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Case Review Kentucky Fried Chicken Advertising Essay

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Case Research Kentucky Fried Chicken Advertising Essay

The company also owns other popular cafe chain such as for example Long John Silver’s, Taco Bell, Pizza Hut etc. With an increase of than 500 systems of KFC stores in the world and more than 50 percent industry shares in the umbrella organization, opportunities in KFC investment is ideally best for businessmen who happen to be motivated in bringing great service to its customers. KFC Corp. has started out making franchises available for sale in 1952. Since then, the company has generated a huge selection of store worldwide. Initially, you will need around $25-$30,000 for franchising a retailer.

On the business website you will find a information regarding free training to development skills in handling such food and restaurant business.

Table Of Contents

Mission

Stated Objectives

Implied Objectives

Rank of KFC in sales

Type of retail data format used by KFC

Swot analysis of the company

Opportunities

Threats

Strengths

Weaknesses

Problems

Organizational structure and its advantages and disadvantage

Recommendations……….

Mission

To sell meals in a fast, friendly environment that appeals to pride conscious, overall health minded consumers. This is the mission of KFC.

Stated Objectives

Product development

Increase variety on menu

Introduce desert menu

Introduce new furniture in all restaurants

2.Implementation on non-traditional units

Shopping mall food courts

Universities

Hospitals

Airports

Stadiums

Amusement Parks

Office Buildings

Mobile Units

3.Boost profitability of KFC through the next:

Reduced overhead costs

Increased efficiencies

Improved customer service

Cleaner restaurants

Faster service

Implied Objectives

Expansion of international procedures to provide the next:

Increased percentage of total sales growth

Increased percentage of revenue growth

Increased growth of franchises into Mexico do my assignment

Expansion of franchise operation beyond Central America

Continued promotion of better graphic through removal of the term “fried” from the name

Rank of KFC in sales

KFC Sales

As of 1995, KFC was ranked sixth in the U.S. sales in fast-food chains

Top 10 Leading U.S. Fast-Food Chains

U.S. Revenue ($M)-(Exhibit 2)

1995

1994

McDonald’s

15,800

14,951

Burger King

7,830

7,250

Pizza Hut

5,400

5,000

Taco Bell

4,853

4,200

Wendy’s

4,152

3,821

KFC

3,720

3,500

Hardee’s

3,520

3,511

Subway

2,905

2,518

Little Caesar’s

2,050

2,000

1)Type of retail essay on courage format used by the KFC

The retail structure of KFC can be involved, Unnat Varma, Advertising Director of the company reveals, “We’ve up to now launched two retail platforms. Dine in restaurants are currently dominant, however, we’ve recently launched food court express outlets. Arriving years will see us actively producing drive-thru formats as well. For these retail forms, space need varies from 500 sq.ft to 5,000 sq.ft.”

2)SWOT Research OF THE COMPANY

Opportunities

Opportunities represent exterior environment that may improve a company’s performance. Opportunities that KFC may take advantage of are as follows:

The Mexican market, which offers a large customer basic, lesser competition.

The Mexican company provide a huge customer base to utilize. The transportation cost to Mexico in comparison to other countries is quite minimal. Therefore the advantages, US companies generally have not expanded substantially in the Mexican market in comparison to European or Asian market. Therefore, the companies can get lesser competition when growing in Mexico.

“Dual branding” helps to charm to the wider customer base and in addition provide higher profit.

This strategy really helps to “improve economies of scale within its restaurant operations.” For most companies that own several fast-meals chain, “dual branding” is definitely an ideal method to extend quickly and increase profit. The firms no longer need to wait for the shop to be developed or spend money and time looking for the location. By adding a brand to the existing fast-food store, the firms are able to broaden quickly and for less money.

3.New franchise regulations in Mexico give fast food chains the chance to expand their cafe bases.

In January 1990, Mexico passed a rules that favored franchise expansion. The law provided for the security of technology transferred into Mexico. Before 1990, there was no coverage for patents, data, and technology transferred to the Mexican franchise. This led to higher number of the company owned fast-food chains rather than the franchises in Mexico.

4. Australian opportunity

Growth in international earnings were highest in Australia, which is now KFC’s most significant international market.

6. New distribution channels give a significant growth opportunity.

Especially in the last few years, consumers are demanding junk food in non-traditional locations, such as for example shopping malls, universities, hospitals, and various other high-traffic areas. The spots listed above are a few of the most famous non-traditional locations. The fast-meals chains are recording huge sales in those areas because of high-traffic. Consequently, the firms are regularly looking and tests for new high-traffic places to expand.

Threats

Threats to a organization are internal factors. The threats that KFC faced with include the following:

1. Saturation of the US market.

According to the National Restaurant Association (NRA), food-service product sales in 1995 will hit $289.7 billion for the U.S. restaurant industry. The NRA estimates the revenue in the fast-food segment of the food industry will grow 7.2% to about $93 billion in america in 1995, up from $87 million in 1994. Although the restaurant market has outpaced the overall economy recently, there are indications that the U.S. industry is slowly becoming saturated.

2. Raising competition and increasing sales of substitute products.

Faced by slowed revenue development in the fast-food sector, various other segments of the industry have turned to latest menu offerings. McDonald’s introduced its McChicken sandwich in the US market in 1989. Domino’s features introduced poultry wings to its menu. Pizza Hut has tried out marinated, rotisserie-cooked chicken.

3. Changing tastes of consumers.

During the 1980s, customers commenced to demand healthier foods and KFC was faced with a restricted menu consisting largely of fried foods. So as to reduce KFC’s picture as a fried poultry chain, it transformed its company logo from Kentucky Fried Poultry to KFC in 1991. In 1992, KFC launched Oriental Wings, Popcorn Poultry, and Honey BBQ Poultry as alternatives to its Initial Recipe fried chicken.

4. Obstacles connected with expansion in Mexico.

One of KFC’s major concerns is the steadiness of Mexico’s labor market segments. Labor is relatively plentiful and low-priced in Mexico, though a lot of the work force continues to be comparatively unskilled. While KFC advantages from lower labor costs, labor unrest, low job retention, absenteeism, and punctuality continue being significant problems.

Strengths

Strengths are available internally in a provider and can be used to the business’s advantage. The strengths determined are as follows:

1. KFC’s top secret recipe.

The secret recipe is definitely a source of marketing, and allowed KFC to set itself apart. Also, KFC was the 1st chain to enter the fast-food industry, right before McDonald’s

2. Name recognition and reputation.

KFC’s early entrance into the fast-food industry in 1954 allowed KFC to build up strong brand recognitio in the industry. The Colonel is usually KFC’s initial owner and an extremely recognizable body, both in the U.S. and internationally, within their new logo.

3. Traditional employee loyalty.

“KFC’s culture was built largely on Colonel Sanders’ relaxed approach to management”. Prior to the acquisition of KFC by PepsiCo, staff members at KFC enjoyed good benefits, a pension, and may receive help with additional non-income needs. This sort of “personal” recruiting management produces a loyal workforce.

Weaknesses

Weaknesses are also located internally like strengths. Weaknesses, however, can limit a company’s probable. The weaknesses for KFC are identified as follows:

1. KFC includes a long time to market with services.

Because of the type of the poultry segment of the junk food industry, innovation was under no circumstances a primary strategy for KFC. However, through the late 1980’s, other fast food chains, such as McDonald’s, began to offer chicken as a menu option. During this time period, McDonald’s had already released the McChicken while KFC was even now testing its own chicken sandwich. This delay substantially increased the price tag on developing consumer recognition for the KFC sandwich.

2. Conflicting cultures of KFC and Pepsi Co.

While KFC’s customs was largely predicated on the Colonel’s laid back method of management, while PepsiCo’s tradition is additional of a “fast track” attitude. Employees do not have the same level of job reliability that they enjoyed prior to the PepsiCo acquisition.

3. Turnover in leading management.

PepsiCo bought KFC in 1986. By the summer of 1990 PepsiCo’s private management had replaced each of the top KFC managers. Nevertheless, by 1995 most of this new PepsiCo control had either left the business or been moved to a new division.

4. New contractual disputes with franchisees in the usa.

This is also an example of the conflicting cultures of KFC and PepsiCo. KFC’s franchisees had been used to little interference from corporate office buildings. In 1989, the CEO announced new contract changes – the first in thirteen years. “The new contract gave PepsiCo operations greater power to take over poor franchises, to relocate eating places, and to make changes in existing restaurants”

Problems

Through an research of the strengths, weaknesses, possibilities, and threats of KFC, the next potential problem areas were identified:

1. No defined target market.

The advertising campaign of KFC does not specifically appeal to any segment. It does not may actually have a steady long-term approach.

2. Saturation of the U.S. Market.

There has been a rise in the entire number of fast-foodstuff chains. Access to restaurants is currently easier because of non-traditional locations, for example in airports and gas stations. Also, the age of Americans will change the regularity of eating dinner out.

3. Health Conscious Customers.

There is a trend toward an extremely healthy diet in the us. This set KFC at an severe disadvantage due to its fried product offering.

3)Organizational Structure and its benefits and drawbacks.

History

Since its inception, KFC possesses evolved through a number of different organizational changes. These improvements were brought about as a result of changes of ownership that adopted since Colonel Sanders first of all sold KFC in 1964. In 1964, KFC was sold to a tiny group of investors that sooner or later took it general public. Heublein, Inc, acquired KFC in 1971 and was highly mixed up in day to day operations. Finally, in 1986, KFC was acquired by PepsiCo, that was trying to increase its quick serve restaurant segment. The PepsiCo management style and corporate tradition was significantly not the same as that of KFC.

PepsiCo has a consumer item orientation. PepsiCo discovered that the marketing of junk food was very similar to the advertising of its soft drinks and snacks. PepsiCo reorganized itself in 1985.

Due to market saturation in the United States, international expansion will be significant to raised profitability and progress.

Present Situation

The organization is currently structured with two divisions under PepsiCo. David Novak is president of KFC. John Hill is Chief Financial Officer and Colin Moore may be the head of Marketing. Peter Waller is brain of franchising while Olden Lee is definitely head of Human Resources. KFC is the main two PepsiCo divisions, which are PepsiCo Worldwide Eating places and PepsiCo Restaurants International. Both these divisions of PepsiCo will be located in Dallas.

Strategic Alternatives

The strategic options for KFC are the following:

1. Re-franchise all provider owned Mexican systems into franchises

Advantages

Reduced risk-political and economical

Increased cash flow from sale of units

Less daily involvement by KFC

Less Administrative Costs for KFC

Disadvantages

Foregoing potential greater profits

Losing control of day to day operation of the franchises

Expansion through franchise endangers company equity

2. Leave Mexico mainly because is and grow various other foreign markets.

Advantages

Focus investment on strongest growing segment in Australia

Less political and financial risks in other international markets

Disadvantages

Still have certainly not mitigated risk in Mexico

Forgoing potential progress at profitable market

Still have brand exposure

RECOMMENDATION

Based on our research of the salient problem and the strategic alternatives, we recommend that

-KFC re-franchise each of the 129 company models in Mexico. This most effectively mitigates the chance of doing business in Mexico by making a franchisee responsible for the profit and lack of each product. KFC will nonetheless receive royalties predicated on the sales of each unit. Nevertheless, franchises will protect the business from currency devaluation.

– KFC has the ability to reduce this risk while nonetheless maintaining a presence in another of the major growing markets. Expansion isn’t recommended at this time due to the volatility of the economic and political condition in Mexico.



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