform and educate the chosen target audience about the organization and its products. The promotion of KFC is quite varieties such as TV program, Internet, public relation and so on. Moreover, KFC innovates a new menu set for it is easy to order and can save money. A special menu set also is cheaper than normal. At KFC, promotion is the main tool to bring all chicken lovers attention towards its delicious one-of-a-kind.
One of KFC’s promotion methods is sales promotion, which includes Premiums, Exhibits, Coupons and Entertainment.
Premiums
For sale promotion KFC has used premiums strategy that give gifts as premiums like watches, keychain, coffee cup, T-shirt, toys to attract customers especially teenagers.
Exhibits
KFC sometimes will hold a huge exhibition in public and let people know the history of KFC and its new products. Since the exhibition will attract people various from different ages and social statues, KFC are able to enlarge its consumer market significantly.
(3) Coupons
All KFC outlets offer its customers with various forms of incentives to buy its Chicken. 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. This strategy can attract many people from middle or lower class people in the U.S. who are always seeking for a lower price.
(4) Entertainment
In some KFC restaurants, children can have a special birthday party and they can play in the amusement area to get a lot of fun. This special service are welcomed by young parents who are busying working and have no time to spend with their children, since it can provide the family a good time to get together and have fun together.
In addition, KFC do its promotion by Advertisement. The channels often used by KFC are through TV Channel, Logo of KFC, Hoarding, Sponsorship, and Mobile vane.
TV Channel
Advertising on different cable channel like Ten Sports, ABC, TNT and also advertising on world call cable advertising.
Logo of KFC
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.
Hoarding
Using regular hoarding to propagate promotion activity in order to make people buy more foods they like.
Sponsorship
This is another tool to strengthen an organizations image. KFC is currently the sponsor of the Australian Cricket Team and the colonel logo can be seen on their uniforms throughout the matches. Since sports have always been very popular among the young people, the sponsorship can leave an energetic and active brand image.
Mobile vane
For the delivery of the order is very quick service, for this purpose KFC has a mobile vane that makes it possible within 30 minutes to deliver the products. The vans also can be a source of advertisement.
Place
KFC operates more than 5,200 restaurants in the United Stated. It has its outlets in various locations throughout the state which are going to cater to our needs for the distribution process.
1. Generally, KFC have two target consumers
(1) People living in a hectic lifestyle – Currently, more and more employees in the U.S. are living in a hectic lifestyle. These kind of people spend whole days working in front of their computer and neither feel like neither having meals nor preparing meals by themselves. The hectic lifestyle made individuals formulate the fast food concept of saving time on preparing food and have a full meal in a very short time.
(2) Consumers who don’t like cooking such as young people. They always like to try something new and eating out with their friends will always be the best choice.
2. The placement of KFC outlets
Target on those consumers, KFC has its special outlets placement strategy. In order to satisfy consumers who have a busy lifestyle, KFC open their outlets in cities such as the first and second tire cities in eastern U.S., in which transportation conditions are better and are in a higher population density. By going to KFC, people can buy their products easily and quickly. KFC have a large market in these kinds of cities because the products can satisfy the citizen’s needs.
In addition, since KFC’s target market are mostly young people. It always place itself close to schools, colleges, cinemas and commercial areas which are mostly populated by young and people who are in a hurry.
These customized placement strategy enable KFC to cater its target consumers.
3. Selling Methods
KFC uses three different methods of selling its products directly to the market.
The first method of distribution used by KFC is direct delivery which is especially appealing to consumers who always work at office or home. They can call KFC ahead of time to place an order. In the last few years, consumers are demanding greater convenience when purchasing. “Free Home Delivery” provides consumers a lot of conveniences. Even in the case they don’t go out their house or office; they can still enjoy KFC’s food. Customers can visit the website to know their operations and about their products.
Another method of distribution which is for customers to dine-in. Customers can go to the nearest KFC restaurant, place an order and either take what they ordered away or just eat at the restaurant. As we know, one of KFC’s strength is its focus on family meal. KFC provides customers a clean place to sit down and enjoy KFC’s products in a fun and family atmosphere. This method made KFC suitable in every stage of life: not only married couple who have children but also single person.
The third method of distribution is online ordering which is still not wide implemented all over the U.S. This method is suitable for those people who do not have much time to prepare meals by themselves. Those people spend whole days in front of their computer to do work. It’s convenient for them to finishing an online ordering. Since the ordering method is useful and did very well in Singapore. KFC in the U.S. has selected California’s South County as the test market that able to determine whether online-ordering services will rollout nationwide. This method is welcomed by the customers because it allows customers to view the entire menu and download any special coupons.
KFC adopts a decentralized marketing system which means managers run operations according to American culture, political and economic situation. This enables KFC operation more flexible. And KFC has its franchises method for channel management system. KFC opens its franchises in most populated and well income areas.
Suggestions
Combine KFC’s target market and its current financial pressure, we have conclude that on one hand, it must reduce the operation cost of outlet; on the other hand it should promote some new product and find new methods of distribution which can bring it more profits. Here, we would like to illustrate some specific strategies for KFC’s future development.
1. Research and development the frozen product sold at supermarket and grocery.
Since KFC provide the family meal to U.S family in its outlet, it can also develop the frozen instant meal and sale them at the supermarket and grocery. Comparing to outlet, where KFC has to sale meal by human labor, distributing products to retailers’ store would cost fewer expense of sites leasing and labor employment.
What is more, there are more and more people would like to purchase food at supermarket only one time per week and do not to eat outside. Although they like the flavor of KFC, the most vital reason why they don’t drive out is because of the cost of time and gas. It is hard for the whole family member to get together and eat outside. But if they can buy the frozen product at supermarket in advance they would have more time choices to enjoy it.
2. Open more outlets in downtown and other population-concentration areas.
While McDonald and subway target on individual, KFC prefer to family. However this doesn’t indicate that KFC couldn’t enter the individual market. KFC can simplify the meal which is more suitable for individual’s intake and open some outlets at downtown and some other high population concentration areas. The outlet located at those areas could not only have higher sales but also promote the brand image to more and more people.
3. Coordinating with those companies whose target are also young people and do a series of coordinated promotion.
For example, KFC can coordinate with toy companies so they can manufacture some kinds of exclusive toy that are accompanied with kids’ meal. Besides, KFC can coordinate with some Hollywood companies, promoting the upcoming movies’ and KFC meal together. This conveys a message to customer: you can watch movies at home, with the enjoyment of KFC’s fried chicken wing.
4. R&D more kinds of food made without increasing-price material.
In these years many commodities’ price keeps going up, such as corn, which accelerates the cost of chicken and erodes KFC’s gross profit directly. To deal with this serious problem, KFC should release more kinds of meal what are not made of those increasing-price materials. For example, KFC can release some vegetable meal, like salad and soup, accompanied by the promoting concept of healthy diet. KFC can charge this food higher than normal food, thus make up the lost of increasing cost.
Reference
1. Crewe and Alsager Faculty, STRATEGIC MARKETING: PLANNING AND CONTROL, 2003
2. The Hoovers, KFC Business Intelligence, Hoover Research Journals, 2008 [Online accessed 1st May 2008]
3. Rahzzla Zolaiqar, KFC Project, 5th of November, 2007
4. Lamb, Hair, McDaniel, Marketing, 7th Edition, 2004
5. Yum! Brands, Inc. Annual Report, 2008
6.
7. http://kfccoupons.cre8hosting.com/index.php?zipcode=97201&submit=Submit
by
may1st (student)
