kfc four ps

KFC’s marketing mix

Executive summary

KFC is one of the most known fast food chains in the world started in the early 1930’s by kernel sanders.

Food, fun and festivity, this is what KFC is all about.

KFC has more then 11,000 restaurants in more than 80 countries and territories around the world.

KFC first time came to Pakistan in 1997 and were the title of being the market leader in its industry.

The marketing mix of KFC consists of 4Ps. It contains every thing KFC do it to influence the demand for their products.

KFC was launched here as an innovative product. KFC has a head-on competition with

McDonalds The brand of KFC is so strong that it is the

attribute itself. KFC introduced itself, has grown and now it

is at maturity stage for the last ten years in Pakistan.

Their products have high price and targeted only upper class.

Total KFC Chicken Pieces Sold Annually = 5.89 Billion

Profit Margin is Or Mark Up = $225000000 KFC has only one channel of distribution

(direct) KFC by its advertisements derives the desire

in the customer to come and enjoy healthy food in their favorite restaurant.

CECOS university (IMIS)

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http://images.google.com.pk/imgres?imgurl=http://www.prontograndprix.com/images/logo_kfcPakistan.jpg&imgrefurl=http://www.prontograndprix.com/mail.html&usg=__KYkZCnjUJtZDdfk-lBdQ29OVoLU=&h=112&w=100&sz=8&hl=en&start=12&um=1&tbnid=EW65SIySErY3AM:&tbnh=86&tbnw=77&prev=/images%3Fq%3Dkfc%2Bpakistan%26hl%3Den%26um%3D1


They spend 2% of its profits on advertisement.

KFC has a good product as far as chicken items are concerned.

Kentucky fried chicken (KFC) - one of the most known fast food chains in the world started in the early 1930’s by kernel sanders in the southern USA as a small franchise operation. Colonel sanders have become a well-known personality through out thousands of KFC restaurants worldwide. Quality, service and cleanliness (QSC) represent the most critical success factors to KFC’s global success.

Food, fun and festivity, this is what KFC is all about. Leading the market since its inception, KFC provides the ultimate chicken meal for the chicken loving nation. Be it colonel sanders secret original recipe chicken or the hot and spicy version, every bite bring a YUM on the face. At KFC we proudly say that:

KFC has more then 11,000 restaurants in more than 80 countries and territories around the world. In 1971 Heublein Inc, acquired KFC, soon after, conflicts erupted between the colonel and Heublein management over quality control issues and restaurant.


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Procurement Issues

All the raw materials like chicken are bought from value chicken, vegetables from Monsalwa and they use caned fruit for salads. The machinery is all automated and is in conformance to international standards. KFC officials often visit the outlets without giving prior notice in order to check the conformance to quality standards and procedures Moreover, Food Inspection Teams from Health Ministry visits twice a year to ensure Hygienic Conditions at the Kitchen.

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. Outside North America, KFC offers beef based products such as hamburgers or kebabs, pork based products such as ribs and other regional fare.

KFC in Pakistan

KFC first time came to Pakistan in 1997 and were the title of being the market leader in its industry. Opening the first KFC outlet in Karachi Gulshan-e- Iqbal Serving delicious and hygienic food in a relaxing environment made KFC everyone’s favorite. Since then, KFC has been constantly introducing new products and opening new restaurants for its customers.Presently KFC is branched out in eighteen major cities of Pakistan (Karachi, Lahore, Gujranwala, Sukkur, Sialkot,


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http://en.wikipedia.org/wiki/Hamburger

http://en.wikipedia.org/wiki/North_America

http://en.wikipedia.org/wiki/North_America

http://en.wikipedia.org/wiki/Dessert

http://en.wikipedia.org/wiki/Side_dish

http://en.wikipedia.org/wiki/Fried_chicken

http://en.wikipedia.org/wiki/Fried_chicken

http://en.wikipedia.org/wiki/Sandwich

http://en.wikipedia.org/wiki/Salad

http://en.wikipedia.org/wiki/Wrap_(food)

http://en.wikipedia.org/wiki/Chicken_(food)



Hyderabad, Islam Abad, Peshawar, Multan, Rawalpinde, & Muree) with more than 60 outlets nation-wide.

Presently KFC has provided jobs to over 1200 Pakistanis, which adds up to 6000 individuals directly dependent in KFC Pakistan. The Government of Pakistan receives over Rs.10 million per month from KFC Pakistan as direct taxes. 95% of all food and packing material used in KFC Pakistan is procured locally, which sums up to a purchase of over Rs.35 million per month. Each new outlet developed by KFC Pakistan costs approximately Rs.40 million, which is a huge amount for our construction industry.

Now lets look to the marketing mix of KFC that how they implement the four Ps of marketing mix.

Marketing mix

The marketing mix is generally accepted as the use and specification of the ‘four Ps’ describing the strategic position of a product in the market place.

Product (goods and service) Price (value of the product) Promotion (aware the people for product) Place (distribution of product)

Marketing mix at KFC

The marketing mix of KFC consists of 4Ps. It contains every thing KFC do it to influence the demand for their products.


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a product is anything that can be offered to a market that might satisfy a want or need.

KFC product planing

KFC product is classified as consumer product as it has no intermediates.

KFC offers specialty goods.

The stock turn over of KFC is high.

Price and quality of the product is always compared.

KFC’s product includes

Goods (Burgers, Chicken Meals etc)

Services (cleanliness, quick service, parties)

Product strategy of KFC


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http://en.wikipedia.org/wiki/Market



KFC was launched here as an innovative product. KFC has got one product line but later they introduced products in the same line to protect their market share. New product ideas are generated from:

Customer services (comments cards)

Gallops survey (mystery shoppers)

KFC have a Quality Assurance department that decides the new product innovation. Q.A. department prepares screening of new ideas and product’s feasibility report. This department does the technical evaluation (whether it is practical to produce the new product or not).

KFC’s products are tested externally by offering trials to customers by giving them free samples.

KFC adds a new product in its present assortment based on

Their competitors

Product’s adequate demand

The satisfaction of key financial criteria

Its compatibility with environmental standard

KFC product line


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KFC product line includes all chicken based products.

Chicken:

o 1 pieceo 2 pieceso 5 pieceso 10 pieces

Burgers:

o Zinger Burgero Colonel’s Chicken Burgero Colonel’s Fillet Burgero Zinger Jr.

Combos:

o Chicken Mealso Sandwich Mealso Family Meals

Desserts & Beverages:

o Fruit Salado Regular & Large Drinko Regular & Large Mineral Watero Teao Scoop of Walls Ice creamo Coffee

Snacks & Side Orders:


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o Arabian Riceo 5 & 10 Pieces Hot wingso Dinner Rollo Regular & Large Frieso Hot Shotso Corn on the Cobo Hot & Crispy Soup

Product mix strategy

The product mix strategies are in relation to:

Competitors:

KFC has a head-on competition with McDonaldsWherever they place their products; KFC goes there as well.Locally in Pakistan KFC face a close competition with the local brands like AFC (Al-Baik Fried Chicken), Fried Chicks, Dixy Chicks etc they are producing the same product as KFC.

Attributes:

The brand of KFC is so strong that it is the attribute itself.

Place and Quantity:

KFC products are based on high quality and prices.


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Product mix expansion

Line Extension:

Through introducing new meals offers.

Alteration of existing products:

Quality Assurance department does it. The department decides which product should be sold and when (seasonal products as rice and soups offered in winters).

Functional modification:

It is also decided by the Q.A. department to introduce new recipes.

Quality modification:

KFC has moved to masses rather than the original recipe.

Contraction

KFC introduced itself, has grown and now it is at maturity stage for the last ten years in Pakistan. When the new deals or offers are not sold as expected, quality assurance department contracts the previous offers and introduces new offers.

Change in product positioning


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KFC products were first offered to upper socio-economic group. Later, introducing discounted and lower price deals, they are now dealing in masses. So, KFC has traded down.In doing so KFC has used the same brand name and same high quality product.

Product management of KFC at initial stage

Market entry was not a big problem for KFC as it is a well-known international brand. In that stage they did promoted through their own brand. Their promotion statement was “KFC in Pakistan”. Management in the rise stage had to make policy for heavy competition with McDonald’s. they open new branches improved and extend the product line by introducing new product items.

Brand of KFC

Brand Name: KFC

Color: Red and white

Symbol: Colonel Harland Sander’s picture and KFC written with it.

Master Brand: The brand itself is so dominant, that it immediately comes in mind.


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o KFC's brand identity -- the logo features Colonel Harland Sanders, one of the best-recognized icons in the world.

o KFC is trade marked registered brand.o It is distinctive, adaptable to addition to

product line.o It suggests something about product.o It is legally protected and registeredo The brand equity is very high as the value

added by brand to the product effects the product selling.

o KFC is marketing the entire output under products own brand

Product packaging

KFC makes its own disposable packaging. If they need promotion Pepsi contributes in improving the packaging quality. KFC does family packaging.They use paper material for packaging to avoid health hazards and environmental pollution.KFC does brand labeling. Some of its products also have informational labels such as Halal, Veggi Burgers and Chicky Meals.

Conclusion


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KFC has made a separate brand image in Pakistan. KFC Pakistan does not serve the vegetarians. Product line is very vast. They study the behaviors of the Pakistani customers. KFC has specific product features. Offering delicious and quality product. Specialization in fried chicken. Charging extra for side dishes. Quality, cleanliness, and service. Product quality assurance.

Price is the any amount of money that customers have to pay while purchasing the product. More broadly, price is the sum of all the values that consumers exchange for benefits of having or using the product or services


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Price strategies of KFC

In introduction stage KFC entered the market using market-skimming strategy. Their products were high price and targeted only upper class. Gradually they trickle down focusing on the middle class to penetrate the market. Also KFC follows one price strategy. Price is determined according to the rates of the raw materials and policies of the Govt. The political and legal forces often affect the policies of KFC and eventually results in change of prices that is due to imposing of taxes.

Price competition

We can compare the price of KFC 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 Pakistan fast food market. It-prices its burgers, French fries and soft drinks.

Product Line Pricing:

KFC has a unique pricing strategy that falls solely on their many product lines. Their Value Meals fall into the category of Product Line Pricing. “Where there is a range of product or services the pricing reflect the benefits of parts of the range.”


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For example, you can order a Two Cheeseburger Value meal that comes with a medium drink and fries. You can Super Size this meal to get a large drink and large fries for a little more money or you can go with another value meal that might include different items for different price.

Penetration Pricing:

When KFC first began to break into the coffee market, they ran a large marketing campaign in order to gain some market share in the industry. For a limited time frame, you could get a free small coffee every morning from 4-7am. This was to promote their new coffee partnership with Green Mountain Coffee and helped spread the word that KFC was now offering coffee.

Cost Based pricing

KFC prices 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.

Calculation of the price under Cost Based Pricing Strategy


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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

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= $1.135Now 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


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Conclusion

KFC charge high prices. Offers different coupons. Concept of discount is lacking in KFC Pakistan. KFC has targeted the upper class people. Service charges are also high. No clear policy for discount and coupons. The employees are trained not to suggest the discounts. KFC sells their experiences on high rates. High revenue due to best strategies.

this refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Placement, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.


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KFC distribution

KFC has only one channel of distribution i.e. direct where the goods are transferred to the consumer directly. KFC has no middlemen.

Distribution of goods and services

KFC does distribution of consumer goods directly to the consumer. KFC also does distribution of services to the consumer like parking, sitting, home delivery, etc. KFC gets Wheels! KFC launched its first mobile unit, which took the streets of Karachi by storm. The mobile unit has been designed to cater to the needs of those who are on the go, and have little time to stop by at a restaurant. It also provides a unique convenience of enjoying the delicious KFC offering anytime, anywhere, thus making fast food truly fast and convenient. KFC intends to further develop its mobile network nationwide through more such units

Target areas

Free home Delivery” strategy – They provide free home delivery to offices & homes at all Pakistan. Accessibility – Resulting in several outlets to cater to the needs of people in & around the city.


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Hectic lifestyle – Due to the hectic lifestyle of office goings individuals the fast food concept saves time of preparing food and gives the customer a full meal quickly. 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.

Placement of outlets

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 everyday. In addition, they also have outlets close to non-vegetarians (mostly Muslim populated areas).

CHANNEL PROCESS


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KFC works on the flow of good operation techniques i.e.“Good Operating Manager→ leads to “Good TeamSelection →Good Services → Good Targets → GoodRevenues through the following internal strategies:o Trainingo Incentive based targetso Recognition for good worko Performance based bonuso Employee benefits to keep them motivatedo Promotion

Vertical marketing system

KFC has corporate vertical marketing system because it is centrally owned by its subsidiary Yum Brands. KFC is affected by the geographic distribution (they have few outlets then its competitor McDonald’s). The unit value of the items is comparatively lower then McDonald’s. KFC has a well-equipped sitting area for the customers and a Chicky play area for the kids.

Conclusion

KFC deals in internal market. Less number of outlets in over all Pakistan. Target only city areas. Slow delivery system in some areas. KFC has well equipped sitting.


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KFC has no intermediaries. Well trained staff with expert supervisors. Seeking customer’s response for quality. KFC has no entertainment in some franchises. Quality conscious people are the main target of KFC.

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

KFC promotion strategy

The logo features Colonel Harland Sanders that is one of the best logo in the world has created its name as a standard in the market. 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. Today the Colonel’s Spirit and heritage are reflected in KFC’s brand identity.

KFC promotion sources

o Advertising


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o Sales Promotiono Public Relationso Events and Experienceso 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

Advertising

KFC by its advertisements derives the desire in the customer to come and enjoy healthy food in their favorite restaurant. They spend 2% of its profits on advertisement and use print media and most recently doing televised marketing to promote it products. Their advertising media involve: Newspapers, Pamphlets, Billboards and Television. KFC does both the primary demand advertising (“Become a Chicken Fanatic”) and the selective demand advertising (e.g. “Zinger Meal”). In its advertising it gives informative messages like “Faryad: Keep the city Clean”. KFC does institutional advertising to stimulate demand. When KFC offers new products then it does product advertising. KFC’s ad’s act as counteracts which means to drive the customer to KFC i.e. it uses pull advertising strategy.


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KFC has put big hoardings on the busy areas of Pakistan and have an effective advertisement campaign on the media in order to MOTIVATE its customers. The colors used in advertising are Red, White and blue which itself is recognition for the brand.

Sponsorship

Sponsorship is another tool to strengthen an organizations image. KFC sponsor’s many NGO’s and other social welfare organizations like Regular sponsorship to SOS village. Sponsorships to FARYAD a plant and life association FARYAD: Keep the City Clean”. They also offer different deals according to the season and occasions. KFC is currently the sponsor of the Australian Cricket Team and the colonel logo can be seen on their uniforms throughout the matches.

Sales Promotion

KFC have joint sale promotions with different companies like HP, Philips, Value Meals, and Pepsi Cola. And most recently with ARY Gold digital and World Call Internet services, Also KFC Proud Partners are Del Monte, Culligan, Shan and Peek Freans. KFC uses the following tools to further enhance its sales.•Premiums•Exhibits


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•Coupons•EntertainmentPSO had made a scheme in which PSO had given the coupons of KFC having 10% off. (1 coupon was given after each purchase of 10 liters of petrol).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 (premiums). Additionally they provide meal vouchers and exciting offers in their print ads.

KFC promotion in parties

KFC organize some musical shows and other parties. With the caption “Biggest Birthday Party” The event took place on Louisville, Kentucky, USA, on Sept.8, 1979, to celebrate the 89th birthday of Kentucky Fried Chicken founder Colonel Harland Sanders.

Quality assurance

KFC takes great pride and care to provide the best food and dinning experience in the quick service restaurant business. They believe eating sensibly, combined with appropriate exercise, is the best solution for a healthy lifestyle. Chicken & its Products are

Locally produced and processed chicken. Supplied in frozen form 100% Halal

Conclusion


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After my research of KFC, I come to conclusion that KFC has a good product as far as chicken items are concerned. But they have to increase other varieties to attract the customers. And they must targets the children, as McDonald’s targeting by making a play land because children are the main source and important ones to push their parents to go to their favorite restaurants. And one more aspect for KFC is that it must also reduce their prices to compete their competitors like McDonald, Crisps Pins and Pizza Hut. The largest threat KFC is faced with is the restaurant industry as a whole. The consumer continues to have many choices when it comes to fast food restaurants. KFC struggles are much do to the inability to bring new products to the market quickly and its innovation of new products. KFC fell behind the market in new products and was copying other fast food chains to stay competitive.

References:

Principle of marketing by Philip kotler Marketing management by Philip kotlerwww.kfc.com www.google.com www.scribed.com www.encyclopedia.com


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http://www.encyclopedia.com/

http://www.scribed.com/

http://www.google.com/

http://www.kfc.com/


kfc four ps

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