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/