IN a Clean, Comfortable Environment

In a Friendly, Courteous Manner

Introduction of
Company

KFC Corporation, based in Louisville, Kentucky, is the world’s

most popular chicken restaurant chain, specializing in Original Recipe ®, Extra
Crispy TM
, and Colonel’s Crispy Strips® chicken with home style sides and five new freshly made
sandwiches. Every day, nearly eight million customers are served around the world. KFC’s menu
everywhere includes Original Recipe® chicken—made with the same great taste Colonel Harland
Sanders created more than a half-century ago. Customers around the globe also enjoy more than 300
other products—from a Chunky Chicken Pot Pie in the United States to a salmon sandwich in Japan.

KFC continues reaching out to customers with home delivery in more than 300 restaurants in the
United States and several other countries. And in quite a few U.S. cities, KFC is teaming up with other
restaurants, Taco Bell and Pizza Hut, selling nearly fifty years ago; Colonel Sanders invented what is
now called “home meal replacement” – selling complete meals to harried, time-strapped families. He
called it, “Sunday Dinner, Seven Days a Week.”

KFC
Today, the Colonel’s spirit and heritage are reflected in KFC’s brand identity – the logo features
Colonel Harland Sanders, one of the best-recognized icons in the world.

KFC specialized in chicken and they says,

“No body’s cooking like KFC today and we are the chicken experts”
“There is no competitor for spicy chicken which is made by KFC”

M issio n sta te m e n t

“ T o b e teh l e a d e r i n w e s t e r n s t y l e sqeurivc ikc e r e s t a u r a n t s t h r o u g h f r i e n d l y s e r v i c e , g o o d q u a l i t y

fo o d an d cle a n a tm o sp h er e”
Vision statement:
The Association of Kentucky Fried Chicken Franchisees, Inc. is united to protect,
promote and advance the mutual interests of all member franchisees and the
Kentucky Fried Chicken system."

Goals of KFC
➢ Build an organization dedicated to excellence.

➢ Consistently deliver superior quality and value in our products and services.

➢ Maintain a commitment to innovation for continuous improvement and grow, striving always to

be the leader in the market place changes.

➢ Generate consistently superior financial returns and benefits our owner and employees.

To establish in India our position as leading WQSR (Western Quick Service

Restaurant) chain, serving good value. Innovative chicken-based products.

Consistently, providing a pleasant dining experience, with fast friendly, in a clean

and convenient location. At all times we must be dedicated to providing

excellent and delighting customers

KFC History

KFC is an internationally renowned fast food industry in the world. They have the main ambition to
increase & maintain the quality in fast food industry. Their aim is to capture the fast food market.
Basically they want to provide their products to anyone that is why they expanding their branches in all
over the world. They want to increase their profit

through giving maximum satisfaction & other better facilities to people that they want. Now after
catching such a marvelous position in the International Market, KFC is introducing a new item “Boneless
Fried Chicken”, with even more attractive and charming taste.

Company overview:

Colonel Harland sanders, born September 9, 1890, actively began franchising his chicken business at the
age of 65. Now, the Kentucky fried chicken business he started has grown to be one of the largest retail
food service systems in the world. And colonel sanders, a quick service restaurant pioneer, have become a
symbol of entrepreneurial spirit. More than two billion of the colonel’s “finger lickin’ good” chicken
dinners are served annually. And not just in America. The colonel’s cooking is available in more then 82
countries around the world.
When the colonel was six, his father died. His mother was forced to go to work, and young Harland had
to take care of his three year old brother and baby sister. This meant doing much of the family cooking.
By the age of seven, he was a master of a score of regional dishes. Ate age 10, his first job working on a
nearby farm for $2 a month. When he was 12, his mother remarried and he left his home near Henryville,
Ind., for a job on a farm in Greenwood, Ind. He held a series of jobs over the next few years, first as a 15-
year-old streetcar conductor in New Albany, Ind., and then as a 16-year-old private, soldiering for six
months in Cuba. After that he was a railroad fireman, studied law by correspondence, practiced in justice
of the peace court, sold insurance, operated an Ohio River steamboat ferry, sold tires, and Operated
service station. When he was 40, the colonel began cooking for hungry travelers who stopped at his
service station in Corbin, KY. He didn’t have a restaurant then, but served folks on his own dining table
in the living quarters of his service station. As more people started coming just for food, he moved across
the street to a motel and restaurant that seated 142 people. Over the next nine year, he perfected his secret
blend of 11 herbs and spices and the basic cooking technique that is still used today.

KFC India

KFC is the world’s No.1 Chicken QSR and has industry leading stature across many countries like UK,
Australia, South Africa, China,USA, Malaysia and many more.
KFC is the largest brand of Yum Restaurants, a company that owns other leading brands like Pizza Hut,
Taco Bell, A&W and Long John Silver. Renowned worldwide for it’s finger licking good food, KFC
offers its signature products in India too! KFC has introduced many offerings for its growing customer
base in India while staying rooted in the taste legacy of Colonel Harland Sander’s secret recipe. Its
signature dishes include the “crispy outside, juicy inside” Hot and Crispy Chicken, flavorful and juicy
Original Recipe chicken, the spicy, juicy & crunchy Zinger Burger, Toasted Twister, Chicken Bucket and
a host of beverages and desserts. For the vegetarians in India, KFC also has great tasting vegetarian
offerings that include the Veggie Burger, Veggie Snacker and Veg Rice meals. In India, KFC is growing
rapidly and today has presence in 11 cities with close to 50 restaurants.
Values of KFC

➢ Focus all our resources to our restaurants operation because that is where we serve our customers.

➢ Reward and respect the contributions of each individual at KFC.

➢ Expand and update training with time and be the best we can be and more.

➢ Be open, honest and direct in our dealings with one and other.

➢ Commit ourselves to the highest standard to the personal and professional integrity at all times.

➢ Encourage new and innovative ideas because these are the key to our competitive growth.

➢ Reward result and not simple efforts.

➢ Dedicate ourselves to continuous growth in sales, profit and size of organization.

➢ Work as a team.

PHILOSOPHY OF KFC
 The CHAMPS Program
Champs stands for our belief that the most important thing each of us can do is to focus on the customer.

It stands for our commitment to provide the best food and best experience for the best value.

CHAMPS stand for the six universal areas of customer expectation common to all cultures and all

restaurants concepts.

THE CHAMPS

These are:

Cleanliness

Hospitality

Accuracy

Maintenance of Facilities

Product Quality

Speed of Service

CHAMPS is the philosophy to ensure that the customer has the consistent quality experience in every

restaurant, everyday, on every occasions and you will be playing role in delivering CHAMPS to our

customers.

AT KFC/TACO BELL OUR GOAL IS TO EXCEED OUR CUSTOMER’S EXPECTATIONS EVERY TIME!
AS A NEW TEAM MEMBER YOU WILL BE CHALLENGED ON A DAILY BASIS TO DELIVER THIS PROMISE TO EACH AND
EVERY CUSTOMER THAT IS SERVED!

WE HAVE MENTIONED IT ALREADY, BUT LET’S TALK ABOUT CHAMPS ONCE AGAIN.
THE LETTERS C.H.A.M.P.S. STAND FOR 6 AREAS CUSTOMERS HAVE TOLD US ARE MOST IMPORTANT:
C = CLEAN RESTAURANTS. WHO WANTS TO EAT IN A PLACE THAT
ISN’T CLEAN?

H = HOSPITABLE EMPLOYEES. THIS MEANS WE GREET

AND SERVE OUR CUSTOMERS ALWAYS WITH A SMILE!

A = ACCURATE ORDERS. EVER GET THE WRONG ORDER?

IT DOESN’T MAKE YOU VERY HAPPY, DOES IT?
M = MAINTAINED FACILITIES. THIS MEANS HAVING A NICE
LOOKING RESTAURANT ON THE INSIDE AND THE OUTSIDE, BEING SURE THE LIGHTS WORK AND THE BUILDING IS IN GOOD
REPAIR.

P = PRODUCT QUALITY. SERVING PRODUCT THAT IS HOT

AND FRESH EVERY TIME!

S = SPEED OF SERVICE. OUR CUSTOMERS WANT OUR

GREAT PRODUCTS AND THEY WANT TO GET THE QUICKLY!

C.H.A.M.P.S. IS A PART OF EVERYTHING YOU’LL DO AT KFC. WE’VE FOUND THAT WHEN WE GIVE CUSTOMERS
THESE 6 THINGS, THEY’LL COME BACK OFTEN! AND THAT’S GOOD FOR KFC AND FOR YOU! THE BETTER KFC AND
TACO BELL DOES, THE BETTER YOU’LL DO WITH MORE HOURS AND GREATER CAREER OPPORTUNITIES.

Economic Analysis of Market

A market in this context refers to a number of all actual and potential buyers of a product (Kotler et al

2003). These buyers have a need to satisfy

Communication
their needs through exchange (Graphic 1).

These needs make up the demand for Industry Product / service Market
(a collection (a collection
particular products and services. Several of seller) Money of buyers

components must be considered, as all these

Information
components have a direct or indirect impact Graphic 1

on KFC’s success.

Changes in the below described components over the last couple of years have led to big changes in

people’s attitudes towards healthy food. It explains why Australians today want to eat healthy and

nutritious-rich food in order to keep themselves healthy and that KFC must adjust their range of product

and their company image to appeal to these new expectations, people have.
Macro environment

KFC operates in a larger macro environment of forces that creates opportunities, but also threats. (Kotler

et al 2003). A company such as KFC usually cannot influence trends in the macro environment, as they

affect people and organisations on a larger scale.

However, KFC has to carefully examine macro environmental trends and must create competitive

responses to such trends. There are six major macro environmental forces KFC has to take into account.

Micro environment

The microenvironment consists of all forces

that are close to KFC, and on which KFC Company Competitors

has an impact. They directly affect KFC’s

ability to serve its customers. (Kotler et al

KFC

2003). Three major components influence

KFC’s micro environment:

Consumers

Graphic 3 (Source: Kotler et al 2003) Micro Environment

Competitors

Because the fast food market in India is highly competitive, KFC faces a wide number of direct and

indirect competitors. KFC’s main competitors are fast food chains such as McDonald’s and Domino’s,

which are already well established throughout India.

McDonalds’s in particular is a direct competitor, as they have already successfully introduced their Salads

plus line (http://www.theage.co.in), which directly targets ‘healthy food’ conscious Indians. But, there are

a number of other competitors that is also focusing on ‘chicken’ types products. All this competition

makes it quite difficult for KFC to maintain or even broaden their customer base. However, with the

introduction of a new and healthy product range, KFC can differentiate itself from most competitors and

will gain a competitive advantage.

Customers

KFC’s customer market consists solely of the consumer market (Kotler et al 2003). KFC’s products are

bought by individuals (males, females, singles, and families). Therefore, the product range KFC offer

should appeal to as many people within this consumer market as possible, to ensure that the maximum

amount of products can be sold. The characteristics of these individuals and a segmentation of them are

discussed later in this report.

Strengths and weakness of competitor

S trengths: 38 products, Attractive Outlets, Huge Marketing, Budget, More entertainment for kids

W eaknesses: Same type of Menu, No Home Delivery

How they compete their competitors ?

It is found that KFC compete its competitors by five ways:

KFC compete its competitors through marketing strategy

They offered different packages at different events like ramdan offer, midnight offer etc.
KFC compete there competitors by providing good services
They must hired the hard selling persons to market their product in the market and motivate their
employees for the sake of organizations and employees do well and they compete there
competitors
KFC has quality products and through these quality products they compete their competitors
Current Sales Analysis

Market Share

KFC has a very long history and has the most recognize able brand in chicken with over 50% of the
market share. It becomes difficult for the companies like Sub way, Mc Donald’s, Chicken planet, Dixie or
those who may want to enter in the market of fast food restaurants.

Due to with over 50% of the market share in fast food industry KFC has recognition around the world and
has been globally positioned for many years in India and to capture the market share in India adopts
champs philosophy

Environmental factors and opportunities

Political :

The operations of KFC are affected by the government policies on the regulations of fast food operation.
Currently government are controlling the marketing of fast food restaurant because of health concern such
as cardiovascular and cholesterol issue and obesity among the young and children in the country.
Governments also control the license given for open the fast food restaurant and other business regulation
need to follow such as for a franchise business. Good relationship with government in giving mutual
benefits such as employment and tax is a must for the company to succeed in any foreign market

Economic:

Though for last 1 year their was economic slowdown all across the globe but the sales of KFC and other
fast food chains did not slow down to that extent that of other sectors in. The GDP (Purchasing Power
Parity) is estimated at 2.965 trillion U.S. dollars in the year 2010. The GDP- per Capita (PPP) was 2700
U.S. dollars as estimated in 2008. The GDP- real growth rate in 2007 was 8.7%. India has the third
highest GDP in terms of purchasing power parity just ahead Japan and behind U.S. and China. Foreign
direct investment rose in the fiscal year ended March 31 2007 to about $16 billion from just $5.5 billion a
year earlier. There is a continuous growth in per capita income; India’s per capita income is expected to
reach 1000 dollars by the end of 2007-08 from 797 dollars in 2006-07. This will lead to higher buying
power in the Hands of the Indian consumers. So taking into considerations the economic factors of India
KFC is safe. The only danger to it will be if there is a terrorist attack in India and the victim is KFC

Socio cultural:

India is the second most populous nation in the world with an approximate population of over 1.1billion
people. This population is divided in the following age structure: 0-14 years – 31.8%, 15-64 years –
63.1% and 65 years and above – 5.1%.
There has also been a continuous increase in the consumption of fast food in India. The social trend
toward fast good consumption is changing and India has seen an increase of 90% fast food consumption
from the year 2002- 2007. This increase is far greater than the increase in the BRIC nations of Brazil (20
per cent), Russia (50 per cent) and China (almost 60 per cent). Thus this shows a positive trend for fast
food industries in India

Technological:

The Indian fast food Industry is heating up with a lot of foreign players entering the Indian market. The
technological knowhow and expertise will also enter the Indian market with an increase in competition.
With the lower rates and increase technology the fast food counters are attracting youth by giving them
attractive deals. For e.g. KFC and Domino’s pizza. For a fast food restaurant, technology does not give a
very high impact on the company and it is not a significant macro environment variables. However KFC
should be looking to competitors innovation and improve itself in term of integrating technology in
managing its operation. For example in inventory system, supply chain management system to manage its
supply, easy payment and ordering systems for its customers and wireless internet technology.
Implementation of technology can make the management more effective and cost saving in the long term.
This will also make customer happy if cost savings results in price reduction or promotional campaign
discount which will benefits them from time to time

Environmental:

As one of world largest consumer of beef, potatoes and chicken, KFC always had been critics for world
environmentalist. This is because high consumption of beef causing the green house effect by methane
gasses coming from the cow’s ranch. Large-scale plantation has effect the environment and lost of green
forest opening for plantation activities. Vegetarian environmentalist criticizes the fast-food giant for
cruelty to animals and slaughtering. In America, once KFC want to introduce whale burger causing
uproar because whales are endangered species. Before using paper packaging, KFC once had been
criticized for being insensitive to pollution because of using ne based packaging for its food products.
Imagine millions of people purchase from fast food operator and how is the impact to world environment
by throwing away those hard to recycle packaging.

Our world is getting concern on environment issue and business operating here should not just care for
profit, but careful usage of world resources for sustainable development and care for environment safety
and health for our future generation. Critics and concern from all public or activist should be review and
support if necessary to ensure we play our social responsibility better.

Legal factors:

As a certified fast food operator, there are many regulations and procedures that KFC should follow. For
example is the Halal certification that becomes a concern to Muslim consumers. KFC should protect its
integrity and consumer confidence by ensuring all materials and process are as claimed or must followed.

Other legal requirement that the business owner should follow as stipulated in laws are such as operating
hours, business registration, tax requirement, labor and employment laws and quality & environment
certification (such as ISO) in which the outlet has been certified. The legal requirement is important
because the offenders will be fined or have their business prohibited from operating which can be
disastrous.
 MARKETING

Since 1982, KFC’s “All-American salute to Mothers” national card contest has been KFC’s
way of honoring moms and their families for making mother’s Day KFC’s biggest sales day of the year.
The contest encourages children to creatively express their feelings for their moms by making a
homemade card and give them chance to compete for more than $10,000 in cash and prizes. Educational
packets, including language, history and art exercises highlighting Mother’s Day, were sent to thousands
of schools nationwide.

There are 4 P’s of Marketing:

1. PRODUCTION
2. PRICING
3. PROMOTION
4. PLACEMENT

 Product

 Real white breast chicken

 Side orders

 Ice cream

 Kids meals

 Buckets

 Price

 Standard value meals

 Meal deals

 Promotion

 The use tv commercials advertising New meals

 They advertise in posters in bus shelters, phone boxes.

  Pop-ups on internet

 Place

 There are over 35 kfc’s in scotland

1. Production:

Basically the product is anything that be offered to a market for attention, acquisition, use, or
consumption that might satisfy a want or need. KFC is specially dealing in the chicken products;
Basically, KFC has the special raspy for chicken products that is why, KFC known as a chicken specialist
allover the glob. KFC target the Asia and east side because they observe that they people are like the
chicken products, so they enter in the market due to the demand of their chicken products. KFC product
variety of product in the chicken, those products are:

PRODUCTS:

• Original recipe® chicken

• Extra Tasty CrispyTM chicken
• Hot WingsTM pieces
• Tender Roast® chicken
• Chunky Chicken pot pie
• Kentucky Nuggest®
• Colonel’s Crispy Strips®
• Honey BBQ sandwich
• Original Recipe® Sandwich
• Tender Roast® Sandwich
• Triple Crunch® Sandwich
• Triple Crunch ®Zinger® Sandwice
BRAND:

There are three brands of the KFC:

1) Taco bell
2) Pizza Hut
3) Long john silvers

2. Pricing:

KFC during pricing their products keep the different points in the mind like they adopt the cost base price
strategy. Pricing of the product includes the Government taxes and excise duties and then they come at
final stage of determine the price of their products. KFC prices of products are a bit high according to the
market segment and it is also compatible to the stander of their products.

Calculation of the price under Cost Based Pricing Strategy:

Total Pounds of Chicken Served in KFC Restaurant Annually = 1.914 Billion

Total KFC Chicken Pieces Sold Annually = 5.89 Billion

Total Retail Sales = $8.9 Billion

Sales Price of per Chicken Piece = Total Retail Sales / Chicken Pieces sold

= $8.9 Billion / $5.89 Billion

=$1.51

We assume that Fixed Cost is = $6000000000

Variable Cost = $675000000

Profit Margin is Or Mark Up = $225000000(25% of Sales)

Per Unit Variable Cost = $675000000 / 5890000000

= $ 0.115

Unit Cost = Variable Cost + Fixed Cost / Chicken pieces Sold

= 0.115 + 6000000000 / 5890000000

= 0.115 + 1.02

= $1.135

Now suppose manufacturer wants to earn 25% mark up on sale. The manufacturer mark up price is
calculated:

Mark Up Price = Unit Cost / (1 – Desired Return on Sales)

=1.135 / (1-.25)

= 1.135 / 0.75

= $1.51
 3. Promotion:

Promotion is one of the necessary plates in any form of business or in other words you can say that
promotion is the key of success. If you promote your product at the right time. KFC also known the
importance and significance of promotion so they uses the bill boards the major source of advertisement
and one of the most important thing that they uses media especially the newspapers to promote their
products. They are also creating awareness among the masses about their existing product range as well
they tell us about the future product.

Marketing efforts to be taken by the restaurant

 Paste delivery posters at petrol pumps, flats, colleges, plazas, and departmental stores.
 Distribution of delivery flyers in residential areas, markets, plazas and institutions (as per the plan)
 Visit offices and business places.

4. Placement:

In the case of the KFC the placement of the product is not important but the placement of the restaurant is
important. The products of the KFC is cooked at the sport and then served after that. KFC Cavalry branch
opened in June 1998, in the main commercial zone of Cavalry Grounds near the Jinnah Flyover. The
restaurant is a three-story building including the basement (where the chicky play area is located). It is
ideally located in the center of a main commercial and residential area of Lahore. The area that KFC
Cavalry caters for is the residential and office area of Cavalry Grounds and Cantt, as the main target
market. Another branch the KFC opened in the Lahore is in Garden Town (opposite to Barkat Market).
KFC also target the Faisalabad and open its branch in D ground. Now we can easily judge that the KFC
target the place for their restaurant, which is well known and is in the Porsche area where the income
level of the people is high then the middle class level. Because the prices of the KFC products is high
with comparison to the local products manufacturer who are dealing in the same kind of product in which
KFC is dealing but the prices of the KFC is high due to special taste, high quality, and due to international
brand, it is the world recognized fast food restaurant all around the world. So, for the placing strategy,
KFC chose the well income class area for their restaura

Product Issues

General description:

Features:

Quality Control Over Ingredients

Every Chicken Tested

K & N’s state-of-the-art Quality Assurance Lab monitors the entire integration process from livestock to

feed and on to preparation of ready-to-cook and cooked products.

Every Chicken Certified

HACCP – K & N’s ensures food safety by implementing the international HACP (Food Safety System)

and enjoy the unique privilege of being the first and only HACCP certified company is India producing

chicken and chicken products. Free from diseases and bacteria, drug residues and other contaminants.

Quality Assurance Certificate

Director General ( Research ) has issued quality assurance certificate for the chicken used by KFC.

Packaging

We are asked as many questions on our packaging as our products by our customers. The

packaging for KFC products is chosen according to performance against three key criteria:

Heat Retention

Moisture removal

Grease absorption
The packaging material and carton design are all adapted to maximise performance against these three
criteria.

Recycled Paper

All our clamshells and chicken boxes contain as much recycled material as it is legally

allowed. By law we are required to have virgin fibre board in any part of the packaging that is in contact
with food. Any virgin fibre comes from board suppliers who use pulp bought from managed forest in
Scandinavia. This ensures that any wood cut for paper production is replaced with new plantings.

Environmental concerns

Over and above ensuring our packaging is supplied via recycled or renewable resources;

KFC are enthusiastically complying with the new environmental directives on recovery and recycling of
packaging waste.

Litter

We at KFC UKI are aware of our responsibilities to the Management of Litter and all our packaging
carries the ‘Keep your Country Tidy’ signs

Branding

This research measured and compared the brand identity of Kentucky Fried Chicken (KFC) in India.
Brand identity was defined as the customer impressions of four different KFC identity elements -
properties, products, presentations, and publications. A survey of young consumers in the countries (n =
795), showed that the respondents were more apt to eat within KFC restaurants, and spend more time
doing so, than the Americans. The Chinese also had much more positive impressions of KFC. Brand
identity impressions were correlated with overall customer satisfaction and with future patronage
intentions for both groups. These findings support a model where differences in cultural frames of
reference lead consumers to actively localize the brand identity of this nominally globalized product.

Promotion Issuue

Sales promotion

For the sales pormotion KFC introduced their goods like watches , keychain, e.t.c to the customers.
Advertisment

The advert titled Pool was done by OGILVY & MATHER, New Delhi advertising agency for KFC
ZINGER BURGER (KFC company) in INDIA. It was released in the June 2009. Business sector is Fast
food outlets & restaurants.

One of KFC's latest advertisements is a commercial advertising its "wicked crunch box meal". The
commercial features a fictional black metal band called "Hellvetica" performing live, the lead singer then
swallows fire. The commercial then shows the lead singer at a KFC eating the "wicked crunch box meal"
and saying "Oh man that is hot".

In 2007, the original, non-acronymic Kentucky Fried Chicken name was resurrected and began to
reappear on company marketing literature and food packaging, as well as some restaurant signage.
FEED US BACK

1. Tick Your Choice (√)

Perfect Above Average Below Poor
Average Average

Food Quality

Food Temperature

Waiting Time

Menu Board

Sitting Arrangement

Restaurant Temperature

Music

Restaurant Cleanliness

Overall Experience

2. When will you be back?

 Next time I blink (very soon)
 May be sometime later
 When I win a Nobel Prize (Never)

3. How many people were in your group?

 I was alone
 Just me and someone
 For me, three is company
 4 or more

4. Would you rather order than Dine in?

 Yaa, I like to mostly order at home
 Sometimes, but I mostly like to dine in
 No fun without Dine in

5. How close is your house to your nearest KFC outlet?

 Within 1 Km
 Between 1 – 3 Kms
 Between 3 – 5 Kms
 Above 5 Kms
6. Do you want a KFC home delivery service?
 My dreams are coming true
 That would help
 Doesn’t make much of a difference
 No thanks

Thank You
Gap 1: the gap between what customers want and what
management thinks customers want. This gap results from a
lack of understanding or a misrepresentation of the
customers’ needs, wants, or desires. A firm that does little or
customer satisfaction research is likely to experience this
gap. An important step in closing this gap is to keep in touch
with what customers want by doing research on customer
needs and customer satisfaction. Every year, Susquehanna
Health System, recipient of the 1999 Global Best Practices
Awards in the category of Exceeding Customer Expectations,
looks at their own as well as national surveys of patient
satisfaction to determine what patients really want.
• Gap 2: the gap between what management thinks
customers want and the quality specifications that
management develops to provide the service. Essentially,
this gap is the result of management’s inability to translate
customers’ needs into delivery systems within the firm. For
example, Kentucky Fried Chicken once rated its managers’
success according to “chicken efficiency,” or how much
chicken they threw away at the end of the night. Consumers
who came in late at night would either have to wait for
chicken to cooked or settle for chicken several hours old. The
“chicken efficiency” measurement did not take customers
into account, and financial performance suffered.
• Gap 3: the gap between the service quality specifications
and the service that is actually provided. If both gaps 1 and
2 have been closed, then gap 3 is due to the inability of
management and employees to do what should be done.
Poorly trained or poorly motivated workers can cause this
gap. Management needs to ensure that employees have the
skills and the proper tools to perform their jobs. Other
techniques that help to close gap 3 are training employees
so they know what management expects and encouraging
teamwork.
• Gap 4: the gap between what the company provides and
what the customer is told it provides. This is clearly a
communication gap. It may include misleading or deceptive
advertising campaigns promising more than the firm can
deliver or doing “what it takes” to get the business. To close
this gap, companies need to create realistic customer
expectations through honest, accurate communication about
what firms can provide.
• Gap 5: the gap between the service that customers receive
and the services they want. This gap can be positive or
negative. For example, if a patient expects to wait twenty
 minutes in the physician’s office before seeing the physician
but waits only ten minutes, the patient’s evaluation of
service quality will be high. However, a forty-minute wait
would result in a lower evaluation.

When any one or more of these gaps are large, service quality is perceived as low.
As the gaps shrink, service quality improves.

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