Kentucky Fried Chicken or KFC has been a late entrant in the Indian market. Even though it has an unique offering with “Crispy Chicken”, it faces stiff competition in the fast food segment from organised players like McDonalds which competes with its range of value meals and Dominos which is symbolised by its 30-minutes delivery of Pizza. In fact, in all major markets across the globe, KFC competes with these two companies. Both the brands have looked at catering their product offerings suited to Indian tastes. KFC has also included items such as Rizo (Rice) which is served only in South-east Asian countries. The company is owned by Yum Brands! and has several licensees in India including KFC Malaysia with Kolkata forming a major sourcing destination.
Why the Indian market is critical for KFC in long run
More than 50% of KFC’s sales and profits are generated from the Chinese market. However, the recent food scandal in China has affected KFC adversely, thereby the emphasising the need to grow in other markets. India forms the perfect answer to this requirement with a young population and growing spending power.
Sales Promotion Campaign adopted by KFC
KFC has a tie-up with FreeCharge.in through which it offers food coupons currently. The various offers that it has are:
1. Get three piece hot wings free with any meal
2. Get a Choco cake on purchase of Rs 300
3. Value Snacker meal at INR 70 (veg) and INR 80 (non-veg)
In terms of in-store sales promotion, KFC offers a special offer to promote breakfast sales. If a meal is ordered in the breakfast slot, the customer can avail another piece of crispy chicken for an additional INR 20 instead of INR 75 in normal case. This can be seen in direct response to McDonald which is promoting its breakfast menu quite heavily with its loyalty cards that offer free McMuffin during breakfast. Both the FreeCharge campaign and the in-store campaign are not valid for home delivery order. However, there is a slight fallacy in this assumption on KFC’s part as Indians are not likely to consume chicken in breakfast.
If we closely analyse the three offers above, the third coupon is redundant as the snacker meals are available at these prices even without the coupons. The second coupon ensures a minimum ticket size of INR 300 in order to avail the offer, which is possible only in groups of 2 or more generally. The only value coupon appears to be three piece hot wings free (INR 59) which can be availed with meals starting from INR 70 (Taxes extra in both cases).
KFC recently started its home delivery service in India, for which it has similar offers. However the minimum order size for home delivery has to be INR 150. In addition to it, KFC was also offering 2 Litre Pepsi free with Chicken buckets for home delivery. The FreeCharge offers were introduced after the home delivery offers got discontinued in January, this year. As a consumer, there is enormous value in the deals as KFC is often perceived as a premium product due to its unique offering.
In fact, the value deals can also be looked at as targeting the college student and the family market to change its perception from a fast food to family food. If we analyse the monetary value of the deals, KFC has a significant cushion as margins are quite high due to the price difference between the final product and the raw materials. The only problem for KFC though will be who redeems it and how it is being redeemed. For instance, the coupon for three piece hot wings free might pose serious challenge towards the profitability in case it is redeemed with the low priced meals. However, there is little doubt that the strategy is bound to increase market share for KFC in the fast food segment in short run.
Food for thought: Can KFC actually emerge as the breakfast destination in India and successfully compete with McDonalds?
You might like reading:
Video : Why Startups Succeed
What is the most important part of building a successful startup? While many people reckon it as the idea behind it, the reality is that perhaps the secret ingredient is actually “Timing”. This TED talk by Bill Gross explains the key ingredients in making a venture successful. Do you agree with his views ? Tags: Bill Gross startup TED
Launch of Sparks! Magazine- Issue 1: 30th June – 20th July 2014
The Editor’s desk The journey from a business blog, started in Dec. 2010, to launching the inaugural edition of a business magazine, we have come a long way. During the course of this journey, we have achieved several major milestones- from hosting writing competitions, case study challenges to opening the platform for B-school students to work with us as campus […]
