KFC (formerly known as Kentucky Fried Chicken) is a trademark franchise of Yum! Brands, Inc., headquartered in Louisville, Kentucky, United States .Founded by Col. Harland Sanders, KFC is known mainly for his fried chicken, which is usually served in a bucket .
Col. Sanders began selling fried chicken at his gas station in the year 1939 in Corbin, Kentucky which subsequently moved to a motel. He closed his business in the late 1940s when the Interstate highway through town. In the early 1950s, he began traveling the United States and met with Pete Harman in Salt Lake City, Utah, and in 1952 co-founded the Kentucky Fried Chicken restaurant is the first in the world (his first restaurant does not use that name). Sanders sold the entire KFC franchise in 1964 worth 2 million USD, which has since been resold three times. Ultimate owner is PepsiCo, which incorporate them into the company Tricon Global Restaurants division, now known as Yum! Brands, Inc. In 1997, Tricon from PepsiCo separately.
In Indonesia, sole franchisee of KFC is PT. Fastfood Indonesia, Tbk ( IDX : FAST ), which was founded by Gelael Business Group in 1978, and registered as a public company since 1994 . Indonesia’s first KFC restaurant opened in October 1979 in Jalan Melawai, Jakarta.
KFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky. KFC is a brand and operating segment, called a “concept” of Yum! Brands since 1997 when that company was spun off from PepsiCo.
KFC primarily sells chicken in form of pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of roasted chicken products, side dishes and desserts.
1. Marketing: Managing Profitable Customer Relationship
The marketing mix is generally accepted as the use and specification of the ‘four Ps’ describing the strategic position of a product in the marketplace.
Anything that can be offered to a market to satisfy a want or need. KFC’s specialty is fried chicken served in various forms. KFC’s primary product is pressure-fried pieces of chicken made with the original recipe. The other chicken offering, extra crispy, is made using a garlic marinade and double dipping the chicken in flour before deep frying in a standard industrial kitchen type machine.
The main products of KFC still are fried chicken but KFC tried to development new products for suitability with modern situation; the menu for health. Moreover, new menu of KFC will emphasize the taste and health.
The cost of KFC products use high pricing strategy but it’s not high overly. KFC in the country tried to enhance quality of fast food restaurants to change attitude of people that they think KFC is junk food.
Most KFC restaurants are located in the source communities such as shopping malls, the petrol, and lodging en route.
The promotion of KFC is quite varieties such as TV program, Internet, public relation, leatlet and etc. moreover, KFC innovate a new menu set for it is easy to order and it’s save money. That a special menu set also is cheaper than normal.
2. Company and Marketing Strategy: Partnering to build customer relationships
a. Marketing Strategy
KFC used the Demographic Segmentation, Geographic segmentation, and Psychographic segmentation. In demographic segmentation, the market is divided into groups based on an age, gender, family size, income, occupation, religion, race and nationality. KFC divides the market on demographic basis in this way:
Age is between 6-65.
Gender is both males and females.
Family size is 1-2, 3-4, 5+
Income is Rs 10,000 n above.
Family lifestyle is almost all.
KFC has outlets internationally and sells its products according to geographic needs of the customer. In India KFC focuses how geographically its customers demand different products. In north India Chicken is the main selling product, while in the south the Veg. items sell more than the chicken.
Dividing a market into different groups based on social class, lifestyle, or personality characteristics is called psychographic segmentation. KFC divides market on the basis of psychographic variables like:
Social class- Upper and Middle class.
Lifestyle is not specific.
Personality is ambitious and authoritarian
b. Target Marketing
As the outlets of KFC are in posh area and prices are too high (overhead expenses-rent, air-conditioning, employees), so KFC targets upper and middle classes. Target market depends upon size and growth rate of population, Company resources and structural attractiveness of market segment.
c. Market Positioning
For a product to occupy a clear, distinctive and desirable place relative to
“Competing products in the minds of target consumer.” In KFC feedback is taken from the customer in order to know the customer demands and then improvements are made in products. KFC focuses on pure and fresh food in order to create a distinct and clear position in the minds of customers KFC has a strong brand name and they are leading the market in fried chicken.
3. The Marketing 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 customer. Three major components influence KFC’s microenvironment:
We can compare the price of their products with McDonald, Dominoes and Pizza Hut. If the competitor provides the same product at a lower price then the organization usually lowers the price of its product too. In the case of KFC, Fried Chicken is its main selling point and controls a monopoly over the Indian fast food market (only with fried chicken). It prices its burgers, French fries and soft beverages with relation to its competitors.
KFC’s customer market consists solely of the consumer market. 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.
4. Segmenting, Targeting, and Positioning : Building the right relationships with the right customers
Age: Generally there is no age limit focus by the KFC. The target and focus is on each and every individual in a society. KFC finds its largest demographic in the young of any society.
Gender: Both male and females are focused by KFC, gender does not play any role here.
Household Size: This plays a vital role in the demographic factor of the KFC. Generally they target whole families rather than single persons. This being the reason for their Family Meals which are basically bundled items served at a nominally cheaper rate.
Income: Income is an important key factor for KFC. This factor decides which class is to be targeted. In the early rise of KFC they focused on the upper class but slowly are introducing economy meals that attract the lower to middle classes.
Consumption Behavior: It estimates the behavior of people, their liking and disliking towards the pricing of the products.
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, and combination of price and quality.
On the basis of the geographical factor we have divided our market in two main segments, urban and semi urban.
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.
Hectic lifestyle of individuals – giving them more time at work and less stress about waiting for food.
Commercialization of urban and sub-urban markets leading to more mid-sector people that find high-end eating joints very to expensive.
Mid-sector people are always looking for change which KFC provides in their range of fast food.
Quality conscious – people in urban areas are more conscious about the quality of food than rural areas.
Urban areas are more populated therefore they help with attracting higher revenues.
Due to KFC placing itself close to schools, colleges, cinemas and markets which are mostly populated by the young and those who are in a hurry, KFC enjoys a large number of footfalls every day. In addition, they also have outlets close to non-vegetarians (mostly Muslim populated areas).
Given the competitive nature of fast food joints, KFC uses the “Push Strategy” to help them create awareness, be different, and sound attractive.
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 all over the globe. KFC target the Asia and East side because people like chicken product so they enter in the market due to the demand of their chicken products. KFC product variety of product in the chicken.
KFC believes in first level channels in the order given: manufactures, retailers, and consumers. 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:
• Incentive based targets
• Recognition for good work
• Performance based bonus
• Employee benefits to keep them motivated
Promotion is the method used to inform and educate the chosen target audience about the organization and its products. Using all the resources of promotion:
• Sales Promotion
• Public Relations
• Events and Experiences
• Coupons, Discounts and Bundled packages
• An organization finds most of its meanings and survival through promotion.
At KFC, Promotion is the main tool to bring all chicken lovers attention towards its delicious one-of-a-kind product, the Fried Chicken.
KFC offered free home delivery service at specific branches in specifics cities. They take at 30 min for delivery and the minimum delivery order should Rs.200.They also provided services to celebrate the birthdays of kids at there home or in KFC restaurants. Now recently KFC also provide services of mobile unit of KFC.
5. Product Services and Branding Strategy
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.
The packaging for KFC products is chosen according to performance against three criteria: heat retention, moisture removal, and grease absorption. The packaging material and carton design are all adapted to maximize performance against these three criteria.
All our clamshells and chicken boxes contain as much recycled material as it is legally allowed. By law we are required to have virgin fiber board in any part of the packaging that is in contact with food. Any virgin fiber 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. For example:
sogood in so many ways
KFC is as committed to the environment as we are to our food and to our customers. We are proud of the steps we have taken so far to reduce our environmental footprint and are committed as a brand to do even more in the in future. It’s an ongoing journey that we’re on and we want to keep you – our customers – informed along the way!
In 2010, KFC introduced fast food’s first reusable food container. We have also replaced our plastic plates with paper serving boxes. It is part of our plan to reduce our use of non-renewable resources and to reduce the amount of Styrofoam from our restaurants.
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.
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.
6. Pricing Products and Pricing Strategies
a. Pricing Strategies
Market skimming: KFC globally enters the market using market skimming. Their products are priced high and target the middle to upper class people. Gradually they trickle down the prices focusing on the middle to lower class people to penetrate both sides of the market.
We can compare the price of their products with McDonald, Dominoes and Pizza Hut. If the competitor provides the same product at a lower price then the organization usually lowers the price of its product too. In the case of KFC, Fried Chicken is its main selling point and controls a monopoly over the fast food market (only with fried chicken). It prices its burgers, French fries and soft beverages with relation to its competitors.
KFC price their product keeping different points in view. They adopt the cost base price strategy. Pricing of the product includes the govt. tax and excise duty and then comes the final stage of determine the price of their product. The products are bit high priced according the market segment and it is also comparable to the standard of their product. In the cost based method we include the variable and fixed cost.
Promotion is the method used to inform and educate the chosen target audience about the organization and its products. Using all the resources of promotion: advertising, sales promotion, public relations, events and experiences, coupons, discount and bundled packages, and organization finds most of its meanings and survival through promotion. At KFC, Promotion is the main tool to bring all chicken lovers attention towards its delicious one-of-a-kind product, the Fried Chicken.
KFC uses the following tools to further enhance its sales.
All KFC outlets offer its customers with various forms of incentives to buy its Chicken. 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.
7. Advertising, Sales Promotion, and Public Relations
Any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor.
• KFC introducing the new products to the customers using many kind of advertising. They inform the customers about the new products. About what kind of product, the price, etc.
• With the advertisement, KFC persuade their customers to buy the products. In order to do that, KFC will make a good and attractive advertisement. So, their customer will attract to buy the products.
• Using the good advertising will make the customers remember about the products. And certainly, they will come again to buy the products.
There are some Media Types that KFC use for their advertising:
b. Sales Promotion
Consumer Promotion Tools:
In order to make the customer satisfied with the products, KFC make the customer promotion. There are:
o Cash Refunds (Rebates)
o Price packs (cents-off deals)
o Advertising Specialties
Trade Promotion Tools:
KFC also give the trade promotion to the customers. Example:
o Discounts – if the customers buy many products, the KFC will give some amount of discount.
c. Public Relations
KFC also building a good relation with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.
Public Relations Tools:
The good relationship with their partner, KFC can increase their investors, lobbying more people, and also can develop a good relation with the customers. For example:
1. SOCIAL RESPONSIBILITY
KFC Colonel’s Scholars®
is looking for high school seniors with entrepreneurial drive, strong perseverance, demonstrated financial need and who want to pursue a college education at an accredited public institution in the state they reside.
The KFC Colonel’s Scholars Program is about you, your dreams and aspirations, and the perseverance to succeed. This program is offered to high school seniors planning to attend a public in-state college or university. Students who meet the criteria may apply online to become a KFC Colonel’s Scholar. Students selected for this scholarship are eligible to receive up to $20,000 to complete a bachelor’s degree program.
2. SOCIAL DIVERSITY
Yum! Global Diversity and Inclusion
For us, diversity is not a target – it’s a way of life and a way of doing business. Everyone can and does make a difference in our organization. One of our HWWT2 principles – Believe in all People – underscores the importance of actively seeking diversity in others; believing everyone has the potential to make a difference; and coaching and supporting every individual to grow to their full capacity. This adds perspective and depth to everything we do. We’ve also found that a diverse team makes for better problem solvers, services all our customers more effectively, and creates a richer culture for all of us to enjoy.
In our company-owned operations in the U.S. for example, about 35 percent of our associates are Caucasian and the remaining 65 percent are Hispanic, African American and/or Asian. In 2010, minorities and women made up 63 percent of our external management hires and 56 percent of internal management hires (promotions).
We are also increasing the representation of African Americans, Hispanics and women among our key talent/decision makers, and growing the pipeline of diversity in our mid-level manager ranks.
All of our brands have leadership initiatives focused on high-potential diversity talent, and all leaders serve as mentors. In addition, last year each of the brand presidents went into their communities to provide business-growth coaching for local networks of minority businesses.
Making progress in diversity is a business priority and the work of everyone in our system. This commitment is reflected in David Novak’s annual goals, or “Blue Chips.” We also have a dedicated Global Diversity and Inclusion Officer who guides our strategy and a number of initiatives that enhance our inclusive workplace
3. SUPPLIER CODE OF CONDUCT
YUM! Brands, Inc. (“Yum”) is committed to conducting its business in an ethical, legal and socially responsible manner. To encourage compliance with all legal requirements and ethical business practices, Yum has established this Supplier Code of Conduct (the “Code”) for Yum’s U.S. suppliers (“Suppliers”).
Compliance with Laws and Regulations
Suppliers are required to abide by all applicable laws, codes or regulations including, but not limited to, any local, state or federal laws regarding wages and benefits, workmen’s compensation, working hours, equal opportunity, worker and product safety. Yum also expects that Suppliers will conform their practices to the published standards for their industry.
Working Hours & Conditions: In compliance with applicable laws, regulations, codes and industry standards, Suppliers are expected to ensure that their employees have safe and healthy working conditions and reasonable daily and weekly work schedules. Employees should not be required to work more than the number of hours allowed for regular and overtime work periods under applicable local, state and federal law.
Non-Discrimination: Suppliers should implement a policy to effectuate all applicable local and federal laws prohibiting discrimination in hiring and employment on the grounds of race, color, religion, sex, age, physical disability, national origin, creed or any other basis prohibited by law.
Child Labor: Suppliers should not use workers under the legal age for employment for the type of work being performed in any facility in which the Supplier is doing work for Yum. In no event should Suppliers use employees younger than 14 years of age.
Forced and Indentured Labor: In accordance with applicable law, no Supplier should perform work or produce goods for Yum using labor under any form of indentured servitude, nor should threats of violence, physical punishment, confinement, or other form of physical, sexual, psychological, or verbal harassment or abuse be used as a method of discipline or control.
Notification to Employees: To the extent required by law, Suppliers should establish company-wide policies implementing the standards outlined in this Code and post notices of those policies for their employees. The notices should be in all languages necessary to fully communicate the policy to its employees.
Audits and Inspections
Each Supplier should conduct audits and inspections to insure their compliance with this Code and applicable legal and contractual standards. In addition to any contractual rights of Yum or Unified Foodservice Purchasing Co-op, LLC (“UFPC”), the Supplier’s failure to observe the Code may subject them to disciplinary action, which could include termination of the Supplier relationship. The business relationship with Yum and UFPC is strengthened upon full and complete compliance with the Code and the Supplier’s agreements with Yum and UFPC.
The Code is a general statement of Yum’s expectations with respect to its Suppliers. The Code should not be read in lieu of but in addition to the Supplier’s obligations as set out in any agreements between Yum or UFPC and the Supplier. In the event of a conflict between the Code and an applicable agreement, the agreement shall control.
4. ANIMAL WELFARE PROGRAM
Yum! Brands, parent company of KFC, is committed to the humane treatment of animals.
Yum! Brands is the owner of restaurant companies and, as such, does not own, raise or transport animals. However, as a major purchaser of food products, we have the opportunity, and responsibility, to influence the way animals supplied to us are treated. We take that responsibility very seriously, and we are monitoring our suppliers on an ongoing basis to determine whether our suppliers are using humane procedures for caring for and handling animals they supply to us. As a consequence, it is our goal to only deal with suppliers who promise to maintain our high standards and share our commitment to animal welfare.
To assist us in that effort, Yum! Brands formed the KFC Animal Welfare Advisory Council, which consists of highly regarded experts in the field. The Council provides us with information and advice based on relevant data and scientific research. The Animal Welfare
Advisory Council has been a key factor in formulating our animal welfare program.
In consultation with our Council, KFC has developed guidelines and audit programs for our suppliers in the broiler industry. We were also a prominent player in the joint effort conducted by the National Council of Chain Restaurants and the Food Marketing Institute to develop comprehensive guidelines for all species of farm animals.
KFC has implemented a farm level audit program – a program which is industry-leading in the areas of poultry care and handling.
With the good relationship, KFC become the famous company that delivering chicken. Also, they have many customers, because the KFC can take care of their relations. And nowadays, KFC have many branch in many countries.
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IT 2009 CLASS 1