How KFC Is Positioning Itself to Gain a Competitive Advantage over McDonald's (Term Paper Sample)

How KFC Is Positioning Itself to Gain a Competitive Advantage over McDonald's Name Course Instructor’s Name Institution Location of Institution Date How KFC is positioning itself to gain a competitive advantage over McDonald's KFC is a fast food multinational organisation headquartered in Louisville, Kentucky. It is the second largest fast food chain with more than 17,000 outlets in 119 countries and serving over 12 million customers annually (Harrington, Ottenbacher and Fauser 2017, 551). KFC specializes in chicken dishes. Founded in 1930 as Kentucky Fried Chicken, it changed its name to KFC, a subsidiary of YUM! Brands. Globally, analysts rank KFC as among the top ten fast food chains in the world. Harland Sanders, dubbed Colonel Sanders, founded KFC in Corbin, Kentucky where he sold fried chicken from a roadside restaurant. He invented the secret chicken recipe that is the signature of today’s KFC chicken (Wu and Cheng 2018, 158). Over the years, KFC has grown to become a global leader in the fast food industry. Although it performs excellently, KFC faces stiff competition from rivals such as McDonald's, Burger King, and Star Bucks Coffee among others. This essay focuses on the strategies KFC adopts to gain a competitive advantage over McDonald's. McDonald's is arguably the largest global fast food chain in the world regarding market penetration and revenue generation (Harrington, Ottenbacher and Fauser 2017, 551). Founded in 1940, McDonald's adopted a quick service system that is in place to date. McDonald’s products include hamburgers, sandwiches, French fries, and desserts. Globally, McDonald’s has a total of 33,510 outlets in 119 countries generating a total of $23 Billion as of 2017. Among the most significant strategies KFC adopts is product differentiation. The world knows KFC for its finger-licking chicken (Genoveva and Siam 2017, 1572). Their motto, “crispy on the outside and juicy is the inside,” “finger licking good,” “nobody does chicken like KFC” and “so good” perfectly describes their chicken (Mylonakis and Eyripiotis 2016, 22). KFC makes its signature chicken dish out of a mixture of 11 herbs and spices. The recipe remains a secret to date and is safely locked in a vault at its headquarters along with vials holding the same. Further, KFC serves the chicken in well branded and conspicuous cardboard “buckets.” The cardboards are unique in the industry and customers like them. Innovation also supports KFC’s grip on the chicken market (Crittenden, Crittenden and Pierpont 2015, 607). The chain recently introduced KFC Original Recipe Bites to counter McDonald’s Spicy Chicken McBites, and Burger King’s Chicken Tenders. In doing so, KFC cements its position in the fried chicken market. Along with product differentiation goes branding and brand value. The branding of KFC is catchy, unique, well patterned and famous (Wu and Cheng 2018, 159). The branding consists of a smiling sculpture of the founder spotting a goatee, a white suit, and a black tie against a red background. With the properties, the company adopts a similar facade, colour scheme, decor, and lighting (Crittenden, Crittenden and Pierpont 2015, 609). Further, it assumes the same order of indoor dining area. As such, it is easy for customers to identify a KFC outlet when they see one. There is global standardization in the taste, aroma, aesthetics, ingredients and nutritional value of food except dishes specially designed to meet the need of the host cultures such as in KFC China, and India (Jeon et al. 2016, 738). KFC adopts strict guidelines for standardizing the type of food ingredients used and in farm produce, the process of growing and rearing plants and animals. With presentations, the company adopts uniformity in restaurant items such as trays, mats, and napkins among other. The takeaway packaging, staff uniform, and staff efficiency is standard across the globe (Genoveva and Siam 2017, 1574). The same applies to KFC’s publications. The outdoor signs, media advertisements, and web pages are the same across all locations. The standardization of food products, the branding of publications and properties enhances KFC’s corporate visibility hence giving the brand value. KFC positions itself competitively by leveraging on franchising. With more than 17,000 international units, KFC enjoys a strong global presence (Crittenden, Crittenden and Pierpont 2015, 610). Franchising improves the brand value of the company hence bargaining power along with improving its revenue and visibility. KFC has a strong presence in Asia, Europe, and Africa. In 1973, KFC entered the Asian market with a restaurant in Hong Kong. The chain increased to 11 stores within a year. However, by 1975, the restaurants closed shop as KFC failed to develop a sustainable business model (Jeon et al. 2016, 738). In later years, KFC teamed up with local investors in a franchise agreement to re-enter the Asian market in 1983; this time equipped with experience from the previous failure. Localising the dishes along with translating content made the re-entry successful. In Asia, the restaurant adopts the name Ken De Jin, a mandarin translation of KFC. KFC China tends to introduce more new products than its competitors (Jeon et al. 2016, 740). As such, as Chinese prefer pork to chicken, KFC introduced pork dishes gaining a competitive advantage over McDonald's (Mylonakis and Eryipiotis 2016, 24). KFC China also offers Chinese style porridge, Beijing style chicken dishes, seafood sauce and Chinese style dough fritters. KFC India is another successful franchise owing to the localisation of its dishes. In India, KFC has incorporated the Indian cuisine into its dishes (Jeon et al. 2016, 742). The world knows India for its colourful and exotic dishes. A significant part of the Indian cuisine is made up of vegetables. KFC slogan in India is “So Veg, So good” and offers meals that are 100% vegetarian. KFC also offers egg dishes, and rice dishes in the country. The restaurant chain opened its first European outlet in the United Kingdom. The company also has franchises in Germany, Spain, and Russia among others. Europe is KFC’S third-largest market (Harrington, Ottenbacher and Fauser 2017, 555). KFC has also made significant penetration into the African market. Currently, there are more than 1000 KFC outlets in sub-Saharan Africa. The number outstrips that of McDonald’s outlets which presently stands at 200. KFC further positions itself strategically to gain a competitive over McDonald's through insisting on providing quality services. KFC sells freshly prepared meals ensuring quality and freshness (Genoveva and Siam 2017, 1574). Also, in the words of Colonel Sanders, the cooks make the chicken the hard way where the preparation starts with the cook inspecting every single piece of chicken. Further, the restaurant chain gives customers a chance to complete an online survey. The company uses the feedback to work on improving the customer experience in future. Quality is a crucial pillar of focus for KFC. KFC strives to ensure that it maintains the highest standards of quality for their products and services. To improve the quality of their products, KFC commits to providing healthy meals by reducing the caloric and fat content in its dishes (Clapp and Rowland 2014, 42). Further, KFC commits to improving its food variety, improving the ingredients and ensuring transparency in its operations. With service, KFC has a standard service procedure. KFC trains its staff continually to ensure that they provide excellent service. Another strategy KFC adopts to gain an advantage is its pricing strategy. KFC takes a cost-based pricing strategy as opposed to McDonald's which adopts a price bundling together with a psychological pricing model (Crittenden, Crittenden and Pierpont 2015, 612). With Cost based pricing, the company adds a margin to the cost of the product. The advantage of this method is that it is flexible and the company can adjust prices when the price of supplies rise, as such, the company can maintain a stable profitability rate. Still, on pricing, the company adopts a skimming pricing strategy. In this case, KFC sets a relatively high price when entering a market. The company then lowers the prices gradually as the years advance (Harrington, Ottenbacher and Fauser 2017, 558). The pricing strategy allows KFC recover its sunk costs early enough before competition reduces the market price. The company also prices it products comparable to that of its main competitors such as McDonald's. Regarding location, KFC strategically locates its outlets in major towns and cities where the population is high, and consumers have high levels of disposable income. The areas are situated along established distribution channels ensuring timely sourcing of raw materials as well as making sure the products reach the consumers in time (Harrington, Ottenbacher and Fauser 201, 560). KFC also locates its outlets near colleges, bus and train terminus, market areas and cinemas to enter a broader target market. KFC is sure to apply the market segmentation theory. Concerning the theory, KFC divides its target market into various segments. The company derives segments by demography, geography, behavioural and psychographic elements (Crittenden, Crittenden and Pierpont 2015, 613). At first, the company adopted a market niche criterion but changed this to counter competition to reach a broader market. With regards to geographic segmentation, the restaurant chain divides the market into geographical sections such as regions, countries, cities, towns, counties, states and neighbourhoods (Genoveva and Siam 2017, 1575). KFC designs and sells its products with the customer’s cultural considerations in the different geographic segments in mind (Wu and Cheng 2018, 167). The company measures the potential of the segments to allow efficient function...