MKT 465 : Strategic Brand

Management

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 By
Submitted To
MOHAMMED MAHIB ULLAH ID # 073 267
KHONDOKER GALIB BIN 030 [SEC- 1 ]
MOHIUDDIN (KGM)
TONMOY MITRA TAPOS ID # 073 028
Lecturer 030 [SEC- 1 ]
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School of Business RIFAT IQBAL ID #

Page073 235 530
Content [SEC- 1 ]
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
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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.

Micro Environment

Company
KFC 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.

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

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

Competitors
Their competitors are
1. Mc Donald’s
2. Boston chicken
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3. Church’s and Popeyes

4. Chick-fil-A
Employees
Employees 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.

The Macro Environmental Forces

These are not controlled by the company and are environmental forces.

Demographic Factor
It 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 factor
In this case we don’t see any major implication of technological factor.

Political Factors
Political 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 Factors
KFC 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,
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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 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
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• 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.

• 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
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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.

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.
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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

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.
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  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.

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

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 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.

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