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2. Introduction

Creating value for customers require an organization to base its strategies on customers’

preferences. This statement entails that the strategies related to production, pricing, value

chain management, market conditions, segmentation, targeting and positioning of the

products and services should be done, keeping in view the customers’ preferences and their

choice (Holbrook 1999).

KFC Corporation is without doubts, one of the premier fast food chains all around the world.

Having its headquarters in Louisville, Kentucky, KFC has become the most popular fast food

brand for producing quality and delicious fresh chicken based food. KFC was founded in

1930 in Kentucky and its first official franchise was launched in 1952 in Utah. Till that time,

KFC established itself as a quality provider of chicken made fast food. Now, KFC holds

around 15,000 restaurants all around the globe in strive to serve a customer base of over 12

millions in 109 countries (KFC Corporation, 2011).

In this term paper, it is tried to understand the customer perceived value of KFC. Therefore

we will critically analyse the value proposition of KFC by comparing it with McDonald. In

the light of this analysis we will generate the new value proposition and implement it.

1.1. Customer Value

Value creation for retaining customers becomes important when the organization actually

start to implement marketing strategies. Value creation delivers a message to the customer

base that the organizations, whose products customers are going to use, thinks for them and

produce products which are better for them (Holbrook 1999).

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KFC’s fried has been the most successful product that the company has introduced in market

since its inaugural. Hence, for this reason, fried chicken has been opted to define the value

addition systems of KFC. To maintain and enhance our position as the leading WQSR

(Western Quick Service Restaurant) good value, innovative chicken based products through

consistently providing a pleasant dining experience with fast, friendly service at clean and

convenient locations. At all times, we must be dedicating to providing excellent service and

delighting customers ( KCF Download Reports, 2011).

KFC or Kentucky Fried Chicken is among the big names in the world of fast food. This name

is sometimes represented by the acronym KFC in some countries, referring to the literal

translation: Kentucky Fried Chicken which is known by its famous slogan "Finger lickin

good!" KFC is now present around the globe through its 14,000 restaurants. The American

brand is present in approximately 100 countries worldwide including 79% of its tens of

thousands of retail outlets are operated by franchise. According to statistics provided on the

official website of the brand, KFC feeds an average of 8 million people a day worldwide.

Founded in 1952, the company Kentucky Fried Chicken is now one of the fast food chains

popular in the world and belongs to the large group Yum! Brands Inc.

As a subsidiary, as well as Taco Bell and Pizza Hut, with a workforce currently reaching over

75,000 employees, the headquarters of the brand of fried chicken is located in the U.S. city of

Louisville, Kentucky. KFC is the undisputed leader in the fast food whose main base of its

dishes is the fried chicken of course. If earlier the typical menu consisted of fried chicken

pieces, fries, a drink and a salad of white cabbage, it is now diversified across countries. In

North America, the company currently offers mashed potatoes, fries, corn, pies and beans

dish. In some European countries, such accompaniments include red beans in sauce, tomato

mozzarella salad, white rice and fried peppers or cut into sticks and stuffed with herbs

(Webber, 1998).

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1.2. The Competition

KFC's competition consists of all companies operating in the fast food industry, which uses a

technology similar attempt to address the same type of customers. When KFC's began to take

their first steps there were no fast food restaurants, so it quickly became the industry leader. It

was from Ray Kroc organize the KFC's Systems, Inc., on March 2, 1955 when other

companies were already in the business and KFC's was beginning to lose its advantage over

other companies such as Burger King, Kentucky Fried Chicken or Chicken Delight. Kroc was

then in a more competitive market, the hamburgers (Brown, 2003).

KFC's has always tried to differentiate their products from other competitors, not just to

differentiate them is through price but through good quality, service, originality and

innovation.

KFC's also known that the growth strategy was essential and when Burger Chef Burger King

and widened as they were about to catch up, KFC's decided to grow even more. In 1967

Burger King had established himself as the expansion program to reach 100 new jobs per

year, tying for the first time the pace of expansion of KFC's. But the threat of Burger Chef

was even greater, since early 1968 expansion program had shortened the distance between it

and KFC's declined to less than 100 seats.

For example, KFC's decided to challenge the competition by risky expansion program and

what he wanted was to increase the openings of chain restaurants, from 100 to 500 a year.

That's when Burger Chef and Burger King began to lose the pace of growth compared to

KFC's to the present day. That was how KFC's regained its hegemony in the fast food

business at a critical period in the competitive positions were established on the market long

term (Ulrich, Brock bank, 2005).

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Just keep in mind that the market for hamburgers does not provide barriers to entry, anyone

can sell hamburgers, but in reality these new restaurants are not direct competitors of KFC's

because they cannot ever come to their position in the short term, since KFC's is a brand

entrenched in the market (Hollensen, 2003).

There are numerous fast food outlets but few offers a menu as varied as KFC's and almost no

growth is based on the sale of hamburgers.

We have pizza (Pizza Hut, Telepizza, Pizza World...), Baguetterie (boccata, Pans and

Company...), but offer products, in part, different from those offered by KFC's and although

they are competitors do not pose the same threat Burger King, Burger Chef, Kentucky Fried

Chicken, etc. working in the same sector.

But apart from the competition relating to products, competition is also referred to the

services the company offers, whether home delivery pizza is KFC's has Automac. If you are

looking for quality is found in KFC's and that is understood by all consumers.

The closest competitors to KFCs are:

Pizza Hut

McDonald’s

Burger King

Baskin-Robbins

Wendy's

Domino's Pizza

TCBY

Dayry queen

Dunkin Donuts

Taco Bell

Arby's

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Subway

Within the branch sell hamburgers, sandwiches and tacos:

Burger King

Taco Bell

Wendy's

Hardee's

Subway

For 1996 KFC's was already 35% of market share in the business chain sandwiches and

tacos. And its sales amounted to 16.37 billion dollars over its nearest competitor Burger

King.

1.3. New Competitors

The world is becoming increasingly common to hear of new franchise chains, although it is

difficult to enter the KFC's sector experience and business model proposed, these franchises

are becoming more competitive and you will Share market subtracting the users of fast food.

There is mounting members which generate greater competition in the business model of fast

food.

3. The Four P’s of Marketing

Marketing is about understanding the customer and ensuring that products are meeting

existing and potential customer needs. Marketing is a series of tactics, which help to make a

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business successful. The basics of marketing that still exist. The four P’s- Product (goods and

service) Price (value pf the product) Place (distribution of product) and Promotion (aware the

people for product) this leads onto strategic thinking segmenting and targeting which can

earn a competitive advantage. Marketing is a process of determining what customers needs

and want, and then planning how customer requirements and needs can be obtained and then

the implementing of the plans can be carried out. Of example a business company will still

have products services and ideas to sell and will still deliver to customers through some

means of distribution. Organisation must be ready for competitive organisations they must

make sure that any rival competitions do not take advantage by offering lower price or goods

which are of the same quality.

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The diagram above shows the analysis of the four P’s of a marketing mix of KFC

2.1. Product

Product is 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

garlic marinade and double dipping the chicken in flour before deep frying in a standard

industrial kitchen type machine.

2.2. Price

Price is 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 it.

2.3. Place

Place includes the target are that KFC is going to cover. This includes:

Free home delivery strategy- they provide free home delivery to offices and

homes (select countries)

Accessibility resulting in several outlets to cater to the needs of people in and

around the city

Hectic lifestyle – due to the hectic lifestyle of office going individuals the fast

food concepts saves time of preparing food and gives the customer a full meal

quickly

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Economically convenient- the pricing appeals to the many classes of the

society.

2.4. Promotion

Promotion is the method used to inform and educate the chosen target audience about the

organisation and its products. Using all the resources of promotion;

PROMOTION

(Source, Author, 2011)

At KFC, promotion is the main tool to bring all chicken lovers attention towards its delicious

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ADVERTISING

SALES PROMOTION

PUBLIC RELATION

EVENT & EXPERIENCE

COUPONS & DISCOUNTS

4. Target Market

The process of evaluating each market segment’s attractiveness and selecting two or

more market segments.

As the outlets of KFC are in posh area and prices are too high (overhead expenses

rent, and 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.

5. Market Segmentation

KFC market segmentation is based on three vital segments that give the key advantage in the

success of the chain. These include the following:

4.1. Geographic segmentation

KFC has outlets internationally and sells its products according to geographic needs of the

customer. KFC focuses how geographically its customers demand different products.

Chicken is the main selling product.

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4.2. Demographic segmentation

In demographic segmentation the market is divided into groups based on the age, gender,

family size, income, occupation, religious, race and nationality.

4.3. 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 ambitious and authoritarian

6. Channels

In order to remain competitive, KFC believes in first level channels in the order given below:

Manufactures

Retailers

Consumers

Following is the process on which KFC based its channel in order to give edge to other food

chain retailers.

5.1. Channel process

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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 targets

Recognition for good work

Performance based bonus

Employee benefits to keep them motivated

Promotion.

7. KFC'S Value Chain

KFC's monitor’s product quality and service through ongoing customer surveys and devotes

much effort to improve methods of production of hamburgers in order to simplify operations,

lower costs, speed up service and deliver greater value to customers (Kotler, Keller, 2006).

The company employs extremely rigid system operations. There are specific rules to do

everything from set the distance between the wall and the refrigerator and the exact

temperature that should fry the potatoes. All these methods are detailed in special books.

KFC's will only be effective to the extent that succeeds in establishing a partnership with

their employees (Endomarketing), franchisees, suppliers, to provide an exceptionally high

value for the customer.

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8. Franchising

They have ambitious plans to expand its franchising program, with which the franchisee

provides full support for consolidation, and to maintain the standards required by KFC.

KFC's is successful because it has a system of corporate standards and individual opportunity

and the franchisee is integrated at the same values and expectations clear and shared.

KFC's Franchise system conceived as a genuine partnership between an independent

contractor and the Company, whose reputation and experience are recognized around the

world. 66% of its restaurants are franchised (Lancaster, Reynolds, 2005).

KFC's has two types of contracts with its franchisees: Conventional and BFL

If the franchise the franchisee buys conventional cooking equipment, decoration, signs, etc..,

in the formula "Business Facility Lease" (BFL) KFC's assume the cost of this equipment and

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leases it to the franchisee. This contract gives the franchisee an option to purchase such

equipment, and have 3 years to exercise.

Once exercised the purchase option, the duration of the contract is extended for a total of 20

years. The initial investments of a franchisee BFL is a minimum of $ 51,000, which must

come from own resources.

9. Strategies Used

Given the competitive nature of fast food joints, KFC uses the PUSH strategy to help them

create

Awareness

Be different

Sound attractive

8.1. Strategies For "Global Domination"

KFC in his 1995 annual report proudly announces its "strategy for global domination." He

says that "KFC's vision of global industry dominate the food service. The global dominance

means setting the performance standard for customer satisfaction while increasing market

share and profits with its strategies of convenience, value and execution.

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8.2. Pricing Strategy

Marketing 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.

8.3. Generic Competitive Strategies

KFC's applies the same competitive strategy in all countries: be the first in the market and

establish your brand as soon as possible through intense advertising. It offers customers the

same product with many options, so we are talking about a wide differentiation strategy.

8.4. Growth Strategies

For growth is the strengthening technique in mitigating risky business Franchising generating

a win-win relationship with them, and choosing the talented.

8.5. Sales Promotion Strategies

Finger lickin Good summarizes all this in addition to continuing use of Colonel Sanders

KFC, marketing makes further concentrated in each of the premises which serves the niche

market of KFC's, it still maintains the projection of happiness and interest to children. We

introduce a new strategy for the smile to the customer.

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8.6. Operational Strategies

It continues to maintain the tolerances and specifications approach with a more stringent

approach, the measurement variables are time care and a smile to the customer, in addition to

this the search for improved inventory time is constant (Darden, 2002).

8.7. Social Responsibility Strategy

As can be seen to assume an active role in society is part of maintaining the strategy. The

workplace diversity remains part of what promotes the corporation; in fact, the newly

appointed CEO is not American. The maintenance of the environment strategy and inform the

knowledge of the nutritional capacity of the food is still part of the strategy.

10. Competitive Advantage of KFC in the Industry

KFC's major competitive benefits over its competitors are the constant innovation and

consistent focus. Kentucky through the development of quality assurance laboratories around

the world, involving the ongoing product reviews and on-site inspection of facilities suppliers

offer improved products. While it is true, KFC staff employed, but lack of experience of

management and training company based on their strong product. Customer service training

is provided further KFC (Hollensen, 2003).

KFC is very favorable to the operation of standard KFC, because it not only provides a

channel for cost standards to cost-effective, and can compare their sales outlets and other

shops with shop space ratio. Productivity therefore can be set as a benchmark, as well as sales

targets. Defective region can easily be evaluated (Ulrich, Brockbank, 2005).

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Standardization of more than 15,000 outlets also encourages innovation. Outlets desire to

reduce fees to their interests in the use of cost and no value innovation can export any harm to

others to implement the program as efficiently as possible.

Perhaps the major obstacle to Kentucky is its stringent standards, cannot change the past by

buyers preference. KFC provides a unified food menu, in recent years it has been revised

according to local tastes and preferences, but the new menu and the restaurant cannot, can

provide new and exciting changes in diet and consumers to respond more effectively

(Webber, 1998).

KFC financial management procedures, plans in the form of customer service is very

effective cost and time, and improve the standards of business is to continuously look for

innovative ways to improve efficiency. Kentucky has built a lasting symbol of the image, the

taste of their food. However, only relying on its emblem resembles Kentucky to sell. If

consumers respond to other rapid assessment of nutritional chain is not good considering the

details of the other stores in the commodity markets new and very fast.

KFC report is based on its brand image and the historical development index; of course, the

components Kentucky rank in other countries sign, because it is an agent of American

culture. With incomes and revenues, KFC has the largest and fastest growing revenue

numbers and testament of its better brand image. Other companies can imitate KFC

operational schemes but they cannot contend the invincible and resilient emblem image of

KFC (Brown, 2003).

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11. Competitive Forces Model

In strategic performance management, Porter’s five force industry competitions for the KFC

include the threat of new entrants, the bargaining power of suppliers, the degree of rivalry

among competitors in the same industry, the bargaining power of buyers and the threats of

substitute’s products. Moreover, the competitive forces model argues that the stronger these

forces are within an industrial setting, the more limited companies raise prices and earn

greater profits. As far as this is concerned a strong competitive force can be regarded as a

threat because it would drastically reduce the profit of an organization (Webber, 1998).

10.1. Threat of New Entrants

No specific technology and low investment to enter the market. Multinationals are

"protected" by their reputations and geographic presence. KFC is also having problems

relating to the risk for potential new entrants in the industry; it is to a certain extent feeble as

the threat of the new entrant is tough to set up a sequence of series of the food industry,

moreover, when new entrants enter the industry they tend to take extra effort in order to take

full control of the industry. The extent to which new entrants can enter an industry exerts a

significant influence on the degree to which companies may act to earn above average in

terms of bottom line.

10.2. Threat of Substitutes

Sandwiches, snacks, home delivery meals at home, traditional restaurants are all

interchangeable products for food from fast-food restaurant. But the environment (changing

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habits) Current mitigates these threats. Firms within the same industrial like Subway are

competing amongst themselves. Substitute’s limits potential returns on an industry by placing

a ceiling on the prices companies charge. The risk of substitute product and services is strong.

There is a somewhat swapping cost that is lower producing it is simpler for clientele to move

from retail industry to other associated products. In addition, it should be documented that the

substitute product to a certain extent very improbable than persons will be spending only on

the food business industry and not anything else.

10.3. Bargaining Power of Suppliers

KFC has almost absolute power over its suppliers it manages to be "affiliates. The group is a

key client sees some exclusive agro-food sector. The reorganization of the supply chain of

McDonald's France is working closely with its suppliers. But multinationals also provide

McDonalds (Coca Cola for soft drinks, water DANONE yogurt). Its bargaining power with

suppliers is undoubtedly a major force of KFC. KFC is also facing issues that are related to

the bargaining power of the suppliers. Suppliers can be viewed as threats when they are able

to force up the price for the supplies or reduce quality or quantity of the products though, if

suppliers are weak then Blockbuster KFC can force down their prices and demand higher raw

material quality, moreover, the negotiating supremacy of the suppliers is feeble (Barnes,

Pinder, 2009).

10.4. Clients Bargaining Power of Customers

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The bargaining power of customers is low since they can only be of influence. It may be

more important when consumer association. The pricing policy KFC’s defined very

meticulous in terms of each country, which further weakened the bargaining power of

customers. Buyers are seen as competitive threats when they are in a position to demand

lower prices or better products. Conversely when buyers are weak like in case of the KFC a

company can raise its prices and declare higher profits. The bargaining power of buyers

within the industry where Blockbuster Inc. compete is considered as extraordinarily strong

(Darden, 2002).

12. Analysis of the External Environment

11.1. Economic Context

There is great economic disparity in where this company operates since, as a fast food

company, affordable, end up having more facilities, usually located in places of transit and

recreation, makes not give the right to determine the economic level. And also generates

increased employment rate in the region.

11.2. Politico-Legal Context

This company has a great political stability, it also makes great investments. The level of

competitiveness in the McDonald's remains at the forefront of fast-food companies around

the world, and has a great worldwide recognition.

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11.3. Socio-Cultural Context

There is a big trend towards an aging population where McDonald's is located, and tends to

worsen over time, since the rate of birth rate is low, the average life expectancy is

increasingly high. The context cultural has an impact on how local cultural forms absorbs

global transforms and adapts to its reality, leading global phenomena hybrids

recontextualized (Lancaster, Reynolds, 2005).

11.4. Technological Context

Regarding its technological context this company works with machines highly specialized

and requires large quantities since it is a franchising and is not located in one place but, with

several stores throughout the world

13. Swot Analysis

12.1. Strength

For the business strategy strengths are the key forces for a company as it identifies and help

the organizations to move towards the goals and objectives that were previously set by the

management which ultimately affect the overall efficiency of the organization like

Blockbuster Inc.

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12.2. Weaknesses

These can be in the form of no clear management styles, poor image, research and

development issue, competitive disadvantage, poor track record, insider problems, financing

problems and possible training problems by managers and supervisors for instance like the

retail industry.

12.3. Opportunities

In addition, from the perspective of the strategic business management, these are factors or

the elements that the KFC should concentrate on as they are considered as the core factors

which guide an organisation in moving towards the goals which ultimately affect the

efficiency and effectiveness of the organisation.

12.4. Threats

What makes an organisation to be strong is to identify possible threats within its operational

base in strategic business management, the threats to KFC could be in the form of

government policies, research, competitive pressures, new entrants, changing customers’

tastes, adverse demographic changes, recession, growing bargaining power of suppliers and

customers.

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14. Recommendations

It is clear that KFC's has focused its strategy to position the brand to assure

customers greater security franchise to invest in the business, the strategic shift

Bell has focused in this direction.

As can be seen from the strategic standpoint KFC's has made changes in the menu

locally, and from the strategic point of view has decided to compete with local

customers where there is capacity to capture market.

You can comment on the context of the overall strategy with respect to previous years

has been successful, is keeping the majority of their items.

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