Kentucky Fried Chicken Firm’s Localization Strategy Report (Assessment)

KFC, also known as Kentucky Fried Chicken, is a US fast food restaurant chain with headquarters in Louisville, Kentucky, and specialization in fried chicken. As of now, KFC is the world’s second-largest restaurant chain in the world, only coming second to McDonald’s. Over the last 90 years, the company has come a long way from a humble hub within a gas station in North Corbin, Kentucky, to an international corporation. In December 2018, KFC had 22,621 locations globally with a strong presence in more than 130 countries. While the fast food chain owes its success partly to the quality of its products, its rise to popularity can also be attributed to its thoughtful international business strategies. When companies decide to go beyond the US market, they need to be ready to face issues arising from this expansion.

The challenges of bringing fast food chains to foreign markets have now been widely research from marketologist, psychological, and culturological standpoints. Chen, Li, and Liu (2013) argue that in order to gain leverage in lucrative foreign markets, companies need to have a good understanding of cultural differences. Chen et al. (2013) enlist some crucial cultural components that need to be considered when building an international strategy: (1) religion; (2) language; (3) education; (4) myths and legends; (5) aesthetics; (6) manners and customs; (7) product consumption; (8) social organization; (9) social organization; (10) values and attitudes. The product localization strategy may be difficult in many aspects, but it becomes especially challenging when it comes to food. Food habits are more than basic needs; they bear a deep psychological meaning and associations because they are formed early in life (Wei, Ping, & Yanan, 2013). Therefore, when entering a new market, a company challenges a person’s ideas about food, which may both compromise or make a good case.

It seems that KFC was able to address all the crucial cultural companies when building its product localization strategy. According to Jacobs (2019) the American company succeeded in outlining the key competitive strategies to be employed. Firstly, KFC found a way to infuse a Western brand with local characteristics (Jacobs, 2019). For instance, in China, KFC is building larger restaurants with more spacious floor to accommodate the influx of customers. Further, if in the US, KFC is mostly apt for takeouts or spending very little time on the spot. In China, on the other hand, KFC has grown to be a family restaurant, and it is furnished and organized in a way to be convenient for extended families.

Because visiting KFC is more of an experience than a quick venture to quench hunger for Chinese people, KFC is constantly adding more items to the menu. As Bell and Shelman (2011) state, KFC is leading an aggressive campaign in China by emphasizing product development. If in the United States, a typical KFC menu only contains around 30 items, in China, it may include more than 50. What is interesting is that KFC has made extreme responsiveness an indispensable part of its localization strategy. In the process of localizing their products, the company discovered that while in the US, customers had more or less homogeneous preferences regarding the spiciness of the food, it was not the case for China. For instance, in Shanghai, customers used to find the food too spicy while in Sichuan, consumers reported the opposite problem. KFC solved the problem by providing customers with a range of different levels of spiciness to choose from. A similar example comes from the company’s strategy in India where a large share of population is vegetarian. Even though in 2016, KFC fell back on its chicken-centric product choice after trying to focus on plant-based foods, up to 30% of the Indian menu remained vegetarian.

What also deserves to be noted is what KFC has undertaken to defeat its key contenders outside the United States. In China, KFC had to compete with Burger King and McDonalds. The US company decided to make a difference by targeting smaller cities while its contenders concentrated their efforts on “conquering” larger ones (Rui, Huang, Lu, Wang, & Wang, 2016). As it turned out, in the case of China, this strategy has proven to be effective. In many smaller, three- and four-tier cities, KFC was the first fast food chain to ever appear, therefore, influencing the cities’ inhabitants and their eating habits. Any other company that would like to build a presence in these same cities would now have to stand competition against KFC. The strategy was complemented by KFC’s serious efforts to ensure food safety through maintaining excellent logistics.

Another element of the product localization strategy devised by KFC revolved around the notion of ownership. According to the company’s mission, ownership was bound to empower overseas partners and give them more agency. To make it possible, KFC acted somewhat counterintuitively: the company rejected the commonly accepted franchising mechanism and focused on ownership. The owners of KFC restaurants in Asia had more freedom to choose the decor and design the menu as well as more control over the business operations.

The last but not the least element that is worth mentioning is customer service. Again, the best example here is China: the country that by the time KFC entered its market, still had strong communist traditions. Chinese people were used to the product scarcity and were not expecting good service. Surely, American employees could make a world of difference for the newly discovered market. However, the problem was that KFC could not supply the new restaurants with workers trained in the US up to the American standards. At that, KFC was confronted with the consequences of the years long “one family – one child” policy. Having grown up without siblings, many Chinese young people did not have appropriate communicative faculties. The solution was to develop exclusive training programs for Chinese employees that would improve their people’s skills.

In summation, when localizing its products for foreign markets, KFC focused on the cultural differences and turned them into competitive advantages. Apart from that, it gained the trust of new customers by taking care of logistics and food safety. Lastly, KFC prioritized customer service and brought the American tradition of pleasing the customer to the East.

References

Bell, D., & Shellman, M. (2011). KFC’s radical approach to China. Web.

Jacobs, H. (2019).KFC is by far the most popular fast food chain in China and it’s nothing like the US brand — here’s what it’s like. Web.

Rui, Y., Huang, H., Lu, M., Wang, B., & Wang, J. (2016). A comparative analysis of the distributions of KFC and McDonald’s outlets in china. ISPRS International Journal of Geo-Information, 5(3), 27.

Wei, C., Ping, L., & Yanan, L. (2013). Product localization in the fast food industry. Innovative Marketing, 9(1), pp. 37-45.