What is marketing?

Almost every marketing textbook has a different definition of the term marketing. The
American Marketing Association (AMA) uses the following: The process of planning and
executing the conception, pricing, promotion, and distribution of ideas, goods, and services to
create exchanges that satisfy individual and organizational objectives. From this definition, we
see that:

Marketing involves an ongoing process. The environment is dynamic. This means that
the market tends to changewhat customers want today is not necessarily what they
want tomorrow. For example, sales of beef are declining in the United States because
consumers have become health oriented. Similarly, Tupperware parties are less popular
today than they once were because there are fewer housewives who do not work outside
the home.

This process involves both planning and implementing (executing) the plan.

Some of the main issues involved include:

o

Marketers help design products, finding out what customers want and what can
practically be made available given technology and price constraints.

Marketers distribute productsthere must be some efficient way to get the

products from the factory to the end-consumer.

Marketers also promote products, and this is perhaps what we tend to think of first
when we think of marketing. Promotion involves advertisingand much more.
Other tools to promote products include trade promotion (store sales, coupons,
and rebates), obtaining favorable and visible shelf-space, and obtaining favorable
press coverage.

Marketers also price products to move them. We know from economics that, in
most cases, sales correlate negatively with pricethe higher the price, the lower
the quantity demanded. In some cases, however, price may provide the customer

with a signal of quality. Thus, the marketer needs to price the product to (1)
maximize profit and (2) communicate a desired image of the product.
o

Marketing is applicable to services and ideas as well as to tangible products. For

example, accountants may need to market their tax preparation services to
consumers.

THE MARKETING ENVIRONMENT

ELEMENTS OF THE ENVIRONMENT:
The marketing environment involves factors that, for the most part, are beyond the
control of the company. Thus, the company must adapt to these factors. It is important to observe
how the environment changes so that a firm can adapt its strategies appropriately. Consider these
environmental forces:

Competition:
Competitors often creep in and threaten to take away markets from firms. For
example, Japanese auto manufacturers became a serious threat to American car makers in
the late 1970s and early 1980s. Similarly, the Lotus Corporation, maker of one of the first
commercially successful spreadsheets, soon faced competition from other software firms.
Note that while competition may be frustrating for the firm, it is good for consumers. (In
fact, we will come back to this point when we consider the legal environment). Note that
competition today is increasingly global in scope.

Economics:
Some firms in particular are extremely vulnerable to changes in the economy.
Consumers tend to put off buying a new car, going out to eat, or building new homes in
bad times. In contrast, in good times, firms serving those needs may have difficulty
keeping up with demand.

Political:
Businesses are very vulnerable to changes in the political situation. For example,
because consumer groups lobbied Congress, more stringent rules were made on the terms
of car leases. The tobacco industry is currently the target of much negative attention from
government and public interest groups. Currently, the desire to avoid aiding the enemy
may result in laws that make it more difficult for American firms to export goods to other
countries.

Legal:
Firms are very vulnerable to changing laws and changing interpretations by the
courts. Firms in the U.S. are very vulnerable to lawsuits. McDonalds, for example, is
currently being sued by people who claim that eating the chains hamburgers caused them
to get fat. Some impacts of the legal environment.

Firms are significantly limited in what they can do by various lawssome laws, for
example, require that disclosures be made to consumers on the effective interest rates
they pay on products bought on installment. A particularly interesting group of laws relate
to antitrust. These laws basically exist to promote fair competition among firms. Some
principles involved here include:
o

Collusion: Firms may not conspire to fix prices (agree that they will not sell
below an agreed upon price) or reduce services.

Predation: Firms may not sell their products below their cost of production for
the purpose of driving competitors out of business so that they, themselves, can
raise prices when competition is reduced.

Market share: Firms which have an unacceptably large market share may be
broken up by court order so that many smaller firms will be around to compete.
(This is what happened to AT&T, and at times, IBM has been worried about this
prospect). Tying: A firm that controls a valuable product may not require the

consumer to buy a more commonplace one to get the scarce product. For
example, Intel controls many of the newest microprocessors (e.g., Pentium IV).
Intel also makes motherboards for computers; however, motherboards are made
by a lot of firms. Intel would be thought to abuse its effective monopoly power if
it required consumers to buy a motherboard in order to get its newest chips.

Technological:
Changes in technology may significantly influence the demand for a product. For
example, the advent of the fax machine was bad news for Federal Express. The Internet is
a major threat to travel agents.

Social:
Changes in customs or demographics greatly influence firms. Fewer babies today
are being born, resulting in a decreased demand for baby foods. More women work
outside the home today, so there is a greater demand for prepared foods. There are more
unmarried singles today. This provides opportunities for some firms (e.g., fast food
restaurants) but creates problems for others (e.g., manufacturers of high quality furniture
that many people put off buying until marriage). Today, there are more blended
families that result as parents remarry after divorce. These families are often strapped for
money but may require duplicate items for children at each parents residence.

Environmental scanning:
Its helps the firm understand developments in the market. Such developments may
involve changes in the market place due to social trends (e.g., Gerber, a manufacturer of baby
products, faces a serious challenge with declining U.S. birth rates), technology (e.g., VCR
makers are threatened by DVD players), or new or potential competitors (e.g., Internet service
providers are being threatened by increasing marketing efforts from MSN). Note that
environmental scanning must be performed continuously, since environmental change does not
cease.

Economic cycles:
The economy goes through cycles. In the late 1990s, the U.S. economy was quite strong,
and many luxury goods were sold. Currently, the economy is somewhat weak, and many firms
are facing the results. Car makers, for example, have seen declining profit margins (and even
losses) as they have had to cut prices and offer low interest rates on financing. Generally, in good
economic times, there is a great deal of demand, but this introduces a fear of possible inflation.
In the U.S., the Federal Reserve will then try to prevent the economy from overheating. This is
usually done by raising interest rates. This makes businesses less willing to invest, and as a
result, people tend to make less money. During a recession, unemployment tends to rise, causing
consumers to spend less. This may result in a bad circle, with more people losing their jobs due
to lowered demands. Some businesses, however, may take this opportunity to invest in growth
now that things can be bought more cheaply.

ABOUT KFC

Kentucky Fried Chicken (KFC) is a fast food restaurant chain that specializes in fried
chicken and is headquartered in Louisville, Kentucky, United States. It is the world's
second largest restaurant chain (as measured by sales) afterMcDonald's, with almost
20,000 locations globally in 123 countries and territories as of December 2015. The
company is a subsidiary of Yum! Brands, a restaurant company that also owns
the Pizza Hut and Taco Bell chains.
KFC was founded by Harland Sanders, an entrepreneur who began selling fried chicken
from his roadside restaurant inCorbin, Kentucky, during the Great Depression. Sanders
identified the potential of the restaurant franchising concept, and the first "Kentucky
Fried Chicken" franchise opened in Utah in 1952. KFC popularized chicken in the fast
food industry, diversifying the market by challenging the established dominance of
the hamburger. By branding himself as "Colonel Sanders", Harland became a
prominent figure of American cultural history, and his image remains widely used in KFC
advertising. However, the company's rapid expansion overwhelmed the aging Sanders,

and, in 1964, he sold it to a group of investors led by John Y. Brown, Jr. and Jack C.
Massey.
KFC was one of the first American fast food chains to expand internationally, opening
outlets in Canada, the United Kingdom, Mexico, and Jamaica by the mid-1960s.
Throughout the 1970s and 1980s, KFC experienced mixed fortunes domestically, as it
went through a series of changes in corporate ownership with little or no experience in
the restaurant business. In the early 1970s, KFC was sold to
the spirits distributor Heublein, who were taken over by the R.J. Reynoldsfood
and tobacco conglomerate, who sold the chain to PepsiCo. The chain continued to
expand overseas, however, and in 1987 KFC became the first Western restaurant chain
to open in China. The chain has since expanded rapidly in China, which is now the
company's single largest market. PepsiCo spun off its restaurants division as Tricon
Global Restaurants, which later changed its name to Yum! Brands.

SWOT ANALYSIS

STRENGTH:
1.

Global Presence: KFC is the worlds 2nd largest restaurant chain with more
than 18,000 KFC outlets in 120 countries and territories around the world. It is
market leader in Non-veg food joints categories in majority of countries it is in.

2.

Strong parent company: It is the subsidiary of Yum! Brands, a restaurant

company that also owns the Pizza Hut and Taco Bell . Yum! Brands, the fortune 500
company, is one of the worlds largest fast food restaurant companies in terms of
system unitsmore than 41,000 restaurants around the world in over 125 countries
& it help individualbrands in optimizing its resource usage.

3.

Veg & Non veg offerings: Although KFC is known for its finger licking
Chickens menu but recently they ventured out in Vegetarian category which is
helping them in increasing their business & attracting both veg & non-veg preferred
customers.

4.

Secret Recipe: Sanders Original Recipe of 11 herbs and spices is one of the
most famous trade secrets in the catering industry. A copy of the recipe, signed by
Sanders, is held inside a safe inside a vault in KFCs Louisville headquarters, along
with eleven vials containing the herbs and spices.

WEAKNESSES
1.

Unhealthy fats: Use of unhealthy fats & unhygienic calories is creating problem
for the fast food chains to which KFC is not an exception.

2.

Managing franchisees: Franchisee management is one of the critical issues in

the success of the fast food chains and due to conflicting operational issues between
KFC and its franchisees many of its outlets got closed since its inception.

OPPORTUNITIES:
1.

Market expansion: Emerging economies and their changing lifestyle resulting

into more of outings with family/friends, corporate parties will result in the high
growth of the industry. Furthermore, the presence and popularity of McDonalds is
anytime more daunting for KFC.

2.

Specializing into vegetarian Menu: Although KFC recently entered in

vegetarian fast food category but they have limited menu items as compared to other
chains like subway, Pizza-hut, Mac Donalds, who are already an established player
in the segment. So specializing into Veg. items like they have in Non-Veg will help
the company in its overall global growth.

3.

Rise in health conscious population: Designing its menu for the health
conscious population will be the driving force for the whole industry in the future
because due to changing lifestyle people are getting less time for themselves due to
which health issues are raising.

4.

Penetration: Strengthening its outlet network by further penetrating the

current market will help KFC in increasing its revenues & become no.1 player in fast
food chain market given that now they have presence in both Veg. & Non-Veg. menu
in the selected market.

THREATS:
1.

Competition: KFC is not a leader in the fast food chain industry so it has to
compete with all other well established fast food companies who all are flourishing in
the market.

2.

Changing Consumer Eating habits: With government & NGOs health

awareness campaigns people are becoming more aware of what to consume & what
to not which is affecting the business of fast food Industry as a whole.

3.

Raw Material prices: Rise in the raw material prices may affect the industry,
of which KFC business is not an exception.

4.

Closure of current Franchisees: Rise in channel conflict resulting into

closing of the franchisees is affecting its brand image & resulting into negative word
of mouth.

COMPETITOR ANALYSIS:
Any Organization cannot enjoy the business without competi
t o r s . N o organization can afford to ignore there competitors. It is very important
for amarketing managers to monitor the activities of there competitors, what they aredoing?
KFC adopted such sort of strategy that there is no competitor for spicy chicken, which
is made by KFC.
KFC beats its competitors through the revising marketing strategy at ever
y movement but the main competitor of KFC is Mc Donalds.
KFC
Spicy products

MC DONALDS
Burger and French Fries

Pakistani people like spicy products instead of boiled

foods
Arabian rice and Zinger burger
Free Delivery
Chicken is eaten by every community
Local staff and highly qualified because local staff can

Big Mac
Free Delivery
Beef is banned in some community
Its staff consists of simple graduates and give them

better deal with the customers.

training
KFC usus Top to Bottom and Bottom to Top approach Mc Donalds uses Top to Bottom approach
in Management
KFC is co branding with walls

No such case

K
SEGMENTTATION:
KFC has divided the market of Pakistan into distinct groups of customers with different
demands, tastes and behavior who require separate products or marketing mix.
In Pakistan the niche marketing is being used for particular classes of people.
They have made segments of the market on the following bases.
Demographical
Behavior
Geographical

DEMOGRAPHICAL BASIS
In demographics their first segment is consisted of the income factor i.e. high income, average
income and low income.
BEHAVIOR
In behavioral aspect they segmented the market on the basis of quality, taste and price. Following
are the different possible segments in this regard.
Taste conscious
Quality conscious
Class conscious
Combination of price and quality
GEOGRAPHICAL BASIS
On the basis of the geographical factor we have divided our market in two main segments.
Urban areas
Sub urban areas

FC

By using these three bases they segmented the market as under.

K
KFC
PROFILE CRITERIA:
1. Gender: KFC is for each gender both male and female.
1

Income: Everyone can use the KFC service upper and middle class .

Age: Age limitation for using their products is above 7.

Occupation: By profession also everyone can use this product means businessmen, students,
workers and other peoples.

Education: It has no need more education that why the person who know something can
easily enjoy with their products.

Family life cycle: KFC is suitable in every stage of life like single married couple and also

Lifestyle: This product is used in every level of social class like upper, middle class.

Attitude: When the customers once buy this product after that they can use the product
continuously.

Purchasing decision: Often KFC changes the purchasing decision of customers because of its
good attributes.

Geographic region: Geographically KFC is used in every part of the country as well as all
over the world.

CURRENT TARGET MARKET:

KFC will be using differentiated market coverage strategy. It means that different marketing mix
will be used for different age groups.
After evaluation of various segments, KFC has decided to target the market of urban and Suburban Areas of Pakistan.
People are educated and they want variety in their diet.
Normally people of rural areas dont take fast food. On the other hand people of urban
areas take fast food.

FC

those who have children can use this product.

KFC
Income of the people of urban areas is normally high and they can afford to purchase
such products, which are slightly higher in price as compared to prevailing prices of local
food in the market.
People of Urban Areas are more quality conscious than the people of Rural Areas.
In Urban Area there lived people from every walk of life and profit generation is easier
than in Rural Areas.
Population density is higher in Urban Areas as compared to Rural Areas, so the numbers of
customers are more in Urban Areas.

MARKETING MIX OF KFC:

There are four ps of marketing:
1. PRODUCTION
2. PRICING
3. PROMOTION
4. PLACEMENT

1. Production:
Basically the product is anything that be offered to a market for attention,

acquisition, use, or consumption that might satisfy a want or need. KFC is

specially dealing in the chicken products; Basically, KFC has the special raspy
for chicken products that is why, KFC known as a chicken specialist allover
the glob. KFC target the Asia and east side because they observe that they
people are like the chicken products, so they enter in the market due to the
demand of their chicken products. KFC product variety of product in the
chicken, those productsare:

PRODUCTS:

Original recipe chicken

Extra Tasty CrispyTM chicken
Hot WingsTM pieces
Tender Roast chicken
Chunky Chicken pot pie
Kentucky Nuggest
Colonels Crispy Strips
Honey BBQ sandwich
Original Recipe Sandwich
Tender Roast Sandwich
Triple Crunch Sandwich
Triple Crunch Zinger Sandwich

BRAND:
There are three brands of the KFC:
Taco bell

Pizza Hut
Long john silvers
2. Pricing:
KFC during pricing their products keep the different points in the mind like
they adopt the cost base price strategy. Pricing of the product includes the
Government taxes and excise duties and then they come at final stage of
determine the price of their products. KFC prices of products are a bit high
according to the market segment and it is also compatible to the stander of
their products.
Calculation of the price under Cost Based Pricing Strategy:
Total Pounds of Chicken Served in KFC Restaurant Annually = 1.914 Billion
Total KFC Chicken Pieces Sold Annually = 5.89 Billion
Total Retail Sales = $8.9 Billion
Sales Price of per Chicken Piece = Total Retail Sales / Chicken Pieces sold
= $8.9 Billion / $5.89 Billion
=$1.51
We assume that Fixed Cost is = $6000000000
Variable Cost = $675000000
Profit Margin is Or Mark Up = $225000000(25% of Sales)

Per Unit Variable Cost = $675000000 / 5890000000

= $ 0.115
Unit Cost = Variable Cost + Fixed Cost / Chicken pieces Sold
= 0.115+ 6000000000 / 5890000000
= 0.115 + 1.02
= $1.135
Now suppose manufacturer wants to earn 2525% mark up on sale. The
manufacturer
mark up price is calculated:
Mark Up Price = Unit Cost / (1 Desired Return on Sales)
=1.135 / (1-.25)
= 1.135 / 0.75
= $1.51

3. Promotion:
Promotion is one of the necessary plates in any form of business or in other
words you can say that promotion is the key of success. If you promote your
product at the right time . KFC also known the importance and significance of
promotion so they uses the bill boards the major source of advertisement A
survey of young consumers in the countries (n = 795), showed that the
respondents were more apt to eat within KFC restaurants, and spend more
time doing so, than the Americans. The Chinese also had much more positive
impressions of KFC. Brand identity impressions were correlated with overall
customer satisfaction and with future patronage intentions for both groups.
These findings support a model where differences in cultural frames of

reference lead consumers to actively localize the brand identity of this

nominally globalized product.

4. Placement:
In the case of the KFC the placement of the product is not important but the
placement of the restaurant is important. The products of the KFC is cooked
at the sport and then served after that. KFC Cavalry branch opened in June
1998, in the main commercial zone of Cavalry Grounds near the Jinnah
Flyover. The restaurant is a three-story building including the basement
(where the chicky play area is located). It is ideally located in the center of a
main commercial and residential area of Lahore. The area that KFC Cavalry
caters for is the residential and office area of Cavalry Grounds and Cantt, as
the main target market. Another branch the KFC opened in the Lahore is in
Garden Town (opposite to Barkat Market). KFC also target the Faisalabad and
open its branch in D ground. Now we can easily judge that the KFC target the
place for their restaurant, which is well known and is in the Porsche area
where the income level of the people is high then the middle
class level. Because the prices of the KFC products is high with comparison
to the local products manufacturer who are dealing in the same kind of
product in which KFC is dealing but the prices of the KFC is high due to
special taste, high quality, and due to international brand, it is the world
recognized fast food restaurant all around the world. So, for the placing
strategy, KFC chose the well income class area for their restaurants.
Purchasing process:
Many people come from home to eat this, and some make impulse decision
as theysaw it .
Market mix Strategy

KFC will be using differentiated market coverage strategy. It means that

different marketing mix will be used for different age groups.
TARGET MARKET FOR FAST FOOD
After evaluation of various segments, KFC has decided to target the market
of Urban and Sub-urban Areas of india.
Product usage
People are educated and they want variety in their diet. Normally people of
rural areas dont take fast food. On the other hand people of urban areas
take fast food. Income of the people of urban areas is normally high and they
can afford to purchase such products, which are slightly higher in price as
compared to prevailing prices of local food in the market. People of Urban
Areas are more quality conscious than the people of Rural Areas.
In Urban Area there lived people from every walk of life and profit generation
is easier than in Rural Areas.
Population density is higher in Urban Areas as compared to Rural Areas, so
the numbers of customers are more in Urban Areas.