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TERM PAPER REPORT SUBMITTED TOWARDS THE PARTIAL FULFILMENT OF

POST GRADUATE DEGREE IN INTERNATIONAL BUSINESS

SUBMITTED BY

YASMITA HOTA-A1802010291

VARUN SHARMA-A1802010058

Section-F

COMPARATIVE ANALYSIS OF MCDONALDS AND KFC

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TABLE OF CONTENTS

CHAPTER

NO.

SUBJECT PAGE

NO.

1 Executive Summary 3

2 Introduction 4

a. Objectives 5

3 Company Profile 6

4 Survey Analysis 31

5 Conclusions and Recommendations 33

6 Bibliography 34

7 Annexure 35

1.

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EXECUTIVE SUMMARY

The international market is flooded with various sectors and industries that involve products of daily as

well as occasional use for the consumers. The use of the products can vary from industrial purpose to

private consumption. One such thriving industry in the modern world is the food and beverage

industry. Food and beverage industry combined with the hospitality sector makes up one of the most

attractive target sectors for multi-national corporations. The concept evolved from the very first diners

in the late 18th century, when the world realized the concept of paid dining experience. Now, the world

cannot live without the taste of a McAloo Tikki or the zing of a Zinger. The bottom line being that the

order-to-eat MNCs have taken over the market like ants on a corpse, gobbling up every ounce of it.

This sector has slowly covered all income groups of consumers and has targeted to achieve a market

share of the highest percentage and the ever increasing competition is resulting in more profitable

options for the consumers.

The consumers are being served with a range of food and beverages to relish on catering every style of

taste and preferences. With growing competition the food giants have take their services to a higher

level with better decreased serving time, value for money prices and changing specialties in their

products.

The following report is a comparative analysis of the operational parameters of McDonalds and

Kentucky Fried Chicken (KFC) and projects an overview of various factors that differentiate the

services of the two food giants. It covers factors like the product variety, customer reach, pricing

strategies, hospitality management, customer relationship management, supply chain management and

employee satisfaction programmes.

The survey was based on the consumer’s response on their choice between KFC and McDonalds and

the basis of their choice was differentiated into various factors.

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INTRODUCTION

McDonald’s vs KFC

McDonald’s and KFC are everybody’s favorite food trip destinations. When you like hamburgers,

McDonald’s is always the top option. When you like fried chicken, KFC is always the first thing that

comes to everyone’s mind. The reason for this is these companies claim of particular products that

have became their trademark until now. The difference between McDonald’s and KFC is mainly the

cuisine.

McDonald’s

1940 is the birth year of McDonald’s and they have started everything. Their Speedier Service System

that was introduced in their very first restaurant is being followed until now in modern day fast food

chains. Their very first mascot was a man with a head of a hamburger that is wearing a chef’s hat. It

was replaced by McDonald’s ever popular clown man. McDonald’s is recorded to currently serving 58

million customers each day in 119 countries. Their restaurants differ from their settings, some offer by-

passers with their drive thru service, some have playgrounds for kids but are just counter service alone.

Some of their restaurants have outer seats as well. McDonald’s signature colors are red and yellow.

Their well-supported products are their famous hamburgers, breakfast offers, desserts, chicken

sandwiches and French fries. For vegetarian customers, McDonald’s have offerings that are suitable

for them. When it comes to regional branches, McDonald’s are known for being fond of offering these

countries food taboos for them to have some sort of relationship with people around. For example,

Portugal McDonald’s are the only ones who have soup in the menu. Another example would be

Indonesia for McRice.

KFC

On the other hand, KFC or Kentucky Fried Chicken started during the Great Depression, which was in

the year 1930. It was first named as “Sanders Court and Cafe”, following the name of Harland Sanders,

the original creator from Kentucky. Their current and most popular logo is the cartooned image of

Sanders with their acronym, KFC. They are popular for their trade secret, their secret recipe made from

11 herbs and spices that is known to create the “finger lickin’ good” flavor of their chickens. Their

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basic products are fried chickens, chicken wraps, sandwiches, salads and some roasted and grilled

chicken cuisines and desserts, too.

Be it McDonald’s or KFC, you’ll surely have a great treat of a meal. Differentiating both will help us

recognize as to what we’d really love to consume. McDonald’s main offer is hamburgers while KFC

offers various kinds of chicken dishes.

OBJECTIVES

1. To conduct a comparative analysis on the marketing parameters of McDonald’s and KFC

2. To study the various aspects of supply chain management, employee satisfaction and hospitality

management of both companies.

3. To conduct survey analysis on the consumer’s preference of food joint amongst McDonald’s and KFC.

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COMPANY PROFILE

MCDONALD’S

History

1955 Ray Kroc opens his first restaurant in Des Plaines, Illinois and the McDonald's Corporation is

created.

1957 Quality, Service, Cleanliness and Value (QSC& V) becomes the company motto.

1959 The 100th McDonald's opens in Chicago.

1961 Hamburger University opens in Elk Grove, near Chicago.

1963 One billion hamburgers sold.

Ronald McDonald makes his debut.

1964 Filet-O-Fish sandwich is introduced.

1965 McDonald's Corporation goes public.

1967 The first restaurants outside of the USA open in Canada and Puerto Rico.

1968 The Big Mac is introduced.

The 1,000th restaurant opens in Des Plaines, Illinois.

1972 A new McDonald's restaurant opens every day.

The Quarter Pounder is introduced.

1973 Egg McMuffin is introduced.

1974 The first Ronald McDonald House opens in Philadelphia.

The Happy Meal is launched.

1983 Chicken McNuggets is introduced.

New Hamburger University campus opens in Oak Brook, Illinois. Set in 80 wooded acres.

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Training is provided for every level of McDonald's management worldwide.

1984

50 billionth hamburgers sold.

Ronald McDonald Children's Charities is founded in Ray Kroc’s memory to raise funds in

support of child welfare.

1989 McDonald's is listed on the Frankfurt, Munich, Paris and Tokyo stock exchanges.

1990 McDonald's opens in Pushkin Square and Gorky Street, Moscow.

1993 The first McDonald's at sea opens aboard the Silja Europa, the world's largest ferry sailing

between Stockholm and Helsinki.

1994 Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidad

and United Arab Emirates, bringing the total to over 15,000 in 79 countries on 6 continents.

1996 McDonald's opens in India – the 95th country.

McDonalds is a leader in convenient foods and beverages, with revenues of about $23 billion and over

1.6 million employees serving the customer’s worldwide. The company consists of the snack business of

Beverages and Foods. PepsiCo brands are available in nearly 115 countries having more than 24,500

restaurants in the world providing 24 hour service having about 1 billon customers to be served all over

the world.

McDonalds’s success is the result of superior products, high standards of performance, distinctive

competitive strategies and the high integrity of our people. McDonalds is continuing to expand and

introduce new alternative beverages in the market. Approximately 85% of McDonald’s restaurant

businesses world-wide are owned and operated by franchisees .All franchisees are independent, full-time

operators. McDonald’s was named Entrepreneur’s Number-one franchise for 1997.

Mc Donald's in India

• McDonald’s entered India in 1996.

• McDonald’s India has a joint venture with Connaught Plaza Restaurants and Hard Castle Restaurants.

• Connaught Plaza Restaurants manages operations in North India whereas Hard Castle Restaurants

operates restaurants in Western India.

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• Today it has around 211 Restaurants across India.

• Presently, it has around 57 outlets in the National capital region.

McDonald’s has developed a menu especially for India with vegetarian selections to suit Indian tastes

and preferences. Keeping in line with this, McDonald's does not offer any beef or pork items in India. In

the last decade it has introduced some vegetarian and non-vegetarian products with local flavours that

have appealed to the Indian palate. There have been continuous efforts to enhance variety in the menu

by developing more such products.

McDonald's has also re-engineered its operations repeatedly in its 11 years in India to address the special

requirements of a vegetarian menu. Vegetable products are 100% vegetarian, i.e.

They are prepared separately, using dedicated equipment and utensils.

Only pure vegetarian oil is used as a cooking medium.

Cheese and sauces are completely vegetarian and egg less.

Separation of vegetarian and non-vegetarian food products is maintained throughout the various stages

of procurement, cooking and serving.

Business model

The McDonald's Corporation's business model is slightly different from that of most other fast-food

chains. In addition to ordinary franchise fees, supplies, and percentage of sales, McDonald's also collects

rent, partially linked to sales. As a condition of the franchise agreement, the Corporation owns the

properties on which most McDonald's franchises are located. The UK business model is different, in that

fewer than 30% of restaurants are franchised, with the majority under the ownership of the company.

McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois.

According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the U.S. have at

some time been employed by McDonald's. (According to news piece on Fox News this figure is one in

ten). The book also states that McDonald's is the largest private operator of playgrounds in the U.S., as

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well as the single largest purchaser of beef, pork, potatoes, and apples. The selection of meats

McDonald's uses varies with the culture of the host country.

McDonald’s corp. is currently one of the most successful consumer products company in the world with

annual revenues exceeding $23 million and has more than 1.6 million employees. McDonald’s

products are recognized and are most respected all around the globe. Currently, its divisions operate in

all over the world in beverages, snack foods, and restaurants. The corporations increasing success has

been based on high standards of performance, marketing strategies, competitiveness, determination,

commitment, and the personal and professional integrity of their people, products and business practices.

Products

McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, French

fries, soft drinks, breakfast items, and desserts. In most markets, McDonald's offers salads and

vegetarian items, wraps and other localized fare. This local deviation from the standard menu is a

characteristic for which the chain is particularly known, and one which is employed either to abide by

regional food taboos (such as the religious prohibition of beef consumption in India) or to make

available foods with which the regional market is more familiar (such as the sale of McRice in

Indonesia).

Pricing Strategy

Value Ladder strategy:-

b) Started offering value meals in a range of prices.

c) Ensure affordability and attract widest section of customers.

d) Brought the customer and provided arrange of entry-level products.

e) Try those new items and graduate to higher-rungs.

f) E.g. - if a customer starts with McAloo Tikki, he will finally graduate to McVeggie and so in Non

veg.

80-20 Menu Board

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•80% visual.

•20% descriptive.

•Easier for customers to understand what 29, 39, 49, 59, 89, 99 rupee options are.

•Pricing range, quick service, no-tips environment attracted middle class and students.

Package deal

• The most common strategy in fast food industry.

• The most preferred style for customers of McDonald’s.

• Plays on Psychological factor of the customer.

• Consumers appreciate the resulting simplification of the purchase decision.

Advertising

Over the years, McDonald's has developed TV advertising campaigns that have become, like

McDonald's, a part of our lives and culture. McDonald's commercials have focused not only on product,

but rather on the overall McDonald's experience, portraying warmth and a real slice of everyday life.

This "image" or "reputation" advertising has become a trademark of the company and created many

memorable television moments and themes, including

McDonald's is Your Kind of Place (1967)

You Deserve a Break Today (1971)

We Do it All for You (1975)

Twoallbeefpattiesspecialsaucelettucecheesepicklesonionsonasesameseedbun (1975)

You, You're The One (1976)

Nobody Can Do It Like McDonald's Can (1979)

Renewed: You Deserve a Break Today (1980 & 1981)

Nobody Makes Your Day Like McDonald's Can (1981)

McDonald's and You (1983)

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It's a Good Time for the Great Taste of McDonald's (1984)

Good Time, Great Taste, That's Why This is My Place (1988)

Food, Folks and Fun (1990)

McDonald's Today (1991)

What You Want is What You Get (1992)

Have you Had your Break Today? (1995)

My McDonald's (1997)

Did Somebody Say McDonald's (1997)

We Love to See You Smile (2000)

There's a little McDonald's in Everyone (2001) - Canada Only

I’m lovin' it (2003)

McDonald's has for decades maintained an extensive advertising campaign. In addition to the usual

media (television, radio, and newspaper), the company makes significant use of billboards(outdoors, on

which large advertisements or notices are posted.) and signage, sponsors sporting events from ranging

from Little League to the Olympic Games, and makes coolers of orange drink with their logo available

for local events of all kinds. Nonetheless, television has always played a central role in the company's

advertising strategy. The taglines were always centralized towards the concept of overall dining

experience and complete service satisfaction.

Employee benefit plans

The Company’s Profit Sharing and Savings Plan for U.S.-based employees includes a 401(k) feature,

a leveraged employee stock ownership (ESOP) feature, and a discretionary employer profit sharing

match. The 401(k) feature allows participants to make pre-tax contributions that are partly matched from

shares released under the ESOP. The Profit Sharing and Savings Plan also provides for a discretionary

employer profit sharing match at the end of the year for those eligible participants who have contributed

to the 401(k) feature. All contributions and related earnings can be invested in several investment

alternatives as well as McDonald’s common stock in accordance with each participant’s elections.

Participants’ contributions to the 401(k) feature and the discretionary employer match are limited to

20% investment in McDonald’s common stock. The Company also maintains certain supplemental

benefit t plans that allow participants to (i) make tax-deferred contributions and (ii) receive Company-

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provided allocations that cannot be made under the Profit Sharing and Savings Plan because of Internal

Revenue Service limitations. The investment alternatives and returns are based on certain market-rate

investment alternatives under the Profit Sharing and Savings Plan.

Training

• February 24, 1961, Hamburger Universities first class of 14 students graduated

• Today, more than 5,000 students attend HAMBURGER UNIVERSITY each year

• Since 1961, more than 80,000 restaurant managers, mid-managers and owner/operators have graduated

from this facility

•McDonald’s invests more than $1 billion annually in training

•“Best Place to Work” – Fortune Magazine 2005

• “One out of 5 Best Places to Work in Latin American”

Finance Department

McDonald’s Finance Department has two key areas of responsibility: financial reporting and

management accounting. Although each of these functions has different priorities, working together

ensures the best financial position for the company now and for the future.

McDonald’s has two sources of profit:

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• Sales made by company-owned restaurants

• Rental and royalty income from franchised restaurants.

Restaurant sales

McDonald’s retains all of the profit earned by company-owned restaurants. In addition to variable costs,

which increase or decrease depending on the level of sales, McDonald’s also incurs costs that are largely

fixed, for example utilities and advertising, which need to be paid for even before the restaurant makes

any sales. Increasing sales and controlling costs are fundamental to ensuring the profit of each restaurant

is either maintained or increased.

Supply chain management at McDonalds (India)

The seed of McDonald's success was sown in 1990 - six years before it started its actual operations.

About two decades ago, the QSR (Quick service restaurants) wouldn't have meant much to the Indian

F&B segment. Today, the acronym has been seamlessly absorbed in the industry lingo. McDonald's,

arguably, one of the first brands that left a strong imprint on the Indian QSR history, has much to do

with this. And its success is credited to its well-established supply management chain.

According to Vikram Bakshi, managing director and joint venture partner of McDonald's India (North &

East), the company invested about Rs 400 crore even before its first restaurant commenced operations in

October 1996. "We had to ensure that we had the back-end linked up to the farm level for delivery

commitment."

The company also deployed the latest state-of-the-art food processing technology for having a sound

supply chain. The transition towards the latest technology, which has been subsequently noticed in other

QSRs as well, changed the Indian fast food scenario to match international standards.

Tracing its success path

McDonald's had been working critically on its supply chain part. Considering, an international brand

trying to make inroads into the Indian consciousness, its Indian supplier partners were developed in such

a manner that made them stay with the company from the beginning. Bakshi explains, "The success of

McDonald's India is a result of its commitment to sourcing almost all its products from within the

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country. For this purpose, it has developed local Indian businesses, which can supply them the highest

quality products required for their Indian operations." As per today's standings, McDonald's India works

with as many as 38 Indian suppliers on a long-term basis, besides several others standalone restaurants

working with it, for various requirements.

McDonald's entered its first distribution partnership agreement with Radha Krishna Foodland, a part of

the Radha Krishna Group engaged in food-related service businesses. As distribution centre, the

company was responsible for procurement, the quality inspection programme, storage, inventory

management, deliveries to the restaurants and data collection, recording and reporting. Value-added

services like shredding of lettuce, re-packing of promotional items continued since then at the centers

playing a vital role in maintaining the integrity of the products throughout the entire 'cold chain'. The

operations and accounting is totally transparent and is subject to regular audits.

"McDonald's had worked aggressively to attain the right suppliers and systems that ensured that 90 per

cent of yield was indigenous before the doors were opened to consumers. The only products that we

used to import were oil and fries, for which we have had made arrangements to manufacture the oil in

India. We ensured that the products developed locally abide by global McDonald's standards," informs

Bakshi.

Over the last 10 years, the company has gained experience and adopted procedures that helped in

maintaining a continuous supply of food products irrespective of the climatic conditions. Bakshi

proclaims, "Our logistics and warehousing system is robust that prepares us to deliver products at the

same temperature throughout, without a single break in the cold chain."

McDonald's – Challenges in SCM

Full Supply Chain responsibility

Multi Temp. Products - Over 65 % temperature controlled

Stores as far as 500 – 1000 kms

Drops per month - Over 1000

Movement mainly by road

Regular movement of perishables by air

Routing Challenges

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No margin for error – Operations critical client

No Stock Outs at store

On time delivery record – above 97 %

Clean delivery record – above 99 %

Unfailing inbound supply chain

The McDonald’s Experience

Marketing in a services industry is becoming an increasingly complex challenge. The paradigms of service marketing demand a passionate understanding of customer expectations and perceptions, and linking them to product design & delivery as well as operational planning. This is where McDonald’s has excelled due to its ability to successfully integrate the customer’s perspective in its products and operations in a comprehensive manner. The revamped menu in India is an example of McDonald’s strategy of integrating the customer’s perspective in its products. The ultimate aim of Service Marketing is not just to become a Service Leader but to create a Service Brand. The Service Delivery Process is the key to achieving this aim of Service Marketing.

McDonald's has been able to create a great experience for its customers by understanding the nature of the entire Service Delivery Process and the various stages in the process that are exposed to the customers. Transparency in the processes at its outlet has helped McDonald’s bring the back office in its outlet at the front so that the customer is able to know the operations and provide feedback on service design improvements.

McDonald’s focus on its People and their service delivery methods therefore plays a very important role in creating a successful Service Brand. The quality and the consistency of the service delivered by McDonald’s have been greatly enhanced by the combination of the factors mentioned above. This has helped McDonald’s become Service Leader and a successful Service Brand. This is evident from the fact that very few of its customers opt for take-home parcels or home deliveries while most of them prefer to eat at the outlet and enjoy the McDonald’s experience.

SWOT Analysis

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KENTUCKY FRIED CHICKEN

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

restaurants based in Louisville, Kentucky. KFC is a brand and operating segment, called a "concept" of

Yum! Brands since 1997, when that company was spun off from PepsiCo. KFC primarily sells chicken

in form of pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also

offers a line of roasted chicken products, side dishes and desserts. Perfecting its secret recipe of 11 herbs

and spices in 1939, KFC has come a long way. With over 10,000 outlets in the world, KFC has

maintained its title, for the last 60 years, of being the chicken Experts. KFC wore the title of being the

market leader in its industry. Serving delicious and hygienic food in a relaxing environment made KFC

everyone’s favorite. Since then, KFC has been constantly introducing new products and opening new

restaurants for its customers. KFC entered India in 1995. But because of KFC not adhering with the

Prevention of Food Adulteration Act, 1954 and certain other mistakes it had to leave India.In 2003 it

again came back with revised strategies and willingness to improve its earlier mistakes. Since then KFC

has a strong presence in 11 cities of India with around 50 stores, it presently has 21 outlets in NCR.

History of KFC

Timeline

9/9/1890 - Harland Sanders is born just outside Henryville, Indiana.

1900-1924 - Harland Sanders holds a variety of jobs including: farm hand, streetcar conductor, army

private in Cuba, blacksmith's helper, rail-yard fireman, insurance salesman, tire salesman and service

station operator for Standard Oil.

1930 - In the midst of the depression, Harland Sanders opens his first restaurant in the small front room

of a gas station in Corbin, Kentucky. Sanders served as station operator, chief cook and cashier and

names the dining area "Sanders Court & Café."

1936 - Kentucky Governor Ruby Laffoon makes Harland Sanders an honorary Kentucky Colonel in

recognition of his contributions to the state's cuisine.

1937 - The Sanders Court & Café adds a motel and expands the restaurant to 142 seats.

1939 - The Sanders Court & Café is first listed in Duncan Hines' "Adventures in Good Eating."

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Fire destroys The Sanders Court & Café, but it is rebuilt and reopened.

The pressure cooker is introduced. Soon thereafter Colonel Sanders begins using it to fry his chicken to

give customers fresh chicken, faster.

1940 - Birth of the Original Recipe

1952 - The Colonel begins actively franchising his chicken business by traveling from town to town and

cooking batches of chicken for restaurant owners and employees. The Colonel awards Pete Harman of

Salt Lake City with the first KFC franchise. A handshake agreement stipulates a payment of a nickel to

Sanders for each chicken sold.

1957 - Kentucky Fried Chicken first sold in buckets

1960 - The Colonel's hard work on the road begins to pay off and there are 190 KFC franchisees and

400 franchise units in the U.S. and Canada.

1964 - Kentucky Fried Chicken has more than 600 franchised outlets in the United States, Canada and

the first overseas outlet, in England.

1966 - The Kentucky Fried Chicken Corporation goes public.

1969 - The Kentucky Fried Chicken Corporation is listed on the New York Stock Exchange.

1971 - More than 3,500 franchised and company-owned restaurants are in worldwide operation when

Heublein Inc. acquires KFC Corporation.

1979 - KFC cooks up 2.7 billion pieces of chicken. There are approximately 6,000 KFC restaurants

worldwide with sales of more than $2 billion.

12/16/1980 - Colonel Harland Sanders, who came to symbolize quality in the food industry, dies after

being stricken with leukemia. Flags on all Kentucky state buildings fly at half-staff for four days.

1982 - Kentucky Fried Chicken becomes a subsidiary of R.J. Reynolds Industries, Inc. (now RJR

Nabisco, Inc.) when Heublein, Inc. is acquired by Reynolds.

1986 - PepsiCo, Inc. acquires KFC from RJR Nabisco, Inc.

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1997 - PepsiCo, Inc. announces the spin-off of its quick service restaurants - KFC, Taco Bell and Pizza

Hut - into Tricon Global Restaurants, Inc.

2002 - Tricon Global Restaurants, Inc., the world's largest restaurant company, changes its corporate

name to YUM! Brands, Inc. In addition to KFC, the company owns A&W® All-American Food®

Restaurants, Long John Silvers®, Pizza Hut® and Taco Bell® restaurants.

2006 - More than a billion of the Colonel's "finger lickin' good" chicken dinners are served annually in

more than 80 countries and territories around the world.

2007 - KFC proudly introduces a new recipe that keeps the Colonel's 11 herbs and spices and finger

lickin' flavor, but contains Zero Grams of Trans Fat per serving thanks to new cooking oil.

Kentucky Fried Chicken in India

KFC is known to be the world’s No.1 Chicken QSR and has industry leading stature across many

countries like UK, Australia, South Africa, China, USA, Malaysia and many more. KFC is the largest

brand of Yum Restaurants, a company that owns other leading brands like Pizza Hut, Taco Bell, A&W

and Long John Silver. Renowned worldwide for its finger licking good food, KFC offers its signature

products in India too! KFC has introduced many offerings for its growing customer base in India while

staying rooted in the taste legacy of Colonel Harland Sander’s secret recipe. Its signature dishes include

the “crispy outside, juicy inside” Hot and Crispy Chicken, flavorful and juicy Original Recipe chicken,

the spicy, juicy & crunchy Zinger Burger, Toasted Twister, Chicken Bucket and a host of beverages and

desserts.

For the vegetarians in India, KFC also has great tasting vegetarian offerings that include the Veggie

Burger, Veggie Snacker and Veg Rice meals. In India, KFC is growing rapidly and today has presence

in 11 cities with close to 70 restaurants.

KFC’s Main Products in India

KFC's specialty is fried chicken served in various forms. KFC's primary product is pressure-fried pieces

of chicken made with the original recipe. The other chicken offering, extra crispy, is made using a garlic

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marinade and double dipping the chicken in flour before deep frying in a standard industrial kitchen type

machine.

Market Positioning

For a product to occupy a clear, distinctive and desirable place relative to “Competing products in

the minds of target consumer.” In KFC feedback is taken from the customer in order to know the

customer demands and then improvements are made in products. KFC focuses on pure and fresh

food in order to create a distinct and clear position in the minds of customers KFC has a strong brand

name and they are leading the market in fried chicken. For a product to occupy a clear, distinctive

and desirable place relative to “Competing products in the minds of target consumer.”

In KFC feedback is taken from the customer in order to know the customer demands and then

improvements are made in products. KFC focuses on pure and fresh food in order to create a distinct

and clear position in the minds of customers KFC has a strong brand name and they are leading the

market in fried chicken.

Marketing Model

KFC is synonymous with chicken. It has to be because chicken is its flagship product. The latest they

have on offer is the marinated hot and crispy chicken that is "crisp and crunchy on the outside, and soft

and juicy on the inside". It gives you a regular Pepsi with this at nothing more than just Rs. 39. But

make no mistake, while this is a rage across the world, KFC has made sure one other thing: it doesn't

want to alienate the vegetarian community "that gave birth to the vegetarian menu". It means you can be

vegetarian and yet be at KFC.

KFC offers a wide range of vegetarian products such as the tangy, lip-smacking paneer tikka wrap 'n'

roll, the vegetarian de-lite burger, and the vegetarian crispy burger. There are munchies such as the crisp

golden vegetarian fingers and crunchy golden fries served with tangy sauces. If you are vegetarian and

looking for a meal, you can combine the veg fingers with steaming, peppery rice and a spice curry.

The mayonnaise and sauces don't have egg in them. Sharanita Keswani, Director, KFC Marketing, says

the vegetarian menu in India came about when KFC found the country had about 35 per cent

vegetarians, and in metros such as Delhi and Mumbai, almost 50 per cent. The non-vegetarian is the

obvious target customer because, as Ms. Sharanita points out, that in most of south India over 70 per

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cent people are non-vegetarians. But she also observes that chicken is KFC's strength. KFC's vegetarian

menu is almost exclusive to India and is the most extensive. Most countries either do not have a

vegetarian menu, and some which do, have a burger at the most. "Contrary to affecting chicken sales,

the presence of a vegetarian menu has made the brand more relevant to a wider cross-section of the

consumer society.

This is essential as we grow the brand across the country," says Ms. Sharanita. While the vegetarian

menu has a significant presence in India owing to the country's distinct tastes, and therefore the need to

localize, KFC's chicken products that are standardized are also modified in certain regards to suit local

tastes. KFC officials say the zinger burger in any part of the world or original recipe chicken tastes the

same as the chicken products are based on standard recipes.

While this brand standard chicken may taste the same in New York or Bangalore, the sauce or topping is

changed. The chicken strips are served with a local sauce or the sauce of the wrap is changed to local

tastes. And as far as India is concerned Ms. Sharanita says: "Making it relevant to local palates, KFC

launched the wrap as chicken and paneer tikka roll in India." The KFC menu strategy is to "balance

standardization and localization". The localization works in two ways: to modify a standard chicken

product with a different topping or sauce; and to have a vegetarian menu, where necessary, along with

the flagship product, chicken. The localization exercise is undertaken in every country. "The U.S. and

European markets have a traditional KFC menu based on chicken burgers and wraps, while Asian

markets like India have been more experimental and adventurous. Here, they have rice meals, wraps,

and sides. The change is imperative as Asian tastes can be very different from Western ones," Ms.

Sharanita observes, adding that KFC learnt very early the high demand for vegetarian products in India.

KFC has taken care to maintain safeguards on the production of its non-vegetarian products in response

to observations by People for Ethical Treatment of Animals that chicken were not being treated

humanely by suppliers. The debate has been on for years now and animal rights activists have prompted

companies to adopt stringent measures. Pankaj Batra, Director, Marketing, Indian Sub-Continent, Yum!

Restaurants International, observes:

"KFC is committed to the well being and humane treatment of chickens. We require all our suppliers to

follow welfare guidelines developed by Yum! Restaurants International, U.S.A., with leading experts on

their Animal Welfare Advisory Council. In India, we source chicken from Venkateshwara Hatcheries

Limited (Venky's), which is one of the leading and respected organised players in the poultry farming

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business. They also supply chicken to several reputed hotel and restaurant chains in the country. We

respect the Indian law and our guidelines completely adhere to them." Ms. Sharanita points out that

while KFC's brand standard products are their strength throughout the world, KFC works around the

core and gives consumers products with a familiar taste, especially "important in a country like India

that is home to such distinct and different food habits". KFC's challenge as Ms. Sharanita puts it, is to

manage a brand's market with the right degree of flexibility so as to be strong in different and varied

product markets.

Advertising

• The logo of the smiling Colonel is probably one of the most recognized faces in the world and instantly

brings the image of fried chicken to one’s mind.

KFC and its new company jingle, “finger lickin good” is a frequent announcement on televisions,

billboards, flyers and radio. The concept of showing a normal customer deeply involved in devouring

his piece of chicken usually turns on the drool factory in everybody’s mouth and makes them rush to the

nearest KFC. In India where chicken lovers are plenty abound these ads featuring normal people connect

instantly and create a rush at their outlets.

Using the following methods KFC spreads

• Using Reminder advertisements KFC stimulates repeat purchases of its products.

• The company anthem “finger lickin good” is just a wakeup call to the consumer to remind them

how good they felt the last time they ate KFC chicken.

• Sponsorship is another tool to strengthen an organizations image. KFC has been the sponsor of

the Australian Cricket Team for a long time before the obesity experts contradicted the concept.

Packaging

The famous paper bucket that KFC uses for its larger sized orders of chicken and has come to signify the

company was originally created by Wendy's restaurants founder Dave Thomas. Thomas was originally a

franchisee of the original Kentucky Fried Chicken and operated several outlets in the Columbus, Ohio

area. His reasoning behind using the paper packaging was that it helped keep the chicken crispy by

wicking away excess moisture. Thomas was also responsible for the creation of the famous rotating

bucket sign that came to be used at most KFC locations in the US.

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Branded Prepaid Coupons

KFC brings to prepaid coupons of different meal combo options, which act as great distributor trade or

customer incentives. These exciting incentives are guaranteed to give a boost to your sales and can make

your incentives stand out from the order run of the mill incentives.

In order to act as true partners, KFC will print branded coupons (minimum quantity 500 coupons) of

your own company or product, which can be redeemed at any of the KFC restaurant nationwide or

restaurants of your choice.

• Corporate meeting, seminars & workshops at KFC, Meeting with trade people or customers can

also be arranged at KFC.

• KFC can arrange all related facilities for the meeting. This facility is available at select outlets.

• Lunch/Dinner for Employees/Dealers/Customers and their Families at KFC

• Companies can arrange lunch/dinner for their employees/dealers/customers at selected KFC

restaurants.

• Outdoor Catering: KFC can bring complete hassle-free meals and serve at your specified

premises.

o Promotional Discounted Coupons for Corporate Customers

o Discounted Promotional Meals on Seasonal Products

o Discounted Promotional Meals for Increasing the Sales Figures

o AYC (All you can Eat) specially offer for Ramazan ul Mubarak

o Free Meal Vouchers for Corporate Clients

o 20% VIP Discount Card for Corporate Clients on all Regular Meals except the

Promotional Deals

o Free Chicky Premium on Chicky Meals

o LSM (Local Store Marketing) special Discounted Deals or Gift for Specific out let

o Free Meal area and Serving in case of any party and Birthday

o Free Gift for Birthday Child and Different Games for Kids

Pricing Strategy

• Market skimming: KFC globally enters the market using market skimming. Their products are

priced high and target the middle to upper class people. Gradually they trickle down the prices

focusing on the middle to lower class people to penetrate both sides of the market.

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• We can compare the price of their products with McDonald, Dominoes and Pizza Hut. If the

competitor provides the same product at a lower price, then the organization usually lowers the

price of its product too.

• In the case of KFC, Fried Chicken is its main selling point and controls a monopoly over the

Indian fast food market (only with fried chicken). It prices its burgers, French fries and soft

beverages with relation to its competitors.

• KFC price their product keeping different points in view. They adopt the cost base price strategy.

Pricing of the product includes the govt. tax and excise duty and then comes the final stage of

determine the price of their product. The products are bit high priced according the market

segment and it is also comparable to the standard of their product. In the cost based method we

include the variable and fixed cost. 

Channels

• KFC believes in first level channels in the order given below:  

– Manufacturers

– Retailers

– Consumers

KFC works on the flow of good operation techniques i.e. “Good Operating Manager→ leads to

“Good Team Selection →Good Services → Good Targets → Good Revenues through the following

internal strategies:  

• Training

• Incentive based targets

• Recognition for good work

• Performance based bonus

• Employee benefits to keep them motivated

• Promotion

HUMAN RESOURCE POLICY IN KFC

Hiring and retaining the right employees is critical to the success of a restaurant's operation.

KFC believes in an integrated approach of perfect distribution of responsibilities of its employees.

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Area Manager

Area Managers are accountable for providing coaching, leadership and operational support to 8-10 KFC

Restaurants within a defined Area.

Restaurant General Managers

The Restaurant General Manager is accountable for creating and running an energetic and valuable work

environment, which is committed to serving the best chicken at the fastest speed and with a smile.

The Restaurant General Manager reports directly to an Area Manager and is accountable for

successfully implementing and maintaining all Company policies and procedures in relation to

operations, customer service, cash handling, marketing, purchasing, human resources, health & safety,

administration, training and development.

Assistant Managers

The Assistant Manager is responsible for assisting the Restaurant General Manager (RGM) in creating

an energetic and valuable work environment, which is committed to serving the best chicken at the

fastest speed and with a smile. Assistant Managers are also responsible for ensuring all Company

policies and procedures are followed in relation to operations, customer service, cash handling,

marketing, purchasing, human resources, health & safety, administration, training and development.

Trainee Managers

Trainee Managers help with day-to-day running of the restaurant, and need to ensure that all operations,

customer service, cash handling, marketing, purchasing, human resources, administration and training &

development policies are followed.

Customer Service Team Members

Responsible for working the service areas and ensuring quality product, service and cleanliness is

delivered to all customers at top speed and with a smile.

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Food Service Team Members

Responsible for putting the crunch in the coating and the zing in the Zinger…the cook’s main task is to

prepare and cook the irresistible KFC products! The cook must also maintain the cleanliness of the

cooking area as well as the quality of product and speed of preparation.

Recruitment and Selection at KFC

Part of KFC’s recruitment strategy is to offer employees high-quality options such as potential for

advancement, company reputation, benefits package and salary scale. When KFC was looking for senior

executives who could run a business, for two years it scoured the management teams across various

industries and offered senior executives of companies like Coca Cola attractive benefits and a better

salary scale to get them on the team. These executives were promised quick advancement on their jobs,

and apparently given such incentives to join that most of the people offered jobs joined KFC even

though they were told beforehand that at immediate present, no senior position was vacant. Hence,

KFC’s attractive salary and benefits package is an effective lure for potential employees (Rigdon, 1991).

For example, among the benefits package that KFC offers, is a medical coverage and prescription

benefits, dental coverage, vision/hearing coverage, life and disability insurance, a 410k plan (which

helps employees save for their future), stock options, a management incentive plan (under which

everyone from assistant manager to senior executive is rewarded for remarkable performance), adoption

assistance, tuition reimbursement plan, college-planning assistance, employee discount, paid vacation

and a group legal plan. KFC also believes in promoting from within, as it encourages employees to

perform well on their jobs, telling them that they in fact can go from being just a team member to the

restaurant manager and later area or region coach (KFC Official site).

As far as selection is concerned, KFC management strongly believes that hiring young people and later

training them is the way to a successful organization. Hence, the age factor is definitely an issue of

concern for recruiters at KFC. The company also strongly believes in diversification.

According to Kyle Craig, president of Kentucky Fried Chicken's U.S. operations, “We want to bring in

the best people but if there are two equally qualified people, we'd clearly like to have diversity.” From

this, we can safely assert that KFC believes in eliminating the glass ceiling, and hiring and keeping

female and minority-group executives. This seems to be working for the company and is an effective

policy: where in 1989, not even one of the company's 17 senior U.S. managers were minority or female,

the situation has improved today, with there being numerous managers either female or part of a

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minority group. KFC admits that it actively tries to recruit and promote women and minority members

in middle and top management ranks.

KFC’S SUPPLY CHAIN MANAGEMENT

Improved reporting of business processes leads inevitably to a more streamlined production process.

With better information on the production process comes the ability to improve the management of the

supply chain, including everything from the sourcing of materials to the manufacturing and distribution

of the finished product.

Quick Reflexes

As a corollary to improved supply chain management comes an improved ability to react to changes in

the market. Better MIS systems enable an enterprise to react more quickly to their environment,

enabling them to push out ahead of the competition and produce a better service and a larger piece of the

pie.

These factors help KFC to work smoothly and efficiently as we already known that they are the only fast

food chain which is selling fried chicken in which they are specialized.

MIS systems let the KFC management:

• To capture information and store it, whenever they are making bills it helps them to count sales per

day, per week and per month because a copy of the bill is stored in the computer.

• Access stored information easily and manipulate it for the needs of their clients’ while billing or taking

order they just enter the code of the product requested at that time.

Every market leading enterprise will have at least one core competency – that is, a function they perform

better than their competition. By building an exceptional management information system into the

enterprise it is possible to push out ahead of the competition. MIS systems provide the tools necessary to

gain a better understanding of the market as well as a better understanding of the enterprise itself.

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PLANNING TOOLS& TECHNIQUES:

KFC managers are mostly indulged in planning technique of forecasting on quantitative grounds that’s

the responsibility of Regional managers to plan with contingency thinking and most of times regional

managers do nothing except firing employees of their jobs to retain profits and revenue which was

generated or to deal with economic issues.

EMPLOYEE DISCIPLINE SYSTEM:

Disciplines are maintained in KFC as this is their core strategy to have disciplined employees is a key to

their success. All this employment discipline is maintained by managers.

FINANCIAL CONTROL:

KFC has one financial department that sees all the financial activities in the organization. Branch

finances are looked after by the Unit Business Managers. UBM has to report all the financial activities

required to be done or done to the finance department directly.

PURCHASING CONTROLS:

Purchasing depends on the restaurant branches. Four types of Purchasing is done

· In house

· Ware house

· Direct

· Indirect

Requests are sent to the respective persons for the purchases (procurement department). In house

purchasing is for the use of in-house keeping and it includes purchasing of furniture goods and storage

goods. Warehouse purchasing is requested by the store supervisor for purchasing goods needs for the

warehouse.

Direct purchasing is done by Managers again for the Branch use things are bought from the certain

amount that is given to the manager by the finance department. Indirect purchasing is done by

requesting the department for goods needed.

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INVENTORY CONTROL:

Inventory is done several times a week one final time a month and at the end of the year. Inventory

controls are looked after by UBM and AUBM and they check inventory for three times a day to be

accurate regarding their costs and what can be saved.

ORGANIZATIONAL CHART:

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SWOT Analysis

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SURVEY ANALYSIS

The report has been designed to study the consumer behavior with respect to McDonalds and KFC. A questionnaire was designed in order to understand the reasons of the consumer perception towards the two food giants. Our method of going about the study at hand involved the basic survey method, whereby we put forward questions to individuals who were divided into the basic segments provided by and aimed at as either the source or target service provider. This was carried out by a survey comprising of two questionnaires, one aimed at the customers at either of the two food joints and the other for the employees employed at the food joints. Our questions were designed to capture the market trends, the grounds behind such a trend, the peripherals related to the functioning of the food joint, key marketing strategies adopted and finally aimed at drawing the inferences and conclusions for the same.

Question 1

Which age group do you belong to?

The first question was essentially designed to throw light on the age group of people visiting/dining at the food joints. This gave us an idea of the preference of a particular food brand among a given age group if any. For e.g. the HAPPY MEAL available at McDonald's attracted the major portion of the younger crowd. As a matter of fact as shown in the following questions, this particular strategy drained almost the entire young consumer segment.

Of the individuals surveyed a majority of the individuals belonged to the 18-25 yr age group both for McDonald's as well as KFC.

Question 2

What is your profession?

This question was essential in calculating the trend of the customers who visit these food joints i.e. the working class of the people visiting the respective places. The survey revealed that the majority of people visiting both the places i.e. 46% for KFC and 55% for McDonald's were students. This thus lays direct stress on the strategies adopted by both the joints resulting in a heavy demand among the student group.

Question 3

Are you a vegetarian/non-vegetarian?

This was essentially designed to demarcate the groups according to whether they were vegetarians or otherwise. It was a preconceived idea that the vegetarians preferred McDonald's of the two while KFC proved to be a non-vegetarian paradise.

This thus showed a balanced market for McDonald's whereas a strong shift for KFC towards the non-vegetarian section.

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Question 4

What is your saying on the pricing of the joint?

In KFC 31% found the food priced nominally and an equal amount of people surveyed i.e. 31% found it expensive. Hence it was concluded that it dropped down to the individual in the case of KFC and there was no clear market trend. In McDonald's 46% found it nominally priced as well as value for money while just 8% found it expensive.

Hence in terms of comparative study it was concluded that McDonalds was optimally priced although KFC wasn't overpriced either.

Question 5

How much do spend on an average per visit?

This question again was concerned with the pricing as well as spending capability of the people.

The results indicated that a major section, i.e. around 52% for KFC and 42% for McDonald's, of people spent between Rs.100-500 thus advocating the fact that the places are priced moderately.

Question 6

Do you get drawn in by the television commercials of the food items?

This question was designed to get an idea about the publicity/advertising strategy of the food brands. Both the brands under consideration are big brands and hence have the capability to allocate adequate budgets towards all sections of marketing. Whether they choose to or not to, is the question at hand. This particular question analyzes the potency of the advertising strategies used by the food brands in attracting or influencing the customers.

The significant questions from the survey and their respective response have been mentioned in the Annexure.

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CONCLUSION

In India fast food market is strongly dominated by these 2 brands. But when it comes to comparing these two brands the following study brings us to a conclusion that as far as market presence and brand value is concerned McDonald's has definitely proved a point for themselves. But KFC who reentered in 2003 has shown a rapid progress and no wonder if in the coming years KFC overtakes McDonald’s in the Indian market share. Both the food-giants have given each other immense competition in terms of customer satisfaction and promotional strategies. The range of products and offers offered by each is remarkable in every context. Although McDonalds has an upper hand with the vegetarian crowd because of its exclusive products, KFC is slowly catching up to the challenge. KFC provides vegetarian alternatives with an added advantage of a complete meal including rice and desert. Where McDonalds fall into the snack option KFC had covered the meal area. Thus it is not quite evident which one can be termed as better than the other.

RECOMMENDATIONS

• KFC needs to re-vamp its vegetarian menu and add more options to it. The fried chicken

category already has more options and varieties as compared to the vegetarian section.

• McDonalds could try to enter the meals category into its menu

• Both companies need to work on their logistics and inventory management (as discussed with

Branch managers)

• Need to train their staff better in handling of the cooked food.

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BIBLIOGRAPHY

References

Eric Scholloser : Fast Food Nation, 2001

Jae K. Shim, Joel G. Siegel : Operations Management, 1999

Michael Armstrong : Strategic Human Resources Management, 2006

Philip Kotler, Kevin Lane Keller : Marketing Management, 2008

WebPages

http://articles.economictimes.indiatimes.com/2011-08-28/news/29935857_1_kafeccino-kfc-s-

krushers-colonel-sanders

http://www.emeraldinsight.com/journals.htm?articleid=1463922

J Lu - International Communication Gazette, 2010 - gaz.sagepub.com

www.kfc.co.in

www.mcdonaldsindia.com

Sage Journals online

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ANNEXURE

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