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.