KFC marketing story - part 4

Hi guys,

It’s me again. Today I come back with the forth part of the Marketing story of KFC. This time, the topic is about the business market that related to the firm. As usual, we will go deeper to this topic by the form of answering some specific questions.

Let’s start!

14. Although your product is a general consumer product it may be sold in business markets. Is it so for your product? And if yes in which business markets is your product sold? (Most consumer products do have a relation to business markets, in doubts if that is the case or not discuss with your fellow students and/or contact your teacher)

KFC does have a relationship with business market but in a form of transferring its brand name to branches in foreign continents. In the situation of KFC, the firm does not sell its dishes to another business; instead, as mentioned, it only trades its brand name and holds the copyright by several-million-dollar contracts. KFC will not 100% control the activities of the restaurant after delegation, the company from then only has periodical percent share of profit from branches.

This transaction can be considered to happen in reseller markets. In this case, KFC is the wholesaler who supply brand name and receipts of chicken dishes; and affiliations around the world are retailers who purchase products and resell them to final consumers. (Dibb, Simkin, M.Pride, & Ferrell, 2012, p. 181) These restaurants have a very big impact on consuming process. To be more precise, they may evaluate the local market to decide in what quality, quantity and at what prices the dishes can be sold; they can even develop and change the menu in conformity with the taste of people. (Dibb, Simkin, M.Pride, & Ferrell, 2012, p. 182) For example, in Vietnam, KFC add rice with chicken dishes to the menu beside the original dishes, while in Australia, the firm gives supplementary dishes of many types of slider.

15. Has your product been adapted to the business markets? If so describe how.

I personal believe that KFC has adapted well in the business market. Under the transferring form of brand name, the activities of KFC have been expanded worldwide effectively, which assists the firm to become one of the leaders in the fast food industry. It cannot be denied that when entering some specific markets, KFC experienced a number of difficulties of market share, competitors, money supply as well as undesirable profits, but the firm has seen prosper currently. For instant, in China market, until the first quarter of 2015, sales had been tanking for three years in China and fell 10% in same period (Lutz, 2015), but after more than a year, KFC China had had a better performance than the parent company, Yum!, expected in the second quarter, after a two-year slump sparked by a food-safety scare, bird flu outbreak and competition from local restaurants. (News, Bloomberg, 2016)

There is a point that needs to be wondered. KFC has been accustomed to this business market, franchising market precisely, and currently has concentrated more on developing countries like Asian markets. However, franchising always goes along with both high expense and high risk. Take an example, it costs KFC over one million dollars for initial expenses of transferring its brand name; after that the firm still has to pay 500 USD per every month of fee for copyright and 5% of the total profit for marketing. KFC may have its capital refunded rapidly with its reputation and experiences of doing business most of the time, but the profit of the firm from the business market can still be affected by exterior factors.

16. Most business purchases are one of three types: new task purchase, modified rebuy purchase or straight rebuy purchase. Which buying situation will be most likely applicable to your product? Explain why.

Among three types of business purchase, Straight Re-buy purchase will be most appropriate for KFC. The reason for this is that this buying situation occurs when people in one market repurchase the same product frequently under roughly the same terms of sale (Dibb, Simkin, M.Pride, & Ferrell, 2012, p. 188); and KFC, as stated, has used to transfer its brand name abroad for years as well as cooperated with many local business men. With the popularity of the firm, franchising can be partly guaranteed, and the danger only experiences in investments and during the transaction, not because of the brand name. Besides the risk, franchising still bring about many profits and advantages for both KFC and the owner of the local restaurant.   

17. Describe the buying center and the buying process for your product in a selected business market of your choice.

·         The buying center: this group of individuals making decision in business includes users, influencers, buyers, deciders and gatekeepers. However, one or a group of people can perform some of these roles. (Dibb, Simkin, M.Pride, & Ferrell, 2012, p. 190) In the situation of KFC, users and gatekeepers are not appear in the business process.

Ø Influencers and deciders: in this case, the two roles are performed by both parties including KFC and people who are transferred to trade under the KFC brand name. They all have different impacts on the business process. For example, KFC can own the receipt of traditional dishes, those that make the name of the firm, but the other party also can add more dishes to diversify the menu and to adapt the final consumer’s taste; the price is as well one factor that can be bargained between two sides. The relationship of KFC and local transferees is bound by a millions dollar contract and several commercial interests.   

Ø Buyers: transferees can choose whether they should accept legal ties and being bound by interests to administrate a restaurant under the brand name of KFC.

·         The buying process:

Ø Stage 1: in this stage, KFC recognizes the need of expand its original market worldwide, and the firm then contacts to people who have manage ability in local area to open a new restaurant. This restaurant will be undersigned in the name of that person but still be bound by KFC. KFC owns the copyright and has the profit share periodically.

Ø Stage 2: during the second stage, KFC will look for information and advice about the new market. The demand is to widen the KFC restaurant system, so the firm may need to understand about the taste of local people, the acceptable price level that people here can afford and also the procedure as well as the cost of the franchising process.  

Ø Stage 3: with all those information, the firm start to look for a transferee in the local area who have the manage ability to trade the restaurant under its band name. This activity may be done through well-known agencies; the condition for a quality manager or owner can involve his profile of business knowledge, responsibility and the economic condition. If it goes favorable, the marketing team of KFC will come up with a list of potential transferees

Ø Stage 4 and 5: these two stages are the time when the firm evaluates and decides the right one that fits the product specifications developed in the second stage. (Dibb, Simkin, M.Pride, & Ferrell, 2012, p. 196) However, KFC tends to franchise its brand name to a number of transferees to increase profits after capital refund and reduce the disruption affected by quality problems, insignificant average profit or bankrupt.

Ø Stage 6: this stage is also called the re-checked stage, when KFC evaluates the performance of branches restaurants by comparing it with specifications and customer expectations. (Dibb, Simkin, M.Pride, & Ferrell, 2012, p. 197)

18. Describe the concept of derived demand, and give an example how this impacts the demand for your product in a business market.

·         “Derived demand is the demand for business products that arises from the demand for consumer products” (Dibb, Simkin, M.Pride, & Ferrell, 2012, p. 188). Basically, there will be two situations that can happen.

·         Firstly, there is an increase in demand coming from customers. This is when customers come to KFC more than often. The amount of food sold is higher. As a result, KFC will make more profit. This will encourage the desire to open for KFC food stalls, which will finally result in more copyright to be sold by KFC Company.

·         Secondly, when there is a decrease in demand. This situation tends to happen when there are more competitors coming to the market. Customers then will have many options to choose from. Thus, the demand for meals from KFC will decrease. That will have bad impact on their profit. There will be no desire for more KFC food stalls to be opened. Actually, the worst situation will be that food stall with lowest profit for a long time can be shut down. In conclusion, KFC Company will have no chance to sell their copyright.

Bibliography

Dibb, S., Simkin, L., M.Pride, W., & Ferrell, O. (2012). Marketing: Concepts and Strategies (6th ed.). China: Cengage Learning EMEA.

Lutz, A. (2015). KFC has one huge problem that's killing business. Retrieved September 28, 2016, from http://www.businessinsider.com/: http://www.businessinsider.com/kfc-sales-in-china-are-tanking-2015-7

News, Bloomberg. (2016, August 3). China Starts to Lose Its Taste for McDonald’s and KFC. Retrieved September 28, 2016, from http://www.bloomberg.com/: http://www.bloomberg.com/news/articles/2016-08-03/china-starts-to-loses-its-taste-for-mcdonald-s-and-kfc

KFC marketing story - part 3

Hi guys!

It’s still me, and today I’m back to continue our journey of discovering the KFC’s marketing strategy. This time, what we’re gonna talk about is the consumer buying behavior and its affect on KFC. As common, we’ll still have a Q&A game. So let’s begin!

10. Describe the social environment of the consumer and the way this influences the use of your product. 

·         Roles and family

Family has a huge influence on the way people choosing and buying products. A single one tends to pay for activities with friends and the personal expenses, while a married individual would spend money for the need of his family, especially when having children in the house. As working in the food industry, KFC has a certain advantage is that it serves for one of the most elementary need of human – eating. Moreover, the flavor, the convenience and the diversity of menu also have widened the competitive market of KFC and help the firm penetrates the local life deeper. However, strong competitors such as McDonalds are still a challenge in the marketing strategies of KFC.

The role of one person in society also affects his spending tendency powerfully. With a plus of choosing business market, KFC can provide its service for the majority of people working in a lot of environments in society. In other words, no matter what people are doing, they still have to feed themselves fast and appropriately.

·         Reference groups

People in this group have really close interaction with individual, they can affect the attitude or behavior of that person when he or she buying something. Reference groups are basically separated into two types: primary group and secondary group.

Primary group includes friends, family members and colleagues; all these people have impact on individual by their experience of using the product before and know precisely about that product. With KFC, reputation and quality is fairly appreciated, as a result, the feedback about the flavor and service often be bonus point. Yet, the complaint about the fat content still a considering issue of managers.

The secondary group is people who have indirect interact with consumers, such as Religious Associations, Political Parties and Clubs. KFC can approach its customers through this organization with advertisements and online promotion on websites.

·         Social classes

People in the upper-middle class have ability to afford costly items, consequently, the large numbers of potential customers of KFC are from this social class. However, KFC also serves products with low and average price which is more suitable to the financial condition of individual from middle to lower income group. By satisfying both classes, KFC can have more customers and gain more profits.

(Management Study Guide, 2016)

11. Discuss your product in relation to the stages of the family life cycle. 

·         Young and single: The young and single demographic attacks exaggerated importance to personal convenience. As a result, KFC, with an average price and its ease of finding and buying, can be a suitable choice for those people. To be more precise, this demographic is most interested in new clothes and vehicles, they often do not feel a need of having a really hearty meals but looking for convenient meals while hanging out with friends. In this situation, KFC can satisfy them for its popularity and serving speed. The restaurant also has many set that is suitable for a group of friends with various items all-in-one.

·         Empty nest 1 (Newlyweds): Couples who are newly married and still have no child are more accommodating in finance; however, they tend to reduce the money spending on ineffective items. This can be an advantage of KFC as the firm serves convenient food but with good flavor; but this can also a disadvantage because some couples prefer cooking themselves at home when having time instead of spending money on fast food. KFC has developed its menu and now is providing many couple sets that meet the demands of this demographic, which is a competitive factor in the market.

·         Full nest 1 and 2: In the full nest 1 and 2, families have more kids in the home. In this period, fast food in general and KFC in particular is always a considering matter. They might not want their children to have a KFC dish because of its high fat content, but sometimes allow their kids to try a KFC meal as the kids have watched the advertisement and are attracted by the colorful and funny animation about the firm. For this demographic, KFC provides specific family sets with bigger serving.

·         Full nest 3: Families that reach the full nest 3 have children who are working or studying in university, as a consequence, a large amount of money will be spent on the children’s education. With this finance situation, people tends to pay less money on fast food, so KFC will not have a potential market with this object.

·         Empty nest 1: Empty nest 1 families have children are not staying at home anymore; the middle-age people often have the ownership of the home and the money. They are likely to pay for their hobbies and mostly for travel. In this situation, KFC has the benefit for its convenience and commonness in the daily life and on the way traveling

·         Empty nest 2: People in the empty nest 2 are mostly retired; they tend to spend a huge amount of money on medical check and in the following generation’s financial problem. With this group, KFC also do not have a big market, but marketing activities can still be done.

(King, 2016)

12. What type of consumer buying behavior is most likely for your product? Describe the consumer buying decision process for buyers of your product.

·         KFC is most likely with routine response behavior as the product is frequently-purchased, acceptable price and has low risk. (Dibb, Simkin, M.Pride, & Ferrell, 2012, p. 150)

·         Consumer buying decision process

Ø  Stage 1 - Problem recognition: KFC is working on fast food industry, so in this basic stage the firm attaches the need of being satisfied immediately by fast food when hungry. KFC has perceived a need in this step of buying behavior, especially in youngster who hanging out a lot and people who love chicken.

Ø  Stage 2 – Information search:

There are two aspects in this stage, one is internal search and the other is external search. In internal search, consumers define the product by what they can remember about it in the past. With this psychology, KFC has many advantages for its popularity as most people know about KFC and understand what the firm is doing is serving fast food in high quality but average price. They can even memorize more through advertisements and print media, or simply by passing a KFC restaurant every day on the way to work.

In external search, consumers start looking for more information from other sources. KFC has its benefit of being really well-known and penetrating the daily life of most people, so basically when people mention about KFC, they often have average or high evaluation. However, working on fast food industry means that KFC has to face with problem of the fat content and food safety. High fat content is always the problem of any fast food restaurant including KFC. Also, KFC has stuck many times with scandals of food safety and ethical breeding; this affects badly to the reputation of the firm even when the case has been amicably settled. But after all, KFC still has a strong brand name; this is represented clearly when looking at Consumer Reports.

Ø  Stage 3 - Evaluation of alternatives

After knowing basic information about KFC, consumers often evaluate it when putting it in a group of alternative products. The evoked set of fast food might be the group of KFC and McDonalds. These two firms are usually compared with each other in order to choose the most suitable products for consumers. Evaluation may be based on price, quality and special criterion of customers. Precisely, the prices of these firms are equivalent, so the decisive factors are the quality and subjective preference of customers. Both KFC and McDonalds serve chicken; KFC chicken is flavored by 11 special spices and plants to create its crisp and tasty feeling, while McDonalds’s chicken is mostly served with burger and salad in a full meal. There are also chicken burger and chicken dishes with rice in the KFC menu system, which has diversified the choice for buyers. Personally I think that this could be an advantage of KFC.

Ø  Stage 4 – Purchase

Even when people decide to try KFC dishes, there are still factors that affect the decision. It could be social surrounding such as other people who have tried KFC before; physical surrounding of music, advertisement and the cleanliness of the restaurant nearby; or antecedent states like the feeling of a person when he/she want to buy KFC chicken and the amount of money left in the pocket.

Ø  Stage 5 – Post-purchase evaluation

In this stage, there can be two cases occur. Customers may have positive comments about the taste and the quality of KFC dishes and some even give bonus point for the serving attitude of the staffs in the restaurant. On the contrary, people may also complaint about its oily taste as well as the quality of the dish when they know that chicken is cooked early and kept in warm environment.

(Vikrant et al., 2016)

13. Develop an attitude scale with which you will be able to measure consumers’ attitudes towards your product.

(This question really make me confused. If there’s anyone who are willing to help me answer this, it will be really great! )

Bibliography

1.       Dibb, S., Simkin, L., M.Pride, W., & Ferrell, O. (2012). Marketing: Concepts and Strategies (6th ed.). China: Cengage Learning EMEA.

2.       King, T. (2016). The Stages of Family Life Cycle Marketing. Retrieved September 19, 2016, from http://smallbusiness.chron.com/: http://smallbusiness.chron.com/stages-family-life-cycle-marketing-61214.html

3.       Management Study Guide. (2016). Social Factors affecting Consumer Behaviour. Retrieved September 20, 2016, from http://www.managementstudyguide.com/: http://www.managementstudyguide.com/social-factors-affecting-consumer-behaviour.htm

4.       Vikrant et al. (2016). Kentucky Fried Chicken. Retrieved September 20, 2016, from https://vi.scribd.com/: https://vi.scribd.com/doc/54273059/Kentucky-Fried-Chicken

KFC marketing story - part 2

Hi guys!

It’s me again and today I come back with the second part of marketing story of KFC. Last time we only talked about the simplest things of KFC and this time, we will move to another part is the Marketing strategy and understanding competitors. To be easier figure out, I will still do as an interview with questions and answers as the previous time. So, let’s start!

5. What is the mission statement of the company?

KFC has decided a mission in this year is that “The Association of Kentucky Fried Chicken Franchisees, Inc. is united to protect, promote and advance the mutual interests of all member franchisees and the Kentucky Fried Chicken system.” (BlaBlaWriting, 2016)

6. Which are the main competing products? Make a distinction between generic competition (non-branded, cheap, same product), product form competition (substitute: can perform same need) and brand competition (direct competitor brands offering same product)

·        Although there are more than 300 menus worldwide, KFC still has a number of competing products. The basic one is core chicken, originated from the on-the-bone chicken pieces flavored with Colonel Harland Sanders' "Traditional Recipe" of 11 herbs and spices. As well as its original chicken dish, KFC also has some major products:

-         Chicken burgers, involving the Zinger and the Tower burgers.

-         Wraps with Twisters and Boxmasters.

-         A numerous finger foods such as crispy chicken strips and hot wings.

-         Popcorn chicken consists of small pieces of fried chicken.

However, KFC has a flexible marketing strategy: it separates different menus to different countries internationally to adapt regional taste. For instant, in Asia, people tend to prefer Zinger chicken burger because of the spicy taste. (Wikipedia, 2016)

·        Distinction between generic competition, product form competition and brand competition.

	Generic competition	Product form competition	Brand competition
Strengths	Inexpensive price	Have potential development in the market	Reputation and experience in the market
Weaknesses	Non-branded	Huge competitors have separated the majority of market share	High price

7. What is the competitive position of the company with the chosen product? Motivate your answer.

KFC has a powerful brand name and they are definitely one of the market leaders in the fast food industry. However, in the recent years, KFC has gradually lost its position in the market. This can be explained by heavy competitions in the chicken market as well as other difficulties in specific markets worldwide such as consumer’s taste or policy challenges. But KFC has had solutions to get back to its throne again with more investment from the parent company, Yum! Brands, and the international market extension.

8. Which differential advantages does the company have over its’ competitors?

KFC owns a unique receipt of 11 herbs and spices for the traditional dish, which has asserted its position in the consumer’s mind. Moreover, the firm has internationally diversified its menu recently and therefore gains more global experiences. Reputation and experience are the two factors that make KFC become a giant symbol in the fast food industry.

9. When we look at the Ansoff Matrix, which growth strategy do you see for your product? Motivate your arguments!

According to the Ansoff Matrix, the two growth strategies that can be suitable for KFC are Market Penetration strategy and Market Development strategy. The reason for this is that the target of KFC is to expand its market share in both current market and new potential market. With existing menus, to reach this goal, the firm needs to advertise impressively and have sound brand building as well as improving the standard of the products.

I think that’s enough for this time. In my next blog, I will answer questions about Consumer buying behavior.

See you!

Bibliography

·        BlaBlaWriting. (2016). BlaBlaWriting--Business Strategy–KFC Company. Retrieved September 112, 2016, from http://blablawriting.com/: http://blablawriting.com/business-strategy-kfc-company-essay

·        Wikipedia. (2016, September 10). KFC. Retrieved September 12, 2016, from https://en.wikipedia.org/: https://en.wikipedia.org/wiki/KFC#Products

KFC marketing story - part 1

Hi guys! 

When you eat KFC chicken and admire its deliciousness, have you ever wondered about the founder of the firm or even about its history? Don't you query of how KFC can penetrate our daily life and develope into a leader in the fast doof industry? If not, I can tell you all those things, and you will definitely be surprised by the marketing art that people have used to popularize this product worldwide.

So, let's start with the introduction of the company and the product. To have the most elementary knowledge of KFC, we can answer the following questions:

1.            Which product has you chosen and why?

The product that I have chosen is KFC chicken. The reason for me to have this choice is that I love chicken and KFC chicken is definitely one of the most memorable dishes during my child hood. Its special flavor has really impressed me, and until now, I still very love the crisp felling every time I bite one piece of KFC chicken. Moreover, I feel working in the nourishment field, especially in the fast food industry, really make me few comfortable and inspired. Among numerous firms are now operating in Vietnam, I believe that KFC is one of the most popular brand name when people mention of chicken. This’s because the marketing division of the company has done their job well, and it is definitely an honor to me to be a part of those people.

2.            Which is the producing company of the product? Is this company also owner of the brand name?

The producing company of KFC is the Yum! Brands. Although KFC is just a subsidiary of the parents company, this firm is also the owner of its brand name. (KFC Vietnam, 2016)

3.            Briefly describe the history and growth of the company that is selling the product.

Kentucky Fried Chicken, pioneered by Colonel Harland Sanders, is originated in a small dining room of Sanders in the station’s humble living quarters in 1930. He first cooked for travellers going through, and later, in 1935, he was made Kentucky Colonel by Governor Ruby Laffoon for his contributions to the state's cuisine. Over the next ten years, he improved his secret recipe of 11 herbs and spices and the technique that is still applied today. In 1955, with the confidence of the taste of his chicken, Sanders decided to dedicate his life to deal in his chicken, and almost 10 years later, the Colonel owned more than 600 KFC restaurants in US and Canada. His interest in the US Company later was sold for $2 million to some investors including John Y. Brown Jr. This man was later the Governor of Kentucky, under his time, Kentucky Fried Chicken Corporation experienced a rapid growth. It went public in 1966 and after 3 years, it was on the list of New York Stock Exchange, then acquired by PepsiCo, Inc. in 1987. In 1997, this firm divided its quick service restaurants, including KFC, into an independent restaurant company called Tricon Global Restaurant, Inc. That restaurant company now is Yum! Brands, Inc., has become the world’s largest restaurant company working in the restaurant service with more than 39,000 restaurants all over the world. (KFC Vietnam, 2016)

4.         Which other products are sold by this company?

KFC not only sells chicken, it also serves sandwiches, meals, desserts and drinks, however, chicken dishes are still the most requested product of the firm. After many years to complete the menu, today, the restaurant has dozens of option to choose, there are even 6 types of chicken particularly including Original recipe, Extra crispy, Kentucky grilled chicken, Popcorn nuggets, KFC go cup and Extra crispy tenders. (KFC, 2016)

The owner of KFC, the Yum! Brands, Inc. also has other brands: Pizza Hut and Taco Bell. This three have created the world’s largest system in terms of restaurant quick service, becoming the global leaders of chicken, pizza and Mexican-styled food categories. (KFC Vietnam, 2016)

So, now you guys have known the basic information of KFC. In the next part of my series, I will introduce you the Marketing strategy and understanding competitors of KFC, which means that we’re gonna go deeper in the marketing story of KFC.

Bibliography

·         KFC. (2016). KFC. Retrieved September 6, 2016, from KFC: https://www.kfc.com/menu/chicken

·         KFC Vietnam. (2016). kfcvietnam/aboutus. Retrieved September 6, 2016, from KFC Vietnam: https://www.kfcvietnam.com.vn/en/about_us/detail/14/history-of-kfc

·         KFC Vietnam. (2016). kfcvietnam/aboutus. Retrieved September 06, 2016, from KFC Vietnam: https://www.kfcvietnam.com.vn/en/about_us

·         KFC Vietnam. (2016). kfcvietnam/aboutus. Retrieved Septamber 6, 2016, from KFC Vietnam: https://www.kfcvietnam.com.vn/en/about_us/detail/15/yum-brands