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COMPETITOR ANALYSIS

The company we have selected for competitor analysis is KFC. The competitive analysis will give a snapshot of competitor position in the market. After competitor analysis a company can evaluate itself among the competitors and then make a strategy to compete. KFC Profile KFC, also known as Kentucky Fried Chicken, KFC Corporation, based in Louisville, Kentucky, is the world's most popular chicken restaurant chain, specializing in Original Recipe, Extra Crispy, and Colonel's Crispy Strips chicken with home style sides. KFC is part of Yum! Brands, Inc., which is the world's largest restaurant system with over 32,500 KFC, A&W All-American Food ,Taco Bell, Long John Silver's and Pizza Hut restaurants in more than 100 countries and territories. KFC has more than 11,000 restaurants in more than 80 countries and territories around the world. And in quite a few U.S. cities, KFC is teaming up with sister restaurants, A&W, All-American Food, Long John Silver's, Taco Bell and Pizza Hut, selling products from the popular chains in one convenient location. KFC Strength and Weakness Analysis: Strength: Good reputation in market Strong brand name Having Maximum outlets in the market Strong financial position Joint venture with the international firms like Pepsi cola and Yem international Using modern technology to interlink their resources Having strong distribution channel Weakness: Company did not come up with new products as compared to McDonald. Limited menu and sticked with their original recipe. Having less sales as compared to McDonald

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KFCs Customers KFCs customers generally choose the restaurant they will eat at based on quality, rapidity, and variety of items. KFCs customers are also really price sensitive and will go elsewhere if they find that the value is not worth the price. They can also be characterized by being people that want to be served fast and be out of the restaurant in no time.

Competitors of KFC
In the fast food industry there are three major competitor of KFC. McDonald is one of the biggest competitors that has capture maximum market share. The AFC is one of the major competitors of KFC and now a new and potential competitor is Subway, no doubt it is new entrant but due to its world wide renowned brand name having potential to capture huge market share. KFC is the market leader in the fast food industry and majority of the customer prefer to dine out at KFC that represents not only their brand loyalty but also availability of KFC outlet at convenient location as compared to rest of fast food restaurants.

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Comparison of KFC & its competitor outlets:

Number of Outlets
KFC McDonald AFC Subway 34 20 21 12

Number of Outlets

KFC McDonald AFC Subway

Competitors Sales data:


Average Daily Sales by one outlet Rs. 125000 145000 80000 Daily Sales by the all outlets Rs. 4,250,000 2,900,000 1,680,000 Sales Per Month Rs. 127,500,000 87,000,000 50,400,000

KFC McDonald AFC

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Average Daily Sales Comparison


300000 250000 200000

Rupees

150000 100000 50000 0 KFC McDonald AFC

Sales Per Month comparison


250,000,000 200,000,000

Rupees

150,000,000 100,000,000 50,000,000 0 KFC McDonald AFC

Competitor Analysis Work Sheet


In the chicken Burger chain segment, the main competitors of KFC are McDonald and AFC. In Pakistan KFC is the market leader because it is the first international chain that opened its out let in country and also having huge number of outlet as compared to rest of the competitors.

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KFC

Mc Donald

AFC

Market
Market dimension Single market Multi market Total Market Regional Market National Market International market Market Entry First in Strategy Follow the leader strategy Last in Strategy Market Commitment Major commitment Average commitment Limited commitment Market Demand Prune market when demand slackens Concentrate on key markets when demand increases Harvest profits when sales plateau Market Diversification Added new businesses or added another stage of production or distribution. Diversified into unrelated business.

(junk food)

(junk food)

(junk food)

KFC

Mc Donald

AFC

Product

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Positioning Positioning a single brand Positioning a multiple brand Repositioning older products Product Life Cycle Promoting more frequent usage Finding new users Finding more uses for product Finding new uses for products basic materials Product Competition Competing Brand Private label Generic Product Product Mix Single product Multiple Products Product Systems Product design Standard Products Customized products Standard product, modified New Products Innovation Modification Line extension Diversification Remerchandising existing products Extending Market for existing products

KFC

Mc Donald

AFC

Pricing
New Products Skim (high) Pricing Penetration (low) pricing Psychological (odd/even) pricing

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Follow the leader pricing Cost plus pricing Established Products Slide down (gradual reduction) pricing Segment pricing Flexible pricing Preemptive pricing Loss leader pricing

Promotion
Advertising Support personal selling Inform target audience about availability of product Persuade prospects to by directly from advertising KFC

McDonald

AFC

Distribution
Channel Structure Direct distribution to end user Indirect distribution through intermediaries (Distributors, dealers)

Multiple Channel Complementary Channels Competitive Channels Channel control Adding a wholesaling function. Adding a retailing function. Controlling more of the manufacturing process Adding franchises Combining with other

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organizations to achieve purchasing economies.

Competitor 1
McDonald McDonalds is the world's leading food service retailer with more than 30,000 restaurants in 118 countries serving 46 million customers each day. McDonalds is one of the world's most wellknown and valuable brands and holds a leading share in the globally branded quick service restaurant segment of the informal eating-out market in virtually every country in which they do business. As a result of many changes in the habits of Americans, competition and other factors such as the economy and profit loss, McDonalds attempts to continue new innovations and services.

Segmentation: McDonald serves their product to the upper class and their new segmentation strategy, by offering Happy Price Menu also covering the middle class segment. Price Strategy: They provide quality food to their at premium price for their high class customer but also adopt preemptive pricing to entertain their middle class segment. Product Strategy: McDonald offering multiple and standard products to their customers. Focus on the new potential users of their product keeping in mind the positioning of the competitor brand. Promotion Strategy: To create the awareness in the mind of their customers McDonald intensively uses both "Indoor" and "Outdoor" means. Place: McDonald is operating in six major cites of Pakistan with the network of 20 restaurants and adopt direct distribution strategy to excess their customers.

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Competitor 2
AFC The time was mid 90's. Fast food companies were booming in Pakistan. Quality fast food in Pakistan was outrageously expensive and on a handful of families could afford to go there. No middle class family could think of taking their children to such big food chains. This was the time when AFC (Al-Najam Fried Chicken) opened its first restaurant at Saman Abad, Main Market in Lahore. AFC make the quality fast food available to all those people who liked the fast food but couldn't dare to afford. At present time, AFC has more then twenty branches Nationwide including Mall Road, Railway Station, Allama Iqbal Town, Twonship, Mughalpura, Defence, Thokar Niaz Baig, G.T. Road and Wapda Town. It has also opened in Faisalabad and Gujrat, Abbotabad, SGD, Gujranwala, Rawalpindi and Karachi. Segmentation: As compared to McDonald the AFC segmenting the price sensitive customers so majority of their customer belong to the middle class. Price Strategy: The products of the AFC are less costly as compared to KFC, McDonald and Subway and acceptable to their segmenting customers. Product Strategy: AFC provides quality food in reasonable price to the middle class segment and they follow the competitor strategy by keeping in mind their target segment. They follow the strategy to extend the market for the existing products. Promotion Strategy: AFC extensively use the outdoor media i.e. billboards and banners and they are not investing in indoor media for their promotion and advertisement. Place: AFC is operating in eight major cities of Pakistan with the network of 21 outlets. Only in Lahore there are 13 outlets of AFC are operating. Direct distribution strategy is being focused by the company.

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Summary of competitor analysis


In Pakistan, KFC have an advantage of its high number of outlets all over the country in spite of that McDonald have high daily sales. Both companies are multinational and operating in international market. KFC and McDonald both follow the leader strategy. The both are attracting the customer due to their internally renowned brand name and as well as their quality of product and services. AFC is targeting low price income segment and also follow the leader strategies. All of the competitors providing standard products to their customers and attempt to get large market share they often gives different packages to their customers. KFC and McDonald Inform target audience about availability of product through different media. AFC tend to use follow-the-leader pricing strategy when launching new products and to use preemptive pricing. Sales force of all the competitors are very efficient and also facilitate their customers by giving home free delivery with in no time. KFC did not come up with new products as compared to McDonald. They have a limited menu and have sticked to their original recipe chicken that made their success since the beginning.

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Zinger Burger

TWISTER

CORN ON CUB

FAMILY FEAST

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STRENGTHS & WEAKNESSES ANALYSIS OF SPA


It is used to evaluate how SPA measures up to a competitors organization. The strength & weakness evaluation is intended to determine where SPA is weak or where it is strong as compared with the competition.

SWOT Analysis
Strengths: (Internal) Good reputation in market Strong brand name Strong financial position Joint venture and collaboration with international and forighen universities. Using modern technology to interlink their resources Weaknesses: (Internal) Poor coordination amongst departments Politics faced by the organization Having less sales as compared to McDonald. Opportunities: (External) Increasing demand for professional degrees An unfulfilled customer needs. Growing Market Potential to capture additional market share Threats: (External) High inflation rate. New HEC regulations Political & social instability. Internal Factor Analysis IFE

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FACTOR

WEIGHT
(How important it is for my product)

RATE (1-4)
(Company Rates its ability)

TOTAL

STRENGTHS Strong Financial position Strong brand name. Good reputation among customer. Maximum number of outlets in the market Favorable access to distribution networks. Firm using modern technology Joint ventures with big firms of the world (Pepsi, Yem International) WEAKNESS Sticked with the original recipe Employee satisfaction is low. TOTAL

0.1 0.2 0.1 0.07 0.1 0.03 0.1

4 3 2 2 4 2 2

0.4 0.6 0.2 0.14 0.4 0.06 0.2

0.2 0.1 1

3 4

0.6 0.4 3

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External Factor Analysis EFE

FACTOR

WEIGHT
(How important it is for my product)

RATE (1-4)
(Company Rates its ability)

TOTAL

Opportunities An unfulfilled customer needs. Arrival of new technology Growing market Potential to capture additional market share Very few brands in Fast Food industry (Brand building) Threats Shift in consumer tastes, away from the firm product. Emergence of substitute product. New government regulations high infation rate political and instability TOTAL social

0.1 0.05 0.1 0.1

4 2 3 2

0.4 0.1 0.3 0.2

0.2

0.8

0.05

0.15

0.12 0.03 0.05 0.2 1

4 1 3 3

0.48 0.03 0.15 0.6 3.21

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GE Matrix
4

3 Market Attractiveness (EFE) 2

1 4 3 2 1

Business Strength (IFE)

Market attractiveness is shown on the vertical axis and Business strength is shown on the horizontal axis, we have examined the companies SWOT (strengths, weaknesses, opportunities and threat) and plotting the external and internal factors on the GE matrix. KFC falls on the 1st and 2nd quadrant that shows there is excellent market environment and KFC is in good position. And Invest to grow strategy must be followed by the company.

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TOWS Matrix
Strength 1. Good reputation in market 2. Strong brand name 3. Having Maximum outlets in the market 4. Strong financial position 5. Joint venture with the international firms. 6. Using modern technology to interlink their resources 7. Having strong distribution channel Opportunity 1. An unfulfilled customer needs. 2. Growing Market 3. Arrival of new technology (to maintain the quality and crispiness of the fried chicken product.) 4. Potential to capture additional market share 5. Very few brands in Fast Food Industry (Brand building). Threats SO 1. S1, S2, S3,S4 2. S4,S5 3. S6 4. S7 5. S3 1. W1, W2 4. W3 Weakness 1. Company did not come up with new products as compared to McDonald. 2. Limited menu and sticked with their original recipe. 3. Having less sales as compared to McDonald 4. employees are unsatisfied WO

ST

WT

1. Shift in consumer tastes, away from 1. S1,S2 the firm product. 2. High inflation rate. 3. Emergence of substitute product. 2. S6 4. New government regulations 5. Political & social instability.

1. W1, W2

GAP

Segments of KFC

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In this portion of project we will discuss that how many segments KFC is serving for its products and what strategy they are using for these segments.

Market segmentation The commonly used basis for segmenting the consumer market may be grouped in following categories, which are selected by the KFC for its products and services.

1) Geographic Segmentation KFC major target segment and consumption is associated with the geographic as well as economic conditions of a place. As the target segment of the KFC is upper5 and middle class so the main outlet are in the urban area specially in the big cities like Lahore, Karachi, Faisalabad, Islamabad and Peshawar.

2) Demographic Segmentation Age: years) Sex: Occupation: Income: Religion: Both Male & Female People from all walks of life Rs. 15,000/- and above Muslims & Non Muslims People from all age groups (Focus Kids 6-12

3) Psychographics Segmentation The social class, which is included in the target group of KFC, is consumer from upper class and middle class. They enjoy getting the services of KFC due to the status and time constraint. The consumer has wide range of personalities from dynamic to interesting. From self confident to extra vested, from adventuresome

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to social able. The personality of a person makes a lot of difference in buying power. The lifestyle of consumer varies from flashy, liberal modern to dull conservative and backward. It is a very important factor which very much influences the buying pattern of the consumer. People will be mostly influenced by high quality, healthful richness and branding of product. 4) Behavioral Segmentation The customer expects high quality in product and services offered. KFC is known for its brand name and quality which creates loyalty and consumers normally dont want to shift from this outlet to other. Due to internationally brand recognition and the quality of service offered, consumer expectation is high and KFC also wants to provide high level of services to their customers. KFC provide different type of packages and deals to sort down the consumer wants. 5) Benefit Segmentation Specially the businessman, students and those person how have not much time to dine out with their family in traditional restaurants due to time constraint. So this segment prefer to fast food restaurants for dine out alone or with family to enjoy quality food with minimum time wastage. 6) Target Market A target market is defined as a group of customers (people or organization) at whom seller specifically intends to aim its marketing efforts. For this purpose company must analyze three components: Consumer Buying Power Social and psychological factors influencing buying patterns

With the increase in literacy rate and high disposable income people awareness about health and expectation about services increased. This means Fast Food

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Industry has market in each age group of society. Due to increased industrialization the income and the life standards are improving. But the new generation is becoming modern and their life style is totally changed and they like Fast food rather than traditional food items.

Marketing Plan --- Xtreme Value Meal


The segment which KFC targeted for their new product Xtreme Value Meal is upper and middle class, People from all age groups belong to all walks of life. Due to internationally brand recognition and the quality of service offered, consumer expectation is high and KFC also wants to provide high level of services with huge assortments to their customers. The target segment for this product is same that the KFC was earlier targeted. The main purpose of launching this product is to increase product line and to capture more potential customers.

Marketing Mix
Product:
Name KFC is launching its new product named as Xtreme Value Meal which is Pizza based deals. Product line Meal for 1 ( one 7 pizza + 1 Regular Drink) Meal for 2 ( one 10 pizza + 2 Regular Drink+ Salad) Meal for 4 ( Two 10 pizza + 4 Regular Drink + two salad)

Price Strategy:
The pricing strategy is to be set by keeping in mind our target audience, competitors price and the total cost during the manufacturing of product. - 19 -

Below table shows the approximate or average total cost and price

Xtreme Value Pizza


Items Flour Egg Chicken Spices Onion Pizza Sause Tomato Cheese Oil Packing Total Proposed Price To be charged

7"
1.80 0.23 20.00 3.00 2.00 4.14 4.00 28.00 1.90 7.00 72.08 130

10"
3.60 0.47 35.00 5.00 3.50 8.29 6.50 52.50 5.70 10.00 130.56 250

13"
5.99 0.78 60.00 7.00 6.00 11.05 9.00 77.00 12.67 12.00 201.49 310

Chicken Tikka Pizza has chicken tikka cubes, green chilies, spicies, onions, cheese. Cost all these and other ingredient in it are been covered and the total cost for 7 is Rs. 72.08, 10 is Rs. 130.56 and for 13 is Rs. 201.49.

Xtreme Value Meal Price:


Meal for 1 ( one 7 pizza + 1 Regular Drink) Meal for 2 ( one 10 pizza + 2 Regular Drink+ Salad) Meal for 4 ( Two 10 pizza + 4 Regular Drink + two salad)

Xtreme Value Meal Deal


Meal for 1 Meal for 2 Meal for 4

Price (Rs.) 160 320 650

Promotion:

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Print Media: Advertisement in newspaper and Magazine specially in leading news paper Dawn, The News, Jang and Nawaiwaqt.

X stand flex sign on the entrance gate


Front lit flex sign on the billboard on different lactations. Broachers and pamphlets to introduce their new product to their customers.

Electronic media: TV Channels: Before launching the product Xtreme Value Meal will be displayed TVC teasers on different Television channels. Some of the famous television channels are GEO Star Plus AAG ARY HUM Radio: there is huge trend of youngsters to dine out in fast food restaurants and a huge number of youngsters listen music on radio especially FM channels are too popular in the youngsters so FM and AM radio channels can be a effective medium to permute our new product.

Promotion on the point of purchase:


When a customer will buy Xtreme Value Meal KFC we will give him or her discounted coupon. And the benefit of this coupon to the customer will be that whenever the customer will come to buy Xtreme Value Meal he or she will get discount. This coupon will be for some specific period of time, like this coupon will be valid for one week or 10 days.

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Placement Strategy:
As KFC have 34 outlet in allover the Pakistan and majority of their outlet are in Lahore. In the Beginning, our new product Xtreme Value Meal introduced in the KFC outlet of Lahore to certain period of time. But after some time this product introduced at every outlets all over the Pakistan. KFC is charging ten rupees for home delivery of their products but in the case of new product Xtreame Value Meal totally free home delivery provided to the customers to encourage the usage and for the promotion of the Product.

Packaging Strategy:
To give value addition to the customers KFC offers packing of Pizza according to the horoscopes star (like LEO, Libra, Aquarius) of a customer has. Also offer packing of different shapes on different cultural and religious occasions like in valentine day the packing shape is like heart. This packing strategy not only gives pleasant effect to the product but also give a attractiveness to the product.

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Market Plan for Three Year


This product of KFC Xtreame Value Meal expected to launch in December 2008. The campaign stars before two month of launching the product in the form of teasers in print media and in electronic media. In first year, the main objective to create awareness about this new product among the potential customers and attain maximum sales of the product. In second year spread this product all over the Pakistan KFC outlets. To sustain and get the competitive advantage we increase the product line in the Xtreame value meal. In third year the main objective of KFC is to create maximum awareness about the product and increase the sales and revenue. Secondly find out the new segment and usages for their product to increase the profitability of the company.

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References

Mr. Kashif Imran

0334-9705010

Assistant Business Manager KFC Joher town Branch

Mr. Umar Saleemi

0322-4689639

Account officer AFC Wapda Town/ PIA Branch

www.kfc.com www.statpak.gov.pk www.afc.com.pk www.mcdonald.com www.commerce.gov.pk www.epb.com.pk http://lahoremall.com/kfc.php Pakistan economic survey

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