Kentucky Fried Chicken

Assignment

On
Kentucky Fried Chicken (KFC)
No bodys cooking like KFC today and we are the chicken experts

There is no competitor for spicy chicken which is made by KFC

(KFC specialized)

Submitted to
Submitted to Mr. Mairaj Jaffari

Submitted by Muhammad Amjad Syeda Saba Abbas Waqas Ahmed Shaikh

MBA-IV (Eve) Batch 2009-10

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Executive Summary:
The KFC (Kentucky Fried Chicken) as a major Quick Service Restaurant (QSR) operator in Pakistan, which has been established for just over 10 years. It serves mainly chicken related items and also offers add ups to its consumers as well. More and more Pakistanis have been opting for a healthier eating diet as a large number of them have become more health conscious. This has opened the door for KFCs main competitors, such as McDonalds, to come out with a new range of healthier products, allowing them to mount a greater challenge on KFCs position as Pakistans leading fast food operator. As a response to the advancement made by KFCs competitors in providing healthier fast food, KFC to introduce a new set of healthier products that would be mainly targeted at health conscious people. Its target market would largely be based on segmentation of age, where it would be focused on customers in the age group of between 4 to 40 years old. The pricing and promotion strategies would also be looked into as KFC prepares to battle with its rivals.

Introduction:

KFC

is the world largest and most well known chicken restaurant, with chains in

more then 10 thousand locations and worldwide in 80 countries. KFC and its franchised employees are more than 200 thousand in all over the world. John Y Brown and Jerry Messy purchased KFC for USA for $2 million in 1964 that time KFC become a corporation. After five years, Colonel buys first 100 shares of KFC. In 1986, Pepsi Company purchased KFC. Pepsi company changed the logo from Kentucky fried chicken to KFC in 1991 and then in 1992 KFC 1000 th restaurant opened in Japan and in 1994 9000th restaurant in china. KFC is the part of Tricon global restaurant. Tricon global restaurant is the world largest restaurant group, with in nearly 100 countries around the world, which in turn was spun off in 1997, and has now been renamed to Yum! Brands. In 1997, KFC DIHE-DADABHOY INSTITUTE OF HIGHER EDUCATION Page 2

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franchised with Gray Mecanza International and started work in Pakistan. Rawalpindi branch started work in 1999 and in Islamabad in August 2002 and now in Pakistan; there are 45 outlets nation-wide.

Objective:
Every organization and company has some certain goals laid down by them to achieve to make it renown and have value added services to satisfy customers. Build an organization dedicated to excellence. Consistently deliver superior quality and value in our products and services. Maintain a commitment to innovation for continuous improvement and grow, striving always to be the leader in the market place changes. Generate consistently superior financial returns and benefits our owner and employees.
To establish a position in Pakistan as a leading WQSR (Western Quick Service Restaurant) chain, serving good value added services and Innovative chicken based products. KFC is consistently providing a pleasant dining experience, with fast friendly, in a clean and convenient location. Every moment dedicated to providing excellent and delighting customers.

Philosophy of KFC
Philosophy of KFC stands on the Champs Program whereas the philosophy of McDonald is on People.

The CHAMPS Program

Champs stands for our belief that the most important thing each of us can do is to focus on the customer. It stands for our commitment to provide the best food and best experience for the best value. CHAMPS stand for the six universal areas of customer expectation common to all cultures and all restaurants concepts. These are: C leanliness H ospitality DIHE-DADABHOY INSTITUTE OF HIGHER EDUCATION Page 3

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A ccuracy M aintenance of Facilities P roduct Quality S peed of Service CHAMPS is the philosophy to ensure that the customer has the consistent quality experience in every restaurant, everyday, on every occasions and you will be playing role in delivering CHAMPS to our customers.

Supply chain management in KFC :

The main three consideration in any supply chain management are : Managing Product Information flow Funds flow

1. Managing product : Raw material : Chicken, vegetables, cheese, etc Raw material suppliers: Reliance and More (vegetables), Chicken(Venkys) Distribution channel (logistics partners) : KFC has no any logistics partner as all the distribution of materials are done by individual suppliers and KFC head office also has its own distribution channel all over pakistan.

2. Information flow : Communication channels : KFC uses email and telecommunication channel for communicating with KFC head office and suppliers like Reliance, More, and Venkys.

3. Funds flow : Funds Flows i.e. the money payment to suppliers and other debtors are done through a bank account. Each and every KFC outlet has its own bank account and the payments of each outlet is done by Head office through these bank account on a monthly bases.

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Drivers of Supply chain management in KFC 1. Facilities : (Production/storage) As KFC follow a centralized system for all its raw material or ingredients are stored and produced at the individual KFC stores. The storage of some items are done for monthly bases and few for weakly bases. 2. Responsive V/S Efficiency : KFC follows the Efficiency method of distribution of materials in all over pakistan. With help of this distribution method it is able to reduce the time involved in movement of goods from one channel to other channel member and then reaching the customer, able to reduce the carriage cost and holding cost involved in responsive method of distribution. With the help of simple diagram the concept of Efficiency distribution method followed by KFC is more transparent 3. Inventory : (Raw Material, Work In Process, Finished goods) Raw material like chicken, vegetables, etc are supplied from the local market of Pune like Reliance, More, Venkys, etc all these are maintained on weakly bases and work in process items and finished goods are maintained on daily bases and are stored in KFC outlet only. 4. Sourcing : (Outsourcing) KFC has not outsourced any of its processes to any other company, all the operations and processes are managed by KFC Head Office (Pakistan) and other by individual KFC outlet itself. 5. Inventory Cycle :

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6.

Type of review followed by KFC : KFC follows a periodic review method for all its process like inventory maintenance except the ingredients supplied by KFC Karachi (HO) which is maintained on monthly bases. Periodic review involves :

Monitoring at periodic intervals. Quantity set as the amount consumed during this interval. Time between the orders is fixed.

Marketing Strategy:
Segmentation:

KFC has divided the market of Pakistan into distinct groups of customers with different demands, tastes and behavior who require separate products or marketing mix. In Pakistan the niche marketing is being used for particular classes of people. They have made segments of the market on the following bases. Demographical Behavior Geographical
DEMOGRAPHICAL BASIS

In demographics their first segment is consisted of the income factor i.e. high income, average income and low income.
BEHAVIOR

In behavioral aspect they segmented the market on the basis of quality, taste and price. Following are the different possible segments in this regard.

Taste conscious Quality conscious Class conscious Combination of price and quality

GEOGRAPHICAL BASIS

In the basis of the geographical factor we have divided our market in three main segments. Urban areas DIHE-DADABHOY INSTITUTE OF HIGHER EDUCATION Page 6

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Sub urban areas

TARGET MARKET FOR FAST FOOD

After evaluation of various segments, KFC has decided to target the market of Urban and Sub-urban Areas of Pakistan. People are educated and they want variety in their diet. Normally people of rural areas dont take fast food. On the other hand people of urban areas take fast food. Income of the people of urban areas is normally high and they can afford to purchase such products, which are slightly higher in price as compared to prevailing prices of local food in the market. People of Urban Areas are more quality conscious than the people of Rural Areas. In Urban Area there lived people from every walk of life and profit generation is easier than in Rural Areas. Population density is higher in Urban Areas as compared to Rural Areas, so the numbers of customers are more in Urban Areas.

4Ps Of Marketing:
Product

Their all products are different from every product and the packaging and other products feature are different form other they change there products by introducing new products but their main product the Kentucky fried chicken is the same
Price

The price is not affordable by all persons in Pakistan. Due to its large setup the price selecting are very challenging for the new product of KFC
Place

They open their outlets in those places in the cities where people can buy products easily and without difficulties. They also introduce mobile units for delivery of their products.

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Promotions

In Pakistan KFC not advertise there products too much because people KFC due to its reputation in other countries. They promote their products through special packages like Ramadan packages, mid night package. They promote there products through billboard, pamphlets and through other promotion strategies.

KFC SWOT Analysis:

Strengths
Brand Equity KFC secret recipe of 11 herbs and species Very strong internationally Strong Franchises all over the world Interactive relationship marketing Strong trademarks recipes Ranks highest among all chicken restaurants Chains for its convenience and menu variety Largest multi-branded restaurant in the world

Weaknesses
Lack of knowledge abut their customers Lack of relationship building with employees, customers and suppliers Lack of focus on Research &Development KFC desserts portion is not as better as should be They only focus higher income level people

Opportunities
They have the opportunity to expand their sweet products They can open more outlets to get maximum market share They can open temporary outlets in peak season in the hill stations like naran, kaghan, swat etc. They can capture more customers by decreasing the price of their products Updating their restaurants, Balanced menu, customer focus and Increase delivery service

Threats
Rated 83 out of 100 in terms of competitiveness Increasing inflation rates directly affect menu prices DIHE-DADABHOY INSTITUTE OF HIGHER EDUCATION Page 8

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Supermarkets and new competitors Health Trend away from fried foods Changing customer demands Some international events badly affected the market of KFC in Pakistan like IRAQ and AFGHAN war and we know KFC is American based. Therefore, it creates a great impact on the performance of KFC. During the war the sale of sale KFC decrease more then 25% Current political situation is a big threat for KFC Diseases like bird flu is the big threat for KFC

Advertisment:
Press advertising
Jang (Karachi, Lahore & Rawalpindi): The news (Karachi, Lahore & Rawalpindi): Dawn (Karachi, Lahore, Rawalpindi): Magazines

Hoardings
In addition to regular hoardings, temporary hoardings for 2-3 months have also been taken.

Commercials
Advertising on different Cable channels like Geo, Ary World, Ten Sports, Music channels, etc and also advertising on world call Cable advertising.

Competitive Analysis:
Any Organization cannot enjoy the business without competitors. No organization can afford to ignore there competitors. It is very important for a marketing managers to monitor the activities of there competitors, what they are doing? KFC adopted such sort of strategy that there is no competitor for spicy chicken, which is made by KFC. KFC beats its competitors through the revising marketing strategy at every movement but the main competitor of KFC is Mc Donalds.

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KFC
Spicy Products
Pakistani people like spicy products instead of boiled food

McDonalds
Burger and French Fries

Arabian Rice and Zinger Burger Free Delivery Chicken is eaten by every community Local Staff and Highly Qualified because local staff can better deal with the customers KFC uses Top to Bottom and Bottom to Top Approach in Management.

Big Mac Free delivery Beef is banned in some community

Its Staff consist of simple Graduates and give them training

McDonalds Uses Top To Bottom Approach.

No such Case.

KFC is Co branding with Walls

Current Products Review:

Mighty Zinger Zinger burger Fish zinger burger Col. Fillet burger Salsa twister Machos burger Chicken burger Cheese Sub 60 twister Nuggets Hot wings Fries Corn on the cob Arabian spice Chicken mania Dinner rolls Crispy chicken chunks Hot and crispy soup Soft Drink Cola slaw Scope of wall Fruit salad Mineral /water Espresso Cappuccino Milo Frothe

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KFC Menu:

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Every Chicken Tested K & Ns state-of-the-art Quality Assurance Lab monitors the entire integration process from livestock to feed and on to preparation of ready-to-cook and cooked products. Every Chicken Certified HACCP K & Ns ensures food safety by implementing the international HACP (Food Safety System) and enjoy the unique privilege of being the first and only HACCP certified company is Pakistan producing chicken and chicken products. Free from diseases and bacteria, drug residues and other contaminants.

Services:
KFC offered free home delivery service at specific branches in specifics cities. They take at 30 min for delivery and the minimum delivery order should Rs.250. They also provided services to celebrate the birthdays of kids at there home or in KFC restaurants. Now recently KFC also provide services of mobile unit of KFC.

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Kentucky Fried Chicken Environmental factors:

Socio-Cultural Element Culture element includes the attitudes, values, norms, beliefs, behaviors and associated demographic trends that are features of a given geographic area. Multinational company faces the challenge to understand about the culture of that country where they work. To solve these problems KFC hire all employees of local area and now it is easy for them to understand about the culture of Pakistan. KFC management knows about that Pakistan is a Muslim country; therefore they use 100% Halaal (Zibiha) chicken. KFC start their branches in those cities which are famous for food eating. Pakistani people like spicy foods, therefore KFC also provide spicy foods in Pakistan. KFC open its branches in advance cities of Pakistan like Lahore, Karachi, and Islamabad/Rawalpindi etc. In these cities mostly come out with their family because KFC mainly focus family. Technological Elements New techniques affect the quality of products and services in better way. Technology is very important in order to compete with the competitors. Organizations have an eye on their competitors and also new techniques which their competitors used. Today the world going fast and market is globalize, new techniques comes in production and services departments. Although KFC and McDonalds has same cooking machinery but KFC has efficient delivery system; they provide home delivery so quickly. KFC purchase machinery from Hanney Penny company, they are main suppliers of machinery through out the world. Economic Elements In Pakistan there is a mixed economy so private organization easily perform their tasks within any given economic system of course, organization are influenced by a variety of economic features over which they have little independent control, such as inflation, interest rates and recession Another important input to the enterprise is the nature of government fiscal and policies. KFC paid tax properly. DIHE-DADABHOY INSTITUTE OF HIGHER EDUCATION Page 13

Kentucky Fried Chicken SalesPromotion

For sales promotion KFC has introduced different strategies such Ramadan Package, Birthday Package, Midnight Package and many other. Also they have introduced goods like watches, keychain, coffe cup, T-shirt, toys e.t.c to the customers

CONCLUSION :
In overall study of Supply chain management ,it has been observed that KFC in all over pakistan follows a similar pattern of Supply chain, that enables it to reduce time involved to reach end customers and reduce expenses in supply chain.Ultimately it is able to reach and fulfill its end customers needs and wants at a reasonable or customer acceptable rates all over pakistan. In short we can say the Supply chain management of KFC has a positive impact on profit maximization by considering following points : 1. KFC (HQ) supplies ingredients to all its outlet by its own transportation network all over pakistan. 2. KFC has no logistics partners they are self sufficient and efficient to all logistic operation involved in reaching the customers. KFC follows a periodic review system to keep track on all its inventory and market demand.

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