Kfc Case Analysis
It is of critical importance that we develop a strong understanding of KFC’s current position and of the market in which it competes. The more comprehensive and well-founded our situational analysis is, the stronger our strategic marketing plan will be.
I. The character and attractiveness of the U.S. food service and fast-food industries in 1994
The fast-food industry is considered a subsection of the food service industry, or rather a submarket within a broader market. This broader industry, the US food service industry, is in what is known as the maturity stage.
Typically, the maturity stage exemplifies the following characteristics:
• Sales continue but at slower pace.
• Competition leads to decreased market share or prices.
• Competing products become very similar and differentiating product becomes both crucial and more difficult
As a result, firms need to place their efforts into encouraging competitors’ customers to switch to their product offering, increase usage per customer and even convert non-users into customers. At this stage, the primary goal of a given firm is to maintain market share. The food service industry, as is the fast-food industry, is typified by franchising which became well-established in the early 1950s. The concept held and in 1994 there were over 550, 000 restaurants and food outlets in America. Although the industry in 1994 was slowing, that is not to say that it was not growing. Food service industry sales were forecast to surpass $275 billion and this had grown at an estimated compound annual rate of 3.9% from 1988 till 1994. This billion dollar industry is dominated by the fast-food and full service segments who commanded annual sales of $86 billion and $85.5 billion dollars respectively. The fast-food segment is prima facie, a very attractive one. Not only did the segment grow 5.6%, outpacing almost all other food categories but its future is also promising with a forecast of 6.3% growth in 1994. In addition, the
I. The character and attractiveness of the U.S. food service and fast-food industries in 1994
The fast-food industry is considered a subsection of the food service industry, or rather a submarket within a broader market. This broader industry, the US food service industry, is in what is known as the maturity stage.
Typically, the maturity stage exemplifies the following characteristics:
• Sales continue but at slower pace.
• Competition leads to decreased market share or prices.
• Competing products become very similar and differentiating product becomes both crucial and more difficult
As a result, firms need to place their efforts into encouraging competitors’ customers to switch to their product offering, increase usage per customer and even convert non-users into customers. At this stage, the primary goal of a given firm is to maintain market share. The food service industry, as is the fast-food industry, is typified by franchising which became well-established in the early 1950s. The concept held and in 1994 there were over 550, 000 restaurants and food outlets in America. Although the industry in 1994 was slowing, that is not to say that it was not growing. Food service industry sales were forecast to surpass $275 billion and this had grown at an estimated compound annual rate of 3.9% from 1988 till 1994. This billion dollar industry is dominated by the fast-food and full service segments who commanded annual sales of $86 billion and $85.5 billion dollars respectively. The fast-food segment is prima facie, a very attractive one. Not only did the segment grow 5.6%, outpacing almost all other food categories but its future is also promising with a forecast of 6.3% growth in 1994. In addition, the