KFC‘s 4P strategy in China Essay
KFC‘s 4P strategy in China
In order to bring success in China, KFC knows that western restaurants need changed by using localization strategy. As cultural adaptation is the process of “adjusting the native ways of thinking and behaviors to be consistent with the local culture” (Kotler, 1982), KFC tends to launch Chinese food apart from western food like burger or chicken wings, for examples, Chinese food like congee and rice, and promote Chinese herbal tea in 2004. KFC launched Chinese products like ‘Wolfberry Pumpkin Congee’, ‘Chicken Porridge with Mushroom’, ‘Duck Soup’, even lunched the ‘Deep-fried dough sticks’ in 2008. 90% of its raw materials are coming from the local too. It is obviously that KFC is trying to create the Chinese taste food when it entering to China market. The Chinese food fit the local taste and it helps KFC to build up the relationship with the Chinese people. Also, KFC introduced several new products with Chinese regional characteristics aiming to adapt local taste.
For instance, ‘Dragon Twister Combo’, ‘Sichuan taste Spicy Chicken’, ‘Cantonese flavor cushion chatter’, etc. As there are many cities in China, KFC wants to treasure different regional tastes, from Beijing to Sichuan or Cantonese tastes. The products that are particularly designed for the Chinese, which gives the chance to KFC promoting their brand to Chinese people and becomes the first western fast food restaurant with Chinese cuisines in China. While KFC has launched diversification products, no matter western food like burger, French fries, chicken wings, or Chinese food like congee, rice, soup, deep-fried dough sticks, etc. People can find different types of food in KFC and it introduces a new product every half month in average, which provided an innovative product lines to customers and enlarge its market in China.
KFC is the first joint vendor of international fast food shop in China and its first restaurant is located in Tiananmen Square (Beijing) in 1987. ‘Perhaps not surprisingly the first KFC outlet had strong novelty value and attracted huge queues and custom.’ (Jim Riley, 2013) It is no doubt that KFC is enjoying the first mover advantage and it attracts Chinese to taste a freshness western restaurant. KFC has more than 4000 outlets in the Chinese market and in every province of China. It covers the major large and medium sized cities like Beijing, Guangzhou, Tianjing, etc. KFC wants to expand its market share in China with a remarkable speed and it identified 16 key cities as its base. Also, it use a strategy to expand its market from the big cities to the medium and small cities. To create a demand of its brand in the big cities, then extend into the medium and small sized cities. KFC started out gaining notice in bustling cities like Beijing, Guangzhou, Shanghai as big cities tend to be the capital cities with larger customer based and higher level of economy development.
It helps KFC to establish its brand image in China while marketing in big cities can help KFC to test the local market with the macro environment and market conditions of fast food industry and less chance of failure for KFC to enter Chinese market. Moreover, KFC choose the locations with large traffic and pedestrian volume which are always near to the supermarkets, gasoline service stations or shopping malls. There is a unique feature that KFC applying for its distribution system, which helps to expand its store network. KFC owned their outlets rather than only franchised them in China with building warehouses and operating a fleet of trucks. It provides extensive staff and management training including from food preparation to customer service and logistics. This special distribution system gives KFC greater control over their outlets and ensure its quality of services.
KFC is using the localization strategy to adapt local taste in their promotion. It changed its slogan into Chinese cultural version from ‘We do chicken right’ to ‘????,????’ in 2005 and ‘??????’ in 2010. This action shows the ambition of KFC is to establish a strong image of pleasing Chinese. With the purpose of motivating the brand awareness and sales volume to targeted customer like family with children, KFC launched several gift promotions which followed the Chinese comic trends. For example, the cartoon named ‘Pleasant Goat and Big Big Wolf’ is extremely hot and popular, KFC promotes its children sets with the doll gift of the cartoon.
This helps to boost the sales volume of its child food set and making a trend to Chinese children to collect KFC gift collections. Also, in order to build up the customer loyalty of children in China, KFC creates its own cartoon named ‘QiQi’ and opens a website (Miaoli City http://www.kfckids.com.cn/) for children to play. Furthermore, the promotion sells union of people in its advertisement, which promoting KFC is a good place for every groups of people to have their reunion time. It can easily find that KFC is creating a pleasant image for families and friends while Chinese is focusing on relationships.
KFC is using the price skimming strategy towards its customers in China. As KFC is targeting middle to high levels class in the big and medium sized cities first, it sets its price in a relatively high in the beginning. The average price for personal meal in KFC is around 30RMB which is higher than the other restaurants in China. But, KFC lower its product price with promotion and discount provided after. Most of its sets have at least 3 dollars discount and KFC gives discount to every new product. Also, online coupons are extremely high usage in China which attract many Chinese having their meals in KFC.
For instance, a dinner set with priced 20RMB can be decreased to 15RMB when customers downloaded the coupon online and gave it to the cashier. The tea set is cheap to attract more customers in the normal hours. For example, a tea set with egg tart and dessert cost 6 dollars only. Apart from the discount, differentiate pricing policy is applied in KFC. With different cost in different outlets or stores in different places, there are different pricing of KFC products. While the economic environment is not the same in each region, the cost used in different KFC restaurants are different namely the rent. Also, with the different profit earned in different areas, KFC reset its price by different time, restaurants, and regions in 2012.
Kotler P. (1982) Global Standardization-Courting Danger, The Journal of Consumer Marketing, 3 (2) spring.
(Jim Riley, 2013), http://www.tutor2u.net/blog/index.php/business-studies/comments/why-localisat