Example Of Market Entry Strategies Of KFC Research Paper

INTERNATIONAL MARKETING

Introduction
For the purpose of understanding the concept of marketing strategy and international marketing, we have chosen the international fast food chain of KFC. Kentucky Fried Chicken or KFC is the world’s famous fast food chain with its head office in Louisville, Kentucky. Founded by Harland Sanders in the decade of 1930’s, the fast food chain is serving more than eleven million customers in a hundred and ten nations at the global level. At present, Kentucky Fried Chicken owns fifteen million restaurants. The founder of Kentucky Fried Chicken invented the chicken recipe on his own for passersby in a fuel station in Louisville. Gradually, the recipe started gaining popularity and Sanders had to open up restaurants first in the US and then in countries of Europe and Asia. The recipe of chicken is primarily composed of eleven ingredients which are unique. Even today, restaurants have been unable to imitate the original taste of KFC. The flavor is still authentic and customers trust KFC for its high quality standards and hygiene. The slogan of KFC is ‘finger lickin’ good’ which reflects the outclass taste of chicken offered by the fast food restaurant. KFC grabbed the maximum market share from China when it first started to expand beyond the borders of US because of its large size population and its association with the popular Yum! Brand. Yum brand has also acquired Pepsico, Pizza Hut and Taco Bell which are the reasons behind its success and popularity (Tepper, 2013). KFC’s main product is chicken which is offered to customers in the form of fried chicken pieces, burgers, sandwiches, rolls, nuggets, hot shots, rice along with soft drinks, salads, sweet corn, coffee and ice creams. The ingredients added into the chicken recipes are similar however; it is ensured that the taste is also adapted to the preferences of locals in a region so as to gain customer loyalty and social acceptance. A list of core products of KFC includes Extra Crispy™ Tenders, Extra Crispy™, Hot Wings™ and Original Recipe® (KFC, n.d.).

When it was decided by the senior management that KFC must expand beyond the borders of US, there arose several questions and to what are the possible modes of making entry into the international market, the possible benefits of each of the modes and then choosing the most suitable entry mode. The commonly used market entry modes in the area of international marketing include direct exports, franchising, joint ventures, alliances, mergers, acquisitions, Greenfield investments, licensing and turnkey projects (Tradestart, n.d.) . It must be mentioned here that the market entry strategies for one business in one industry may not yield positive results for companies operating in another industry. KFC considered many strategic options before entering into the global market and finally found the option of franchising the best one.

Franchising

KFC allows international expansion through franchising. By franchising, KFC gives the rights of operation to the franchisee who is a local and has ample experience in the hospitality industry. Ding (2013) elaborates that franchisee understands the social and cultural trends and promotes localization under the reputed brands. Customers are attracted towards KFC because they know that the brand will never disappoint them and the fact that it is operated by a local enhances trust on quality. KFC and franchisee both benefit equally- KFC is able to capture more market share, generate revenues and fulfils its aim of expanding into global locations. The franchisee, on the other hand, benefits by strengthening its image by associating itself to the world’s popular food chain. KFC has a very well defined criterion for selecting franchisee for international regions. The assessment criterion for a franchisee is based on a few steps such as its experience in operating multi-unit fast food restaurants; sound liquid capital and net worth, an influencing business history free of criminal convictions, and positive portrayal by media; commitment towards complying to the franchise agreement; promise to ensure blending brand and local culture and; having a focus towards business growth. Franchisee who fulfils the mentioned assessment criterion gets to run a franchise of KFC in a particular location (KFCfranchise, n.d.). Throughout the world, there are seventeen thousand franchises of KFC operating successfully and opening plan of many more is in the pipeline. However, KFC would never choose a franchisee that is into business with any of the competitors of KFC such as McDonalds, Burger King, Subway, Wimpy etc.

Why KFC Chose to Go Global?

KFC gained much popularity in the fast food market of US since its establishment. As competition rose and markets became saturated, it was then KFC realized that it must expand its operations beyond borders so as to build brand equity, entice more customers at global level as well as strengthen its financial position. KFC also wanted to tap markets where customers are plenty and fast food options are few. The trend of fast food was increasing as the overall lifestyle of global population was undergoing radical shift from traditional to modern. KFC viewed these trends as opportunity of global expansion and by making use of successful marketing strategies; it succeeded in achieving its long term objectives. Moreover, Yum brands which is the parent company of KFC has always dared to go global therefore, it was obvious for the brand to implement the idea of global expansion to KFC (Frey, 2009).

Marketing Mix for KFC

Product
The product of KFC includes it fried chicken made from original recipe along with other items in the menu including crispy Zinger burgers, chicken pieces, chicken nuggets, chicken rolls, French fries, beverages and salads. The core products of KFC are similar in all locations. The authentic recipe is followed in all items on the menu however; the final taste delivered to customers is totally in line with their taste buds. The products of KFC appeal all customer segments equally and the food is more like a family meal. Special and limited menus are offered on special regional occasions so as to make the customers feel valued and give them a chance to dive into a delicious experience.

Pricing

The prices of all items on the KFC menu are very reasonable. Prices are usually set by keeping the competitors prices in view. KFC can also consider charging a premium in some locations because the recipe is totally unique and no other restaurant can deliver equivalent quality even after eighty years of operations. Usually prices are affordable by customers having low and middle income. KFC is a family dining restaurant with a casual ambience and does not appeal to the elite class therefore; prices of meals are not high.

Placement

As discussed in earlier sections, KFC has its presence is more than a hundred and ten countries with seventeen thousand restaurants. This indicates that restaurants are within the reach of customers. They can easily find KFC outlets in busy shopping malls, food courts, and popular highways and enjoy tasty and delicious chicken meals.

Promotion

KFC has always considered promotional efforts as a great way to increase market share. Whenever KFC opens up a new restaurant, introduces new deals in the menu or decides to offer discounts, it makes use of several promotional channels. Advertisements are shown on local television and played on popular radio channels. Brochures are distributed to customers in shopping malls, play parks, cinemas so as to create awareness about the new initiatives. Advertisements are also printed in the newspapers in order to grab maximum attention of customers. KFC offers free toys in kids’ meals which are usually based on popular and recent animated characters which are appealing to children and early teenagers. KFC membership cards are offered to regular customers on the basis of which they are given chance to enjoy discounted meals at all KFC restaurants. Free home delivery service in several of locations is a great way to please customers and maintain competitive advantage. Sending greetings cards to loyal customers is also used as a promotional technique to retain customers. Social media is also seen as a great, low cost and highly efficient marketing and advertisement tool where news about new and delicious meals reach the target market within no time.

People

The employees of KFC are provided special trainings so that they can not only perform their routine job responsibilities in the best possible manner but also play their role in attracting and maintaining long term customer relationships. Trainings can also be offered on job using rotation method such that employees get to know how all duties are performed and integrated to achieve desired results. The staff is usually very polite and make sure that customers feel satisfied with the quality and taste of the food. The staff is trained to operate the latest technology used in complaint handling and ordering.

Processes

The processes of KFC are up to date-the frying equipment is based on latest and innovative technology systems in which the temperature is maintained and exact quantity of ingredients is added to the healthy chicken. Moreover, the software used for scheduling, forecasting, payrolls, employees’ database is all in line with the modern technologies and those employed by competitors.

Physical Evidence

The physical appearance of all KFC restaurants is more or less same. The color of walls and furniture is based on a standard choice. The ambience is casual which is usually seen as comfortable and suitable for families including children, teenagers and adults. The physical appearance is not elite but appeals the target market with perfection. In several KFC restaurants, there is a small play area for kids which are a main attraction for young parents and children.

Paperless

Paperwork is usually associated to inefficiency and traditional business approach. All the processes and procedures of KFC work on electronic systems. There is an integration of all functions in digital format and no paper work is done by management which is a sign of KFC’s operational efficiency.

Brand Positioning and Advertisement

KFC has positioned itself as a fast food chain which aims at offering freshly prepared friend chicken to its customers which is based on the original Colonel’s recipe. The brand communicates strong values, taste, flavor, fun loving and casual ambience, superior quality chicken and a promise that there will be no compromise on flavors and quality. Keeping in view the advertising and promotional efforts of its direct and indirect competitors, KFC has also invested a huge portion of its revenues in advertisement campaigns. The aim of these campaigns is to communicate the customers about the newly added menu items, low prices, opening of new restaurants and special/limited chicken deals. Promotional efforts by KFC have been discussed in prior section.

SWOT Analysis for KFC, Oman

Strengths
One of the biggest strengths of KFC is that it is a well established international fast food brand which never compromises on taste and quality. KFC has a secret and authentic recipe which its competitors have never been able to imitate. The equipments used by KFC are based on latest technologies and help the brand maintain competitive advantage in the market of Oman. The employees of KFC are experienced and well trained and assist the fast food chain in delivering quality while keeping the customers satisfied. Strong distribution channel can be seen as a greatest strength of any organization (Dibb, Simkin, 2004). 

Weaknesses

KFC has a few products on the menu which gives it a weak position among competitors. Experimenting with new and unique chicken items can help it grab more market share. The production cost in some locations is higher as compared to competitors.

Opportunities

As consumer lifestyle is getting busier day by day, they are showing more inclination towards fast food which can be seen as a great business expansion opportunity for KFC. Youngsters are more attracted towards fast food so by offering special deals for friends and family groups, revenues can be increased. Franchising is a suitable way to expand further in the global fast food market.

Threats

Impact of Social and Cultural Factors
In international market, the cultural and social factors vary with respect to religion, customs, values and social behavior (Weick, 2009). In Muslim countries such as Oman, KFC has to serve halal chicken to the customers or else its franchise operation would become difficult and there are chances of it getting banned on permanent basis. The ingredients added into the chicken recipes are those which appeal the taste buds of locals otherwise KFC would meet failure. Obesity and healthy lifestyle are main social issues seen at the global level. KFC is accused of feeding customers with chicken which is not healthy and made of harmful calories. Although KFC has tried its best to reveal that it makes use of the finest quality ingredients but the issue is still there and KFC is facing it boldly.

International Distribution Channels

According to Strydom (2004), KFC makes use of indirect distribution channels-the distribution chain begins with suppliers to KFC restaurants to customers. This implies that KFC has main suppliers which provide fresh and superior quality chicken, oil, potatoes, salad vegetables, spices and sauces which are then processed in the restaurants’ machinery and then made available to customers on order. The quality of food is inspected by the food authorities on regular basis.

Conclusion

KFC is a popular fast food chain which is serving eleven million customers across the globe. The brand has successfully expanded globally using the method of franchising. The brand reputation and emotional association with target market defines its capabilities. The brand communicates values, culture and a fun loving environment and focuses on maintaining its competitive advantage by making use of promotional and advertisement campaigns.

References

Dibb, S., Simkin, L. (2004). Marketing Briefs. Burlington, MA: Elsevier Butterworth-Heinemann. p108-122.
Ding, J. (2013). KFC—global strategies. Available: http://fastfoodcrave.blogspot.com/2013/03/KFCglobal-strategies.html. Last accessed 1st Jan 2016.
Frey, K.K. (2009). The World Is Flat #3: How KFC Went Global. Available: https://youngentrepreneurfoundation.wordpress.com/2009/10/01/the-world-is-flat-3-how-KFC-went-global/. Last accessed 1st Jan 2016.
KFC. (n.d.). Be Your Own Colonel. Available: http://www.KFC.com/about/franchising. Last accessed 1st Jan 2016.
KFCfranchise. (n.d.). Assessment Criteria. Available: http://www.KFCfranchise.com/requirements-investment-fast-food-franchise.php. Last accessed 30th Dec 2015.
Strydom, J. (2004). Introduction to Marketing. Cape Town: Juta and Co Ltd. p130-133.
Tepper, R. (2013). Yum! Brands' International Product Strategy: How The Double Down Went Global. Available: http://www.huffingtonpost.com/2013/03/11/yum-brands-international-product-strategy_n_2814360.html. Last accessed 31st Dec 2015.
Tradestart. (n.d.). Market Entry Strategies. Available: http://www.tradestart.ca/market-entry-strategies. Last accessed 1st Jan 2016.
Weick, K.E. (2009). Making Sense of the Organization, Volume 2: The Impermanent Organization. West Sussex: John Wiley & Sons, Ltd. p225-250.