Research Paper: KFC Marketing Research

Pages: 9 (2528 words)  ·  Bibliography Sources: 15  ·  Level: College Junior  ·  Topic: Business  ·  Buy This Paper

KFC Marketing Research

The following pages focus on discussing the managerial implication of KFC opening a drive-through service in China. There are several reasons that support the company's investments in this market. The production potential and China allows companies that outsource some of their processes and activities to benefit from reduced production costs. Although it is expected that the quality of the products and services in China is similar to that of products made in Europe and in the U.S., the complaints of several customers across the world about the products made in China has determined the reluctance of certain companies.

Another advantage of China is represented by the fact that this market has great potential and that is characterized by a continuous development and expansion process. The economic improvements in the region allow Chinese people to benefit from increased incomes. This means that a greater percentage of their income is spent on eating out, which clearly favors KFC.

The company's investment on the Chinese market can also be attributed to the profits prospects associated with this market. KFC's image on international level must not be neglected when analyzing its position on the Chinese market. KFC is one of the company's that represent the Western civilization, which some of the Chinese customers tend to be interested in. The fast food eating style tends to be more and more appealing to Chinese customers that find it difficult to find the time for traditional meals, because of the increased amounts of time they spend at work or at school. Therefore, it is recommended that KFC takes advantage of the opportunities provided by the Chinese market.

Secondary Market Research

Competition Analysis

The main competitor of KFC on international level is represented by McDonald's. The same situation applies in China. The two fast food chains provide similar products and services and address the same customer segments. They also practice similar prices. The differentiation between the two companies is made by introducing new products and by developing diverse promotional campaigns.

The main categories of products provided by McDonald's are represented by: burgers, sandwiches, chicken, breakfast, salads, snacks, beverages, coffee, desserts, and shakes. The menus developed by McDonald's are the dollar menu, the extra value meals, happy meals, and mighty kids meals.

The promotional strategy of McDonald's is different in each country and adapted to the characteristics of the market. In the U.S., promotions refer to dishes that are preferred by most customers, like barbeque and bacon, while in Asian countries these promotions refer to other dishes. The promotions that the company intends to introduce are based on thorough market analysis in each country (Annual Report, 2009).

Same as KFC, McDonald's expands its business through franchises. The companies selected this strategy because of its advantages. For example, by using franchises, expansion costs are significantly lower. In addition to this, the company is able to gain significant profits with reduced investment levels. However, there are certain disadvantages associated with this strategy. By using franchises, the company has reduced control on their activity.

McDonald's financial situation allows the company to make significant investments in the Chinese market. It is difficult to create competitive advantage in such a business environment. McDonald's is also cost-efficient, same as KFC. In other words, it is not likely that these companies can introduce divergent price strategies.

There are also smaller competitors that KFC must take into consideration. These competitors are represented by small, local restaurants that provide traditional Chinese food. The advantages of these restaurants are represented by the fact that their tradition on the market allows them to benefit from a high number of loyal customers. Also, they have the ability of satisfying large customer segments that KFC has difficulties reaching, like older customer segments. The problem of these restaurants is that their position on the market and financial power does not allow them to introduce competitive prices for their products and services.

Therefore, KFC focuses on counteracting the actions of McDonald's. This is because smaller restaurants do not have the ability to develop and sustain cost-effective strategies, which is one of the alternatives that KFC addresses in its strategy. The image of McDonald's is stronger than that of KFC on international level. KFC must develop competitive advantage that allows the company to exploit this situation and improve its global image.

Customer Satisfaction

The main customer segments addressed by KFC are represented by individuals aged 20 to 35, with medium incomes, and with busy lifestyles. These individuals value their career and their education and spend a lot of time at work. This situation does not allow them to prepare their meals or to eat in restaurants where customer service is slower. Therefore, they prefer to eat at fast food restaurants.

However, there are several problems associated with this type of food. Most people are concerned with the quality of these products. Fast food is considered to be unhealthy and able to produce a series of health problems. There are countries like the U.S. And the UK where fast food has become a national phenomenon with severe consequences on the health and lifestyle of the population. The governments in these countries are trying to develop and implement strategies intended to increase the population's awareness level regarding fast food and its effects (French & Crabbe, 2010).

Therefore, customers in China are interested in purchasing fast food products of higher quality. This customer segment is developing and presents great potential. This means KFC should focus its strategy on this customer segment (Jing, 2000).

Secondary customer segments are represented by individuals aged over 36 that like eating out, but cannot afford expensive restaurants. KFC provides an alternative to such restaurants by offering diversified menus at medium prices. However, KFC must work on expanding its range of products and services in order to satisfy a higher number of customers.

The following characteristics have been identified in KFC's existing and potential customers:

Individuals with busy lifestyles

Individuals interested in different foods in comparison with traditional Chinese food

Quality conscious

Restaurants located near their workplace or school

Individuals with medium incomes

KFC Strategy

Given the nature of the fast food industry and the position of McDonald's, KFC must develop a push strategy in order to improve its position on the Chinese market. In other words, the company must develop and implement strategies based on intense advertising and promotions in order to gain competitive advantage. The most important factors included in the company's strategy are represented by:

Awareness

Differentiation

Increasing attractiveness

Pricing strategy

Cost-based strategy

Awareness

KFC is extremely popular worldwide and in China. However, it seems that the awareness level among existing and potential customers on the Chinese market can be improved, which would lead to an increased number of customers (Haq, 2011). There are market segments in China that the company does not successfully address. This is also because of the reduced awareness level among these categories of customers. Therefore, KFC must make use of marketing techniques, like TV ads, banners, brochures, where the company can promote its product and price ranges and inform customers about the drive-through service.

Differentiation

As mentioned above, there is little differentiation between KFC's and McDonald's products. However, KFCs products are not as associated with low quality as the products of McDonald's are. In addition to this, KFC can differentiate from its competitors by introducing the drive-through service.

Increasing the attractiveness level

KFC has continuously focused its strategies on this aspect. In addition to providing interesting menus adapted to the characteristics of the local market, KFC offers different toys on certain menus for kids. The KFC locations also provide play areas. Given the fact that KFC's customers are usually busy people preoccupied with their work, the company's restaurants provide Internet facilities (Annual Report, 2008).

Pricing strategy

The pricing strategy is one of the most important aspects of the company's marketing mix. Although KFC provides similar products and services as McDonald's does, it is more difficult for KFC to offer smaller prices. This is mainly because the company's restaurants are located in expensive areas with higher rent requirements. The company is trying to reduce these expenses by locating its restaurants near business centers, schools, areas highly circulated. This allows KFC to reach a higher number of customers.

Cost-based strategy

As mentioned above, in order to gain competitive advantage in the fast food industry, it is important to follow cost-effective strategies. However, it is difficult for KFC to achieve this objective on the U.S. market. But the situation is different on the Chinese market. This is because the company can provide high quality workforce at lower costs.

Factors of Influence

The introduction of the drive-through service in China raises several issues and is influenced by several factors. These factors refer to economic, environmental, and technological aspects. Economic factors refer to the financial investments that KFC must make in order to develop and introduce the drive-through service.

In addition to the technical aspects of the business, KFC must thoroughly assess the locations of the drive-through restaurants… [END OF PREVIEW]

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