appns@hotmail.comIntroduction

Kentucky Fried Chicken, better known as KFC, is the largest chicken restaurant chain

worldwide with almost 1000, outlets located in well over 70 countries. CEO, David

Rodgers, heads it, it is part of the tricon restaurants internationals which is one of the

most leading multinational organizations in the world. Said to be the second most famous

and largest fast food franchise in the World, No. 1 brand in Asia with the market leader

ship in Japan, China, Malaysia, Indonesia, and Korea.

 

 

 

History Of KFC

1939

Colonel Harland D. Sanders perfects secret blend of 11 herbs and spices in Corbin, Ky., and restaurant.

1952

 Pete Harman insalt Lake City becomes the first Kentucky Fried Chicken franchises.

1956

colonel Sanders sells Corbin, Ky., restaurant and goes on the road to enlist new franchisees. The Colonel signs his first international franchisee in Canada.

1964

    Kentucky Fried Chicken sold to the group of investors including John Y. Brown Jr., and Jack Massy for $2 million.

1969

Kentucky Fried Chicken listed on New York Stock Exchange. Colonel Sanders buys first 100 shares.

1971

  Kentucky Fried Chicken acquired by the Hwublien Inc.

1980

 colonel Sanders dies and is buried in Louisville’s Cave Hill cemetery.

1982

Kentucky Fried Chicken has becomes a of R.J.Reynolds industries when Heublein Inc. is acquired by RJR (now RJR Nabisco, Inc.).

1986

Kentucky Fried Chicken becomes a subsidiary of PepsiCo, Inc. for $840 million. Grand opening of Colonel Sanders Technical Center in the Louisville, KY.

1987

Kentucky Fried Chicken opens first Western style quick service restaurant in China.

1991

a new logo is introduced to emphasize chicken variety – replacing “Kentucky Fried Chicken”with “ KFC”.

1993

          KFC adds non-fried chicken to menus in the U.S. and Australia.

1994

   KFC officially opens its 9,000th restaurants in the world – in Shanghai, China – and announces a $200 million investment over the next four years for the 200 restaurants in 48 Chinese cities.

1995

     KFC introduce Colonel’s Cristy Strips® and smashes Guinness record with “ World Largest Pot Pie” in New York city to introduce Chinky Chicken Pot Pie. Opens first restaurant in Moscow.

1996

 KFC introduces Tender Roast® chicken pieces and brings back one of the world most recognized packages  -- the bucket.

1997

     Kentucky Fried Chicken introduce Honey BBQ- flavored Tender Roast® Spicy Buffalo Crispy Strips TM and chicken TwisterTM – chicken and veggies “ like a meal all wrapped up and ready to go”.

KFC In Pakistan1n 1997, Kentucky Fried Chicken entered the market under the banner of Artal, a

European food conglomerate which has invested heavily in the food sector in the

Pakistan. It goes credit to KFC that it was the first franchise to begin its operations from

the densely populated area of Gulshan-e- Iqbal. This unique step was taken out of the

special concern for the middle and lower middle class incomes groups who has so for

being neglected by brand name franchises in their areas. The first KFC restaurant opened

its door in January 1997, drawing thousand of the eager customers to enjoy quality food

and friendly service in clean surrounding.

                 Boosted by the huge success of the first restaurant, new outlets mushroomed at

prime location in both Karachi and Lahore that continue to attract a record number of

quality food lovers.

Entrance of Kentucky Fried Chicken in the food industry has resulted in numerous

positive developments in various areas. One of the major ones beings its contribution to

the Pakistan economy by generating revenue and creating employment. Each Kentucky

Fried Chicken restaurant employ roughly 50 local people which would total to near about

one thousand direct employs in all- taking in all 18  restaurants in Pakistan. Other than

these there are number of indirect employs, for example, construction workers who build

the restaurant and suppliers. All direct employs have to undergo mandatory training

through extensive programs and a series of workshops in order to ensure efficient

management and services.

Mission StatementTo maintain and enhance our position as the leading WQSR chain serving good value,

innovative chicken based products through consistently providing a pleasant dinning

experience with fast, friendly service at clean and convenient locations. At all times, we

must be dedicating to providing excellent service and delighting customers.

DepartmentsThere are five departments in the company.

     Marketing Department

     Finance Department

     Operation Department

     HRM Department

     Quality Control Department

Functions of departments

Marketing department

Marketing is the delivery of the right product to the right customer, at the right place, at

the right time and at the right price through right communication and promotion. 

Marketing is often dynamic, challenging, and rewarding it can also be frustrating and

even disappointing.  But it is never dull.

In KFC all the Marketing efforts (Product Planning, Pricing, Distribution and Promotion)

are designed and combined in a coherent and consistent way. They have the updated

knowledge of market situation.  They keep eye on actions of the competitors.  They

consider that all employees are potentially good, responsible, helpful and trustworthy and

they have given them opportunity for growth, self-control and personal responsibility. 

They know that teamwork and collaboration generate a greater volume of production than

does destructive interpersonal competition. Now Kentucky Fried Chicken captures a

maximum market share.  This is only due to excellent marketing strategies adopted by the

organization.

Marketing department is the main and most active department of the Kentucky Fried

Chicken it perform all the key activities of the business. The basic purpose of the

marketing department is to advertise its products in the market and keep eye on the

competitors that what they are doing. The department introduces the new policies and

satisfying the customers.

The body of the department is comprised of Marketing Manager, Assistant Marketing

Manager and Planning Manager.

Finance Department

 The finance department provides close support the business manager on the financial

implication of business strategies that are formulated. Regular feedback is also given to

Departmental Heads to facilitate monitoring of cost at the department level.

The finance department prepares statutory accounts and management accounts of the

business.

The statutory accounts comprise of all the final accounts of business transactions, Profit

and Loss accounts, COGS (cost of good sold), Balance Sheet and Cash Flow Statement

etc. which, by law, the business has to prepare. The Finance Department analysis the

business results and prepare the monthly and quartly review of business operations. The

Cashier handles routine day to day cash transactions.

This Department is also responsible for maintaining fixed assets listening and arranging

insurance cover on the assets of the business the tax related issues of the Business and all

the transactions processing’s, e.g. recording of sales and payments etc, are also handle by

the Finance Department.  Finally the Finance Department liaises with internal and

external auditors, product margins, variable cost and fixed assets within the business as

well.

OPERATION DEPARTMENT:

It is very important department in the Kentucky Fried Chicken. The incharge of the

operation department is operation manager. This operation manager is responsible for the

following operations and functions.

         Cooking

        Cleanliness

        Administration of restaurant.

        Complaint handling of the customers

        Daily order to procurement Department

        Day to day demand forecasting

        Daily lectures to crew people

        Trained the employees

Hrm Department

According to the marketing manager of KFC that HRM Department play a very

important role in the organization.

The aim of this department to provide a highly qualified and competent employees to the

organization. The HRM Department performs the following functions:

         Reviewing application form

         Interviewing applicants

         Inducting new employees

         Appraising employees performance

         Make a decision about the employees training

         Provide a career advice to subordinates

Quality Control Department

Quality control means monitoring the quality weight, strength, consistency, color, taste,

reliability, finish, or any one of myriad of characteristics to ensure that the products meet

the international standard.

For this purpose there is separate department in Kentucky Fried Chicken which is

responsible for the quality control. This department satisfying the customers needs for the

quality, and differentiate the organization from the competitors and attract the large

number of customers.

 The duty of this department is check the raw material that whether it is according to the

standard or not. Department check the quality each and every step till the final product.

Because according to the Marketing Manager of KFC the early detection of defective part

of process can save the cost of further work on the product. 

 

 

Role Of Marketing Department In KFC

 Marketing department of Kentucky Fried Chicken play a very important role in the

organization.

     The first and basic function of this department is to promote its products in the market

in different ways. According to the marketing manager of KFC we advertise our products

on international television channels, print media, banners, etc.

    This department creates the awareness among the people about the packages, which

are given on the special events like Eid, Basant, etc.

   Marketing Manager of KFC says that it is the world of competition, therefore to

survive in the market we work for the future. So the third function of marketing

department of KFC is to make plans to achieve the objective of organization in future.

   Marketing department of KFC also analyses to increase or decrease the sale.

   When the sale of KFC is going to decrease, the marketing department of KFC

conducts a proper marketing research to find out the problems, basic reason behind the

problem and try to solve it and to save the organization from this type of faults in future.

Objective Of Marketing Department In Kfc

 According to the marketing manager of KFC that marketing department have two

objectives.

  The first department of KFC is to create the awareness and provide the following

information to the higher authorities of KFC.

This department shows the marketing position of the organization.

This department shows the market share of KFC.

This department gives the suggestion to the higher authorities for the future

improvement.

This department provides the information about their competitors to the higher

authorities of KFC.

    The second basic objective of Marketing Department is that it meets the budget in the

required time span. The marketing department of KFC is to promote its products and

make the future plan to live in the budget.

TARGET MARKET

Target market is the group of people to whom an organization wants to communicate its

message and to generate some positive attitude, behavior and action toward the

organization offerings. So while preparing or developing the promotional strategy, the

organization need to clearly define their target market.

According to the marketing manager of KFC the target market is

    Upper upper class

    Upper middle class

    Lower upper class

    Highly paid professionals

    Youngsters

Competitors

Competitors are the elements of paramount important in the business world. The analysis

of the competitors activity is and important to do as to know the need and wants of the

customers. The competitors are the force, which shape the activities of any organization.

The statement of marketing manager of KFC is that at this time we have two strong

competitors:

   Macdonald’s

   Subway 

Products Offered By The KFC

French Fries

Zinger Burger

Colonel’s chicken burger

Nuggets

Twister

Hot wings

Arabic rice

Corn of the cob

Dinner roll

Fruit salad

Chocolate mousse

Chicken pcs.-originional recipe/ hot & crispy

Cold drinks

Mineral water

Colonel’s sundae

Colonel’s premium cone

Rass bhara

Tea

Coffee

 KFC will position itself in local market as a bright, pleasant, air conditioned restaurants

and “casual atmosphere” and will target families and young consumers which can be

termed as “three generation from middle and upper middle income segments”.

KFC stands for high quality products, hygienic and affordable fast food in an array of

complete meals. The chicken is prepared with unique secrets recipes in variety of ways to

suit different taste and eating occasions. The meals are made more appetizing by

supplementing with fresh, tasty side dishes and rich home style dessert.

 Another aspect of KFC franchise is its demand for distinguished standards in quality,

efficiency, hygienic, and sanitation. Hence the level of efficiency has subsequently risen

amongst its competitors, which has resulted in an improvement in the overall food

market.

Marketing Mix

As we know that the marketing mix is the combination of four things.

KFC blends all these four P’s of marketing mix in a very organized manners, which helps

the organization in satisfying the customers demand as well as achieving the mission of

the organization.

Combinations of that marketing mix are:

    Product.

   Pricing Structure.

   Place / Distribution system.

   Promotional activities.

 

Selected Product

 We select the product (Chicken PCs.) for the explanation. As we know that this product

match the taste level of Pakistani people. KFC introduced this product first time in

Pakistan in 1997, when they opened first restaurant in Karachi. This product breaks all

the record of sale.

According to the marketing manager of KFC that we prepare chicken PCs. And mostly

all the other products on the automatic plants and we deliver the product (Chicken PCs.)

after the proper examination by the quality control department.

 Raw material used in this product like meat, etc. is purchased from the big Supplier

Company, which supply the meat at a same time to all the stores.

Price

Prices of Chicken PCs. and all the other products of KFC are set by the Head Office by

adopting the proper method. According to

  Marketing Manager price of any product is equal to the cost plus desirable profit.

According to the marketing manager of KFC that the pricing strategies of organization

are different in the different countries due to different exchange rate, inflation, and

different tax polices in the different countries.

But in Pakistan KFC main concern is to sell in volume and maintain it on long term basis.

They are charging a price which they think fair to customers.

The policy of KFC is that they do not set the prices on the basis of competitors. The aim

of KFC is to satisfy the customers in low prices. In economics we can say that when the

prices are constant, the demand of product increase, volume of sale is increase, and

revenue is also increase, as a result of this circle the profit of the organization is increase

but the prices remains constant. So selling on low prices has a valid justification.

Placement

 The Chicken PCs. and all the other products of KFC are available at all the 18

restaurants in Pakistan.

Distribution Of Restaurants

The first restaurant of KFC was opened in Karachi. After this KFC opened its restaurants

in Lahore at Defense, Cavalry Ground, and Barket Market. At this time there are 18

restaurants in all the Pakistan. But the question is that why the KFC chose Defence area

for opening the restaurant. The Marketing Manger of KFC gives us  answer that before

opening a new restaurant in any where our organization conduct a research to evaluate

customers need, people buying power and customer expectations from KFC and to find

out what current and potential competitors are doing in that area.

You can say that Defence is the area of the upper upper  and upper middle class. In this

area there are many up standard private universities like LUMS, ILM, etc. and collages,

offices, posh shopping centers and the population itself is a good market for the fast food.

Therefore KFC Defence attracts the students, children, families and visitors of that area.

On the other hand KFC in Karachi too has strong reason and argument about slecting the

site of Nipa, Churungi, Gulshan Karachi. It is a strong education and family oriented

middle class area. Most of families living are joint family system. Therefor this restaurant

attracts the large number of the customers. The area is inhibited by the several million

peaceful people who want to take their children out but there are not place this purpose.

KFC provide this facility in that area and people are pleasure with us.

Promotion

The element in an organization’s marketing mix that serves to inform, persuade and

remind the market of a product and/or the organization selling it in the hope of

influencing the recipients feelings, beliefs, or behavior. The policy of KFC is that to

adopt the same methods to promote all its products including the Chicken PCs.

According the marketing manager of KFC that they use the following promotional

methods:

Advertising

   Advertising is non-personal communication of information usually for a persuasive in

nature about product services or ideas through the identified sponsors through the various

media.

Advertising perform the communication, education and marketing function it tells people

about the benefits of products or services and educate them how they can make their life

and time better off.

In KFC advertising are performed by the marketing department.

The advertising are used by the management of KFC and rational behind it is that the

organization consider that it has a market segment. So advertisement will have a great

waste reach and their advertising cost per consumer or the customer will high enough. So

advertising is not very appropriate tool of promotion mix for them.

However regardless of heavy or low use of the advertisement, the advertisement of the

organization serves for the two purposes and various with respect to advertisement

conducted by the central body and that advertisement activities are:

        About the multinational chain of KFC.

        The local body conduct advertisement about some packages which serves the

functions of educating the people how they can make their time more pleasurable.

Television Advertisement

Television combine sound, motion and design special visual effect. But KFC advertises

himself on TV in other countries. In Pakistan it gives ads on TV very rarely. In 1997,

when it opened its first branch in Karachi at that time it advertised itself on TV properly.

The purpose of this advertisement is just to create the awernance among the people about

their products and packages.

PRINT MEDIA

 They give the desirable information in the print ads to the target market in order to

inform the customers about the benefit of their products.

Whenever they introduced new products they give ads on print media at regular intervals.

So that the customer is informed about the new product. For their matured products they

give ads with different gaps in the newspapers. The newspapers they use are:

   The news

   Dawn

   Jung

Out Door Advertisement

In order to remain in the mind of customer KFC used out door advertisement i.e.

Billboards

Banners

Posters

 Personal sellilng:

                   Personal selling is the special form of the interpersonal communication. Their

goal is to bring its prospects attention that will satisfy a need and that will elicit a

response, hopefully in the form of purchase.

Personal selling is highly effective when target market is narrow one and you need to

convince the prospect in order to induce an action from him. But this technique demands

higher degree of considerbility. The sales force of KFC needs to know about their

products and that of competitors, must allocate the customers with potential, discover

their needs, developing the sales presentation directly striking at the needs of the

customers, and after close the salesmen the must go for follow up.

                     KFC Marketing Management considers it as one of its most important tool.

The management says that it is the tool, which helped them to develop and persuade their

customers at the beginning of their operation. The Marketing Manager of KFC says that

it’s a very powerful way to promote the products.

 Public Relation

It is communication efforts that are designed to favorably influence attitudes toward an

organization, its products and policies. KFC is not just a quality food restaurant, but also

a socially conscious corporate citizen. It has been equally involved in promoting and

funding several community welfare projects through aggregate KFC revenue. TCF (The

Citizen Foundation) is a professionally managed, non-profit organization with the aim to

provide underprivileged children with basic and formal education and to contribute

toward increasing the literacy rate in Pakistan. KFC has collaboration with the TCF to

further the main objectives with dedication and professionalism by opening school in

Pakistan. Another social venture is the Children’s Hospitals. KFC strongly believes in

humanitarian issues and is devoted to the cause of helping impoverished children. It has

using its increasingly popular mascot Chichy to provide the children of NICH (National

Institute Of Child Health) and SOS villages of Pakistan with lively entertainment and

toys and contributing toward their development. KFC also helped the different NGO’s

(Non Governmental Organization).  According to the marketing manager of KFC that

organization do all this to fulfill the social responsibility and create a good image in the

market.

KFC ensures steady international standards of quality base on the basic ingredient of

perfection in technology, financial acumen, and trained management – all aimed at

making its customers satisfied and satisfied to the highest degree.

Swot Analysis

Strengths

Brand Equity

2nd Only to McDonald’s in Foreign Sales $550M

Strong Cash Flows

Generate $1B each year

Very strong Internationally

UK, Middle East, Thailand, China, Japan, Korea, Mexico

Strong Franchise and License Fee revenues for cash flow.

Interactive relationship marketing

Strong trademarks recipes

Ranks highest among all chicken restaurant chains for its convenience and menu

variety.

Largest multibranded restaurant in the world 100 KFC and Pizza Hut combos 600

KFC and Taco Bell combos

Weaknesses Recent drop in sales for KFC

Failed to rank in top 20 in growth in 2000.

Same Store sales declined

Lack of point of scale scanning system

Admitted inability to provide quality service

Lack of knowledge abut their customers

Lack of relationship building with employees, customers and suppliers i.e. Chick-

fil-a

Question of over franchising leads to loss of control and quality

Lack of focus on R&D

Opportunities Growth of 18-24 age demographic

Increase in U.S. median income

International beef scare from mad-cow and hoof and mouth disease

Home Meal Replacement Market will exceed an estimated $577 billion by 2020

Targeting to growing ethnic markets – Asian American and Hispanic

New Leadership

Domestic markets

Updating restaurants

Balanced menu

Customer focus

Increase delivery service

Threats Rated 83 out of 100 in terms of competitiveness

Increasing wage rates directly affect menu prices

85% annual employee turnover for fast –food market

Supermarkets and new competitors threaten HMR market

International Exchange Rates

Health Trend away from fried foods

Changing customer demands

Quality of Service Focus

ProblemsKentucy Fried Chicken had done a great job of building its brand image in the global

market while sales in the US are being maintained yet are not growing too significantly.

There are many competitors and so KFC must focus on quality and brand image if it is

going to be able to maintain its profit margins in the USA. Below is a further summary

of problems that KFC is facing in its drive to become a world class fast food restaurant

chain as a part of the Tricon family.

Problem AnalysisCorporate Strategy

Tricon needs to more closely manage its KFC operation. The company has done

a remarkable job in building the corporate brand image in the global environment. Yet,

the company does not have a clear mission or vision for its domestic market here in the

USA. The KFC segment of the company has done a poor job of working to understand

the customers and maintain solid foundational relationships with them. This is in part

because the company’s structure and processes are not in line with customer’s

expectations for today. This was evident during the in-store audit.

Corporate Growth Strategy Domestic MarketKFC has Corporate Growth strategy opportunities. The organization needs to work

harder to build its sales in the domestic markets. The Colonel’s Promise is not being

lived up to in many of the stores. The company needs to focus on improving quality

which will then lead to increased growth for the KFC side of the organization.

Furthermore, the multi-branding will help KFC sales to grow, as their can be an increased

benefit from combining capital in placing 3 stores together to operate as one unit.

The company also needs to work on its knowledge management and organizational

learning strategies. The company has aging systems for management processes. This

symptom shows that the company is not providing clear direction to the franchises on

improving technology within the businesses. Overall, when a franchise is more

profitable, then the management will have more funds to ensure that the technology is up

to date. A poor organizational learning strategy is also reflected in the fact that many of

the store are old, run-down, and basically shells of a past cash cow now flirting with a

declining market. Management is not focused on quality, and the customer experience is

far from what one encounters from a trip to Chick-filet at the same relevant cost for a

meal purchase. KFC must work harder in the domestic market to build ways to train

managers and franchise owners on how to adapt new technology and to take the KFC

team overall to a new level of sales, marketing, and domestic profit levels.

Segmentation, Product Offering, Targeting Marketing Tier I Strategy

KFC needs to focus more heavily on its available target markets. There is a lot of money

being spent in the United States on food away from the home. As an analyst, it is

recommended that KFC start by studying the following market segments for trends and

behaviors on how they can glean away some profits on some of these consumer segments

spending. The data was pulled from the National Bureau of Labor Statistics.1

Furthermore, KFC must be weary that from the data below that there are many

competitors competing for the same dollars in consumer expenditures. This is why KFC

franchises should heed closer attention to the Colonel’s Promise.

By studying trends of the different markets who purchase food away from home, KFC

will be able to better position itself strategically to be a leader in the fast food product

segment. In the last graph above on Food outside of the home annual expenditure shows

that the overall trend for food purchases outside of the home has been continually rising.

By using the data above, KFC as an organization will be able to focus on each of its

unique target markets and to be able to position themselves to provide customer value to

each of the market segments that can serve to be highly profitable. Lastly, by

understanding each of the segments, KFC will be able to begin to more quickly

differentiate itself from the competitors.

1

KFC should carefully look at and implement a market study to determine what is

important to customers in different categories and segments. What part of the market is

keen on quality or price, or a combination of both.

Strategy Analysis Marketing Tier II

Product Strategy and Integrated Communication Mix

With its multiple new offerings and brand associations with the 3 restaurants, Tricon and

KFC should definitely use an integrated common mix of products. Today, customers are

more demanding and knowledgeable with thousands of messages targeted at them daily.

KFC must create synergy between franchises and give them access to data and feedback

from direct response, database marketing, public relations, and direct marketing. Many

of the KFC store breakdowns in the franchises could be strongly related to an insufficient

integrated communication mix. The only means to do this is with integrated marketing

communications.2 KFC can also accomplish this goal by focusing on higher quality in its

franchises across the nation. KFC should send out a team of auditors to the various

franchises to conduct quality audits to ensure that the franchisors are keeping their

promise to KFC that a quality food product and environment is being served each time.

The support of a strong senior management support group is not evident when a

customer can walk into a store and leave completely disgusted only to go and tell many

other customers about the experience. This results in negative marketing which will then

force customers to go and make purchases with competitors. KFC has a lot of work to do

if it is going to remain the market leader in the chicken product segment.

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