Kfc Brand Plan

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Brand Plan Based on Case

KFC: Doing Chicken Right in the U.S. Fast- Food Industry

Brand Plan Based on Case

KFC: Doing Chicken Right in the U.S. Fast- Food Industry

Submitted To

KHONDOKER GALIB BIN MOHIUDDIN (KGM)

Lecturer

School of Business

Submitted By

MOHAMMED MAHIB ULLAH ID # 073 267 030 [SEC- 1 ]

TONMOY MITRA TAPOS ID # 073 028 030 [SEC- 1 ]

RIFAT IQBAL ID # 073 235 530 [SEC- 1 ]

MKT 465 : Strategic Brand Management

KFC: Doing Chicken Right in the U.S. Fast- Food Industry

MKT 465 : Strategic Brand Management

KFC: Doing Chicken Right in the U.S. Fast- Food Industry

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Page Content

KFC FACTS 3

Defining the Problem 4

Environment Analysis 4

Positioning/ Core Route 6

SWOT Analysis 7

IMC Tools 8

IMC Plan 8

Monitoring & Tracking Tools 9

Contingency Plan 10

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KFC Facts

KFC is based in Louisville, Kentucky, and is the world’s most popular chicken restaurant chain.

1952, Col. Sanders started franchising his recipe door to door financed by his $105.00 SS Check

• 1964, Col Sanders had more than 600 franchised outlets in the US and Canada.

• 1964, Sold his interest in his company for $2 million to a group of investors.

• 1966, KFC went public

• 1969, Listed on the NYSE

• 1971, KFC was acquired by Heublein Inc. for $285 million.

• 1982, Heublein & KFC Inc. was acquired by RJ Reynolds

• 1986, RJ Reynolds & KFC, was acquired by PepsiCo, Inc. $840 million.

• More than 9,000 outlets [1994]

• 63 countries and territories around the world [1994]

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Defining the problem

After PepsiCo acquired KFC RJR Nabisco, KFC faced some difficult parent-subsidiary relationship. They follow different types of organizational culture than KFC.KFC’s strategy was longer relationship with employees and behave like a family member but PepsiCo depends more on performance if don’t do well they don’t hesitate to sack their employees. Employees were always in a threatening position from where it was tough to provide better service.

Another problem was decentralization .PepsiCo decision making process was decentralized so that problem was created from different level and lack of coordination was occurred.

KFC’s offerings were relatively limited before PepsiCo purchased them, after PepsiCo purchased them, they came up wider variety of food where some were not successful .That means they had a problem with their offerings .They did not differentiated their offerings for different targeted segments .They were not as fast as their competitors to build restaurants, means they had problem in delivery channels. They were only in fried chicken market this is also a problem so their competitor were getting advantage in non fried chicken. Health issue was another problem.

Franchising problem was that they were not maintaining distance that they maintained between franchiser and their own outlets .They did not able to deal with franchiser uniformly.

Environment Analysis

There are certain forces, inside and outside an organization that affect marketing management’s ability to build and maintain successful relationships with target customers. Like all other companies, KFC also has such forces around it; marketing environment is made up of Micro environment and Macro environment.

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Micro Environment

CompanyKFC is the multinational company that has chain of fast food restaurants all over the world. In world it has 9033outlets out of which, 5120are based in us, KFC is growing rapidly, by having their strong relationship with their customers and the trust which they have developed, in the past years, employees are the main assets of the company, and so they are very much concerned. The company has very organized check and balance system, which is used for the evaluation of the employee and the individual outlet as well.

SuppliersAs they are in food industry suppliers have a great impact on their service. They try to ensure better quality.

CustomerThey are the base for any business KFC think more about consumer and try to provide food according to consumer demand.

CompetitorsTheir competitors are

1. Mc Donald’s2. Boston chicken 3. Church’s and Popeyes4. Chick-fil-A

EmployeesEmployees are asset for the organization so if they are not satisfied there is some problem and we see here is service problem because they failed to maintain good relation with employees.

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The Macro Environmental ForcesThese are not controlled by the company and are environmental forces.

Demographic FactorIt designed food according to taste of population .They influence consumer to visit their store by giving specific offer. They try to gain competitive advantage by creating point of difference.

Technological factorIn this case we don’t see any major implication of technological factor.

Political FactorsPolitical factor is that they were sued because of not following contracts they have a good relation with government they can avoid these or can minimize this kind of negative affect.

Cultural FactorsKFC is always concerned about the culture and ethical values of the community. They serve food that goes with US culture. They takes care of ethical and moral value of this community

Positioning/ Core Route

To positioning in market KFC first segmented the market based on geography demography and psychograph. They have store in different geographic location in US. In demographic segmentation, the market is divided into groups based on an age, gender, family size, income, race and nationality. Dividing a market into different groups based on social class, lifestyle, or personality characteristics is called psychographic segmentation. KFC

targets upper and middle class. Target market depends upon size and growth rate of population, Company resources and structural attractiveness of market segment. For a product to occupy a clear, distinctive and desirable place relative to “Competing products in the minds of target consumer.” KFC focuses on pure and fresh food in order to create a distinct and

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clear position in the minds of customers. KFC has a strong brand name and they are leading the market in fried chicken. They provide better value for consumer in exchange of price.

SWOT Analysis

Strength

KFC is a Market leader: World’s largest chicken restaurant chain and third largest fast-food chain.

KFC had refocused international strategies to grow its company and franchise restaurant base all over the world.

Find, motivate, and retain hard-working and entrepreneurial managers and franchisees around the globe.

Weakness

Management Shift of Year 1986 when KFC was acquired by PepsiCo from RJR Industries. Sweeping changes into the culture was initiated by the new management- this brings about demoralization to old KFC employees and even franchisees.

KFC’s leadership in the US market was so extensive that it had fewer opportunities to expand its US restaurant base, which was growing at about 0.8% per year.

There was widespread discontent among the franchisees, some of whom felt the new owners did not understand the chicken business and were not providing leadership expected from a franchisor.

Opportunity

Overseas expansion with the rapid economic.

International Appeal to American products.

Demographic trends (demand for food eaten outside of the home.

Threats

Saturated fast food industry in U.S. market

Consumer health food trend

Healthier, swift, sophisticated and cheap alternatives. Prominent examples include McDonalds and the newer entrant to the fast food market, Subway.

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Home-cooked image of Boston Chicken

IMC Tools

IMC is the method used to inform and educate the chosen target audience about the organization and its products. Using all the tools of IMC:

• Advertising

• Sales Promotion

• Public Relations

• Events and Experiences

• Coupons, Discounts

At KFC, IMC is the main tool to bring all chicken lovers attention towards its delicious one-of-a-kind product, the Fried Chicken

IMC Plan

Advertising

The logo of the smiling Colonel is probably one of the most recognized faces in the world and instantly brings the image of fried chicken to one’s mind.

• KFC and its new company jingle, “finger licikin good” is a frequent announcement on televisions, billboards, flyers and radio. The concept of showing a normal customer deeply involved in devouring his piece of chicken usually turns on the drool factory in everybody’s mouth and makes them rush to the nearest KFC. Using the following methods KFC spreads its message of finger licking good chicken.

• Using Reminder advertisements KFC stimulates repeat purchases of its products. The company anthem “finger lickin’ good” is just a wakeup call to the consumer to remind them how good they felt the last time they ate KFC chicken.

• Sponsorship is another tool to strengthen an organizations image.

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Sales Promotion

KFC uses the following tools to further enhance its sales.

• Premiums

• Exhibits

• Coupons

• Entertainment

Using coupons that one can acquire after spending a particular amount over a period of fixed time, customers can enjoy the benefits of free meals or free add-ons. Additionally they provide meal vouchers and exciting offers in their print ads, which the customer must cut and bring along.

Events

Sponsoring events in schools, college or sports tournament can be a good strategy for KFC.

Monitoring & Tracking Tools

After owned by PepsiCo KFC works on the flow of good operation techniques i.e. “Good Operating Manager→ leads to “Good Team Selection →Good Services → Good Targets → Good Revenues through the following internal strategies:

• Training

• Incentive based targets

• Recognition for good work

• Performance based bonus

• Employee benefits to keep them motivated

• Promotion

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Contingency Plan

Short-term:

First, they need to have a clear vision, solve the internal issues and get some cash in order to make sure that they are strong as a company and ready to compete internationally before going ahead with their expansion project.

Create a great working atmosphere

Develop a healthier menu

Get some cash from selling unprofitable restaurants

Evaluate countries based on attractiveness

Based on the analysis, we can conclude that they should start by solving their internal issues such as management and restaurant menu before thinking about expanding.

They should work on the management issues to create a good atmosphere where employees are happy to work in.

They also need to make sure that their restaurants offer a diversified menu, provide their customers with quality food, excellent service and restaurant cleanliness.

KFC should always listen to their customers and try to follow the new trends on the market in order to fully satisfy their customers. Otherwise, competitors will satisfy them and will eventually outperform you as Boston did with its grilled chicken.

Even though, KFC seems to have an emotional attachment to their original recipe that made their success, they definitely need to move on and develop new products that customers want in order to increase their financial performance and value. We have seen that Boston and Popeye’s are stealing customers away from KFC because they understood what customers wanted and started offering healthier items. KFC should certainly do the same and enhance their menu.

Concerning their expansion strategy, KFC should start by closing a few non-profitable stores in the US that are currently drowning money from KFC. This will allow KFC to get the cash necessary to invest in new markets, which offer more growth potential. We have seen that the US market is not as attractive as it used to be , it has become saturated and certainly does not appear to have a bright future ahead. KFC has to select countries based on their attractiveness and make sure that they can provide above-average returns, which will be discussed more in detail in the intermediate term.

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Long Term

KFC need to keep an eye and be aware of new technology in order to improve their productivity and be able to compete more efficiently because even though they may have a competitive advantage now, they can be sure that they will eventually be challenged.

Stick to their mission; quality food-excellent service restaurant cleanliness

Keep control over franchises

Come up with new items regularly

Keep an eye on possible mergers & acquisitions

Be aware of new technology to stay efficient and competitive

They need to stay close to their mission (provide customers with quality food, excellent service and restaurant cleanliness) and make sure to know how to achieve their long-term objectives. They also have to keep innovating and coming up with new items regularly. Remember that even though, they come up with similar products, customers are most likely going to try them.

They also have to follow the trend and go hand in hand with customers to satisfy their changing needs, as we have previously discussed with the current healthier food trend. They also want to keep an excellent image by treating employees fairly and keeping a good control over franchises to make sure they follow the company’s procedures.

Concerning the American market, they should always keep an eye at competitors and see if possible mergers or acquisitions could be made. McDonald’s has been faster than KFC when they acquired Boston, which could have really helped KFC regain its loss market share and reduce competition. They also have to keep working on their low-cost/differentiation strategy by better taking advantage of their competitive forces such as economies of scales, bargaining power, image/brand worldwide recognition.