Kfc Business Report 5g2e3n

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Business report on KFC Writer [] Date []

Introduction of KFC KFC is the brand of YRI (Yum Restaurants International Australia). They have worldwide popularity and recognition in the world and they are serving from 1919 in the fried chicken industry. There has been remarkable history of 50 years of KFC in the market, due to their strengthening system. They are enjoying great customer satisfaction and have earned rewards from the winning team (KFC, 2013). With this report, the aim is to study that how marketing campaign of the KFC can be enhanced. Currently KFC is relying over distributing emails to the people. Email marketing is an old technique for promoting the brand because of the reason that emails usually went directly to the junks and remain unnoticed. This has been turned into the newest technique of marketing. In this report this techniques have been widely discussed with their financial benefits. Objectives of the analysis Objective of the selected analytical topic is to analyse that how CSR environment can be improved while employing the better marketing techniques. It is also goaled to figure out the positive affect of proposed strategy over the financial strategies of the KFC. So the stated objectives are as follows: •

To investigate that how KFC can employ new marketing strategy in improving CSR environment

•

To explore that how KFC’s current financial expenses can be saved on email marketing

Market analysis Competition The major competitors of the KFC in the fast food industry are Pizza Hunt, A&W restaurants, Taco Bell, Mr. Burger, McDonalds and Long John Silver. Together 96% market share is enjoyed by the Pizza hut and KFC in the world. They are having 116 outlet chains in Australia. KFC is the part of the YUM brands, which was found in 1952 in Louisville, Kentucky USA. They have to face intense competition in the market. They are serving in chicken, Mexican and the sea food (Salahuddin, & Aziz, 2012). SWOT analysis: SWOT analysis is the best way to know about the company’s internal and external environment, in which they operate. The SWOT analysis for the KFC Australia has been done here. It will help in knowing the strengths and weakness (internal environment) and threat and opportunities (external environment) of the company. Strength: •

KFC is the dominant player in the chicken segment

•

It has strong trademark and recipes

•

Due to their menu variety and the convenience, it is ranking among the highest chicken restaurants in the world

•

KFC successfully generates almost $1 Billion each year

•

KFC is enjoying third largest position in the chicken segments

•

They have strong brand history of over 50 years

•

With its amazing 11 herbs and species, it has won almost 50% of the market share in the world (Salahuddin, & Aziz, 2012)

•

KFC is the identifiable brand in the world of fried chicken

•

KFC enjoys motivated workforce, strong locations, franchises and store management

•

It has good image in the mind of global customers

•

It also has strong distribution network in the airports, shopping malls etc

•

It is having top of the position among competition

•

KFC believes in continuous improvement of quality and production (Study Mode, 2008)

Weakness: •

KFC is losing market share because of intense competition in the fried chicken industry

•

KFC do not gather too much data about their customers, thus they have limited amount of customer knowledge

•

There have rising queries over the franchising which has lead to lose the quality and control

•

KFC sales have become stagnated because of different cultures

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There is discontent among the franchisees, some of the whom have felt that the new owners have not understood the chicken business. Therefore they are not able to provide better leadership (Salahuddin, & Aziz, 2012)

•

The stores floundered and thus become underperforming the operations of franchised. This has convinced that company does not know about its own business.

•

There is lack of focus over the research and development in KFC

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There is no innovative products in KFC menu, due to dealing only in chicken

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There is no product differentiation

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They are doubling their outlets to remain competitive, but have no strategic vision

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Mergers with Pepsi Co. and other companies have raised difficulty in understanding the big cultural differences

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KFC is failed to maintained the hygienic food standards (Study Mode, 2008)

Opportunities: •

Changing trends of demographic has provided new opportunity for the diverse products and new locations

•

Outside eating trend has also enabled the huge demand for the food

•

KFC has opportunity to capture the un-catered global markets, for enhancing their revenue.

•

Consumers are timely becoming more health conscious and thus they have opportunity to produce more healthy products

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By fulfilling their environmental responsibility, they will become able to improve their public image and thus enhance their profitability (Salahuddin, & Aziz, 2012)

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Diversification is opened avenue for the new fast food and other meals

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For rapid economic growth and the trend towards two people earning in family has enabled the company to expand overseas

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Australian market still has growth potential

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McDonalds is having 35% and Burger King is having 16% market share in the sandwich market. This gives opportunity to KFC to get in to sandwich market.

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The shutting down of the Friends and Shoney’s business has given more opportunity for grabbing market share

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There are many underperforming restaurants which can be easily took over by KFC

Threats: •

Competition from Pizza Hut, McDonalds, Subway and other strong brands

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Competition threat from the local restaurants

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Standard maintenance problem due to the international franchising

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Sustaining the position of market leadership in global fast food industry (Salahuddin, & Aziz, 2012)

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Other brands are offering new menus which is threat for the company

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Increasing amount of the health conscious customers

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High prices of the products as compared to other brands

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Less economical deals and packages as compared to the tempting deals (Study Mode, 2008)

Proposed strategy The strategy proposed for enhancing the CSR environment is by the adaptation of new strategies of marketing. KFC was previous dealing with the email marketing. Email marketing is the oldest technique, which is no more effective. This is due to the fact that emails go directly in to the junk emails of the customers and thus have no viewing. The newly proposed strategy is to adopt the Facebook, You Tube and other social media sites for advertising the offerings of the KFC. The Facebook is having more than 5 million active s and thus it has more exposure. Every Facebook customer is able to view the ads, according to the demographics. Facebook will be approached and ask to display the ads on the profile of youngsters and kids of Australia. The reason for targeting these two groups is due to having huge influential power. Kids create pester for their parents and bring them to the restaurants. Youngsters normally spend half of their income on dine outs.

The second strategy is to create videos of the KFC brand and display it on the You Tube. You Tube have huge amount of promised customers. This site is the most visited site. Dealing with You Tube will offer huge benefits to the KFC for improving their exposure. Lastly, Hotmail, Gmail and Yahoo can be approached and asked that they can charge loyalty fees and directly sent the messages of KFC to the email box of the customers, rather than in the junk folders. This can also enhance the exposure of the brand. Financial assessment The current costing of the ments:

Costing

Amounts The greatest of 5% of the gross revenues or

Royalty minimum of $825. Advertising on emails National

2.5% of the gross revenues

co-operative 4.5% of the gross revenues.

Advertising Renewal

$6,750

istrative

$500

Additional Service charges

$0 - $2,000

Late royalty payments

1- 1.5% per month

Radio Promotion

$240,000 per year

Outdoor advertising

$600,000 per year

Face book advertising

$ 600 per year

Advertising on mX

(Quarter page, national rate, $2492280 per year)

3332880 Cost of advertising Currently KFC is spending almost 2.5% or $412.5 (monthly) over their local ments of the emails marketing. They are totally spending 4.5% of their gross income over the ment campaign. The current strategy of marketing will shrink the cost of email marketing and will turn it in to the financial revenue for the company. The ment cost will be spending on only Facebook, new website and You Tube marketing. The financial assessment is given as:

Costing

Amounts

Advertising on emails

$5000 (per month)

Facebook marketing

$10000 (per month)

Facebook fan page

Free

Facebook group

Free

You Tube video

$200,000

You Tube marketing

$5000 per month

New employee hiring for Facebook

$5000 per month

New employee hiring for You Tube

$5000 per month

New equipment cost

100,000

Web deg and development

50,000

Website launch

100,000

This will enable the KFC to save huge amount on the monthly and the yearly basis. They have allotted the budget of 1 million for a year, for the marketing campaign. This has been shrunken $930,000 and will save almost $70,000 for the company. They can spend this money on enhancing their menu offerings as well. The corporate social responsibility of the KFC Australia include the diversity in the culture, following the designed code of conduct, work collaboration with the community, becoming environment friendly and being the worker of social welfare, (KFC, 2013). The above offered proposal will enable the CSR of the company to become closer to their responsibility. They will become able to save more and thus invest more in meeting their CSR. Saving $2000,000 means,

investing this amount for the welfare of the employees, customers and society. This will also enable the company to meet their social, ethical and economical responsibility. Conclusion KFC has facing immense competition which is required to be dealt. They are required to offer new menus and locations in Australia. Adaptation of Facebook and Youtube marketing will be very fruitful for the company. It will enhance the CSR environment and also improves the financial position of the company.

References: KFC, (2013). Franchise opportunity. Online. Accessed on [13th September 2013]. Available at KFC, (2013). Responsibility. Online. Accessed on [13th September 2013]. Available at Salahuddin, S., & Aziz, A., (2012). Marketing management. Online. Accessed on [13th September

2013].

Available

at


lectures.com.http://www.kfc.com.http://www.pepsiCo.com.http://www.pizzahut.com.13
Study Mode, (2008). SWOT Analysis of KFC. Online. Accessed on [13th September 2013]. Available at

Franchise direct, (2013). Online. Accessed on [13th September 2013]. Available at

Appendix: Investment Tables: Initial Investment Free Standing Outlet Name of Fee Building Construction Costs Equipment, Signage, and Décor Site Work Miscellaneous Permits, Utility Deposits, Licenses, and Architectural Costs Application & Background Check Fee Initial Franchise Fee Development Services Fee Real Estate Grand Opening Expense Start-up Inventory Training Expenses Miscellaneous Opening Costs Additional Funds Total Estimated Expenditure

Low $425,000 $216,000 $100,000

High $565,000 $366,000 $250,000

$50,000

$100,000

$300

$500 $45,000 $0 $35,000 $400,000 $1,000,000 $5,000 $10,000 $2,500 $9,500 $5,000 $10,000 $50,000 $75,000 $1,308,800 $2,471,000

Ongoing Fees Type of Fee Royalty

Local Advertising National Cooperative Advertising

Amount The greater of 5% of gross revenues or a minimum of $825, whichever is greater per month (minimum fee subject to adjustment based upon the Consumer Price Index). 2.5% of gross revenues (or as agreed to with local advertising co-ops). 4.5% of gross revenues.

$6,750 (subject to adjustment based upon the Consumer Price Index) For existing franchisees $3,375 for first outlet and $1,688 for each additional outlet in the same transaction. For new franchisees $6,750 for first outlet and $3,375 for each additional outlet in the same transaction. Entire cost of audit, including expenses of auditing personnel. $500 services fee for each transaction in which KFCC processes changes to franchisee’s corporate structure or when processing other approved modifications $0 - $2,000

Renewal

Transfer

Audit

istrative Additional Services Costs, expenses and attorneys' fees Indemnification Late royalty payments Food Standards Consultations (FSC) Services and Software Maintenance for KFCC's MERIT System

Will vary Will vary 1- 1.5% per month $265 per follow-up assessment. $160.34 per unit per month.

Year of FDD: 2012

Cost of advertising Radio Promotion

$20,000 per month

(Strategicmedia, 2009) Outdoor advertising $ 50,000 per month (Find media, 2013) Facebook advertising $50 per month (Approximate $0.35 cost per click at beginning) (Loomer, 2012) Advertising on mX (Quarter page, national rate, $6923 per day) (advertising rate, 2013)