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Among brands mentioned above, KFC is the market leader with 100 restaurants till theend of the year 2011, and account for 60 percent of fast food market share in Vietnam.That is the reason why this brand is chosen for study to better understand fast foodmarket in Vietnam.This study examines the case of KFC Vietnam through their product, price, place and promotion strategies
Student: Doan Thi Bich Hoai ID: A2127281 INTERNATIONAL MARKETING MANAGEMENT The report: The Marketing Mix of KFC in VietNam Professor: SHIH, KUANG - HENG Student: Doan Thi Bich Hoai ID: A2127281 Department: Banking & Finance 1 Student: Doan Thi Bich Hoai ID: A2127281 Introduction One of the identities that help people be distinct from one culture to another culture iseating habits. Geographic sites and local food supply determine what people eat and howto enjoy food. Take for an example, people from Asia consume more vegetables than people from Western countries to some extent. Western people tend to have quick andsimple lunch while Asian people prefer longer one However, this is not to say that local people always stick to the way and type of food theyeat from time to time. As we can see, Everyday American and European people dine atJapanese, Thai, Vietnamese or Chinese restaurants. Similarly, on the other side of theglobe, Asian people enjoy their meals at French or Italian restaurants. To be morespecific, foreign restaurants are now more popular in Vietnam, especially Western stylefast food with more than 200 restaurants nationwide. KFC, Lotteria are Jollibee, PizzaHut are just some brands to name. As a matter of fact, more and more teenagers andyoung people go to fast food restaurants when hanging out with friends and family In this research,fast foodis defined ashot food such as a burger that is quick to cook or is already cooked and is therefore served very quickly in a restaurant. (Cambridge Advanced Leaner’s Dictionary) Among brands mentioned above, KFC is the market leader with 100 restaurants till theend of the year 2011, and account for 60 percent of fast food market share in Vietnam.That is the reason why this brand is chosen for study to better understand fast foodmarket in Vietnam.This study examines the case of KFC Vietnam through their product, price, place and promotion strategies 1. KFC Corporation 1.1. Overview. KFC Corporation, also known as Kentucky Fried Chicken is the world's most popular chicken restaurant chain. KFC primarily sells chicken pieces, chickensandwiches, 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 restaurant system,with more than 36,000 locations around the world. KFC, based in Louisville, Kentucky, is the world's most popular chickenrestaurant chain specializing in Original Recipe, Extra Crispy and Colonel's CrispyStripschicken with home-style sides and freshly made chicken sandwiches. Since itsfounding by Colonel Harland 2 Student: Doan Thi Bich Hoai ID: A2127281 Sanders in 1952, KFC has been serving delicious, already- prepared complete family meals at affordable prices. Perfecting its secret recipe of 11herbs and spices in 1939, for the last 60 years, of being the chicken experts, KFC worethe title of being the market leader in its industry. Serving delicious and hygienic food ina relaxing environment made KFC everyone’s favorite. Since then, KFC has beenconstantly introducing new products and opening new restaurants for its customers. Up tonow there are over 17,000 KFC outlets in 109 countries and territories around the world,serving millions of customers each day. Food, fun & Festivityare all what attached to KFC, leading the market since itsinception; People at KFC can proudly say, “We do chicken right” 1.2. Goals • Build an organization dedicated to excellence. • Consistently deliver superior quality, and value in our products andservices. • Maintain a commitment to innovation for continuous improvement andgrowth, striving always to be the leader the market place changes. • Generate consistently superior financial returns and benefit our ownersandemployees. 1.3. Value KFC’s commitment to provide the best food and best experience for the best valuethe universal areas of customer expectation common to all cultures and all restaurantconcepts • Cleanliness • Hospitality • Accuracy • Maintenance of Facilities • Product Quality • Speed of Service 2. KFC Vietnam KFC is known in Vietnam under the special name “Gà rán KFC” – a fast foodrestaurant chain serving the meals made from chicken, hamburgers and the most famousmeal is fried chickenKFC entered the market for the first time in 12/1997 in Ho Chi Minh city. Nowthis fast food restaurant chain has been in more than 18 provinces and cities of Vietnam. • Time lines of first restaurants: 12/1997 – Ho Chi Minh City 06/2006 – Ha Noi 08/2006 – Hai Phong & Can Tho 07/2007 – Bien Hoa – Dong Nai 01/2008 – Vung Tau 3 Student: Doan Thi Bich Hoai ID: A2127281 05/2008 - Hue 12/2008 – Buon Ma Thuot 11/2009 – Đa Nang 04/2010 – Binh Duong 11/2010 – Vinh, Nghe An 05/ 2011 – Nha Trang – Khanh Hoa 06/2011 - Long Xuyen – An Giang 08/2011 - Quy Nhon & Rach Gia 09/2011 - Phan Thiet 12/2011 – Hai DuongSource:www.kfcvietnam.com.vn In 2011, the total revenue of fast food industry was VND810 bn. and the growthrate was about 26 percent. This growth rate makes fast food a very attractive market. Thefollowing chart shows the current market share of KFC and its competitors Source:http://nhipcaudautu.vn/article.aspx?page=1&id=4202-subway-da-den a. Key product planning A product is anything that can be offered to a market that might satisfy a want or need • KFC product is classified as consumer product as it has no intermediates. • KFC offers specialty goods. • The stock turn over of KFC is high • Price and quality of the product is always compared • KFC’s product includes • Goods (Burgers, Chicken Meals etc) • Services (cleanliness, quick service, parties) 4 Student: Doan Thi Bich Hoai ID: A2127281 A typical KFC meal consists of chicken, coleslaw and potato & gravy. All of theingredients are of the highest quality and freshness. To ensure this, the company setsrigorous standards for product uniformity and quality, which must be met by allsuppliers b.Key product line KFC product line includes all chicken based products • Chicken (Original recipe chicken or Hotchicken) -1 piece -3 pieces -6 pieces -9 pieces -18 pieces • Burgers/Snacks - Shrimp burger - Zinger burger - Flava roast burger - 3 pieces crispy Strips - Flava roast chicken rise… • Combo - Original recipe chicken - Hot &spicy chicken - Sandwich -Chicky meal with gift - Popcorn chicken - Sharenijoy • Side orders - French fries - Mashes potato - KFC (Coleslaw) - Sweet bun • Desserts & Beverages -KFC cone -KFC sundae 5 Student: Doan Thi Bich Hoai ID: A2127281 -Hot pie -Pepsi -Milo -Egg tart 3. The marketing mix in Viet Nam: 3.1. Product: The most important thing in product strategy of KFC is to differentiate their product from other competitors in the same industry and gain competitive advantage inconsumers’ mind. KFC’s original recipe is what made Colonel Sanders and KFC famous.He developed the secret formula of 11 herbs and spices which cost millions of dollar andit still defines irresistible flavor of KFC today. Also, the products of KFC in Vietnam, aswell as all over the world, are produced with similar recipe. KFC not only makes itself unique from the others but also varies its products to create an abundant menu. Inaddition to traditional dishes such as fried chicken and hamburger, when penetrating inVietnam, KFC tried to provide more options in order to satisfy Vietnamese tastes such asfillet fried chicken, sandwich, gravy chicken rice, mixed cabbage and jumbo… The sizeof hamburgers is also smaller to fit Vietnamese customers. The list of products isclassified in many categories to help customers feel free to choose their favorite food.Moreover, adding shrimps, fishes to the menu makes customers interested and curiousrather than only serving chicken.KFC not only focuses on developing new products and changing the quality tocatch up with customers’ demand but also takes care of customers’ health. The mostobvious evidence is that in 2007, after two years of experimenting, KFC found out thatthe normal oil contains high linolenic acid (8%) which could cause heart attack. KFC’snew recipe targeted the health conscious customers. Therefore, they introduced a savory blend of six secret herbs and spices and slow-grilled to juicy perfection which has lessfat, calories and sodium than the original recipe fried chicken. This new recipe wasapplied in 5500 KFC restaurants around the world, including Vietnam. Furthermore, in2004, bird flu epidemic exploded in most of countries in Asia which affected directly thesales of KFC in particular and other chicken-oriented restaurants in general. To gaincustomer’s trust, KFC imported chicken from North America as well as made a close processing to ensure food safety. Since KFC has long-term strategy in Vietnam, theyspend more time on gaining market share and getting the loyalty of customers here. 6 Student: Doan Thi Bich Hoai ID: A2127281 KFCVietnam only chooses prestigious and quality guaranteed suppliers with certifiedqualifications to express their concern of customers’ health 3.2.Price: Price decision is a vital role to capture the market share. Although KFC extremelysucceeded in foreign markets and became one of the best in the fast food industry, theyvirtually had no reputation when setting first step penetrating in Vietnam. And KFC wasso smart that they used low price strategy when coming to Vietnam in 1997 in order tocapture the market share before other big competitors such as Lotteria, Mc Donald’srealized how potential Vietnam was. The purpose of this low price strategy was that theywanted to retain a large number of loyal customers. New customers were also attracted by this strategy, they would be curious about the products and tried at least once. Theother objective KFC considered when using this strategy was to maximize their marketshare in comparison with other competitors in Vietnamese market. One famous slogan of low price strategy was “An That No, Chang Lo Ve Gia”(Just eat all, Don’t Worry aboutPrice) Then, when there were more loyal customers, KFC increased their price gradually.As we can see, this strategy was definitely effective since from 2006, KFC began to gain profit and the number of loyal as well as new customers all grew significantly. In thefight of fast food, KFC knew how to make itself more special than the others by possessing unique competitive idea such as combining 2 portions into one called combowith lower price than having 2 separate dishes 3.3. Place: Today, the urbanization is growing very fast, most of the citizens become much busier and more hurried. They do not have much time to prepare their meal at home.Therefore, fast-food plays an important role in their daily life. It is easier to have meals ina very convenient and quick way. Besides, the youth seems to be delighted with Westernculture, they like modern life style. That can explain why KFC Vienam only openedtheir stores mainly at commercial centers, department stores in big city like Ho Chi Minhand Ha Noi. KFC restaurants are designed to show both modern and quick service with eye- catching decoration. Facilities are active and dynamic in red. When we go inside a KFCrestaurant we will see the brightness of KFC from logos to menu displays. All thesedesigns seem inviting to the youth. 7 Student: Doan Thi Bich Hoai ID: A2127281 Due to KFC placing itself close to schools, colleges, cinemas and supermarketswhich are mostly populated by the young and those who are in a hurry, KFC enjoys alarge number of footfalls everyday. In Vietnam,, KFC mainly focus on big cities such asHo Chi Minh , Ha Noi, Da Nang and other high populated areas. Getting deeper in eachcity, KFC also try to locate at central districts in order to offer the convenience for customers. For instance, in Ho Chi Minh, KFC Vietnam open outlets at supermarkets,roundabouts, Commercial centers in District 1, 3, Phu Nhuan District, Tan Binh District,etc 3.4. Promotion: Promotion is the method used to inform and educate the chosen target audienceabout the organization and its products. The target customers of KFC Vietnam areteenagers and young people. KFC Vietnam uses all types of promotion: - Advertising - Sales Promotions - Public Relations - Events and Experiences - Coupons, Discounts and Bundled packages An organization finds most of its meanings and survival through promotion. AtKFC, promotion is the main tool to bring all chicken lovers’ attention towards itsdelicious one-of-a- kind product, the Fried Chicken 3.5. Advertising KFC's advertising strategy is focused on building brand image, and making itfamiliar to consumers about a new popular but fast food in the world. KFC is not onlyadvertising on print media such as newspapers and magazines but also advertising onelectronic media such as television and the Internet. Besides, KFC also regularly holdoutdoor advertising activities through billboards, posters, signs, leaflets. The logo of the smiling Colonel is probably one of the most recognized faces inthe world and instantly brings the image of fried chicken to one’s mind. KFC and its new company jingle, “finger licking good” is a frequentannouncement on televisions, billboards. The concept of showing a normal customer deeply involved in devouring his piece of chicken usually turns on the drool ineverybody’s mouth and makes them rush to the nearest KFC store. 8 Student: Doan Thi Bich Hoai ID: A2127281 Using reminding advertisements, KFC stimulates repeated purchases of its products. The company anthem “finger linkin good” is just a wake-up call to theconsumer to remind them how good they felt the last time they ate KFC chicken.Sponsorship is also another tool to strengthen an organizations image. In its 100 th store opening celebration, KFC had sponsor 100,000USD for The Saigon TimesFoundation 3.6. Sales Promotion KFC uses the following method to further enhance its sales. - Premiums (VIP cards) - Exhibits - Coupons - Entertainment - Sales Promotion All KFC outlets offer its customers with various forms of incentives to buy itsChicken. Using coupons that one can acquire after spending a particular amount over a period of fixed time, customers can enjoy the benefits of free meals or free add- ons.Additionally, they provide meal vouchers and exciting offers in their printed ads,which customers cut and bring along in order to have a discount on their receipt.KFC is also timely to have other promotions on special cases of the year *WHEN BUYING 1 "PART EATING CHRISTMAS" your loved one will receive a cardand have the chance to get MORE ATTRACTIVE GIFTS: + 04 LAPTOPS NOKIA N72 phone + 10+ 10 MP4 player + 200 pairs of fashion + 50 000 Christmas cards * With each purchase 01 large glasses of Pepsi, customers will receive 01 codes to participating in the program drawn automatically by message to the operator (8113) or visit Website:www.pepsiworld.com.vn.KFC Vietnam also created a fan page on Facebook to get more loyal young customers.They encouraged customers to write interesting status to win a iPad 4. Conclusion Through the case of KFC, we can see that fast food business was not easy to set upas well as grow up in Vietnamese market. Fast food industry has to overcome manydifficulties 9 Student: Doan Thi Bich Hoai ID: A2127281 to have a position in customers’ minds. The successful lesson of KFC inVietnam has proved that if a business in fast food business wants to be successful in anymarket should have strong brand name, long-term strategy, effective marketingcampaigns, well-designed service, a combination of standardization and localization, andespecially continuous improvement in order to adapt with the local environment Reference http://www.klexpress.com/modules/general/index.php?page=news&act=detail&id=10 http://www.scribd.com/doc/86854290/kfcwww.facebook.com/KFCinIndia http://lighthouseinsights.in/kfc-india-launches-fiery-grilled-campaign.html http://www.kfc.com http://www.kfcvietnam.com.vn 10 [...]...Student: Doan Thi Bich Hoai ID: A2127281 http://www.vnnhahang.com/forum/t451-tim-hieu-chien-luoc-phat-trien-cua -kfc- taivn.aspxwww.gso.gov.vn/default.aspx?tabid=407&idmid=4&ItemID=1346 www.nextdiner.blogspot.com/2011/11 /kfc- con-uong-thanh-cong www.facebook.com/KFCVietnam www.pepsiworld.com.vn 11 . being the chicken experts, KFC worethe title of being the market leader in its industry. Serving delicious and hygienic food ina relaxing environment made KFC everyone’s favorite. Since then, KFC. A2127281 INTERNATIONAL MARKETING MANAGEMENT The report: The Marketing Mix of KFC in VietNam Professor: SHIH, KUANG - HENG Student: Doan Thi Bich Hoai ID: A2127281 Department: Banking & Finance 1 Student:. Product: The most important thing in product strategy of KFC is to differentiate their product from other competitors in the same industry and gain competitive advantage inconsumers’ mind. KFC s original