Competitor Analysis ____________________________________________________________ ________________ pg 5 Category Attractiveness ____________________________________________________________ ______________ pg 8 References ____________________________________________________________ ________________________ pg 9 Appendix ____________________________________________________________ ________________________ pg 10 SWOT Strengths |Weaknesses | |Brand Loyalty |No delivery service | |Brand Awareness |More expensive than most food outlets | |Nationwide Coverage |High staff turnover | |Ability to Finance |Only specialize in chicken | |Ability to Produce |Not NZ owned | |Product Consistency |Use of palm oil for cooking | |Longevity of Organisation |Market perception ??? unhealthy food | |Strong marketing division |KKK association | | | | |Opportunities |Threats | |Fast food is a growth category |More competitors than ever | |More single working parents needing convenience Pressure from substitutes ??? ever evolving | | |fast food range in supermarkets | |Senior aged consumers are increasing |Country Fried Chicken now has 120 stores | |Population is increasing |Demand for healthier foods | |Ethnic diversity of population is increasing |Not catering for the children’s market | |Sales seasonality does not impact |Category Rivalry & costs associated | |significantly on fast food sector |with this | | |Not catering for the elderly | | |Burger King and Wendy’s ability to grow | | | | Overall Strategy 1. Marketing Objectives ??? Increase market share by 3% in 2011 Previous studies established that the fast food industry in New Zealand is worth approximately $1. 7bn per annum and is continuing to grow steadily. KFC sales have continued to grow over the past 2 years including during the recession period in 2008/2009. Sales results for 2009 put KFC at $148 million per annum and it is expected that the 2010 year end result will be around $150 million.
Macro environmental factors such as the increasing population and ethnic diversity of population also give grounds to support growth. Based on this information, the objective of market share increase is realistic and achievable. 2. Generic Strategy ??? KFC’s primary focus is branding and this has been at the forefront of all advertising in recent years. The colours of red and white are clearly identified with KFC and the slogan “can’t beat that taste” has become recognized as a KFC slogan in most households in New Zealand. The secondary focus is channel management with KFC ensuring they have a presence in all of the main provinces in New Zealand.
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The organization promotes products to a large percentage of the population and advertises through many channels including TV, radio, billboards, universities etc. Consideration has been given to the 4 main strategies for growth Product Development ??? The development of new products would give KFC a great opportunity to tap into more of the fast food sector by catering more for the health conscious and creating more options and choice for the consumer. It is also risky though as we do not know if the new products will appeal to our current customers or if they will attract new customers. There is opportunity for product development but this would be costly and may not give the desired result.
Market Development ??? Developing a new market for KFC products would provide a great opportunity for substantial growth in sales and market share. KFC does not currently cater well for the elderly, which we know to be an ever increasing part of the New Zealand population. There is also an opportunity to provide more range and incentives to appeal to the children’s market. One of the main concerns about adopting a market development strategy is that it means selling products to a target market that we know little about. Much research should be undertaken prior to using this strategy. Diversification ??? This option would provide endless amounts of opportunity and would have an improved chance of being successful due to the already stablished brand which is highly recognized and known for its longevity. KFC is extremely good at providing great tasting fast food. To diversify and go into something other than fast food is highly risky and would require substantial funding with an unknown result. Market Penetration ??? Limits the amount of growth potential as our target market consists only of current customers and competitor customers. Benefits of this include the knowledge we already have of these customers, what products sell well etc and there is much less risk of getting it wrong and costs involved in growing this sector can be kept to a minimum, keeping marketing costs within budget.
After considering all aspects of the situational analysis, the greatest opportunity with the lowest risk factor lies within market penetration with a focus on current customers and competitors customers. The objective is to implement strategies to increase consumption within current customers and convert some competitor’s customers over to KFC. Positioning Strategy Giving consumers the best tasting chicken at affordable prices for over 70 years. KFC’s main competitive advantage is the taste of their chicken. Hence the new slogan “Can’t beat that taste”. As long as KFC has the word “fried” in their brand name, they are unable to emphasize any health benefits and have to combat this issue by focusing on taste.
KFC has also been around for many years and has gained expertise as a result of this and it is important to incorporate the long standing brand when developing a positioning strategy. Price plays such a dominant role in consumers purchasing decisions, therefore it is necessary to consider KFC’s price positioning. KFC is not the cheapest fast food option but can be classified as affordable. Segmentation Criteria Consideration has been given to the many segmentation variables available and the following variables have been selected as being identifiable in the creation of the appropriate target market. [pic] Target Market PersonalityImpulsive LifestyleStudent Age 18-25yrs
After segmenting the market by personality, lifestyle and age, it became apparent that the impulsive typed character is most likely to directly respond to marketing campaigns and when combined with the student lifestyle and most common age of students, we have created a niche target market for KFC. It is estimated that there are around 500,000 individuals enrolled in study in New Zealand currently. Around 210,000 of these individuals are aged 25 years or under. (Statistics NZ, 2008). It is my assumption that around two thirds of these students would behave quite impulsively when it comes to eating habits. Therefore, the estimated target market consists of around 160,000 individuals. Competitive Advantage
KFC has one very strong advantage over the competition and that is the taste of their chicken. Many consumers crave KFC at times and are unable to substitute the taste with another product. The other point of difference is that they season their chips. This makes their chips more flavorsome than the competitor’s product. When considering competitors such as Burger King, Wendy’s and McDonalds, many consumers are willing to go to either as they all provide the standard burger and fries combos. Another competitive advantage that has seen KFC stay on top of the market is there comprehensive range that caters for families. There are many options of family packs suitable for varying sizes of households. Product Strategy
In order to appeal to the student market we will need to provide a value for money strategy. The idea would be to create a ‘Student Value Meal’ which will consist of 2 pieces of original chicken, fries and a drink for $5. 00. The packaging would be kept very simple and have a low cost or budget look to it but still have the colours of red and white. The complimentary hand wipes that KFC used to offer also need to be re-introduced and provided with every order. KFC Menu [pic] It is recommended that KFC make minimal changes to their current menu. The only suggestion is that since they are now offering salads and healthy drinks, they should look at creating a healthy meal combo.
They also now sell chicken fillets which are a healthier option to the original recipe chicken therefore the recommendation is to offer a chicken fillet, coleslaw and Charlie’s Juice Combo for the health conscious consumer. Chicken nuggets appear to offer very little value or attractiveness as part of this menu. They are not part of a kid’s meal and are not included in any combo or family meals. It is suggested that sales for this product line are reviewed and the product considered for deletion. Alliances with both Sara Lee and Charlie’s do not appear to create a more attractive range for targeted consumers and it is recommended that these also be reviewed with the intent of creating more appealing and price competitive options. Pricing Strategy When considering a pricing strategy it is necessary to distinguish between price, cost and perceived value.
The most important factor is the perceived value and it is my opinion that most consumers perceive KFC to be somewhat of a treat as it is considerably more expensive than many other fast food options. This does not appear to have had a dramatically negative effect and one can assume that the product differentiation, range, distribution and quality have succeeded in superseding any price issues. It is apparent though, that there is an opportunity to introduce a product to cater for consumers with less of a budget. The Student Value Meal has been created as a result of this need to cover off a lower price point without changing the perceptions that consumers have of the KFC brand. The pricing objective is to maintain current pricing and increase perceived value. Distribution Strategy
KFC already has a very good distribution strategy with locations in all main provinces and clear visibility in design, colour and structure. The only recommendations are the following: ??? Continue to observe population growth in all areas to forecast demand and availability of product ??? Offer a student delivery service on a particular day where all orders of student value meals are delivered to universities and educational facilities free of charge. From a logistical point of view, this requires orders being placed by 10am to an 0800 number, collation of orders for each facility and delivery at a set time. Each meal has a set price of $5. 00 so transactions should be fairly simple.
University / Educational Facility advertising of this service should be undertaken widely before implementing. Strategic Alliances 5 possibilities for strategic alliances have been identified as follows: 1. Spend $30+ in one purchase at KFC and receive a free new release DVD voucher from Video Ezy. This strategic alliance can be used for promotional periods during times of the year where sales are down. It is my opinion that this package would appeal to many KFC customers who purchase family meals to take home and can also enjoy watching a new release whilst enjoying their meal. 2. Purchase 12 x family meals (valued at $29. 95 and over) in 12 months and receive a family pass (2 adults, 2 children) to Rainbowz end.
This is a siginifcant reward for significant loyalty and is easily achievable for customers by making KFC a monthly family treat. Rainbowz End is the only fun park of its kind in New Zealand and although only located in South Auckland, this can still be an attractive reward to all consumers nationwide as the voucher would have 12 months validity to allow plenty of time to redeem, or it can be sold on sites such as TradeMe. 3. Sponsorship of junior netball nationwide by providing player of the day certificates that entitle the bearer to one free original fillet burger or popcorn chicken. This form of sponsorship gives KFC the image of being involved in communities and sport and would draw more customers into store with an increased likelihood of other purchases. 4.
All Blacks Combo ??? 3 pieces of original or spicy chicken, fries, bean salad, coleslaw, potato & gravy, bread roll and a drink + a scratch and win ticket for $12. 00. This form of strategic alliance would have needed to be implemented at least 12 months prior. The promotion would be in support of the 2011 Rugby World Cup and the scratch & win tickets would have 5 main prizes nationally of tickets for 2 people to the World Cup along with one night’s accommodation close to the venue. Many other minor prizes would also be redeemable such as free upsized of a meal, free piece of chicken etc. 5. Battle of the Bands ??? With students being our target market it is suggested that KFC in conjunction with all of the universities in New Zealand brings back the popular event of the battle of the bands.
Entries are made and auditions and performances are held in each of the main cities. The prize for the winning band could be a trip for band members (maximum of 5) to Kentucky to learn the heritage of KFC along with $10,000 spending money. Promotion Strategy Promotional objectives are to increase consumption and gain some competitors customers without diluting brand value. Strategies include support for sport and music as described in the strategic alliance suggestions above. TV advertising has been a successful method of creating brand awareness for KFC and it is recommended that the above promotions are launched through TV initially and then through a more targeted approach.
Unique Selling Proposition ??? When considering what KFC’s USP is, key points to factor in are whether the proposition is desirable, exclusive and believable. Taste is what gives KFC their unique selling proposition. Taste is not only limited to the 11 herbs and spices secret recipe of their chicken but also the unique seasoning used on their chips. References Business Scoop. (2010). Restaurant Brands ups dividend as Colonel booms, Paul McBeth 08-4-2009 http://business. scoop. co. nz/2010/03/05/restaurant-brands-4q-sales-rise-5-3-led-by-kfc/ Burger King. (2010). Locations, Retrieved on 29th March 2010 from http://www. burgerking. co. nz/#/locations/ Daily Finance. (2009). Wendy’s fast food chain says Sayonara to Japan, Retrieved 30th March 2010 from http://www. dailyfinance. om/story/company-news/fast-food-chain-wendys-says-sayonara-to-japan/19275293/ Food 2 Go Magazine. (2010). Country Fried Chicken ??? It tastes so much better . . . Retrieved 29th March 2010 from http://www. countrychicken. com/images/an_article_from_food_to_go_magazine_NZ. pdf Ministry of Health. (2007). Obesity in New Zealand, Retrieved 25th March 2010 from http://www. moh. govt. nz/moh. nsf/indexmh/obesity-key-facts Oporto. (2010). Locations, Retrieved on 29th March 2010 from http://www. oporto. co. nz/locations/index. aspx Squirrel. (2010). NZ mortgage rate forecast 2010, Retrieved 24th March 2010 from http://www. squirrel. co. nz/nz-mortgage-rate-forecast-2010/ Statistics New Zealand. (2008). eople and communities, divorces, Retrieved 12th March 2010 from http://search. stats. govt. nz/nav/ct2/peoplecommunities_divorces/ct1/peoplecommunities/0 Telegraph UK. (2009). Recession finger lickin good . . . Retrieved on 29th March 2010 from http://www. telegraph. co. uk/finance/newsbysector/retailandconsumer/4733058/Recession-finger-lickin-good-for-KFCs-UK-chief-Martin-Shuker. html Wendy’s. (2010). Locations, Retrieved on 29th March 2010 from http://www. wendys. co. nz/? #/locations/ Yahoo Finance. (2010). Wendy’s / Arby’s boost buy back plan. Retrieved 29th March 2010 from http://finance. yahoo. com/news/WendysArbys-Boosts-Buyback-zacks-2416282315. html? x=0&. v=1