Industry Background
These few decades, the lifestyle and pace of modern people has become faster changing ever. Thus, people are demanding for fast food for take away or dine in which are quick to fill up their stomach. This has fueled up the competition of fast-food restaurants to share the cake of fast-food industry. There has been an ongoing battle between the fast-food restaurants. KFC, McDonalds, Sugar Bun, and Marry Brown are the top selling fast-food restaurants in
Corporation & SBU Background
QSR Brands Bhd. with its subsidiaries together engages in the operation of fast food restaurants in
KFC
KFC Malaysia is the famous fast food restaurant in
SBU Situational Analysis
SBU Culture
All fast food restaurants under Yum! Brands in the world have unique culture throughout the world, which applies to every brand under the Yum! Brands, which shows they have very strong belief towards their culture. ‘CHAMPS’ is the soul culture for KFC in the world: Cleanliness, Hospitality, Accuracy, Maintenance, Product Quality, and Speed with Service.
Cleanliness
Make it shine! As referred to KFC RGM Manish Patel tells his team, they spend the first two hours of each day keeping his restaurant sparkling, with the program called “Cleaning Captain”. In 2006, he was named KFC’s RGM of the year.
Hospitality
Letting the customer know that they come first. As referred to how LJS/A&W RGM Kris Jaccard defines hospitality. Kris has been keeping the customer top of mind for 15 years with franchisee BNC Food Group, she is designated a “training restaurant”. She scored 90% for CHAMPS in 2006.
Accuracy
KFC RGM Liu Bing Zhi, defines accuracy as serving delicious food the right way every time with smiles, and making sure their orders are correct. In-store surveys help the team stays focused on their customers’ needs and keep their CHAMPS scores in 90% plus range, while growing sales.
Maintenance
Displaying a high-energy attitude. As referred to Pizza Hut RGM Don Bryant keeps his eye on all parts of the business. Making sure customers don’t have a bad experience because something is not working right is very important that contribute to the customers’ satisfactions. He scored 95% in 2006.
Product Quality
Perfect tacos every time. As referred to Taco Bell company RGM of the year, Ramona Ureda. Customer coming in because they know they will get great food, she knows customers expect their orders to be perfect and the quality of the product as high as possible. She scores 97% for CHAMPS in 2006.
Speed with Service
Things move fast in the five restaurants that Mejid Mamdouh oversees in
All the information above extracted from Yum! Brands’ annual report.
SBU Resources
The following are the corporate resources of KFC Holding (KFC 2007):
- In terms of marketing resources, KFC has located around 6% of its estimated cost breakdown which is equivalent to 1.5 million out of 25 million just for marketing activities in year 2007 (Equity focus 2007).
- KFC owns corporate headquarters in Jalan Sultan Ismail, Kuala Lumpur which has the market value around 90 million and a 22 storey building (Hotfrog 2006).
- Kulim is the main funding of KFC Holding as it controls the flows of expense for KFC (Equity focus 2007).
- KFC has operated more than 370 outlets around 13 states in
- KFC has its manufacturing company named KFC Manufacturing Sdn. Bhd (Hotfrog 2006).
- Besides, KFC also has its 15 warehouses and 25 logistic services located in Shah Alam, Selangor,
- In terms of technology resources, KFC has its own machine to manufacture, cook and its company website setup online.
- In terms of intangible resources, KFC has well-known brand name around the world. It also has a scale advantage as it is the first Western Quick Service Restaurant in the world to set up restaurants and the first to establish a children's club named KFC Chicky Club (QSR Brand Bhd 2007).
- Another significant resource of KFC Malaysia is its corporate culture, which is the CHAMPS, as mentioned above.
SBU Stakeholders
Shareholders
The main concern of the shareholders of company is the profit that the company can generate, and the amount of money that can be allocated for them. Besides profit, there are other concerns which are theft, loss, damage, misuse, or waste related to the assets, example would be physical assets, financial assets, and intellectual property from theft. Not only this, shareholders need to be informed on how the company is going frequently. Annual report should also be prepared through hardcopy or softcopy to shareholder timely, neatly, accurate, complete and understandable to shareholders.
Employees
For the employee, they are interested in how the company going is simple, they depends for their living, as when they work the company will pay them back in return. When the company success in the profit making, they also get benefited in terms of bonus or commission, thus boosting the staff morale. Not only this, most company which offer better return to employee get the best employee, people are willing to sacrifice for them. The company should also look into the safety and health problem of their employee.
Customers
Customers are able to justify a company’s success, while consuming food in KFC; they are looking into many aspect, like the quality and quantity of the food offered, the surrounding of the restaurant, the staff inside the store and many more. Thus consider the interest of customers in making any decision is important, because without customer, the company can hardly get revenue. Also the image of a company in customers’ perception is important, bad image will lead to low sales. For example, the KFC offer variety of meals, namely kids’ meal, family meal, budget meal etc.
Suppliers
Supplier is very important to a company, especially restaurant like KFC because food that they supply need to be fresh, and for Malaysian context, Halal policy need to be strictly adhered. Furthermore, their interest may include building mutual relationship based on integrity, legal, and ethical behavior. Supplier will always try to avoid dealing with a company is not mutually trusted.
Government
Government played a vital role in Malaysian restaurant, especially in the Halal policy. Because
SBU Past Performance
| KFC | 2003 RM 000 | 2004 RM 000 | 2005 RM 000 | 2006 RM 000 |
| Profit Before Tax | 66,056 | 66,736 | 5,563 | 142,304 |
| No. Restaurants | 336 | 350 | 350 | 375 |
From the table above, KFC has lower revenue dramatically in the year 2005. This is mainly due to the legacy issue of mainly property assets which requires KFC to pay huge and one-off impairment charges. But KFC only manage to get profit before tax of only 5,563 thousand due to legacy issues of their assets. KFC suffered a loss of 32,475.4 thousand in 2005 (KFC 2007). The growth of sales and revenue began to stable in 2006 as KFC launched a few new products such as Cheesy BBQ Meltz and others after the aftermath of bird flu issue no longer threaten the market in
Awards & Achievements
| Award | Year | Awarding Body |
| Best New Product Development 2004 | 2004 | Yum! Brands |
| Beat Year Ago Award | 2005 | Yum! Brands |
| Overall Marketing Excellence Award | 2005 | Yum! Brands |
| Tiger Award - Mr. S.K. Wong | 2005 | Yum! Brands |
| Brand Visibility Award | 2005 | Yum! Brands |
| Best Brand Image Award | 2006 | Yum! Brands |
| Best Overall Marketing Award | 2006 | Yum! Brands |
| Best New Product Award | 2006 | Yum! Brands |
| Product Excellence 2006 | 2006 | Yum! Brands |
| Marketing Excellence 2006 | 2006 | Yum! Brands |
Source: KFC 2007
SBU Customers
Market Performance
| KFC Restaurants | Revenues in Billion (RM) |
| 2003 | 1.38 |
| 2004 | 1.41 |
| 2005 | 1.46 |
| 2006 | 1.52 |
Figure above is Revenue of KFC Restaurants from Year 2003 to 2006.
By referring to the table above, there was a low growth of 0.03Billion of revenue generated between year 2003 and 2004. As in 2004, there was a breakout of Asian Bird Flu in
From 2004 to 2005, there was an increase of 0.05 Billion of revenues. This was mainly due to the new launched of combo meal called KFC X-Meal, which offers extra choice and variety. It consists of an OR Fillet Burger, one piece of chicken and a choice of either regular potato wedges or regular coleslaw or a regular whipped potato. This was the first time ever KFC customers could get both burger and chicken with a side dish as part of one individual meal combo. This meal had reduced the anxiety of customers especially teenagers and young adult who wanted to eat both burger and chicken at the same time yet paying affordable price. In addition of a great mean, KFC also advertised and held promotion for the launch of KFC X-meal through TV, radio, press and outdoor advertising, point-of-sale materials and ambience (KFC Launches new combo meal 2005). This is the reason that the revenues rose up 0.05bilion with a positive growth.
Interestingly, the revenue also increased by 0.06Billion from 2005 to 2006 with a positive growth. Apart from the X-Meal that generated huge sales which was permanent product sold in every KFC restaurants. Another reason was due to new launched of product by KFC Restaurants. KFC Restaurants launched the new Cheesy BBQ Meltz which contributed at least 10% of the sales. This product was successfully launched to target teens and young adults as well. The Cheesy BBQ Meltz is toasted tortilla bread filled with melted Mozzarella cheese, crushed BBQ nancho chips, tomatoes and mayonnaise. With heavy advertisement and promotion costs of RM4 Million, the increased sale was showing a positive return of the effort (Tong 2006).
Market segments for KFC Restaurants
The market segments are basically divided by 4 groups:
- Children
KFC targets children boys and girls with age 12 below who love to eat fried chicken. At the same time also targets children who love to get free toys with meals. Thus KFC has Chicky Meal with free toy.
- Teen & Young adult
KFC also targets teens and young adult with age 12 to age 25 who love of its fried chicken. Normally, KFC target boys and girls who like to eat both fried chicken and burger at for an affordable mean. Thus KFC has X Meal which emphasizes extra choice and extra variety with lower price.
- Family
KFC targets family which both parents and 2 less or more kids dining together in KFC restaurants or take away. KFC also have children playground that normally parents would bring their children to play at there, while they could peacefully eat their meals. Thus KFC has Mini Bucket Combo and Variety Bucket to cater for bigger numbers of people to eat with favorable price.
- Budget customers
KFC has concerned of budget customers’ appetite with basically age 12 to 55. Thus KFC also has ala carte menu and real savers menu which emphasize in 1 set with lower price and side orders as well such as potato wedges.
SBU Competition
The main competitor of KFC Malaysia currently is McDonald. There are many other competitors in the market which includes Sugar Bun, Marie Brown, and other fast food chain restaurants. On the other hand, there is an inter-competition among the SBUs of same corporate for examples Pizza Hut.
The sales figure of KFC Malaysia for the year 2006 was RM 1.52 billion, but unfortunately the sales figure of McDonald could not be obtained because it is not a listed company. However, McDonald’s growth rate and also market share could be obtained through reliable source.
The market share of KFC Malaysia for the year 2006 was 44% while the market share of McDonald for the same year was 14%. And the growth rate for the KFC Malaysia I year 2006 was 4%, and growth rate of McDonald for the same year was 15%.
There were quite a number of successes that McDonald had achieved, for example Superbrands Certificate was given to McDonald in the year 2003 (Superbrands Asia 2007), and its creativity in the recent year is crucial for its success (Chen 2007). As for the KFC Malaysia, it is always one step backward of McDonald in term of menu, for example its Fish burger comes after McDonald offered their Fish Burger, and the 24 hours operation which is practicing in KFC now was actually initiated by McDonald.
However, for a company to survive in a country is not simple, and it requires something special that others do not have, for example sustainable competitive advantages. The meaning of sustainable advantages means erecting barriers against competitor, just like what KFC has something special over McDonald. One of the most significant advantages that KFC has over McDonald is the early entry and establishment of KFC in
The other advantage of KFC Malaysia would be its supplier teams, which are Region Food Industries, Commissary, and Baker’s Street are also the SBU of QSR Brand. It is advantage that it will manage to get its materials at a cheaper price, because of the same corporate it is in, as compared to dealing with other external supplier.
As for the McDonald, the advantage would be its worldwide reputation is better than KFC (Keen 2005), because of the popularity and the wider acceptance. For example everyone would think of McD Burger once they heard about the McDonald. One more advantage, would be that it is not public listed, the reason being it is an advantage is because it can prevent its competitors to get its information like sales revenue conveniently.
Although both of the companies have their own advantages, but the advantages of KFC Malaysia are seems to be internally, which is still not yet fully utilized. While for the McDonald, it has fully utilized its brand name, its creativity to create better awareness among population in the world. The very important criterion is to fully utilize advantages of KFC to out win its major competitor, McDonald.
Changes
PEST Analysis
Political Factors
Halal regulations
Halal issue is very important in
Economic Factors
Economic Growth/Drop
Economic rate is very important in doing business. It will affect the currency exchange rate in
Interest rate
Interest rate is the rate charged or paid for the use of money and usually not a fixed rate. It is normal that a company borrow money from the bank. So if there is any change in the interest rate, it will somehow affect debt repayment and also the incentive to borrow. Little changes in the interest rate will affects the operating profit of KFC and their debt ratio.
Social Factors
Culture
Culture refers to the way people live their life. Every country has different culture. The way how Malaysian perceived food is changing from he past till present. People nowadays tend to look at the quality of food. This is a change from past behavior. This may due to the increasing of unhealthy society among Malaysians.
Education
The population in
Technological Factors
Improvement of internet uses
The uses of internet have grown more and even shopping is done online. It is so convenient that enable businesses to operate in the internet world due to increasing of computer users. For instance, KFC website - http://www.kfcholdings.com.my provide all the information about them and their products. It also shows the share price rate in the website.
Key Trends, Issues, Problems and opportunities
After going through the situational analysis, KFC Malaysia has several trends in the market, issues and problems and finally opportunities that have or might been through.
Key Trends
Health conscious
In today’s world environment, one of the major group arising is the health conscious people. This trends happens throughout the world and it is increasing in a fast pace. KFC Malaysia offers mostly fried products which are definitely a forbidden food for these consumers, so in order to grab these market shares, KFC Malaysia needs to come out with healthier food that will suit their appetite.
Price Sensitive
Other major type of consumers arising in today’s world is that they are very price sensitive, a little change in the price of the products will affect their buying behavior. While setting the product price, attention should be paid more to avoid any unwanted outcomes, which results loss for the company.
Cost reduction
As today’s economic environment, where everything from personal usage to corporate usage has increased their prices, it is necessary for KFC Malaysia to consider in cost reduction, in order to have competitive edge as compared to their competitors. This cost reduction is important as its advantages will outweigh the disadvantages.
Issues & Problems
Government
The first issue of KFC is government, there is a proposal developed by the government recently to overcome the claims of fast food being unhealthy food for consumer. Basically the proposal is about banning all advertisement for fast food industries, includes KFC Malaysia. Once the government agreed the proposal, KFC Malaysia will have hard time in promoting their products.
Customer’s complaint
The second issue faced by KFC Malaysia is that customer complaint. From the situational analysis, KFC should notice that there were protests from customers saying that eating meat is dangerous and it contain toxic, during the avian flu outbreak few year ago. This eventually will bring poor images for customers which convinced by them, thus leading bad images for KFC Malaysia.
McDonald getting more growth rate
From the situational analysis, McDonald in
Lack of Manpower
Also from the situational analysis, there is a huge variance between the number of workers and branches for both KFC Malaysia and McDonald, where McDonald has relatively more manpower for each of their branches. In term of human resource cost KFC would be lower, but in terms of efficiency McDonald will be better than KFC.
Corporate taxes decreased
There is a 25% decrease in the corporate taxes in the budget 2008 in
Opportunities
Trend of Children Love Fried Chicken
There is increasing of popularity of eating fried food among the children. As the growing populations of teenagers and children in
Tapping the New Beef Market
As the past few years back then, there was an outbreak of Avian Flu that devastated majority of the poultry stocks. Few years present, there are still news of Avian Virus is lurking around countries like
Introduction of Set Breakfast
Recently, there is a trend of growing concern of nutritious breakfast in the concept of customers. Customers think that it is important to eat a nutritious breakfast in order to have enough energy to go for work, study etc. Thus, KFC should tap the breakfast market in fast food industry by introducing breakfast that has proteins, and some vitamins values in. Due to the facts of fast food ready to serve in short time, customers who are rushing during the morning time could grab a nutritious breakfast in KFC and eat with haste.
Introduction of New Menu
There is an increase demand toward snack food in KFC. Snack food like Mexican foods are new and would be welcomed in the market of
Place of Visit for Tourists
Portfolio Analysis
In the portfolio analysis of this project will show the comparison of KFC Malaysia and McDonald. The two important factors in developing a BCG Matrix is relative growth rate and relative market share of both the company.
| Year | Revenue |
| 2006 | 1.52 |
| 2005 | 1.46 |
| 2004 | 1.41 |
| 2003 | 1.38 |
| 2002 | 1.25 |
The table above is the revenue sales figure for the KFC Malaysia starting from year 2002 to 2006, which can be seen, is growing over the years; later it will be put into formula to calculate their growth rate for past years. As for revenue of McDonald, the revenue could not be obtained however the growth rate could be obtained through reliable source, quoting that they growth rate for the past ten years were 15%. From the calculating below, the growth rate for the KFC Malaysia for the past few years, is only 4%.
As for the market share of both the company, KFC Malaysia has the market share of 44%, while McDonald has the market share of 14%.
As for the overall sales contribution, it would not be available for this case, because of the absence of information in the sales of McDonald. However sales contribution of KFC Malaysia is predicted more than McDonald
To make it simple to see, please see the table below
| | KFC | McDonald |
| Growth Rate | 4% | 15% |
| Market Share | 44% | 18% |
? STAR KEY KFC McD
20
INDUSTRY GROWTH
10
CASH COW DOG
0
RMS
50 40 30 20 10 0
From the BCG Matrix above, KFC is a Cash Cow, and the McDonald is actually situated at the quadrant of question mark. The definition for cash cow is that it will generate large profits but little potential for the long-term. In this case, KFC Malaysia is in this quadrant, the reason being is due to that it has high market share but with low growth rate. Although it is in cash cow situation now, but KFC Malaysia should not be satisfied of it, because it is possible for it to become a dog. In order for this cash cow to become a star again, which is the most ideal position for a company; steps need to be taken in order to get there.
As for the McDonald part, it is currently in the quadrant of question mark, and the definition of question mark is that it generate low profits currently but there is big potential for future profitability, steps they need to do is to increase their market shares. Increasing the market share is somehow easier to be achieved as compared to KFC Malaysia, the things that need to be done is the McDonald company concentrate more in developing it, and it could someday become the star, and outweigh KFC Malaysia.
Steps that need to be done now are to bring KFC Malaysia to become a star, and formulate strategies that enable KFC Malaysia to sustain in long term. Therefore, clear mission statement is created to realize it.
SBU Objectives & Goals
v To become the leading fast food chain in
1. To target the segment of health conscious and vegetarian customer
2. Reduce the cost of production
3. Improve customer satisfaction
4. To increase growth rate
5. To increase market share in rural area
1. Capture the market of health conscious and vegetarian customer by 10 percent in year 2009.
2. Reduce cost of production of 20% by the year 2009.
3. Improve customer satisfaction by 50% through various methods, for example opinion box, provide training, stringent standardization procedure before year 2010.
4. To increase growth rate from 4% currently to 8% by the year 2009.
5. To increase market share in rural area by 10% in year 2010. For example Senadin, Miri.
Strategies
Current Strategies
Market Strategies
Market Scope
Currently, the management of KFC is using multi-market strategy for their products. It covers segments including children, family, teen & young adults and budget customer. Every segment has its own marketing mix. Their purpose is to try to target every possible customer segment to increase and maintain revenue for the firm.
Market Geography
For now, KFC is only targeting nationally as in the business only expand and develop in
Market Commitment
KFC is practicing strong commitment in order to increase profits and market share. Stronger bond will build among employees in KFC and thus increase the cooperativeness of staff. Strong commitments encourage them to compete with other rivalry such as McDonald.
Products Strategies
The current strategy for KFC Malaysia of the product strategy varies; they have used many strategies in order to perform well in the market. Below are some of their current strategies.
Value
Their current value added of their product is collaboration with hotlink, that when customer receives a sms from hotlink, they can go redeem the product of discounted food from KFC Malaysia outlet. Another value added of their products is free gifts, drinks upgrade to bigger portion.
Scope
The scope of their current product is multi product, which each product will suit into their different target market. The benefit of this product is each segment of customer will get what suit them the most. For example they have Kids’ Meal for kids.
Elimination
For the elimination strategy, KFC Malaysia has been doing this all the while for the promotional product, namely Twister, and Waikiki Burger that existed for a short period. To be detail, their strategy used is harvesting elimination, meaning they tried to pack and go for the product.
Design
As for the design strategy, their current method is customizing standardization. They are using scope of product that is multiple in customized designs, but they have standardized the procedure of producing, which is the design customization.
New Product Development
KFC Malaysia will come out with new product once in a while; some of their promotional products that were introduced were Twister and Waikiki Burger. Developing a new product and eliminate it after some times will help them to gain numerous market shares, as people will try the product before it vanish again.
Pricing Strategies
Pricing for existing products – maintain
Pricing is an important marketing factor for KFC because it brings impacts to the firm’s profit. Getting the right price will bring sufficient profit for the firm. In terms of KFC’s existing products, they are maintaining their product pricing.
Segmented pricing for customers
Customer
KFC has come out with segmented pricing strategy for the customers of the SBU. Membership cards (Chicky Club) for kids has been used for a long time. Children’s can enjoy special discount while purchasing KFC’s products especially kid’s products. And children who are registered as members also have some special surprise presents.
Time
Currently KFC offer different time pricing. For instance, KFC now has snacks time in the after noon from Monday to Friday with a cheaper price. This actually encourage customers to have a tea time culture in
Distribution Strategies
Indirect Channel
Currently KFC has implemented indirect channel in distributing the fast foods. KFC’s Corporate, QSR Brands Corporation is the franchisee which has Ayamas Breeder, Life sauce factory etc which act as suppliers for KFC Restaurants which are the retailers that sell fast foods. This is the flow of indirect channel distribution:
Suppliers (QSR Brands) Ã Retailers (KFC Restaurants) Ã Customers
Speculation
The fast foods sold in KFC Restaurants are based on speculation strategy. As KFC restaurants ordered the supplies like meat stock, vegetables, breads etc based on anticipated sales for each week. Thus KFC Restaurants could prevent wastage of supplies due to improper calculation.
Selective Distribution
KFC Restaurants are selective distribution as these restaurants are limited to a certain amounts in each region. This is to minimize the stiff competition between each other in a same region. KFC Restaurants did well in the past 30 years for gaining market share with over 390 restaurants in
Vertical marketing system -contractual
In order to improve the brand name of KFC in
Communication Strategies
Advertising
Currently, KFC is advertising in television, newspaper and radio. For television, KFC advertise mainly of its new meal or promotion during the commercial break. Furthermore, the advertisement also broadcast in its own website: www.kfc.com.my. For instance, the latest ad showed 2 Malay couples promoting the new KFC meal, Combo Ria with satay sauce by using a hilarious and comedy chit-chat. For the newspaper, KFC advertises the new meals and promotion which sometime provide free voucher to get discount. For radio, KFC normally advertise by persuading and reminding customers to dine in KFC restaurants.
Sales Promotion
KFC always utilize the sales promotion in order to promote its new meals. By providing free voucher cutting from newspaper to get discount for new foods is always practiced by KFC. Besides free voucher for discount, KFC also has free vouchers in newspaper for free gift redeem such as soft drink etc. Moreover, KFC also collaborate with Maxis Hotlink to give Maxis prepaid users who hold KFC promotional SMS could get special meal when dine in KFC.
Public Relation
KFC has on-going of sponsoring television program just for kids such as Chicky Hour on every Saturday morning at TV3 has been going strong for more than 5 years. KFCs’s Chicky Hour showed fantastic cartoon program which enabled KFC to successfully capture the market of children successfully. In addition to that, KFC also practiced numerous corporate social responsibilities such as having a KFC Charity Collection Box in every outlet which could get customers to contribute for charity of orphanages. Moreover, KFC also has 3 restaurants employing staffs which are speech and hearing-impaired to help them build up the confidence and self esteem in their life.
Recommended Strategies
Market Strategies
Market Scope
KFC are recommended to continue with their existing multi-market strategy pursued as their current multi-market strategies targeting children, family, teen & young adults and budget customer benefits KFC in terms of revenue and market share. As an add-on, KFC might want to consider adding one more marketing mix into their business just for health conscious customers. Since communities nowadays receive high education quality and become smarter, they will demand a healthier life. This is an issue which KFC can take into account.
Market Commitment strategy
KFC are recommended to continue maintaining or increase their strong commitment in fast food industry. This is because the rivalry of the fast food industry has been increasing due to government legacy on lower corporate tax for 27% for year 2007 which encourage business to come into the industry as stated in The Star Online (Budget 2008 2007). KFC should be prepared and responsive enough to compete with its major competitors through understanding the needs and wants for its target markets. KFC have to ensures the sustainable competitive advantage is achieved which is to protect the secret recipe of fried chicken from competitors.
Products Strategies
Product Repositioning
The first recommended product strategy is repositioning, especially among their existing customer. This is due to many people have argued that fast food product is not healthybecause the food served are normally deep-fried. By repositioning their SBU, KFC Malaysia can actually convince their customer that its products are healthy to consume, for example KFC use zero trans fat oil. Revenue of the company can regain strength when people change their perception towards KFC Malaysia, especially health conscious customer are growing. As one of the goals stated, is to improve their customer satisfaction, by well understanding customers it could increase customers satisfaction.
Value
Second strategy that would recommend for KFC Malaysia is the value added for their product. KFC should further enhance this value added to contribute more toward their growth rate, as their recommended goal now is to regain the growth rate and market share. The group recommended that they can give voucher for customer when they purchase their products, stating next purchase will have certain discounts. Another ways of doing would be that they establish a KFC cards, just like what Bonus Link doing, they can collect points every time they buy products from KFC Malaysia. By doing this their customer loyalty can also be improved.
New Product Development
Thirdly, new product development is also proposed to have new product like Dumpling and Satay. Both of the products are traditional dishes for
Product Design
Last but not least, is the product design, KFC Malaysia should use the customization strategy for their products. The morale behind this is that people will choose what ingredient they wanted for their products, they will do it themselves, and pay only when they proceed to the counter. Just like what the Deli is doing. By doing this, the company can reduce their cost, because not much people is needed in preparing the food at the back when they get order, all they need to do is to prepare the food earlier, put in on places and people will do it themselves, the next thing they will do is to calculate how much to be charged. Not only this, customer will be more satisfied if they can choose what they want to eat, and health conscious customer can have more choices in dining, because they are not restrained from eating things that they do not want.
Pricing Strategies
Pricing for existing products – maintain
Suggested recommendation for KFC would be continue maintaining the current price of existing products. Changes in prices will not benefit KFC because charging the products with lower prices might lead to customers’ perceptions that the food quality will decrease while charging prices for the products too high might cause the customers to switch their preferences to competitor’s fast food company like Mc Donald.
New product pricing strategy - skimming pricing
For new products that launched by KFC should use skimming pricing. As the products are new, KFC still have to adjust the pricing of their product to the right price to avoid negative impacts of their production cost. Setting the right price can help KFC to cover the costs of production and a secure profit growth.
Segmented pricing for customers
Customer
Apart for only focus on children’s welfare, KFC can also offered older citizen in
Time
Currently KFC also offer 24 open hours in west
Distribution Strategies
Channel Modification Strategy: Cost, Coverage and Channel trends:
Cost
It is recommended KFC’s primary priority is to reduce the cost to the minimum as possible. In order to lower the cost of distribution, it is recommended to conduct full scale market research toward the place of distribution before actually setup a restaurant. With the good market research result, it could prevent losses from setting up a restaurant in unprofitable location.
Coverage
Furthermore, it is recommended that there is potential for KFC in penetrating to suburb or even to rural area. The importance of suburb area is due to the density of population live around the suburb would be a great opportunity to exploit. Thus, it would be recommended to setup restaurant in suburb area such as Desa Senadin in Miri,
Channel Trends
For the channel trends, there is an increase pace of lifestyle in
Communication Strategies
Direct Marketing
KFC should collect customer database through the registration of member cards for KFC usage. This is to enable KFC to collect customers’ information especially regarding the email. When there is new promotion or new meals, KFC could send these exciting 1st-hand news to the customers’ email with relative cheap cost and convenience. This could both inform and remind customers to dine or take away in KFC restaurants.
Sales Promotion
KFC should organize more events such as sweepstakes, lucky draw etc. As customers tend to be attracted with free lucky draws and sweepstakes, KFC should behold the opportunity to attract more customers to dine in or take away in KFC restaurants in order to participate in the particular lucky draw or sweepstakes. Moreover, KFC could organize event like drawing competition in restaurants. This could be done by giving a drawing paper to the children to draw and fill colour after customers purchased meal, and the list of winners would be informed after the due date. This could attract more children to participate as children are tending to like drawing and filling colour.
Public Relation
KFC should endorse famous singer or celebrity to promote KFC meals through advertisement. It also could be done through the singing concert that would be sung by the famous singers. KFC could search opportunity by collaborating among the rising-famous singers in
Implementation Charts
| 2008 | January | February | March | April | May | June | July | August | September | October | November | December |
| Product | | | | | | | | | | | | |
| Repositioning | | | | | | | | | | | | |
| Value | | | | | | | | | | | | |
| New Product Development | | | | | | | | | | | | |
| Product Design | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Price | | | | | | | | | | | | |
| Existing Product – Maintain | | | | | | | | | | | | |
| New Product – skimming pricing | | | | | | | | | | | | |
| Segmented pricing | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Place | | | | | | | | | | | | |
| Cost | | | | | | | | | | | | |
| Coverage | | | | | | | | | | | | |
| Channel Trends | | | | | | | | | | | | |
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| Promotion | | | | | | | | | | | | |
| Direct Marketing | | | | | | | | | | | | |
| Sales Promotion | | | | | | | | | | | | |
| Public Relation | | | | | | | | | | | | |
Evaluation
Product Strategy
1. Repositioning
The repositioning should be implemented after a market survey that conducted in 3 months from January to March. The reason being to choose the first 3 months in the year is to give space for KFC to correctly reposition for the rest of the months. It can be evaluated by using market survey method to understand the satisfaction level of customers toward KFC repositioning strategy which is supervised by Marketing Manager.
2. Value
The value part of this strategy divided into two parts. The first part which is offering coupon is to be implemented on March to May to create more attractions during non-school holidays. While the second part, KFC Cards, should be implemented from July onwards, making the management able to find out the feasibility of such method. Both the strategy can be evaluated through the feedbacks from customers. This overall process should be supervised by the Marketing Manager.
3. New Product Development
New KFC product should be introducing to public on May to July, and November to December as these periods are school holidays thus can attract more customers. The intermittent period between will enable the operation department to have time to design new product. This need to be supervised by both operation manager and marketing manager, by looking at the quality of the product offered, and the customers’ response.
4. Product Design
The product design for KFC is about customization of the products. The suggested time of implementing this is October until December 2008. The evaluation could be conducted through feedbacks from customers regarding their satisfaction toward the new product. To be supervise by both Marketing Manager and Operational manager again.
Pricing Strategy
1. Existing products – Maintain Price
For existing product the price will be maintained throughout the year only for certain period such Chinese New Year, Hari Gawai and Hari Raya season. The month which is under those season are February, June and October in year 2008. KFC can imposed the mentioned pricing strategy for existing product to boost temporally sales.
2. New products – Skimming Pricing
For new products proposed pricing strategy will be skimming pricing. The perfect period to impose the proposed strategy is May, June and July. This is because sales promotion are being impose as a promotion for those three months and it is a good idea for KFC to introduce new products to customers.
3. Segmented Pricing
Segmented pricing which is use on the senior citizens (members only) is proposed to be the whole year. This special price that imposed is to act as privilege for them. But take note this strategy can only be use if KFC come out with healthy meal for them as they older citizens above 40 years old is not encourage to consume lots of fried food.
Distribution strategy
1. Cost
In conjunction with the market research that would be done during January until March regarding the repositioning strategy. KFC could probe respondents to give opinion regarding the satisfaction level toward the locations of KFC outlets. Hence, KFC could use the information to reduce the opportunity costs of setting up outlets. This should be supervised by Operation Manager.
2. Coverage
After the market research survey, KFC could extend its outlet scope to places that respondents would like to have. Furthermore, KFC could set the mobile restaurants to rural places to have trial on the market of rural places. Thus the period of extending the coverage is best to be April until August which is the period after the market research survey. This should be supervised by Distribution Manager.
3. Channel trends
KFC should launch a website that specially designed to cater for online order and speed delivery. KFC should implement this website in 2 months time which is from September to October which is sufficient time to launch a success website. Moreover the website should launch prior to cater the increasing demand during school holidays on November and December. This should be supervised by Public Relation Manager.
Promotion Strategy
1. Direct Marketing
In conjunction with the launch of KFC cards from July onward, new members would register and fill up their contact details. Thus KFC should utilize the customer contact details to persuade, inform and remind customers to purchase KFC meals especially internet direct marketing. This implementation period is ongoing as it is priority to update customers with news every month.
2. Sales Promotion
KFC should launch its sales promotion conjunction with the new products launching. As new products launching would certainly attract customers to come, hence the sales promotion like lucky draw, sweepstakes, drawing competition etc would certainly grab the customers’ mind to revisit KFC again. Thus, it would increase the repeat sales for KFC. The implementation period is May to July and November to December. This should be supervised by Marketing Manager.
3. Public Relation
KFC should held singing concert during school holiday that is November and December. As this is the peak period of customers to visit KFC restaurants. Thus KFC should give concert ticket with half price to customers who purchase up to a required amount. This should be implanted during November to December and supervised by Public Relation Manager.
