Marketing Strategy

8 August 2016

Kentucky Fried Chicken ( KFC ) – one of the most well-known fast-food chains in the world started in the early 1930’s by Kernel Sanders in the Southern USA as a small franchise operation. Since in 1964 Colonel Sanders first sold KFC. It was sold in a small group of investors who promoted KFC in public. Quality, service and cleanliness ( QSC ) represents the most critical success factor to KFC’ global success. Food, Fun & Festivity, this is what KFC is all about. Leading the market since its inception, KFC provides the ultimate chicken meals for the Chicken Loving Nation.

In 1971 Heublein was highly involved in the day to day operations. However, R. J. Reynolds then acquired Heublein in 1982. R. J. took a more laid back approach and allowed business as usual at KFC. After that in 1986 PepsiCo bought this company and tried to grow it very fast and as well the restaurant segment even if KFC and PepsiCo had a very different culture and style which means that it was totally different. PepsiCo is a big company which recognized itself in 1985 and owns as well Pizza Hut, Taco Bell and now KFC.

Marketing Strategy Essay Example

PepsiCo has a consumer product orientation and found that the marketing of fast food was very similar to the marketing of its soft drinks and snack foods. PepsiCo combines snack food, soft drinks and restaurants together and it’s a huge company in the world with many restaurants. Nowadays KFC belongs to YUM international and is the largest chicken restaurant in the world with over 32,500 restaurants with, A&W All-American Food™, Taco Bell, Long John Silver’s and Pizza Hut in more than 100 countries. Today, some of the older KFC restaurants have become famous in their own right.

One such restaurant is located in Marietta, Georgia. This store is notable for a 17m tall sign that looks like a chicken. The sign, known locally as the Big Chicken, was built for an earlier fast-food restaurant on the site called Johnny Reb’s Chick, Chuck and Shake. It is often used as a travel reference point in the Atlanta area by locals and pilots. Perfecting its secret recipe in 1939 , KFC has come a long way , with over 10,000 outlets in the world, KFC maintained its title , for the last 60 years , of being “ The Chicken Experts ” 1. 2 : KFC Mission

The mission of the KFC is to sell food in a fast ,to have a friendly environment that appeals to pride conscious, to be in a health minded consumers. The objectives of KFC are to increase the variety of menu, to introduce desert menu and introduce buffet to restaurants. Another objective goal is to target Menu items of African Americans in major cities with the following foods: greens, macaroni and cheese, peach cobbler, red beans and rice. The implementations on non-traditional units are including the shopping mall food courts, universities, hospitals, airports, stadiums, amusement parks, office buildings, mobile units.

History KFC is knew in Vietnam with other familiar names is Kentucky Fried Chicken – the chain of professional fast-food restaurants , serving dishes made ?? from chicken, hamburgers and the main famous dish is the Kentucky Fried Chicken . KFC joined Vietnam market from Dec 1997 in Saigon Super Bowl, located near Tansonnhat Airport HCMC. Now all most in the main streets of Vietnam have KFC restaurant. Development history: Dec 1997 – HCMC June 2006 – Ha Noi Aug 2006 – Hai Phong & Can Tho July 2007 – D? ng Nai – Bien Hoa Jan 2008 – Vung Tau May 2008 – Hu?

Dec 2008 – Buon Ma Thu? t Nov 2009 – Da N? ng Apr 2010 – Binh Duong Nov 2010 – Vinh, Ngh? An May 2011 – Nha Trang – Khanh Hoa Jun 2011 – Long Xuyen – An Giang Aug 2011 – Quy Nhon va R? ch Gia Sept 2011 – Phan Thi? t Dec 2011 – H? i Duong Feb 2013 – H? Long The KFC brand is targeted to top brand of fast-food for every one of all ages.. One of the annual activities of the community of KFC is the “WORLD HUNGER Relief”. In Vietnam, the program place at Christmas time, every customer can contribute their abilities to the fund “WORLD HUNGER Relief “with KFC. 2. 2 KFC business situation in Vietnam

From age 90th of last century, exactly at the end of 1997, KFC come to Vietnam. A chain of fried chicken bring KFC brand name establish in Hochiminh city , but business policy at that time have limit , beside that peoples do not know “ fast food” as well …therefore all most KFC restaurant have to bear losses . This picture not change in 07 years after , 07 years with the bad business result , 07 years KFC Vietnam losing … In 2005 , flu bird attacking all Asia to make a very bad effect in business , KFC Vietnam have only one way to solve that problem if they still want keep the old menu by import chicken from North America only .

From 2006 up to now, KFC at Hochiminh city become eventful with large of custom, peoples come to KFC restaurant to enjoy products of new technology life, especially for young peoples. KFC starting open more restaurants in HCM city and other provinces, one of big event is open to the North and Hanoi is the first shop in the North. We can say, KFC Vietnam really start PLAY THE GAME. With near 100 shops still activity, KFC Vietnam expects open more shops in all cities of Vietnam. Beside open more shop, KFC Viet Nam tried to give more dish following Vietnam taste as : Com Ga Flava Roast , Ga ran gion khong xuong, Xa lach ga gion, C?

 Besides, KFC Vietnam strict used franchise in their business activities. In addition, all operations of the stores are operating under strict management of the parent company. This is one of the principles that KFC Corporation is applying. CHAPTER 3: PEST ANALYSIS 3. 1 Demographical Factor : Following factors included in the demographical factors of the pest analysis of KFC VN a) Age: Generally there is no age limit which is focus by the KFC. They target & focus on each and every age of the society. But for somehow in my opinion they target heavily on the youngest as compared to the middle & old age.

Which the target market is under ages 30, KFC looking for motivation market. In other hand, KFC is also particularly interested to children, KFC tried to impact on child awareness from little. b) Gender : In this case they generally focus on the both Males & Females of the society & similarly target them c) Household size: Household size plays a vital role in the demographical factor of KFC. Generally they target the whole family not a single family member. That’s why they introduced many family packages meals as well as they set-up separately play area for child in each restaurant.

d) Population: Population also a vital role in the demographical factor of KFC. Depend on population size they can make their strategy. 3. 2 Economic Factors a) Income: Income is an important economical factor of the KFC. This factor decides which class KFC is going to target. Vietnam in third countries group which lower income, it’s one of difficult that KFC have to face when they come to Viet Nam. Through introduced some meal from them, we cans say that they target the middle and the upper level as well. b) Consumption behavior :

KFC also estimated the consumption behavior of the people, their liking and disliking and make decision accordingly. c) Payment methods : Payment method is an important factor in the economical factor of the KFC . They check the behavior of the regarding the payment methods of the people . They check whether they gives money in the forms of cash or plastic money. d) Opcution : By choosen two main market is Hanoi and HCMC , it’s could give KFC reached some big groups like studens / young people living and working at downtown . There are too many college , university and offices here . It’s also suitable which KFC direction .

Technological factor : a) Research & Development : Research &development is also an important factor in the technological factor . KFC always support the work of research & development in order to introduce the new technology. b) Capital formation : Capital formation means stock of machinery. KFC has a stock of machinery in order to run its business activities. In other words KFC has a good amount of Capital Formation 3. 4 Political Factors : a) Government Policies: although KFC is a foreign company, but they have to obey the policies of the Government where they run its business activities.

KFC has handled this situation very tactfully and obey the policies of the Government as prescribe by the government in order to run this kind of business. b) Price policies : Price policies are also an important factor. KFC maintain & design its price policy keeping in view the income & income distribution of the people living in the country. c) Political stability Political stability is very important if KFC want to become the leader in fast food business in Vietnam. In Vietnam, political is good point for KFC developing. 3. 5 Ethical / Legal factors :

a) Business law: Just like the Government policies the business unit which is working in Vietnam also regulates the law regarding the nature of business. KFC also fulfills this factor. b) Social responsibilities & Ethics : Social responsibilities & Ethics are important factor. KFC tries his level best to this factor. We can see it clearly from the first introduce of KFC on their web: One of the annual activities of the community of KFC is the “WORLD HUNGER Relief”. In Vietnam, the program place at Christmas time, every customer can contribute their abilities to the fund “WORLD HUNGER Relief “with KFC.

3. 6 Social / Cultural Factor: a) Social class: As analysis previous that KFC target the middle and the upper class. But of course, they do not miss lower middle class – if they have change to services. b) Culture : Through the culture of KFC from where they come is different but they adopt the Vietnam culture also. c) Religion KFC not meet any difficult with religion in Vietnam, all most people from Chris / Buddhist can eat KFC except very small peoples in vegetarian food group. 3. 7 Geographical factor: KFC concentrate to big cities, huge population like Ha N? i, TP. HCM, Da N? ng, H?

Phong…In this group, two main markets is Ha N? i and H? Chi Minh city . KFC appear in H? Chi Minh city from 1997, but until 2006 they just open the first shop in Ha N? i. They’re not using storm development (like G7 Vietnam – a thousand of shops appear after one night – and 100% disappear now). They reach to the long term business in Vietnam market by development step by step, slow but stable. 3. 8 Psychology factor Vietnam in developing countries group with the youngest economical, motivation and creation. The economy market also create the new life style , this new trend attracting so much to the young peoples .

“ Saving time – Style – Motivation” – there are very suitable with KFC. So, this can help KFC believe to get successful in Vietnam. CHAPTER 4 : KFC VIETNAM SWOT ANALYSIS 4. 1 : Opportunities / Threat / Strengths/ Weakness – Opportunities (O) 1. Consumer income increasing ( O1) 2. Large population ( O2) 3. A lot foreigner in VN ( O3) 4. Motivation economic market ( O4) – Threat (T) 1. Competitor (T1) 2. Tariffs (T2) 3. Flu bird (T3) 4. Consumer health (T4) – Strength (S) 1. Well known (S1) 2. Good distribution (S2) 3. Good services (S3) 4. Strong financial (S4) 5. Good place (S5) 6. High quality (S6) – Weakness (W) 1. Price (W1)

2. Human resource (W2) 4. 2 Outside factor: – From competitors in Fast food industry like Lotteria, Jollibee,Domino …They all have a good business strategy, good distribution systems, beside that we can see Pho24 , Traditional noodle …is a suitable products. All of them are a big challenge of KFC. – The tax is one important factor that affects to business. Currently, the tax rate that applies to the food industry increasing. So when the tax increases make production costs rising accordingly then affecting consumer demand. So this is the challenge of firm to observe and maintain the tax rate and sales growth together.

– KFC is famous brand for fried chicken. And the material is mainly chicken. But it’s still being affected by H5N1 avian flu. So it will affect the supply source of KFC. This is one challenge for KFC in stabilizing supply source to meet the consumer demand as well as to ensure the quality of chickens. – Now, in motivation economic market, life running so quickly then the people does not have enough of time to prepare home-cooked meals. Therefore, the fast food industry with a convenient, quickly, delicious, comfortable space … has attracted many people chosen.

So the demand is increasing and this is one of opportunity for KFC. – Today, health becomes primary concern because the current number of people suffering from obesity, heart disease, diabetes is increasing rapidly. And fast food is considered as one of reason, it makes the consumer feel more serious and careful when using. This is one major challenge that the fast-food industry is facing, not only KFC. At the same time, with many scandals about food safety causes consumers to lose confidence in the food outside. It’s very important with KFC when building and develop the brand name. – Now, people’s income is raising .

It’s chance for KFC to develop products and improve sales. 4. 3 Internal factor: – KFC fried chicken is the first brand in Vietnam and also the famous brand in the world, this is strength in general business as well as in the fast food industry in particular. – Distribution System: KFC have a chain of stores throughout big cities in Vietnam, delivery to your door in the fastest time. It’s a perfect type of distribution and convenience for consumers. This strength of KFC. – Quality Product: KFC always keep product in high quality level. Thanks to the strength of this, KFC’ products are favored and trusted by consumer.

– Customer service: with many attractive promotions, facilities and equipment in the stores are always clean; the staffs polite and attentive, the modern way create one system which high class. By that, consumers feel comfortable when coming to KFC store. – Financial: KFC is owned by Yum corporations are operating with more than 33,000 restaurants in more than 100 countries worldwide. Four companies KFC, Pizza Hut, Taco Bell and Long John Siver is the leading brand of Yum Corp . , With strong financial , KFC can deploy the large business finance , as well as easy to compete with other competitors.

This is a strong point of KFC Vietnam with the support of Yum Corp!. – Place: KFC chain stores are always placed at the conveniently located, center, at the corner of big street, shopping malls, supermarkets, airport … Its help consumers fell convenient and help business growing, attract more customers day by day. – Price: the price still high, there are not much cheap prices for the low incomes consumer who takes a lot of market in Vietnam now. This is a weakness for KFC Vietnam. – Manpower: In Vietnam, the psychology of workers in the fast food industry is doing temporary jobs, not permanent.

Thus the continuous training of new employees causing unnecessary waste. On the other hand, it makes the labor force is not stable. 4. 4 Use strengths to catch the opportunity (SO): – S1O1: with strong brand name, KFC should to sell more products to increase market share and increase sales – S1O2: increasing people’s income is one chance, thanks to well-known brand name KFC should to improve brand reputation more and more to attract consumer chosen their products. – S2O1: KFC should complete chain stores better than now in the country to meet the requirement growing day by day of customers.

– S3O1: improve and expand customer service better to capture consumer demand is increasing, even to meet the requirements of the most difficult customers. – S3O2: customer service needs to be more professional. – S4O1O2: maximize capital, investment product innovation to catch the opportunities. – S5O1: open more stores in downtown places & big street corners, shopping malls… – S6O1O2: product quality keep in high level, improved taste, safety food … it will attract more and more customers come to KFC. 4. 5 Use strengths to overcome threats (ST) – S1T1: In addition to KFC, the fast food market in Vietnam has Lotteria, Jollibee …

are all well-known names. Therefore, competition is inevitable. KFC should keep carefully when choosing new store and promotion policy … to have most effectively. – S1T4: Running the well-known brand trusted by consumers, KFC should pay attention to the health of consumers to keep the food always safety. So KFC always give high product quality, ensure food hygiene and safety. – S2T1: KFC have a good distribution system, it will help the strengths competition. It should increase staff more in this system. – S3T1: KFC customer service better and better to help consumers choose KFC more and more, it’s will help in competition.

KFC should have good competitive strategies to attract customers more. – S4T2: With support from strong financial, KFC not meet difficult when tariffs increase. – S4T3: Thanks to strong financial, KFC can respond to the sourcing of raw materials to ensure quality, even in H5N1 flu bird. – S5T1: KFC business location is very convenient, usually located in the center, big streets at downtown. It’s attracted many peoples thus creating good conditions to compete in business.

– S6T1: thanks to the delicious product, taste, are processed with a special formula, so KFC products should not be mixed with other flavors. It’s really a competitive advantage for KFC. 4. 6 Overcoming weaknesses to take advantage of opportunities (WO) – W1O1: need adjust price of product more suitable to catch more consumers with average incomes to take opportunities as demand increases. – W2O2: training professional staff, KFC should be have more supportive policies for staff to help maintain long-term employees to decrees the training costs, as well as improving the quality of customer service. 4.

Minimize weaknesses to avoid threats (WT) – W1T1: Price of KFC products is still high, KFC needs adjust to have reasonable price – W1T3: The H5N1 flu is makes the material supply is limited, increases prices. Therefore, in addition to finding the best safety materials, KFC must also have policies to keep stable prices and keep quality together. – W2T1: KFC should increase the salaries of employees to ensure the long-term human resources, do not change frequently. KFC should give a message to employees about stable work, long term relationship, is not part time job. CHAPTER 5: MARKETING MIX of KFC Vietnam

Marketing mix consists of 4P’s are: Product Price Place Promotion 5. 1 Product: 5. 1. 1: Product Planning * Their product as consumer product as it has no intermediates * KFC offers specialty goods * The stock turnover of KFC is high * Price and quality of the product is always compared * Their product includes : Goods and services 5. 1. 2: Product strategy: It was launched here as an innovative product. KFC has got one product product line but later they introduced products in the same line to protect their market share. New product ideas are generated from: *Custom services * Quick survey

They have a quality assurance department that decides the new product innovation. QA dept. prepares screening of new ideas and product’s feasibility report. This department does the technical evaluation (whether is practical to produce the new product or not). The products are tested externally by offering trials to customers by giving them free samples . KFC uses telemarketing , print media , billboards , televised marketing for promotion. KFC adds a new product in its present assortment based on: *Their competitor * Product’s adequate demand * The satisfaction of financial criteria

It’s compatibility with environmental standard 5. 1. 3 Product line KFC product line includes all chicken based producing: Chicken: 1 piece 2 pieces 5 pieces Combos: Chicken meals Sandwich meals Family Meals Dessert & Beverages: Fruit salad Regular & Large Drink ( Pepsi) Regular & Large Mineral water Ice creams 5. 1. 4 Product Mix Strategies: Competitor : In Vietnam , KFC has a head-on competition with Lotteria , KFC almost set up in the same area with Lotteria Attributes : the brand name of KFC is so strong that is it the attribute itself Price and quality: KFC products are based on high quality and from medium price up.

Product Mix Expansion Line extension: Through introducing now meals offer Alteration of existing products: Quality assurance department does it. The department decides which product should be sold and when. 5. 1. 6 Change in product positioning: KFC introduced itself, has grown and now it is at maturity stage for the last 15 years in VIETNAM 5. 1. 7 Management in Introduction stage: Market entry was not a big problem for KFC as it is a well-known international brand. In that stage they did promoted through their own brand. Their promotion statement was “KFC in Vietnam”.

Management in the rise stage had to make policy for head-on competition with Lotteria . It also extended product line by introducing new product items 5. 1. 10 Product Branding , Packaging & Labelling Brand name : KFC Color : Red, White Symbol: Colonel Harland Sander’s picture and KFC written with it KFC Brand: KFC brand identify – the logo features Colonel Harland Sanders one of the best recognized icons in the world. KFC is trademarked registered brand It is distinctive , adaptable to addition to product line Ait suggests something about product It is legally protected and registered

Brand Equity : The brand equity is very high as the value added by brand to the product effects the product selling Branding Strategies : KFC is marketing the entire output under products own brand. Complimentary Branding: Pepsi Packaging strategies: KFC makes its own disposable packaging. If they need promotion Pepsi contributes in improving the packaging quality. KFC does family packaging. They use paper material for packaging to avoid health hazards & environmental pollution. Labeling: KFC does brand labeling. Some of its products also have information labels such as Chick meals, hot pug… 5.

2 PRICE: KFC Pricing strategies: In introduction stage KFC entered the market using market –skimming strategy. Their products were high price and targeted only upper class. Gradually they trickle down focusing on the middle class to penetrate the market. Also KFC follows one price strategy. Price is determined according to the rates of the raw materials and policies of the Gov. The political and legal forces aften affeet the policies of KFC and eventually results in change of prices that is due to imposing of taxes. 5. 3 PLACE Distribution Channel: KFC has only one channel of distribution i. e.

direct the goods are transferred to the consumer directly, KFC has no middlemen. Distribution of Consumer Good & Services: KFC does distribution of consumer goods directly to the consumer KFC also does distribution of services to the consumer like parking, sitting, home delivery, etc. 5. 4 PROMOTION: The logo features Colonel Harland Sanders that is one of the best logo in the world has created its name as a standard in the market. KFC by its advertisements derives the desire in the customer to come and enjoy healthy food in their favorite restaurant. They use print media to promote it products: newspapers, Billboard…

KFC has put big boarding on the downtown of Vietnam and have an effective advertisement campaign on the media in order to motivate its customers. The color used in advertising are Red, White and blue which itself is recognition for the brand. KFC have joint sale promotion with different companies in the same area for one even or by themselves. .. And most recently with Thanhnien ,Tuoitre newspaper ADDITIONAL : Some suggestion for KFC VietNam KFC Vietnam can using some below suggestion for Marketing : Using collectibles KFC can using marketing program through collectibles, particularly those that kids enjoy.

Select a movie or popular animated film. ( Like Toy Story , Iron Men …) Find companies who sell dolls, glasses or other mementos that are related to the movie. Offer four or six characters or glasses. Provide one free item for the purchase a kids’ meal. This fast food marketing strategies2 entices people to come back until they have all the collectibles. Choose a popular theme for your collectibles that other fast food companies are not marketing. Children will feel happy with that and the parents happy together. Using loyalty programs Frequency card programs are a popular now, KFC can set up type of loyalty program for their restaurants.

Create a display and sign-up forms to promote your frequency card program. Invite people to fill out an application. Reward people according to the frequency in which they visit your restaurant. For example, KFC could offer people a free drink after their reach four visits, then free one meal after their next four visits. Ultimately, a customer could earn a free family meal after 10 visits or more. Keep repeating this cycle for six, eight or 10 weeks, or whichever time frame you choose. With all of those programs, all customers could enjoy and fell satisfaction.

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