1.0 Executive Summary
Kentucky Fried Chicken (KFC) Malaysia is a major Quick Service Restaurant (QSR) operator in Malaysia and has been established for just over 20 years now. It serves mainly chicken related items, but offers side dishes to its consumers as well. Lately, more and more Malaysians have been opting for a healthier eating diet as a large number of them have become more health conscious. This has opened the door for KFC’s main competitors, such as McDonald’s, to come out with a new range of healthier products, allowing them to mount a greater challenge on KFC Malaysia’s current position as Malaysia’s leading fast food operator.
As a response to the advancement made by KFC’s competitors in providing healthier fast food, KFC are to introduce a new set of healthier products that would be mainly targeted at health conscious people, living in Malaysia. Its target market would largely be based on segmentation of age, where it would be focused on customers in the age group of between 4 to 40 years old.
KFC Malaysia would, nevertheless, have to fight off fierce competition from other fast food operators, such as Kenny Roger’s, Burger King, A&W, Radix Chicken and KFC’s biggest rival, McDonald’s, who are also trying to take hold of the new market of healthier products. The new healthier menu that KFC Malaysia is going to introduce would not only be a new healthier alternative to its existing products, but also an addition to what it already has to offer. The pricing and promotion strategies would also be looked into as KFC Malaysia prepares to introduce its new healthier menu to the public.
2.0 Business Overview
2.1 Company Background
Since its inception, KFC has evolved through several different organizational changes. These changes were brought about due to the changes of ownership that followed since Colonel Sanders first sold KFC in 1964. In 1964, KFC was sold to a small group of investors that eventually took it public. Heublein, Inc purchased KFC in 1971 and was highly involved in the day to day operations. R.J. Reynolds then acquired Heublein in 1982. R.J. took a more laid back approach and allowed business as usual at KFC. Finally, in 1986, KFC was acquired by PepsiCo, which was trying to grow its quick serve restaurant segment. PepsiCo presently runs Taco Bell, Pizza Hut, and KFC. The PepsiCo management style and corporate culture was significantly different from that of KFC. PepsiCo has a consumer product orientation. PepsiCo found that the marketing of fast food was very similar to the marketing of its soft drinks and snack foods.
PepsiCo reorganized itself in 1985. It divested non-compatible units and organized along three lines: soft drinks, snack foods and restaurants. PepsiCo Worldwide Restaurants was created to create synergism between its restaurant companies. By the end of 1994, KFC was operating 4,258 restaurants in 68 foreign countries. KFC is the largest chicken restaurant and the third largest quick service chain in the world. Due to market saturation in the United States, international expansion will be critical to increased profitability and growth. Since its blooming, KFC have not contribute anything to green marketing, which include pricing, product, place and distribution KFC Corporation, based in Louisville, Kentucky, is the world’s most popular chicken restaurant chain, specializing in Original Recipe®, Extra Crispy®, Kentucky Grilled Chicken™ and Original Recipe Strips with home-style sides, Honey BBQ Wings, and freshly made chicken sandwiches.
Every day, more than 12 million customers are served at KFC restaurants in 109 countries and territories around the world. KFC operates more than 5,200 restaurants in the United States and more than 15,000 units around the world. KFC is world famous for its Original Recipe® fried chicken — made with the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected more than a half-century ago. Customers around the globe also enjoy more than 300 other products — from Kentucky Grilled Chicken in the United States to a salmon sandwich in Japan. KFC is part of Yum! Brands, Inc., the world’s largest restaurant company in terms of system restaurants, with more than 36,000 locations around the world.
The company is ranked #239 on the Fortune 500 List, with revenues in excess of $11 billion in 2008. 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. 2.2 Company Vision, Mission and Objective
VisionTo be the leading integrated food services group in the Asia Pacific region based on consistent quality products and exceptional customer-focused service.| MissionTo maximize profitability, improve shareholder value and deliver sustainable growth year after year|
3.0 Marketing Mix
3.1 Product Strategy
Product is a bundle of physical, any combination of goods and services offered and symbolic attributes designed to satisfy the needs and wants of consumers. Consumers buy want satisfaction, not object. For example, customer went KFC to buy fried chicken because they want taste it, fulfill their desired, not because they want a food. Thus, a product is anything tangible or intangible that can be offered for purchase or use by consumers. Tangible product is one that consumers can actually see, hear, smell, taste or touch, such as burger and French fries. Intangible product is a service that cannot be touched.
For example, counter service person served customers to make an order. One way to distinguish services from goods is the good-services continuum. Spectrum along which goods and services fall according to their attributes, from pure good to pure service. A meal at KFC restaurant is a mix of goods and services. It combines the physical goods such as burger, fried chicken, French fries and drinks with the intangible services of an attentive serve staff and comfortable surroundings.
Development of Product Lines
KFC offers its consumers a product line which is produced a series of related products. The motivations for marketing complete product lines rather than concentrating on a single product include the desire to grow, enhancing the company’s position in the market and optimal use of company resources.
Desire to grow is a company limits its growth potential when it concentrates on a single product, even though the company may have started that way, as KFC did with its single product, fried chickens. Now the company sells fried chickens in spicy, chicken nuggets, burger and etc to customers.
Enhancing the company’s market position is a company with a line of product often makes itself more important to both consumers and marketing intermediaries than a firm with only one product. A shopper who purchases a tent often buys related camping items. For instance, KFC now offers a wide range of products with which consumers can completely order meals for satisfy their appetite.
Optimal use of company resources is an organization may reduce the average production and marketing costs of each product by spreading the costs of its operations over a series of products.
KFC identify their products in the marketplace with brand names, symbols and distinctive packaging. Almost every product distinguishable from another gives buyers some means of identifying it. Brand name is part of a brand, consisting of letters, numbers or words that can be spoken and that identifies and distinguishes a firm’s offerings from those of its competitors. For example, KFC is a brand name and able to identifies and distinguishes its offerings from other competitors.
Brand mark is a symbol or pictorial design that distinguishes a product, such as the grandfather for KFC. Trademark is a brand for which the owner claims exclusive legal protection. The Kentucky Fried Chicken company is a trade name, but KFC is a trademark of the company’s product.
3.2 Distribution Strategy
Target areas consists of “Free home Delivery” strategy, accessibility, hectic lifestyle and economically.KFC provide free home delivery to offices and homes for select countries .Accessibility is resulting in several outlets to cater to the needs of peoples in and around the city .Due to the hectic lifestyle of office goings individuals, the fast food concept saves time of preparing food and gives the consumer a full meal quickly .Economically convenient is the pricing appeals to the many classes of a society.
3.2.1 Target Market
In the target market, location is one of the components .The hectic lifestyle of individuals giving the consumer more time at work and less stress about waiting for their food. The people in urban areas is more conscious about the quality of food than rural areas. Urban areas are more populated therefore they help with attracting higher revenues. Besides that, the placement of the outlets is very important. Due to the KFC placing itself close to the schools, colleges, cinemas and markets which are mostly populated by the young and those who are in hurry, KFC enjoys a large number of footfalls every day. In addition, they also have outlets close to non-vegetarians and mostly at the Muslim populated areas.
KFC also have their own strategy.KFC is facing the competitive nature of fast food joints, KFC uses the “Push Strategy” to help them create awareness among the customer. The customer will get the awareness of KFC when the KFC is doing the advertising or promotion. Hence, it can help to increases the revenues.KFC make themselves to be different compare with other fast food company. They make the consumer feel that they are the only fast food outlets which can provided the delicious chicken to the consumer.KFC also make itself to be sound attractive.
They produce one slogan called “Finger Lickin Good”. All the consumer will automatically think of KFC when listen to this slogan so KFC is sound attractive because people will think their chicken is delicious until licking their finger when eat the chicken of KFC. Place includes company activities that make the product available to target consumer.KFC are no market intermediaries such as reseller and wholesalers. They provide product directly to the customer. For the location, KFC have certain outlets per market area. For inventory, the warehouses for ingredients are in the Dubai. In transportation, the supplier uses their own vehicles for the supplying of the chicken and breads.
KFC believes in first level channels in the order of manufacturers to retailers to consumers. Firstly, the manufacturers produce the product then sell it to the retailers. The retailers improve the product and transform it into food then sell in to the customers.
3.2.4 Channel Process
The channel process is that the KFC works on the flow of good operation techniques that is “Good Operating Manager” leads to “Good Team Selection” to Good Services to Good Targets to Good Revenues through the internal strategies like training, incentive based targets, recognition for good work, performance based bonus, employee benefits to keep them motivated and promotion. Firstly, the employee will given the training to train them how to serve the customer politely. Next, the employee are given the incentive based on their targets they had hit in the certain period. This will encourage the employee to work harder to achieve their target so that this will help to increase the revenues of KFC.
The recognition for good work also is one of the useful strategy to help increase the revenues of KFC. When the worker had done the job well without any mistakes, the worker should be praise by the manager, so that this can encourage other worker to work harder also. The performance based bonus also can be use to increase the revenues of KFC. Employee can get the extra bonus based on their performance. The employee benefits should be maintain to keep them motivated in their job.
3.3 Promotion Strategy
Promotion is the method used to inform and educate the chosen target audience about the organization and its products. KFC using several resources of promotion such as advertising, sales promotion and public relations. KFC has invested large amounts of money to promotion. For instance, the famous slogan of KFC, “Finger Lickin Good” has been changed for better development on promoting company. In this year, KFC has created a new slogan, that is “So Good” and launch on 4th April 2011. KFC had spend RM3.5 millions to launch this slogan. The reasons of changing slogan are able to spread out the message and brand’s name more effective to the bigger target market. Advertising is the most effective way in promotion. KFC uses many mass media channels in advertising their company such as television, newspapers, radio, internet and so on.
Advertising can attracts new customers and maintains their memories about image of KFC. Hence, reputation of company also increases in order to strengthen their position in market place. Due to the advertisement in newspapers and internet, consumers are easier to know about KFC latest informations. For example, advertising during the period of promotion is to inform customers and attract them to consume in KFC. They also having a website which is listed out all the informations about KFC and a “Facebook” page that can promote KFC. Sales promotions are short-term incentives used to encourage consumers to purchase a product or service. KFC use consumer promotion tools not only short-term but it also encourages long-term customer relationship. KFC had introduce a few membership to increase the target market such as Sunriser Card, Chicky Club and KFC Snax. These membership are categories by age of consumers.
Consumers can get discount, coupons and special services when they become members. Special services like members of Chicky Club can organize an birthday party in KFC outlets which KFC will provide all the stuff. Other than that, KFC organize “KFC Chicky Carnival” every year since year 2004 with different themes of carnivals which is target on children. KFC also introduce some promotional tools like foldable trolley bag, toys, key chain and others. In order to attract more costomers, KFC relate the promotional tools with some latest topics. For example, KFC had introduce limited edition of “Transformers: Dark of The Moon” laptop sleeve which is the latest movie. On the other hand, KFC promote their brand through event marketing. Events like “Treasure Hunt” and “Spot & Win” competitions in order to capture the attention of consumers to KFC by rewarded prizes for the winners. Public relations builds positive public relations with various groups by obtaining favorable publicity, establishing a good corporate image, and handling or heading off unfavorable rumors, stories, and events.
For example, Projek Penyayang KFC was developed to provide food to 80 homes every quarter. Projek Penyayang KFC was founded in 1995 in an effort to enable thousands of orphans and underprivileged children to enjoy KFC meals. Over 6,500 children are treated to KFC food every year. This year marks the 10th Anniversary of Projek Penyayang. Besides, Tabung Penyayang KFC, a charitable fund, whose sole purpose was to help orphanages in Malaysia. Tabung Penyayang was founded in 1997, to help children and the needy through various CSR programme. Tabung Penyayang KFC is a unique fund as it represents a percentage of revenue generated from the sale of KFC’s Kids’ Fun Meals. This not only help the lower class of people but also build well organization image and reputation.
3.4 Pricing Strategy
At KFC, They recognize that improving the quality of life and economic vitality of the communities in which they conduct business is in the best interest of their company, their patrons, their employees and industry. In order to show their appreciation for Malaysian support for making them as a market leader, all of them would wanted to give something for the community, Charities for Project Penyayang, KFC was developed to provide food to 80 homes every quarter which founded in 1995. Their objective is an effort to enable thousands of orphans and underprivileged children to enjoy the KFC meal. Over 6500 children are treated to a finger licking good every year. They also organized a charitable fund which is Tabung Penyayang whereby their objective is to help orphanages in Malaysia and help children and the needy through various SR Programmes. Unique fund as it represents a percentage of revenue generated from the sales of KFC’s Kids fun meals.
Price perceived to subsidize after products unnecessarily in MCD. The Price cover the cost of production, I think the customer would be satisfied with quality of foods and the price is quite reasonable too. Besides, KFC also promoted the food from time to time and come out with new recipes to attract more customers to try their foods. Recently, KFC just came out with O.R Chicken Chop and drinks with price RM 16.50, it also come out with free gift of foldable trolley bag. With those free gift, maybe some customers they just want the bag, but not really the meal. Like for example, we can talk about the coca-cola glasses which offered by MCD.
Suppliers perceived to receive a fair share of profits because suppliers take responsibilities to have documented program for animal welfare including a designated program leader, formal employee training, and a system of regular self-audits and record keeping. Corrective action for suppliers deviation from KFC’s poultry welfare guidelines should be clearly stated and effective. Besides, they needs to maintained standard of breeding, hatching and raising of poultry at the form level.
Supplier’s responsibilities are forming education and training of poultry. Besides that, hatchery operations such as climate and sanitation, must be monitored in order to promote chick’s health. Furthermore, they should provide comfort and shelter to the birds which are clean, well-ventilated and protective. They should raising-consistent with federal law including promote growth in chicken. Proper nutrition and feeding- KFC’s guidelines recommend that suppliers should formulate.
They must be feed in order to deliver proper nutrition and promote the health of the birds. Seller does not receiving a fair margin but depending on their performance because they are one who help to sell the foods and do all the jobs in the restaurant. Hidden price means reducing the quality of the packaged quantity , sized or weight. There are some service charges which added as well as income tax to the price of food. Therefore, the customers have to pay more for it. Besides , free gift also indicated in hidden price too. If price decreases, it will lead to more consumption as demand for chicken will be increase. It is fair to society because everyone got an opportunities to get the food at lower price. Like those even children and students have an opportunities to eat KFC.
The products that Kentucky Fried Chicken (KFC) produced were friendly and safe to environment, especially chicken. Residues of chicken bones can be decay to avoid from pollutes and harms the environment and it can become fossil fuel if it bury in land. The chicken bones will be bury and pass through many generation after generation, layer after layer of deeply buried in the ground. After a long period of evolution for millions of years, these reserves of chicken bones remain in the composition of the strata have been formed or that there will be hard as a rock like the color of coal charred, thick slimy liquid oil and natural gas. At the same time, the products that KFC produced were unfriendly and harmful to environment too.
Products especially plastic cup lid and straw of the drinks were difficult and unable to decay even though it buried in land. These residues will be throwaway to waste yard or burn it in trash burning down field. This kind of behavior will pollutes environment and cause air pollution. Although some of the products that KFC produced were unfriendly and harmful to environment, but operator of KFC was using eco-friendly ingredients such as chicken, fish and beef to produce products. Examples of these products are fried chicken, chicken burger, fish burger, beef burger and chicken ball. These products were safe to eat and harmless to human health.
To produce so much of products, the environment, animals and humans were suffered. The environment was polluted and cause pollutions such as air pollution, noise pollution and water pollution during the produce processing. The factory was set up and machines were purchased. The smoke that released from machine caused air pollution. The smoke may is the release of particles into air from burning fuel for energy to implement following process. One of the examples for this particulate matter is diesel smoke. This type of pollution is sometimes referred to as “black carbon” pollution. The smoke may also is the release of noxious gases, such as sulfur oxides (SO), carbon monoxide, nitrogen oxides (NO), and chemical vapors. These gases can take part in further chemical reactions once they are in the atmosphere, such as forming smog and acid rain.
Machines also caused noise pollution because of the sound that it makes when used. This pollution made environment suffered and effected on human being and animal. Noise pollution is a type of energy pollution in which distracting, irritating or damaging sounds are freely audible. The sound that machines makes were disturb any natural process or cause human or animal harm, even if the sound does not occur on a regular basis. Noise pollution will effects on health and behavioral in nature. Noise can damage physiological and psychological health. It can cause annoyance and aggression, hypertension, high stress levels, tinnitus, hearing loss and sleep disturbances. Noise effects animal species communicate louder, which is called “Lombard vocal response”. If creatures do not “speak” loud enough, their voice will be masked by anthropogenic sounds. These unheard voices might be warnings, finding of prey, or preparations of net-bubbling.
When one species begins speaking louder, it will mask other species’ voice, causing the whole ecosystem to eventually speak louder. Industry factory caused water pollution by used freshwater to carry away the waste that produced into water bodies such as rivers, lakes, groundwater and oceans. Water pollution affects plants and organisms living in these bodies of water. The effects of this pollution not only damages to individual species and populations, but also to the natural biological communities. For example, oils that produced cannot dissolve in water. It can stop marine plants receiving enough light for photosynthesis and harm for fish and marine birds. In addition, the asbestos that produced is a serious health hazard and carcinogenic to humans. Asbestos fibres can be inhaled and cause illnesses such as asbestosis, mesothelioma, lung cancer, intestinal cancer and liver cancer.
The name of this fast food company is not green. The name of this company was chose based on what kind of services that their company provides. The full name of KFC was Kentucky Fried Chicken that shows they are provides fast food and relevant services and selling them to customers. The name also shows the main product that they produced was fried chicken. Because of the name of this fast food company is KFC and it is not a green company name, so it is not greener than competitors especially McDonald. However, the name of McDonald also not a green company name. McDonald is the surname of brothers McDonald, Dick and Mac McDonald, they were founder member for this fast food company.
The product that produced by KFC can be reused or recycled after use. The drinks that KFC sold to customers were wax-lined paper cups. This wax-lined paper cups can be reused after used to lubricate things around the building, lightly protect wooden surfaces and help prevent rust or grime on garden tools and etc. To recycled, the wax-lined paper cups and paper plates can collect and send it to recycle centre.
The consumption unnecessarily is high.
Certain customers, especially teenager were over-using the products. They become obesity because they were taking too more over the products. Obesity is an excess proportion of total body fat. A person is considered obese when his or her weight is 20% or more above normal weight. The most common measure of obesity is the body mass index or BMI. A person is considered overweight if his or her BMI is between 25 and 29.9; a person is considered obese if his or her BMI is over 30. “Morbid obesity” means that a person is either 50%-100% over normal weight, more than 100 pounds over normal weight, has a BMI of 40 or higher, or is sufficiently overweight to severely interfere with health or normal function. Taking in more calories than they burn leads to being overweight and, eventually, obesity. The body stores unused calories as fat. Obesity can be caused by they are eating more food than your body can use and not getting enough exercise.
4.2 Distribution Strategy
KFC has the opportunity to generate more revenue by placing the outlets at the place which with the crowded people. When the outlets are located at the place which full of people, the opportunity of getting profit is higher than place the outlets at the remote places. Besides the opportunity, the KFC also face the threats from other fast food industry such as Mc Donald and Marrybrown. In Mc Donald, there are fried chicken available to customer who want eat fried chicken. Therefore, KFC will lose the customer who want eat fried chicken just because Mc Donald are provided fried chicken in their outlets. Hence, KFC should maintain their quality of food to ensure that all the customer still purchasing food in their outlets compare go to Mc Donald purchase fried chicken. This is the huge treats that KFC will face in the coming year. KFC should always produce the high quality food to the customer to make sure the customers are loyal to them.
4.3 Promotion Strategy
For promotion strategy, KFC should change their promotion position of product related to “green”. KFC can add some green issues when promoting their product such as enlarges the recycle logo and mentions it obviously in order to persuade and remind consumers recyle the product after finish consump it. Then, the sales leaflets also should be reduce or instead of other form to promote, for example, uses only the internet to publish KFC product posters or leaflets and television channels to show the KFC TV commercials. With this way, the operating costs of KFC can be decrease and the uses of paper will be reduce thereby also save the trees. Besides, KFC should involve public relations in relation to green issues. KFC can cooperate with green charity fund like World Wide Fund for Nature(WWF) and help them raising fund to conserve the environment in order to create their values in green market. KFC can create partnership or sponsorship relation with WWF in the events organized by them.
6.4 Pricing strategy
A fast food company usually adjusts their basic prices to account for various customers’ differences and changing situations. If KFC wanted to develop a new pricing strategy than any other fast food companies have, I highly recommend a discount and allowances. This is to reduced prices to reward customer responses such as to promoting the product. This strategy is good on develop on the lower-middle class people area. Next recommended strategy I would like to introduce is promotional pricing. Like any other fast food company such as McDonald are using this strategy better than others. This is to temporary reducing prices to increase short-run sales. For instance, KFC can reduces its prices during the month of Ramadan and also offers different schemes and similarly Warid Zem offers nights free offers to their customers.
Other than that, my next recommendation is to increase more bundle pricing on different product. To increase customer taste and preferences, KFC can use to create more create more different combo deals continuously. As one combo packages are introduced it will not last long but to increased its short run sales. The reasons are to let customers get intention on KFC product and the second reason is to promote its product in advertisement for telling its customers that KFC offer much more packages compare to others Fast Food Company Such As McDonald.
From the data above all, KFC’s early entrance into the fast-food industry in 1954 allowed KFC to develop strong brand name recognition and a strong foothold in the industry. The secret recipe has long been a source of advertising, and allowed KFC to set itself apart. Also, KFC was the first chain to enter the fast-food industry, just before McDonald’s, which opened its first store a year later, and the “secret recipe” was the initial home replacement strategy. They emphasized customer service, cleaner restaurants, faster and friendlier service, and continued high-quality products. In other hand, KFC is well using promotion mix to persuasively communicate customer value and maintain customer relations, especially on advertising and sales promotion, but still can make further improvement.
However, between 1971 and 1986, KFC was sold three times. The first two sales, to Heublein, Inc and to R.J. Reynolds, left the company largely autonomous. It wasn’t until the sale to PepsiCo in 1986 that changes in top management started to take place. These changes happened almost immediately after the sale. Nevertheless, the conflict cultures of KFC and PepsiCo because of KFC’s culture was largely based on the Colonel’s laid back approach to management, while PepsiCo’s culture is more of a “fast track” attitude. Employees do not have the same level of job security that they enjoyed before the PepsiCo acquisition.
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