Case Analysis: Yum! China

Objectives:

1. To understand some key marketing terms in

the case

2. To elaborate on the success and strategies of

YUM! China

3. To analyze the marketing problems of YUM!

1. Some Key Terms

Product localization:

- Adaptation to local conditions (similar to

standardization)

Product standardization:

- Products/services in all markets are

homogenous (uniform) in its marketing mix

(4Ps); design, taste, costs, promotions

packaging, warranty etc.

Franchising:

- A method of business / marketing expansion through

licensing and rights of distribution for a fee.

- Franchisors sells rights to franchisees

Supply Chain:

- the system of organizations, people, technology,

activities, information and resources involved in moving

a product or service from supplier to customer.

Quality:

- Defined as the total features of the product or

service that satisfies needs; or ‘freedom from

defects’

TQM:- Marketers involved in organization-wide

process of continuous improvement to produce

better products, services, business process

Customer Perceived Value (CPV):

- Customers evaluate differences between

benefits and costs of product against other

choices

2. Success of KFCAnalysis

Adapted to changes in the marketing mix (7Ps;) People /

Physical Evidence / Process

Innovative business model that is very localized and

efficient

Good internal distribution systems that allow KFC to cut

costs

Know-how of retail expansion and management

Lesser threats from Mcdonalds etc.

Value proposition:- A statement that provides all total customer

benefits of the product

• Freshness of Product

• 50 range of Chinese KFC products

• Efficient and polite services

• Home delivery services within an hour

• Personalized marketing chicken taste for you

• Delightful dining

Success of KFC

2. Strategies for YUM!

Generic Strategies (Michael Porter)

Differentiation strategies

Marketing Strategies

Marketing Mix adaptation strategies

Mass targeting strategies

Extensive distribution networks

Market penetration of retail stores

Product and Market Development strategies

3. Problems for YUM!Analysis

Complex legal environment of different provinces will

decrease quality of KFC

Little franchises will decrease opportunities to increase stores

The Chinese KFC products are not long-term cash cows

Many supplier levels increase risks and costs in the supply

chain

Too many stores cannibalize each other

Access to remote locations difficult

Mcdonalds always a threat in recession