KFC China and its Marketing
Case Study 2
Introduction
KFC China is a quick service restaurant that’s has dominated the local fast-food market. Marketing has significantly contributed to its success. This report covers KFC-China’s current localized marketing strategy consisting of product, promotion price and placement strategies. It will also discuss the potential issues that may affect business operations in the near future, these include; increasing costs, emerging seniors market, economic slowdown and supplier issues.
Analysis
Product:
KFC’s products include a large variety of mainly food-items which have been localized and diversified to differentiate from its competitors (Yum!2012). China’s mass-consumer market encapsulates traditionalist-tastes (Shen2008) for which, taking into account the sociocultural-factors, KFC includes a larger menu, consisting of western and Chinese dishes such as rice pudding and custard tarts (Bell2011). Presumably to ensure KFC’s products meet the changes to consumer-tastes, it frequently undertakes new product-development to enhance its localized product-line, which in turn creates product-differentiation. This is evident in the fact the KFC introduces up to 50 new localized-items to its menu annually (Bell2011). Nevertheless there are high-costs associated with the research and development and the opportunity-cost of not using the money for (example) expanding operations (Zwicker1976). Those who argue against KFC’s strategy recommend it to start focusing more on the ‘pricing’ of the food-items rather than the ‘frequency of new product-introduction’ as high prices may encourage consumers to purchase a substitute (Cho2009), a component of Porter’s five-forces. However critics cannot disagree that KFC-China contributes roughly 40% of Yum! Groups’ profits (BBC). Furthermore, KFC-China is a well-established brand thus has an existing brand-loyalty with a strong-reputation and brand-equity. In fact, by adding new items on the menu, KFC encourages
Introduction
KFC China is a quick service restaurant that’s has dominated the local fast-food market. Marketing has significantly contributed to its success. This report covers KFC-China’s current localized marketing strategy consisting of product, promotion price and placement strategies. It will also discuss the potential issues that may affect business operations in the near future, these include; increasing costs, emerging seniors market, economic slowdown and supplier issues.
Analysis
Product:
KFC’s products include a large variety of mainly food-items which have been localized and diversified to differentiate from its competitors (Yum!2012). China’s mass-consumer market encapsulates traditionalist-tastes (Shen2008) for which, taking into account the sociocultural-factors, KFC includes a larger menu, consisting of western and Chinese dishes such as rice pudding and custard tarts (Bell2011). Presumably to ensure KFC’s products meet the changes to consumer-tastes, it frequently undertakes new product-development to enhance its localized product-line, which in turn creates product-differentiation. This is evident in the fact the KFC introduces up to 50 new localized-items to its menu annually (Bell2011). Nevertheless there are high-costs associated with the research and development and the opportunity-cost of not using the money for (example) expanding operations (Zwicker1976). Those who argue against KFC’s strategy recommend it to start focusing more on the ‘pricing’ of the food-items rather than the ‘frequency of new product-introduction’ as high prices may encourage consumers to purchase a substitute (Cho2009), a component of Porter’s five-forces. However critics cannot disagree that KFC-China contributes roughly 40% of Yum! Groups’ profits (BBC). Furthermore, KFC-China is a well-established brand thus has an existing brand-loyalty with a strong-reputation and brand-equity. In fact, by adding new items on the menu, KFC encourages