Kentucky Friend Chicken India Questioonaire

Kentucky Fried Chicken

Table of Contents Executive Summary…………......……….....…………………………….……….3

Management Team……………………………………….....…………..…………4

Market Analysis........................................................................................................................... 7

porters Five Forces Analysis………………………………………….…………12

SWOT Analysis........................................................................................................................... 14

PESTEL Analysis……………………………………………………..………….16

BCG Matrix……………………………………………………………………....18

Questionnaire………………………………………………………..…………..19

Data Analysis………………………………………………………..…….……..21

Data Interpretation……………………………………………………….……..23

2

Submitted to Prof. Navneet Gera

Marketing Research Project

Abhinav - 1Harsh – 19Jayant – 20Mridul – 30Mudit – 32

F - 3

In the Indian fast food industry, every single major as well as minor

player follows the home delivery model. In India itself a lot of

consumers prefer eating n their homes. Therefore, the home

delivery model has been a definite success. For some reason not

known to consumers, KFC does not follow a home delivery service

model, even though it does so abroad. It is due to this reason we

believe that KFC has lost out of a big market share in India. The

basis of our questionnaire is to find out through primary data

collection that should KFC start a home delivery service, or in other

words, is there demand for such a service to invest into.

3

4

5

6

Market Analysis

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 (Graphic 1).

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.

(http://www.marketresearch.com).

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 competitive responses

7

Industry(a collection

of seller)

Market(a collection

of buyersMoney

Product / service

Information

Communication

Graphic 1

to such trends. There are six major macro environmental forces KFC has to

take into account.

Micro environment

The microenvironment consists of all

forces that are close to KFC, and on

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:

8

KFC

Graphic 3 (Source: Kotler et al 2003) Micro Environment

Company Competitors

Consumers

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 India.

McDonalds’s in particular is a direct competitor, as they have already

successfully introduced their Salads plus line (http://www.theage.co.in), which

directly targets ‘healthy food’ conscious Indians. 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 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.

9

Company

KFC is a multinational fast food chain company that has successfully

established itself in the Indian market. It has a long history, going back to

where Colonel Harland Sanders created its distinct recipes. The KFC brand is

well known in India, which makes it a powerful marketing tool to use against

competitors. (http://www.kfc.com).

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, are affecting KFC’s brand image in a

negative way and result in direct dollar losses, as less people are consuming

KFC chicken.

10

Advertising

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.

KFC Business Strategy

KFC fast-food chains are currently under the restaurant division of PepsiCo

Incorporated. Some major threats include the changing attitudes of society

toward healthier eating habits, KFC has more than 9,800 outlets located in 77

countries. In marketing, KFC restaurants are not restricted from locating within

close proximity of other KFC restaurants. There are two alternative strategies

for KFC. The first strategy involves keeping PepsiCo beverage division and

snack foods division together, and a divestiture of PepsiCo restaurant

division; selling Taco Bell, Pizza Hut, and KFC.

Present Situation

The organization is currently structured with two divisions under PepsiCo.

David Novak is president of KFC. John Hill is Chief Financial Officer and Colin

Moore is the head of Marketing. Peter Waller is head of franchising while

Olden Lee is head of Human Resources. KFC is part of the two PepsiCo

divisions, which are PepsiCo Worldwide Restaurants and PepsiCo

Restaurants International. Both of these divisions of PepsiCo are based in

Dallas.

11

Entry For the current Indian 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 India or even make a significant amount of profit. While there are enough people in urban India 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 India, 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. In terms of food, KFC, upon its move into India, urged many of its U.S. suppliers to also extend branches into India. 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.

12

Substitutes and Complements As mentioned above, there are a few major competitors in the fast-food industry in India 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 Indian 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 Unlike what one would expect, KFC has little rivalry with similar fast-food chains in India. 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, Indian chicken lovers who may not be as accepting to pizzas (many Indian 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.

13

INTERNAL FACTORS – 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 recognised in other markets outside India, where the company is among the leading fast food giants. The brand is recognised and trusted in India 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 Indian 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

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. India is still mostly a vegetarian dominated cultured society.

South India is especially very much so. This may reduce the market share of the company.

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

14

OPPURTUNITIES

New Markets: Globalisation has opened doors for new markets for the company. As the developed markets are mostly saturated, the developing countries like India and China promises a good market and generation of demand in the future. With more than 70% of the markets in india being unexplored and un organised, 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 India. 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 Indian mindset is fast changing.

Large Youth population: India 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.

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 organisations, 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.

15

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%. India 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 from just $5.5 billion a year earlier. There is a continuous growth in per capita income; India’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 Indian consumers. So taking into considerations the economic factors of India KFC is safe. The only danger to it will be if there is a terrorist attack in India and the victim is KFC.

Socio cultural:India is the second most populous nation in the world with an approximate population of over 1.1billion people. This population is divided in the following age structure: 0-14 years – 31.8%, 15-64 years – 63.1% and 65 years and above – 5.1%. There has also been a continuous increase in the consumption of fast food in India. The social trend toward fast good consumption is changing and India 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 India.

Technological:

16

The Indian fast food Industry is heating up with a lot of foreign players entering the Indian market. The technological knowhow and expertise will also enter the Indian 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 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 procedures that 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.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 outlet has been certified. The legal requirement is important because the offenders will be fined or have their business prohibited from operating which can be disastrous.

17

Boston Consultancy Group (BCG) Matrix

Question Mark:Currently KFC have launched a new product in the market. They have also tried to come into the beverages market by launching its new brand of shakes called KRUSHERS. As it is a fairly new product it comes in the category of the Question Mark in the BCG Matrix. It has a low market share thus brings low revenue. KFC is advertising a lot to popularize this product so there is a lot of expenditure on it. This product is individually not bringing any profits and is a cash drain for the company. Company may decide to completely remove this product from the market if it does not do well soon and start bringing in revenue.

DOG:KFC’s Veg Thali comes under this category. Although company had launched this product much earlier, it has still failed to become a success. As KFC is known more for its non-veg food, this also results in low demand for this item. It has a low market share and although low on expenditure (as company does not spend on its promotion), it does not bring in much revenue as demand is low. The product is mostly CASH NEUTRAL.

CASH COW:KFC’s Chicken Bucket is the most successful product of the company. It has the highest market share amongst all the other products. It has good demand in the market and brings in huge sales revenue. The development and other expenses are also low and thus this product is a CASH SIRPLUS for the company.

STAR:The star product of the company is its crispy Boneless Chicken. It has a high market share and brings in high revenue. But it also has high developmental expenditure involved. The profit therefore is generally not very high brought in by this product. This product is CASH NEUTRAL for the firm. The company is trying make this product a cow as well, by reducing the expenditure

18

KFC India - BCG Matrix

Crispy Boneless Chicken

Krushers

Chicken Bucket

VegThali

?

19

1. Tick Your Choice ()Perfect Above

Average

Average Below

Average

Poor

Food QualityFood TemperatureWaiting TimeMenu BoardSitting ArrangementRestaurant TemperatureMusicRestaurant CleanlinessOverall Experience

2. When will you be back? Next time I blink (very soon) May be sometime later When I win a Nobel Prize (Never)

3. How many people were in your group? I was alone Just me and someone For me, three is company 4 or more

4. Would you rather order than Dine in? Yaa, I like to mostly order at home Sometimes, but I mostly like to dine in No fun without Dine in

5. How close is your house to your nearest KFC outlet? Within 1 Km Between 1 – 3 Kms Between 3 – 5 Kms Above 5 Kms

6. Do you want a KFC home delivery service? My dreams are coming true That would help Doesn’t make much of a difference No

thanks

Thank You

The data we received is as follows:-

20

We did a survey on KFC on people with age group of mostly 20-25yrs. Mostly all were open to non-veg food, and following were the results. As seen below KFC has shown a good report on all the micro factors that we considered.

Food Qualit

y

Waiti

ng Time

Menu Board

Sitting Arra

ngement

Restaura

nt Temp.

Music

Restura

nt Cleanlin

ess

Overall E

xperence

0

2

4

5 Perfect , 1 Poor

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

YES Definitely

Makes No difference

NO not required

0 20 40 60 80100

Percentage

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

21

Within 1Km60%

1-3Km20%

3-5Km15%

Above 5Km5%

Would you like to order at home or Dine in?

25%

30%

35%

22

DATA INTERPRETATION -

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 convienence, 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 capitalise 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.

_____________________________________________________________________

23