Introduction
Kentucky Fried Chicken (KFC) is a world-known chain of fast food restaurants based in the United States. It’s the world’s most popular chain of restaurants that sells chicken pieces in a variety of forms. The company receives more than 12 million customers per day in its various restaurants based in 109 countries in the world. Harland Sanders is the person believed to have come up with this recipe more than half a century ago. The cooperation is part of the world’s largest restaurant, Yum! Brands Inc.
KFC Business Strategy Evolution
Over the years, KFC has used a number of business strategies that have enabled them to evolve from a one-man business to a multi-billion dollar enterprise. One of the skills that it first utilized was ensuring that one’s skills and knowledge were invaluable. The success of a business is greatly affected by the level of expertise the company brings in. It is obvious that the higher the level of skills and expertise, the greater the potential for business success.
It is advisable that people set up businesses based on their own set of skills and areas of expertise, just like the founder of KFC, Colonel Harland Sanders. His knowledge and expertise in preparing chicken meals contributed to the success and expansion of KFC (KFC Business Strategies 2011).
Another strategy that was adopted was the strategy of achieving uniqueness. Being able to be set apart from other competitors goes a long way toward improving the growth rate of any business. This is only achieved by doing things differently. It is therefore advised that the entrepreneur skims the market first to establish what they could do that is different from their competitors, and it also has to appeal to their customers.
The way products are produced, packaged, delivered, or even serviced delivery to the customer has to be unique and different from other competitors. KFC came up with the pressure of fried chicken which set them apart from other chicken restaurants. It also included a special blend of recipes and herbs that made their chicken taste different from the others. Sanders became very popular in the 1930s for using this technique.
Persistence and focus is another strategy that KFC adopted when it started its business. At the start of every business, it is never a guarantee that the business will be a success. It may take some time for the sales to go up, and the business may sometimes experience a loss.
Persistence and focusing on what works and what doesn’t ensures that, in the long run, the business becomes a success. Colonel Sanders lost his business at the age of 65 but rebuilt it in ten years. This saw him opening a total of 600 franchises which saw him earn approximately $300 000 before tax.
Bringing in experts into your business is a good way of ensuring that the business continues to build and grow. The experts can be partners or employees; however, they are the most important people who will structure the business into systems that will outlive even the founder of the business. In 1964, KFC allowed professional managers to take over the business. This saw the business grow from a one-man business to a multi-billion dollar franchise. It even expanded into the international market and established its outlets in various foreign countries.
They believed that their products had a good market in other states other than the United States. Not only this, but also the production rate, as compared to the consumers’ rate, was profitable, and they had little or no competition. Ironically, by 1992, KFC was collecting more revenue from foreign markets than it was collecting from the United States.
KFC Promotion Strategy
The push and pull strategy is most efficient if a producer wants to supply their stock to stores and at the same time create a demand-supply for their products. This is particularly effective for a business that is still starting. The push strategy is whereby the producer of the goods has to work extra hard to distribute their products to retailers and wholesalers. Fast-moving consumer goods can work effectively well for the push strategy whereby the customers are ready to make purchasing decisions.
The manufacturer can engage the retailers in promotion strategies such as face-to-face selling and encouraging them to stock the product (Kotler & Armstrong 2010). Once the product has gained a good customer base, the product can sell itself, and the pull strategy can then cooperate. The pull strategy is whereby the product has gained popularity, and the consumer is actively seeking this product.
The demand for the product is so high that retailers are making orders so as to stock their shelves and supply the customer with the product. This can only be made possible through advertising so that the brand is visible to the consumers as well as to the retailers. The pull strategy takes advantage of the supply-demand chain whereby the retailers will only stock goods that the consumer is interested in buying (Lamb, Hair & McDaniel 2008).
KFC has mostly utilized the push and pull strategy, whereby it has managed to draw customers towards its products. It is famous for its company jingle, ‘finger licking good.’ They use it to create an impact on their customers and inform them of the product that they are selling. In their advertisements, they show a person devouring a piece of chicken, and this, in turn, makes the customer desire to have a piece of the KFC chicken.
Advertising is a good way of ensuring that their customers are constantly reminded of how good their ‘finger-licking’ chicken is. Coupons, entertainment, premiums, and exhibitions have all been utilized by KFC to enhance their sales. The company has come up with various incentives that attract its customers to buy its various chicken products.
For instance, it offers free meals to customers after the customer has spent a certain amount of money buying their products. A coupon is issued to the customer, who in turn will use it to get their free meal. They also offer free meal vouchers using print media whereby the customer cuts out the voucher and goes to one of their outlets to collect their meals.
KFC Marketing Strategy: the 7 p’s
The seven P’s were developed as a strategy that aids in continually evaluating and re-evaluating business activities. The seven P’s formula consists of product, people, price, promotion, place, packaging, and positioning. They help to ensure that a business is on track and is achieving the maximum results possible for today’s marketplace (Stephenson & Thurman 2007). The product needs to be evaluated with the eyes of an outsider.
This can be done by acting like an outside marketing consultant brought in to evaluate if the business is headed in the right direction. The company chain of restaurants specializes in fried chicken served in a variety of forms. It’s well known for its pressure-fried and crispy chicken. KFC has managed to branch out internationally and sell its products according to the geographical needs of the customers.
For instance, they have realized that the customer needs in North India are different from those in the South. Those in the North prefer to eat chicken items, while those in the South prefer to eat vegetarian items. They have therefore managed to determine the geographical demand for their items.
In addition, it has managed to divide its customer base into different groups using a demographic basis. For instance, it has divided the groups according to gender, family size, age group, etc. This way, they have been able to identify the needs of the various groups and therefore provide them with products that will satisfy them.
They have further divided their customer base into psychographic segments. This division is based on social class, personality, or even lifestyle. These various categories of people have different demands, and therefore KFC has managed to distribute products that cater to each of their needs.
It is important to consider the location of one’s business, and thus, this leads to the second P, which is positioning. The location of a business directly affects its sales. In addition, an entrepreneur should know what the consumers think of his or her products on the ground.
What is their position on the product in terms of its quality and the services that are given to them? KFC has gone out on a limb by doing its market research and establishing what the consumer wants and what improvements can be made to its products. In order to satisfy their customers and improve their position in their customers’ minds and hearts, KFC produces the freshest and purest food. This gets the customers talking positively about their products and services to other people.
Pricing, which is the third P in the seven P’s, should be evaluated and re-evaluated every now and then. The entrepreneur should ensure that the prices are just right for the current market situation. It is advised that the prices should be readjusted every now and then to suit the customers’ needs and the market pricing. This, therefore, calls for an increase and a decrease in the prices. Entrepreneurs should consider pairing up services with the goods that they are selling.
This can be done by giving special offers and promotions accompanied by the products being sold. In addition, it would also be a good idea to spread out the pricing of the products over a period of months or years to avoid losing the customer base. Moreover, pricing should be done according to the effort put into producing a product. It would be considered to be more profitable to raise the price for a certain product if the effort that goes into it is equivalent to its pricing.
Even though the percentage of customers may go down, the remaining percentage will generate profits on every sale. Before putting a price tag on its product, KFC looks at certain demographic factors such as age, gender, and household size. Although it has no age limit, KFC’s largest consumer group consists of young people regardless of their gender or gender roles.
They have also found that their biggest consumers come from whole families rather than single households, and thus they invented the ‘family meals’ offer (Kentucky Fried Chicken- KFC- Marketing Mix- Four Ps 2009).
When pricing its products, KFC has also looked at economic factors. The income bracket determines which people the company will most likely target. In the beginning, their main focus was on the upper class, but as years went by, their focus shifted to include the lower and middle-class families. Consumption behavior also determines the pricing of products according to which products the customers favor more to the least favored.
Before determining the prices of its products, KFC, first of all, skims the market. They do this by pricing their products to suit the upper class before lowering their prices to accommodate the lower class category of people. Their prices also can be relatively compared to those of their competitors. KFC has dominated the chicken business, so their chicken products have a higher selling price than other fast food restaurants.
However, other products, such as burgers and pizzas, are sold at a lower price to attract customers. When pricing their products, they also consider the government tax and excise duty. Their prices are comparable to the products they give to the consumers as well as their market segment (Kentucky Fried Chicken- KFC- Marketing Mix- Four Ps 2009).
The place is the fourth P. There are many ways in which a business enterprise can sell its products. First of all, the company may decide to sell its goods directly from its location or disperse agents on the ground to advertise and sell to potential customers. On the other hand, a company may utilize a variety of strategies such as telemarketing or through catalogs and mail orders.
Either way, the company has to come up with a strategy that ensures the customer receives essential information that will equip them with the knowledge to make a buying decision (Tracy 2004). The company must therefore ensure that the customer can access these services through the strategic location of the business. KFC has utilized this strategy fully by coming up with a variety of services that they give to their customers.
To begin with, they came up with the free home delivery strategy whose sole purpose was to deliver their products to homes and offices free of charge. They ensured that their customers didn’t have to travel long distances to access one of their outlets, so they strategically put in place outlets around the city.
KFC also didn’t leave out individuals who led a hectic lifestyle with little time to prepare meals. It has catered well for such individuals by giving them a full meal in minutes. Despite its high pricing, KFC has managed to control its pricing to suit all classes of people.
KFC has cleverly placed its outlets in highly populated areas such as the urban areas, which in turn bring in more profits for them. Schools, colleges, markets, and cinemas are usually highly populated, and therefore, KFC has taken advantage of this and situated its outlets in these areas.
It utilizes the push strategy whereby it relies on its ability to sell its own products and services. Promotional efforts such as discounts can be used to help push their products and services through the distribution channels. This creates a sense of awareness and autonomy, and it also sounds attractive to the customer.
Promotion is the fifth P in marketing. Businesses use this strategy to inform the customer of their products and services. This directly affects the sales of the business’s products if the promotion is done in the right way. Advertising slogans are the most common way of promoting products and services to customers. The way it is done will highly influence the customer’s interest.
A slight adjustment to the advertisement slogan goes a long way to improve company sales, as the customers will always be talking about the products. It is important to try out various ways of advertising, promoting, and selling products. The same form of advertising may only work for a short period of time before the customers lose interest.
Therefore to continue keeping the customer interested in the company’s products and services, the form of advertising and promotion has to be re-evaluated from time to time (Tracy 2004). KFC uses promotion as the main tool for informing their customers of various offers on their chicken products. To begin with, their logo of the smiling colonel is most likely an image that makes customers associate KFC with chicken.
They use a company jingle, ‘finger licking good,’ to create an impact on their customers. They show a normal person devouring a piece of chicken, which makes the customer desire to have a piece of the KFC chicken pieces. This strategy has worked effectively in India, where there is the largest market for chicken lovers.
KFC uses advertisements to ensure that their customers are constantly reminded of how good their ‘finger-licking’ chicken is. In order to enhance its overall image, the company sponsors various organizations, such as the cricket team, which spots the company logo on their uniforms when they go for their matches and tournaments. By using tools such as coupons, entertainment, premiums, and exhibitions, KFC has managed to enhance its sales.
The company has come up with various incentives that attract its customers to buy its various chicken products. For instance, it offers free meals to customers after the customer has spent a certain amount of money buying their products. A coupon is issued to the customer, who in turn will use it to get their free meal. They also offer free meal vouchers using print media whereby the customer cuts out the voucher and goes to one of their outlets to collect their meals.
The sixth P is the packaging. This is how the product being sold appeals to its customers. The packaging has to be attractive and clean. In addition, the customer has to be impressed on the very first encounter if the company wants to retain a good customer base. This calls for proper grooming of the hired personnel. They have to be properly dressed for the job and offer quality services. The offices and waiting rooms where the business is being conducted have to be thoroughly clean and presentable.
Customers have to have a sense of trust when they make their purchase choices. It is important for the company to do some research and know what improvements to make to the quality of their packaging and what appeals to their customers.
KFC is famous for its packaging. It is known for using the paper bucket for its large chicken orders and the use of a rotating bucket sign that’s used in most outlets in the US. It is also environmentally conscious and has introduced the reusable food container. Plastic plates have long been replaced with paper serving boxes, all in an effort to reduce environmental pollution.
The final P is people. A company has to know what type of people to hire and what they can do best. The right people have to be hired to do the right job. When trying to establish a successful business, knowing which people will perform which tasks best is something that a company must initially consider before hiring any personnel.
The right people may be able to propel the business to achieve maximum sales. KFC has hired personnel that are able to deal with their customers efficiently and ensure that their customers are satisfied. In addition, the personnel hired are allocated positions that suit their skills and abilities.
KFC Problems and Solutions
KFC sells up to 850 million chickens a year. It does this in collaboration with other companies that slaughter and rear the chickens for them. However, KFC, in collaboration with these companies, has been accused of killing the chickens inhumanely and subjecting them to torture.
They have been accused of standing by as chickens are crammed into cages resulting in broken bones, before they’re slaughtered. Animal rights organizations have condemned these acts, and this poses a problem for KFC if they intend to keep any customers.
KFC has also faced problems with health experts who claim that the oils used to make the chicken consist of trans fats, which result in complicated health issues such as obesity. Nutritionists and other health organizations have threatened to sue KFC if they do not change the kind of fat that they use to make their chicken products.
Furthermore, the company has faced protests in India where angry farmers are against the company bringing in ‘junk food’ to a nation that greatly suffers from malnutrition. The farmers fear that the number of growing fast-food chain restaurants could deplete the country of their livestock and lead to the deterioration of agricultural activities.
How KFC can remain relevant in the market
Consumers’ desire to have a healthier diet at KFC and the humane treatment of chickens is one of the challenges that KFC faces today. These issues are closely related to the company’s sales and should therefore be addressed immediately if the company wants to maintain its customer base.
A new marketing plan has to be designed in order to improve the overall image of KFC and attract more customers. The marketing strategy has to address the issue of torturing chickens and thus create solid revenue for the company.
Reference List
KFC Business Strategies.2011, Viewed on <www.successprinciplesonline.com/business-strategies/kfc-business-str…>
Kentucky Fried Chicken- KFC- Marketing Mix- Four Ps. 2009. Viewed on <www.scribd.com/…/Kentucky-Fried-Chicken-KFC-Marketing-Mix-fo..>
Kotler, P & Armstrong, M. G. 2010. Principles of Marketing. New Jersey: Prentice Hall
Lamb, W. C, Hair, F. J & McDaniel, C. 2008. Marketing. Canada: Cengage Learning
Stephenson, J & Thurman, C. 2007.Ultimate Small Business Marketing Guide. Canada: Miller Works.
Tracy, B. 2004. The 7 Ps of Marketing. Viewed on <www.entrepreneur.com/article/70824>