Project Report On KFC

Project Report On

Kentucky Fried Chicken From

Supervised by : Prof.Dr.Zain Yousafzai Submitted by : Siawoosh Wared ( BBA Hons ) Registration # 1711-306055 ( BBA 11 ) th

Preston University Peshawar Session 2006 – 2010

Project Report Marketing Strategies With Reference To Kentucky Fried Chicken

A Project report submitted to the Preston University in partial fulfillment of the requirement for the Degree of Bachelor of Business Administration. Supervised by : Prof.Dr.Zain Yousafzai Submitted by : Siawoosh Wared ( BBA Hons ) Registration # 1711 – 306055 ( BBA 11 ) th

Preston University Peshawar Session : 2006 – 2010 II

Project Report On

CD Page

III

Approval Sheet

Vice Chancellor :

______________________ Prof.Dr.Anwar Hassan

Internal Supervisor :

______________________ Prof.Dr.Zain Yousafzai

External Supervisor

:

__________________

IV

Department of Business Administration Preston University Peshawar

Preface This report focus on KFC marketing strategies, its marketing environment , demographic factor ,marketing factors. I designed a report to provide a brief description about its marketing mix & its major competitors in Pakistan. We also discuss four P’s of marketing & their marketing tools. In addition to it, this report includes a research base survey on KFC. We all have tried our level best to fulfill all the requirements mentioned to us. Now its depend upon the reader to read it carefully and understand what we want to communicate. This report provides a brief knowledge about KFC in Pakistan.

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Acknowledgement With profound sense of gratitude and regard, I express my sincere thanks to my guide and mentor Prof.Dr.Zain for his valuable guidance and the confidence he instilled in me, that helped me in the successful completion of this project report. Without his help, this project would have been a distant affair. His thorough understanding of the subject and professional guidance was indeed of immense help to me. Also, this acknowledgement would remain incomplete without thanking the staff of KFC Islamabad and Peshawar for their whole-hearted and kind co-operation. I am also greatly thankful to the faculty members of our institute who cooperated with me and gave me their valuable time.

Siawoosh Wared VI

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Table of Contents Chapter 1st

Introduction

. 1. 2. 3.

Introduction of company . . . . . . . . . . . . . . . . . . . . . . . Introducing New Product . . . . . . . . . . . . . . . . . . . . . . Pricing Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Chapter 2nd . 1. 2. 3. 4.

Company

and

15 15 16 17

Branches

Situation Analysis ( Current Products ) . . . . . . . . . . KFC’s Original Recipe . . . . . . . . . . . . . . . . . . . . . . KFC’s Outlets In Pak . . . . . . . . . . . . . . . . . . . . . .

Chapter 4th 1.

Analysis

KFC History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Company’s Overview . . . . . . . . . . . . . . . . . . . . . . . . KFC Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Values of KFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 3rd . 1. 2. 3.

Situation

11 12

19 20 21

KFC’s Mission and Philosophy

Philosophy of KFC The “CHAMPS” Program . . . . . . VII

. 24

The CHAMPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Mission of statement . . . . . . . . . . . . . . . . . . . . . . . . . . . Goal of KFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. 3. 4.

Chapter 5th

Product

25 25

Issue

. Quality Control Over ingredients . . . . . . . . . . . . . . . . . . 27 Every chicken tasted . . . . . . . . . . . . . . . . . . . . . . . . . . .

1. 1.1 27 1.2

Every

chicken certified . . . . . . . . . . . . . . . . . . . . . . .

27 1.3

Quality assurance certificate . . . . . . . . . . . . . . . . . . . . . 27 Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2. 27

Recycled Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Environment Concerns . . . . . . . . . . . . . . . . . . . . . . . . Litter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

2.1 2.2 2.3

28

Branding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. 28

Table of Content . . . . Chapter 5th

Product

Issue

. 4. 4.1 4.2 4.3 4.4

Four Forces Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Buys / Supplies Bargaining Power . . . . . . . . . . . . . . . . . . Substitute and Complements . . . . . . . . . . . . . . . . . . . . . . . Rivalry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

VIII

30 30 30 31 31

Chapter 6th

Current

Target

Market

. 1.

Promotions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33

2. 2.1 2.2 2.3

Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Demographical Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Geographical Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33 33 33 34

3. 4. 5.

Profile criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Market Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Market for fast food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

6. 6.1 6.2 6.3

35 35 35

6.4

Economic Analysis of Market . . . . . . . . . . . . . . . . . . . Macro Environment . . . . . . . . . . . . . . .. . . . . . . . . . . . Micro Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Costumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. 8.

Strength and Weakness of Competitors . . . . . . . . . . . . . Current Sale Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35 36

9. 9.1 9.2

Environmental Factors and Opportunities . . . . . . . . . . . Political . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Economical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Socio Cultural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Technological . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36 37 .....

9.3 9.4 9.5 9.6 10. 10.1 10.2 10.3 10.4

35

37 37 37 37

Summary of Current Situation . . . . . . . . . . . . . . . . . . . . . . . 38 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Table of Contents . . . . IX

Chapter 7th 1. 2. 3. 4. 5. 6. 7. 8.

Marketing Strategies of KFC

Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-Ps of Marketing . . . . . . . . . . . . . . . . . . . . . . . . Competitive Analysis . . . . . . . . . . . . . . . . . . . . 45 Promotion Issues . . . . . . . . . . . . . . . . . . . . . . . . Advertisements . . . . . . . . . . . . . . . . . . . . . . . . . . Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. 41 43 46 47 49 51 52

Table of Graphs

1. 2. 3. 4. 5. 6.

Macro Enviromnet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Competiive Advantages . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50 Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Project Report X

On

Chapter No # 1st Introduction

Department of Business Administration Preston University Peshawar

XI

Introduction of Company KFC Corporation, based in Louisville, Kentucky, is the world’s most popular chicken restaurant chain, specializing in Original Recipe ®, Extra Crispy TM, and Colonel’s Crispy Strips® chicken with home style sides and five new freshly made sandwiches. Every day, nearly eight million customers are served around the world. KFC’s menu everywhere includes Original Recipe® chicken—made with the same great taste Colonel Harland Sanders created more than a halfcentury ago. Customers around the globe also enjoy more than 300 other products—from a Chunky Chicken Pot Pie in the United States to a salmon sandwich in Japan. KFC continues reaching out to customers with home delivery in more than 300 restaurants in the United States and several other countries. And in quite a few U.S. cities, KFC is teaming up with other restaurants, Taco Bell and Pizza Hut, selling nearly fifty years ago; Colonel Sanders invented what is now called “home meal replacement” – selling complete meals to harried, time-strapped families. He called it, “Sunday Dinner, Seven Days a Week.” Today, the Colonel’s spirit and heritage are reflected in KFC’s brand identity – the logo features Colonel Harland Sanders, one of the best recognized icons in the world. XII

KFC KFC specialized in chicken and they says, “No body’s cooking like KFC today and we are the chicken experts” “There is no competitor for spicy chicken which is made by KFC” Introducing New Product Now enjoy T2O Cricket festivity with KFC's exciting new offer; Get a complete T20 Meal Box which includes; 1 Zinger Burger, 3 pcs. Hot Wings, 1 regular Drink, 1 Fries and 1 Dinner Roll ! in only Rs 320/- only

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Pricing Issues Pricing Policy for “Zinger Burger” new product from KFC Manufacturing cost

RS.180/-

5% marketing cost ( Per.Unit )

RS. 50/-

Total cost

RS.230/-

15% G.S.T +15% RETAIL MARGIN

RS.90/XIV

Total retail Price

RS.320/-

Pricing Strategy for “Deal 6” From KFC Manufacturing cost

RS. 140/-

5% marketing cost ( Per.Unit )

RS. 25/-

Total cost

RS.165/-

15% G.S.T +15% RETAIL MARGIN

RS.45/-

Total retail Price

RS.210/-

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Chapter No # 2nd Situation Analysis

Department of Business Administration Preston University Peshawar

KFC History KFC is an internationally renowned fast food industry in the world. They have the main ambition to increase & maintain the quality in fast food industry. Their aim is to capture the fast food market. Basically they want to provide their products to anyone that is why they expanding their branches in all over the world.

They want to increase their profit through giving maximum satisfaction & other better facilities to people that they want. Now after catching such a marvelous position in the International Market, XVI

KFC is introducing a new item “Boneless Fried more attractive and charming taste.

Chicken”, with even

Company’s Overview

Colonel Harland sanders, born September 9, 1890, actively

began franchising his chicken business at the age of 65. Now, the Kentucky fried chicken business he started has grown to be one of the largest retail food service systems in the world. And colonel sanders, a quick service restaurant pioneer, have become a symbol of entrepreneurial spirit. More than two billion of the colonel’s “finger lickin’ good” chicken dinners are served annually. And not just in America. The colonel’s cooking is available in more then 82 countries around the world.

When the colonel was six, his father died. His mother was forced

to go to work, and young Harland had to take care of his three year old brother and baby sister. This meant doing much of the family cooking. By the age of seven, he was a master of a score of regional dishes. Ate age 10, his first job working on a nearby farm for $2 a month. When he was 12, his mother remarried and he left his home near Henryville, Ind., for a job on a farm in Greenwood, Ind.

He held a series of jobs over the next few years, first as a 15-

year-old streetcar conductor in New Albany, Ind., and then as a 16yearold private, soldiering for six months in Cuba.

After that he was a railroad fireman, studied law by correspondence, practiced in ustice of the peace court, sold insurance, operated an Ohio River steamboat ferry, sold tires, and Operated service station. When he was 40, the colonel began cooking for hungry ravelers who stopped at his service station in Corbin, KY. He didn’t have a restaurant then, but served folks on his own dining table in the living quarters of his service station. XVII

As more people started coming just for food, he moved across the street to a motel and restaurant that seated 142 people.Over the next nine year, he perfected his secret blend of 11 herbs and spices and the basic cooking technique that is still used today.

KFC Pakistan KFC is the world’s No.1 Chicken QSR and has industry

leading stature across many countries like UK, Australia, South Africa, China,USA, Malaysia and many more.

KFC is the largest brand of Yum Restaurants, a company that owns other leading brands like Pizza Hut, Taco Bell, A&W and Long John Silver. Renowned worldwide for it’s finger licking good food, KFC offers its signature products in Pakistan too! KFC has introduced many offerings for its growing customer base in Pakistan while staying rooted in the taste legacy of Colonel Harland Sander’s secret recipe. Its signature dishes include the “crispy outside, juicy inside” Hot and Crispy Chicken, flavorful and juicy Original Recipe chicken, the spicy, juicy & crunchy Zinger Burger, Toasted Twister, Chicken Bucket and a host of beverages and desserts. KFC also has great tasting vegetarian offerings that include the Veggie Burger, Veggie Snacker and Veg Rice meals. In Pakistan, KFC is growing rapidly and today has presence in 10 cities with close to 60 restaurants.

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Values of KFC •

Focus all our resources to our restaurants operation because that is where we serve our customers.

• Reward and respect the contributions of each individual at KFC.

•

Expand and update training with time and be the best we can be and more.

• Be open, honest and direct in our dealings with one and other. • Commit ourselves to the highest standard to the personal and professional integrity at all times. •

Encourage new and innovative ideas because these are the key to our competitive growth.

• Reward result and not simple efforts. •

Dedicate ourselves to continuous growth in sales, profit and size of organization.

• Work as a team. XIX

Project Report On

Chapter No # 3rd Company & Branches

Department of Business Administration Preston University Peshawar XX

Situational Analysis Current Products Kentucky fried chicken • · Zinger burger • · Krushers • · GameBox • · Twister • · Boxmaster • · Chicken Bucket • · Hot wings • · Fries • · Corn on the cob • · Zing Kong • · Snacker(chicken & veggie) • · Veggie Feast • · Soft Drink • · Coleslaw • · Chicken Thali • · Veg Finger • · Snack Box • · Sundae • · Soft Twirl • · Brownie Sundae

XXI

KFC Original Recipe 6 cups Crisco Shortening 1 eggs well beaten 2 cups Milk 2 cups Flour 2 teaspoons ground pepper 3 tablespoons salt 1 teaspoon MSG 1/8 teaspoon Garlic Powder 1 dash paprika 2 Frying Chickens cut into 6 pieces Place shortening into the pressure cooker and heat over medium heat to the shortening reaches 400F. In a small bowl, combine the egg and milk. In a separate bowl, combine the remaining six dry ingredients. Dip each piece of chicken into the milk until fully moistened. Roll the moistened chicken in the flour mixture until well coated. In groups of four or five, drop the covered chicken pieces into the shortening and lock the lid. When pressure builds up cook for 10 minutes.

XXII

KFC Outlets in Pakistan Islamabad . 11 - United Bakery Building, F-6/2, Super Market, Islamabad. For Delivery: Ph: 111-532-532 Chicky Fun Area

Karachi … SA-2, See Breeze Centre, F1-17, Block - 5, Kh-e-Roomi, Clifton, Karachi. For Delivery: Ph: 111-KFC-KFC (111-532-532) Chicky Fun Area

Peshawar . University Road, Burjaman Plaza Near Shadman Chowk, XXIII

Peshawar. For Delivery: Ph: 111-532-532 Chicky Fun Area

Lahore

……………………………………………………

160/2, Block 2, Phase-1 LCCHS, Lahore For Delivery: Ph: 111-532-532 Chicky Fun Area

Hyderabad . Unit No. 1, Shah Latifabad, Thandi Sarak, Hayderabad. For Delivery: Ph: 111-532-532 Chicky Fun Area

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Chapter No # 4th KFC’s Mession & Philosophy

Department of Business Administration Preston University Peshawar

Philosophy of KFC the CHAMPS program Champs stands for our belief that the most important thing each of us can do is to focus on the customer. It stands for our commitment to provide the best food and best experience for the best value. CHAMPS stand for the six universal areas of customer expectation common to all cultures and all restaurants concepts. The CHAMPS These are: XXV

Cleanliness Hospitality Accuracy Maintenance of Facilities Product Quality Speed of Service CHAMPS is the philosophy to ensure that the customer has the consistent quality experience in every restaurant, everyday, on every occasions and you will be playing role in delivering CHAMPS to our customers.

Mission of Statement “ To be the leader in western style restaurants through friendly service, good quality food and clean atmosphere “

XXVI

Goals of KFC Build an organization dedicated to excellence. Consistently deliver superior quality and value in our products and services. • Maintain a commitment to innovation for continuous improvement and grow, striving always to be the leader in the market place changes. • Generate consistently superior financial returns and benefits our owner and employees. • •

•

To establish in Pakistan our position as leading WQSR (Western Quick Service Restaurant) chain, serving good value. Innovative chicken-based products.

•

Consistently, providing a pleasant dining experience, with fast friendly, in a clean and convenient location. At all times we must be dedicated to providing excellent and delighting customers.

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XXVII

Chapter No # 5th Product Issues

Department of Business Administration Preston University Peshawar

Product Issues General description: XXVIII

Features: Quality Control Over Ingredients Every Chicken Tested K & N’s state-of-the-art Quality Assurance Lab monitors the entire integration process from livestock to feed and on to preparation of ready-to-cook and cooked products.

Every Chicken Certified HACCP – K & N’s ensures food safety by implementing the international HACP (Food Safety System) and enjoy the unique privilege of being the first and only HACCP certified company is Pakistan producing chicken and chicken products. Free from diseases and bacteria, drug residues and other contaminants.

Quality Assurance Certificate Director General ( Research ) has issued quality assurance certificate for the chicken used by KFC.

Packaging

We are asked as many questions on our packaging as our products by our customers. The packaging for KFC products is chosen according to performance against three key criteria: • Heat Retention • Moisture removal • Grease absorption The packaging material and carton design are all adapted to maximize performance against these three criteria.

XXIX

Recycled Paper All our clamshells and chicken boxes contain as much recycled material as it is legally allowed. By law we are required to have virgin fibre board in any part of the packaging that is in contact with food. Any virgin fibre comes from board suppliers who use pulp bought from managed forest in Scandinavia. This ensures that any wood cut for paper production is replaced with new plantings. Environmental Concerns Over and above ensuring our packaging is supplied via recycled or renewable resources; KFC are enthusiastically complying with the new environmental directives on recovery and recycling of packaging waste. Litter We at KFC UKI are aware of our responsibilities to the Management of Litter and all our packaging carries the ‘Keep your Country Tidy’ signs.

Branding This research measured and compared the brand identity of Kentucky Fried Chicken (KFC) in Pakistan. Brand identity was defined as the customer impressions of four different KFC identity elements - properties, products, presentations, and publications. A survey of young consumers in the countries (n = 795), showed that the respondents were more apt to eat within KFC restaurants, and spend more time doing so, than the Americans. The Chinese also had much more positive impressions of KFC. Brand identity impressions were correlated with overall customer satisfaction and with future patronage intentions for both groups. These findings support a model where differences in cultural frames of reference lead consumers to actively localize the brand identity of this nominally globalized product. XXX

Four Forces-Analysis Entry For the current Pakistan market for fast food, it is not difficult for a fast food restaurant to enter the market. However, it would be extremely difficult to take over already running major fast food chains' dominancy in Pakistan or even make a significant amount of profit. While there are enough people in urban Pakistan for any restaurant to survive, KFC holds the first-mover advantage into the 'non-veg food specialty food segment' that gives them free reputation. Customers, especially children who are used to going to KFC as a treat or reward from their parents or grandparents, are not going to want to go to other restaurants they’ve never heard of. The brand name is already established. Also, there is already a large variety in the numerous western-style dining places in Pakistan , such as McDonald’s, Pizza Hut, Domino's and Subway, and any new fast-food entrants would just be presenting something very similar to what’s already there. While small Neighborhood restaurants generally have low barriers to entry, these are the barriers to entry for similar restaurant businesses to enter the fast-food chain market.

Buyer/Supplier Bargaining Power The customers of KFC, especially as individual buyers, have almost no bargaining power because if only one customer threatens to no longer eat at KFC, the store is not going to lower its price because the cost of losing one customer is not very great. The suppliers, like the buyers, have very little bargaining power.

XXXI

In terms of food, KFC, upon its move into Pakistan, urged many of its U.S. suppliers to also extend branches into Pakistan. KFC also began helping local suppliers by giving them technological support to improve their products. This is a brilliant strategy because the supplies that KFC would otherwise need to import from the U.S. can now be obtained domestically, and if the U.S. suppliers decide to raise their prices, KFC can easily switch to the local suppliers. This gives us a brilliant strategy. With this strategy, KFC created competition among its suppliers, lowering the supplier bargaining power. In terms of human resources, labor cost is extremely low because the supply of non-skilled workers great exceeds the demand for them. With so little buyer and supplier bargaining powers, KFC is able to have a very tight control over its prices and expenditures.

Substitutes and Complements As mentioned above, there are a few major competitors in the fastfood industry in Pakistan for KFC, namely McDonald’s, Pizza Hut, Domino's and Subway. The substitute products, in this case, would be burgers, pizza, and sandwiches. Though they are competitors, their primary products differ greatly from each other, in that they sell, chicken, burgers and fries, pizzas, and sandwiches, respectively. Traditional Pakistan dining, home-cooked meals, and grocery stores with ready-to-eat foods are also substitutes, as families could choose any one of these over fast food for a meal. These substitutes are definitely considered healthy as compared to the fast food chains. Even foods from street vendors count as substitute goods. While other fast foods serve as substitute to KFC, they can also serve as complements for fast foods as a whole. If the general price of fast foods goes up,KFC’s price rises as well, and the same can be said of the quantity sold of these products, which make them complements to each other. KFC also sets up stores located near popular tourist attractions, so tickets to these tourist spots are also complementary goods because the more people tour these attractions, the more customers KFC will get.

Rivalry XXXII

Unlike what one would expect, KFC has little rivalry with similar fastfood chains in Pakistan. The primary reason is that their core products are different, as in they sell different kinds of fast foods with very different tastes and styles. For example, if KFC raised its price for chicken by a small amount, Pakistan chicken lovers who may not be as accepting to pizzas (many Pakistani people strongly dislike the taste of cheese) are not going to switch to Pizza Hut just because the price for KFC increased. In addition to that, these restaurants have such different target customers that the fluctuation of price for one restaurant is not going to affect the others. For example, a full meal at KFC ranges about Rs. 100, whereas a full meal at Pizza Hut can cost over Rs. 300. The drastic difference in price assures no price competition between these restaurants.

Project Report On

XXXIII

Chapter No # 6th Current Target Market

Department of Business Administration Preston University Peshawar

Current Target Market Promotions KFC

In Pakistan KFC not advertise there products too much because people

due to its reputation in other countries. They promote their products through special packages. They promote there products through billboard, pamphlets and through other promotion strategies.

Segmentation

XXXIV

KFC has divided the market of Pakistan into distinct groups of customers with different demands, tastes and behavior who require separate products or marketing mix. In Pakistan the niche marketing is being used for particular classes of people. They have made segments of the market on the following bases. •

Demographical

•

Behavior

•

Geographical By using these three bases they segmented the market as under.

Demographical Basis In demographics their first segment is consisted of the income factor i.e. high income, average income and low income.

Behavior In behavioral aspect they segmented the market on the basis of quality, taste and price. Following are the different possible segments in this regard. • Taste conscious • Quality conscious • Class conscious XXXV

• Combination of price and quality

Geographical Basis On the basis of the geographical factor we have divided our market in three main segments. • Urban areas • Sub urban areas

Profile criteria: 1.Gender: KFC is for each gender both male and female. 2.Income: Everyone can use the KFC service upper and middle class . 3.Age: age limitation for using this product above 15 4.Occupation: By profession also everyone can use this product means businessman student workers and other peoples. 5. Education: It has no need more education that why the person who know something can easily enjoy with this product. 6. Family life cycle: KFC is suitable in every stage of life like single married couple and also those who have children can use this product. 7. Lifestyle: This product is used in every level of social class like upper, middle class. 8. Attitude : When the customers once buy this product after that they can use the product continuously. 9. Purchasing decision: Often KFC changes the purchasing decision of customers because of its good attributes. 10. Geographic region: Geographically KFC is used in every part of the country as well as all over the world.

XXXVI

Product positioning Customer perceive this product as a unique product that other are not giving .

Attitudes The attitudes of the public is very good people like our this new product like others.

Purchasing process: Many people come from home to eat this , and some make impulse decision as they saw it .

Market Coverage Strategy KFC will be using differentiated market coverage strategy. It means that different marketing mix will be used for different age groups.

Target Market For Fast Food

After evaluation of various segments, KFC has decided to target the market of Urban and Sub-urban Areas of Pakistan.

Product usage • People are educated and they want variety in their diet. •

Normally people of rural areas don’t take fast food. On the other hand people of urban areas take fast food.

• Income of the people of urban areas is normally high and they can afford to purchase such products, which are slightly higher in price as compared to prevailing prices of local food in the market. • People of Urban Areas are more quality conscious than the people of Rural Areas.

XXXVII

•

In Urban Area there lived people from every walk of life and profit generation is easier than in Rural Areas.

•

Population density is higher in Urban Areas as compared to Rural Areas, so the number of customers are more in Urban Areas.

Economic Analysis of Market A market in this context refers to a number of all actual and potential buyers of a product (Kotler et al 2003). These buyers have a need to satisfy their needs through exchange . These needs make up the demand for particular products and services. Several components must be considered, as all these components have a direct or indirect impact on KFC’s success. Changes in the below described components over the last couple of years have led to big changes in people’s attitudes towards healthy food. It explains why Australians today want to eat healthy and nutritious-rich food in order to keep themselves healthy and that KFC must adjust their range of product and their company image to appeal to these new expectations, people have .

Macro environment KFC operates in a larger macro environment of forces that creates opportunities, but also threats. (Kotler et al 2003). A company such as KFC usually cannot influence trends in the macro environment, as they affect people and organisations on a larger scale. However, KFC has to carefully examine macro environmental trends and must create XXXVIII

competitive responses to such trends. There are six major macro environmental forces KFC has to take into account.

Micro environment on

The microenvironment consists of all forces that are close to KFC, and

which KFC has an impact. They directly affect KFC’s ability to serve its customers. (Kotler et al 2003). Three major components influence KFC’s micro environment:

Competitors Because the fast food market in India is highly competitive, KFC faces a wide number of direct and indirect competitors. KFC’s main competitors are fast food chains such as McDonald’s and Domino’s, which are already well established throughout Pakistan . McDonalds’s in particular is a direct competitor, as they have already successfully introduced their Salads plus line , which directly targets ‘healthy food’ conscious Pakistanis. But, there are a number of other competitors that is also focusing on ‘chicken’ types products. All this competition makes it quite difficult for KFC to maintain or even broaden their customer base. However, with the introduction of a new and healthy product range, KFC XXXIX

can differentiate itself from most competitors and will gain a competitive advantage.

Customers

KFC’s customer market consists solely of the consumer market (Kotler et al 2003). KFC’s products are bought by individuals (males, females, singles, and families). Therefore, the product range KFC offer should appeal to as many people within this consumer market as possible, to ensure that the maximum amount of products can be sold. The characteristics of these individuals and a segmentation of them are discussed later in this report.

Strengths and weakness of competitor

Strengths: 38 products, Attractive Outlets, Huge Marketing, Budget, More entertainment for kids

Weaknesses: Same type of Menu, No Home Delivery How they compete their competitors ? It is found that KFC compete its competitors by five ways: · KFC compete its competitors through marketing strategy · They offered different packages at different events like ramdan offer, midnight offer etc. · KFC compete there competitors by providing good services · They must hired the hard selling persons to market their product in the market and motivate their employees for the sake of organizations and employees do well and they compete there competitors KFC has quality products and through these quality products they compete their competitors

Current Sales Analysis Market Share XL

KFC has a very long history and has the most recognize able brand in chicken with over 50% of the market share. It becomes difficult for the companies like Sub way, Mc Donald’s, Chicken planet, Dixie or those who may want to enter in the market of fast food restaurants. Due to with over 50% of the market share in fast food industry KFC has recognition around the world and has been globally positioned for many years in Pakistan and to capture the market share in Pakistan adopts champs philosophy

Environmental Factors and Opportunities Political : The operations of KFC are affected by the government policies on the regulations of fast food operation. Currently government are controlling the marketing of fast food restaurant because of health concern such as cardiovascular and cholesterol issue and obesity among the young and children in the country. Governments also control the license given for open the fast food restaurant and other business regulation need to follow such as for a franchise business. Good relationship with government in giving mutual benefits such as employment and tax is a must for the company to succeed in any foreign market.

Economic: Though for last 1 year their was economic slowdown all across the globe but the sales of KFC and other fast food chains did not slow down to that extent that of other sectors in. The GDP (Purchasing Power Parity) is estimated at 2.965 trillion U.S. dollars in the year 2010. The GDP- per Capita (PPP) was 2700 U.S. dollars as estimated in 2008. The GDP- real growth rate in 2007 was 8.7%. Pakistan has the third highest GDP in terms of purchasing power parity just ahead Japan and behind U.S. and China. Foreign direct investment rose in the fiscal year ended March 31 2007 to about $16 billion XLI

from just $5.5 billion a year earlier. There is a continuous growth in per capita income; Pakistan’s per capita income is expected to reach 1000 dollars by the end of 2007-08 from 797 dollars in 2006-07. This will lead to higher buying power in the Hands of the Pakistani consumers. So taking into considerations the economic factors of Pakistan KFC is safe. The only danger to it will be if there is a terrorist attack in Pakistan and the victim is KFC.

Socio cultural: Pakistan’s population is divided in the following age structure: 014 years – 31.8%, 1564 years – 63.1% and 65 years and above – 5.1%. There has also been a continuous increase in the consumption of fast food in Pakistan. The social trend toward fast good consumption is changing and Pakistan has seen an increase of 90% fast food consumption from the year 2002- 2007. This increase is far greater than the increase in the BRIC nations of Brazil (20 per cent), Russia (50 per cent) and China (almost 60 per cent). Thus this shows a positive trend for fast food industries in Pakistan.

Technological: The Pakistani fast food Industry is heating up with a lot of foreign players entering the Pak market. The technological know how and expertise will also enter the Pak market with an increase in competition. With the lower rates and increase technology the fast food counters are attracting youth by giving them attractive deals. For e.g. KFC and Domino’s pizza. For a fast food restaurant, technology does not give a very high impact on the company and it is not a significant macro environment variables. However KFC should be looking to competitors innovation and improve itself in term of integrating technology in managing its operation. For example in inventory system, supply chain management system to manage its supply, easy payment and XLII

ordering systems for its customers and wireless internet technology. Implementation of technology can make the management more effective and cost saving in the long term. This will also make customer happy if cost savings results in price reduction or promotional campaign discount which will benefits them from time to time.

Environmental: As one of world largest consumer of beef, potatoes and chicken, KFC always had been critics for world environmentalist. This is because high consumption of beef causing the green house effect by methane gasses coming from the cow’s ranch. Large-scale plantation has effect the environment and lost of green forest opening for plantation activities. Vegetarian environmentalist criticizes the fast-food giant for cruelty to animals and slaughtering. In America, once KFC want to introduce whale burger causing uproar because whales are endangered species. Before using paper packaging, KFC once had been criticized for being insensitive to pollution because of using ne based packaging for its food products. Imagine millions of people purchase from fast food operator and how is the impact to world environment by throwing away those hard to recycle packaging.

Our world is getting concern on environment issue and business operating here should not just care for profit, but careful usage of world resources for sustainable development and care for environment safety and health for our future generation. Critics and concern from all public or activist should be review and support if necessary to ensure we play our social responsibility better.

Legal factors: As a certified fast food operator, there are many regulations and proceduresthat KFC should follow. For example is the Halal certification that becomes a concern to Muslim consumers. KFC should protect its integrity and consumer confidence by ensuring all materials and process are as claimed or must followed. XLIII

Other legal requirement that the business owner should follow as stipulated in laws are such as operating hours, business registration, tax requirement, labor and employment laws and quality & environment certification (such as ISO) in which the outlethas been certified. The legal requirement is important because the offenders will be fined or have their business prohibited from operating which can be disastrous.

Summary of current situation

SWOT analysis mean strength, weakness, opportunities and threats and the SWOT analysis of KFC are:

Strengths •

Goodwill and reputation: The company certainly has earned a good name and reputation by its previous products and services in the market. It is even more recognized in other markets outside Pakistan, where the company is among the leading fast food giants. The brand is recognized and trusted in Pakistan for its quality products, price, and customer service. It therefore has a good head start and enjoys a good chance of becoming a leader in Pakistan fast food industry.

•

Employee Loyalty: Employee Loyalty is one of the major strengths of KFC. The turnover rate in the company is amongst the lowest in the industry.

•

Customer Loyalty: Despite gain by Boston Market and Chick-fill A, KFC customer base remained loyal to the KFC brand because of its unique taste. KFC has continued to dominate the dinner and take out segment of the Industry.

•

Ranks highest among all chicken restaurant chains for its convenience and menu variety. It generates $1B revenue each year.

Weaknesses

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•

KFC was losing market share as other Chicken chain increased sales at a faster rate.

•

KFC share of Chicken Segment sales fell from 71 percent 1999 , to less than 56 percent in 2009 , a 10 -years drop of 15 percent.

•

Huge competition in this segment.

•

KFC has not yet invested much on R&D, and innovating new products for Pakistan Markets. This may lead to failure of their products as they are not in line with the Pakistan mind set, peoples taste and preferences and their likes and dislikes. This may prove fatal for the company.

Opportunities •

New Markets: Globalization has opened doors for new markets for the company. As the developed markets are mostly saturated, the developing countries like Pakistan and China promises a good market and generation of demand in the future. With more than 70% of the markets in Pakistan being unexplored and un organized, KFC has a good scope of expanding its operations in the country.

•

Cross Culture: Generally there is a good acceptance of American culture of fast food in Pakistan. People are opening up to fast foods more regularly in their daily lives and not just keeping it a once in a month affair. Thus Pakistan mindset is fast changing.

•

Large Youth population: Pakistan has a very large share of youth population a compared to other countries. More than 60% of the population is under the age of 30yrs. As the young generation are more open to fast foods and demand it more, this is a good news for the company.

•

New variety: Company can also come up with new variety in the menu like Pizzas, garlic breads to attract more customers.

XLV

Threats • Competition: Competitor companies like McDonalds are fast

catching up with the market.McDonald’s with sales of more than 19 billion in 1999, accounted for 15 percent of the sales of the nation’s top 100 restaurant chains.

• Organisations like PETA People for Ethnic Treatment for Animals

have given a bad name to the company which may prove disastrous to the image of the firm. Currently, KFC is under massive attacks from animal organizations, questioning the way KFC’s suppliers are threatening the chicken, before they got slaughtered. Anti-KFC campaigns, such as the one from PETA are affecting KFC’s brand image in a negative way and result in direct dollar losses, as less people are consuming KFC chicken

• Saturated US Market: Now KFC cannot rely on just its home market to generate sales. As the US markets are already saturated and leave no or little scope for growth, company necessarily needs to look at offshore foreign markets to generate sales and keep up the profits.

XLVI

Project Report On

Chapter No # 7th Marketing Strategies of KFC

XLVII

Department of Business Administration Preston University Peshawar

Marketing Strategies Of KFC There are different strategies adopted by KFC for different events. They market their products on different events and in different activities as they are helping SOS village. According to KFC, kids become the future permanents customers and we know very well that without any marketing strategy no marketing program and no product is successful because we depend upon customers, customer not depend on us. KFC is following Niche Marketing and Societal Marketing techniques. KFC possess a western culture because some of the Pakistanis people are also following that culture. •

KFC are moving from Divisional Level to the District level by opening branches

• KFC also offer free home delivery. • KFC open their outlets on reachable places. • KFC menu consists of more than 30 products. •

KFC gives more priority to Family. XLVIII

Marketing Since 1982, KFC’s “All-American salute to Mothers” national card contest has been KFC’s way of honoring moms and their families for making mother’s Day KFC’s biggest sales day of the year. The contest encourages children to creatively express their feelings for their moms by making a homemade card and give them chance to compete for more than $10,000 in cash and prizes. Educational packets, including language, history and art exercises highlighting Mother’s Day, were sent to thousands of schools nationwide.

There are 4 P’s of Marketing: 1. 2. 3. 4.

Production Pricing Promotion Placement

1st. Production: Basically the product is anything that be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. KFC is specially dealing in the chicken products; Basically, KFC has the special raspy for chicken products that is why, KFC known as a chicken specialist allover the glob. KFC target the Asia and east side because they observe that they people are like the chicken products, so they enter in the market due to the demand of their chicken products. KFC product variety of product in the chicken, those products are: Products: · Original recipe® chicken · Extra Tasty CrispyTM chicken · Hot WingsTM pieces XLIX

· · · · · · · · ·

Tender Roast® chicken Chunky Chicken pot pie Kentucky Nuggest® Colonel’s Crispy Strips® Honey BBQ sandwich Original Recipe® Sandwich Tender Roast® Sandwich Triple Crunch® Sandwich Triple Crunch ®Zinger® Sandwich

Brand: There are three brands of the KFC: 1) Taco bell 2) Pizza Hut 3) Long john silvers

2nd. Pricing: KFC during pricing their products keep the different points in the mind like they adopt the cost base price strategy. Pricing of the product includes the Government taxes and excise duties and then they come at final stage of determine the price of their products. KFC prices of products are a bit high according to the market segment and it is also compatible to the stander of their products. Calculation of the price under Cost Based Pricing Strategy: Total Pounds of Chicken Served in KFC Restaurant Annually = 1.914 Billion Total KFC Chicken Pieces Sold Annually = 5.89 Billion Total Retail Sales = $8.9 Billion Sales Price of per Chicken Piece = Total Retail Sales / Chicken Pieces sold = $8.9 Billion / $5.89 Billion =$1.51 We assume that Fixed Cost is = $6000000000 Variable Cost = $675000000

L

Profit Margin is Or Mark Up = $225000000(25% of Sales) Per Unit Variable Cost = $675000000 / 5890000000 = $ 0.115 Unit Cost = Variable Cost + Fixed Cost / Chicken pieces Sold = 0.115 + 6000000000 / 5890000000 = 0.115 + 1.02 = $1.135 Now suppose manufacturer wants to earn 25% mark up on sale. The manufacturer mark up price is calculated: Mark Up Price = Unit Cost / (1 – Desired Return on Sales) =1.135 / (1-.25) = 1.135 / 0.75 = $1.51

3rd . Promotion: Promotion is one of the necessary plates in any form of business or in other words you can say that promotion is the key of success. If you promote your product at the right time. KFC also known the importance and significance of promotion so they uses the bill boards the major source of advertisement and one of the most important thing that they uses media especially the newspapers to promote their products. They are also creating awareness among the masses about their existing product range as well they tell us about the future product.

Marketing efforts to be taken by the restaurant: •

Paste delivery posters at petrol pumps, flats, colleges, plazas, and departmental stores.

•

Distribution of delivery flyers in residential areas, markets, plazas and institutions (as per the plan)

• Visit offices and business places.

4th .Placement: In the case of the KFC the placement of the product is not important but the placement of the restaurant is important. The products of the KFC is cooked at the sport and then served after that. KFC Cavalry branch opened in June 1998, in the main commercial zone of Cavalry Grounds near the LI

Jinnah Flyover. The restaurant is a three-story building including the basement (where the chicky play area is located). It is ideally located in the center of a main commercial and residential area of Lahore. The area that KFC Cavalry caters for is the residential and office area of Cavalry Grounds and Cantt, as the main target market. Another branch the KFC opened in the Lahore is in Garden Town (opposite to Barkat Market). KFC also target the Faisalabad and open its branch in D ground. Now we can easily judge that the KFC target the place for their restaurant, which is well known and is in the Porsche area where the income level of the people is high then the middle class level. Because the prices of the KFC products is high with comparison to the local products manufacturer who are dealing in the same kind of product in which KFC is dealing but the prices of the KFC is high due to special taste, high quality, and due to international brand, it is the world recognized fast food restaurant all around the world. So, for the placing strategy, KFC chose the well income class area for their restaurants.

Competitive analysis Competitors You cannot enjoy the business without competitors. No organization can afford to ignore there competitors. It is very important for a marketing managers to monitor the activities of there competitors, what they are doing? KFC adopted such sort of strategy that there is no competitor for spicy chicken, which is made by KFC. LII

KFC beats its competitors through the revising marketing strategy at every movement but the main competitor of KFC are Mc Donalds

Competitive Advantage KFC

Mc Donald’s

Spicy Product Pakistani People like spicy food rather than boiled food

French Fries and Burgers

Arabian Rice and Zinger Burger

Big Mac

Free Delivery

Chargers on Home Delivery

Chicken is eaten in very community

Beef is banned is some community

Local stuff and highly qualified because local stuff can better deal with customers

Its stuff is consists of simple graduates and give them training

KFC uses Top to Bottom and Bottom to Top approach in their Management

Mc Donald’s use Top to Bottom approach in their Management

Promotion Issues LIII

Sales promotion

For the sales pormotion KFC introduced their goods like watches , keychain, e.t.c to the customers.

LIV

Advertisement I do not normally think that advertising stunts are particularly interesting or creative, but I thought this one by KFC was…well… inspired. KFC, the fried chicken franchise , is offering itself as a corporate sponsor for pothole repair. An actor dress as KFC founder Colonel Sanders and a road repair group got started this week in the franchise’s hometown of Louisville, Ky. Filling up hundreds of holes. Many of the repairs are decorated with a while stencil saying the spot was”Re-freshed by KFC” A play on KFC’s ad campaign stressing the freshness of their chicken . KFC spokesman Russell Dayer said that crew is using “ Regular asphalt,” not day – old biscuits .

LV

Business sector is Fast food outlets & restaurants. One of KFC's latest advertisements is a commercial advertising its "wicked crunch box meal". The commercial features a fictional black metal band called "Hellvetica" performing live, the lead singer then swallows fire. The commercial then shows the lead singer at a KFC eating the "wicked crunch box meal" and saying "Oh man that is hot". In 2007, the original, non-acronymic Kentucky Fried Chicken name was resurrected and began to reappear on company marketing literature and food packaging, as well as some restaurant signage.

Data Analysis The data we received is as follows:We did a survey on KFC on people with age group of mostly 20-25yrs. Mostly all were open to KFC’s recipe , and following were the results. As seen below KFC has shown a good report on all the micro factors that we considered.

We also asked questions on whether they would like KFC to start home delivery services.

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We also inquired “How close is the nearest KFC outlet from your house?

Would you like to order at home or Dine in?

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Questionnaire about KFC in Peshawar 1. Age…………

7. In terms of location, why do you come to KFC?

2. Your occupation …………………………………

a. It lies on a main road

3. When did you know about KFC?.......................

c. It looks out of 2 roads

4. Why do you choose KFS but other restaurants?

d. Others…………………………….

…………………………………………………… ……………………………………………………

(You can tick more than 1 option)

b. It lies next to a supermarket

8. Would you prefer order at home or dine in the KFC ?

5. By what way did you know about KFC? a. Advertisement on newspaper/magazine

a. Dine In

b. Internet

b. Order at home

c. Family/friends/ colleagues

c. Really doesn’t matter

d. Banner

9. What factors of location affect your decision?

e. People working for KFC

a. Near your house

f.

b. On the way to work or school

Leaflets

g. Others………………

c. Near shopping centre

6. Do you think KFC should start Home Delivery Service ?

d. Near the red light so that it’s easy to be recognized

a. Yes

e. Others………………………….

b. No c. If Yes ( Why )

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Toronto Alum’06 peace and Conflict studies , International Relations +001-647-2845838 ( [email protected] ) ( http://arashwared.blogspot.com/ )

10. What do you think about the parking area at KFC? a. Good b. Normal c. Bad (Please, specify your reasons) ……………………………………………

Corporate Office ( Karachi ) Cupola Pakistan Ltd. 5th Floor , Park Tower , Sharah-e-Firdousi Clifton , Karachi Tel : 92-21-5877976 ( http://www.facebook.com/pages/KFCpakistan )

11. How does the KFC’s prestige affect your decision a. Very much b. Normal c. Very little 12. Does the logo attract you? Yes…………..No…………….

Akhtar Munir NBP , University Town Branch , Peshawar Tel:+92-333-9157958

(if yes, please specify your reasons) …………………………………………………… 13. How often do you come to KFC a. Every 3 days

http://www.coursework4you.co.uk/essay s-and-dissertations/analysis-ofcompanies/kentucky-fried-chickenkfc/kentuckyfriedchickenkfc.php

b. Once a week c. Once a month d. Other options…………………. 14. What do you think about the price here? a. Very expensive

http://www.scribd.com/doc/6546600/Qu estionnaire

b. Expensive but still payable c. Reasonable

http://foodcourt.pk/index.php? option=com_wrapper&Itemid=113

d. Cheap 15. How do you feel about KFC's food? a. Delicious

http://www.kfc.com/contact/

b. Good

http://www.pueblo.gsa.gov/

c. Normal d. Not Good

http://www.kfcpakistan.com/

17. What are your suggestions for improving KFC's service quality? (If any) …………………………………………………………

Thank you very much for your cooperation! 

Reference Arash.N.Wared LIX

Conclusion It is clear from the above report that a high number of people actually like to order from their home or workplace rather than coming. This may be due to more convenience, time shortage or just not willing to come and dine. Certainly the home delivery market is huge and KFC can take well advantage of the situation. Thus it would be in the best interest of the company to start the service as soon as possible and capitalize on the opportunity. KFC expects a rise in the orders by at least 20% by starting this service. Therefore, to conclude we would say that KFC should definitely have a home delivery service.

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