Marketing Analysis â KFC

Introduction KFC operates in 74 countries and territories throughout the world.

It was founded in Corbin, Kentucky by Colonel Harland D. Sanders. y 1964, the Co
lonel decided to sell the business to two Louisville businessmen. In 1966 they t
ook KFC public and the company was listed on the New York Stock Exchange. In 197
1, Heublein, Inc. acquired KFC, soon after, conflicts erupted between the Colone
l (which was working as a public relations and goodwill ambassador) and Heublein
management over quality control issues and restaurant cleanliness. In 1977 a "b
ack-to-the-basics" strategy was successfully implemented. By the time KFC was ac
quired by PepsiCo in 1986, it had grown to approximately 6,600 units in 55 count
ries and territories. Due to strategic reasons, in 1997 PepsiCo spun off its res
taurant businesses (Pizza Hut, Taco Bell and KFC) into a new company called Tric
on Global Restaurants, Inc.
Reasons for going overseas Companies moves beyond domestic markets into internat
ional markets for the following reasons: *Potential demand in foreign market *Sa
turation of domestic markets *Follow domestic customers that go abroad *Bandwago
n effect *Comparative advantage - some countries possess unique natural or human
resources that give them an edge when it comes to producing particular products
. This factor, for example, explains South Africa's dominance in diamonds, and t
he ability of developing countries in Asia with low wage rates to compete succes
sfully in products assembled by hand.
*Technological advantage - In one country a particular industry, often encourage
d by government and spurred by the efforts of a few firms, develops a technologi
cal advantage over the rest of the world. For example, the United Sates dominate
d the computer industry for many years because of technology developed by compan
ies such as IBM, Hewlett-Packard and Intel Organization structures for Internati
onal Markets (Modes of Entry) *The mode of entry affects a company's entire mark
eting mix Exporting *Export merchant (Indirect) *Export agent (Direct) *Company
sales branches Contracting *Licensing *Franchising *Contract manufacturing Direc
t Investment *Joint venture *Strategic alliance *Wholly owned subsidiaries Crite
ria for selecting a mode of entry 1.Company's marketing objectives: - production
volume - time scale (long/short term) - coverage of market segaments 2.Company'
s size 3.Government encouragement or restrictions 4.Product quality requirements
5.Human resources requirements 6.Market information feedback 7.Learning curve r
equirements 8.Risks: political or economic 9.Control needs Mode(s) of entry for
KFC *Franchising/Licensing *wholly owned subsidiary *Joint venture Firstly, KFC'
s traditional franchising strategy, which is emphasizing standardization and red
ucing financial risk, on the expense of cultural sensitivity and control. Due to
China's strict foreign investment laws such a strategy is not feasible. In addi
tion, KFC will be pioneering in the fast-food field and thus needs to be highly
sensitive to cultural demands. In the past, KFC encountered problems with aligni
ng corporate planning with franchisee's short-term focus on profitability.