kfc four ps sardar ahmad swati semester 2

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    KFCs marketing mix

    CECOS University ofEmerging sciences

    Kentucky fried chicken

    We dedicate this report to our Parents and

    Respectable Teachers

    Sardar Ahmad Khan

    MBA 022 (A)

    CECOS university (IMIS)

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    KFCs marketing mix

    ACKNOWLEDGEMENT

    First of all, we would like to offer our eternal thanks to theAlmighty Allah who blessed us with the perseverance andthe sprit of hard work to complete this assignment. We are

    also grateful to our parents for their patience and belief inus. We offer our respectful gratitude to our Retail Marketing

    course teacher miss Zanab saleem for her guidance &encouragement. She inspired us to complete this

    assignment. We felt motivated and encouraged every timewe discussed this important topic in our classroom as wellas doing surveys. This assignment gave us an opportunity

    to participate and learn about the marketing mix

    implementation. .We would like to thank all of those peoplewho helped us through our entire Retail Marketing mix

    assignment.

    January 4, 2010Cecos University (IMIS)

    Sardar Ahmad khan

    CECOS university (IMIS)

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    KFCs marketing mix

    Table of content

    Executive summary ***************************** 01

    Introduction to KFC *************************** 02

    KFC in Pakistan ******************************* 03

    KFC marketing mix ****************************04

    Product planning ****************************** 05

    Product mix strategy ************************** 08

    KFC brand management ********************* 10

    Price strategy **********************************12

    KFC distribution (place) ***********************15

    Promotion strategy **************************** 18

    Sources of promotion ************************* 19

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    KFCs marketing mix

    Quality assurance ***************************** 21

    Conclusion ************************************* 22

    Executive summary

    KFC is one of the most known fast food chains in theworld started in the early 1930s by kernel sanders.

    Food, fun and festivity, this is what KFC is allabout. KFC has more then 11,000 restaurants in morethan 80 countries and territories around the world. KFC first time came to Pakistan in 1997 and werethe title of being the market leader in its industry. The marketing mix of KFC consists of 4Ps. Itcontains every thing KFC do it to influence the demandfor their products.

    KFC was launched here as an innovative product.

    KFC has a head-on competition withMcDonalds

    The brand of KFC is so strong that it is theattribute itself. KFC introduced itself, has grown and now itis at maturity stage for the last ten years inPakistan. Their products have high price and targeted

    only upper class. Total KFC Chicken Pieces Sold Annually =5.89 Billion Profit Margin is Or Mark Up = $225000000

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    KFCs marketing mix

    KFC has only one channel of distribution(direct) KFC by its advertisements derives the desirein the customer to come and enjoy

    healthy food in their favorite restaurant. They spend 2% of its profits onadvertisement. KFC has a good product as far as chickenitems are concerned.

    Kentucky fried chicken (KFC) - one of the most known fastfood chains in the world started in the early 1930s bykernel sanders in the southern USA as a small franchise

    operation. Colonel sanders have become a well-knownpersonality through out thousands of KFC restaurantsworldwide. Quality, service and cleanliness (QSC)represent the most critical success factors to KFCs globalsuccess.

    Food, fun and festivity, this is what KFC is all about.Leading the market since its inception, KFC provides the

    ultimate chicken meal for the chicken loving nation. Be itcolonel sanders secret original recipe chicken or the hotand spicy version, every bite bring a YUM on the face. AtKFC we proudly say that:

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    KFCs marketing mix

    KFC has more then 11,000 restaurants in more than 80countries and territories around the world. In 1971Heublein Inc, acquired KFC, soon after, conflicts eruptedbetween the colonel and Heublein management over

    quality control issues and restaurant.

    Procurement Issues

    All the raw materials like chicken are bought fromvalue chicken, vegetables from Monsalwa and theyuse caned fruit for salads. The machinery is allautomated and is in conformance to international

    standards. KFC officials often visit the outletswithout giving prior notice in order to check theconformance to quality standards and proceduresMoreover, Food Inspection Teams from HealthMinistry visits twice a year to ensure HygienicConditions at the Kitchen.

    KFC primarily sells chicken in form of pieces, wraps,salads and sandwiches. While its primary focus is friedchicken, KFC also offers a line of roasted chickenproducts, side dishes and desserts. Outside NorthAmerica, KFC offers beef based products such ashamburgers or kebabs, pork based products such as ribsand other regional fare.

    KFC in Pakistan

    KFC first time came to Pakistan in 1997 and were the titleof being the market leader in its industry. Opening the firstKFC outlet in Karachi Gulshan-e- Iqbal Serving deliciousand hygienic food in a relaxing environment made KFC

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    http://en.wikipedia.org/wiki/Chicken_(food)http://en.wikipedia.org/wiki/Wrap_(food)http://en.wikipedia.org/wiki/Saladhttp://en.wikipedia.org/wiki/Sandwichhttp://en.wikipedia.org/wiki/Fried_chickenhttp://en.wikipedia.org/wiki/Fried_chickenhttp://en.wikipedia.org/wiki/Side_dishhttp://en.wikipedia.org/wiki/Desserthttp://en.wikipedia.org/wiki/North_Americahttp://en.wikipedia.org/wiki/North_Americahttp://en.wikipedia.org/wiki/Hamburgerhttp://images.google.com.pk/imgres?imgurl=http://www.prontograndprix.com/images/logo_kfcPakistan.jpg&imgrefurl=http://www.prontograndprix.com/mail.html&usg=__KYkZCnjUJtZDdfk-lBdQ29OVoLU=&h=112&w=100&sz=8&hl=en&start=12&um=1&tbnid=EW65SIySErY3AM:&tbnh=86&tbnw=77&prev=/images%3Fq%3Dkfc%2Bpakistan%26hl%3Den%26um%3D1http://en.wikipedia.org/wiki/Chicken_(food)http://en.wikipedia.org/wiki/Wrap_(food)http://en.wikipedia.org/wiki/Saladhttp://en.wikipedia.org/wiki/Sandwichhttp://en.wikipedia.org/wiki/Fried_chickenhttp://en.wikipedia.org/wiki/Fried_chickenhttp://en.wikipedia.org/wiki/Side_dishhttp://en.wikipedia.org/wiki/Desserthttp://en.wikipedia.org/wiki/North_Americahttp://en.wikipedia.org/wiki/North_Americahttp://en.wikipedia.org/wiki/Hamburger
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    KFCs marketing mix

    everyones favorite. Since then, KFC has been constantlyintroducing new products and opening new restaurants forits customers.Presently KFC is branched out in eighteen major cities of

    Pakistan (Karachi, Lahore, Gujranwala, Sukkur, Sialkot,Hyderabad, Islam Abad, Peshawar, Multan, Rawalpinde,& Muree) with more than 60 outlets nation-wide.

    Presently KFC has provided jobs to over 1200 Pakistanis,which adds up to 6000 individuals directly dependent inKFC Pakistan. The Government of Pakistan receives overRs.10 million per month from KFC Pakistan as direct

    taxes. 95% of all food and packing material used in KFCPakistan is procured locally, which sums up to a purchaseof over Rs.35 million per month. Each new outletdeveloped by KFC Pakistan costs approximately Rs.40million, which is a huge amount for our constructionindustry.

    Now lets look to the marketing mix of KFC that how theyimplement the four Ps of marketing mix.

    Marketing mix

    The marketing mix is generally accepted as the use andspecification of the four Ps describing the strategicposition of a product in the market place.

    Product (goods and service)

    Price (value of the product)

    Promotion (aware the people for product)

    Place (distribution of product)

    Marketing mix at KFC

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    KFCs marketing mix

    The marketing mix of KFC consists of 4Ps. It containsevery thing KFC do it to influence the demand for theirproducts.

    a product is anything that can be offered to a market thatmight satisfy a want or need.

    KFC product planing

    KFC product is classified as consumer product as ithas no intermediates.

    KFC offers specialty goods.

    The stock turn over of KFC is high.

    Price and quality of the product is always compared.

    KFCs product includes

    Goods (Burgers, Chicken Meals etc)

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    http://en.wikipedia.org/wiki/Markethttp://images.google.com.pk/imgres?imgurl=http://www.prontograndprix.com/images/logo_kfcPakistan.jpg&imgrefurl=http://www.prontograndprix.com/mail.html&usg=__KYkZCnjUJtZDdfk-lBdQ29OVoLU=&h=112&w=100&sz=8&hl=en&start=12&um=1&tbnid=EW65SIySErY3AM:&tbnh=86&tbnw=77&prev=/images%3Fq%3Dkfc%2Bpakistan%26hl%3Den%26um%3D1http://en.wikipedia.org/wiki/Market
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    KFCs marketing mix

    Services (cleanliness, quick service, parties)

    Product strategy of KFC

    KFC was launched here as an innovative product. KFChas got one product line but laterthey introduced productsin the same line to protect their market share. Newproduct ideasare generated from:

    Customer services (comments cards)

    Gallops survey (mystery shoppers)

    KFC have a Quality Assurance department that decidesthe new product innovation. Q.A. department preparesscreening of new ideas and products feasibility report.This department does the technical evaluation (whetherit is practical to produce the new product or not).

    KFCs products are tested externally by offering trials tocustomers by giving them free samples.

    KFC adds a new product in its present assortment basedon

    Their competitors

    Products adequate demand

    The satisfaction of key financial criteria

    Its compatibility with environmental standard

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    KFCs marketing mix

    KFC product line

    KFC product line includes all chicken basedproducts.

    Chicken:

    o 1 piece

    o 2 pieces

    o 5 pieces

    o 10 pieces

    Burgers:

    o Zinger Burger

    o Colonels Chicken Burger

    o Colonels Fillet Burger

    o Zinger Jr.

    Combos:

    o Chicken Meals

    o Sandwich Meals

    o Family Meals

    Desserts & Beverages:

    o Fruit Salad

    o Regular & Large Drink

    o Regular & Large Mineral Water

    o Tea

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    KFCs marketing mix

    o Scoop of Walls Ice creamo Coffee

    Snacks & Side Orders:

    o Arabian Rice

    o 5 & 10 Pieces Hot wings

    o Dinner Roll

    o Regular & Large Fries

    o Hot Shotso Corn on the Cob

    o

    Hot & Crispy Soup

    Product mix strategy

    The product mix strategies are in relation to:

    Competitors:

    KFC has a head-on competition with McDonaldsWherever they place their products; KFC goesthere as well.Locally in Pakistan KFC face a close competitionwith the local brands like AFC (Al-Baik FriedChicken), Fried Chicks, Dixy Chicks etc they are

    producing the same product as KFC.

    Attributes:

    The brand of KFC is so strong that it is the attributeitself.

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    KFCs marketing mix

    Place and Quantity:

    KFC products are based on high quality and prices.

    Product mix expansion

    Line Extension:

    Through introducing new meals offers.

    Alteration of existing products:

    Quality Assurance department does it. Thedepartment decides which product should besold and when (seasonal products as rice andsoups offered in winters).

    Functional modification:

    It is also decided by the Q.A. department tointroduce new recipes.

    Quality modification:

    KFC has moved to masses rather than theoriginal recipe.

    Contraction

    KFC introduced itself, has grown and now it is atmaturity stage for the last ten years in Pakistan.

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    KFCs marketing mix

    When the new deals or offers are not sold asexpected, quality assurance department contractsthe previous offers and introduces new offers.

    Change in product positioning

    KFC products were first offered to upper socio-economic group. Later, introducing discounted andlower price deals, they are now dealing in masses.So, KFC has traded down.In doing so KFC has used the same brand nameand same high quality product.

    Product management of KFC at initialstage

    Market entry was not a big problem for KFC as it isa well-known international brand. In that stagethey did promoted through their own brand. Theirpromotion statement was KFC in Pakistan.

    Management in the rise stage had to make policyfor heavy competition with McDonalds. they opennew branches improved and extend the productline by introducing new product items.

    Brand of KFC

    Brand Name: KFC

    Color: Red and white

    Symbol: Colonel Harland Sanders picture andKFC written with it.

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    KFCs marketing mix

    Master Brand:The brand itself is sodominant, that it immediately comes in mind.

    o KFC's brand identity -- the logo featuresColonel Harland Sanders, one of the best-recognized icons in the world.

    o KFC is trade marked registered brand.

    o It is distinctive, adaptable to addition toproduct line.

    o It suggests something about product.

    o It is legally protected and registeredo The brand equity is very high as the valueadded by brand to the product effects theproduct selling.o KFC is marketing the entire output under

    products own brand

    Product packaging

    KFC makes its own disposable packaging. If theyneed promotion Pepsi contributes in improving the

    packaging quality. KFC does family packaging.They use paper material for packaging to avoidhealth hazards and environmental pollution.KFC does brand labeling. Some of its products alsohave informational labels such as Halal, VeggiBurgers and Chicky Meals.

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    KFCs marketing mix

    Conclusion

    KFC has made a separate brand image inPakistan.

    KFC Pakistan does not serve thevegetarians.

    Product line is very vast. They study the behaviorsof the Pakistanicustomers.

    KFC has specific product features.

    Offering delicious and quality product. Specialization in fried chicken.

    Charging extra for side dishes. Quality, cleanliness, and service. Product quality assurance.

    Price is the any amount of money thatcustomers have to pay while purchasingthe product. More broadly, price is the sum

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    KFCs marketing mix

    of all the values that consumers exchangefor benefits of having or using the productor services

    Price strategies of KFC

    In introduction stage KFC entered the market usingmarket-skimming strategy. Their products werehigh price and targeted only upper class. Graduallythey trickle down focusing on the middle class topenetrate the market. Also KFC follows one pricestrategy. Price is determined according to the

    rates of the raw materials and policies of the Govt.The political and legal forces often affect thepolicies of KFC and eventually results in change ofprices that is due to imposing of taxes.

    Price competition

    We can compare the price of KFC products with

    McDonald, Dominoes and Pizza Hut. If thecompetitor provides the same product at a lowerprice then the organization usually lowers the priceof its product too. In the case of KFC, Fried Chickenis its main selling point and controls a monopolyover the Pakistan fast food market. It-prices itsburgers, French fries and soft drinks.

    Product Line Pricing:

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    KFCs marketing mix

    KFC has a unique pricing strategy that falls solely on their many

    product lines. Their Value Meals fall into the category of

    Product Line Pricing. Where there is a range of product or

    services the pricing reflect the benefits of parts of the range.

    For example, you can order a Two Cheeseburger Value mealthat comes with a medium drink and fries. You can Super Size

    this meal to get a large drink and large fries for a little more

    money or you can go with another value meal that might include

    different items for differentprice.

    Penetration Pricing:

    When KFC first began to break into the coffee market, they rana large marketing campaign in order to gain some market share

    in the industry. For a limited time frame, you could get a free

    small coffee every morning from 4-7am. This was to promote

    their new coffee partnership with Green Mountain Coffee and

    helped spread the word that KFC was now offering coffee.

    Cost Based pricing

    KFC prices their product keeping differentpoints 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 stageof determine the price of their product.

    The products are bit high priced accordingthe market segment and it is also comparable tothe standard of their product.

    In the cost based method we include thevariable and fixed cost.

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    KFCs marketing mix

    Calculation of the price under Cost Based PricingStrategy

    Total Pounds of Chicken Served in KFCRestaurant Annually = 1.914 Billion

    Total KFC Chicken Pieces Sold Annually =5.89 Billion

    Total Retail Sales = $8.9 Billion

    Sales Price of per Chicken Piece = Total RetailSales / chicken Pieces sold = $8.9 Billion / $5.89Billion =$1.51 we assume that Fixed Cost is =$6000000000

    Variable Cost = $675000000

    Profit Margin is Or Mark Up = $225000000(25%

    of Sales) per unit variable cost = $675000000 /5890000000 = $0.115

    Unit Cost = Variable Cost + Fixed Cost / Chickenpieces Sold= 0.115 + 6000000000 / 5890000000= 0.115 + 1.02= $1.135

    Now suppose manufacturer wants to earn 25%mark up on sale. The manufacturer mark up priceis calculated:

    Mark Up Price = Unit Cost / (1 Desired Returnon Sales)

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    KFCs marketing mix

    =1.135 / (1-.25)= 1.135 / 0.75= $1.51

    Conclusion

    KFC charge high prices.

    Offers different coupons.

    Concept of discount is lacking in KFCPakistan.

    KFC has targeted the upper classpeople.

    Service charges are also high.

    No clear policy for discount andcoupons. The employees are trained not tosuggest the discounts.

    KFC sells their experiences on highrates.

    High revenue due to best strategies.

    this refers to how the product gets to the customer; for example,

    point-of-sale placement or retailing. This third P has also

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    KFCs marketing mix

    sometimes been called Placement, referring to the channel by

    which a product or service is sold (e.g. online vs. retail), which

    geographic region or industry, to which segment (young adults,

    families, business people), etc. also referring to how the

    environment in which the product is sold in can affect sales.

    KFC distribution

    KFC has only one channel of distribution i.e. directwhere the goods are transferred to the consumerdirectly. KFC has no middlemen.

    Distribution of goods and services

    KFC does distribution of consumer goodsdirectly to the consumer.

    KFC also does distribution of services to theconsumer like parking, sitting, home delivery, etc.

    KFC gets Wheels! KFC launched its first

    mobile unit, which took the streets of Karachi bystorm. The mobile unit has been designed to caterto the needs of those who are on the go, and havelittle time to stop by at a restaurant. It alsoprovides a unique convenience of enjoying thedelicious KFC offering anytime, anywhere, thusmaking fast food truly fast and convenient.

    KFC intends to further develop its mobilenetwork nationwide through more such units

    Target areas

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    KFCs marketing mix

    Free home Delivery strategy Theyprovide free home delivery to offices & homes atall Pakistan. Accessibility Resulting in several outlets

    to cater to the needs of people in & around thecity. Hectic lifestyle Due to the hectic lifestyleof office goings individuals the fast food conceptsaves time of preparing food and gives thecustomer a full meal quickly. Hectic lifestyle of individuals giving themmore time at work and less stress about waiting for

    food. Commercialization of urban and sub-urbanmarkets leading to more mid-sector people thatfind high-end eating joints very to expensive.

    Mid-sector people are always looking forchange which KFC provides in their range of fastfood. Quality conscious people in urban areas

    are more conscious about the quality of food thanrural areas.

    Urban areas are more populated thereforethey help with attracting higher revenues.

    Placement of outlets

    Due to KFC placing itself close to schools, colleges,cinemas and markets which are mostly populatedby the young and those who are in a hurry, KFCenjoys a large number of footfalls everyday. In

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    KFCs marketing mix

    addition, they also have outlets close to non-vegetarians (mostly Muslim populated areas).

    CHANNEL PROCESS

    KFC works on the flow of good operationtechniques i.e.Good Operating Manager leads to Good TeamSelection Good Services Good Targets GoodRevenues through the following internal strategies:o Training

    o Incentive based targets

    o Recognition for good worko Performance based bonus

    o Employee benefits to keep them motivatedo Promotion

    Vertical marketing system

    KFC has corporate vertical marketing systembecause it is centrally owned by its subsidiary YumBrands. KFC is affected by the geographicdistribution (they have few outlets then itscompetitor McDonalds). The unit value of theitems is comparatively lower then McDonalds. KFChas a well-equipped sitting area for the customersand a Chicky play area for the kids.

    Conclusion

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    KFCs marketing mix

    KFC deals in internal market.

    Less number of outlets in over all Pakistan.

    Target only city areas.

    Slow delivery system in some areas.

    KFC has well equipped sitting.

    KFC has no intermediaries.

    Well trained staff with expert supervisors.

    Seeking customers response for quality.

    KFC has no entertainment in somefranchises.

    Quality conscious people are the main targetof KFC.

    Promotion is the method used to inform andeducate the chosen target audience about theorganization and its products. Using all theresources of promotion

    KFC promotion strategy

    The logo features Colonel Harland Sanders that isone of the best logo in the world has created itsname as a standard in the market. The logo of thesmiling Colonel is probably one of the mostrecognized faces in the world and instantly bringsthe image of fried chicken to ones mind. Today

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    KFCs marketing mix

    the Colonels Spirit and heritage are reflected inKFCs brand identity.

    KFC promotion sources

    o Advertising

    o Sales Promotion

    o Public Relations

    o Events and Experienceso Coupons, Discounts and Bundled packages

    An organization finds most of its meanings andsurvival through promotion.At KFC, Promotion is the main tool to bring allchicken lovers attention towards its delicious one-of-a-kind

    Advertising

    KFC by its advertisements derives the desirein the customer to come and enjoyhealthy food in their favorite restaurant. They spend 2% of its profits onadvertisement and use print media and mostrecently doing televised marketing to promote itproducts.

    Their advertising media involve:Newspapers, Pamphlets, Billboards and Television.KFC does both the primary demand advertising(Become a Chicken Fanatic) and the selectivedemand advertising (e.g. Zinger Meal).

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    KFCs marketing mix

    In its advertising it gives informativemessages like Faryad: Keep the city Clean.

    KFC does institutional advertising tostimulate demand. When KFC offers new productsthen it does product advertising.

    KFCs ads act as counteracts which meansto drive the customer to KFC i.e. it uses pulladvertising strategy. KFC has put big hoardings on the busy areasof Pakistan and have an effective advertisementcampaign on the media in order to MOTIVATE itscustomers. The colors used in advertising are Red,White and blue which itself is recognition for thebrand.

    Sponsorship

    Sponsorship is another tool to strengthen anorganizations image. KFC sponsors many NGOsand other social welfare organizations like Regularsponsorship to SOS village. Sponsorships toFARYAD a plant and life association FARYAD: Keepthe City Clean. They also offer different dealsaccording to the season and occasions. KFC iscurrently the sponsor of the Australian Cricket

    Team and the colonel logo can be seen on their

    uniforms throughout the matches.

    Sales Promotion

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    KFCs marketing mix

    KFC have joint sale promotions with differentcompanies like HP, Philips, Value Meals, and PepsiCola. And most recently with ARY Gold digital andWorld Call Internet services, Also KFC Proud

    Partners are Del Monte, Culligan, Shan and PeekFreans. KFC uses the following tools to furtherenhance its sales.

    Premiums

    Exhibits

    Coupons

    EntertainmentPSO had made a scheme in which PSO had giventhe coupons of KFC having 10% off. (1 coupon wasgiven after each purchase of 10 liters of petrol).Using coupons that one can acquire after spendinga particular amount over a period of fixed time,customers can enjoy the benefits of free meals(premiums). Additionally they provide mealvouchers and exciting offers in their print ads.

    KFC promotion in parties

    KFC organize some musical shows and otherparties. With the caption Biggest BirthdayPartyThe event took place on Louisville,Kentucky, USA, on Sept.8, 1979, to celebrate the89th birthday of Kentucky Fried Chicken founderColonel Harland Sanders.

    Quality assurance

    KFC takes great pride and care to provide the bestfood and dinning experience in the quick service

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    KFCs marketing mix

    restaurant business. They believe eating sensibly,combined with appropriate exercise, is the bestsolution for a healthy lifestyle. Chicken & its Productsare

    Locally produced and processed chicken.

    Supplied in frozen form

    100% Halal

    Conclusion

    After my research of KFC, I come to conclusion that

    KFC has a good product as far as chicken items areconcerned. But they have to increase othervarieties to attract the customers. And they musttargets the children, as McDonalds targeting bymaking a play land because children are the mainsource and important ones to push their parents togo to their favorite restaurants. And one moreaspect for KFC is that it must also reduce their

    prices to compete their competitors like McDonald,Crisps Pins and Pizza Hut. The largest threat KFC isfaced with is the restaurant industry as a whole.

    The consumer continues to have many choiceswhen it comes to fast food restaurants.KFCstruggles are much do to the inability to bring newproducts to the market quickly and its innovationof new products.KFC fell behind the market in new

    products and was copying other fast food chains tostay competitive.

    References:

    Principle of marketing by Philip kotler

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    KFCs marketing mix

    Marketing management by Philip kotlerwww.kfc.comwww.google.comwww.scribed.com

    www.encyclopedia.com

    28

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