International Marketing

PROJECT REPORT

KFC Vietnam

Instructor : Dr. VU THE DUNG

RESEARCH QUESTIONS

1. What makes KFC Vietnam successful in International marketing perspectives?

2. Why did KFC not leave after seven years of loss?3. Are strategies of KFC Vietnam similar to those of KFC India?

KFC Corporation

• Based in Louisville, Kentucky

• Founded by Harland Sanders in mid 1950s

• Secret recipe of chicken with eleven herbs and spices.

• His growing age prompted Colonel Sanders to sell off the business for $2 million in 1964 to Jack Massey and John Brown Jr- two Louisville businessmen.

• In 1970 KFC merged with Heublein Inc, a producer of alcoholic beverages with little restaurant experience.

• In 1986 KFC was sold to Pepsico.

• There are over 15,000 KFC outlets in 105 countries and territories around the world.

Overview

17,000 KFC outlets in 109 countries and territories around the world

KFC Financial Highlights

International sales in $billion

Year end 2011 2010 2009 2008 2007 5-year growth

KFC 8,920 8,554 8,230 7,830 7,394 5%

Source: www.yum.com/annualreport/

Fast food market in Vietnam

KFC60%

Lotteria30%

Jollibee & others10%

Total sales in 2011: VND810 bn. Growth rate: 26%

KFC Vietnam

• Found by Tony Chew in 1997• Opened first restaurant in Saigon Super Bowl, Dec. 2007.• No profit during the first seven years. • 100 restaurants and outlets in 18 provinces and cities with

3000 jobs so far• 60% of fast food market share• Planning to reach 200 restaurants in 2015 with 7000 jobs.• Competitors: Lotteria, JollieBee…

KFC Vietnam

• Time lines of first restaurants:

12/1997 – Ho Chi Minh City 06/2006 – Ha Noi 08/2006 – Hai Phong & Can Tho 07/2007 – Bien Hoa – Dong Nai 01/2008 – Vung Tau 05/2008 - Hue 12/2008 – Buon Ma Thuot 11/2009 – Đa Nang 04/2010 – Binh Duong 11/2010 – Vinh, Nghe An 05/ 2011 – Nha Trang – Khanh Hoa 06/2011 - Long Xuyen – An Giang 08/2011 - Quy Nhon & Rach Gia 09/2011 - Phan Thiet 12/2011 – Hai Duong

PRODUCT

• Traditional fried chicken with original secret recipe: 11 herbs and spices

• Newly developed products to satisfy Vietnamese tastes– Diversify menu : fillet fried chicken, sandwich,

gravy chicken rice, mixed cabbage and jumbo, shrimp, fish, rice with chicken

– Classify products in categories : combo for kids, for family, snack, salad,…

KFC Products

Delivery menu – 13 options

Delivery menu

Original Fried Chicken

Combo

Combo

Combo

Menu for Kids

Light meals

Light meals

Light meals

Side orders

Side orders

Desserts & Beverages

Desserts & Beverages

Desserts & Beverages

Price

• Low price strategy from the beginning Retain the number of loyal customersAttract new customersMaximize the market share• Increase price when customers increase in

number• Combine 2 portions into 1 with lower price• “Ăn Thật No, Chẳng Lo Về giá!”

Place

• Funny and modern designs• In store and delivery sale• Big cities• Supermarkets, shopping centers• Business districts

Promotion

• Advertising• Sales Promotions• Public Relations• Events and Experiences• Coupons, Discounts and Bundled packages

Advertising

Sales promotion

Sales promotion

Sales promotion

Public relations

KFC Vietnam 100th store celebration

Sales promotion

with Euro Cup

Fan page

On sales

Problems

– Vietnamese people were not used to Western fast-food and greasy food.

– Financial crises in 2008 and 2009 reduced the turnover of KFC.

– Bird flu in 2005 => people did not believe in quality of products made from chicken.

Solutions

–Added rice to the menu–EZ menu during economy crisis–Only imported chicken from North America

and diversified the menu with beef and fish

Potential problems

– Competition from other fast-food brand names: Lotteria, Jollibee …

– Taste of Vietnamese people: prefer tough than friable chicken.

– People are more afraid of implicit disease from fast food such as obesity, heart attack,…

Future

• 200 restaurants and outlets by 2015• Expanding to other provinces and cities

The story of 7even

• 7 years of loss and loss:Vietnamese tastes to Western fast foodUrbanizationHigh rental outlets

The story of 7even

• Why did KFC Vietnam not leave this market?Long-term strategyStable politicsPotential market

Emerging market Young population Customer concern to hygiene and safety

Lessons learned from KFC Vietnam

• To be successful in Vietnam, fast food businesses need

Strong brandLong-term strategyCombination of standardization and localizationGood locationsEffective marketing campaignsWell-designed serviceContinuous improvement

KFC INDIA

• The first outlet opened in 1995 in Bangalore• Issues:– Protests from farmers and PETA– Targeted to high class income group– Menu without flavors and spices which Indian like.

Left Indian Market after one year

KFC INDIA

• KFC decided to re-entry to India in 2003 with new strategies.

• Now KFC has opened >100 outlets and will expand to 500 in 2015

• Competitors:– McDonalds– Pizza Hut– Domino Pizza– Café Coffee Day– Barista.– ….

KFC INDIA 4P’s

• Products: not only traditional KFC menu, but also more meals with Indian culture:– Fried Chicken– For vegetarian: Veg snacker, veg strips with salsa…– Rizo Rice: made from vegetable and fine Indian

herbs– Drinks: Pepsi and others

KFC INDIA 4P’s

• Price:– Target to high income group and to middle class of

customers also.– Give lower price for the same products from

competitors

• Place:– Expand network cross the country but more in big

cities: Dehli, Kolkata…– Location with large number of young people

KFC INDIA 4P’s

• Promotions:– Reminder ads: “Finger lickin’ good”– Sales promotions, coupons…– Events

KFC Vietnam versus KFC IndiaKFC Vietnam KFC India

Population 85 m. 1 bn.

Market share 60% 10%

Competitors Less More

Consumer acceptance More positive More negative

Localization More from beginning Less from beginning

Price strategy Low price Low price

Lessons learned from KFC Vietnam

• To be successful in Vietnam, fast food businesses need

Strong brandLong-term strategyCombination of standardization and localizationGood locationsEffective marketing campaignsWell-designed serviceContinuous improvement

GROUP 1 MEMBER

1. Nguyễn Thành Được2. Nguyễn Đăng Hạt3. Nguyễn Thị Minh4. Phạm Thị Hồng Phượng5. Lê Thị Thúy Linh6. Lữ Vân Phan Nhớ7. Đoàn Giang Sơn8. Trần Thị Ngọc Quyên