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1. 0 Introduction In 1939, Colonel Harland Sanders, the founder of KFC first gave the world of his most famous creation, Kentucky Fried Chicken (KFC), featuring the secret blend of 11 herbs and spices. Since then, millions of people the world over have come to love his one of a kind chicken, home style side dishes and hot and fresh biscuits. Over many years, KFC has been spread and well known in almost every country around the world. The first outlet KFC Malaysia situated in the heart of the city, Kuala Lumpur since 1973 and has been served for more than 30 years old.
From Malaysia to different states, 336 KFC outlets have been steadily set up today. Besides that, KFC has won several awards such as “Marketing Excellence Award for the Asia Pacific region in 1991, Grand prize in International Potato Championship organized by the U. S potato board and received the “Best specialty” prize for being most creative in marketing the potato products in1997. KFC in Malaysia offer a wide range of meal for all ages and its selection has expanded over the years to include favorites such as popcorn chicken, Kentucky Nuggets, Cheezy Wedges etc. esides that, KFC also offer the individual meal, family meal, add on meal and chicky meal for the concerned of different age group. KFC served as the fast-food restaurant to preserve a tradition of giving customers tasty, juicy and crunchy chicken with a selection of home-styled side dishes and desserts to satisfy the customer’s need. For beverage, aroma of hot Milo, coffee and tea are served; carbonate drinks, orange juice makes people refreshing on the hot sunny days. The Garden Salad is affordable, dedicated to young adults and seniors who were health conscious and nutritionally aware.
With the great meal, healthy options, and friendly service environment in KFC, customer will definitely have a wonderful time enjoying their meal. As we know that, society nowadays is very health conscious, most fast food and restaurant chain now post nutrition in their menu. A new health menu of Curried Lentils for KFC will be launched. This great tasting healthy vegetarian meal that consist of onion, garlic, lentils, carrots, celery stalks, tomatoes and kale, together with some curry powder and mix it to bring out its flavor.
Curried Lentils brings nutrition benefits making this a complete meal with protein and vegetables. This new creation is mainly appeal to the young adults and seniors’ citizens who were more health conscious and KFC hopes that this will be a better way for children and teenagers to practice a healthy habit since young as well as other people from different age group from age 12 to 55. In additions, with the effective training and efficiency of the workers and quality services, customer satisfaction will be achieved. 2. Current Market Analysis Competitors Outlets Nando’s chicken 5 Burger King 8 Kenny Rodgers 23 A 25 McDonald’s 126 KFC 336 McDonald’s The first local McDonald’s restaurant located at Jalan Bukit Bintang, Kuala Lumpur, and today, they have 126 outlets operated in Malaysia standing as the 2nd highest QRS restaurant in Malaysia. Recently, McDonald’s has change it’s concept into new packaging, not through their principle of quality and services, cleanliness, value consistency but also to satisfy the need of the customers.
The new buzzwords, “I’m lovin’ it” is a sporting of a new creative and friendly concept to attract more customers. McDonald’s new concept packed with energy and youthfulness so that people who enjoy the meal there are in for a great time. Kenny Rodgers Kenny Roger’s chicken are healthier compared to KFC’s chicken. Kenny Rogers Roasters operates casual dining restaurants with fire roasted rotisserie chicken as the main menu item and a variety of hot and cold side dishes. The concept is known the wood-fire roasting and a proprietary marinade that provides a unique product today.
A A offers a variety of menu items for those that want lower fat, lower calorie choices, including the grilled chicken sandwich and diet root beer. The virtual “Gold Standard” for A Root Beer, also denominates Malaysia’s First QRS Chain, where quality “A Taste to Remember” food is served hot and fresh environment. Besides that, A&W also provide other services such as, organizing a birthday and catering functions etc. Furthermore, the core menus of A&W are fried chicken, burgers and hot dogs. The chain’s signature includes Root Beer, Root Beer Floats, Waffle and Sandwiches.
There are the Malaysian favorites. Burger King Burger King in a fact is healthier than KFC due to the reason the chicken in Burger King is grilled. They also provide low carbs burgers; indulge in low fat Fire-Grilled Chicken Salads and less calories under 400. Nando’s Chicken Nando’s Malaysia opened its first store in June 1998 in Bangsar, Kuala Lumpur. The unique of the product for Nando’s is their flame-grilled chicken, chicken meals are cooked to different level of spiciness, which is lemon and herbs, mild, hot and extra hot peri-peri. 2. 1 Market analysis
KFC Malaysia has strongly operated 336 outlets which achieved revenue of RM694. 52 million in 2003, representing an increase of 31% of profit over prior year’s RM673. 53 million. Approximately 50% of its market share continues to dominate the Quick Service Restaurant (QSR). Besides, there are many other QSR such as Burger King, McDonald’s, Domino, Pizza Hut and many more restaurant serves the different types of food. KFC has noticed a growth of 60% in demand for healthy food through the launching of new health menu such as Corn on the Cob and Bandito Pockett. 2. 2 Product analysis
KFC is a Quick Service Restaurant (QSR) which is well-known, with its Original Recipe, and hot & spicy KFC served as main option, a variety of menu items for those that want lower fat, lower calorie choices, including Tender Roast and Honey BBQ Sandwiches; Corn on the Cob. In addition, KFC side order including Vegetable Salad, Tangy Coleslaw, Whipped Potato, Potato Wedges, Cheezy Wedges and others. Besides that, KFC also serves Popcorn Chicken, Kentucky Nuggets, Colonel Burger and Zinger Burger for individual meals. On the other hand, to highlight the importance of family togetherness, KFC also added family meal on its menu.
The KFC add on meal also available, and not forgetting the Chicky Meal that created for children. Hence, KFC beverage includes Carbonate Drinks, Float, Ice Milo, Ice Lemon Tea, Orange, Kiwifruit Juice, Coffee, Tea or Hot Milo and Mineral Water. 2. 3 Competitive analysis There are many competitors that compete with KFC. Competitors like Mary Brown, Burger King, and McDonald, Sugar Bum, Domino, Pizza Hut, and each of these fast food restaurants has different marketing strategies, target, objectives etc to always improve their market sales. These competitors can be divided into two categories, which is the close sand distant competitor.
There are many competitors that compete with KFC. Competitors like Marry Brown, Burger king, McDonald, Sugar Bum, Nando’s Chicken and each of these restaurant has different marketing strategies, target etc. however, all of the restaurant above has one thing in particular which there are too selling chicken in the QSR industry. KFC face the closet competition with Nandos. Nando’s menu offer mainly grilled peri-peri chicken and could be served in four different flavors which is extra hot, hot, medium and lemon & herbs. Nando’s and KFC main meal are chicken. KFC also face distant competitors like Long John Silver, Dominos, Pizza Hut etc. hese competitors has one common goal which is to attract QSR food lovers. Long John Silver creates a unique style by offering deep fried fish and Domino offers various flavor of Pizza. Each of these distant competitors offers different type of food and menus but same dine in the take away style. Among all the competitors, KFC earns a better competitive advantage with the 336 outlets in Malaysia and it’s well distributed compared to distant competitors. McDonald Malaysia with the outlet of 126 is very competitive and is always fighting for market leadership in Malaysia.
McDonald therefore becomes the main target that KFC need to focus on. 2. 4 Macro environment analysis 2. 4. 1 Demographic environment The population is Malaysia have increase from 15% to 28% within 20 years to 21 million of people, in different race, religion, believes and age. The increment of population, allow individuals to spend more disposable income on eating out. More women in the work force then ever before and this has contributes to increase. The existence of KF, with its QSR and served as western fast food outlet that changes the demand for KFC meals. Besides hat, KFC outlets are mostly located in the metropolitan areas. Majority of the citizen moves to this develop area due to the changes of individual demand, and the existing opportunities, education and work place, Eventually, this will increase the population of people dine in KFC as well. KFC sees the future in the expansion of restaurant chains to complement and meet the higher demand. 2. 4. 2 Economic environment The current market economy is slightly recovering after the SARS last year and Iraq war. Hence, more people are dining outside since this “hit” has subsided.
Malaysia is a country of Islamic which constitutes of different races like Malay, Chinese, Indian and tribal people. Chicken and fish are the main preference of Malaysians as it’s a Halal. KFC’s pricing for its menu is affordable and reasonable for almost everyone. Consumers who dine in KFC are mostly from the middle and upper class group, earning the average income of RM4000. These group of people are mainly form by educated people who able to afford and enjoy in KFC. Therefore, it’s estimated that there will be a slightly economy growth of 3% to 4 % when the market bounce back. Cultural environment
In this 21st century, nations are exposed to the western cultures due to the advancement of technology in this modern world. People are willing to meet, socialize, and gather for a couple of drinks, couple could meet up for a meal rather than communicate through the wireless network or mobile phones. Moreover, due to the hectic living lifestyle in this modern world, all this existence has created a higher demand for the food industry. KFC has grab the opportunity by providing customers a better place to relax and gather, direct flow of communication and selling alternatives rather than plainly selling food and beverage.
The changes of the society’s attitude have also changed the idea and people are more nutrition aware and health conscious. Example: most of the customer will want to know the food knowledge before eating them to avoid fried food, and they prefer food that is rich and have balance of nutrition. To suit the change, KFC also operated the healthy menu especially beneficial for the century today of the healthy food and nutrition concept. Political environment The introduction from the government of HALAL, which means permitted since Malaysia is an Islamic country.
KFC’s Curried Lentils is HALAL and is absolutely suitable for Malaysian of different races, Malay, Chinese, Indian and other indigenous. Under the new rules of 2002, qualifying advertising expenditure for double deduction includes professional fees made to a company resident Malaysia for advertising or promoting Malaysian brand name goods which was not included in the previous rules. Besides that, Malaysia has established and strengthened national food control systems, including the formulation and revision of food legislation (acts and regulations) and food standards in accordance with Codex Standards.
Food standards are being harmonized with global standards to facilitate trade and protect consumer health. Curried Lentils is healthy product, by customers for customer’s product and it is based on quality, sanitary and safety considerations. 3. 0 Market Potential for the New Product The demand for the nutrition food for consumers is increasing rapidly. Consumers nowadays are more health conscious and more nutrition aware, they hope to love longer and to live a quality life through proper eating and balance of nutrition are really important for century today.
This has eventually leads to many restaurants to change to meet the society’s need by offering new health menu. KFC therefore, also launch its health menu by targeting the middle income group, age ranging from 12 to 55. 3. 1 Target market demographics Household population increased from 18% to 22% in 2004. Due to this increase, people tend to spend more disposal income in eating out. Besides that, more women working nowadays compared to long ago where women last time, they were full time mother and wife.
As time changes the world, people becoming more educated and these changes most of the people tend to eat outside because they have rush hour. KFC kicks in as the alternative, as the QSR to help people save time by offering them take away fast service food. Hence, the domestic populations in demanding for healthy food increase gradually, many people tend to be health conscious and nutrition aware. To meet the change to satisfy the customer’s need, KFC also launch the new health menu by using market niche to target its segment which is through geographic, demographic, and psychographic factors.
KFC hopes that by using this target segment, this health menu, Curried Lentils will benefit everyone. 3. 2 Type of market segment 3. 2. 1 Geographic segment There is total 336 KFC outlets in Malaysia and mostly located in the strategic area, such as Kuala Lumpur, Petaling Jaya, Bangsar etc. all this places are well-develop area with the target of hectic life of working people, as they are always in the rush hour, and this has lead them to prefer the choice of QSR restaurant. 3. 2. 2 Demographic segment The world’s population consists of 21 million of people in all ages.
KFC has segmented to target patrons from age 15 to 55 years old with the income ranging from RM1500 to 5000. From the fact, most people nowadays are more sociable and educated, at least and almost everyone has a degree holder, a good occupation and approximately earning the income ranging from RM1500 ??? 3000 for fresh graduates. Indeed, it’s affordable choice for them. Since Malaysia is a Muslim country, consisting of 59% Malay and other indigenous, 32% Chinese and 9% Indian, therefore, they practice the different life-style, religions, believes and cultural.
Example, some of the Chinese and Indian do not eat beef, for Malay, they do not eat pork. KFC therefore, serves chicken as the main menu to satisfy the Malaysian. 3. 2. 3 Psychographic segment Young executive tend to dine in at QSR, due to their hectic life-style and personality. As KFC is one of the QSR that not just allow them to take away, it’s also offer fast service. Besides that, the price is reasonable and affordable. In Malaysia, most of the housewives do not cook on weekends and they prefer to eat out since weekend is a family day for most of the Malaysian, so KFC will probably be their choice. . 3 Market Expansion Grid Marketing has the responsibility to achieve the sales to the profitable level. KFC new Curried Lentils need to identify, evaluate and select the market opportunities to lay down the strategies. One very useful too for identifying the growth opportunities is the product /market expansion grid. KFC’s new products focus on market penetration and hope to make more sales than its product without changing the real product. If the product is successful to earn the profit, KFC would add new store to make it easier for more customer to visit.
Besides that, various improvements such as advertising, pricing, service, employee training would encourage customer to buy more. For example: for the customer who buys more than certain value, voucher will be given to encourage them for the next visit. KFC management would also like to consider the market development, a way to identify and develop the current product. Hence, KFC could review the demographic markets and geographical areas. KFC is now expanding all in almost every city, 336 outlets and still expanding. Product development means offer and modify the new product for the current market.
For example: KFC can increase its food offering by partnering with other supermarket like Giant, Tesco, Carrefour and to extend it brands to new product. KFC do not just focus for growing their business but also conscious the strategy for downsizing them. For example: KFC’s previous product, Prosperity Meal, Garden Salad and etc, they only last for a season of time, and change when the time change because most of the people tend to get bored after some time and need and would prefer new thing. Therefore, KFC need to invent and create or make new improvement for new product again. . 4 Customer profile 3. 4. 1 Family and children Big or small family, most of the family in Malaysia, housewives tend to dine outside especially on public holiday, mostly Saturday and Sunday. As parents nowadays are also becoming more health conscious and prefer healthy food for not only themselves but as well as their children. Now, with the introduction of more healthy food in KFC, it will serve as the opportunity for family to practice healthy life-style. Besides that, this health menu is also suitable for diabetics as it is low in sugar for meals and sugarless for beverages.
KFC hopes that parent will also encourage their children take in, and make eating healthy food a habit since younger. Young executive Young executive ranging form age group 22 ??? 30 years old and most of them are degree holder, earning average income of 1500 or above will definitely be a perfect target market for KFC as well due to their hectic life-style and demand for fast food service. With the healthy eating habits has becoming a trend, more young executive will concern of their eating behavior and with the introduction of KFC new health menu; it will definitely be the right choice for them. 3. . 3 Senior citizens The totals of 85% of senior citizens are very health conscious. They are more aware with selecting and preferring the healthy food. People of this group prefer food that rich of nutrition, low fat, low calories, low in sugars and has more benefit. As we know that, people tend to be more health aware when grow older, hence, the new health menu will definitely be a good choice for the senior citizen who seeks to have a proper nutrition, diet at the reasonable and affordable price. Family Life-Cycle Stage Below is the Family Life- Cycle Stage, which is a series of stages in which ttitudes and behavioral tendencies change over time as a result of developing maturity, income and status. But for the situation below, KFC is analyzing the income of different family in the society in Malaysia. KFC’ s new product also look at the group of people which they are more concerned with price and the group that wants quality of the product and has less sensitive to the price. Family Life-Cycle Stage Young single Young married and no children Young married with children Older married with children Older married no children Older singles RM1500 and below
RM1600- RM2500 RM2600- RM4000 RM4100-RM 5500 RM5600 and above 3. 5 Objectives Two objectives have been analyzed: Profit earning in the coming 2 years. Trendy healthy lifestyle of eating. 3. 4. 1 Financial objective Base on the KFC annual report 2003, KFC Malaysia has achieved revenue of RM694. 52 million which is an increase of 3. 1% over the previous year. In the coming 2 years, KFC again hope can earn the profit of 75 million. The introduction of curried lentils, new health menu is expected to have low price in the beginning of the sales.
After the promotion, the sale is expected to increase although profit will still be lower earning the normal profit. Since the new health menu will increase the sale, low cost deduction and low cost per customers, profits will roar at 60% of sales. 3. 4. 2 Marketing objective Few marketing objectives have been form in order to earn the profit in the next 2 years. Maximizing profit and through the quality service, cleanliness, and satisfying customer’s need. Always low price concept for customers. Promote the awareness of healthy eating concept and trendy eating life-style.
Provide quality staff training and development. Besides that, this marketing objective of introducing the new health menu is to make Curried Lentils a permanent menu in KFC. Customer feedback will be KFC’s concern and constantly improving to satisfy the consumers. Price will also be revaluated to suit the demand of the market. 4. 0 The new product range After identifying KFC target, customer and their requirements, five strategies if form which is the Ps + 4Ps. KFC will use the 5Ps consist of positioning, product strategy, promotion strategy and place to launch its new healthy menu. 4. Positioning strategy To satisfy customers need, we have to understand their needs better than the other competitors and deliver the value of it. Competitive advantage is an advantage over competitors gained by offering consumers greater value, through lower prices or by providing more benefits that justify higher prices. One of the KFC’s objective is to maximize profit and through the quality service, cleanliness, and satisfying customer’s need. Therefore, KFC will deliver it promise for that objective. To achieve the objective, KFC will give customers more value than other competitors’ offer do.
To make the product and quality that different from others, KFC will also analyze the entire experience together with the product and services. Product, packaging, services, channels and people will all be specifically identified as well as attention of other competitors. Product differentiation takes place at a continuous extent, and for example, Curried Lentils can be differentiated on design, taste, packaging and KFC could assure the customers that Curried Lentils is definitely a healthier, fresher, and better quality food product.
Besides that, to determine the quality, KFC will maintain its consistency, durability, repairability and reliability so that to achieve customer satisfaction and make sure they visit the product again. Besides that, customer service will be upgrade through speeding, accuracy, convenient and careful deliver, hence, all the employees will have to attain consistency training to improve. 4. 1. 1 Overall positioning strategy Form passion into position, that’s what KFC aim to make for the latest product of Curried Lentils.
This health menu, Curried Lentils are all low in fats, low in calories, low in sugar and it’s taste delicious, furthermore, it has balance of nutrition and definitely has more benefit. All the consumers choose the best thing and which has the greatest value and benefit. Therefore, KFC will position the new product on the key benefit that they offer relative to competing brands. As you can see, Curried Lentils not only set as a healthy product, it also offer benefit in take away service, tasty and it can warm you during the raining days.
The packaging of Curried Lentils comes with 2 different sizes, which is regular and large, in a cup that cost RM2. 50 and RM4. 50. Affordable, reasonable price with a friendly environment as well as customer’s service will be fast and employees will be professionally trained. KFC promise the quality of the product will be maintained, controls, and customer-friendly guarantees are in place to assure consistency. Besides, the most unique of this Curried Lentils is the adding of “kale”, this is not usually found in such recipes, but it’s a great and add more nutrition benefits for our daily life. . 1. 2 Developing positioning statement The summed up of the new Curried Lentils’ positioning statement would be in this form: “To young adults and senior citizen who have rush hour and were health conscious, curried lentils is a take away fast food that gives you more nutrition with the adding of “kale”, this is not usually found in such recipes that add more value in our daily life. With Curried Lentils, it’s a promise of healthier life. ” KFC believes that the unique and the strength of the product will convince the customers and shape the position of the new product. 4. 2 Product strategy
KFC’s new health menu, Curried Lentils will serve as a market demand for healthy food. The features and the benefit of the Curried Lentils are much more. Example, Curried Lentils consist of kale, kale is not usually found in such recipes, but it’s a great and adds more flavor nutritional benefits making this a complete dish and vegetables. Curried Lentils are made for the new life style of people who are nutrition aware and health conscious. The ingredients: 1 cup green lentils 1 table spoon vegetable broth 1 medium onion 3 medium cloves garlic 2 medium carrots 2 medium celery stalks 2 cups kale tea spoon curry powder 1 15oz tomatoes 3 table spoon fresh cilantro, salt and black pepper Curried Lentils in this recipe contains of: % Daily Value Vitamin B3 17. 4 Zinc 18. 1 Vitamin B2 18. 2 Copper 21. 2 Vitamin B5 22 Magnesium 24. 6 Potassium 27. 5 Sodium 29 Vitamin B1 31. 8 Protein 32. 3 Manganese 34. 9 Vitamin B6 38. 5 Tryptophan 43. 8 Phosphorus 44. 7 Iron 45. 1 Molybdenum 67. 7 Folate 70. 8 Fiber 76. 7 Vitamin C 98. 5 Vitamin A 364. 4 Vitamin K 626. 8 The new Curried Lentils is convenient and even anyone can enjoy whether as a stand alone meal, as appetizer or as a wholesome meal. With RM4. 0 of price, is not just affordable, it’s also help society to save more and of course worth buying. The new creation of Curried Lentils is definitely a reward for the modern age today. The quality of Curried Lentils is always assured, giving the value, benefit and customer satisfaction. Hence, Ingredient used is highly quality, rich and balance of nutrition, and regulated by world health organization. Furthermore, it’s approved as HALAL product. Besides that, KFC will also set up few systems to develop and track product benefits such as the feedback from the customers, suggestions or improvement will also be made.
KFC also pay attention to the product changes with other competitors. Example: Do the changes in KFC’s Curried Lentils offering suggest desired product benefits? 4. 2. 1 Branding A brand serves to identify a new product; it could simply be a name, symbol, sign or any combination that could differentiate one company’s product from those competitors. For example, almost everyone recognize NIKE, or the brand name, “coca-cola”. When the brand name is registered, it’s exclusively use. Such protection is to prevent other competitors from exploiting the brand name and as well to prevent the lose recognition of certain product.
Well, KFC conscious that “Curried Lentils”, the new invention product are of crucial importance to its consumers because most of the people will stick to what they like to eat once they found the satisfaction and remain the customer loyalty. In fact, most of the people think brand name products are superior product. For example, KFC has made a name in Malaysia; almost every Malaysian knows KFC stands for Kentucky Fried Chicken and mainly offer chicken. The new research indicates that, with some marketing support, trademark has created an indefinite life for KFC.
One of the product that offer by KFC for the previous project was the “Garden salad” and it has created a successful and product satisfactory, this has brought the new view and increasing of confidence for the customers to visit KFC. Naturally, customers will assume that a new product launch with a reputable name will meet the similar standards of quality and services. Besides that, Curried Lentils also helps in its introduction with others competitive product from other competitors in the market. 4. 2. 2 Packaging Today, most products come neatly packaged in various design, style, color, size and shapes.
Packaging of a product could be significant in characteristic and if offers to customers, it could add on more benefits. For example: a package design of a product can protect products from becoming spoil. It’s the same for KFC’s Curried Lentils, the product packaging made of easy and convenient for those who were in the rush hour, they could just order and take away, whether as a stand-one meal, appetizer or a dish that accompanies a wholesome meal. Besides that, Curried Lentils’ packaging also comes in two different sizes, which is large and regular, with the two different prices of RM4. 50 and RM 2. 50.
Hence, the packaging color also very important, for Malaysian Chinese, red color symbolize prosperity, green color for Malay symbolized wealthy and etc. KFC hope that a new packaging may appeal to the new target market without losing the previous market. Therefore, Curried Lentils will be package in smaller quantities may attract the single-person in the market while continuing to appeal to the original market. 4. 2. 3 Labeling A label provides information about the product or its manufacturer. Example, the mouthwash advertise was found to be ineffective and today they can only claim for the product kill germs.
Besides that, the consumer packaging and labeling Act requires that Labels must list ingredients in descending order of importance and the uncoded, minimum shelf life must be displayed. 4. 3 Pricing strategy The KFC curried lentil new health menu’s price will be determine by the interaction of supply and demand in the Malaysia market KFC requires more and concrete methods of setting prices for their new health product menu; they cannot simply place the product in stores and set the price according to the number of people who buy the product.
The producer or manufacturer is expected to know the price of the new Curried Lentils in order to plan for production and profit. Besides, wholesalers and retailer must also know the price in order to plan their resale prices and to determine the profits. KFC believes that product pricing directly affects a company’s profit and therefore requires careful analysis. Cost of manufacturing, sales, overhead, and the profit objective must be planned and calculated. A pricing strategy depends on the specific objectives of KFC and penetration pricing will be followed.
One of the general trends, penetration pricing, in which a company introduces a product at a low price to gain a large portion of the market quickly would also be use. If customers accept the new product, then KFC can benefit from economies of scale in production and lower its cost. If KFC could establish the new product in the market with this manner, the profit would be high. If KFC could introduce one or more similar product, then the profit would be higher at a higher price. The low price of the KFC Curried Lentils and the strong market position may prevent other competitors from entering the market. . 3. 1 Pricing approaches KFC’s product pricing approach must be both attract consumers and provide a profit. The two basic approaches are used to set the price for Curried Lentils, which is the cost approach and market approach. Under the market approach, prices are based on what consumers are willing to pay for the new product. Therefore, the competition would also affect price. Cost pricing Under the cost approach, the costs of doing a business are the primary determinants of price.
KFC’s general administrative, amount of profit, and the initial pricing structural will also be taken into account, for the research and development as the cost of introducing the product to the market. These include the advertising and promotional schemes. For here, KFC’s new product will consider the two basic method of cost pricing. Mark-up pricing Mark-up pricing which is generally use by retailer, the percentage is added to the cost of the product to arrive at the selling price. Mark-up pricing = (selling price ??? cost) / cost = (RM4. 50- RM1. 50)/ RM1. 50 = RM2 Therefore, if Curried Lentils cost is RM1. 0, sold for RM4. 50 then the mark-up price represent 100%. Break ???even analysis Break-even analysis shows the minimum sales volume of KFC would make at a particular price in order to cover all costs. Total cost = Fixed cost + Variable cost Total revenue = Price * Quantity Sales = RM 4. 50 Fixed cost = RM52000 Less: Variable cost = RM 2. 00 _________________________ Contribution margin = RM2. 50 _________________________ Therefore, at Break-even point = Fixed cost / contribution margin per unit = RM52000/ RM2. 50 = 20800 units
Assuming the unit sales volume is 500000 units. Profit = [contribution margin per unit * unit sales volume] – total fixed cost = [RM2. 50 * 500000 units] ??? RM52000 = RM 1198000 Curried lentils = RM2. 50 (regular) Curried lentils = RM4. 50 (large) The graph shows a break even calculation and the break-even point. The break even point, where total cost and total revenue are equal is 20800units. At that volume, the total revenue from selling one unit of Curried Lentils at price RM 4. 50 each is equal to the total cost (fixed cost + variable cost) of producing that number of units.
If the volume of the product sold is above the break-even point, the firm will make a profit otherwise the firm will incur losses. 4. 3. 2 Other pricing consideration Most consumers tend to believe that price and quantity are related, the higher the price of a product, the better the quality. Therefore, KFC would also keep this price ???quality relationship in mind when pricing the new product. Besides that, KFC will also enhance the quality of the service and build customer relationship. If Curried Lentils is priced too low, a large segment of the target market may assume that quality is too low and may not purchased the product.
Another factor that KFC would consider is the psychological pricing. In pricing, products at 79 cents, RM 9. 95 or RM 29. 95 instead of 80cents, RM10, or RM30, marketer hope that the customers will unconsciously view 9. 95 as significant less than RM 10. Due to the launch of the new product, Curried Lentils will be priced at RM4. 50, not at the price of RM3. 99 or RM4. 99. Curried Lentils is a new product, and most people do not know about Curried Lentils, by selling at price RM 3. 99, it will not cover the cost and maybe incur losses, by selling at price RM 4. 9, it would be too expensive and people would not try due to the expensive offer price. With pricing affordable, reasonable, and this healthy product is definitely worth buying even for lower income earner. Curried lentils, is objective to satisfy the customer needs by targeting the people of nutrition aware and KFC hopes that the youngster to start on the habit of eating healthy food. 4. 4 Promotion strategy 4. 4. 1 Promoting the product As we know that, promotion is a communication used to increase sales of a product or services either directly or indirectly.
KFC has to inform and create the consumer awareness among people about the existing of the new healthy menu, the Curried Lentils. There are many ways could be use to promote new product, through television, radio, billboard, magazine, newspaper or sales talk through the display demonstrations. The idea of this promotion will be in various methods by developing the healthier concept and nutritionally aware among people. Besides that, by adopting the promotional mix, KFC will definitely achieve its sales target. The promotional mix is use to appeal to the target market nd is the combination of advertising, personal selling, sales promotion and publicity. For here, KFC will be using two of the promotional mix which is advertising, and sales promotion. Advertising The most important of advertising is the ability to reach a large numbers of people through the use of mass media such as television, radio, newspaper and magazine etc. KFC’s Curried Lentils will be promoting through television especially in certain television programme to gain exposure to a large portion of its specific target market and to create consumer awareness of the existing product.
Besides that, Curried Lentils will be advertising in the daily star newspaper for a period of time. Hence, the use of media to advertise KFC’s new health menu in the lesser amount would be distributing flyers to student in different colleges would help to encourage student to begin their eating healthy habit. The commercial advertising will be prepared by advertising agencies that specialize in planning, producing and placing advertisements in various advertising media for their clients. An agency typically consists of copywriter, artist and media buyers etc.
Agencies are normally paid 15% commission based on the cost of the advertising placed in the media. . Sales promotion Other than advertising, sales promotion are also used to increase the sales or the awareness of the new product. By using this method, KFC can increase its sales volume, increase the awareness, loyalty and enjoy more frequently with the special offer given. Every visit with the purchase of a set of individual KFC meal with Curried Lentils, individual will be given a coupon of 50% offer Curried lentils for a specific time period.
KFC will also use the premium approach, with every purchase of a large family meal and Curried Lentils, customer will be reward one of the collection of Disney, Home On The Range’s cartoon product. Hence, the outside signs, window displays, and display racks as part of the sales promotion to reshape and beautify the more friendly environment to attract more customer curiosity and to welcome the launch of Curried Lentils. Publicity Publicity is a media communication about the newsworthy products or services.
Since Curried Lentils is a new creation for KFC, publicity will be use as one of the approach to increase product sales and to create the awareness of Curried Lentils, the highly nutrition product. Publicity will be done by printing articles about the new Curried Lentils, which may attract consumer interest. 4. 5 Place strategy 4. 5. 1 Channel distribution Channel distribution is the method that used to get the product to the customers. KFC new health menu, Curried Lentils will be distributed in all existing outlets in Malaysia.
Since Curried Lentils is a low-priced product that appeals to the mass market, an indirect selling approach would be use with the support of advertising and as long as it’s KFC outlets, consumer could enjoy Curried Lentils. Besides that, sales through a local KFC outlet may be the best distribution method since KFC has a large number of customers located in city area such as Bangsar, Kuala Lumpur etc. However, a small number of geographically dispersed buyers would never be ignored, individual selling would be provided. 4. 5. 2 Types of channel distribution
The type of channel distribution that KFC would use for curried lentils is: Producer > Wholesaler > Retailer > Consumer 4. 5. 3 Selection of distribution product Since Curried Lentils will be promoted in all the KFC outlets in Malaysia, intensive distribution would be use as approach. Wide availability are more important than the nature outlets, convenience product would have a high replacement rate. Besides that, Article that focuses on the importance of intensive distribution in the fast-food industry would make the product available where a customer may want to purchase fast-food . 0 Conclusion 21st century has changes the way of people live, changes the attitude of the society and people tend to be more health conscious and nutrition aware. No doubt, this has lead to the demand for food and service industry. KFC seizes the opportunity by introducing a new health menu to the market to meet the customer’s need. This health menu, Curried Lentils comes with individual meal, family meal and side order. In order to meet its marketing objective, KFC has uses the market niche approach to launch its new health menu.
The main target KFC focus on are age around 12 to 55 years old who are children, parent, young adult, young urban adult and senior citizen. Hence, the KFC also uses the marketing strategies to launch its health menu. The marketing strategy includes positioning, product, pricing, promotion and placing strategy. With good service, quality product and consistency, this new health menu will surely make an impact on Malaysian diet. KFC will definitely a QSR, where consumers are able to enjoy alternatives choices here. 6. References Principles of marketing, 10th edition, 2004, author – Philip Kotler & Gary Armstrong, publisher ??? Prentice Hall. Marketing, 7th edition 2002, Kerin,R, Berkowitz,E, Hartley, S & Rudelius. http://www. kfc. com/ http://www. kfc. com. my/ http://www. kfcholdings. com. my/kfch_corp/corpcomm/milestone_five_awardsl. htm http://malaysia. designerz. com/malaysia-business-economy-restaurants. php http://www. onlinewbc. gov/docs/market/mk_target_mkt. html http://www. busymarketing. com/basics. shtml http://www. cspinet. rg/nah/09_01/yogurt. html http://familydoctor. org/x1967. xml http://www. whfoods. com/index. html http://www. uiowa. edu/~commstud/adclass/adage-positioning. html http://www. quickmba. com/marketing/mix/ http://www. skyrme. com/ppt/km99/sld024. htm http://www. businessplans. org/Segment. html http://www. sba. gov/test/wbc/docs/market/MKPLAN_object3. html http://www. businessbureau-uk. co. uk/sales-marketing/segmentation. htm 7. 0 Survey This survey is conducted to 100 people ranging from the age from 12 to 55 of both genders.
The purpose of this survey is to upgrade its current facilities to meet the consumers’ requirement as well as to understand the customer’s needs. The survey including the understanding of KFC customer’s towards the food product, opinion of the new product, suggestion to enhancement and customer’s preference. KFC Survey Form Name: _______________________ age: ___ 1. Have you heard of KFC (Kentucky fried chicken)? Yes No 2. What is your favorite food in KFC? Chicken Rice Salad Mashed potato Others 3. How many times a week does you eat out? one 1 to 3 4 to 7 8 and above 4. Where do you go for fried chicken? KFC Kenny Roger’s Nando’s chicken Others 5. Have you heard of Curried Lentils? Yes No 6. How do you know our new product? Magazine Television Radio Internet Friends / Relative family 7. Which special offer do you prefer to have? Cash coupon Discount Gift Buy one free one 8. Is there any improvement in our service? Yes No Cleaning services Efficiency 9. What specific services would you like to introduce? 24 operating hours specific areas for babies message board reading corner others Survey Result