Marketing Plan of Launching a KFC Branch in Ljungby PDF

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Project Report On Marketing Plan of Launching a KFC Branch in Ljungby

Submitted by: Mohammad Rastegari

Submitted to:

Under the Guidance of Peter Caesar Session 2016-2017 1st Semester

INDEX Table of Contents 1

Current Marketing Situation

4 1.1 Market Description ...................................................................................................................... .................................. 4 1.2 Product Review ............................................................................................................................. .................................. 5 1.3 Competitive Review ............................................................................................................................. ........................... 5 1.4 Channels and Logistics Review ............................................................................................................................ ..........7

2

Strengths, Weakness, Opportunities, and Threat Analysis

7 2.1 Strengths ........................................................................................................................ .................................................. 7 2.2 Weakness ......................................................................................................................... ................................................. 7 2.3 Opportunities ................................................................................................................. ................................................. 8 2.4 Threats ............................................................................................................................ .................................................. 8 3

Objectives and Issues

9 3.1 First-Year Objectives ........................................................................................................................ ............................. 9 3.2 Issues .............................................................................................................................. .................................................. 9

4

Marketing Strategy

9 4.1 Positioning ....................................................................................................................... ................................................ 9 4.2 Product Strateg ............................................................................................................................. .................................. 9 4.3 Pricing ............................................................................................................................. ............................................... 10 4.4 Distribution Strategy ........................................................................................................................... ......................... 10 4.4.1 Indirect Distribution Channel ........................................................................................................................... ...... 10 4.5 Marketing Communication Strategy .......................................................................................................................... 10 4.5.1 Public Relation Tools ................................................................................................................................. ............... 10 4.5.2 Sales Promotion ........................................................................................................................... .............................. 11 4.5.3 Event Marketing ........................................................................................................................... .............................. 11 4.6 Market Research .............................................................................................................................. .............................. 11 5

Action Program

6

Budget

7

Controls

11

13

13

8

References

14 Appendix A : page.18

Executive Summary KFC is preparing to expand their franchise into Ljungby, Sweden. Even though Ljungby is currently occupied by five fast food brands, McDonalds, Max, Burger King, Sibylla and SUBWAY, KFC still believes that they can get a strong foothold with its strong brand and years of experience. KFC will target four groups of segments in Ljungby. These are children, families, teens & young adults, and budget customer wo are consuming fast food. KFC will offer its customer pure and fresh food in order to create a Finger Lickin’ Good! experience and thereby gaining customer loyalty. The fast food market is growing steadily with about 2,6% every year which makes it a good market to invest on. For the first year KFC is aiming to achieve a 25% marketing share of Ljungbys QSRs with a revenue of approximately 9 100 000 million SEK. Which after the calculated marketing cost, 97 000 SEK, will give KFC a total of 9 003 000 SEK left to pay all the costs and get a winning margin on.

1

Current Marketing Situation

Kentucky fried chicken (KFC) was founded in 1930 by a business man named Harland Sanders and has grown to become a part of the third largest concern in the quick service restaurant (QSR) industry, Yum! Brands[CITATION Nor16 \l 1053 ]. The fast food markets total turnover in 2015 was 581 billion USD and has, from 2011-2016, had an annual growth of 2.6%[ CITATION IBI16 \l 1053 ]. Because of the strong growth internationally in the fast food business KFC has decided to expand their interest in Sweden by opening a restaurant in Ljungby. In Sweden the fast food market industry has 12,8% of the restaurant market shares[ CITATION Sta16 \l 1053 ]. The current fast food competition in Ljungby is currently occupied by McDonalds, Max, Burger King, Sibylla and SUBWAY[ CITATION Lju16 \l 1053 ]. KFC will break into this market by mainly offering chicken in which no other of their fast food competitors are doing. This gives KFC a great differentiation from the existing fast food market.

1.1 Market Description The fast food market in Ljungby has five established brands which gives people a variety of choices[ CITATION Lju16 \l 1053 ]. These five restaurants consist of four hamburger QSR and one sandwich QSR. Since the market of Ljungbys QSR only consist of two different types of food in general, our research show that people are open to new choices (see appendix A.6). This gives KFC an opportunity to take advantage of the market situation and give people a new segment to choose from. Table 1 shows how KFC focuses on the needs of four targeted segments: Table 1 Targeted Segment

Customer Need

Children: Boys and girls

Like to get themselves a

between the age 4-12

free toy with their meals.

Teens & Young adults:

Likes to differentiate

Corresponding Features/Benefits KFC offers a free toy together with their “Chicky meal”. KFC offer a broad menu

4

with everything from burgers to Between the age 12-25

their meals. chicken wraps with low prices. KFC offers big family buckets with different types of fried

Families with children

Affordable family food

chicken so that a family can

packs. choose their favourite variety of chicken. KFC offers a menu that is

Budget customers: Between the age 12-55

both Lower price meals.

economical friendly and you get a lot of food for the money.

1.2 Product Review

([ CITATION KFC16 \l 1053 ] 5

1.3 Competitive Review Looking directly at the chicken segment in Ljungby and close by cities there´s no established chicken restaurant and therefor opening a KFC would meet no direct competition from the chicken segment. However, KFC counts as a QSR and thereby are competing with other restaurants in this industry. Though there aren´t any chicken based restaurants there ´re fast food chains that have a small assortment of chicken in their menu[ CITATION McD162 \l 1053 ][ CITATION Mål16 \l 1053 ][ CITATION Bur16 \l 1053 ][ CITATION Sub162 \l 1053 ]. What makes a QSR? To be counted as a QSR you´ll have to serve food that is affordable to the vast majority. The food also has to be easy to prepare in a short amount of time which leads to the last step. By having it made easy and quickly the meal can therefore be served consumer within a couple of minutes[ CITATION Far16 \l 1053 ]. Table 2. Comparing KFC with their competitors and their services

Brand KFC McDonalds Max Burger King Sibylla

1 2 3 4 5 6 7 8

Start ( Yea r) 193 01 194 05 196 86 195 47 193 28

Industry Chicken fast food franchise Hamburger fast food franchise Hamburger fast food franchise Hamburger fast food franchise Hamburger fast food franchise

Drive-in

Services Home Delivery

Breakfast

Y2

N3

N4

Y2

N3

Y4

Y2

N3

N4

Y2

N3

N4

Y2

N3

N4

[ CITATION Nor16 \l 1053 ] [CITATION map16 \l 1053 ] [CITATION Goo16 \l 1053 ] [ CITATION Goo161 \l 1053 ] [ CITATION McD16 \l 1053 ] [ CITATION Max16 \l 1053 ] [ CITATION KIN16 \l 1053 ] [ CITATION Nor161 \l 1053 ]

6

Subway

196 9

Sandwich and Pizza Franchise

N2

5 Table 3. General Data

Brand

KFC McDonalds Max Burger King Sibylla SUBWAY

Ranking Franchises (Worldwide) 310 110 >10010 410 0 210

N3

N4

No. of Branches Worldwide < 2000011 > 3600015 < 12018 > 1500020 16023 < 4400025

Worldwide Revenue In Sweden (Billion USD )

Brand Value (Billion USD )

212

> 2313

> 1214

22016

> 2517

> 8814

10618

< 118

122

> 314

16023

< 124

1927

> 2114

Even though there are some strong established brands, KFC strongly believes that there is a big market for their products. Because of the already well established brand, recognition won´t be a problem.

1.4 Channels and Logistics Review We have chosen to start a KFC restaurant here in Ljungby based on a marketing research. The research showed a 91,7% interests in opening a KFC here in Ljungby (see appendix A.5). More precisely, we have decided to open it in the city centre of Ljungby because of its close relation to the inhabitants. But it´s also because that three out of our five competitors are located in the outer part of Ljungby city[ CITATION Lju16 \l 1053 ]. 9 [ CITATION Sub16 \l 1053 ] 10 [ CITATION Fra16 \l 1053 ] 11 [ CITATION Nor16 \l 1053 ] 12 [ CITATION KFC161 \l 1053 ] 13 [CITATION YUM14 \p 98 \l 1053 ] 14 [CITATION Sta161 \l 1053 ] 15 [CITATION Sta15 \l 1053 ] 16 [ CITATION McD161 \l 1053 ] 17 [ CITATION Sta151 \l 1053 ] 18 [ CITATION Max161 \l 1053 ] 19 [ CITATION Gai16 \l 1053 ] 20 [ CITATION Sta152 \l 1053 ] 21 [ CITATION Goo162 \l 1053 ] 22 [ CITATION Sta153 \l 1053 ] 23 [ CITATION Nor162 \l 1053 ] 24 [ CITATION Car16 \l 1053 ] 25 [ CITATION Sta162 \l 1053 ] 26 [ CITATION Sub161 \l 1053 ] 27 [ CITATION Sta154 \l 1053 ]

7

Two of these three are Mcdonalds and Max which are the first and third most popular QSR when it comes to Ljungby (see appendix A.6). Thereby positioning ourselves in the inner city will give us a better competitor advantage.

2 Strengths, Weaknesses, Opportunities, and Threat Analysis We have done our SWOT analysis according to the book "Principles of Marketing"[ CITATION Kot15 \l 1033 ].

2.1 Strengths 1. Strong brand. As you can see in table 3, KFC has already established a strong global brand name. They are known almost anywhere which will lead to easier marketing and publicity. Because of a strong brand name, the media will probably give the company free publicity and awareness for the incoming restaurant. 2. Specializes in chicken. KFC is the only fast food restaurant in Sweden that focuses mainly on fried chicken. There is no other restaurant that is in or near Ljungby that serves this segment. 3. Family Meals. They have meals that are made for multipole people which no other QSR in Ljungby has. This will give KFC an extra appeal to families or friends that wants to eat together.

2.2 Weaknesses 1. Limited menu. Taking a look at menu in the product review you can see that KFC has a limited menu. This may get the customers tired of the same old menu. 2. Unhealthy. Kentucky fried chicken indicates an unhealthy food offering in its name. And Since the health trend has become increasingly stronger and because KFC doesn’t offer many healthy options they may lose more health engaged customer segments[ CITATION Sve15 \l 1053 ]. 3. Environmental issues. KFC imports its chicken from Holland and that creates environmental problems since it has to travel long distance with trucks[ CITATION KFC162 \l 1053 ]. KFC can thereby lose an environmental customer segment. 8

4. Breakfast. Breakfast is the most important meal and todays people, because of their busy working schedules, do not always have enough time to make and eat breakfast. So by not serving breakfast KFC may lose potential customers. For example, McDonalds which offers breakfast for its customers (see table 2).

2.3 Opportunities 1. Growing industry. The global QSR industry has been growing between 2011-2016 by an average of 2,6%. [ CITATION IBI16 \l 1033 ] 2. New market. Since we are the only restaurant in this segment this gives us an opportunity to attract and expand our market to other cities around Ljungby.

2.4 Threats 1. Established brands. Ljungby already has five fast food chains well established on the market which will make it hard to break through the market[ CITATION Lju16 \l 1053 ]. 2. Small town. Ljungby is a town with only 15,000 people. This makes the number of targeted customer kind of small especially with five other fast food chains[ CITATION Lju16 \l 1053 ]. Strengths - Strong brand - Specializes in chicken - Family meals

Weaknesses - Limited menu - Unhealthy - Environmental issues

Opportunities

- Don’t offer breakfast Threats

- Growing industry

- Established brands

- New market

- Small town

3 Objectives and Issues 3.1 First-Year Objectives In the first year, KFC hopes to attract 25% of the fast food market shares. This would get us a minimum of total revenue of roughly 9,1 million SEK 9

in sales. With the average household paying 1318,75 SEK per year. Table 4 explains how we calculated to these numbers.

Table 4 The amount each households spends on fast food annually ( SEK )

A

1055028

%50 of QSR industry is Hamburgers and 'other' fast food like Subway28

Our potential customers are %25 of Ljungby municipality which is 27 638 people29

The amount each housholds spends on Hamburgers and 'other' fast food like subway

Market Share

B = A × %50

C = B × %50

D

E=D×C

5,275

1,318.75

6,909

9,111,244

( SEK )

( person )

Potential Sales (SEK)

3.2 Issues The biggest obstacle that KFC faces is breaking through the already established industry of fast food chains and to reach its first-year goal of 25% market share.

4 Marketing Strategy 4.1 Positioning KFC has always lived around the motto: It´s Finger Lickin’ Good! And that is something that we stand by[ CITATION Tra15 \l 1053 ]. Therefor 28 [CITATION Äij14 \p 10 \l 1053 ] 29 [ CITATION Mig16 \l 1033 ]

10

you may pay a little bit more but you get more in return. Because when the customer’s order they don´t just get an ordinary fast food meal, on the contrary, KFC offers a finger licking good experience for the customer. KFC: s years of experience in fried chicken makes our quality exceed competitor’s, and not only in the fried chicken segment but all over the taste experience. That is why KFC focuses on pure and fresh food in order to create a distinct and clear position in the minds of the customers.

4.2 Product strategy KFC has as you can see in the product review a wide variety of products, such as chicken burgers, chicken hot wings, chicken bites and salad and wraps. They also serve side offering like fries, sodas, desserts and coffee. The Ljungby KFC are planning to do a test launch with different kinds of vegetarian products. The product has already been tested before and gave a 10% increase in sales[CITATION Yum16 \p 76 \l 1053 ].

4.3 Pricing KFC offer a broad range of meals to a variety of different prices shown in the product review. These are the franchise prices that are decided on competitor basis and put slightly higher. For example, max has a burger meal for about 81 SEK[CITATION Mål16 \l 1053 ] whereas as you can see in the KFC menu above, KFC has matching meals for around 89 SEK. However, KFC have bucket meals that cost from 179-369 SEK which is double or four double the price that you pay at the other five big fast food restaurants. Thus, putting KFC in another price range compared with the five other QSRs, even though these are made for families and groups.

4.4 Distribution strategy 4.4.1 Indirect Distribution Channel KFC has implemented the indirect distribution channel. Where they are supplied with the necessary QSR ingredients to make their food to distribute it to the end customers[ CITATION Web16 \l 1053 ]. Supplier

Retailer(KFC)

Customer

4.5 Marketing communication strategy The communication strategies used below is based on the marketing tools from the book "Principles of Marketing"[ CITATION Kot15 \l 1033 ] 11

4.5.1 Public relation tools Press relations. KFC will announce the launch of a restaurant in Ljungby on social media and to local and nationwide newspapers. This will hopefully give good and free publicity. Thus, creating awareness for readers in and outside of Ljungby. Corporate identity materials. By adding posters with KFC’s logo on it and have it on buildings and in bus stops plus having flag posts around the upcoming restaurant, people will build awareness and start wondering about what’s happening. Direct and digital marketing. A big brand like KFC has a lot of followers on different social medias. On their global Facebook page, they have over 42 million followers [CITATION Fac16 \l 1053 ]

and on their Swedish

Facebook page they have around 14000 followers[CITATION Fac16 \l 1033 ]. This is a lot of fans that you can build relations with and get feedback from. Also having certain sharing competitions on Facebook, Instagram and Twitter, will give good publicity and awareness. Facebook will also be used to market certain posts that KFC want to spread for different campaigns or special messages. This will reach the segments from 13 and upwards[CITATION Fac16 \l 1053 ]. 4.5.2 Sales Promotions TV will be one of KFC biggest advertising tools to create a market position in the customer’s minds and to keep interest going into active decisions. This will reach not just Ljungby, but the whole county. KFC will as well send out post mails with coupons when different campaigns are ongoing, reaching the people in Ljungby by postal code. 4.5.3 Event Marketing On holidays and special occasions, KFC will ...