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