Specific Tactics for creating Service Atmospheres MKT412

Kentucky Fried Chicken: Background

KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food

restaurants based in Louisville, Kentucky, in the United States. KFC has been a brand and

operating segment, termed a concept of Yum! Brands since 1997 when that company was spun

off from PepsiCo as Tricon Global Restaurants Inc.

KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus

is fried chicken, KFC also offers a line of grilled and roasted chicken products, side dishes and

desserts. Outside the USA, KFC offers beef based products such as hamburgers or kebabs,

poutine, pork based products such as ribs and other regional fare.

The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952,

though the idea of KFC's fried chicken actually goes back to 1930. Although Sanders died in

1980, he remains an important part of the company's branding and advertisements, and "Colonel

Sanders" or "The Colonel" is a metonym for the company itself. The company adopted KFC, an

abbreviated form of its name, in 1991. Newer and remodeled restaurants will adopt the new logo

and name, while older stores will continue to use the 1980s signage. Additionally, Yum!

continues to use the abbreviated name freely in its advertising.

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Specific Tactics for creating Service Atmospheres MKT412

Type Wholly owned subsidiary

Industry Restaurants

Founded 1930 (original)(North Corbin,

Kentucky)

1952 (franchise)(South Salt Lake,

Utah)

Founder(s) Harland Sanders

Headquarters Louisville, Kentucky, U.S.

Key people Roger Eaton, President

Harvey R. Brownlea, COO

James O'Reilly, VP for Marketing

Products Fried chicken, grilled chicken,

related Southern foods

Revenue $520.3 million USD (2007)[1]

Employees 24,000 (2007)[1]

Parent Yum! Brands

Website KFC.com

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Question 1:

Who is the firm’s target market?

Answer:

Target marketing tailors a marketing mix for one or more segments identified by market

segmentation. Target marketing contrasts with mass marketing, which offers a single product to

the entire market.

Two important factors to consider when selecting a target market segment are the attractiveness

of the segment and the fit between the segment and the firm's objectives, resources, and

capabilities.

Target Market Selection

The target customers of KFC are mixed. It basically target higher class as well as middle class

people. There are different types of customers like economic customers who make purchase

decision based primary on the price, personalized customer consumers who desire to be

pampered and attended to and who are much less price sensitive, apathetic customers consumer

who seek convenience over price and personal attention.

Attractiveness of a Market Segment

The following are some examples of aspects that should be considered when evaluating the

attractiveness of a market segment:

• Size of the segment (number of customers and/or number of units)

• Growth rate of the segment

• Competition in the segment

• Brand loyalty of existing customers in the segment

• Attainable market share given promotional budget and competitors' expenditures

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• Required market share to break even

• Sales potential for the firm in the segment

• Expected profit margins in the segment

Market research and analysis is instrumental in obtaining this information. For example, buyer

intentions, sales force estimates, test marketing, and statistical demand analysis are useful for

determining sales potential. The impact of applicable micro-environmental and macro

environmental variables on the market segment should be considered.

Note that larger segments are not necessarily the most profitable to target since they likely will

have more competition. It may be more profitable to serve one or more smaller segments that

have little competition. On the other hand, if the firm can develop a competitive advantage, for

example, via patent protection, it may find it profitable to pursue a larger market segment.

Suitability of Market Segments to the Firm

Market segments also should be evaluated according to how they fit the firm's objectives,

resources, and capabilities. Some aspects of fit include:

• Whether the firm can offer superior value to the customers in the segment

• The impact of serving the segment on the firm's image

• Access to distribution channels required to serve the segment

• The firm's resources vs. capital investment required to serve the segment The better the firm's

fit to a market segment, and the more attractive the market segment, the greater the profit

potential to the firm.

Target Market Strategies

There are several different target-market strategies that may be followed. Targeting strategies

usually can be categorized as one of the following:

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Specific Tactics for creating Service Atmospheres MKT412

• Single-segment strategy - also known as a concentrated strategy. One market segment (not the

entire market) is served with one marketing mix. A single-segment approach often is the strategy

of choice for smaller companies with limited resources.

• Selective specialization- this is a multiple-segment strategy, also known as a differentiated

strategy. Different marketing mixes are offered to different segments. The product itself may or

may not be different - in many cases only the promotional message or distribution channels vary.

• Product specialization- the firm specializes in a particular product and tailors it to different

market segments.

• Market specialization- the firm specializes in serving a particular market segment and offers

that segment an array of different products.

• Full market coverage - the firm attempts to serve the entire market. This coverage can be

achieved by means of either a mass market strategy in which a single undifferentiated marketing

mix is offered to the entire market, or by a differentiated strategy in which a separate marketing

mix is offered to each segment.

A firm that is seeking to enter a market and grow should first target the most attractive segment

that matches its capabilities. Once it gains a foothold, it can expand by pursuing a product

specialization strategy, tailoring the product for different segments, or by pursuing a market

specialization strategy and offering new products to its existing market segment. Another

strategy whose use is increasing is individual marketing, in which the marketing mix is tailored

on an individual consumer basis. While in the past impractical, individual marketing is becoming

more viable thanks to advances in technology.

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The comparison of KFC in the worldwide units

Yum! Brand the parent to KFC was started in October 7, 1997

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Specific Tactics for creating Service Atmospheres MKT412

Question 2:

What does the target market seek from the service experience?

Answer:

The target market seeks several things from the service experience. If those are fulfilled

customers feel satisfied if not customer dissatisfaction occur. The target customer of KFC

expects the following things from the service experience.

1. Knowledgeable and available staff: While a customer is making the buying decision,

they want knowledgeable assistance, available when they want it. Customers place a high

value on accurate information and want to be served by employees who know the product

inside and out.

2. Friendly people: Customers not only want product-savvy sales people, they want them

to be friendly and courteous. Your staff should value each customer more than any

individual sale.

3. Good value: This is where price factors in. But customers surveyed see price as only one

component of the bigger picture of “value” that includes the service, information and

follow-up they also receive.

4. Convenience: The service rule here is simple: make it easy! Says Gross, “Customers

want merchandise that is well organized, attractively displayed and easy to find. That’s

how today’s customers define convenience, and the easier you can make the shopping,

the more money you will be lugging to the bank.”

5. A fast finish: This final item is where too many businesses fall flat, right at the finish

line. While customers are in the process of deciding to buy or not, they are proceeding on

your time. They want thoughtful help making the right decisions. But once the buying

decision is made, get out of their way because now you are working on their time, and

they want to complete the transaction and be on their way as quickly as possible. At the

cash register, there is no time for making additional suggestions.

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If these are effectively fulfilled, customers show a desire to stay or further explore the service

otherwise they will avoid it.

Service Environment

Facility exterior is the physical exterior of the service facility that includes the exterior design,

signage, parking, landscaping and the surrounding environment.

Facility interior is the physical interior of the service facility that includes the interior design,

equipment used to serve customers, signage, layout, air quality and temperature.

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Question 3:

What atmospheric elements can reinforce the beliefs and emotional reactions that buyers

seek?

Answer:

Due to the intangibility of services, service quality is difficult for consumers to objectively

evaluate. As a result, consumers often rely on the tangible evidence that surrounds the service to

help them form their evaluations. The role of physical evidence in the marketing of intangibles is

multifaceted. Physical evidence can fall into three broad categories:

a. Facility exterior,

b. Facility interior,

c. Other tangibles.

Facility exterior is the physical exterior of the service facility that includes the exterior design,

signage, parking, landscaping and the surrounding environment.

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Facility interior is the physical interior of the service facility that includes the interior design,

equipment used to serve customers, signage, layout, air quality and temperature.

Other tangibles are the part of firm’s other physical evidence such as business cards, stationary,

billing statements, reports, employee appearance, uniforms and brochures.

The use of physical evidence to create service environments and its influence on the perception

and behaviors of individuals is referred to as environmental psychology. The Stimulus-

Organism-Response (SOR) model was developed by environmental psychologists to help

explain the effects of the service environment on consumer behavior. The SOR model consists of

three components:

a. A set of stimuli,

b. An organism component and

c. A set of responses or outcomes.

In a service context, the different elements of the firm’s physical evidence, such as the exterior,

interior design, lighting and so on that compose the set of stimuli. The organism component

which describes the recipients of the set of stimuli within the service encounter includes

employees and customers. The responses of employees and customers to set of stimuli and

influenced by three basic emotional states:

a. Pleasure - displeasure,

b. Arousal - nonarousal,

c. Dominance - submissiveness.

The pleasure - displeasure emotional state reflects the degree to which consumers and

employees feel satisfied with the service experience.

The arousal - nonarousal emotional state reflects the degree to which consumers and employees

feel excited and stimulated .

The dominance - submissiveness emotional state reflects the degree to which consumers and

employees feel in control and able to act freely within the service environment.

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Ideally, service firms should utilize physical evidence to build environment that appeal to

pleasure and arousal states and creating atmosphere that create submissiveness.

Theory asserts that customers and employees are exposed to the set of stimuli that make up the

firm’s perceived Servicescape and the responses to these stimuli are moderated by emotional

states. Customers and employees internally respond to the firm’s environment at different levels

– cognitively, emotionally and physiologically.

Cognitive responses are the thought of individuals and according to the model include beliefs,

categorization and symbolic meaning. Beliefs that states consumers’ opinions about the

provider’s ability to perform the service. Categorization that states consumer assessment of the

physical evidence and a quick mental assignment of a firm to a known group of styles or types.

Symbolic meaning that inferred from the firm’s use of physical evidence.

Emotional responses to the firm’s physical environment on an emotional level instead of an

intellectual or social level. Positive emotions that create atmospheres in which employees love to

work and customers want to spend their time and money.

Physiological responses are often described in terms of physical pleasure or discomfort. Typical

physiological responses involve pain and comfort. Like, environments in which music is played

very loudly that create discomfort for the customer; the lack of a nonsmoking section may cause

some customers in breathing and further discomfort. Instead of being arousing, environments

that are brightly lit may cause eye discomfort. All these responses determine whether a customer

will approach and explore the firm’s offering or avoid and leave the premises to minimize the

amount of physiological discomfort.

Ultimately, individuals base their perceptions of a firm’s facilities on their interpretation of

sensory cues. The following section discusses how firms can utilize the senses of sight, sound,

touch and taste in creating sensory appeal that enhances customer and employee attraction

responses.

Sight Appeals:

Sight appeals can be defined as the process of interpreting stimuli that appeal to consumers are

size, shape and colors. Consumers interpret visual stimuli in terms of visual relationships,

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consisting of perceptions of harmony, contrast and clash. Harmony refers to visual agreement

and is associated with quieter, plusher and more formal business settings. In comparison, contrast

and clash are associated with exciting, cheerful and informal business settings.

Size perceptions are the actual size of the firm’s facility, signs and departments conveys

different meaning to different markets. In general, the larger the size of the firm and its

corresponding physical evidence, the more consumers associates the firm with importance,

power, success, security and stability. For many consumers, the larger the firm, the lower the

perceived risk associated with the service purchase. Such consumers believe that larger firms are

more competent and more likely to engage in service recovery efforts when problems do arise.

Color perceptions are the color of the firm’s physical evidence often makes the first impression,

whether seen in the firm’s brochure, the business cards of its personnel or the exterior or interior

of the facility itself. The psychological impact of color upon individuals is the result of three

properties: hue, value and intensity. Hue refers to the actual color such as red, blue, yellow or

green. Value refers the lightness and darkness of the colors. Darker values are called shades and

lighter values are called tints. Intensity refers the brightness or dullness of the hue. KFC focus on

red color basically because it is the symbol of appetite.

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The location of the Firm which is dependent upon the amount of customer involvement

necessary to produce the service. While low customers contact services should consider locating

in remote sites that are less expensive and closer to sources of supply, transportation and labor,

high customer contact services have other concerns.

The Firm’s Architecture that states the architecture of the firm’s physical facility is often a

three way trade off among the type of design that will attract the firm’s intended target market,

the type of design that maximizes the efficiency of the service production process and the type of

design that is affordable. The firm’s architecture conveys a number of impressions as well as

communicates information to its customers such as the nature of the firm’s business.

The Firm’s Sign has two major purposes: to identify the firm and to attract attention. The firm’s

sign is often the first “mark” of the firm that customer notices. All logos on the firm’s remaining

physical evidence such as letterhead, business cards and note cards should be consistent with the

firm’s sign to reinforce the firm’s image.

The Firm’s Entrance and foyer areas can dramatically influence customer perceptions about the

firm’s activities. Worn carpet, scuffed walls, unprofessional network, torn and outdated reading

materials and unskilled and unkempt personnel form one impression. In contrast, neatly

appointed reception areas, the creative use of colors, distinctive furnishings and friendly and

professional staff create a much different and more positive impression.

Sound Appeals:

Sound appeals have three major roles: mood setter, attention grabber and informer. Proactive

methods for purposely inserting sound into the service encounter can be accomplished through

music and announcements. Music helps set the mood of the consumers’ experience while

announcements can be used to grab consumers’ attention or to inform them of the firm’s

offerings. Sound can also be a distraction to the consumers’ experience; consequently, sound

avoidance tactics should also be considered.

Music in which studies have shown that background music affects sales in at least two ways.

First, background music enhances the customer’s perception of the store’s atmosphere, which in

turn influences the consumer’s mood. Second, music often influences the amount of time spent

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in stores. In one study, firms that played background music in their facilities were thought to care

more about their customers. Studies have shown that in addition to creating a positive attitude,

music directly influences consumer buying behavior. Playing faster tempo of the music increases

the pace of consumer transactions. Slowly down the tempo of the music encourages customers to

stay longer. Still other studies indicate that consumers find music distracting when considering

high involvement purchases, yet found that low involvement purchases made the choice process

easier.

Sound Avoidance which plans the firm’s facilities, it is as important to understand the

avoidance of undesirable sounds as it is to understand the creation of desirable ones. Desirable

sounds attract customers and undesirable sounds distract from the firm’s overall atmosphere.

Other tactics for eliminating unwanted noise include installing durable hallway carpets to

eliminate the distracting sounds of clicking heels, strategically placing loud central air

conditioning units in areas away from those where the firm conducts the majority of its business

and also installing lower ceilings and sound absorbing partitions so that unwanted sounds can be

reduced even further.

Scent Appeals:

Sense of smell is our most accurate level of recall. So, scent appeal is an important factor to

consider. What we smell is significantly more influential on our moods and emotions than any

other sense. Our sense of smell is the strongest of all human senses and the closest sense linked

to memory and emotion. Research has shown that people remember 35% of what they smell,

compared with only 5% of what they see, 2% of what they hear and 1% of what they touch. This

Research clearly shows that scent enhances consumer product memories.KFC which provides

pleasurable scents often induce customer to make more purchases and can affect the perception

of products that don’t naturally have their own scent. KFC provides pleasurable scents for

making a friendly environment for the employees to work effectively and for the customers KFC

provides pleasurable scents that attract themselves to come more in KFC.

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Taste Appeals:

Taste appeal the final sensory cue, are the equivalent of providing the customer with samples.

Within the service sector, the usefulness of the taste appeals when developing the service

atmospheres is depend upon the tangibility of the service. Service firm such as carwash, dry

cleaners and restaurants may use taste appeals to initially attract customers. While sampling

firms the firm’s services, the customer will have opportunity to observe the firms physical

evidence and form perception regarding the firm and its performance capabilities. Consequently,

firms that use samplers should view this process as an opportunity rather than as catering to a

bunch of people who want something for free.

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Question 4:

How do these same atmospheric elements affect employee satisfaction and the firm’s

operations?

Answer:

Cognitive Responses:

Cognitive Responses are the thought processes of individuals and, according to the model,

include beliefs, categorization, and symbolic meaning. In the formation of beliefs, the firm’s

environment acts as a form of non-verbal communication and influences a customer believe

about the provider’s ability to perform the service. Through the physical evidence, employees

form beliefs about the firm based on the overall perceived servicescape. Beliefs that states

consumers’ opinions about the provider’s ability to perform the service. Categorization that

states consumer assessment of the physical evidence and a quick mental assignment of a firm to

a known group of styles or types. Symbolic meaning that inferred from the firm’s use of physical

evidence.

Emotional Responses:

Emotional Responses do not involve thinking; they simply happen, often inexplicably and

suddenly. Specific songs, for example, may make individuals feel happy, feel sad, or recreate

other past feelings that were associated with the particular piece of music. Scents have similar

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effects on individuals. Obviously, the goal of effective physical evidence management is to

stimulate positive emotions that create atmospheres in which employees love to work and

customers want to spend their time and money.

Physiological Responses:

Physiological Responses are often described in term of physical pleasure or discomfort. Typical

physiological responses involve pain and comfort. Environments in which music is played very

loudly may lead to employee discomfort and movement away from the source of the noise. The

lack of a nonsmoking section may cause some employees dificulty in breathing and further

discomfort. Instead of being arousing, environments that are brightly lit may cause eye

discomfort. In contrast, a dimly lit restaurant may cause eye strain as employee’s struggle to

serve customers menus. All these responses determine whether a employee will approach and

explore the firms offering or avoid and leave the premises to minimize the amount of

physiological discomfort. Because of the duration of time spent in the firm’s facility, employees

might find the physical environment particularly harmful appropriate ambient conditions such as

temperature and air quality are direct related to employees’ willingness to continue to work, their

productivity while at work, their job satisfaction, and their positive interaction with co-worker.

• Ambient conditions

– Temperature, air quality, noise, music, odor

• Space/Function

– Layout, equipment, furnishings

• Signs, symbols, and artifacts

– Signage, personal artifacts, style of decor

• Sound appeals

– mood setter, attention grabber, informer

– music, announcements, and sound avoidance

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Specific Tactics for creating Service Atmospheres MKT412

• Scent appeals

– pleasurable scents vs foul odors

• Taste appeals

– the equivalent of providing the customer with free samples

Question 5:

Does the suggested atmosphere development plan compete effectively with competitors’

atmospheres?

Answer:

The effective management of physical evidence is particularly important to KFC. Due to the

intangibility of services, consumers lack objectives sources of information when forming

evaluations. As a result, customers often look to the physical evidence that surrounds the service

when forming evaluation.

A firms physical evidence includes, but is not limited to, facility exterior design elements such as

the architecture of the building, the firms sign, parking, landscaping, and the surrounding

environment of the firms location, interior design elements such as size, shape, and colors, the

firm entrance and foyer areas, equipment utilized to operate the business, interior signage,

layout, air quality and temperature, and other physical evidence that forms customer perception,

including business cards, stationary, billing statements, reports, the appearance of personnel, and

the firms brochures.

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Specific Tactics for creating Service Atmospheres MKT412

From a strategic perspective the importance of managing the firms physical evidence steams

from the firm’s ability to: (1)package the service, (2)facilitate the flow of the service delivery

process, (3)socialize the customers and employees alike in terms of their respective roles,

behaviors, and relationship, and(4) differentiate the firm from its competitors.

From a theoretical perspective, the firm’s environment influences the behavior of consumers and

employees alike due to the inseparability of many services.

When designing the firm’s facilities, consideration needs to be given to weather the firm is a

remote service, an interpersonal service, or a self service. The subsequent design should reflect

the needs of the parties who are dominating the service production process.Decession about

facility location , layout, product design, and process design in particular may re3sult in different

outcomes, depending on weather the customer is actively involved in the production process..

Finally, numerous tactical decisions must be made by KFC when designing the firm’s

environment. Individual’s base perception of the firms services on sensory cues that exist in the

firms environment. Specific tactical decision must be made by KFC about the creation and

sometimes the avoidance of the scent appeals, sight appeals, sound appeals, touch appeals, and

taste appeals. The design and management of the KFC sensory cues are critical to the firm’s

long-term success.

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