KFC Marketing story - Part 13

22. Are there any price-related promotions (such as price discounts or multi-pack discounts) around your product?

The pricing strategies between countries and continents are different and are specialized by some certain marketing activities, including some price-related promotions. This is because of dissimilarity in culture, taste as well as customer behaviour between nations, which require diverse actions to attract clients. Take India as an example, KFC India has offered a tie-up with FreeCharge.in through which it provides coupons and discounted sets. Besides, for in-store promotion, the firm also has various offers such as breakfast sales promotion, precisely, if a client orders his meal in the breakfast period, he can receive another piece of crispy chicken. In a developing country in which technology has a strong impact like India, these activities should result in some actual effects. However, I personally believe that those actions can cause fallacy and may actually be not in the Indian market as people here actually do not prefer chicken products for their breakfast.

Meanwhile, in Vietnam, the promotion program is related to the lunch time. Specifically, KFC Vietnam offers rice dishes with different types of chicken in a lower price within 3 hours of lunch time. In my point of view, this program is more effective as Vietnamese usually prefer a completed and well-prepared meal for lunch in an acceptable price, especially when the target customers of the firm are students and normal employees.

23. Which pricing tactics are being used for your product?

-       Currently, KFC’s potential markets have been moved to some developing economics. To adapt to the immature markets, KFC the price skimming as its pricing strategy from the beginning. This is because KFC has more competitive advantages than other competitors for its advance management experience, supply chain, strong financial support and high reputation in the international market; with all those elements, the firm can attract clients with middle and high income level.

-       When having been more familiar to the market, KFC will implement psychological strategy, to be more precise, the multiple unit pricing strategy, to some products of the menu. For example, KFC offers several buckets of chicken which are priced more inexpensive and are more simplicity to order. This kind of pricing will be suitable for all classes in society. Collected information from different sources will be used to figure out which specific positions are surrounded with target clients and more suitable for the strategy. Moreover, KFC will also focus on advertise more on the option for the type of grilled chicken rather than the original one, which is fried.

24. Which influence do other marketing mix elements have on the price of your product?

-       STP: The income level of clients can have a remarkable influence on the profit of KFC, which results clearly in the target groups of customers of the firm. KFC focuses on the group of people with middle and high salary, as it serves foods in good quality and provides impressive services; this will partly affect the price. The positioning stage, or relating to the reputation of the firm, also plays a certain role in the process of setting prices. With the international popularity of KFC, the costs of the firm, however, can be seen as affordable for most classes of social.

-       Product: The prices of raw materials and original ingredients are directly proportional to the cost of KFC’s dishes.

-       Promotion: The way of contributing can directly influence the position of the brand in customers mind. KFC has spent a lot on promotions, specifically on advertising, to increase its reputation and gain customer loyalty. The promotion campaigns vary between different countries and areas to adapt local taste and therefore can penetrate the market deeper.

-       Place: One big part on the expenditure list is transportation, in other words, pricing depends largely on fuel costs.  

25. Describe whether your company does use price differentiation

Differential pricing is not really suitable for KFC. This strategy is more preferable to its competitors, McDonald as this firm focus on the cost competition, while KFC concentrate more on the products and quality.

26. Estimate the price elasticity for your product.

(Dineshbakshi, 2013)

27. How can the manufacturer influence the consumer price?

KFC’s supply chain includes 3 stages:

-       Procurement planning: From the historical data about monthly budget and the information about required ingredients (such as the demand of chicken, bread and buns, potatoes or required spice and herbs), managers can order the correspondent raw materials. Packaging materials are also consisted in the purchasing list.

-       Warehousing: Usually it takes approximately one week to transport raw material and relevant items to the KFC warehouse. The derived expenses during transportation will be calculated as one part of added value.

-       Distribution: The raw materials that are storage in the ware house will then be divided and distributed to every KFC restaurants in the area. According to the order number of different outlets as well as the arrival time, packaging and shipments, the manager can generate the summary data, including the cost for vehicle selection delivery services and safe rate.

All of the elements above, together with the cooking process and the in-store serving services, are resulted in the manufacturer margin. The total process improves the value of the original material and increase the price that customers need to pay for their order when eating in KFC restaurants.

Bibliography

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

Dineshbakshi. (2013). Price determination. Retrieved from http://www.dineshbakshi.com/: http://www.dineshbakshi.com/images/stories/economics_diagrams/price_determination_small.gif

KFC marketing story - part 12

16. Which services (related to your product) are offered by the manufacturer of your product? Describe the extended marketing mix for these services.

The service marketing mix of KFC is really strong and hard to be beaten. At this moment, the only competitor with the 7P’s at the same level is McDonald.

-       Product

The main product of KFC is still fried chicken. Besides that, KFC offers chicken burgers, including Zinger Burger and Tower Burger. Wraps such as Twisters and Boxmasters are also served. In the menu, there are other dishes like a variety of finger food, for example, chicken delights with three options of Fiery Grilled, Hot and Crispy and Original Recipe. One part of the menu is for streetwise (Veg Snacker, Chicken Snacker, Snack Box, Rizo Rice, Rizo Gravy, Mini Krusher), snacks (Popcorn Chicken, Hit Wings, Boneless chicken strips) and veggie as a perfect additional part of every meals (Veg Snacker, Veg Zinger, Veg Strip with Salsa). Desserts and Krusher are also included. Specifically, for Krusher, KFC offers Frappe, Iced Mochaccino and Iced Kappucino, and for desserts, KFC has Soft Wirl, Choamor and Brownie Sundae.

-       Promotion

Promotion is how one firm can inform and impress the target customers about its organization and products. The strategy of KFC is to “logo” itself. Until now, the logo of Colonel Harland Sanders of KFC is still one of the most recognized in the world that has been created; it has really proved the standard of the firm.

Promotional activities of KFC are offered through add-ons in the current menu such as gift coupons, family sets, kid meals or sometimes gifted T-shirts or bags. In every KFC outlet, LCD screens are placed, playing advertisings of KFC and promote the existing products. Online advertising and advertising on television are the two other practical promotion sources of KFC.

-       Place/Distribution

“Place” in 7P’s is how customers can approach the products. In the case of KFC, there is only one channel of distribution, which is connecting directly to the consumer without any middle-party.

The position of KFC outlets are always placed in strategic areas that are close to colleges, schools, stations, in the urban places or any populated market with a large amount of youngsters and adults. This helps KFC approaches its clients easily; for the reason of profit, there can be more than one KFC outlet in the same district.

-       Price

Price refers the amount of money required to purchase products. The recent pricing strategy of KFC focuses more on all communities; they offer average price in order to penetrate the market deeper. The price policies, however, is often affected by the political and legal forces, specifically by the imposing of taxes. KFC applies both optional pricing and mixed bundling pricing. This means that customers can choose and pay money in the traditional way or through add-ons screen. There are combo offers which include a mix of items, and the firm offers a specific price range.

-       Process

The business process of any KFC outlet starts when the customers visit the restaurant. The process also includes online orders from customers. KFC has been targeted to the easier and more convenient process in order to get greater customer satisfaction.

-       Physical evidence (Ambience)

This element refers to the physical environment of the restaurants where the clients visit.  Interior decorations are designed based on certain standards given by the head company. KFC aims to create positive influence on customer satisfaction, and technology equipment has been used practically in this process.

-       People

There are employees involved in providing services to customers; all of them are trained by the company and are provided with certain guidelines to communicate with clients.

17. Which new services do you see could be interesting to have for your product?

KFC has already provided a wide range of services, as a result, developing a new service, however, seems to be difficult. Instead, KFC can improve the current service. According to some online surveys about KFC, the commonest comment is about the correctness. Employees often arrange incorrect orders and sometimes even miss some orders.  Another complaint relates to the waiting time for order and for taking foods. Although people enjoy the taste of KFC, it is definitely annoyed of waiting for a long time while hungry. These factors can have some certain impact on the quality of service provided by KFC, so if complaints are fixed and improved, customers will be more satisfied.

18. Explain the intangibility, variability, inseparability and perishability of these services and explain which consequences these service characteristics have for the marketing of your product.

-       Intangibility

The definition for this characteristic is based on the fact that services cannot be seen, touched, tasted or smelled. This is tricky for KFC to evaluate the current quality, which may causes difficulties in improving the customer satisfaction. KFC also meets limitation in advertising, displaying as well as setting price since this factors are all influenced by customers and their feedbacks. The answer for this challenge, however, has been made practically in the case of KFC. The solution is to consider quality in terms of research and experience; KFC also improves the communication process by using customer testimonials and referrals and provides service in specific details. This really works well in images and posts in the official website of KFC.

-       Variability

The quality of service can fluctuate by many factors, including where, when and how it provides. For a fast food firm as KFC, this characteristic is even more susceptible. There are always some slight changes in service, although it is not really the fault of the firm itself. A specific example is the number of clients varies in different period time of the day, of the week and between different outlets. Some Friday lunch time will be extremely busy, while on Tuesday, at the same time, the restaurant can be much emptier. Similarly, the number of customers visit the restaurant in holidays is much higher than other time. This leads to dissimilar profits between days, months, and year.

-       Inseparability

This characteristic relates to the relation of production and consumption. In the situation of KFC, the meals are made immediately after customers order and are served within a short time. Usually, because of this characteristic, clients tend to expect strongly in how services will be provided; and this results in dissatisfaction when their expectations are not met.  However, for KFC, the reputation of the firm can partly be the guaranty of quality.

-       Perishability

Services cannot be stored or repeated in the same way. An example relates to KFC is that the restaurant can be full at dinner time one night while the next day, at the same time, it will be half empty. Without flexible staff and plan, expenses are equal for both nights, although the revenue is different. This means that the profit will be influenced.

19. The quality of the service is a key feature of services. Give two examples of how the quality of services for your product could enhance the client/consumer’s quality perception.

Take an example of KFC Vietnam, the firm offer some special discounts or coupons for certain days of group of people. Precisely, KFC provides “The special Tuesday” program, in which customers can buy certain dishes with much lower prices. This program has really impressed the group of students and workers as they do not really have money but still interest in trying quality food like KFC. Besides, KFC also has some special services in the birthday of customers; in that special day of clients, every order of that person will be discounted. Special gifts are also served in certain days. These interesting activities have really improved customer satisfaction in Vietnamese market.

Another example is when KFC opens an outlet in a new market, it will offer some new dishes with new flavours that suit the local taste. For instant, in Vietnam, KFC outlets provide meals with chicken and rice. There are three types of chicken with different flavours to choose, including the traditional flavour and the spicier one with pepper. By trying to adapt the taste of local people, the quality of service o KFC will also be improved.

20. Let’s say that you export your product in a country you never exported to before. What promotional strategies could you follow in relation to the product issues and promotion? (See fig.21.6 p 632) Describe a possible strategy for your product.

For KFC, the possible promotional strategy is to adapt both product and promotion. This strategy is applied when promotional campaign has reached to international market and products are popular but need to meet local customers and demands. To be more precise. KFC spends much of their time, resources and money to adapt the local eating habits. Based on that knowledge, KFC will create and produce the most suitable menu that related to the cultural food and still remain the special of KFC dishes. This can directly bring advantages to customers and helps KFC to improve customer loyalty. Meanwhile, promotion of KFC is also adapted to the local culture and trend, as the interest of target clients vary from one place to other areas. Although this strategy can be the most expensive among all four promotional strategies, it actually works well in the case of KFC so far.

KFC marketing story - part 11

12. How is the product presented in the supermarkets/shop? Describe the shop’s atmospheres, using the following elements: general atmosphere, music, colour, shop design, personnel’s clothing. Where in the shop is your product located (in the front; in the back, near the cash register)? Explain why this specific location has been chosen. If your product cannot be found in supermarkets/shops, describe the “best” spatial environment of the place where you see your product being sold.

KFC is not presented in the supermarket; the firm has its own outlets to sell chicken and meals. Every KFC restaurants are designed with the main colour of red and white and decorated with creative graphics and picture in order to create the cosiest atmosphere. The music played in the restaurants is usually popular songs that are widely recognised and interested. The employees in every restaurant wear uniforms when working. The KFC uniform, is 100% cotton and should fit the body properly, not too tight, too lose or hanging, so that the employees can feel comfortable and work in the best condition; the design in the red theme and fit form also create the speedy and active impression in customers’ minds. KFC managers decide the location of the new restaurants based on the following factors.

- Propinquity to Customers: KFC outlets are always placed near the target customers and the target market, specifically the crowded places like in the city central or near the station, so that the customers can easily approach to outlets.

- Total costs: KFC tries to select the area with the lowest price of land, labour, constructions, taxes and energy cost. Minimizing the expenditure in those factors can help KFC reduce the product cost and instead focus on marketing activities and operating activities.

- Quality of Labour: The ideal location for KFC is the place where skilled labour is available. This can be the reason for the fact that KFC tends to open new outlets in big cities and developing areas.

- Infrastructure: The suitable location should be in the area with adequate infrastructure, which is easy to transport and reachable to different means of transportation.

13. Take some photographs of the shelves up to 1.5 meter to the left and right of your product. Where are the best known brands located? Which value brands are offered? Which own-label offerings are present? If not relevant for your product, give a description of how you would locate other brands of the same product and/or other similar products of the same brand.

As mentioned above, KFC has its own outlets, and KFC chicken is not sold in any department of supermarket. The competitors of KFC, serving in the same industry, also have their own restaurants. The competition between those firms is not presented in one particular one supermarket but appear in a larger scale. Basically, the way of choosing the suitable location for new outlet is fairly similar to KFC. In one same area, the rivalry depends not only on the marketing strategy but also partly on the number of outlet, the design issues and the quality of employees. Take McDonald, the greatest opponents of KFC, as an example. The KFC’s outlet and the McDonald’s outlet are rarely placed right beside each other; this is because the properly distance can cause certain competitive advantages. Moreover, KFC and McDonald can instead increase the number of restaurants. By scattering the outlets, both firms will have more chance to attract customers and expand the profit.

14. Count the number of facings of your product and compare this to the number of facings of competing brands. Measure the space on the shelves and calculate the “share of space” of your brand. If not relevant for your product make an estimation of these aspects.

The facing of KFC is not determined by the “share of space” in shelves with different products in the same supermarket. This factor is affected by the reputation of the firm in the market and the royalty of customers.

15. Describe the relation between transportation, packaging and communication in relation to your product.

Transportation has a certain impact on the service of KFC. The demand of fast ordering and home delivery has been rising rapidly recently, and KFC has definitely caught up with the new trend really fast. However, a raising problem is about the amount of time when bringing the ordered dishes to customer’s home. This matter is influenced partly by the condition of road, traffic and how the shipper drives. Usually, when customers finish their order, KFC’s staff will mention about the probable time to ship the meals from the nearest restaurant to the customer’s house. This period of time varies depends on the time of cooking and the time on roads when having known the direct location of customers. Being clear like that can give clients the basic impression of time and avoid conflicts with customers.

The second factor, packaging, conversely, affect the business of KFC indirectly. Its main impact relates more to the environmental issue, which is relevant to the law part. Consumers definitely do care about the environment, and that is the reason why KFC choose paper packaging for easier recycling process. The fees and taxes on packaging recently is actually a big deal for KFC in many continents, as a result, besides the quality of food, the firm also has to spend more attention to the packaging stage.

Lastly, I want to describe more about communication and its relation with KFC. Communication of KFC can be divided in two main parts, internal and external. Internal communication is between employees or between managers and staffs. This relates more to the organization part. External communication, instead, has some certain impacts on the marketing strategy of KFC. This includes communication between managers and customers and between staffs and customers. Both of them influence the customer services. The former takes place when there are conflicts with customers or clients want to give feedback; the later directly affect the impression of customers when trying one KFC restaurant. No-word communication can also be one of the practical and unique forms to communicate with customers. This is presented through quotes, pictures painted on the wall or the advertising video played in the T.V screen. This can be some examples for this type of communication in a KFC outlet in India.

KFC marketing story - part 10

HI GUYS!
I'm back with another part about the marketing strategy of KFC. For this time, I will not talk much at the beginning part but instead go straight to the point. Let's start!

 8. Draw an overview of the distribution channels for your product. Describe the channels in terms of complexity and distance.

Traditionally, KFC uses the direct distribution channel; in other words, provide its products directly from the outlets to the consumers. This helps reduce the total margins and create closer relationship with customers as well as control the operating activities more effective.  Recently, the firm has taken advantages of the Internet for marketing communication, selling and purchasing; this is called eCommerce (Dibb, Simkin, Pride, & Ferrell, 2012, p. 422).

However, the internationalizing process in the few recent years has caused the demand of using a new distribution channel. Opening the market in different continents has resulted in a new form of distributing, and KFC chosen the retailer channel in its marketing campaign. Franchising has become a trend; KFC franchises its brand name and the receipt of some traditional dishes to its international restaurant. The flow of indirect channel distribution can be described as following: Producer / Supplier (KFC Head Company) à Retailer (KFC international outlets) à Consumers / Customers.

9. Describe which distribution functions are fulfilled through the different channel members.

In the situation of KFC, retailers (franchisers) take responsibilities for three functions; however, they have to obey the regulations set in the contract with KFC.

To begin with, the financial function of KFC is to set price for its products. The value of products fluctuates between areas and countries based on the menus and prices of raw materials in different countries. The firm also has to take responsibilities for any lost while doing business. Next, KFC in charge in the logistical function, precisely, in the process of sorting and transporting. The delivery service is available in every KFC restaurants to meet the demand of customers, and its effectiveness can affect roughly the feedback and the loyalty from customers. In the fast food industry, loyalty plays an important impact in the development of the firm in the market. Come at the last position is the commercial function; in the case of KFC, the firm has its role in collecting information, promoting and providing customer services. The collected information has its real effect when improving the service or opening the new out let in one market.

10. How can your product’s image be influenced by the retail concept in which it is sold? Clarify your answer!

For KFC, the retailers play the essential part on product’s image.

Firstly, we can consider about the positive effect. When the retailer, in this case is the KFC restaurant, serves the customers well, customers might have good impression on their mind, which leads them to consume KFC food for the next time. Some restaurants also provide some promotions like coupon discount or happy meal for their customer which increases the profit not only for the retailer buts also for the parents company. However, the coin has its two sides. The negative effects might also take place in some unexpected cases. Bad customers’ service is one of the worse effects over the image. There are lots of situations which customers lost their interest in KFC due to the attitude of employees towards the customers.

In the second place, the food safety is not successfully met, which leads to the disappointment of customers. In worst situation, KFC even has to face legal issue if their customers have problems related to health which cause by only one retailer in the whole process of providing food.

11. Which distribution strategy has been chosen for your product?

As mentioned above, KFC has been following both distribution channels, direct and indirect. Besides, the firm has also applied the speculation strategy, selective distribution strategy and the contractual vertical marketing system (VMS).

  Mentioned firstly in the list is the speculation strategy. Based on the historical data of weekly sales, KFC can predict the supplies of meat stock, vegetables and breads. This can prevent the wastage of supply and save the money spending on ingredients and raw materials.

Secondly, KFC outlets work in the selective distribution strategy. International KFC restaurants are limited by some certain differences in regions and consumer behaviours; as a result, this strategy will work well as KFC only needs to use some available outlets in an area to distribute its products.

Last but not least, the contractual VMS also works effectively in the case of KFC. According to the book “Marketing: Concepts & Strategies”, a vertical marketing system is a marketing channel in which a single channel member coordinates or manages channel activities to achieve efficient, low-cost distribution aimed at satisfying target market customers. (Dibb, Simkin, Pride, & Ferrell, 2012, p. 426) Under this kind of system, inter-organisational relationships are formulized through contracts that mentioned the rights and obligations of each member.

Bibliography

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