Marketing Segmentation in Kentucky Fried Chicken͟ Final Project for MKT 211
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A Research Report on ͞Marketing Segmentation in Kentucky Fried Chicken͟ Final Project for MKT 211 Course Instructor: Dr. Maher Bakri Prepared By: Zeina Saleh Hussein Jaber Suzane Hmedeh American University of Culture and Education ʹ Tyre Campus Faculty of Business - Spring Semester/ 2010 A Research Report on ͞Marketing Segmentation in Kentucky Fried Chicken͟ Page | 2 DEDICATIONS We would like to dedicate this project to our course instructor Dr. Maher Bakri. We also would like to thank him for guiding us through every step of it. It is he who helped us gain a thorough understanding of the many areas encountered in the busy marketing environment which in-return, has helped us in the completion of this project and most definitely will benefit us in our future careers. Page | 3 TABLE OF CONTENTS Page Abstract͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙5 General Information͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙͙͙͙͙͙͙͙͙͙...6 Additional Information͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙ KFC͛s Story͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙͙͙͙͙͙ Basis for Success͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙͙͙͙͙͙͙..͙͙͙..͙͙͙͙..8 The Colonel͛s Promise and Vision͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙͙͙͙ The C.H.A.M.P.S. Program.................................................................................. Corporate Overview͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙...9 Facts and Figures͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙͙..͙͙͙͙͙͙͙͙͙͙ Type of Restaurant / Outlet͙͙͙͙͙͙͙͙.͙͙͙.͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙.. Franchise Model͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙. Organizational Structure͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙10 Major Competitors͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙͙͙͙͙11 In the Chicken QSR Segments͙͙͙͙͙͙..͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙͙͙.. In the Other Segments͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙͙͙. Market Share͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙.. Chicken QSR Segment Graph͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙.12 Global QSR Industry Graph͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙.͙͙. Products͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙....13 KFC͛s Original Recipe͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙. KFC͛s Second Secret͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙ KFC͛s Marketing Team͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙........ Brand Equity͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙.͙͙14 Brand Identity͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙͙ Strategy Identity͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙͙͙ Brand Name͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙..͙͙͙͙͙͙͙͙.15 Advertisements ͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙..͙͙͙͙͙.͙͙.. Slogans used worldwide͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙͙͙.͙.16 Market Segmentation͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙...18 The Need for Market Segments͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙. Types of Segments͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.. KFC͛s Market Segmentation͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙.͙͙19 KFC 4 P͛s Marketing Mix͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙..͙..͙...͙͙͙͙ Product Placement/ Brand Transformation͙͙͙͙͙͙͙͙͙͙͙͙..͙͙͙͙͙͙..͙͙..21 The New Campaign͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙. New Product Targeting͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙͙ Test Marketing of the New Product͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙.͙͙. New Product Promotion͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙͙. Analysis and Recommendations͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙.22 References͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙͙.͙͙͙͙͙͙͙..23 Page | 4 ABSTRACT KFC is a major quick serving restaurant (QSR) serving over 12 million customers on a daily basis through its 21,400 restaurants in 109 countries. This report views the marketing segmentation that KFC implements. Prior to that, the report gives an introduction about KFC, its establishment and history. Throughout the years, KFC has lost a large number of their market share to other healthier fast food restaurants due to the fact that consumers have become more health conscious. In response to the consumer͛s demands, KFC introduced a healthier product that is mainly targeted at health conscious people. This particular product was discussed thoroughly because it has transformed the entire image of KFC. Furthermore, the report provides an insight into the organizational purpose of KFC. Current strategies and recommendations include the analysis of the strategies that KFC is using to expand and maintain its market share. Page | 5 GENERAL INFORMATION KFC Corporation, also known as Kentucky Fried Chicken is the world's most popular chicken restaurant chain. KFC primarily sells chicken pieces, chicken sandwiches, chicken pot pies, crispy chicken strips, wraps and salads. KFC is part of Yum! Brands, Inc., the world's largest restaurant company in terms of system restaurants, with more than 36,000 locations around the world. Type: Fast Food Chain Founded: 1930 (North Corbin, Kentucky) First Franchised: 1952 (South Salt Lake, Utah) Founder: Harland Sanders Headquarter: Louisville, Kentucky Industry: Quick Service Restaurant (QSR) industry Revenues: $ 520.3 million (2007) Employees: 24,000 (2007) Parents: Yum! Brands Key People: Roger Eaton, President Harvey R. Brownlea, COO James O'Reilly, VP for Marketing ADDITIONAL INFORMATION In French-speaking Quebec, Canada, KFC is known as PFK (Poulet Frit Kentucky); this is one of the few instances in which the KFC initials is changed for the local language (even in France itself, it's called KFC). In Puerto Rico and Spanish-speaking areas of the United States, KFC is known as PFK (Pollo Frito Kentucky). KFC͛S STORY Pete Harman was building a successful burger business in Utah when a white-haired, goateed acquaintance from Kentucky showed up unexpectedly and offered to cook for him a fried chicken dinner. Colonel Harland Sanders had a business proposition. He was certain that one helping of his specialty chicken, coated with a blend of 11 herbs and spices, would persuade Mr. Harman to add chicken to his menu. Mr. Harman was hooked after a few bites. Soon, his restaurant was promoting the dish, called Kentucky Fried Chicken. The chicken became an instant hit in that August of 1952 as customers lined up outside the Salt Lake City eatery to take home dinners by the bucketful. For $3.50, they got 14 pieces of chicken, mashed potatoes, rolls and gravy. Page | 6 From humble beginnings, Kentucky Fried Chicken became a fast-food staple and its originator one of the world's most recognizable faces. Fifty years later, the chain built on Mr. Sanders' salesmanship and home-style cooking boasts nearly 12,000 restaurants worldwide generating sales of nearly $10 billion a year. For Mr. Sanders, success was a long time coming. He drifted from job to job, including stints as a railroad fireman, insurance salesman, steamboat ferry operator, tire salesman and service station operator. He perfected his chicken and the cooking technique in the late 1930s while serving hungry customers who stopped at his service station Ͷ now a historic landmark in Corbin, Ky. The title ͞colonel͟ was an honorific bestowed on Mr. Sanders by a Kentucky governor. He decided to take his chicken from a handful of local restaurants to a national stage at the age of 62, a time when most people are thinking of retiring. He crisscrossed the country by car, his cookware and herbs and spices in the back, to whip up batches of chicken for restaurateurs and their employees. The demonstrations sealed many handshake deals in which restaurant operators agreed to pay Mr. Sanders a nickel for each chicken sold. By 1964, Mr. Sanders had signed up more than 600 franchised outlets when he sold the company for $2 million to a group headed by Jack Massey and Mr. Brown, who later became governor of Kentucky. Kentucky Fried Chicken took flight under Mr. Brown and his partners. By 1971, when they sold the company for $285 million to Heublein Inc., it had more than 3,500 franchised and company-owned restaurants. Mr. Brown attributed the company's success to its emphasis on take-home dinners that resembled the kind mother made, a revolutionary concept in the restaurant industry. The company also capitalized on Mr. Sanders' popularity. The colonel always looked the part of the Southern gentleman, wearing his trademark white suit and black string tie while pitching chicken or dishing out homespun wisdom on television shows. Mr. Sanders stayed on as company spokesman, promoting the chicken in folksy television commercials, until his death in 1980 at the age of 90. KFC changed hands a few more times. It became a subsidiary of R.J. Reynolds Industries Ͷ later RJR Nabisco Ͷ when Heublein sold it in 1982. PepsiCo acquired KFC from RJR Nabisco in 1986 for about $840 million. In 1997, PepsiCo's three fast-food restaurant chains Ͷ KFC, Taco Bell and Pizza Hut Ͷ spun off to form Tricon Global Restaurants Inc. This year, Louisville-based Tricon changed its name to Yum! Brands Inc. Page | 7 BASIS FOR SUCCESS KFC͛s success is owed much to the vision, energy, and heart of its founder and corporate icon, Colonel Sanders. Colonel Sanders developed the special cooking process and created the blend of 11 secret herbs and spices known to the world today as Original Recipe Kentucky Fried Chicken. The Colonel͛s Promise and vision which states the following: To Serve Our Valued Customers y Hot, Great Tasting Meals y Great Value for Your Money y Quickly and Accurately y In a Clean, Comfortable Environment y In a Friendly, Courteous Manner Today, the company continues to maintain rigorous quality control programs to ensure that its customers around the world enjoy the highest possible quality restaurant services and food products. KFC employees are trained to deliver this promise to each and every customer that is served. The C.H.A.M.P.S Program It is a program that backs up the Colonel͛s promise to the customers. C.H.A.M.P.S stands for the six universal areas of customer