1|Page

2|Page

1. Introduction
Creating value for customers require an organization to base its strategies on customers production, preferences. pricing, This statement entails that market the strategies related to

value

chain

management,

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
3|Page

use, thinks for them and produce products which are better for them 1999).

(Holbrook

KFCs 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
4|Page

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).

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

5|Page

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). 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 McDonalds
6|Page

Burger King Baskin-Robbins

Wendy's Domino's Pizza TCBY Dayry queen Dunkin Donuts Taco Bell Arby's 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.

7|Page

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.

2. The Four Ps 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 business successful. The basics of marketing that still exist. The four Ps- 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.

8|Page

The diagram above shows the analysis of the four Ps 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. KFCs specialty is fried chicken served in various forms. KFCs 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.

9|Page

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

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;

10 | P a g e

ADVERTISING

SALES PROMOTION PROMOTION

EVENT & EXPERIENCE

PUBLIC RELATION

COUPONS & DISCOUNTS

(Source, Author, 2011) At KFC, promotion is the main tool to bring all chicken lovers attention towards its delicious one of a kind product, the fried chicken.

3. Target Market

The process of evaluating each market segments 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

11 | P a g e

population, segment.

company

resources

and

structural

attractiveness

of

market

4. 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.

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;
12 | P a g e

Social class upper and middle class Lifestyle is not specific Personality is ambitious and authoritarian

5. 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 KFC works on the flow of good operation techniques i.e. Good Operating Managerleads 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.

13 | P a g e

6. KFC'S Value Chain

KFC's monitors 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.

14 | P a g e

7. 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 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.

8. Strategies Used
Given the competitive nature of fast food joints, KFC uses the PUSH strategy to help them create
15 | P a g e

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.

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.

16 | P a g e

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.

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.
17 | P a g e

9. 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). 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
18 | P a g e

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).

10. Competitive Forces Model

In strategic performance management, Porters 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 substitutes 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).

19 | P a g e

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 habits) Current mitigates these threats. Firms within the same industrial like Subway are competing amongst themselves. Substitutes 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.

20 | P a g e

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

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 KFCs 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).

21 | P a g e

11. 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.

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).

22 | P a g e

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

12. 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.

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.

23 | P a g e

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.

13. 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.
24 | P a g e

Bibliography

Anonymous, 2011. Kentucky Fried Chicken four Ps of marketing mix [Online] Available at: <http://www.scribd.com/doc/19080033/Kentucky-Fried-Chicken-KFC-MarketingMix-four-Ps> [Accessed 14 Nonember 2011] Barnes, C., Blake, H., & Pinder, D. (2009). Creating & delivering your value proposition: managing customer experience for profit. London: Kogan Page. Brown, M. (2003). User-driven competitive intelligence crafting the value proposition. Houston, Tex.: American Productivity & Quality Centre. Darden, B. (2002). Secret recipe: why KFC is still cooking' after 50 years. Irving, Tex.: Tapestry Press. Hollensen, S. (2003). Marketing management: A relationship approach. Essex: Pearson Education Limited. Kotler, P., & Keller, K. L. (2006). Marketing management. Upper Saddle River, NJ:Prentice Hall International. Lancaster, G., & Reynolds, P. (2005). Management of marketing. New York: Elsevier Butterworth-Heinemann. Schaefer, L. M. (2001). Fast-food restaurant. Chicago, Ill.: Heinemann Library. Ulrich, D., & Brockbank, W. (2005). The HR value proposition. Boston, Mass.: Harvard Business School Press. Webber, H. (1998). Divide and conquer: target your customers through market segmentation. New York: Wiley.

25 | P a g e