Research Korner: Kentucky Fried Chicken Case Studies

Managing Markets: Case of KFC

MANAGING MARKETS   Marketing mix modeling is a term of art for the use of statistical analysis such as multivariate regressions on sales and marketing time series data to estimate the impact of various marketing tactics on sales and then forecast the impact of various marketing tactics on sales and then forecast the impact of future sets of tactics.(1) Various companies have been using MMM or marketing mix modeling as part of their “secret formula” and most of them have been succeeding and their businesses are expanding. But one of the most notable among these companies is KFC, a leading food chain globally.  What kind of good strategies that we observe in the KFC that we don’t usually see in the other food markets?  First and foremost is, the way the marketing mix modeling is being implemented in all their branches and outlets.  Second is, the optimizing of budget by allocating spends to those activities which give the highest return on investment.  If we look closely on the first aspect, strategists have been gaining competitive advantage for KFC due to the fact that almost all corners of the world have this company which specializes in serving tasty and crunchy chicken, spaghettis and many more.  Of course, logic would tells us that if KFC is not well-received in one place, automatically its aura and salability to other places would be put into jeopardy.  But this would not be true to a company such as KFC, where the theory on how to be more competitive and uplift more its service to the people are at the forefront.  However, all these means of implementing marketing mix theory would be in vain if the strategist or marketing managers cannot and don’t know how to implement them prudently and wisely.  The time-frame and venues are of vital parts in considering the effectiveness of every business.  In the early 80’s a certain appliance  company was at the peak of its popularity and almost all people would patronize its name and bought their appliances no matter how costly they are as long as they carry with them the brands name.  Yet, and perhaps due to the marketing managers and strategists’ inability to foresee the future and the consideration of the place, the once famous company went into bankruptcy and suddenly disappeared like bubbles in the air.  Talking about venues and time-frame as great tools in safeguarding the salability and consistency of the market, KFC (most specific example is the Philippines), I should say, has been gaining advantage over the other food chain companies.  And why is this so?  Firstly, the strategists know full well that the Filipinos are grossly in love with eating fried chicken and other pastas as well.  The strategists here considered two salient points: venues and time-frame.  Venue because, Filipinos are fried-chicken loving country.  And this “addiction” cannot be separated from them.  Time frame because, eating fried chicken is something that endures for lifetime.  The second aspect hinges on these: forecast sales, simulating various scenarios, identifying the most and least efficient marketing activities, mix promotional tactics (2), have also contributed to the effectiveness of putting into practice  the theory of marketing mix.  The effectiveness of each of the marketing elements is defined in terms of its contribution to sales-volume, effectiveness, efficiency ROI (return on investment).  These insights are then utilized and acquired to adjust marketing tactics and strategies.  To optimize the marketing plan and also to visualize sales while simulating various scenarios is not just useful for reporting the established and experienced effectiveness of the activity, it also helps in visualizing the budget by identifying the most and least efficient marketing activities.  In this way, the marketing manager can reallocate this marketing budget in different proportions and see the direct impact on sales value.  At this point, the strategists or marketing managers can optimize the budget by allocating expenditure to those activities which give the highest return on investment.  In forecasting sales, the strategists employ the psychology of optimism.  Pessimistic attitude has no room in business because it does not only lowers the moral of the workforce, but it also puts the company into a false sense of security.  Being optimistic, marketing managers forecast sales so as to add more to the efficiency and contribution on sales-volume.  In identifying the least and most efficient marketing activities, the strategists can address effectively the problem.  The least efficient marketing activities can be done by checking the personnel and supervisor whether they are really doing their assigned tasks.  Secondly, by monitoring and consistently upgrading the more efficient ones, the marketing managers are doing a check and balance work which is important in raising the level of quality of the market.                The ultimate objectives of all the employed tactics and techniques in the market world revolve around the sales volume, effectiveness of the strategy , efficiency on return on investment.  And the best of these of course is, return on investment (and of course—the interest and how much you gain from your business). Footnotes: 1. Marketing mix modeling—WikiPedia                    2. Return on Investment--WikiPedia

Managing Markets: Case of KFC

MANAGING MARKETS Marketing mix modeling is a term of art for the use of statistical analysis such as multivariate regressions on s...