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