What is in a Marketing Plan?

The marketing plan will cover the rationale for the business, it’s unique differentiation, which the principals believe is not only right and appropriate for the area in which the business will be situated but also sets it apart from other similar operations in the surrounding area.  In addition to this rationale, the targeting and positioning strategy will be outlined, along with the overall marketing strategy, communications and actionable marketing plan, including costing’s for advertising and promotion of the new venture.

Market Research Approaches

Prior to commencing any research consideration was given to the following pertinent questions, (Reuvid)

i. What and where is the main competition?ii. What are the potential customers looking for?

iii. Where should the market positioning of the business be?iv. What is the profile of the target customer?v. What approaches should be taken to achieve economic promotion of the business?

In order to answer these questions, both desk and field research were undertaken and you can read the rest of the marketing plan here

Ivory Research welcomes Rowan Truebody to the Ivory Research team, thank you for joining the ever-growing talented writers we have at Ivory Research and supplying a sample of your work (above).

Why Rowan Truebody is the ideal custom writer;

Rowan holds a BmedSci in Speech and Language Therapy from Sheffield University. Rowan has worked in a variety of industries, including healthcare, human resources and

marketing and promotions, providing analysis and reporting papers Rowan’s background and well rounded experience shows that she he has  extensive

knowledge of expectations and requirements for work at both undergraduate and graduate level.

KFC Marketing Plan

Industry BackgroundThese few decades, the lifestyle and pace of modern people has become faster changing ever.

Thus, people are demanding for fast food for take away or dine in which are quick to fill up their

stomach. This has fueled up the competition of fast-food restaurants to share the cake of fast-

food industry. There has been an ongoing battle between the fast-food restaurants. KFC,

McDonalds, Sugar Bun, and Marry Brown are the top selling fast-food restaurants in Malaysia

today. The have the same goals to provide quality food, serve quickly, in attractive, clean

surroundings. They are all on top in different areas. Many of their competitive advantages have

come to a halt. They all have been working on other strategies to beat the competition (Yum

Brands! 2007).

Corporation & SBU BackgroundQSR Brands Bhd.

QSR Brands Bhd. with its subsidiaries together engages in the operation of fast food restaurants

in Malaysia, Brunei and Singapore. It operates approximately 193 Pizza Hut restaurants in

Malaysia and Singapore; 456 KFC restaurants in Malaysia, Singapore, and Brunei; and 13 Rasa

Ayamas restaurants in Malaysia. The company has employed over 20,000 employees throughout

Malaysia, Singapore and Brunei. The company is involving in the integrated poultry, breeder

farms, hatchery, feedmill, and poultry production and processing operations, as well as vegetable

farming, baking, sauce production, and commissary operations. In addition, QSR Brands Bhd

engages in the poultry retail and convenience food stores operations, trading in consumables, and

property holding operations. The company is headquartered in Kuala Lumpur, Malaysia. QSR

Brands Bhd. Successfully listed on the Main Board of Bursa Malaysia on 1 April 2004 (QSR

Brands Bhd. 2007).

KFC Malaysia

KFC Malaysia is the famous fast food restaurant in Malaysia; products it sells include chicken,

burger, nugget, sandwich, wedges, drinks, fries, coleslaw and many more. It has captured 44% of

market shares in Malaysia. Its first restaurant was opened in 1973 on Jalan Tunku Abdul

Rahman, now it has more than 390 restaurants throughout Malaysia and growing. Among all,

their secret recipe chicken is the KFC most famous dish, it has great taste and truly enjoyed by

Malaysian ever since. Kentucky Nuggets was conceived in Malaysia, and found its way to KFC

worldwide today. “Meals on Wheels”, was also developed in Malaysia, creating and bringing

opportunity for people to taste where KFC might not available. KFC Kids’ Chicky Club was also

developed to suite for kids. Chicky and Friends, the character in the KFC, bring pleasure and fun

to all children, a good example would be television program sponsored, The Chicky Hour, which

broadcast on every Saturday morning at TV3. Some other activities developed by KFC Malaysia

include Projek Penyayang KFC, Tabung Penyayang KFC, “Tabung Penyayang” KFC Collection

Boxes, and 3 of KFC restaurant are operted by speech and hearing-impaired staffs. All the

information above extracted from the KFC Malaysia website (KFC Holdings 2007).

SBU Situational Analysis

SBU Culture

All fast food restaurants under Yum! Brands in the world have unique culture throughout the

world, which applies to every brand under the Yum! Brands, which shows they have very strong

belief towards their culture. ‘CHAMPS’ is the soul culture for KFC in the world: Cleanliness,

Hospitality, Accuracy, Maintenance, Product Quality, and Speed with Service.

Cleanliness

Make it shine! As referred to KFC RGM Manish Patel tells his team, they spend the first two

hours of each day keeping his restaurant sparkling, with the program called “Cleaning Captain”.

In 2006, he was named KFC’s RGM of the year.

Hospitality

Letting the customer know that they come first. As referred to how LJS/A&W RGM Kris

Jaccard defines hospitality. Kris has been keeping the customer top of mind for 15 years with

franchisee BNC Food Group, she is designated a “training restaurant”. She scored 90% for

CHAMPS in 2006.

Accuracy

KFC RGM Liu Bing Zhi, defines accuracy as serving delicious food the right way every time

with smiles, and making sure their orders are correct. In-store surveys help the team stays

focused on their customers’ needs and keep their CHAMPS scores in 90% plus range, while

growing sales.

Maintenance

Displaying a high-energy attitude. As referred to Pizza Hut RGM Don Bryant keeps his eye on

all parts of the business. Making sure customers don’t have a bad experience because something

is not working right is very important that contribute to the customers’ satisfactions. He scored

95% in 2006.

Product Quality

Perfect tacos every time. As referred to Taco Bell company RGM of the year, Ramona Ureda.

Customer coming in because they know they will get great food, she knows customers expect

their orders to be perfect and the quality of the product as high as possible. She scores 97% for

CHAMPS in 2006.

Speed with Service

Things move fast in the five restaurants that Mejid Mamdouh oversees in Paris. Prioritize people

capability first, then satisfied customers and profitability will follow! This veteran started as a

crew member in 1993, and his outstanding coaching skills and CHAMPS showed that he was an

unique leader.

All the information above extracted from Yum! Brands’ annual report.

SBU Resources

The following are the corporate resources of KFC Holding (KFC 2007):

In terms of marketing resources, KFC has located around 6% of its estimated cost

breakdown which is equivalent to 1.5 million out of 25 million just for marketing

activities in year 2007 (Equity focus 2007).

KFC owns corporate headquarters in Jalan Sultan Ismail, Kuala Lumpur which has the

market value around 90 million and a 22 storey building (Hotfrog 2006).

Kulim is the main funding of KFC Holding as it controls the flows of expense for KFC

(Equity focus 2007).

KFC has operated more than 370 outlets around 13 states in Malaysia and 68 outlets in

Singapore recently.

KFC has its manufacturing company named KFC Manufacturing Sdn. Bhd (Hotfrog

2006).

Besides, KFC also has its 15 warehouses and 25 logistic services located in Shah Alam,

Selangor, Kuala Lumpur, Johor, Penang and Sarawak (Hotfrog 2006).

In terms of technology resources, KFC has its own machine to manufacture, cook and its

company website setup online.

In terms of intangible resources, KFC has well-known brand name around the world. It

also has a scale advantage as it is the first Western Quick Service Restaurant in the world

to set up restaurants and the first to establish a children's club named KFC Chicky Club

(QSR Brand Bhd 2007).

Another significant resource of KFC Malaysia is its corporate culture, which is the

CHAMPS, as mentioned above.

SBU Stakeholders

Shareholders

The main concern of the shareholders of company is the profit that the company can generate,

and the amount of money that can be allocated for them. Besides profit, there are other concerns

which are theft, loss, damage, misuse, or waste related to the assets, example would be physical

assets, financial assets, and intellectual property from theft. Not only this, shareholders need to

be informed on how the company is going frequently. Annual report should also be prepared

through hardcopy or softcopy to shareholder timely, neatly, accurate, complete and

understandable to shareholders.

Employees

For the employee, they are interested in how the company going is simple, they depends for their

living, as when they work the company will pay them back in return. When the company success

in the profit making, they also get benefited in terms of bonus or commission, thus boosting the

staff morale. Not only this, most company which offer better return to employee get the best

employee, people are willing to sacrifice for them. The company should also look into the safety

and health problem of their employee.

Customers

Customers are able to justify a company’s success, while consuming food in KFC; they are

looking into many aspect, like the quality and quantity of the food offered, the surrounding of the

restaurant, the staff inside the store and many more. Thus consider the interest of customers in

making any decision is important, because without customer, the company can hardly get

revenue. Also the image of a company in customers’ perception is important, bad image will lead

to low sales. For example, the KFC offer variety of meals, namely kids’ meal, family meal,

budget meal etc.

Suppliers

Supplier is very important to a company, especially restaurant like KFC because food that they

supply need to be fresh, and for Malaysian context, Halal policy need to be strictly adhered.

Furthermore, their interest may include building mutual relationship based on integrity, legal,

and ethical behavior. Supplier will always try to avoid dealing with a company is not mutually

trusted.

Government

Government played a vital role in Malaysian restaurant, especially in the Halal policy. Because

Malaysia is an Islamic country, obeying certain rules regarding Islam practices is necessary. The

government may impose certain rules that will portrait threat for company, for example there are

certain discussions among government pupils regarding of banning the advertisement of fast

food industry.

SBU Past Performance

KFC

2003

RM 000

2004

RM 000

2005

RM 000

2006

RM 000

Profit Before

Tax66,056 66,736 5,563 142,304

No. Restaurants 336 350 350 375

From the table above, KFC has lower revenue dramatically in the year 2005. This is mainly due

to the legacy issue of mainly property assets which requires KFC to pay huge and one-off

impairment charges. But KFC only manage to get profit before tax of only 5,563 thousand due to

legacy issues of their assets. KFC suffered a loss of 32,475.4 thousand in 2005 (KFC 2007). The

growth of sales and revenue began to stable in 2006 as KFC launched a few new products such

as Cheesy BBQ Meltz and others after the aftermath of bird flu issue no longer threaten the

market in Malaysia as stated in The Edge Daily (Tong 2006).

Awards & Achievements

Source: KFC 2007

SBU Customers

Market Performance

Award Year Awarding BodyBest New Product Development 2004

2004

Yum! Brands

Beat Year Ago Award2005

Yum! Brands

Overall Marketing Excellence Award2005

Yum! Brands

Tiger Award - Mr. S.K. Wong2005

Yum! Brands

Brand Visibility Award2005

Yum! Brands

Best Brand Image Award2006

Yum! Brands

Best Overall Marketing Award2006

Yum! Brands

Best New Product Award2006

Yum! Brands

Product Excellence 20062006

Yum! Brands

Marketing Excellence 2006200

6 Yum! Brands

KFC Restaurants Revenues in Billion (RM)2003 1.382004 1.412005 1.462006 1.52

Figure above is Revenue of KFC Restaurants from Year 2003 to 2006.

By referring to the table above, there was a low growth of 0.03Billion of revenue generated

between year 2003 and 2004. As in 2004, there was a breakout of Asian Bird Flu in Asia. This

had triggered the alert of public to avoid eating poultry such as chicken and this had slight

impacted the sales of KFC Restaurants. During the outbreak, shares in Malaysia's KFC Holdings

(Malaysia) Bhd slipped 1.4 percent on the Kuala Lumpur (Kentucky Fried Fish? Asian Bird Flu

Wings KFC 2004). In addition to that, there was a protest leaded by Animal Liberation Victoria

from Australia against the KFC chickens sale in Kuala Lumpur. They were protesting that the

“Meat is Toxic” and “Eating Meat is Hazardous to Life” which were referring to the Asian Avian

Bird Flu Outbreak. This had slightly impact the brand name of KFC Restaurants (KFC Cruelty

2004).

From 2004 to 2005, there was an increase of 0.05 Billion of revenues. This was mainly due to

the new launched of combo meal called KFC X-Meal, which offers extra choice and variety. It

consists of an OR Fillet Burger, one piece of chicken and a choice of either regular potato

wedges or regular coleslaw or a regular whipped potato. This was the first time ever KFC

customers could get both burger and chicken with a side dish as part of one individual meal

combo. This meal had reduced the anxiety of customers especially teenagers and young adult

who wanted to eat both burger and chicken at the same time yet paying affordable price. In

addition of a great mean, KFC also advertised and held promotion for the launch of KFC X-meal

through TV, radio, press and outdoor advertising, point-of-sale materials and ambience (KFC

Launches new combo meal 2005). This is the reason that the revenues rose up 0.05bilion with a

positive growth.

Interestingly, the revenue also increased by 0.06Billion from 2005 to 2006 with a positive

growth. Apart from the X-Meal that generated huge sales which was permanent product sold in

every KFC restaurants. Another reason was due to new launched of product by KFC Restaurants.

KFC Restaurants launched the new Cheesy BBQ Meltz which contributed at least 10% of the

sales. This product was successfully launched to target teens and young adults as well. The

Cheesy BBQ Meltz is toasted tortilla bread filled with melted Mozzarella cheese, crushed BBQ

nancho chips, tomatoes and mayonnaise. With heavy advertisement and promotion costs of RM4

Million, the increased sale was showing a positive return of the effort (Tong 2006).

Market segments for KFC Restaurants

The market segments are basically divided by 4 groups:

Children

KFC targets children boys and girls with age 12 below who love to eat fried chicken. At the

same time also targets children who love to get free toys with meals. Thus KFC has Chicky

Meal with free toy.

Teen & Young adult

KFC also targets teens and young adult with age 12 to age 25 who love of its fried chicken.

Normally, KFC target boys and girls who like to eat both fried chicken and burger at for an

affordable mean. Thus KFC has X Meal which emphasizes extra choice and extra variety

with lower price.

Family

KFC targets family which both parents and 2 less or more kids dining together in KFC

restaurants or take away. KFC also have children playground that normally parents would

bring their children to play at there, while they could peacefully eat their meals. Thus KFC

has Mini Bucket Combo and Variety Bucket to cater for bigger numbers of people to eat with

favorable price.

Budget customers

KFC has concerned of budget customers’ appetite with basically age 12 to 55. Thus KFC

also has ala carte menu and real savers menu which emphasize in 1 set with lower price and

side orders as well such as potato wedges.

SBU Competition

The main competitor of KFC Malaysia currently is McDonald. There are many other competitors

in the market which includes Sugar Bun, Marie Brown, and other fast food chain restaurants. On

the other hand, there is an inter-competition among the SBUs of same corporate for examples

Pizza Hut.

The sales figure of KFC Malaysia for the year 2006 was RM 1.52 billion, but unfortunately the

sales figure of McDonald could not be obtained because it is not a listed company. However,

McDonald’s growth rate and also market share could be obtained through reliable source.

The market share of KFC Malaysia for the year 2006 was 44% while the market share of

McDonald for the same year was 14%. And the growth rate for the KFC Malaysia I year 2006

was 4%, and growth rate of McDonald for the same year was 15%.

There were quite a number of successes that McDonald had achieved, for example Superbrands

Certificate was given to McDonald in the year 2003 (Superbrands Asia 2007), and its creativity

in the recent year is crucial for its success (Chen 2007). As for the KFC Malaysia, it is always

one step backward of McDonald in term of menu, for example its Fish burger comes after

McDonald offered their Fish Burger, and the 24 hours operation which is practicing in KFC now

was actually initiated by McDonald.

However, for a company to survive in a country is not simple, and it requires something special

that others do not have, for example sustainable competitive advantages. The meaning of

sustainable advantages means erecting barriers against competitor, just like what KFC has

something special over McDonald. One of the most significant advantages that KFC has over

McDonald is the early entry and establishment of KFC in Malaysia. The first restaurant of KFC

in Malaysia was opened in year 1973 while the first restaurant of McDonald in Malaysia was

opened in the year 1982. This early entry into the market is very important because first comer

usually gain more from the experience curve. Another main advantage of early entry is cost

reduction; because of having economics of scale, for example “the bigger you are, everything

becomes cheaper”, a very lively example from KFC would be its big chains of KFC outlets in

Malaysia, which amounted of 390 outlets. Another advantage is experience and expertise, there

is a good example of “the more you do something, the better at it you get”, which is clearly

reflected the effective labor forces, economies of scale through standardization of products and

processes among all outlets.

The other advantage of KFC Malaysia would be its supplier teams, which are Region Food

Industries, Commissary, and Baker’s Street are also the SBU of QSR Brand. It is advantage that

it will manage to get its materials at a cheaper price, because of the same corporate it is in, as

compared to dealing with other external supplier.

As for the McDonald, the advantage would be its worldwide reputation is better than KFC (Keen

2005), because of the popularity and the wider acceptance. For example everyone would think of

McD Burger once they heard about the McDonald. One more advantage, would be that it is not

public listed, the reason being it is an advantage is because it can prevent its competitors to get

its information like sales revenue conveniently.

Although both of the companies have their own advantages, but the advantages of KFC Malaysia

are seems to be internally, which is still not yet fully utilized. While for the McDonald, it has

fully utilized its brand name, its creativity to create better awareness among population in the

world. The very important criterion is to fully utilize advantages of KFC to out win its major

competitor, McDonald.

Changes

PEST Analysis

Political Factors

Halal regulations

Halal issue is very important in Malaysia as the Muslim population in Malaysia is huge.

Government always concern of Halal issue of the food in the country. The word “Halal” came

from an Arabic word which means lawful. Actions, food & drinks and things that allow by

Shariah law is called Halal and can be safely use or consume by Muslims (Halal Definition

2007). So, in terms of the procedure to execute chicken and the process to handle it until the

customers hand has to pay attention to as Halal issue is big in Malaysia.

Economic Factors

Economic Growth/Drop

Economic rate is very important in doing business. It will affect the currency exchange rate in

Malaysia which impacts on businesses costs and operations. When come to outsourcing currency

is a determination of company’s success. If there is positive growth in economic, that means

businesses are doing great in the market. KFC may enjoy a short period of high profit due to

increasing economic growth but they also have to prepare in case economic rate of Malaysia

falls.

Interest rate

Interest rate is the rate charged or paid for the use of money and usually not a fixed rate. It is

normal that a company borrow money from the bank. So if there is any change in the interest

rate, it will somehow affect debt repayment and also the incentive to borrow. Little changes in

the interest rate will affects the operating profit of KFC and their debt ratio.

Social Factors

Culture

Culture refers to the way people live their life. Every country has different culture. The way how

Malaysian perceived food is changing from he past till present. People nowadays tend to look at

the quality of food. This is a change from past behavior. This may due to the increasing of

unhealthy society among Malaysians.

Education

The population in Malaysia started to improve their educational level. People are getting smarter

by increasing in literacy rate.

Technological Factors

Improvement of internet uses

The uses of internet have grown more and even shopping is done online. It is so convenient that

enable businesses to operate in the internet world due to increasing of computer users. For

instance, KFC website - http://www.kfcholdings.com.my provide all the information about them

and their products. It also shows the share price rate in the website.

Key Trends, Issues, Problems and opportunitiesAfter going through the situational analysis, KFC Malaysia has several trends in the market,

issues and problems and finally opportunities that have or might been through.

Key Trends

Health conscious

In today’s world environment, one of the major group arising is the health conscious people.

This trends happens throughout the world and it is increasing in a fast pace. KFC Malaysia offers

mostly fried products which are definitely a forbidden food for these consumers, so in order to

grab these market shares, KFC Malaysia needs to come out with healthier food that will suit their

appetite.

Price Sensitive

Other major type of consumers arising in today’s world is that they are very price sensitive, a

little change in the price of the products will affect their buying behavior. While setting the

product price, attention should be paid more to avoid any unwanted outcomes, which results loss

for the company.

Cost reduction

As today’s economic environment, where everything from personal usage to corporate usage has

increased their prices, it is necessary for KFC Malaysia to consider in cost reduction, in order to

have competitive edge as compared to their competitors. This cost reduction is important as its

advantages will outweigh the disadvantages.

Issues & Problems

Government

The first issue of KFC is government, there is a proposal developed by the government recently

to overcome the claims of fast food being unhealthy food for consumer. Basically the proposal is

about banning all advertisement for fast food industries, includes KFC Malaysia. Once the

government agreed the proposal, KFC Malaysia will have hard time in promoting their products.

Customer’s complaint

The second issue faced by KFC Malaysia is that customer complaint. From the situational

analysis, KFC should notice that there were protests from customers saying that eating meat is

dangerous and it contain toxic, during the avian flu outbreak few year ago. This eventually will

bring poor images for customers which convinced by them, thus leading bad images for KFC

Malaysia.

McDonald getting more growth rate

From the situational analysis, McDonald in Malaysia is actually growing in a faster pace as

compared to KFC Malaysia. If this situation cannot be overcome soon, McDonald market shares

will begin to grow and compete with KFC Malaysia.

Lack of Manpower

Also from the situational analysis, there is a huge variance between the number of workers and

branches for both KFC Malaysia and McDonald, where McDonald has relatively more

manpower for each of their branches. In term of human resource cost KFC would be lower, but

in terms of efficiency McDonald will be better than KFC.

Corporate taxes decreased

There is a 25% decrease in the corporate taxes in the budget 2008 in Malaysia. Although this

might help KFC Malaysia, also portrait threat of new competitors in fast food industry. Due to

lowered taxes, new competitors can appear in the market relatively easier as compared to before.

Opportunities

Trend of Children Love Fried Chicken

There is increasing of popularity of eating fried food among the children. As the growing

populations of teenagers and children in Malaysia, Singapore and Brunei, KFC has plentiful of

opportunity to capture this young market. This is due to the fact that children and teenagers

prefer foods that are fried which would taste better and delicious. Furthermore, their passions to

drink soft drink also draw them to eat fast food besides the factor of speed of dining fast food.

Tapping the New Beef Market

As the past few years back then, there was an outbreak of Avian Flu that devastated majority of

the poultry stocks. Few years present, there are still news of Avian Virus is lurking around

countries like Malaysia, Thailand, Vietnam etc. Hence, KFC has opportunity to tap the beef

market as some customers are worried to eat chicken due to the news they heard. Thus there is

potential market for KFC to grow if it launches new menu with beef meat. This would able to

recapture the customers who afraid of eating chicken in KFC.

Introduction of Set Breakfast

Recently, there is a trend of growing concern of nutritious breakfast in the concept of customers.

Customers think that it is important to eat a nutritious breakfast in order to have enough energy

to go for work, study etc. Thus, KFC should tap the breakfast market in fast food industry by

introducing breakfast that has proteins, and some vitamins values in. Due to the facts of fast food

ready to serve in short time, customers who are rushing during the morning time could grab a

nutritious breakfast in KFC and eat with haste.

Introduction of New Menu

There is an increase demand toward snack food in KFC. Snack food like Mexican foods are new

and would be welcomed in the market of Malaysia, Brunei and Singapore. As Mexican foods are

tropical foods that very superb and suit the tastes and appetites of tropical customers in Malaysia,

Brunei and Singapore. This opportunity would be a great success as the launch of Cheesy BBQ

Meltz had increased the sales of KFC of 10% in 2006. Cheesy BBQ Meltz is a type of Mexican

food, with its success and there would be spacious market growth of Mexican Foods to be

launched in KFC’s menu.

Place of Visit for Tourists

Malaysia has abundant of tourists from Middle East as the culture of Malaysia is quite similar to

Middle East and the religion is Islam. With the increase of tourists visit Malaysia, KFC could

expect an opportunity to capture the market of tourists as the foods offered by KFC are Halal

Guaranteed which suit the appetite of Middle East tourist. On year 2007 is Cuti-cuti Malaysia

which mean tourist year for Malaysia which could further escalate the amounts of tourist to visit

Malaysia. Thus is important for KFC to decorate the outlets to attract more tourists to dine in or

takeaway in KFC.

Portfolio AnalysisIn the portfolio analysis of this project will show the comparison of KFC Malaysia and

McDonald. The two important factors in developing a BCG Matrix is relative growth rate and

relative market share of both the company.

Year Revenue

2006 1.52

2005 1.46

2004 1.41

2003 1.38

2002 1.25

The table above is the revenue sales figure for the KFC Malaysia starting from year 2002 to

2006, which can be seen, is growing over the years; later it will be put into formula to calculate

their growth rate for past years. As for revenue of McDonald, the revenue could not be obtained

however the growth rate could be obtained through reliable source, quoting that they growth rate

for the past ten years were 15%. From the calculating below, the growth rate for the KFC

Malaysia for the past few years, is only 4%.

As for the market share of both the company, KFC Malaysia has the market share of 44%, while

McDonald has the market share of 14%.

As for the overall sales contribution, it would not be available for this case, because of the

absence of information in the sales of McDonald. However sales contribution of KFC Malaysia

is predicted more than McDonald Malaysia, because of the market share of KFC bigger than

McDonald.

To make it simple to see, please see the table below

KFC Malaysia McDonaldGrowth Rate 4% 15%Market Share 44% 18%?

STAR

KEY

KFC

McD

20

10

0

50 40 30 20 10 0

From the BCG Matrix above, KFC is a Cash Cow, and the McDonald is actually situated at the

quadrant of question mark. The definition for cash cow is that it will generate large profits but

little potential for the long-term. In this case, KFC Malaysia is in this quadrant, the reason being

is due to that it has high market share but with low growth rate. Although it is in cash cow

situation now, but KFC Malaysia should not be satisfied of it, because it is possible for it to

become a dog. In order for this cash cow to become a star again, which is the most ideal position

for a company; steps need to be taken in order to get there.

As for the McDonald part, it is currently in the quadrant of question mark, and the definition of

question mark is that it generate low profits currently but there is big potential for future

profitability, steps they need to do is to increase their market shares. Increasing the market share

INDUSTRY GROWTH

CASH COW DOG

RMS

is somehow easier to be achieved as compared to KFC Malaysia, the things that need to be done

is the McDonald company concentrate more in developing it, and it could someday become the

star, and outweigh KFC Malaysia.

Steps that need to be done now are to bring KFC Malaysia to become a star, and formulate

strategies that enable KFC Malaysia to sustain in long term. Therefore, clear mission statement is

created to realize it.

SBU Objectives & Goals

Mission

To become the leading fast food chain in Malaysia

Objectives

1. To target the segment of health conscious and vegetarian customer

2. Reduce the cost of production

3. Improve customer satisfaction

4. To increase growth rate

5. To increase market share in rural area

Goals

1. Capture the market of health conscious and vegetarian customer by 10 percent in year 2009.

2. Reduce cost of production of 20% by the year 2009.

3. Improve customer satisfaction by 50% through various methods, for example opinion box, provide

training, stringent standardization procedure before year 2010.

4. To increase growth rate from 4% currently to 8% by the year 2009.

5. To increase market share in rural area by 10% in year 2010. For example Senadin, Miri.

Strategies

Current Strategies

Market Strategies

Market Scope

Currently, the management of KFC is using multi-market strategy for their products. It covers

segments including children, family, teen & young adults and budget customer. Every segment

has its own marketing mix. Their purpose is to try to target every possible customer segment to

increase and maintain revenue for the firm.

Market Geography

For now, KFC is only targeting nationally as in the business only expand and develop in

Malaysia. There are around 390 KFC outlets in Malaysia currently.

Market Commitment

KFC is practicing strong commitment in order to increase profits and market share. Stronger

bond will build among employees in KFC and thus increase the cooperativeness of staff. Strong

commitments encourage them to compete with other rivalry such as McDonald.

Products Strategies

The current strategy for KFC Malaysia of the product strategy varies; they have used many

strategies in order to perform well in the market. Below are some of their current strategies.

Value

Their current value added of their product is collaboration with hotlink, that when customer

receives a sms from hotlink, they can go redeem the product of discounted food from KFC

Malaysia outlet. Another value added of their products is free gifts, drinks upgrade to bigger

portion.

Scope

The scope of their current product is multi product, which each product will suit into their

different target market. The benefit of this product is each segment of customer will get what suit

them the most. For example they have Kids’ Meal for kids.

Elimination

For the elimination strategy, KFC Malaysia has been doing this all the while for the promotional

product, namely Twister, and Waikiki Burger that existed for a short period. To be detail, their

strategy used is harvesting elimination, meaning they tried to pack and go for the product.

Design

As for the design strategy, their current method is customizing standardization. They are using

scope of product that is multiple in customized designs, but they have standardized the procedure

of producing, which is the design customization.

New Product Development

KFC Malaysia will come out with new product once in a while; some of their promotional

products that were introduced were Twister and Waikiki Burger. Developing a new product and

eliminate it after some times will help them to gain numerous market shares, as people will try

the product before it vanish again.

Pricing Strategies

Pricing for existing products – maintain

Pricing is an important marketing factor for KFC because it brings impacts to the firm’s profit.

Getting the right price will bring sufficient profit for the firm. In terms of KFC’s existing

products, they are maintaining their product pricing.

Segmented pricing for customers

Customer

KFC has come out with segmented pricing strategy for the customers of the SBU. Membership

cards (Chicky Club) for kids has been used for a long time. Children’s can enjoy special discount

while purchasing KFC’s products especially kid’s products. And children who are registered as

members also have some special surprise presents.

Time

Currently KFC offer different time pricing. For instance, KFC now has snacks time in the after

noon from Monday to Friday with a cheaper price. This actually encourage customers to have a

tea time culture in Malaysia.

Distribution Strategies

Indirect Channel

Currently KFC has implemented indirect channel in distributing the fast foods. KFC’s Corporate,

QSR Brands Corporation is the franchisee which has Ayamas Breeder, Life sauce factory etc

which act as suppliers for KFC Restaurants which are the retailers that sell fast foods. This is the

flow of indirect channel distribution:

Suppliers (QSR Brands) Retailers (KFC Restaurants) Customers

Speculation

The fast foods sold in KFC Restaurants are based on speculation strategy. As KFC restaurants

ordered the supplies like meat stock, vegetables, breads etc based on anticipated sales for each

week. Thus KFC Restaurants could prevent wastage of supplies due to improper calculation.

Selective Distribution

KFC Restaurants are selective distribution as these restaurants are limited to a certain amounts in

each region. This is to minimize the stiff competition between each other in a same region. KFC

Restaurants did well in the past 30 years for gaining market share with over 390 restaurants in

Malaysia, Brunei and Singapore.

Vertical marketing system -contractual

In order to improve the brand name of KFC in Malaysia, Singapore and Brunei, KFC restaurant

should be having vertical marketing system whereby there is a contractual agreement with the

concept of franchisee, Yum! Brand. The concept of CHAMPS is Cleanliness, Hospitality,

Accuracy, Maintenance, Product Quality and Speed with Delivery. These concepts are important

to ensure the brand name of KFC is with quality assured. Thus it is recommended that KFC

restaurants should impose the CHAMPS concept in every of its restaurants.

Communication Strategies

Advertising

Currently, KFC is advertising in television, newspaper and radio. For television, KFC advertise

mainly of its new meal or promotion during the commercial break. Furthermore, the

advertisement also broadcast in its own website: www.kfc.com.my. For instance, the latest ad

showed 2 Malay couples promoting the new KFC meal, Combo Ria with satay sauce by using a

hilarious and comedy chit-chat. For the newspaper, KFC advertises the new meals and

promotion which sometime provide free voucher to get discount. For radio, KFC normally

advertise by persuading and reminding customers to dine in KFC restaurants.

Sales Promotion

KFC always utilize the sales promotion in order to promote its new meals. By providing free

voucher cutting from newspaper to get discount for new foods is always practiced by KFC.

Besides free voucher for discount, KFC also has free vouchers in newspaper for free gift redeem

such as soft drink etc. Moreover, KFC also collaborate with Maxis Hotlink to give Maxis prepaid

users who hold KFC promotional SMS could get special meal when dine in KFC.

Public Relation

KFC has on-going of sponsoring television program just for kids such as Chicky Hour on every

Saturday morning at TV3 has been going strong for more than 5 years. KFCs’s Chicky Hour

showed fantastic cartoon program which enabled KFC to successfully capture the market of

children successfully. In addition to that, KFC also practiced numerous corporate social

responsibilities such as having a KFC Charity Collection Box in every outlet which could get

customers to contribute for charity of orphanages. Moreover, KFC also has 3 restaurants

employing staffs which are speech and hearing-impaired to help them build up the confidence

and self esteem in their life.

Recommended Strategies

Market Strategies

Market Scope

KFC are recommended to continue with their existing multi-market strategy pursued as their

current multi-market strategies targeting children, family, teen & young adults and budget

customer benefits KFC in terms of revenue and market share. As an add-on, KFC might want to

consider adding one more marketing mix into their business just for health conscious customers.

Since communities nowadays receive high education quality and become smarter, they will

demand a healthier life. This is an issue which KFC can take into account.

Market Commitment strategy

KFC are recommended to continue maintaining or increase their strong commitment in fast food

industry. This is because the rivalry of the fast food industry has been increasing due to

government legacy on lower corporate tax for 27% for year 2007 which encourage business to

come into the industry as stated in The Star Online (Budget 2008 2007). KFC should be prepared

and responsive enough to compete with its major competitors through understanding the needs

and wants for its target markets. KFC have to ensures the sustainable competitive advantage is

achieved which is to protect the secret recipe of fried chicken from competitors.

Products Strategies

Product Repositioning

The first recommended product strategy is repositioning, especially among their existing

customer. This is due to many people have argued that fast food product is not healthybecause

the food served are normally deep-fried. By repositioning their SBU, KFC Malaysia can actually

convince their customer that its products are healthy to consume, for example KFC use zero trans

fat oil. Revenue of the company can regain strength when people change their perception

towards KFC Malaysia, especially health conscious customer are growing. As one of the goals

stated, is to improve their customer satisfaction, by well understanding customers it could

increase customers satisfaction.

Value

Second strategy that would recommend for KFC Malaysia is the value added for their product.

KFC should further enhance this value added to contribute more toward their growth rate, as

their recommended goal now is to regain the growth rate and market share. The group

recommended that they can give voucher for customer when they purchase their products, stating

next purchase will have certain discounts. Another ways of doing would be that they establish a

KFC cards, just like what Bonus Link doing, they can collect points every time they buy

products from KFC Malaysia. By doing this their customer loyalty can also be improved.

New Product Development

Thirdly, new product development is also proposed to have new product like Dumpling and

Satay. Both of the products are traditional dishes for Malaysia’s two main races, Chinese and

Malay. In touching people’s heart, people will like KFC more than any other fast food

restaurants. Market share thus will be further increased.

Product Design

Last but not least, is the product design, KFC Malaysia should use the customization strategy for

their products. The morale behind this is that people will choose what ingredient they wanted for

their products, they will do it themselves, and pay only when they proceed to the counter. Just

like what the Deli is doing. By doing this, the company can reduce their cost, because not much

people is needed in preparing the food at the back when they get order, all they need to do is to

prepare the food earlier, put in on places and people will do it themselves, the next thing they

will do is to calculate how much to be charged. Not only this, customer will be more satisfied if

they can choose what they want to eat, and health conscious customer can have more choices in

dining, because they are not restrained from eating things that they do not want.

Pricing Strategies

Pricing for existing products – maintain

Suggested recommendation for KFC would be continue maintaining the current price of existing

products. Changes in prices will not benefit KFC because charging the products with lower

prices might lead to customers’ perceptions that the food quality will decrease while charging

prices for the products too high might cause the customers to switch their preferences to

competitor’s fast food company like Mc Donald.

New product pricing strategy - skimming pricing

For new products that launched by KFC should use skimming pricing. As the products are new,

KFC still have to adjust the pricing of their product to the right price to avoid negative impacts of

their production cost. Setting the right price can help KFC to cover the costs of production and a

secure profit growth.

Segmented pricing for customers

Customer

Apart for only focus on children’s welfare, KFC can also offered older citizen in Malaysia with

membership card. Since a new customer segment which is health conscious customer has been

add in into new strategy of KFC, older customer age 40 and above will actually come to KFC

and enjoy meal. Hereby KFC can offer a special price and discount for the registered old

customers. From the membership forms they fill in, information regarding their personal details

and their preferences can be obtained (information will remain confidential within the

organization). The customers will receive birthday cards and special discounts for food that they

ordered.

Time

Currently KFC also offer 24 open hours in west Malaysia but the price is normal like usual. It is

recommended that special discounted price can be offer in the midnight from 12am to 8am

everyday to encourage more customers to come to KFC in the middle of the night.

Distribution Strategies

Channel Modification Strategy: Cost, Coverage and Channel trends:

Cost

It is recommended KFC’s primary priority is to reduce the cost to the minimum as possible. In

order to lower the cost of distribution, it is recommended to conduct full scale market research

toward the place of distribution before actually setup a restaurant. With the good market research

result, it could prevent losses from setting up a restaurant in unprofitable location.

Coverage

Furthermore, it is recommended that there is potential for KFC in penetrating to suburb or even

to rural area. The importance of suburb area is due to the density of population live around the

suburb would be a great opportunity to exploit. Thus, it would be recommended to setup

restaurant in suburb area such as Desa Senadin in Miri, Sarawak. While for the rural area, KFC

should launch mobile restaurants by having mobile kitchens on coaches to sell KFC foods to

rural places. As these places have many children who like fried chicken but couldn’t go to town

area to enjoy the food.

Channel Trends

For the channel trends, there is an increase pace of lifestyle in Malaysia, Singapore and Brunei as

well. Thus customers would demand speed of delivery of food to their places. Therefore, KFC

should launch internet order through internet which customers can instantly select food they

would like to eat and pay with credit cards. Then the order would be instantly processed in the

nearest outlet and deliver to the customers.

Communication Strategies

Direct Marketing

KFC should collect customer database through the registration of member cards for KFC usage.

This is to enable KFC to collect customers’ information especially regarding the email. When

there is new promotion or new meals, KFC could send these exciting 1st-hand news to the

customers’ email with relative cheap cost and convenience. This could both inform and remind

customers to dine or take away in KFC restaurants.

Sales Promotion

KFC should organize more events such as sweepstakes, lucky draw etc. As customers tend to be

attracted with free lucky draws and sweepstakes, KFC should behold the opportunity to attract

more customers to dine in or take away in KFC restaurants in order to participate in the

particular lucky draw or sweepstakes. Moreover, KFC could organize event like drawing

competition in restaurants. This could be done by giving a drawing paper to the children to draw

and fill colour after customers purchased meal, and the list of winners would be informed after

the due date. This could attract more children to participate as children are tending to like

drawing and filling colour.

Public Relation

KFC should endorse famous singer or celebrity to promote KFC meals through advertisement. It

also could be done through the singing concert that would be sung by the famous singers. KFC

could search opportunity by collaborating among the rising-famous singers in Malaysia and it

would help boost the sales of KFC. This could be done by giving half price concert ticket when

customers purchase particular meal in KFC restaurants. Furthermore, customers’ behaviors

would tend to like discount and half price incentives and it would assure KFC could successfully

capture the markets.

Implementation Charts2008 January February March April May June July August September OctoberProduct

Repositioning

Value

New Product Development

Product Design

Price

Existing Product – Maintain

New Product – skimming pricingSegmented pricing

Place

Cost

Coverage

Channel Trends

Promotion

Direct Marketing

Sales Promotion

Public Relation

Evaluation

Product Strategy

1. Repositioning

The repositioning should be implemented after a market survey that conducted in 3 months

from January to March. The reason being to choose the first 3 months in the year is to give

space for KFC to correctly reposition for the rest of the months. It can be evaluated by using

market survey method to understand the satisfaction level of customers toward KFC

repositioning strategy which is supervised by Marketing Manager.

2. Value

The value part of this strategy divided into two parts. The first part which is offering coupon

is to be implemented on March to May to create more attractions during non-school holidays.

While the second part, KFC Cards, should be implemented from July onwards, making the

management able to find out the feasibility of such method. Both the strategy can be

evaluated through the feedbacks from customers. This overall process should be supervised

by the Marketing Manager.

3. New Product Development

New KFC product should be introducing to public on May to July, and November to

December as these periods are school holidays thus can attract more customers. The

intermittent period between will enable the operation department to have time to design new

product. This need to be supervised by both operation manager and marketing manager, by

looking at the quality of the product offered, and the customers’ response.

4. Product Design

The product design for KFC is about customization of the products. The suggested time of

implementing this is October until December 2008. The evaluation could be conducted

through feedbacks from customers regarding their satisfaction toward the new product. To be

supervise by both Marketing Manager and Operational manager again.

Pricing Strategy

1. Existing products – Maintain Price

For existing product the price will be maintained throughout the year only for certain period

such Chinese New Year, Hari Gawai and Hari Raya season. The month which is under those

season are February, June and October in year 2008. KFC can imposed the mentioned pricing

strategy for existing product to boost temporally sales.

2. New products – Skimming Pricing

For new products proposed pricing strategy will be skimming pricing. The perfect period to

impose the proposed strategy is May, June and July. This is because sales promotion are

being impose as a promotion for those three months and it is a good idea for KFC to

introduce new products to customers.

3. Segmented Pricing

Segmented pricing which is use on the senior citizens (members only) is proposed to be the

whole year. This special price that imposed is to act as privilege for them. But take note this

strategy can only be use if KFC come out with healthy meal for them as they older citizens

above 40 years old is not encourage to consume lots of fried food.

Distribution strategy

1. Cost

In conjunction with the market research that would be done during January until March

regarding the repositioning strategy. KFC could probe respondents to give opinion regarding the

satisfaction level toward the locations of KFC outlets. Hence, KFC could use the information to

reduce the opportunity costs of setting up outlets. This should be supervised by Operation

Manager.

2. Coverage

After the market research survey, KFC could extend its outlet scope to places that respondents

would like to have. Furthermore, KFC could set the mobile restaurants to rural places to have

trial on the market of rural places. Thus the period of extending the coverage is best to be April

until August which is the period after the market research survey. This should be supervised by

Distribution Manager.

3. Channel trends

KFC should launch a website that specially designed to cater for online order and speed delivery.

KFC should implement this website in 2 months time which is from September to October which

is sufficient time to launch a success website. Moreover the website should launch prior to cater

the increasing demand during school holidays on November and December. This should be

supervised by Public Relation Manager.

Promotion Strategy

1. Direct Marketing

In conjunction with the launch of KFC cards from July onward, new members would register and

fill up their contact details. Thus KFC should utilize the customer contact details to persuade,

inform and remind customers to purchase KFC meals especially internet direct marketing. This

implementation period is ongoing as it is priority to update customers with news every month.

2. Sales Promotion

KFC should launch its sales promotion conjunction with the new products launching. As new

products launching would certainly attract customers to come, hence the sales promotion like

lucky draw, sweepstakes, drawing competition etc would certainly grab the customers’ mind to

revisit KFC again. Thus, it would increase the repeat sales for KFC. The implementation period

is May to July and November to December. This should be supervised by Marketing Manager.

3. Public Relation

KFC should held singing concert during school holiday that is November and December. As this

is the peak period of customers to visit KFC restaurants. Thus KFC should give concert ticket

with half price to customers who purchase up to a required amount. This should be implanted

during November to December and supervised by Public Relation Manager.