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Background of KFC

1.1    Background of KFC

KFC started operating in New Zealand in 1971 in Auckland. KFC is now present in more than 98 stores in the country. It also maintains consistency in serving the same delicious food in all its stores. The real original recipe Chicken popular in New Zealand is uses Colonel’s world known 11 herbs and spices. KFC New Zealand also introduced a wide range of fresh taste familiar product. The menu of KFC also includes Hot and Spicy chicken, Wicked Wings, Twisters, and many more delicious varieties for which the people of New Zealand are crazy. Most recently, transformation of stores with cubicle space sitting arrangement, outdoor seating and plasma screens is the main aim of KFC. They developed more than 65 stores in New Zealand. In fact, New Zealand’s store plan has been so effective that it has been taken on as the standard for KFC worldwide. The vision of KFC is to be the leading food services provider group in the world and give consistent quality products. The mission of the KFC is to increase the profitability, enhance shareholder value and providing sustainable growth every year.

1.2 Portfolio of organization 

The products offered by KFC are chicken, mashed potatoes, biscuit, gravy coleslaw, corn on the cob, green beans, and drinks. The report describes the various marketing practices of KFC New Zealand. The analysis of various current market environment factors is discussed to know the impact of environmental factors on KFC. After this the competitor analysis is described to know the effect of competitors on the performance of KFC. Then the marketing strategies like segmentation, targeting and positioning is discussed to know the target market strategy of KFC. After analysing marketing strategies the marketing mix various components is discussed in detail to know the 4P strategy of company. In the end future marketing plan and strategy of the company is analysed to find the future target and aim of company.

2.1     PESTEL analysis: 

2.1.1 Political factors:

Present: The political factors which affect the performance of KFC primarily are tax regulations and government stability. The company’s presence in New Zealand will be affected positively as the political system in New Zealand is stable and company performance will not be affected due to instability.  

Future: The Company needs to adopt changes frequently according to the political environment in a country in future (De Mooij, 2013).  Moreover there are several laws related to health and food security and are becoming mandatory for the organizations to follow them.

Portfolio of organization

Legal factors:  

Present: KFC is a well-known company in the food industry. In order to comply with the applicable law, the KFC is adopting and adhering to prevalent regulations in New Zealand. The company’s financial statement and other documents need to be authentic and valid in order to exist in that country (Hollensen, 2015).

Future: KFC should also fulfill sustainability regulations whichever applicable on it. The organization will try to enhance the sustainable economic growth and social equity. 

2.1.2 Economic factors:

Present: The economic factors bring the concentration of the organization towards the specific determinants which affect business. The main determinants are interest rates, inflation and taxation leaving impact on the revenue generation of KFC.  Moreover the prices of products of KFC are changed as there is higher tax on the food products.

Future: In future, the purchasing power parity (PPP) inside the New Zealand is increasing from time to time. The increase in PPP started already in last decade which is leaving effect on the restaurants chain like KFC. The KFC future growth will be affected due to less purchasing power amongst youth and middle income families.

2.1.3 Social factors:

Present: Society's attitudes are towards the habit of consumption of healthy food are changing in the recent year. Individuals these days are consuming more healthy food and less fried food. Today, customers are selecting the restaurant which provides quality food, lesser service time and variety of products.

Future: KFC's customers are generally price sensitive and will go to some other restaurant in the event they find the value they received isn't justified. In future also the customers will needed to be served quickly in very less time and to be out of the eatery in very less time. In New Zealand KFC, is adorning its outlets indifferent national and social occasions. The advantage which KFC provides is employment with every new store to approximately 20-25 people.

2.1.4 Technological analysis:

Present: KFC uses technology to attract customers from other competitors. The innovative techniques are introduced in the business area with an increase in competition. With the lower rates and modernization, fast food companies are attracting youth by providing the entertainment activities at restaurant.

Future: For a fast food diner, innovation will have an impact on the company reputation. However KFC should look to competitor’s improvement and upgrade itself in terms of organizing development.

2.1.5 Environmental factors:

Present: It is one the important analysis needs to be done by the company to know the effect of its activities on the environment. KFC is moreover preferred by customer as the waste produced by it is not harming the environment to great extent like industrial waste.

Current market environment

Future: KFC purchases its packaging and raw material from a company which will be contributing in deforestation for preparing the packing material.

2.1 Micro analysis of KFC (Porter Five Force):

  • Threat of new entrants:

Present: Though the fast food chain industry is difficult to enter due to the presence of a large number of competitors. KFC, Pizza Hut, and many other brands are giving a stiff and tough competition to new entrants in the market. Moreover, the Radix Fried chicken has become more popular nowadays because of offering a renewed menu (Dobbs, 2014).

Future: KFC is having the advantage and image of possessing well-known brand amongst the mind of customers. This is creating the benefit for KFC as the international ventures of KFC are becoming more popular (Armstrong, et al., 2014). It is preferable by customers as they choose KFC in comparison to other new fast food restaurants unless the new entrants actually offer different menus as compared to the more established restaurants.

  • Threat of substitute products:

Present: There are various fast food outlets in the market offering comparative food variety as KFC (Magretta, 2011). For example Popeye's Louisiana Kitchen has been one of the best market opponents for KFC. The fast food eatery offers side dishes such as, Cajun sauce, pureed potatoes and rice notwithstanding giving customers mellow and fiery chicken alternatives (Varadarajan, 2010).

Future: The threats of substitutes in case of KFC products in future are high as other competitors are providing identical products only. This has made the fast food eatery exceptionally prevalent. Moreover, KFC has increased its diversion by giving Wi-Fi administrations and furthermore providing morning service to customers.

  • Bargaining power of suppliers:

Present: KFC is having access to numerous suppliers of their primary item which is chicken. This gives the eatery adaptability to work with the best suppliers. For example in 2004 the organization terminated an agreement with one of their chicken providers on account of unrefined butchering of the chicken. The major population of suppliers declines the impact of individual suppliers on McDonald's. Future: In light of the absence of territorial or worldwide organizations together among suppliers the power of suppliers will decrease in future as well. This implies they don't control the delivery system connected to McDonald's offices. The abundance of other items present in market easily like flour, wheat and other also reduces the effect of these suppliers on KFC.

  • Bargaining power of buyer:

Present: The bargaining power of buyer is high in influencing KFC’s business. In case of KFC buyer’s high bargaining power depends on two factors like they are low switching cost for individuals and small quantity of product purchased by customers. It is simple for customers to switch brands, consequently making them capable in convincing establishments like KFC to assure consumer satisfaction.

PESTEL analysis

Future: Every buyer purchase is small in comparison to KFC aggregate income (Shen & Xiao, 2014). For future determination of demand by customers becomes a difficult task as customer switch to other brands easily. In this manner, the Five Forces model demonstrates that KFC must incorporate the buying power of customers as amongst the most critical factors in creating future strategies.  

  • Competitors rivalry

Present: KFC is facing the strong competition from rival companies. This component of Porter’s five force model discloses the power of competitors present in market on each other. Companies like McDonalds, Pizza Hut and Subway are the main competitors of KFC.

Future: in future aggressiveness will be significant factor in development, forceful promotion, exchanging cost, and brand name loyalty (Dey, 2016). These all implies that earning customers loyalty is difficult and in this manner making rivalry significantly harder in future also. The Five Forces model demonstrates that competitive analysis is among the huge attentive point in KFC strategy formation.

2.3 Market situation

2.3.1 Competitor Analysis:

Competitor

Brand

Product benefit/features

McDonalds

Burger

· McDonald’s products never run out of stock, Less costly, low calorie, convenient to carry anywhere, double Cheeseburger (Zaheeruddin, 2015).

Subway

Chicken

· Gluten free options, freshly cooked, 100% white meat chicken, special species used.

Pizza hut

Pepperoni Pizza 

Fresh and frozen for safety from harmful food infection,

Different toppings available.

3.1 Market Segmentation analysis:

3.1.1 Demographic:

Present: KFC has many demographic segments to provide product according to the target customer needs. It is called division of market into various geographical units, for instance countries, regions and cities (Ryan, 2016). KFC has outlets in almost every country.

Future: KFC will be selling its products in accordance with the needs and demands of customer. For instance, it is planning in New Zealand to have has approximately 500 numbers of outlets and to be present geographically in every city of New Zealand.

3.1.2 Psychographics:  

Present: This segment helps KFC to find out the lifestyle, personality traits and values of people. These factors will be enabling KFC to find out the needs and demands of family and trends in food industry.

Future: In future the families will be more active and going for picnics will be targeted by KFC preferably more than families who prefer home food at daily basis (Zahay & Griffin, 2010). Moreover the modern family will purchase more frequently market food for their family members then conservative family.

3.1.3 Geographic:

Present: KFC is a global company and located all over the world. Therefore the company should target other countries to introduce their product and become a famous brand in every possible country (Wymer, 2011).

Future: The segmentation in geographic areas in future will be done by KFC like in country, states and cities variety of choices of customers. Then after deciding segment company should focus on best way like regional retail stores to introduce KFC’s product.

Micro analysis of KFC (Porter Five Force)

3.1.4 Behavioural:

Present: It is dividing the market in different groups on the basis of the customer behaviour, attitude and response towards the product. KFC is segmenting the market in behavioural segment according to taste, quality, ingredients and many more categories.

Future: Following four will be main categories in future which KFC will use in behavioural segment.

  1. Taste conscious
  2. Quality conscious
  3. Class conscious
  4. Combination of price and quality

3.2 Target Market Analysis

Undifferentiated marketing analysis:  

Present: In an undifferentiated marketing also known as Mass marketing, a firm typically ignores individual segment differences and targets the whole market with mainly one offering (Dibb, 2010). It emphasizes on designing a marketing program for a product or a service with a superior image that can be sold to huge number of buyers through mass distribution and communication channels.

Future: Undifferentiated Marketing will be appropriate for KFC in future also, as all the consumers in fast food have identical preferences and the market showing no natural segments (Keegan & Green, 2015). Moreover the undifferentiated will be preferred by KFC and they will be having good marketing team and resources. This will help KFC in producing more and more products and expanding the marketing base to great level of people.

3.3 Market Position Analysis

Present: The positioning statement of KFC is Life tastes better with KFC. The positioning of KFC is its remarkable taste of item that and it not only offers chicken, it offers variety of products and fulfillment of client needs and demands (Fuchs & Diamantopoulos, 2010).

Future: For future, KFC is designing consumer preferable interior of restaurant like.

Four Seat Zone- Nearly 160-180 seats underline of the various gathering of customers. That it can be quiet zone for client.

Dinning Zone- It is a zone for clients who require a formal eating. Dinning zone comprise of a square table, a red living room seat that it is attractive during family gathering.

Eating Zone- It is a zone for clients who need a light meal or can wait for an arrangement to taste water, the French fries. This zone is the chair type of the Red Lounge Chair that make feels casual and agreeable (Blankson & Crawford, 2012).

KFC amended new stores for the desire of customer since they would prefer not to be just products to be served quickly but should be flavourful as well. For example, the KFC eatery on Floor 6 of Central World was revolted store and a picture that it is fashionable with music of Beyonce. It indicates worldwide Brand's KFC as a high brand.

4.1 Product strategy analysis:

Present: KFC is exceptionally managing its operations and product development in the chicken products. Primarily, KFC has the special recipe for all chicken products making it unique from competitors (Jobber & Ellis-Chadwick, 2012). KFC is famous as a chicken expert everywhere throughout the New Zealand due to the varieties and quality of product offered by it.

Future: KFC will focus on the population of different zones of New Zealand which like the chicken items. They will be entering in the every possible market because of the request of their chicken items (Stark, 2015).  

KFC is variation of item in the chicken, those well-known products are:

Product Categories

There are distinctive items which customers prefer are:

1) Chicken

2) Burger

3) Desserts and Beverages

4) Snacks and side requests.

Augmented products:

KFC is delivering superior products services and still the scope of administrations isn't finished (Blattberg & Deighton, 2010). KFC equips its workers to give fast and productive support of the customers who are standing in lines to take their order.

To give great augmented services they have a strategy of CHAMPS Program. CHAMPS define that customer satisfaction and loyalty can be achieved only by focusing on values desired by customers from KFC. CHAMPS remain for the six general territories of customer desire normal to all societies and eateries ideas.

The CHAMPS for products is as follows:

  • Cleanliness
  • Hospitality
  • Accuracy
  • Maintenance of Facilities
  • Product Quality
  • Speed of Service

4.2 Price strategy analysis: 

Market Skimming:

Present: KFC enters the market by using market skimming. The products of KFC are generally priced high and focus on the high as well as middle class individuals. Then after some time they move down the costs concentrating on the lower class individuals as well to infiltrate the both sides of the market (Peter & Donnelly, 2011). On account of KFC, Fried Chicken is the main offering product which controls monopoly over the fast food market. It generally set prices for its burgers, French fries and drinks by keeping in the mind the strategy of rivals.

Future: KFC in future also will values different product keeping distinctive focuses on all categories. Pricing of the product is already inclusive of the government taxes and other obligations. The final price of the product in future also will be decided by after taking consideration of all cost and taxes. The products are generally higher than the market price in comparison to the market competitors but it do provide standard of the product.

4.3 Place Strategy Analysis

Distribution strategy:

Present: KFC is using the service firm sponsored supplier franchise system. The franchise buys all the ingredients it uses and fulfils all other requirements of the KFC. This practice is adopted to have the product up to the standards of international KFC chain (Lin, 2011). The Suppliers of KFC include K & Ns, Pepsi Co, Hilal and Nescafe. Breads and bunsare produced by KFC chefs only. Chicken is mainly imported from California, India and Dubai. Future: The food companies within New Zealand will compete in the industry by raising prices or reducing quality of produced goods or services and reach to huge number of population. Moreover KFC will be using the franchise system for providing products to its customers. The suppliers will meet the requirement kept by the KFC which it sets according to the international standards. The distribution strategy helps KFC in reaching to all the target customer effectively.  

4.4 Promotion Strategy Analysis:

Advertising:

Present: KFC introduce the new items amongst the customers by using numerous types of promotional methods. They educate the target customer about the new items, its type, value, its accessibility and so on (Ataman, Van Heerde & Mela, 2010). With the advertisement, KFC induces their clients to purchase the items. For achieving this, KFC will make a decent and alluring advertisement for everyone, so that their customers will pull in to purchase the items.

Future: Using the great advertisement will influence the clients to recall about the items. Undoubtedly, they will come back again to purchase the items. They will present it through various kinds Media Types like:

  • Newspaper
  • Radio
  • Internet

Sales promotion:

Present: All KFC outlets offer its clients with different types of incentives to purchase its Chicken. Utilizing coupons which a customer gather after spending a specific sum over a specified time, clients can appreciate the advantages of free meals or free additional items.

Future: KFC will use the following tools to further enhance its sales in future.

  • Premiums
  • Exhibits
  • Coupons
  • Entertainment

Public Relations:

Present: KFC is developing respectable relations with organization various population by achieving positive promotion activities, developing corporate image, and managing or removing negative rumours against the organization (Shah, 2013).

Various tools used by KFC for Public Relations Tools are:

  • News
  • Speeches
  • Internet

Future: The future campaigning through public relation will help KFC to attain the future objectives also. The future public relation KFC can use mainly are social media like Instagram, Facebook, and other sites which will help KFC in gathering more and more customers.

Marketing budget 2018

Marketing budget expenses

Jan

April

July

October

Amt ($)

Amt ($)

Amt ($)

Amt ($)

Advertisements

15000

16500

18150

19965

Catalogues

3000

3300

3630

3993

Websites

5000

5500

6050

6655

Promotions

10000

11000

12100

13310

Shows

8000

8800

9680

10648

Public relation

10000

11000

12100

13310

Training

15000

16500

18150

19965

Services

13000

14300

15730

17303

Total (A)

79000

86900

95590

105149

Sales (B)

150000

160000

200000

250000

Marketing expenses/sales

53%

54%

48%

42%

Marketing Mix activity:

Product: A product can be described as anything that can be offered a business opportunity for consideration, and utilization that fulfill need or demand of individual. KFC is managing in the chicken items excellently (Yüksel, 2012). Basically, KFC has the exceptional formula for chicken items which is the reason for KFC to be known as a chicken pro everywhere throughout the globe. KFC focus on the New Zealand and east side since they watch that these individuals like the chicken items, so they enter in the market because of the request of their chicken items (Papadopoulos & Heslop, 2014). KFC is variety of products in the chicken, those items are

Product Categories

There are distinctive items separated into segments according to the difference in the product are:

1) Chicken

2) Burger

3) Desserts and Beverages.

4) Snacks and breakfast.

Burger:  It includes the following burger items:

i)    Mighty Zinger, ii)   Zinger Extreme, iii) Fish Zinger, iv) Veggie Burger and v)    Colonel Fillet Burger

Price: Price is any amount of money that customers have to pay while purchasing the product. More broadly, price is the sum of all the values that consumers exchange for benefits of having or using the product or services.

In the introduction phase KFC adopts the market skimming pricing strategy to enter the market (Woodcock, Green & Starkey, 2011). The products are priced at higher rate and targets only rich class people. After sometime they move down to absorb the other customer in market as well, so in future KFC can also adopt this pricing strategy to know the popularity of its product amongst the people. Prices of the products are decided according to the prices of competitors also to attract the people. Moreover the legal force also has impact on the prices of KFC’s products.

Place: Place includes the following areas where KFC will be opening the business in future to increase the size of company. The place decided by company is of no use if it is not reachable by the customers easily (Ingenbleek & Van der Lans, 2013). The success of opening a store depends upon promotional activity adopted by company to make the new outlet run effectively. The modern and digitised store should be open by KFC in order to success in the future as well. As nowadays people needs modernization, so the new store opening should be according to the needs and future requirement of the economy.  

Promotion: Promotion means activities that KFC can undertake in future to increase the business of company (Bruwer & Johnson, 2010). In present time the sales of company can be enhanced by the different promotional ideas like effectiveness of social media tools used by company to attract customers, unique television advertisements, e-mail marketing and various other ideas. These all ideas will help KFC in making its position in minds of customer in future as well.

7.1 Marketing metrics

Customer metrics: Customer metrics are methods which are used for calculating the value of customers in a company like KFC and KFC value in minds of people. The factors which are included in customer metrics are customer satisfaction, quality of product and loyalty. These measures are related to estimate out the estimated revenue a company will be generating in the future. The following are common types of customer metric which is used to calculate customer loyalty: Brand awareness and brand engagement.

Distribution metrics: The distribution metrics is also called market coverage; it can be defined as number of outlets covered by a product as a portion of total revenue of company. In case of KFC distribution metrics will help in managing the supply of its products to its stores.  

Communication metrics: The communication metrics defines the company ability to handle the complaints against company effectively through proper communication. The main focus of communication metrics for KFC is to handle the customer queries and solving them in very less time with effective communication.

Conclusion:

The above report discussed about the various marketing analysis used by KFC to measure its performance in market. The analysis gave a brief idea about how the competitors analysis, environment analysis can benefit the KFC business. This report also analysed market situation in which KFC is selling the product with the help of segmentation, targeting and positioning of the products. It follows undifferentiated strategy in targeting the customer with finding the USP of the product. After STP, the marketing mix is discussed in detail to find about product, price, place and promotion strategy KFC is using to lead in the market. And in last the future marketing plan off KFC is analysed with budget, and action plan of KFC with the help of marketing metrics.

References

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