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com
Introduction

Kentucky Fried Chicken, better known as KFC, is the largest chicken restaurant chain

worldwide with almost 1000, outlets located in well over 70 countries. CEO, David

Rodgers, heads it, it is part of the tricon restaurants internationals which is one of the

most leading multinational organizations in the world. Said to be the second most famous

and largest fast food franchise in the World, No. 1 brand in Asia with the market leader

ship in Japan, China, Malaysia, Indonesia, and Korea.

History Of KFC
1939

Colonel Harland D. Sanders perfects secret blend of 11 herbs and spices in Corbin, Ky.,
and restaurant.

1952

Pete Harman insalt Lake City becomes the first Kentucky Fried Chicken franchises.

1956

colonel Sanders sells Corbin, Ky., restaurant and goes on the road to enlist new
franchisees. The Colonel signs his first international franchisee in Canada.

1964

Kentucky Fried Chicken sold to the group of investors including John Y. Brown Jr.,
and Jack Massy for $2 million.

1969

Kentucky Fried Chicken listed on New York Stock Exchange. Colonel Sanders buys first
100 shares.

1971

Kentucky Fried Chicken acquired by the Hwublien Inc.

1980

colonel Sanders dies and is buried in Louisville’s Cave Hill cemetery.

1982

Kentucky Fried Chicken has becomes a of R.J.Reynolds industries when Heublein Inc. is
acquired by RJR (now RJR Nabisco, Inc.).

1986
Kentucky Fried Chicken becomes a subsidiary of PepsiCo, Inc. for $840 million. Grand
opening of Colonel Sanders Technical Center in the Louisville, KY.

1987

Kentucky Fried Chicken opens first Western style quick service restaurant in China.

1991

a new logo is introduced to emphasize chicken variety – replacing “Kentucky Fried

Chicken”with “ KFC”.

1993

KFC adds non-fried chicken to menus in the U.S. and Australia.

1994

KFC officially opens its 9,000th restaurants in the world – in Shanghai, China – and
announces a $200 million investment over the next four years for the 200 restaurants in
48 Chinese cities.

1995

KFC introduce Colonel’s Cristy Strips® and smashes Guinness record with “ World
Largest Pot Pie” in New York city to introduce Chinky Chicken Pot Pie. Opens first
restaurant in Moscow.

1996

KFC introduces Tender Roast® chicken pieces and brings back one of the world most
recognized packages -- the bucket.

1997

Kentucky Fried Chicken introduce Honey BBQ- flavored Tender Roast® Spicy
Buffalo Crispy Strips TM and chicken TwisterTM – chicken and veggies “ like a meal all
wrapped up and ready to go”.
KFC In Pakistan
1n 1997, Kentucky Fried Chicken entered the market under the banner of Artal, a
European food conglomerate which has invested heavily in the food sector in the
Pakistan. It goes credit to KFC that it was the first franchise to begin its operations from
the densely populated area of Gulshan-e- Iqbal. This unique step was taken out of the
special concern for the middle and lower middle class incomes groups who has so for
being neglected by brand name franchises in their areas. The first KFC restaurant opened
its door in January 1997, drawing thousand of the eager customers to enjoy quality food
and friendly service in clean surrounding.

Boosted by the huge success of the first restaurant, new outlets mushroomed at
prime location in both Karachi and Lahore that continue to attract a record number of
quality food lovers.

Entrance of Kentucky Fried Chicken in the food industry has resulted in numerous
positive developments in various areas. One of the major ones beings its contribution to
the Pakistan economy by generating revenue and creating employment. Each Kentucky
Fried Chicken restaurant employ roughly 50 local people which would total to near about
one thousand direct employs in all- taking in all 18 restaurants in Pakistan. Other than
these there are number of indirect employs, for example, construction workers who build
the restaurant and suppliers. All direct employs have to undergo mandatory training
through extensive programs and a series of workshops in order to ensure efficient
management and services.
Mission Statement
To maintain and enhance our position as the leading WQSR chain serving good value,

innovative chicken based products through consistently providing a pleasant dinning

experience with fast, friendly service at clean and convenient locations. At all times, we

must be dedicating to providing excellent service and delighting customers.

Departments
There are five departments in the company.

 Marketing Department

 Finance Department

 Operation Department

 HRM Department

 Quality Control Department

Functions of departments
Marketing department

Marketing is the delivery of the right product to the right customer, at the right place, at
the right time and at the right price through right communication and promotion.
Marketing is often dynamic, challenging, and rewarding it can also be frustrating and
even disappointing. But it is never dull.

In KFC all the Marketing efforts (Product Planning, Pricing, Distribution and Promotion)
are designed and combined in a coherent and consistent way. They have the updated
knowledge of market situation. They keep eye on actions of the competitors. They
consider that all employees are potentially good, responsible, helpful and trustworthy and
they have given them opportunity for growth, self-control and personal responsibility.
They know that teamwork and collaboration generate a greater volume of production than
does destructive interpersonal competition. Now Kentucky Fried Chicken captures a
maximum market share. This is only due to excellent marketing strategies adopted by the
organization.

Marketing department is the main and most active department of the Kentucky Fried
Chicken it perform all the key activities of the business. The basic purpose of the
marketing department is to advertise its products in the market and keep eye on the
competitors that what they are doing. The department introduces the new policies and
satisfying the customers.

The body of the department is comprised of Marketing Manager, Assistant Marketing

Manager and Planning Manager.

Finance Department

The finance department provides close support the business manager on the financial
implication of business strategies that are formulated. Regular feedback is also given to
Departmental Heads to facilitate monitoring of cost at the department level.

The finance department prepares statutory accounts and management accounts of the
business.

The statutory accounts comprise of all the final accounts of business transactions, Profit
and Loss accounts, COGS (cost of good sold), Balance Sheet and Cash Flow Statement
etc. which, by law, the business has to prepare. The Finance Department analysis the
business results and prepare the monthly and quartly review of business operations. The
Cashier handles routine day to day cash transactions.

This Department is also responsible for maintaining fixed assets listening and arranging
insurance cover on the assets of the business the tax related issues of the Business and all
the transactions processing’s, e.g. recording of sales and payments etc, are also handle by
the Finance Department. Finally the Finance Department liaises with internal and
external auditors, product margins, variable cost and fixed assets within the business as
well.

OPERATION DEPARTMENT:

It is very important department in the Kentucky Fried Chicken. The incharge of the
operation department is operation manager. This operation manager is responsible for the
following operations and functions.

• Cooking

• Cleanliness

• Administration of restaurant.

• Complaint handling of the customers

• Daily order to procurement Department

• Day to day demand forecasting

• Daily lectures to crew people

• Trained the employees

Hrm Department

According to the marketing manager of KFC that HRM Department play a very
important role in the organization.

The aim of this department to provide a highly qualified and competent employees to the
organization. The HRM Department performs the following functions:

• Reviewing application form

• Interviewing applicants

• Inducting new employees

• Appraising employees performance

• Make a decision about the employees training

• Provide a career advice to subordinates

Quality Control Department

Quality control means monitoring the quality weight, strength, consistency, color, taste,
reliability, finish, or any one of myriad of characteristics to ensure that the products meet
the international standard.

For this purpose there is separate department in Kentucky Fried Chicken which is
responsible for the quality control. This department satisfying the customers needs for the
quality, and differentiate the organization from the competitors and attract the large
number of customers.

The duty of this department is check the raw material that whether it is according to the
standard or not. Department check the quality each and every step till the final product.
Because according to the Marketing Manager of KFC the early detection of defective part
of process can save the cost of further work on the product.
Role Of Marketing Department In KFC

Marketing department of Kentucky Fried Chicken play a very important role in the
organization.

 The first and basic function of this department is to promote its products in the
market in different ways. According to the marketing manager of KFC we advertise our
products on international television channels, print media, banners, etc.

 This department creates the awareness among the people about the packages, which
are given on the special events like Eid, Basant, etc.

 Marketing Manager of KFC says that it is the world of competition, therefore to

survive in the market we work for the future. So the third function of marketing
department of KFC is to make plans to achieve the objective of organization in future.

 Marketing department of KFC also analyses to increase or decrease the sale.

 When the sale of KFC is going to decrease, the marketing department of KFC
conducts a proper marketing research to find out the problems, basic reason behind the
problem and try to solve it and to save the organization from this type of faults in future.

Objective Of Marketing Department In Kfc

According to the marketing manager of KFC that marketing department have two
objectives.

 The first department of KFC is to create the awareness and provide the following
information to the higher authorities of KFC.

• This department shows the marketing position of the organization.

• This department shows the market share of KFC.
• This department gives the suggestion to the higher authorities for the future
improvement.
• This department provides the information about their competitors to the higher
authorities of KFC.

 The second basic objective of Marketing Department is that it meets the budget in
the required time span. The marketing department of KFC is to promote its products and
make the future plan to live in the budget.

TARGET MARKET

Target market is the group of people to whom an organization wants to communicate its
message and to generate some positive attitude, behavior and action toward the
organization offerings. So while preparing or developing the promotional strategy, the
organization need to clearly define their target market.

According to the marketing manager of KFC the target market is

 Upper upper class

 Upper middle class

 Lower upper class

 Highly paid professionals

 Youngsters

Competitors

Competitors are the elements of paramount important in the business world. The analysis
of the competitors activity is and important to do as to know the need and wants of the
customers. The competitors are the force, which shape the activities of any organization.
The statement of marketing manager of KFC is that at this time we have two strong
competitors:

 Macdonald’s

 Subway

Products Offered By The KFC

 French Fries
 Zinger Burger
 Colonel’s chicken burger
 Nuggets
 Twister
 Hot wings
 Arabic rice
 Corn of the cob
 Dinner roll
 Fruit salad
 Chocolate mousse
 Chicken pcs.-originional recipe/ hot & crispy
 Cold drinks
 Mineral water
 Colonel’s sundae
 Colonel’s premium cone
 Rass bhara
 Tea
 Coffee
KFC will position itself in local market as a bright, pleasant, air conditioned restaurants
and “casual atmosphere” and will target families and young consumers which can be
termed as “three generation from middle and upper middle income segments”.

KFC stands for high quality products, hygienic and affordable fast food in an array of
complete meals. The chicken is prepared with unique secrets recipes in variety of ways to
suit different taste and eating occasions. The meals are made more appetizing by
supplementing with fresh, tasty side dishes and rich home style dessert.

Another aspect of KFC franchise is its demand for distinguished standards in quality,
efficiency, hygienic, and sanitation. Hence the level of efficiency has subsequently risen
amongst its competitors, which has resulted in an improvement in the overall food
market.

Marketing Mix

As we know that the marketing mix is the combination of four things.

KFC blends all these four P’s of marketing mix in a very organized manners, which helps
the organization in satisfying the customers demand as well as achieving the mission of
the organization.

Combinations of that marketing mix are:

 Product.

 Pricing Structure.

 Place / Distribution system.

 Promotional activities.
Selected Product

We select the product (Chicken PCs.) for the explanation. As we know that this product
match the taste level of Pakistani people. KFC introduced this product first time in
Pakistan in 1997, when they opened first restaurant in Karachi. This product breaks all
the record of sale.

According to the marketing manager of KFC that we prepare chicken PCs. And mostly
all the other products on the automatic plants and we deliver the product (Chicken PCs.)
after the proper examination by the quality control department.

Raw material used in this product like meat, etc. is purchased from the big Supplier
Company, which supply the meat at a same time to all the stores.

Price

Prices of Chicken PCs. and all the other products of KFC are set by the Head Office by
adopting the proper method. According to

Marketing Manager price of any product is equal to the cost plus desirable profit.
According to the marketing manager of KFC that the pricing strategies of organization
are different in the different countries due to different exchange rate, inflation, and
different tax polices in the different countries.

But in Pakistan KFC main concern is to sell in volume and maintain it on long term basis.
They are charging a price which they think fair to customers.

The policy of KFC is that they do not set the prices on the basis of competitors. The aim
of KFC is to satisfy the customers in low prices. In economics we can say that when the
prices are constant, the demand of product increase, volume of sale is increase, and
revenue is also increase, as a result of this circle the profit of the organization is increase
but the prices remains constant. So selling on low prices has a valid justification.
Placement

The Chicken PCs. and all the other products of KFC are available at all the 18
restaurants in Pakistan.

Distribution Of Restaurants

The first restaurant of KFC was opened in Karachi. After this KFC opened its restaurants
in Lahore at Defense, Cavalry Ground, and Barket Market. At this time there are 18
restaurants in all the Pakistan. But the question is that why the KFC chose Defence area
for opening the restaurant. The Marketing Manger of KFC gives us answer that before
opening a new restaurant in any where our organization conduct a research to evaluate
customers need, people buying power and customer expectations from KFC and to find
out what current and potential competitors are doing in that area.

You can say that Defence is the area of the upper upper and upper middle class. In this
area there are many up standard private universities like LUMS, ILM, etc. and collages,
offices, posh shopping centers and the population itself is a good market for the fast food.
Therefore KFC Defence attracts the students, children, families and visitors of that area.

On the other hand KFC in Karachi too has strong reason and argument about slecting the
site of Nipa, Churungi, Gulshan Karachi. It is a strong education and family oriented
middle class area. Most of families living are joint family system. Therefor this restaurant
attracts the large number of the customers. The area is inhibited by the several million
peaceful people who want to take their children out but there are not place this purpose.
KFC provide this facility in that area and people are pleasure with us.

Promotion

The element in an organization’s marketing mix that serves to inform, persuade and
remind the market of a product and/or the organization selling it in the hope of
influencing the recipients feelings, beliefs, or behavior. The policy of KFC is that to
adopt the same methods to promote all its products including the Chicken PCs.
According the marketing manager of KFC that they use the following promotional
methods:

Advertising

Advertising is non-personal communication of information usually for a persuasive in

nature about product services or ideas through the identified sponsors through the various
media.

Advertising perform the communication, education and marketing function it tells people
about the benefits of products or services and educate them how they can make their life
and time better off.

In KFC advertising are performed by the marketing department.

The advertising are used by the management of KFC and rational behind it is that the
organization consider that it has a market segment. So advertisement will have a great
waste reach and their advertising cost per consumer or the customer will high enough. So
advertising is not very appropriate tool of promotion mix for them.

However regardless of heavy or low use of the advertisement, the advertisement of the
organization serves for the two purposes and various with respect to advertisement
conducted by the central body and that advertisement activities are:

• About the multinational chain of KFC.

• The local body conduct advertisement about some packages which serves the
functions of educating the people how they can make their time more pleasurable.

Television Advertisement

Television combine sound, motion and design special visual effect. But KFC advertises
himself on TV in other countries. In Pakistan it gives ads on TV very rarely. In 1997,
when it opened its first branch in Karachi at that time it advertised itself on TV properly.
The purpose of this advertisement is just to create the awernance among the people about
their products and packages.

PRINT MEDIA

They give the desirable information in the print ads to the target market in order to
inform the customers about the benefit of their products.

Whenever they introduced new products they give ads on print media at regular intervals.
So that the customer is informed about the new product. For their matured products they
give ads with different gaps in the newspapers. The newspapers they use are:

 The news

 Dawn

 Jung

Out Door Advertisement

In order to remain in the mind of customer KFC used out door advertisement i.e.

 Billboards

 Banners

 Posters

Personal sellilng:

Personal selling is the special form of the interpersonal communication. Their

goal is to bring its prospects attention that will satisfy a need and that will elicit a
response, hopefully in the form of purchase.
Personal selling is highly effective when target market is narrow one and you need to
convince the prospect in order to induce an action from him. But this technique demands
higher degree of considerbility. The sales force of KFC needs to know about their
products and that of competitors, must allocate the customers with potential, discover
their needs, developing the sales presentation directly striking at the needs of the
customers, and after close the salesmen the must go for follow up.

KFC Marketing Management considers it as one of its most important tool.

The management says that it is the tool, which helped them to develop and persuade their
customers at the beginning of their operation. The Marketing Manager of KFC says that
it’s a very powerful way to promote the products.

Public Relation

It is communication efforts that are designed to favorably influence attitudes toward an

organization, its products and policies. KFC is not just a quality food restaurant, but also
a socially conscious corporate citizen. It has been equally involved in promoting and
funding several community welfare projects through aggregate KFC revenue. TCF (The
Citizen Foundation) is a professionally managed, non-profit organization with the aim to
provide underprivileged children with basic and formal education and to contribute
toward increasing the literacy rate in Pakistan. KFC has collaboration with the TCF to
further the main objectives with dedication and professionalism by opening school in
Pakistan. Another social venture is the Children’s Hospitals. KFC strongly believes in
humanitarian issues and is devoted to the cause of helping impoverished children. It has
using its increasingly popular mascot Chichy to provide the children of NICH (National
Institute Of Child Health) and SOS villages of Pakistan with lively entertainment and
toys and contributing toward their development. KFC also helped the different NGO’s
(Non Governmental Organization). According to the marketing manager of KFC that
organization do all this to fulfill the social responsibility and create a good image in the
market.
KFC ensures steady international standards of quality base on the basic ingredient of
perfection in technology, financial acumen, and trained management – all aimed at
making its customers satisfied and satisfied to the highest degree.

Swot Analysis

Strengths

 Brand Equity
 2nd Only to McDonald’s in Foreign Sales $550M
 Strong Cash Flows
 Generate $1B each year
 Very strong Internationally
UK, Middle East, Thailand, China, Japan, Korea, Mexico
 Strong Franchise and License Fee revenues for cash flow.
 Interactive relationship marketing
 Strong trademarks recipes
 Ranks highest among all chicken restaurant chains for its convenience and menu
variety.
 Largest multibranded restaurant in the world 100 KFC and Pizza Hut combos
600 KFC and Taco Bell combos

Weaknesses
 Recent drop in sales for KFC
 Failed to rank in top 20 in growth in 2000.
 Same Store sales declined
 Lack of point of scale scanning system
 Admitted inability to provide quality service
 Lack of knowledge abut their customers
 Lack of relationship building with employees, customers and suppliers i.e. Chick-
fil-a
  Question of over franchising leads to loss of control and quality
 Lack of focus on R&D
Opportunities
 Growth of 18-24 age demographic
 Increase in U.S. median income
 International beef scare from mad-cow and hoof and mouth disease
 Home Meal Replacement Market will exceed an estimated $577 billion by 2020
 Targeting to growing ethnic markets – Asian American and Hispanic
 New Leadership
 Domestic markets
 Updating restaurants
 Balanced menu
 Customer focus
 Increase delivery service
Threats
 Rated 83 out of 100 in terms of competitiveness
 Increasing wage rates directly affect menu prices
 85% annual employee turnover for fast –food market
 Supermarkets and new competitors threaten HMR market
 International Exchange Rates
 Health Trend away from fried foods
 Changing customer demands
 Quality of Service Focus

Problems
Kentucy Fried Chicken had done a great job of building its brand image in the global
market while sales in the US are being maintained yet are not growing too significantly.
There are many competitors and so KFC must focus on quality and brand image if it is
going to be able to maintain its profit margins in the USA. Below is a further summary
of problems that KFC is facing in its drive to become a world class fast food restaurant
chain as a part of the Tricon family.
Problem Analysis
Corporate Strategy

Tricon needs to more closely manage its KFC operation. The company has done
a remarkable job in building the corporate brand image in the global environment. Yet,
the company does not have a clear mission or vision for its domestic market here in the
USA. The KFC segment of the company has done a poor job of working to understand
the customers and maintain solid foundational relationships with them. This is in part
because the company’s structure and processes are not in line with customer’s
expectations for today. This was evident during the in-store audit.

Corporate Growth Strategy Domestic Market

KFC has Corporate Growth strategy opportunities. The organization needs to work
harder to build its sales in the domestic markets. The Colonel’s Promise is not being
lived up to in many of the stores. The company needs to focus on improving quality
which will then lead to increased growth for the KFC side of the organization.
Furthermore, the multi-branding will help KFC sales to grow, as their can be an increased
benefit from combining capital in placing 3 stores together to operate as one unit.
The company also needs to work on its knowledge management and organizational
learning strategies. The company has aging systems for management processes. This
symptom shows that the company is not providing clear direction to the franchises on
improving technology within the businesses. Overall, when a franchise is more
profitable, then the management will have more funds to ensure that the technology is up
to date. A poor organizational learning strategy is also reflected in the fact that many of
the store are old, run-down, and basically shells of a past cash cow now flirting with a
declining market. Management is not focused on quality, and the customer experience is
far from what one encounters from a trip to Chick-filet at the same relevant cost for a
meal purchase. KFC must work harder in the domestic market to build ways to train
managers and franchise owners on how to adapt new technology and to take the KFC
team overall to a new level of sales, marketing, and domestic profit levels.

Gained Insight
Experimentation Observation Analysis Examination and
Understanding

Segmentation, Product Offering, Targeting Marketing Tier I Strategy

KFC needs to focus more heavily on its available target markets. There is a lot of money
being spent in the United States on food away from the home. As an analyst, it is
recommended that KFC start by studying the following market segments for trends and
behaviors on how they can glean away some profits on some of these consumer segments
spending. The data was pulled from the National Bureau of Labor Statistics.1
Furthermore, KFC must be weary that from the data below that there are many
competitors competing for the same dollars in consumer expenditures. This is why KFC
franchises should heed closer attention to the Colonel’s Promise.
By studying trends of the different markets who purchase food away from home, KFC
will be able to better position itself strategically to be a leader in the fast food product
segment. In the last graph above on Food outside of the home annual expenditure shows
that the overall trend for food purchases outside of the home has been continually rising.
By using the data above, KFC as an organization will be able to focus on each of its
unique target markets and to be able to position themselves to provide customer value to
each of the market segments that can serve to be highly profitable. Lastly, by
understanding each of the segments, KFC will be able to begin to more quickly
differentiate itself from the competitors.
KFC should carefully look at and implement a market study to determine what is
important to customers in different categories and segments. What part of the market is
keen on quality or price, or a combination of both.
1
Strategy Analysis Marketing Tier II

Product Strategy and Integrated Communication Mix

With its multiple new offerings and brand associations with the 3 restaurants, Tricon and
KFC should definitely use an integrated common mix of products. Today, customers are
more demanding and knowledgeable with thousands of messages targeted at them daily.
KFC must create synergy between franchises and give them access to data and feedback
from direct response, database marketing, public relations, and direct marketing. Many
of the KFC store breakdowns in the franchises could be strongly related to an insufficient
integrated communication mix. The only means to do this is with integrated marketing
communications.2 KFC can also accomplish this goal by focusing on higher quality in its
franchises across the nation. KFC should send out a team of auditors to the various
franchises to conduct quality audits to ensure that the franchisors are keeping their
promise to KFC that a quality food product and environment is being served each time.

The support of a strong senior management support group is not evident when a
customer can walk into a store and leave completely disgusted only to go and tell many
other customers about the experience. This results in negative marketing which will then
force customers to go and make purchases with competitors. KFC has a lot of work to do
if it is going to remain the market leader in the chicken product segment.