Sunday, 27 February 2011

KENTUCKY FRIED CHICKEN VS MCDONALD IN THE CONTEXT OF MARKETING 1




MKT 501

ASSIGNMENT

KENTUCKY FRIED CHICKEN VS MCDONALD IN THE CONTEXT OF MARKETING

Group members

Aishah bt. Md Yunos                          2010824132
Munirah bt. Ghazali                           2009967901
Norain bt. Mokhtar                           2010896748
Nur Balqis Ashraf bt. Ramly 2009589979
Nurul Akmal Aishah bt. Yaacob         2009166781

Group: AS227 4A

Submitted to: Prof Hamdan Hasan


Kentucky Fried Chicken  Four P’s of Marketing mix.       
                                   
Introduction

KFC Corporation (KFC), founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky, in the United States. KFC has been a brand and operating segment, termed a concept of Yum! Brands since 1997 when that company was spun off from PepsiCo as Tricon Global Restaurants Inc.

KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of grilled and roasted chicken products, side dishes and desserts. Outside North America, KFC offers beef based products such as hamburgers or kebabs, pork based products such as ribs and other regional fare.

The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952, though the idea of KFC's fried chicken actually goes back to 1930. The company adopted the abbreviated form of its name in 1991. Starting in April 2007, the company began using its original name, Kentucky Fried Chicken, for its signage, packaging and advertisements in the U.S. as part of a new corporate re-branding program; newer and remodeled restaurants will have the new logo and name while older stores will continue to use the 1980s signage. Additionally, Yum! continues to use the abbreviated name freely in its advertising.

Born and raised in Henryville, Indiana, Sanders passed through several professions in his lifetime. Sanders first served his fried chicken in 1930 in the midst of the Great Depression at a gas station he owned in North Corbin, Kentucky. The dining area was named "Sanders Court & Café" and was so successful that in 1936 Kentucky Governor Ruby Laffoon granted Sanders the title of honorary Kentucky Colonel in recognition of his contribution to the state's cuisine. The following year Sanders expanded his restaurant to 142 seats, and added a motel he bought across the street. When Sanders prepared his chicken in his original restaurant in North Corbin, he prepared the chicken in an iron skillet, which took about 30 minutes to do, too long for a restaurant operation. In 1939, Sanders altered the cooking process for his fried chicken to use a pressure fryer, resulting in a greatly reduced cooking time comparable to that of deep frying. In 1940 Sanders devised what came to be known as his Original Recipe.

The Sanders Court & Café generally served travelers, often those headed to Florida, so when the route planned in the 1950s for what would become Interstate 75 bypassed Corbin, he sold his properties and traveled the U.S. to sell his chicken to restaurant owners. The first to take him up on the offer was Pete Harman in South Salt Lake, Utah; together, they opened the first "Kentucky Fried Chicken" outlet in 1952. By the early 1960s, Kentucky Fried Chicken was sold in over 600 franchised outlets in both the United States and Canada. One of the longest-lived franchisees of the older Col. Sanders' chicken concept, as opposed to the KFC chain, was the Kenny Kings chain. The company owned many Northern Ohio diner-style restaurants, the last of which closed in 2004.

Marketing Mix
The marketing mix is generally accepted as the use and specification of the 'four Ps' describing the strategic position of a product in the marketplace.
·        Product
·        Price
·        Place
·        Promotion

Product
Anything that can be offered to a market to  satisfy a want or need.
             KFC's specialty is fried chicken served in various forms. KFC's primary product is pressure-fried pieces of chicken made with the original recipe. The other chicken offering, extra crispy, is made using a garlic marinade and double dipping the chicken in flour before deep frying in a standard industrial kitchen type machine.




Segmentation

§  Geographic segmentation :
KFC has outlets internationally and sells its products according to geographic needs of the customer.InIndia KFC focuses how geographically its customers demand different products.In northIndia Chicken is the main selling product, while in the south the Veg. items sell more than the chicken.

  • Demographic Segmentation
            In demographic segmentation, the market is divided into  groups based on an age, gender, family size, income,  occupation, religion, race and nationality.  KFC divides the market on demographic basis in this way:
§         Age is between 6-65.
§         Gender is both males and females.
§         Family size is 1-2, 3-4, 5+
§         Income is Rs 10,000 n above.
§         Family lifestyle is almost all.

§ Psychographic segmentation
    Dividing a market into different groups based on social class, lifestyle,  or personality characteristics is called psychographic segmentation.  KFC divides market on the basis of psychographic variables like
§         Social class- Upper and Middle class.
§          Lifestyle is not specific.
§          Personality is ambitiousand authoritaria

TARGET MARKET
 “The process of evaluating each market segment’s attractiveness and selecting two or more segments”
    As the outlets of KFC are in posh area and prices are too high (overhead expenses-rent, air-conditioning, employees), so KFC targets upper and middle classes. Target market depends upon size and growth rate of population, Company resources and structural attractiveness of market segment.

Market Positioning

KFC uses itsattri butes to Position its Product (Fried Chicken)

For a product to occupy a clear,  distinctive and desirable place relative to
“Competing products in the minds of target  consumer.”
In KFC feedback is taken from the customer in order to know the customer demands and then improvements are made in products. 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.

Price
    Price is the any amount of money that customers have to pay while purchasing the product. More broadly, price is the sum of all the values that consumers exchange for benefits of having or using the product or services

§         Demographic factors

§         Age: Generally there is no age limit focus by the KFC. The target and focus is on     each and every individual in a society. KFC finds its largest demographic in the young of any society.
§         Gender: Both male and females are focused by KFC, gender does not play any  role here.
§         Household Size: This plays a vital role in the demographic factor of the KFC. Generally they target whole families rather than single persons. This being the reason for their Family Meals which are basically bundled items served at a nominally cheaper rate


§         Economic Factors
§         Income:Income is an important key factor for KFC. This factor decides which class is to be targeted.In the early rise of KFC they focused on the upper class but slowly are introducing economy meals that attract the lower to middle classes.
§          Consumption Behavior:It  estimates the behavior of people, their liking and disliking towards the pricing of the products.

§         Geographic location
§         preference
§         urban
§          semi urban

§         Behavior segmentation
§         taste conscious
§         quality conscious
§          class
§         combination of product and quality

§         Pricing Strategy
Market skimming: KFC globally enters the market using market skimming. Their products are priced high and target the middle to upper class people. Gradually they trickle down the prices focusing on the middle to lower class people to penetrate both sides of the market.

§         Competition
 We can compare the price of their products with McDonald, Dominoes and Pizza Hut.If the competitor provides the same product at a lower price then the organization usually lowers the price of its product too.In the case of KFC, Fried Chicken is its main selling point and controls a monopoly over theIndian fast food market (only with fried chicken).It prices its burgers, French fries and soft beverages with relation to its competitors.
§         Cost Based
 KFC price their product keepingdifferent points in view. They adopt the cost base price strategy. Pricing of the product includes the govt. tax and excise duty and then comes the final stage of determine the price of their product. The products are bit high priced
according the market segment and it is also comparable to the standard of their product.In the cost based method we include the variable and fixed cost.


Place
§ Target Areas
§          “Free homeDelivery” strategy - They provide free home delivery to offices & homes (select   countries).
§         Accessibility  - Resulting in several outlets to cater to the needs of people in & around the city.
§         Hectic lifestyle -Due to the hectic lifestyle of office goings individuals the fast food concept saves time of preparing food and gives the customer a full meal quickly.
§         Economically convenient - The pricing appeals to the many classes of a society

§         Target Market

1. Location
§         Hectic lifestyle of individuals ± giving them more time  at work and less stress about waiting for food.
§         Commercializationof urban and sub-urban markets leading to more mid-sector people that find high-end eating joints very to expensive.
§          Mid-sector people are always looking for change which KFC provides in their range of fast food.
§          Quality conscious± people in urban areas are more conscious about the quality of food than rural areas.

2. Placement of outlets
§         Due to KFC placing itself close to schools, colleges, cinemas and markets which are mostly populated by the young and those who are in a hurry, KFC enjoys a large number of footfalls everyday.In addition, they also have outlets close to non-vegetarians (mostly Muslim populated areas).

§         Strategy
Given the competitive nature of fast food joints, KFC uses the “Push Strategy” to help them create:
§         Awareness
§         Be different
§         Sound attractive

·        Channels
KFC believes in first level channels in the order given below:
§         Manufacturers
§         Retailers
§         Consumers

·        Channel process
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 target
§         Recognition for good work
§         Performance based bonus
§         Employee benefits to keep them motivated
§          Promotion

Promotion
Promotion is the method used to inform and educate the chosen target audience about the organization and its products. Using all the resources of promotion:
§         Advertising
§         Sales Promotion
§         Public Relations
§         Events and Experiences
§         Coupons, Discounts and Bundled packages
§         An organization finds most of its meanings and survival through promotion.
At KFC, Promotion is the main tool to bring all chicken  lovers attention towards its delicious one-of-a-kind  product, the Fried Chicken.

§         Advertising
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 likin 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.InIndia where chicken lovers are plenty abound these ads featuring normal people connect instantly and create a rush at their outlets. 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 linkin good” is just a wake up 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. KFC is currently the sponsor of the Australian Cricket Team and the colonel logo can be seen on their uniforms throughout the matches.




§         Sales Promotion
 KFC uses the following tools to further enhance its sales.
ü      Premiums
ü      Exhibits
ü      Coupons
ü      Entertainment

All KFC outlets offer its customers with various forms of incentives to buy its Chicken. 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.

McDonalds

In the 1990s managers will be judged on their ability to identify, cultivate, and exploit the core competencies that make growth possible - indeed, they'll have to rethink the concept of the corporation itself.
Organizations do not exist in vacuum. They operate within a competitive industrial environment. Analyzing its competitors not only enables an organization to identify its own strengths and weaknesses but also help to identify opportunities for and threats to the organization from its industrial environment. SWOT analysis is a systematic analysis of these factors and the strategy that reflects the best match between them.
These principals analyzed in relation to the core competence of McDonalds, one of the largest food chain companies in the world. First start with the strengths and the positive aspects which define the performance of this company. How to define the company's strengths? Strength is a distinctive competence that gives the firm a comparative advantage in the market place. For instance financial resources, image, market leadership and buyer supplier relations and etc .
McDonalds is the no 1 fast food chain stores with a 40 million customers visiting it per day. It has over 30,000 branches in 120 countries. It derives 80% of its revenues from eight countries like Canada, Brazil, Germany, France, Japan, UK, Australia and US. The greatest strength was creating an image in the minds of the people and introducing them to the fast food culture. Delivery speed, customer care and cleanliness are the core strengths on which these stores expanded. They created a corporate symbol and their advertisement campaigns were highly successful in establishing the brand image and logo in the minds of the millions. Two main competitors generally identified with McDonalds are the Burger King and the KFC. McDonalds marketing strategy is concerned with the internal resources, external environment and its basic competencies along with its share holders.

McDonald's product value is also its greatest strengths. Customers know what to expect when they walk into a McDonalds store. It gives great emphasis to human resources by satisfying both the customer and the employees. Next is the innovation aspect wherein new products line up to catch up with the new trends and tastes of the people. Its diversity into other new business ventures can also be considered as its strengths.

How effective are these strengths to the company in the long run?
 McDonalds today is not that amendable as it was during its inception. What are the driving factors which results in its present decline in terms of sales and services? To analyze this factor we have to look at the weaknesses part of the companies business and marketing strategy. What can generally be termed as a weakness of a company? The same factors which were considered as strengths also become a weakness if it impedes the overall performance of the company.
Customer trends change and so does their choices. People are generally tired of the same brands that they had been using over the years, so when they do not see the expected innovation they migrate to new brands. Moreover people see McDonalds every where and this over exposure might also be a reason for abstinence. Moreover maintaining the standards of such a huge chain becomes feasible and when there is lack of quality service in one store it effects the whole brand.
The secret of any marketing strategy is to reach the target audience. And here again the target audience should be chosen carefully. In the case of McDonalds as projected in its the targeted audiences were the kids. Demographics and customer financial and psychological aspects define a business concerns success. Health conscious women and senior citizen comprise the major population but kids soon grow out to become adults. Recent law suits and documentaries resulted in the companies recent innovation and a major change related to health related product ranges and this switch over as per the needs of today's trend and needs has increased the lost popularity of McDonalds a bit.

All the above factors point out the external strengths and weaknesses. There are also internal factors which affect the performance and overall benefits the company stands to enjoy. Kids based marketing strategy which was earlier a weakness has changed since 2003. Now more teenagers and adults rule the McDonalds ad world. The research and develop which lacked earlier is also looked into and the brand quality is being defined with various research and development options today. McDonald at one stage started concentrating on expansion and growing big that it missed out on key factors like quality maintenance and R&D.
One major threat to any brand is its relationship between the management and the franchise dealers. Organization strength is the back bone of any concern and when that starts shaking the whole system will collapse. But slowing McDonald is recovering from all these weaknesses as its brand managers can easily communicate, compare and improve their services through the latest technological developments wherein they can use the internet to motivate, compare and improve upon other centers performances.
The overall analysis of all the external and internal strengths and weaknesses on this company should be linked in order to draft a sustainable plan for the companies' further improvement. For any improvement or expansion the internal resources must be readily available. And thus analyzing this aspect can lead to a modified strategy to suit its vision. Keeping in mind the available resources the planner should think globally. Hence making use of all the core competencies the firm can definitely sustain in the competitive market.
The change in the top managerial level has creating a new wave in its performance and major changes have been implemented to retain and sustain the brand quality and innovation. As the new CEO rightly quotes,
"The world has changed. Our customers have changed. We have to change too."
James R. Cantaloupe, Chairman and CEO, McDonald's, 2003.


What is sustainable competitive advantage? How can it be related to McDonalds?
SCA is the advantage a company has which is difficult or impossible for other companies to possess or break through. It can either be the brand, dynamic customer care, cost structure or its patent. Whatever the advantage in order to be considered as sustainable it should either be proprietary or distinctive. Other than this three different aspects that help in SCA are,the managerial and organizational process should share a good integration and coordination.
The much needed 'value' is created thereby as everyone strives to work for a common goal. The organization should learn and bring about changes according to the need of the hour and should always be flexible to changes in the environment such as customer trends, legal or government restriction and developments in the technology. McDonalds is presently concentrating on this advantage by concentrating on organizational behavior and managerial expertise. Previously this advantage was ignored as the organization was more into expansion of its outlets over the globe than strengthening its core advantage. As the result the revenue did not see much of a change while newer outlets were open. The company suffered a massive loss first time since their inceptions which further lead to the change in the managerial heads.
Technological, structural and financial assets of a company are excellent market position which helps in the SCA. McDonalds no doubt is abundant with such aspects like structure, technology and finance. To identify and implement these assets in the proper direction towards the improvement of the company is all that is needed. After 2003 the company has really started to concentrate on its greatest advantages.
 Most of all the greatest advantage is the vision or the dream with which the company was started. Sustaining this dream over the years is any companies' greatest advantage. A brand usually revolves around this vision sustaining this vision and working in lieu with it is a great SCA. McDonalds was started out to help people who had very little time to cook or was too busy to get into a proper restaurant. The vision was to provide quick service, cheap products and quality satisfaction. Keeping this vision in mind the company which slackened a bit because of incompetent franchise holders is being weeded and new and better people are put in this place as the torch bearers of the company sustaining and living the vision.
To sum it all up SCA means implementing the best value based strategy using all the advantages which are unique to the company and that which cannot be copied or replicated by other competitors. The importance of this SCA can be evident by the reply the great investment guru Warren Buffet gave when asked about how he evaluates his investment portfolio. He simply answered 'sustainable competitive advantage'. Hence based on the dynamic integrated and intelligent human resources can always be the only dependable and sustainable SCA.
Outsourcing boom or doom in today's business environment
Today everything is outsourced from employee appointment to finance and customer care. No organization is best enough to handle all kinds of work. Moreover concentrating on every detail is not possible with a big concern especially like McDonalds. But great care should be taken not to outsource the core competences of the company. General advantages of outsourcing are cheap service, knowledge of markets offshore, flexible resources, speedy operations, expansion in supplier relationship etc. most of all the company can concentrate on its core competencies and outsource rest of its operation. Recently McDonald has tested its drive through order facility. Wherein it makes sure that the order placed with the outlet is accurate. The order taken by the outsourced company is reverted back to the home restaurant. These call center has a digital camera which clicks the vehicle you drive through and the delivery man back home can integrate the order and the person who placed it using the image of the car. Outsourcing thus helps in the increase of the external suppliers and fills up the difficulties faced because of the lack of the latest technologies and other innovations.
What started of as a success story with McDonalds had to face a number of risks, competitions and major set backs. What makes it still strong and ranked among the top business concerns is its core competences and the sustainable competitive advantages both internal and external. Of course keeping up with the changing times the company has also set foot in outsourcing but the point to keep in mind here is not to be driven away by this outsourcing mania. This company has started to revert back to its golden glory recently because of large scale revamping of its organizational and structural changes being implemented.
No particular competitive strategy is guaranteed to achieve success at all times. Risk attitudes can change and vary by industry volatility and environmental uncertainty and several internal conditions also might be involved. Thus the "four P's" of marketing (product, price, place and promotion) provide a good starting point for consideration of the requirements of strategy implementation in the marketing function. The mix of these marketing elements should be appropriate and the plans for each of the elements should also be appropriate.The marketing function is consumer oriented and hence marketing decisions are based on the careful identification of consumer needs and on the design of marketing strategies to meet those needs. The distribution system brings the product or service to the place where in can best fill customer needs. Access to distribution can mean all the differences between success and failure for a new product. Because many products require support from distribution channels in the form of prompt service, rapid order processing etc the choice of distributors, wholesalers and jobbers is extremely important.
Promotion is more than advertising. The location, size and nature of markets which the business strategy defines will guide promotion mix decisions and should indicate the content of promotional material as well. Pricing is a complex issue because it is related to cost, volume, trade offs etc and because it is frequently used as a competitive weapon. Pricing policy changes are likely to provoke competitor response. Using price to jockey for position can lead to price wars, which usually hurt all participants.
Marketing has received increasingly greater attention in the competitive business since the early modern era. The old concept of marketing focused on the firms existing products and considered marketing to consist of selling and promotion to maximize sales at a profit. The new concept however focuses on the firms existing potential customers and seeks to earn profit through customer satisfaction with an integrated marketing program.

CONCLUSION
Fast food is a multibillion dollar business around the world. KFC and MCD. Both names are synonymous with the fast food industry. Which one do you prefer?
Both remained as the top selection of quality fast food. They need a lot of strategies to attract customer to buy their product. Both of them have pros and contras.
KFC means Kentucky Fried Chicken. The mainly product of the company is based on chickens. This is because of the secret recipe that they have. In other hand, MCD is McDonald’s. The main product is actually burger. However, both of them have many kind of product the recently. This is because they have to compete among them in this fast food industries.
From the opinions of the customers the said that MCD is actually their target is towards the children while KFC is going to general. Is this for real? Yes, because we can see from the mascots they used for all these years. MCD use a clown as its mascot that all of the children like the funny and full of colours while KFC use an old man that warm to all level.
According to some people also, as Malaysians they rarely eat burger because it is American style or maybe it suit with youth and people who living in town. So, most of them choose KFC for hot and spicy fried chicken or the original for who do not like spice. However, MCD has made some changes, it also produced fried chicken product to beat the KFC. But, it is still hard to compete the taste. On top of that, recently, MCD has many products than KFC.
What do you can get with around RM10 from the both service? From MCD we could get a burger, French fries and a soft drink. While from KFC we could get 3 pieces of fried chickens, a soft drink, whipped potato and salad. Personally, by eating from MCD product with that amount is actually not exactly full but for KFC it is really full even only eat the fried chicken for 2 pieces.
However, eat chickens daily is exactly the right diet comparing to eat burger. This is because in a burger it contains all the diet that we need in our daily. In fried chickens it only has fat and protein. It is also very oily. Eating fried chicken everyday can cause disease than eating burger in every single day.
Between KFC and MCD, personally MCD the ways it attract customer is better than KFC. This is because the promotion that MCD’s made is very cheerful and it is different from other company. Even the taglines that its use also made people remember about it. For example, “I’m lovin it” and the latest “When mmm... meets ahhh...” It is very meaningful. For KFC it only has “Finger licking good”. It is have been used for many years.
Moreover, services to the customers also important. The employees need to services the best as they can because the customer is always right. This is because the services also can make the customer will come again. For example, in some MCD’s, they have playground for the children. This is the prove that you can see that the MCD target is children. 








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2 comments:

  1. prof xde corection ker???

    ReplyDelete
  2. Too many grammar mistakes, a lot of points are incorrect and not relevant. Sorry to say that. Bad work.

    ReplyDelete