KFC Marketing Story - The final part

25. Try to estimate the Market potential and the Sales potential for your product in the Netherlands in the year 2015 using the break down approach or the build-up approach.

According to the book “Marketing: Concepts & Strategies”, market potential is the total amount of a product or service that clients consume within a certain period of time at a precise marketing activity in industrial level. (Dibb, Simkin, Pride, & Ferrell, 2012, p. 684) Sales potential, meanwhile, is the highest percentage of market potential that a person or a company working an industry can expect to achieve for a product or service. (Dibb, Simkin, Pride, & Ferrell, 2012, p. 685) To estimate the market potential and sale potential, in the situation of KFC, the break-down approach will be the more suitable in comparison with the build-up approach.

The economic situation of Netherlands has a huge influence on the business of KFC and also its marketing plan.

 (Euromonitor, 2016)

As illustrated in the bar graph above, the percentage of GDP development has varied significantly during the period of 2010-2016. Although this index began with a high level, 3.8%, it sunk remarkably in 2011 as a resulted of the financial crisis. At that time, KFC’s business experienced a terribly slump as the value of money decreased deeply and consumers did not spend much on extra products or services like fast food. Since then, the economy has been rehabilitated and shown a regular upward trend. In 2015-2016, the GDP growth index is 3%; this means that Dutch people might pay more on the fast food industry in general and for KFC product in particular.

The inflation rate also plays an important role in the development of an economy. Although this figure increased to a magnificent level, 2.5%, between 2011 and 2013, it has declined drastically recently. In 2016, the inflation in Netherlands is only 0.4%. This has affirmed the increasing value of money as well as the selling ability of companies included KFC.

(Euromonitor, 2016)

The Market potential of KFC in the Netherland market is calculated based on both GDP index and inflation rate. According to the data above, KFC is likely to growth 0.4% – 3% in business in 2016. The Sales potential in this year is 3%.

26. Give three valid arguments why the company should write a marketing plan for the Dutch market for your product. Can you think of any arguments not to write a marketing plan?

There a numerous advantages to write marketing plan for the Dutch market for KFC. In my assignment I will only mention three best of them. Coming in the first position of the list is that this having a marketing plan can help determine potential customers and strong competitors. From that determination, KFC can provide specific strategies that is most suitable and promptly. Having certain management for certain group of clients or opponents can help prepare and minimize unexpected conflicts. This point also links to the second benefit of using the resources around in the best way. Investigations with specific data and evaluations are always necessary to firms that participating in services like KFC. With this plan, KFC manager can define the advantages from the economy, market, policies and the market trends. Understanding those factors and applying it wisely will increase the profits and develop the reputation among customers. Finally, a marketing plan consists of the SWOT, which can assist KFC’s managers to highlight points that need to remain, improve, replace and avoid.

Basically, the marketing plan is significantly important to any company included KFC. Personally I think that it is better to make this plan as sufficient as possible.

27. If you were asked to develop a sales forecast for your product for the years 2016, 2017 and 2018, which forecasting technique would you use? Give two advantages and two disadvantages of the chosen forecasting technique.

A sale forecast is the expected quantity of product or service of companies during a certain period of time at a specific level of marketing activity. Sales forecast is used for planning, organizing, implementing and control activities of companies. There are several methods to predict sales including executive judgement, surveys, time series analyses, correlation methods and market tests. (Dibb, Simkin, Pride, & Ferrell, 2012) For KFC, I personally think that time series analyse can be a suitable method.

The time series analyse is the technique of using the historical sale figures to discover a pattern of patterns in the company’s sales. (Dibb, Simkin, Pride, & Ferrell, 2012, p. 689)

Using this technique can bring some certain advantages, especially for companies with reasonably stable demand like KFC. First, this method can be used to determine market trends. Figures organised in order show upward and downward tendencies in sales for a specific product or service. Based on this, KFC managers can save time and effort to make a marketing plan. Secondly, the time series method is a practical tool to calculate financial development. With this result, managers of KFC can determine the sales potential as well as the expected profit in the next period and have the particular plan.

However, this technique also has some drawbacks. A big problem in using this method is about the identification of turning points. It is not simple to tell that the current figures are probably deviations or signs of a new tendency. Moreover, predicting for a long period may be impossible for big brands with long history of business and complicated data in the past like KFC. Calculating with big numbers and several items can causes errors; the number of mistakes will increase when going to estimate further. Usually, KFC mere use this technique for weekly and monthly forecast.

Bibliography

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

Euromonitor. (2016). GDP measured at purchasing power - Statistic. Retrieved October 18, 2016, from http://www.portal.euromonitor.com/: http://www.portal.euromonitor.com/portal/statistics/tab

Euromonitor. (2016). Inflation - Statistic. Retrieved October 18, 2016, from http://www.portal.euromonitor.com/: http://www.portal.euromonitor.com/portal/statistics/tab

KFC marketing story - part 6

Hi guys!

It’s me again with my long mysterious marketing story of KFC. This time, what I will tell you guys is KFC when marketing in international markets and globalization. Q&A game is ready so let’s start.

22. Has your product an international brand?

If yes: What is the level of international involvement of the manufacturer? In which countries is the product available? If possible, try to get market share data for some countries. What market entry strategy was followed by the manufacturer? Are there any indications that there are differences in product positioning between countries?

If no: Study the UK (United Kingdom) market. Are there similar products on the UK market? If possible, try to get market share data. What market entry strategy would you suggest if the company would want to enter the UK market? Which product positioning would you suggest?

KFC has a significant strong international brand name, in other words, KFC is in the global marketing level. To be more precise, the firm has a summary commitment to international marketing and includes applying its assets, experience and products to expand and maintain marketing strategies on a global. KFC’s marketing strategies are developed for many continents to enable it to complete worldwide. (Dibb, Simkin, Pride, & Ferrell, 2012) Until now, KFC has had about 18.000 outlets in 115 countries and territories around the world. (KFC, 2016) In my point of view, the firm has its strongest influence in USA, China and India.

(The Statistics Portal, 2016)

As showed in the bar chart, the number of KFC restaurants worldwide has experienced a regular upward trend in all three countries during the period. This number increased every year, however, to explain more, I will mention below the specific statistics of market shares in each country.

The first country among three is USA.

                                

                                 (Euromonitor, 2016)

KFC stands at the 10^th position in the US market, and its market share has declined regularly from 2010 to 2015. The proportion of share began with 2.5% and ended up with only 1.8%; this shows that the business of KFC in the US recently has come across many threats and has lost its monopoly as in the past.

Come secondly in the list is China. The picture of market share, however, is totally different from it’s of USA. As can be seen from the table below, KFC has owned the first position in the China market. Its market share increased 1.2% in 2010 and reached the highest point of 6.4% in 2012. In the next part of the 2010-2015 period, although this number reduced moderately to only 4.3% in 2015, the market share of KFC was still far higher than other brand names. The percentage of KFC was even twice time of McDonald’s. This can be recognized as a huge successful of KFC China.

 (Euromonitor, 2016)

Finally, I want to mention India.

                              (Euromonitor, 2016)

According to the table above, KFC was one of the three fast food supplier in India. The market share of KFC was 0.8% in 2010 and grew to 1.4% in 2013. This number remained in the year but decreased to 1.2% in 2015. However, in general, share has experienced an upward trend. The two biggest competitors of KFC in this region are Domino’s Pizza and McDonald, yet the disproportion between McDonald and KFC has been insignificant recently.

All above, the position of KFC changes in different nation. Difference can be the consequence of separate marketing strategies and impact from competitors as well as customers.

In the home game, KFC applies the penetrate strategy to expand the market, but in the non-domestic markets, the firm uses a specific form to directly invest is franchising. Under this form, certain intellectual property rights such as trade names, brand names and copyrights are granted to use. (Dibb, Simkin, Pride, & Ferrell, 2012, p. 131) This structured is explained precisely in answers of week 1.4 – Business marketing. In general, KFC and franchisees will be bounded by licenses, franchisees are allowed to trade under the name of KFC. Conversely, KFC can control the business, assist the franchisee in running the business and gain profits partly. Even in one market, KFC can still have several franchising branches which lead to competition between KFC outlets.

23. Do you see evidence of impact of the recent international turmoil (e.g. Ukraine Crisis/ trade with Russia, ISIS in the Middle East, War in Israel/Gaza, Ebola virus in Africa, Argentina bankruptcy, “Brexit”) on your company and/or your product?

Personally, war in Israel/Gaza or ISIS in the Middle East with its political impact does have influences in KFC business. Political instability makes people lose their chance to enjoy services, particularly fast food, as they cannot afford such service when even do not have a stable job. In the situation that people do not have demand to go to a KFC restaurant, the profit will be affected negatively and the restaurant even has to close down. Moreover, safety threats are also difficulties to restaurants to open and maintain their business smoothly.

In Argentina market, bankruptcy affects the purchasing power of the economy. In that case, people, with less money and the value of money is fluctuated, will not prefer to use a service which only serves the medium class and request certain money like KFC. The market is not potential when the bad condition of the economy seems not to get better in a short time. Investing in this market is not a wise strategy.

24. Which international legal forces (government policies, tax regulation) have an impact on the marketing position of your product? Try to find at least three national or international relevant laws.

Difference Government laws and regulations between countries makes trading become a complicated issue for international firms. Local Governments have numerous laws for stature, consumer protection, food safety and wages and so on. In the case of KFC, I think that franchising-related laws may affect significantly the business of the firm. To be more precise, I will take India as a typical example.

In comparison to other countries in the world, franchising in India is staying at a growing stage and basically, franchising-specific regulation is not really necessary. Legislation about franchising, generally, is separated in some following groups.

-       The Contract Act: The relationship between KFC and franchisees is controlled by the Indian Contract Act, 1872 (the Contract Act) of the Government. The contract here is an agreement applicable by law.

In section 27 of this Contract, agreements in restriction of trade are void. The monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) also legalize trading restrain-related agreements; however, according to the Contract Act, it is compulsory for KFC to have knowledge about the implications of a restrain provision in a franchising agreement.

-     Consumer protection and legal responsibility: The Consumer Protection Act, 1986 seeks to give solution to consumers in case of imperfect products or weakness in services and holding the producers and service supplier liable. It is important for KFC to know clearly about this law when doing a marketing strategy in order to avoid conflicts with consumers.

-      Monopolies and restrictive practices law and competition law: The Monopolies & Restrictive Trade Practices Act, 1969 (MRTP Act) outlaws the imposition of limit in source of demand and costing of products. Knowing this law, KFC managers can estimate the most suitable price for products in the India market without being considered as monopolistic or restrictive.

-     Competition law: the Competition Act, 2002 (the Competition Act) involves anti-competitive agreements with the purpose of presuming to have a remarkable contrary effect on competition. With enough knowledge, KFC can direct of indirectly conclude sale prices, restrict production, demand, markets or investment. Sometimes, KFC managers can even divide the market and production by geographical part, by type of products or services or by the quantity of consumers in market. This makes managing become easier and more logical, especially in the giant franchising system of KFC in India market.

-      Foreign exchange regulations: The Foreign Exchange Management Act, 1999 and the related laws are very important in a marketing plan as it involves types of payment such as franchise fee, trademarks training costs and advertisement involvements.

This has been the 6^th part of my story and our story is about to go to its end. Anyway, I still very pleased to have you guys followed my blog.

Love you all !

Bibliography

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

Euromonitor. (2016). Brand Shares (Global - Historical Owner). Retrieved October 11, 2016, from http://www.portal.euromonitor.com/: http://www.portal.euromonitor.com/portal/statistics/tab

Euromonitor. (2016). Brand Shares (Global - Historical Owner). Retrieved October 11, 2016, from http://www.portal.euromonitor.com/: http://www.portal.euromonitor.com/portal/statistics/changemeasure

Euromonitor. (2016). Brand Shares (Global - Historical Owner). Retrieved October 11, 2016, from http://www.portal.euromonitor.com/: http://www.portal.euromonitor.com/portal/statistics/changemeasure

KFC. (2016). About KFC. Retrieved October 11, 2016, from https://www.kfc.com/: https://www.kfc.com/about

The Statistics Portal. (2016). Number of Kentucky Fried Chicken restaurants worldwide from 2010 to 2015, by region. Retrieved October 11, 2016, from https://www.statista.com/: https://www.statista.com/statistics/256793/kfc-restaurants-worldwide-by-geographic-region/

KFC marketing story - part 5

Hi everyone!

I’m back again with the next part of the story. This time, I will reveal a secret of environmental analysis of KFC. As usual, let’s start with our little Q&A game.

19. Go to the website of the head office of the organization selling your product.  Look at recent statements to the press, press clippings and check out the latest available annual report. Which environmental factors have a major impact on the marketing policies of the company? Motivate you answers.

Personally, the marketing policies of KFC are affected remarkably by social forces and technology.

According to the book “Marketing: Concepts and Strategies”, social forces are people or groups of consumers and the related issues that press marketers to supply high quality products and services through socially reasonable choices and activities. (Dibb, Simkin, M.Pride, & Ferrell, 2012, p. 85) To be more precise, those social factors are consumer preferences and recent market tendencies. In the case of KFC, this aspect affects the firm in a very significant way. Consumers are expressing concern about the food safety as well as “Green” problems such as waste disposal. As the rising consideration of people about these issues, KFC also meets many problems. The firm has once stuck in scandals about fat content and dirty chicken and cost a noticeable spending to arrange. Another example is in the United States, authorities of many cities have passed law forbidding using plastic packaging in restaurants. This fact did make problems and forced KFC and many fast food restaurants to change the packaging materials. However, society not only creates troubles, is also helps KFC to improve its standard to adapt the new demand of consumers. Buyers need high quality meals with average prices, so KFC changed and present different dishes and sets for different types of people. Comparing to the first menu of Kentucky decades ago, current menus consist of many unique dishes suitable to separate international market. KFC, for the convenience of customers, also provides the shipping system. Customers no longer have to visit directly the restaurant to buy foods, they can order favorite dishes via the website and wait for delivery. All above, KFC need to provide several short-term strategies to adapt the society in each current-situation.

The next force I want to mention is technology. Technology has opened many conveniences and opportunities for KFC. It helps the firm in transportation, approach customers through the Internet, expanding the total market internationally and even forecast the new market trend. Conversely, technology also goes with risks. This tool is not easy to control, and KFC need to pay attention when making a technological marketing strategy. In the digital era, not only KFC but others rivals also use digital marketing or mobile marketing; this leads to the competition to attract customers. A unique marketing strategy is necessary but costly and also takes time to perform. Besides, technological condition is different between areas, so marketers of KFC cannot use just one marketing plan for every continent.

20. Visit the website of the Central Bureau of Statistic. Search two statistical publications in which relevant data about the external environment for you product can be found. You might want to use the interactive searchable database Statline: http://statline.cbs.nl/statweb/?LA=en. Explain which data are relevant and why.

The information from CBS Statline is based on statistics of the Netherlands. From this website, I have chosen two tables that relevant to the consumption of KFC chicken.

The first table is about Consumer Prices Index.

 (CBS Statline, 2016)

CPI has a direct impact on the selling policy of KFC. The fluctuation of this index can bring about negative result as the significant rise of price often accompanies with the declination in profit. Moreover, deflation definitely leads to the decrease in buying demand of consumers. In this situation, producers, including KFC, are forced to lower the price to maintain the business. However, the profit of KFC is still affected because of the different shrinkage of starting factors. According to the figure from the Statistic Netherlands, the CPI has experienced an upward trend, especially in the latest two months. The increase is not high enough to result in inflation but instead raise the selling activities of KFC restaurant system. The rising expenditure on fast food and take way food has created an opportunity for KFC to expand consumption.
KFC, conversely, also can use CPI index as a tool to correct the salary of employees to suit the living price. The firm too can adjust retain activities and incomes hourly and weekly in order to gain the biggest benefit.
The second statistical publication illustrates the number of chicken and pig being raised in the Netherland from 2010 to 2015.

(CBS Statline, 2016)

As shown in the graph, the number of housed animals, particularly pigs and chickens, both experience an ascending trend. A remarkable point is that the number of the two groups decreased slightly in the first three years but increased back in the left of the period. The total number of chickens is much higher than that of pigs. Figures have proved that KFC Netherland has sufficient supply of meat ingredient to run the business. Moreover, I personally think that adequate supply can be followed by the decrease in prices of raw material.

21. Are there any social, cultural or religious differences in the Netherlands that would affect the consumption of your product? Explain why.

In my view, food habit has some certain impacts in the consumption of KFC. Although KFC Netherland still keeps the several traditional dishes, I think that they have added a number of changes in the menus. As far as I know, Netherland’s cuisine is special for its cheese. While other European countries prefer soft cheese, Dutch people use tough or semi-tough cheese; some kinds of cheese even included special plants. People here also eat much food with cheese processing. This might affect the ingredient of KFC meals, to be more precise, KFC can increase cheese content in dishes to adapt the taste of customers.

For this final question, any comments and extra information are welcomed. As you know, I’m not a typical Dutch or having been living in the Netherland for a long time to really understand the social or culture here. As a result, I will be really pleased to learn something from you all.

See you next time.

Bibliography

CBS Statline. (2016, May 27). Agriculture; crops, livestock and land use by general farm type, region. Retrieved October 9, 2016, from http://statline.cbs.nl/: http://statline.cbs.nl/Statweb/publication/?DM=SLEN&PA=80783eng&D1=120,124&D2=0&D3=0,13,106&D4=10-15&LA=EN&HDR=G2,G3&STB=T,G1&VW=T

CBS Statline. (2016, October 6). Consumer prices; price index 2015=100. Retrieved October 9, 2016, from http://statline.cbs.nl/: http://statline.cbs.nl/Statweb/publication/?DM=SLEN&PA=83131eng&D1=0-1,4-5&D2=317&D3=233,246,259-268&LA=EN&HDR=T&STB=G1,G2&VW=T

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