History and market strategy of KFC

Kentucky Fried Chicken, better known as KFC, is the largest chicken restaurant chain worldwide with almost 1000, outlets located in well over 70 countries. CEO, David Rodgers, heads it, it is part of the tricon restaurants internationals which is one of the most leading multinational organizations in the world. Said to be the second most famous and largest fast food franchise in the World, No. 1 brand in Asia with the market leader ship in Japan, China, Malaysia, Indonesia, and Korea.

Colonel Harland D. Sanders perfects secret blend of 11 herbs and spices in Corbin, Ky., and restaurant.

Pete Harman insalt Lake City becomes the first Kentucky Fried Chicken franchises.

1956

colonel Sanders sells Corbin, Ky., restaurant and goes on the road to enlist new franchisees. The Colonel signs his first international franchisee in Canada.

1964

Kentucky Fried Chicken sold to the group of investors including John Y. Brown Jr., and Jack Massy for $2 million.

1969

Kentucky Fried Chicken listed on New York Stock Exchange. Colonel Sanders buys first 100 shares.

1971

Kentucky Fried Chicken acquired by the Hwublien Inc.

1980

colonel Sanders dies and is buried in Louisville’s Cave Hill cemetery.

1982

Kentucky Fried Chicken has becomes a of R.J.Reynolds industries when Heublein Inc. is acquired by RJR (now RJR Nabisco, Inc.).

1986

Kentucky Fried Chicken becomes a subsidiary of PepsiCo, Inc. for $840 million. Grand opening of Colonel Sanders Technical Center in the Louisville, KY.

1987

Kentucky Fried Chicken opens first Western style quick service restaurant in China.

1991

a new logo is introduced to emphasize chicken variety – replacing “Kentucky Fried Chicken”with ” KFC”.

1993

KFC adds non-fried chicken to menus in the U.S. and Australia.

1994

KFC officially opens its 9,000th restaurants in the world – in Shanghai, China – and announces a $200 million investment over the next four years for the 200 restaurants in 48 Chinese cities.

1995

KFC introduce Colonel’s Cristy Strips® and smashes Guinness record with ” World Largest Pot Pie” in New York city to introduce Chinky Chicken Pot Pie. Opens first restaurant in Moscow.

1996

KFC introduces Tender Roast® chicken pieces and brings back one of the world most recognized packages — the bucket.

1997

Kentucky Fried Chicken introduce Honey BBQ- flavored Tender Roast® Spicy Buffalo Crispy Strips TM and chicken TwisterTM – chicken and veggies ” like a meal all wrapped up and ready to go”.

1n 1997, Kentucky Fried Chicken entered the market under the banner of Artal, a European food conglomerate which has invested heavily in the food sector in the Pakistan. It goes credit to KFC that it was the first franchise to begin its operations from the densely populated area of Gulshan-e- Iqbal. This unique step was taken out of the special concern for the middle and lower middle class incomes groups who has so for being neglected by brand name franchises in their areas. The first KFC restaurant opened its door in January 1997, drawing thousand of the eager customers to enjoy quality food and friendly service in clean surrounding.

Boosted by the huge success of the first restaurant, new outlets mushroomed at prime location in both Karachi and Lahore that continue to attract a record number of quality food lovers.

Entrance of Kentucky Fried Chicken in the food industry has resulted in numerous positive developments in various areas. One of the major ones beings its contribution to the Pakistan economy by generating revenue and creating employment. Each Kentucky Fried Chicken restaurant employ roughly 50 local people which would total to near about one thousand direct employs in all- taking in all 18

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restaurants in Pakistan. Other than these there are number of indirect employs, for example, construction workers who build the restaurant and suppliers. All direct employs have to undergo mandatory training through extensive programs and a series of workshops in order to ensure efficient management and services.

To maintain and enhance our position as the leading WQSR chain serving good value, innovative chicken based products through consistently providing a pleasant dinning experience with fast, friendly service at clean and convenient locations. At all times, we must be dedicating to providing excellent service and delighting customers.

There are five departments in the company.

‘ Marketing Department

‘ Finance Department

‘ Operation Department

‘ HRM Department

‘ Quality Control Department

Marketing department:

Marketing is the delivery of the right product to the right customer, at the right place, at the right time and at the right price through right communication and promotion. Marketing is often dynamic, challenging, and rewarding it can also be frustrating and even disappointing. But it is never dull.

In KFC all the Marketing efforts (Product Planning, Pricing, Distribution and Promotion) are designed and combined in a coherent and consistent way. They have the updated knowledge of market situation. They keep eye on actions of the competitors. They consider that all employees are potentially good, responsible, helpful and trustworthy and they have given them opportunity for growth, self-control and personal responsibility. They know that teamwork and collaboration generate a greater volume of production than does destructive interpersonal competition. Now Kentucky Fried Chicken captures a maximum market share. This is only due to excellent marketing strategies adopted by the organization.

Marketing department is the main and most active department of the Kentucky Fried Chicken it perform all the key activities of the business. The basic purpose of the marketing department is to advertise its products in the market and keep eye on the competitors that what they are doing. The department introduces the new policies and satisfying the customers.

The body of the department is comprised of Marketing Manager, Assistant Marketing Manager and Planning Manager.

FINANCE DEPARTMENT:

The finance department provides close support the business manager on the financial implication of business strategies that are formulated. Regular feedback is also given to Departmental Heads to facilitate monitoring of cost at the department level.

The finance department prepares statutory accounts and management accounts of the business.

The statutory accounts comprise of all the final accounts of business transactions, Profit and Loss accounts, COGS (cost of good sold), Balance Sheet and Cash Flow Statement etc. which, by law, the business has to prepare. The Finance Department analysis the business results and prepare the monthly and quartly review of business operations. The Cashier handles routine day to day cash transactions.

This Department is also responsible for maintaining fixed assets listening and arranging insurance cover on the assets of the business the tax related issues of the Business and all the transactions processing’s, e.g. recording of sales and payments etc, are also handle by the Finance Department. Finally the Finance Department liaises with internal and external auditors, product margins, variable cost and fixed assets within the business as well.

OPERATION DEPARTMENT:

It is very important department in the Kentucky Fried Chicken. The incharge of the operation department is operation manager. This operation manager is responsible for the following operations and functions.

· Cooking

· Cleanliness

· Administration of restaurant.

· Complaint handling of the customers

· Daily order to procurement Department

· Day to day demand forecasting

· Daily lectures to crew people

· Trained the employees

HRM DEPARTMENT:

According to the marketing manager of KFC that HRM Department play a very important role in the organization.

The aim of this department to provide a highly qualified and competent employees to the organization. The HRM Department performs the following functions:

· Reviewing application form

· Interviewing applicants

· Inducting new employees

· Appraising employees performance

· Make a decision about the employees training

· Provide a career advice to subordinates

QUALITY QONTROL DEPARTMENT:

Quality control means monitoring the quality weight, strength, consistency, color, taste, reliability, finish, or any one of myriad of characteristics to ensure that the products meet the international standard.

For this purpose there is separate department in Kentucky Fried Chicken which is responsible for the quality control. This department satisfying the customers needs for the quality, and differentiate the organization from the competitors and attract the large number of customers.

The duty of this department is check the raw material that whether it is according to the standard or not. Department check the quality each and every step till the final product. Because according to the Marketing Manager of KFC the early detection of defective part of process can save the cost of further work on the product.

Marketing department of Kentucky Fried Chicken play a very important role in the organization.

ƒ‹ The first and basic function of this department is to promote its products in the market in different ways. According to the marketing manager of KFC we advertise our products on international television channels, print media, banners, etc.

ƒ‹ This department creates the awareness among the people about the packages, which are given on the special events like Eid, Basant, etc.

ƒ‹ Marketing Manager of KFC says that it is the world of competition, therefore to survive in the market we work for the future. So the third function of marketing department of KFC is to make plans to achieve the objective of organization in future.

ƒ‹ Marketing department of KFC also analyses to increase or decrease the sale.

ƒ‹ When the sale of KFC is going to decrease, the marketing department of KFC conducts a proper marketing research to find out the problems, basic reason behind the problem and try to solve it and to save the organization from this type of faults in future.

According to the marketing manager of KFC that marketing department have two objectives.

ƒ‹ The first department of KFC is to create the awareness and provide the following information to the higher authorities of KFC.

Œ This department shows the marketing position of the organization.

Œ This department shows the market share of KFC.

Œ This department gives the suggestion to the higher authorities for the future improvement.

Œ This department provides the information about their competitors to the higher authorities of KFC.

ƒ‹ The second basic objective of Marketing Department is that it meets the budget in the required time span. The marketing department of KFC is to promote its products and make the future plan to live in the budget.

Target market is the group of people to whom an organization wants to communicate its message and to generate some positive attitude, behavior and action toward the organization offerings. So while preparing or developing the promotional strategy, the organization need to clearly define their target market.

According to the marketing manager of KFC the target market is

‘ Upper upper class

‘ Upper middle class

‘ Lower upper class

‘ Highly paid professionals

‘ Youngsters

Competitors are the elements of paramount important in the business world. The analysis of the competitors activity is and important to do as to know the need and wants of the customers. The competitors are the force, which shape the activities of any organization.

The statement of marketing manager of KFC is that at this time we have two strong competitors:

‘ McDonald’s

‘ Subway

ƒ‹ FRENCH FRIES

ƒ‹ ZINGER BURGER

ƒ‹ COLONEL’S CHICKEN BURGER

ƒ‹ NUGGETS

ƒ‹ TWISTER

ƒ‹ HOT WINGS

ƒ‹ ARABIC RICE

ƒ‹ CORN OF THE COB

ƒ‹ DINNER ROLL

ƒ‹ FRUIT SALAD

ƒ‹ CHOCOLATE MOUSSE

ƒ‹ CHICKEN PCs.-ORIGINIONAL RECIPE/ HOT & CRISPY

ƒ‹ COLD DRINKS

ƒ‹ MINERAL WATER

ƒ‹ COLONEL’S SUNDAE

ƒ‹ COLONEL’S PREMIUM CONE

ƒ‹ RASS BHARA

ƒ‹ TEA

ƒ‹ COFFEE

KFC will position itself in local market as a bright, pleasant, air conditioned restaurants and “casual atmosphere” and will target families and young consumers which can be termed as “three generation from middle and upper middle income segments”.

KFC stands for high quality products, hygienic and affordable fast food in an array of complete meals. The chicken is prepared with unique secrets recipes in variety of ways to suit different taste and eating occasions. The meals are made more appetizing by supplementing with fresh, tasty side dishes and rich home style dessert.

Another aspect of KFC franchise is its demand for distinguished standards in quality, efficiency, hygienic, and sanitation. Hence the level of efficiency has subsequently risen amongst its competitors, which has resulted in an improvement in the overall food market.

MARKETING MIX CONTRIBUTION:

As we know that the marketing mix is the combination of four things.

KFC blends all these four P’s of marketing mix in a very organized manners, which helps the organization in satisfying the customers demand as well as achieving the mission of the organization.

Combinations of that marketing mix are:

‘ Product.

‘ Pricing Structure.

‘ Place / Distribution system.

‘ Promotional activities.

We select the product (Chicken PCs.) for the explanation. As we know that this product match the taste level of Pakistani people. KFC introduced this product first time in Pakistan in 1997, when they opened first restaurant in Karachi. This product breaks all the record of sale.

According to the marketing manager of KFC that we prepare chicken PCs. And mostly all the other products on the automatic plants and we deliver the product (Chicken PCs.) after the proper examination by the quality control department.

Raw material used in this product like meat, etc. is purchased from the big Supplier Company, which supply the meat at a same time to all the stores.

PRICE:

Prices of Chicken PCs. and all the other products of KFC are set by the Head Office by adopting the proper method. According to

Marketing Manager price of any product is equal to the cost plus desirable profit. According to the marketing manager of KFC that the pricing strategies of organization are different in the different countries due to different exchange rate, inflation, and different tax polices in the different countries.

But in Pakistan KFC main concern is to sell in volume and maintain it on long term basis. They are charging a price which they think fair to customers.

The policy of KFC is that they do not set the prices on the basis of competitors. The aim of KFC is to satisfy the customers in low prices. In economics we can say that when the prices are constant, the demand of product increase, volume of sale is increase, and revenue is also increase, as a result of this circle the profit of the organization is increase but the prices remains constant. So selling on low prices has a valid justification.

PLACEMENT:

The Chicken PCs. and all the other products of KFC are available at all the 18 restaurants in Pakistan.

DISTRIBUTION OF RESTAURANTS:

The first restaurant of KFC was opened in Karachi. After this KFC opened its restaurants in Lahore at Defense, Cavalry Ground, and Barket Market. At this time there are 18 restaurants in all the Pakistan. But the question is that why the KFC chose Defence area for opening the restaurant. The Marketing Manger of KFC gives us answer that before opening a new restaurant in any where our organization conduct a research to evaluate customers need, people buying power and customer expectations from KFC and to find out what current and potential competitors are doing in that area.

You can say that Defence is the area of the upper upper and upper middle class. In this area there are many up standard private universities like LUMS, ILM, etc. and collages, offices, posh shopping centers and the population itself is a good market for the fast food. Therefore KFC Defence attracts the students, children, families and visitors of that area.

On the other hand KFC in Karachi too has strong reason and argument about slecting the site of Nipa, Churungi, Gulshan Karachi. It is a strong education and family oriented middle class area. Most of families living are joint family system. Therefor this restaurant attracts the large number of the customers. The area is inhibited by the several million peaceful people who want to take their children out but there are not place this purpose. KFC provide this facility in that area and people are pleasure with us.

PROMOTION:

The element in an organization’s marketing mix that serves to inform, persuade and remind the market of a product and/or the organization selling it in the hope of influencing the recipients feelings, beliefs, or behavior. The policy of KFC is that to adopt the same methods to promote all its products including the Chicken PCs.

According the marketing manager of KFC that they use the following promotional methods:

ADVERTISING:

Advertising is non-personal communication of information usually for a persuasive in nature about product services or ideas through the identified sponsors through the various media.

Advertising perform the communication, education and marketing function it tells people about the benefits of products or services and educate them how they can make their life and time better off.

In KFC advertising are performed by the marketing department.

The advertising are used by the management of KFC and rational behind it is that the organization consider that it has a market segment. So advertisement will have a great waste reach and their advertising cost per consumer or the customer will high enough. So advertising is not very appropriate tool of promotion mix for them.

However regardless of heavy or low use of the advertisement, the advertisement of the organization serves for the two purposes and various with respect to advertisement conducted by the central body and that advertisement activities are:

· About the multinational chain of KFC.

· The local body conduct advertisement about some packages which serves the functions of educating the people how they can make their time more pleasurable.

TELEVISION ADVERTISEMENT:

Television combine sound, motion and design special visual effect. But KFC advertises himself on TV in other countries. In Pakistan it gives ads on TV very rarely. In 1997, when it opened its first branch in Karachi at that time it advertised itself on TV properly. The purpose of this advertisement is just to create the awernance among the people about their products and packages.

PRINT MEDIA:

They give the desirable information in the print ads to the target market in order to inform the customers about the benefit of their products.

Whenever they introduced new products they give ads on print media at regular intervals. So that the customer is informed about the new product. For their matured products they give ads with different gaps in the newspapers. The newspapers they use are:

‹ The news

‹ Dawn

‹ Jung

OUT DOOR ADVERTISEMENT

In order to remain in the mind of customer KFC used out door advertisement i.e.

¾ Billboards

¾ Banners

¾ Posters

PERSONAL SELLILNG:

Personal selling is the special form of the interpersonal communication. Their goal is to bring its prospects attention that will satisfy a need and that will elicit a response, hopefully in the form of purchase.

Personal selling is highly effective when target market is narrow one and you need to convince the prospect in order to induce an action from him. But this technique demands higher degree of considerbility. The sales force of KFC needs to know about their products and that of competitors, must allocate the customers with potential, discover their needs, developing the sales presentation directly striking at the needs of the customers, and after close the salesmen the must go for follow up.

KFC Marketing Management considers it as one of its most important tool. The management says that it is the tool, which helped them to develop and persuade their customers at the beginning of their operation. The Marketing Manager of KFC says that it’s a very powerful way to promote the products.

PUBLIC RELATION:

It is communication efforts that are designed to favorably influence attitudes toward an organization, its products and policies. KFC is not just a quality food restaurant, but also a socially conscious corporate citizen. It has been equally involved in promoting and funding several community welfare projects through aggregate KFC revenue. TCF (The Citizen Foundation) is a professionally managed, non-profit organization with the aim to provide underprivileged children with basic and formal education and to contribute toward increasing the literacy rate in Pakistan. KFC has collaboration with the TCF to further the main objectives with dedication and professionalism by opening school in Pakistan. Another social venture is the Children’s Hospitals. KFC strongly believes in humanitarian issues and is devoted to the cause of helping impoverished children. It has using its increasingly popular mascot Chichy to provide the children of NICH (National Institute Of Child Health) and SOS villages of Pakistan with lively entertainment and toys and contributing toward their development. KFC also helped the different NGO’s (Non Governmental Organization). According to the marketing manager of KFC that organization do all this to fulfill the social responsibility and create a good image in the market.

KFC ensures steady international standards of quality base on the basic ingredient of perfection in technology, financial acumen, and trained management – all aimed at making its customers satisfied and satisfied to the highest degree.

RECOMMENDATIONS

. KFC should increase their own restaurants , which enables it to control quality ,services ,restaurants and cleanliness. Therefore more capital is needed.

.On the other hand if company operated franchise based restaurants overall in latin America, its brand image could be build, and its competitors will be loosing first more advantage.

. Latin America market is developing markets , so its growth is high and entry barriers are low.

. KFC could make strategic alliances with key suppliers to take advantage over competitors in the market.

.An peeling business model and good strategy has golden opportunity to shape the rules and establish itself as the recognize market leader.