Kfc Marketing Research free essay sample

Malaysia’s first ever KFC Restaurant was opened on Jalan Tuanku Abdul Rahman, and KFC Malaysia has grown ever since. KFC Malaysia is a Western Quick Service Restaurants (WQSR) operation, well known for its fast food service. It is the single largest WQSR chain in Malaysia and in the Asia-Pacific region (excluding Japan). ? The items on its menu are mostly chicken-related items. But besides the chicken products or items that they serve, there are also side dishes included in the menu such as coleslaw, French fries, mashed potatoes, and potato wedges. KFC Malaysia caters to various groups of people; from individuals to families, and children as well. They serve different sets of meals to suit the different group of customers KFC Malaysia caters to. People can never be fully satisfied. Lately, people have become more worried about their health and because of that, sales of fast food have been declining. Therefore, ideas of introducing a range of healthier eating alternatives to KFC’s existing product range have been put forward. However, there are certain things that must be identified before the ideas can be put into action. The purpose of this report is to identify the following: -Is there consumer demand for a new range of healthier products? -What type of new products should be introduced? -How should these new products be marketed? ? Fast Food Operations, Business Structure, http://www. kfcholdings. com. my/kfch_corp/business_fast. htm 2. 0Current Market Situation 2. 1 Microenvironment Analysis 2. 1. 1 Suppliers KFC Malaysia has developed its operations over the years and has in a way become its own supplier. As the only integrated food operator in Malaysia, KFC has undertaken operations in hatchery, breeder farms, feedmill, and processing. It does, however, import hatchers and incubators from Chickmaster, USA to be used in the hatching processes. KFC also has exclusive rights to Ross Breeders of Scotland to breed the fast-growing broilers. ? 2. 1. 2 The Company’s Market KFC Malaysia uses the differentiated or segmented marketing strategy. The geographic, demographic, and psychographic variables are the 3 main segments that KFC Malaysia uses. Psychographically, KFC Malaysia’s market is mainly segmented based on the lifestyle its regular customers, basically those who have work on their hands all the time. This kind of customers would want quick-serving food, and KFC provides just that. Demographically, KFC Malaysia’s market segment is based on age. KFC caters to, generally, people who are roughly in the age group of 4 to 40 years old. Elderly people would not choose to go to any fast food outlets, including KFC, as their health is at stake. Geographically, KFC Malaysia’s market segment is largely based on density. There are around 340 KFC outlets in Malaysia, and most of them are situated in suburban and city areas. Figure 1 shows the locations of the KFC outlets all around Malaysia. Integrated Poultry Operations, http://www. kfcholdings. com. my/kfch_corp/business_fast. htm Figure 1: KFC outlets in Malaysia, taken from http://www. kfc. com. my/outlets/index. html 2. 1. 3 Competitors Like any other fast food service, KFC Malaysia has many competitors that range from those selling chicken based products to those selling non-chicken based products. Despite the many competi tors that KFC Malaysia has, it still is by far the most popular Western Quick Service Restaurants (WQSR) chain around, controlling almost 60% of the WQSR market in Malaysia. But this might soon change if KFC Malaysia does not act faster than its competitors in introducing a new range of healthier products. McDonald’s (Malaysia) is the closest rival or competitor of KFC Malaysia, and it has reacted quickly in the wake of people wanting healthier products. ‘Bubur Ayam McD’ is an example of a healthier product that McDonald’s has come up with. It contains a certain amount of vitamins, carbohydrate, minerals and fibre. The chicken used in this product is shredded, and is therefore healthier compared to fried chicken. Another competitor, Kenny Roger’s, a chicken based fast food restaurant, offers roasted chicken, which is healthier than fried chicken as it does not contain so much oil, while Nando’s Chickenland Malaysia has grilled chicken on its menu. Other competitors, such as Burger King, AW, Shakey’s Pizza, and Malaysia’s very own Marrybrown, are mainly offering salads in order to attract more health-conscious customers. 2. 2 Macroenvironment Analysis 2. 2. 1 Economic Environment The economic environment is a crucial macroenvironment force that plays a big part in KFC Malaysia’s performance and operations. It mainly consists of factors that affect the consumer buying power and spending patterns of KFC’s customers. The economic condition in Malaysia has been growing well, with an average of about 5% growth in its Gross Domestic Product (GDP) over the year 2003. This continued growth of the Malaysian economy would allow consumer purchasing power to increase and thus, bring about a possibility of an increase in sales of consumer products and services. The chart below shows the Malaysian economic growth throughout the year 2003. Figure 2: Quarterly growth of Malaysian economy throughout 2003. % figures were taken from http://www. kfcholdings. com. my/kfch_corp/kfch_ar2003. pdf, â€Å"The Economy†, pg . 30. of KFC Holdings (Malaysia) Annual Report 2003. ] 2. 2. 2 Demographic Environment The demographic environment is another major macroenvironment force that has an influence over KFC Malaysia’s operations. Size, density, location, and age are some of the demographic for ces that are important to KFC Malaysia. All of these forces contribute to how KFC operates and market its products. Most of KFC Malaysia’s patrons usually come in between an age group of 7 to about 30 years old. Nearly 70% of KFC Malaysia’s total customer population come from this age group. KFC Malaysia’s market is mainly focused based on its density, where places such as towns and cities have more outlets than others places where the density is lower. This is because the size of population in those kinds of places is usually higher, and thus makes the possibility of gaining higher sales greater as well. 2. 2. 3 Technological Environment KFC Malaysia’s operations are, in some ways, very much influenced by the technological environment. Technological forces can allow KFC Malaysia to broaden its market opportunities, as well as create new products for its customers who are now living in a technologically advanced era. Operations of KFC Malaysia can also be smoothened as new technologies come in. 2. 2. 4 Cultural Environment The Malaysian society’s basic values, perceptions, preferences, and behaviours are the cultural forces that affect KFC Malaysia’s performance and operations. The way KFC’s customers look and view this organisation plays a big role in how it is run. KFC Malaysia has always been viewed as the provider of a â€Å"finger lickin’ good† eating experience, and it is vitally important that its customers continue to have that perception on KFC. 3. 0The New Healthier Product Proposal 3. 1 New Proposal There are now a growing number of health-conscious individuals in the world, especially in Asia, and that includes Malaysia. Fast food has always been one-of-those ‘unhealthy’ food in people’s minds. Therefore in order for KFC Malaysia to attract this group of people and not lose its current customers who are now health-conscious, new proposals of a healthier menu is a necessity. There are 2 proposals in this report; one of them is making some modification to KFC’s current menu, while the other is a proposal of a few new ‘healthier’ products. Adjustments or changes that are to be implanted into KFC Malaysia’s current menu must not be too drastic that it takes away the tastiness of its menu. Here are some proposed modifications. -Replace ice-creams with not so expensive, fruit yogurts in its family set meals. -Use less fattening or fat-free dressings for the coleslaw. -Put less gravy on top of the mashed potatoes. Add more lettuce in its burgers, less sauce. -Give customers the option to choose fruit juices instead of soft drinks in its set meals. Apart from the modifications on KFC Malaysia’s current menu, there are other additional products that could be included into its menu. Here are the proposed additional products. -A set meal consisting of a Tender Roasted Chicken Sandwich, a customer-choice fruit juice (orange/apple/w atermelon/honeydew/mango), and a cup of BBQ baked beans. -Salads, such as Garden Salad and Chicken Salad. 4. 0Market Potential for New Proposal In order for the new proposal to be implemented, it is important for KFC Malaysia to take a brief look into its market potential, target market, and product rationale. 4. 1 Product Rationale 4. 1. 1 Objectives or Purposes of New Product There are a few reasons why the new proposal has been proposed. KFC Malaysia needs to be sensitive to the current situation in Malaysia, where more people are becoming health conscious. Fast food restaurants are one of the very few restaurants that people would usually go to when it comes to eating healthy food. KFC Malaysia ought to try to change these people’s mindsets, and that can be done by introducing the new ‘healthier’ and modified products. A healthier menu which is able to maintain the â€Å"finger linkin’ good† eating experience that KFC usually provides would definitely have a positive impact on its market demand. The proposed modified and new KFC products would allow KFC Malaysia to develop its product, and expand its current menu. This is called product development, as shown in the product/market expansion grid in Figure 3. Existing ProductsNew Products Existing MarketsMarket PenetrationProduct Development New MarketsMarket DevelopmentDiversification Figure 3: The Product/Market Expansion Grid.? ? Kotler, P. and Armstrong, G. , Principles of Marketing, 10th ed. Pearson Education International, pg. 48 The potential increase in sales is another reason why the proposal should be implemented. As the Malaysian society is moving towards a health conscious mindset, it is only natural for the demand for healthy products to increase. A similar outcome would be expected of the new and modified KFC products, once they are introduced. A possibility of an increase of about 20% of its current sales should be a practical expectation. As this takes place, KFC Malaysia’s profit would, likewise, be expected to rise accordingly to about up to 15% of its current profit level. KFC’s profits would be expected to rise further as time goes by, when people are more familiar with the new and modified products. The new and modified KFC products would also be a boost to its current market share. KFC Malaysia is believed to be dominating about 50% of the WQSR market share at the moment. Investing into the healthier menu would increase its market share by about 5% or more. This would be a vital step to brush off challenges from KFC Malaysia’s main competitors, notably, McDonald’s. 4. 2 Target Market As KFC Malaysia is often viewed as a family oriented fast food restaurant, its target market would mainly be focused on families that consist of parents, particularly those with young children, who are concern for theirs and their children’s health. However, the healthier menu would not only be targeted at this group of people, but also at young working adults who are health conscious, and teenagers who are concern about their body shape. Young working adults, youths, parents and children would be able to enjoy the Tender Roasted Chicken Sandwich and the salads without feeling guilty of consuming unhealthy and fattening food, as they consist of good, healthy nutrition. 4. 3 Market Potential The market potential for the healthier menu is indeed very good. Malaysia has a population of about 24 million people, where slightly less than two third of that number consume fast food. The fast food market in Malaysia is mainly dominated by KFC Malaysia. Therefore with the introduction of the healthier menu, KFC Malaysia can expect to attract more potential customers than its competitors. And as more people get to know about the healthier menu that is to be introduced, KFC Malaysia can expect its market to broaden. 5. 0The New Product Range 5. 1 Positioning Strategy 5. 1. 1 Competitive Advantage KFC’s dominance in the Western Quick Service Restaurants (WQSR) market in Malaysia, where it controls more than 50% of the market, is a major competitive advantage that it has over its competitors, such as McDonalds, Burger King, Kenny Roger’s, Shakey’s Pizza, and other fast food operators. KFC Malaysia’s position as a â€Å"Great Value for Money† fast food operator is often present in the mindset of most Malaysians, and this is another competitive advantage for KFC. However, KFC’s competitors have been trying to move a step forward and challenge its position in the market by introducing healthier products in their menu. Therefore, KFC Malaysia should, likewise, take action and enforce brand image differentiation. KFC should plant a new image of itself into the public’s mind and make them view KFC as not only a provider of tasty chicken products, but also a provider of healthy and, yet, affordable fast food. . 1. 2 Overall Positioning Strategy and Positioning Statement KFC Malaysia should adopt the ‘more for more’ positioning strategy, where it implies that the new healthier menu is better than the previous menu, and it is charged at only a slightly higher price. The new modifications such as replacing the ice-cream with a fruit yogurt in the family set meals requires a higher cost as yogurts are more expensive, therefore the slight increase in price is mainly to cover that additional cost. Nevertheless, the healthier menu, although slightly more expensive, is still very much affordable. A positioning statement is important as it sums up KFC Malaysia’s positioning in the market. As offering a healthier menu would implant a new ‘healthier’ image of KFC in the public’s mind, its positioning statement should be â€Å"To health conscious people who want to consume healthy food, KFC (Malaysia) is a well established fast food operator that allows you to enjoy healthier, nutritious, and yet, tasty original recipe fast food. † 5. 2 Product Strategy 5. 2. 1 Product Attributes 5. 2. 1. 1 Product Quality The quality of KFC Malaysia’s fast food dishes is a major characteristic that would make its customers come back for more. As the quality of its current menu has always been well maintained, the quality of its healthier menu should either be just as good, or better than before. Total quality management (TQM) is an approach that KFC Malaysia can use to improve the quality of its products. 5. 2. 1. 2 Product Features Product features are a competitive tool that differentiates KFC Malaysia from its competitors. As for KFC, its new and modified healthier menu is offered alongside the current menu. Customers can either decide to consume on the new menu alone or together with any dish on its current menu. For example, the Garden Salad can go together with the KFC Chicken Nuggets or be consumed as a lone dish. This would allow KFC Malaysia’s customers to have a greater variety of choice. 5. 3 Pricing Strategy 5. 3. 1 Cost-Based Pricing This is the simplest pricing method that KFC Malaysia can use is deciding the prices for its new and modified healthier menu. By using this pricing method, the cost of its products is the main determinant that would affect the pricing decision of KFC Malaysia. For a start, KFC Malaysia would charge an extra amount of RM0. 0 for each of its family set meals because of the introduction of the fruit yogurts in place of the ice-creams. As for the newly proposed products, which are the Tender Roasted Chicken Sandwich set and the salads, it would be appropriate not to charge a high price for them. It would be recommendable for KFC Malaysia to price the Tender Roasted Chicken Sandwich set at RM6. 90 per set. The salads, on the other hand, would be priced at RM3. 50 per dish. However, the cost-based pricing would not be KFC Malaysia’s long-term pricing method. It can be slowly changed to value-based prising. 5. 3. 2 Value-Based Pricing Getting feedbacks from KFC Malaysia’s customers would be a sensible thing to do in order for it to switch its pricing method to value-based pricing. As time passes, KFC Malaysia’s customers would get familiarised with the healthier menu. KFC should then consider getting its customers’ feedbacks and perception of value of the healthier value. If its customers view the menu highly and would be willing to pay a higher price for it, then KFC Malaysia should consider increasing the price by a small sum and see if there is any change in the demand for its healthier products resulting from the change in price. . 3. 3 New-Product Pricing Strategy The Tender Roasted Chicken Sandwich set would be something new to KFC Malaysia’s customers. Therefore it should adopt the market-penetration pricing strategy, as it would allow KFC to first introduce the new product at a reasonably low price and then, increase the price slightly as demand increases. 5. 4 Promotions Advert ising, sales promotion, and public relations are the promotion tools that KFC Malaysia should use as the healthier menu is relatively new to its customers. 5. 4. 1 Sales Promotions KFC Malaysia could use sales promotions in the early stages of introducing the new healthier menu in order to encourage its customers to, at least, try it out. Promotions such as special contests, giving coupons, and special offers during public holidays would be useful in attracting customers to try the healthier menu. 5. 4. 2 Advertising Advertising the new menu through television would be an effective method as it would be able to introduce the new healthier menu to a large number of Malaysians, most of which watch the television almost everyday. The advertisement should focus on the healthy aspect of the healthier menu and stress on KFC’s priority in providing healthy but yet, tasty fast food to its customers. This would help improve the public’s perception about KFC’s products. The pull strategy could be used in its advertising as well. 5. 4. 3 Public Relations KFC Malaysia should always be in relation with its customers. This can be done by organising special events such as charity programs and health talks, and running clubs that are similar to that of KFC Kids’ Fun Club. By doing so, its customers can feel that there is a close link or connection between KFC and them. 5. 5 Placements KFC Malaysia should practise test marketing since the healthier menu is relatively new to its customers. As for now, KFC should introduce its new menu in a few of its existing outlets, perhaps focusing on the West-coast of Malaysia, as there is where most of the towns and cities are located. Kuala Lumpur, the capital of Malaysia, would be an ideal place to start introducing the healthier menu. Once the menu is well recognised, KFC Malaysia can start introducing it to other KFC outlets in Malaysia. 6. 0Conclusion In conclusion, KFC Malaysia must act towards the new shift in demand for healthier products even though it is dominating the Western Quick Service Restaurants (WQSR) market in Malaysia. KFC should use its advantage as a leading WQSR operator to take a strong hold in the new and uprising market of healthier fast food products. It is quite clear that there would be demand for a new range of healthier products. Therefore, people with a health conscious mindset, and people who are concern about their body shape are the 2 segments that would form the target market for KFC