KFC International Marketing Strategy - Essay Sample

Introduction

KFC is a fast food restaurant, founded in the United States, and also known as Kentucky Fried Chicken. It is a subsidiary of a restaurant company, Yumi Brands, specializing in a fried chicken dish. It is the world's second-largest fast-food chain. KFC was founded in 1952 by Colonel Harland Sanders and is headquartered in Louisville, Kentucky. By 2018, the fast-food chain magnate had approximately 22,621 locations globally, with a presence in 136 countries. The restaurant's original signature dish is the seasoned, pressure-fried chicken, with Sanders' secret recipe of eleven different herbs and spices giving it its signature taste. However, the restaurant has since expanded its menu to include other chicken products. One of the restaurant's goals has always been to dominate the Chinese market, and through a vigorous expansion strategy and campaign, has successfully made China its single largest market. The paper analyses and investigates KFC's international marketing strategy, and recommendations for the way forward.

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Kentucky Fried Chicken's first restaurant outlet was opened in China in 1987, making it the first foreign fast-food establishment in China. The company's first outlet was in Qianmen, Beijing. The company noticed that in order to achieve success, first, the brand had to be accepted by the Chinese people (Shualing & Zhi, 2015). To accomplish this, the company entered into a partnership with several companies and organizations in China. It, therefore, started as a joint venture, with KFC controlling 60 percent stake. The other percentages went to Beijing Tourist Bureau, who managed 27 percent of the shares, and Beijing Food Production controlling 13 percent of the shares. In 1988, Bank of China also entered an agreement with KFC, taking a 25percent stake in the business venture, a move that saw KFC's stake diluted to 51 percent (Shualing & Zhi, 2015). However, the parent company still had total control of the enterprise.

KFC has had steady growth in China, making it the largest fast-food restaurant in the country. The restaurant currently has more than 5000 restaurants in 1100 cities. According to Euromonitor, as of 2016, KFC held an 11.6 percent market share, as compared to McDonald's 5.6 percent (Shen & Xiao, 2013). Euromonitor projects that the KFC brand will have a commanding lead in the market share index for a long time to come, mainly because of its aggressive catering to Chinese tastes.

There are several reasons why KFC can occupy the Chinese market successfully. The number one reason is the company's decision to infuse the brand from the west with Chinese characteristics. KFC's top management saw the need to stretch the brand, which in turn made consumers view KFC as a member of the local business enterprise, and not as a foreign restaurant selling expensive exotic-style dishes. Instead, the Chinese saw KFC as a restaurant serving a variety of food that appeals to the Chinese population. One aspect of the infusion is in the outlet size. The KFC stores are twice as large as those found in the United States, allowing for bigger kitchens and floor space for the dinners to interact and linger freely (Dong & Tian, 2009). While the outlets in the United States are designed for takeouts, in China KFC made a special effort to accommodate larger groups and extended families.

Another example of infusion of the western brand with Chinese characteristics is in the menu. In the United States and other Western countries, there is not much product in the KFC menu. However, due to China's vibrant and diverse cultural heritage and dietary habits, there was a need to develop a diverse menu to meet the China market expectation. The KFC China menus include up to 50 items, which is in sharp contrast to the restaurant's menu in the United States, which has about 29 items. One advantage of the menu variety is that it adds to the number of people frequenting the outlets, and also encourages repeat visits. The fast-food chain in China can introduce up to 50 items in a year, with some offered temporarily, as compared to one or two items in the United States. Another area of interest was the recipe. In the earlier days, whenever the same recipe was served in all the outlets, there were complaints. For example, Shanghai residents argued that the dishes were extremely hot, while the population in Hunan complained that the dishes were too bland. To address this issue, the company adopted a policy that adopts different recipes for a given region.

The second reason why KFC can occupy the Chinese market successfully is because of its rapid expansion. One factor that led to the rapid expansion was the existence of McDonald's stores in four major cities in China. So, instead of going head-to-head with the largest fast-food company in the world, KFC opted to expand to other smaller towns (Rui, Huang, Lu, & Wang, 2016). The model put the company in a unique position, giving it an outlook of a national fast-food enterprise with outlets all over China. The scale allowed the business enterprise to reduce cost. The company also has a strategic advantage. By arriving in a location earlier than competitors, the company is able to pick sites that have the best traffic and visibility. The company is automatically guaranteed free publicity whenever a city or town celebrates the opening of a new outlet. A national presence also means that the KFC brand and its parent company Yu is popular with mall developers, giving it an upper hand in selecting strategic locations (Rui, Huang, Lu, & Wang, 2016). The rapid expansion has therefore enabled the brand to develop a wider market share as compared to its competitors such as McDonald's.

The third reason is the company's logistics network. The success of fast-food chains anywhere in the world depends on distribution networks, which guarantee proper handling of food from the farms to the restaurant. Therefore, to realize success, in 1977, the company established a distribution arm. It also built warehouses and invested in its fleet of trucks. Although expensive, the company had to invest in logistics network if the company was to handle the rapid expansion, support a diverse and unique menu, and to rapidly introduce new products (Bhaumik, 2015). KFC China, in a bid to maintain high standards, closely monitors the supply chain. It also trains employees on the importance of personal hygiene, ranging from the dress code to physical cleanliness.

Most of the company's products are sourced in the host country, which significantly reduces costs. It also helps in building the relationship between the parent company Yumi and the Chinese national and local governments.

Another reason for the projected KFC's dominance is its decision to focus on ownership and not franchising. Through the strategy of company-owned-outlet, the company can control about 90 percent of the outlets, since they are company owned. One advantage of owning an outlet is that it allows the company to take charge of every operation in the firm, from monitoring the results and success of new products to menus and decors. The strategy also provides for a centralized purchase system, which in turn curbs costs, and also guarantees the company majority shares of outlet profits.

Kentucky Fried Chicken interests me because of some reasons. First, is its ability to remain on top of the fast-food chain market in China for over three decades, commanding a considerable market share as compared to its competitors. In a country that values its culture and values, and one that has remained hostile to foreign companies for a long time, especially companies from the United States, KFC China is a strange success story. The company has been able to stay on top of the fast-food industry in China due to its dynamic approach to different situations. The company, through its management, understood the market demand of the Chinese market, which required a high level of quality service, as well as incorporating local cuisines into the menus. The flexibility of the company's policy, without necessarily compromising on quality is also another reason for interest. For example, while in the United States there are about 21 items in the menu; in China, the company increased the number to 50, which enabled the locals to be able to enjoy their dishes while at the same time appreciating the western dishes. The company is also known to supply on a recipe in the United States. However, in China, the company provides different recipes to different outlet locations; another example of flexibility.

KFC also offers a special menu for children, commonly known as Kids Meals, which are healthy for children consumption. Not all recipes served in KFC outlets are children friendly, and that is why the company came up with unique recipes that met the standards for a kid-friendly meal (Shen & Xiao, 2013). Such recipes contain foods that are low on sugar, fat, and high on carbohydrates, protein. The menu items for kid-friendly meals are categorized according to the level of calories on each item. For instance, a meal with Kentucky Grilled Chicken drumstick, applesauce, green beans, and water contain 210 calories. The kid-friendly meal should also be soft and easy to chew and digest by the children. Packaging is also important, and that is why KFC came up with a smaller bucket for serving the chicken. The smaller bucket made it easier for the children to have easy access to the chicken, which in turn increases customer experience. The parent company has heavily invested in nutritional and marketing research projects that ensure that KFC continues to make improvements and explore opportunities for improving Kids Meal offerings and the nutritional makeup of kid-friendly meals.

KFC China has enjoyed a considerable market share in China for a long time, and this has to be maintained. Several recommendations can help the company achieve even greater success in the future. First, the company should put more focus on the flavor, quality, and price of new products. Great emphasis on quality, flavor, and price will ensure that consumers get value for their money, which in turn will lead to revisits, and ultimately a strong and growing consumer base. Currently, much focus is on the frequency of the company's new product introduction (Singhania & Saini, 2018). Frequent new product introduction can eventually detract customers focus away from the company's core products, which are the driving force behind the company's success.

The company should also develop senior local talent within the KFC hierarchy, to take on top national and regional leadership of KFC China. The locals understand the Chinese market better, and with competent locals at the helm, the company can experience a boost in sales and market share. There is no success without implementation, and this has played and continues to play a significant role in the company's success. Apart from localized people, products, systems and processes, the successful implementation must also rely on the flexibility of the company's policies and strategies. The company must be willing to change direction according to new government policies, as well as crisis and opportunities. Constant innovations in its production approach and products will also enable the company to remain top in the Chinese market.

KFC China has shown that with the best business strategy, a company can have tremendous success in foreign countries. KFC China's competitive advantages depart from its conventional U.S model. The company adopted a dynamic approach in China, which is a tight market for U.S companies to penetrate. Infusing western brand with Chinese characteristics, having an extended menu, expanding rapidly, developing a logistics network, forcing ownership rather than fra...