Final Project Report 1
Final Project Report 1
Final Project Report 1
KFC or Kentucky Fried Chicken is a fast food restaurant chain that specializes in fried chicken and is headquartered in Louisville, Kentucky, United States (US). It is the world's second largest restaurant chain overall (as measured by sales) after McDonald's, with over 18,000 outlets in 120 countries. . The aim of this market research is to find out the category drivers for consumers in fast food industry and the feasibility of opening KFC in Bhubaneswar city. Data was collected through survey methodology (an online as well as offline questionnaire was used to collect Pan India data) and apart from spreadsheet analysis, Jaccard Analysis and SWOT Analysis was also done to reach at the results.
The quantitative findings showed that the attributes value for money , taste and hygiene are the three primary category drivers in fast food industry and KFC lags behind in these factors when compared to its competitors Dominos and McDonalds. Also from SWOT Analysis we found that KFC currently has certain weaknesses that it has to ponder upon and certain opportunities to tap upon. With these findings it can be concluded from our marketing research that opening of KFC is currently not feasible in Bhubaneswar.
Contents
ACKNOWLEDGEMENT .............................................................................. Error! Bookmark not defined. EXECUTIVE SUMMARY ............................................................................................................................ 2 BACKGROUND ......................................................................................................................................... 4 LITERATURE REVIEW ............................................................................................................................... 4 THE CATEGORY........................................................................................................................................ 5 MARKETING OBJECTIVE .......................................................................................................................... 7 RESEARCH OBJECTIVE ............................................................................................................................. 8 CONCEPTUAL FRAMEWORK ................................................................................................................... 8 KEY INFORMATION AREAS ......................................................................................................... 9 RESEARCH METHODOLOGY .................................................................................................................. 10 TARGET GROUP ............................................................................................................................ 10 METHODOLOGY ........................................................................................................................... 10 PROCESS ......................................................................................................................................... 10 SAMPLING ...................................................................................................................................... 11 Sample Size ................................................................................................................................... 11 VARIABLES ............................................................................................................................................. 11 QUANTITATIVE ANALYSIS.................................................................................................................... 123 UNIVARIATE ANALYSIS .................................................................................................................... 134 JACCARD ANALYSIS ........................................................................................................................... 17 SWOT ANALYSIS .......................................................................................................................... 19 SUMMARIZED RESULTS OF THE QUANTITATIVE RESEARCH ...................................... 20 CONCLUSION......................................................................................................................................... 20 LIMITATIONS OF THE RESEARCH........................................................................................................... 21 Appendix .................................................................................................. Error! Bookmark not defined.
Appendix A :....................................................................................................................................................................................................................... Error! Bookmark not defined. Appendix B : .................................................................................................................................................................................................................................................................. 21 Appendix C : .................................................................................................................................................................................................................................................................. 22 Appendix D : ...................................................................................................................................................................................................................... Error! Bookmark not defined. Appendix E : .................................................................................................................................................................................................................................................................. 23
BACKGROUND
KFC or Kentucky Fried Chicken is a fast food restaurant chain that specializes in fried chicken and is headquartered in Louisville, Kentucky, United States (US). It is the world's second largest restaurant chain overall (as measured by sales) after McDonald's, with over 18,000 outlets in 120 countries. KFC's original product is pressure fried chicken pieces, seasoned with Sanders' recipe of 11 herbs and spices. The constituents of the recipe represent a notable trade secret
Bhubaneswar , is the capital city of the Indian state of Orissa. It is a largely residential city with outlying industrial areas. The city has a large number of regional corporate offices , educational institutes and software firms. The metro area of the city has a population of around 12,00,000 with a large student and young professional population .
LITERATURE REVIEW
We studied some current literature and news reports available on the growing fast food market in India. There is a huge potential in the fast food market that is just starting to boom in India. According to a report published by market research firm RNCOS The world has witnessed a sharp growth in Food and Beverage industry over the past few years. The entry of multinationals, aggressive rise of commodity branding and low cost of technology is changing the economics of the food industry.
The manufacture & export of food & beverage has been constantly increasing since past few years. According to the firms new research report, Indian Fast Food Market Analysis, the Indian Fast Food Industry is anticipated to grow at a CAGR of around 34% during 2011-2014. Anticipating the future growth, many big international players are entering into the market by making deals with the domestic players. And those already present in the Indian market are expanding their presence in different provinces of the country. This trend will emerge more strongly during our forecast period, providing opportunities to local players to widen their product portfolios. The research further revealed that there is a large scope of growth in the untapped tier-II and tier-III cities, owing to which, major fast food retailers have already started applying various marketing strategies in popularizing their brands in these cities. Furthermore, they are aiming to provide
affordable and customized products to suit the needs of people that would ultimately provide necessary boost to the Indian fast food industry. The report also provides extensive information on the countrys fast food market, besides discussing the growing segments like Noodle market, Pizza market, and others food market. Thus, it provides valuable information about the Fast food companies and provides necessary insight for investors looking to enter this market. Moreover, the report features forecast for fast food sales in the country. The forecast is based on the correlation between past market growth and growth in base drivers, such as middle class, urbanization, cultural shift, and lifestyle changes. Due consideration is given on competitive landscape to enable clients to understand market structure and growth prospects.
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There is a great belief in the India growth story with the Increase in income level and presence of
rising middle class. This combined with the increasing health consciousness among consumers of fast food presents unique opportunities for a fast food chain like KFC in India. Thus, this area presents a huge marketing opportunity for companies and so is an exciting subject for study as well more so in the localized environment of Bhubaneswar.
THE CATEGORY
Fast Food is the term given to food which can be prepared and served pretty quickly. While meals prepared with low preparation time can be considered fast food, typically it represents food sold in a restaurant or store with quick preparation and served to the customer in a packaged form or takeout. Outlets may be stands or kiosks which may provide no shelter or seating. Franchise operations which are part of restaurant chains have standardized foodstuffs shipped to each restaurant from central locations. According to an industry body and E&Y study on the Indian food industry called 'Flavours of Incredible India Opportunities in the Food Industry', published in October 2009, investment opportunities in the Indian food industry are set to shoot up by a huge 42.5 per cent to US$ 181 billion in 2015 and to US$ 318 billion by 2020. Fast food is one of the worlds largest growing food types. Indias fast food industry is growing by 40% a year and is expected to generate a billion dollars in sales by 2005.The multinational segment of Indian fast food industry is up to Rs. 6 billion, a figure expected to zoom to Rs.70 billion by 2005. By 2005, the value of Indian dairy products is expected to be Rs.1, 00,000 million. In last 6 years, foreign investment in this sector stood at Rs. 3600 million which is about one-fourth of total investment made in this sector. Because of the availability of raw material for fast food, Global chains are flooding into the country.
MARKET SIZE & MAJOR PLAYERS Dominated by McDonalds, it has as many as 88 outlets. Dominos pizza is present in around 100 locations. Pizza hut is also catching up and it has planned to establish 125 outlets at the end of 2005. KFCs have established around 200 outlets. Nirulas is established at Delhi and Noida only. However, it claims to cater 50,000 guests every day. The major players in fast food are:
The main reason behind the success of the multinational chains is their expertise in product development, sourcing practices, quality standards, service levels and standardized operating procedures in their restaurants, a strength that they have developed over years of experience around the world. The home grown chains have in the past few years of competition with the MNCs, learnt a few things but there is still a lot of scope for improvement.
MARKETING OBJECTIVE
RESEARCH OBJECTIVE
To determine the factors which are important for consumers of fast food To identify how far KFC serves those factors The research objective is to find out what are the factors which influence the preferences of consumers of fast food. The study focuses on those factors which would influence the potential consumers and to see whether KFC can satiate those needs. We are evaluating the strengths and weaknesses of the KFC brand as per the consumer opinion. Overall we are trying to infer our marketing objectives through the analysis of our research objectives.
CONCEPTUAL FRAMEWORK
The conceptual framework underlying the study of the shift in the consumers mindset is influenced by a lot of factors as shown in the diagram above. It illustrates the macro effects of the increase in income level and the impending rise of the middle class. It also documents how there is an increasing trend of health consciousness among the consumers of fast food, which complements pretty well with KFCs offering of high quality service with product innovation. We are looking at how all these opportunities could be converted into high sales if KFC enters the Bhubaneswar market
Demographics Here we are focusing on the customer and the type of customer who would like to visit KFC outlets. We would like to know the income levels the age groups which would be interested and what each demographic segment are looking for when it come to fast food and how KFC is viewed by them.
Pricing We are looking at the price sensitivity of the potential customers and how much they might be willing to forego in terms of their expenses on fast food. We are trying to see whether KFCs price points would fit in with customers price requirements. Looking at the Health perceptions on buying decisions As KFC has positioned itself as fast food outlet with a health perspective it is necessary to know how much this is valued by the potential target segment. Service features Any fast food joint would be judged on its service features as it is an integral part of such fast food chains. Here we try to get a picture of the customer expectations as well as their perception of KFC on these service features. Product Offering The product offering is equally important and we try to get a feel for the consumer perceptions of the different product features and their opinion regarding KFC I meeting their expectations. Brand Image Based on the perception of a brand, each customer will have certain expectations from the brand. We need to study what these expectations are and what are the factors, which help in meeting those expectations.
RESEARCH METHODOLOGY
TARGET GROUP
Since we were studying the fast food category there are three groups that we targeted in our study:
1. 2.
Consumers of fast food. Non-Consumers who have health considerations with respect to food.
Working professionals Youths in the age group of 25-40 with high disposable income Students and other youth about to join service or start up on their own First year students of XIMB were also considered for the study
METHODOLOGY
The attempt of this study was to cover the viability of KFC in Bhubaneswar, the coverage included quantifying or finding the strong and the weak attributes that leads to sales in this category hence the methodologies used are:
While the group observation and discussion helped us to identify the qualitative aspect of the study at length the survey methodology helped us to reach to a various inferences related to percentage of people preferring fast food and what are they looking at from a fast food provider, the primary drivers for the fast food segment, the strengths and weaknesses of the brands, stochastic share of brands etc. which is discussed in detail in the report at a later part.
PROCESS
Since we are targeting customers in Bhubaneswar our survey had to be confined to the regional level. The focus of our survey shall be:
Online questionnaire: We used this as our method for collecting data so as to reach customers from all possible segments and various cities. Offline survey : We also got survey filled manually by the people visiting Dominos, Pizza Hut and PalHeights.
SAMPLING
For the quantitative analysis, an online questionnaire was floated on the internet as we sought to seek respondents from a wide variety of backgrounds. Social networking sites were used to get feedback from the target segment. Also survey was conducted offline by visiting places such as Dominos, Pizza Hut and Pal Heights.
Sample Size
Around 60 people were included in the study with the following rough breakup.
Aspiring groups comprising of students, young working people and executives were considered.
VARIABLES
The variables that were considered for analysis with regards to our analysis are: Age: Age of respondents Gender: Gender of respondents Employment: Employment related information Income: Income level of the respondents Weekly spending on fast food: Current level of spending on fast food
Price for taste: Requirement in terms of price as against taste Trust in ingredients: How customers perceive the authenticity of ingredients Hygiene factors: Cleanliness and other hygiene factors Location: Store location Hospitality: Service parameter in terms of reactions of service staff Taste: Taste of the food Customization: Impact of customization on consumer preferences Menu diversity: Importance of diversity in menu offerings Share of mind: Share of mind of KFC
We had come up with these variables after much brainstorming among the group. We felt that these variables would cover all of the aspects required to help us get an accurate conclusion from our analysis.
QUANTITATIVE ANALYSIS
Quantitative data analysis has been done in the following way. An Excel Analysis of the demographic profile was done first to understand the respondents background and to check the general attributes of the respondents. Then the Factor Analysis was done, the result of which has been explained below. Then Jaccard Analysis was done to find out the primary drivers for the luxury watches category. It was followed by stochastic share analysis and SWOT analysis. We also performed a stochastic analysis with regard to brand preference of the customers. This is how an extensive quantitative analysis for our research was done. DEMOGRAPHIC DETAILS SAMPLE SIZE: 60
UNIVARIATE ANALYSIS
GENDER
Female 12%
Gender
Male 88%
The respondents composed of 12% female respondents and 88% males in total sample of 60 respondents Age-wise breakup of respondents
Age group
36-50 0% >50 2% 10-18 0%
Most of the respondents were in the 25-35 age category with 60% of the respondents being in that range. Majority of the other 50% chunk were from the 19-24 age range. Monthly Income data
Monthly Income
>25000 23%
<6000 60%
Most of the respondents were students hence income levels were low. Around 60% of the sample has less than 6000 Rs monthly income. Around 23% of the population has income greater than 23%. Liking for fast food
Yes 90%
63%
63% of the respondents spend around 101-500 Rs on fast food weekly. This is good in KFCs perspective as their price range is compatible to the weekly spending. Share of Mind
McDonald 24%
Subway 17%
Pretty evenly spaced out in terms of share of mind. Even though KFC has the lowest among all the other fast food brands with 17% share of mind. Attribute preference
We see the preference for various attributes. To note, with regards to Customization which is considered a strong point for KFC the consumer preferences are neutral. Taste is most preferred, Hygiene, Price and Hospitality also having high ranking. Fast food category preference
45 40 35 30 25 20 15 10 5 0
Pizzas are highly preferred. The category which KFC is in i.e Sandwiches is towards the lower end in terms of preferences with around 23 people preferring Sandwiches. Pizzas are preferred by 40 respondents.
JACCARD ANALYSIS
Jaccard analysis is the market research technique to identify the category drivers of an industry in a defined market. It gives a clear picture regarding which are the attributes that customers are more inclined to. Thus concentrating on these attributes will give the competitive edge and hence help increase the market share. The analysis is based on the customer preferences regarding brands and their attributes and captures which are the attributes customers prefer and which are the brands they prefer in those attributes. The data thus collected is categorized into three groups, YY: implies those who prefer the brand as well as associate the brand with the specified attribute YN: implies those who prefer the brand but do not associate the brand with the specified attribute. NY: implies those who do not prefer the brand at all but still associate the brand with the specified attribute. NN is not considered as it does not provide any satisfactory information regarding preferences pertaining to attributes and brands in which these attributes are positioned. Finally the Jaccard score is computed as, Jaccard Score = YY/(YY+YN+NY) The attributes are ranked based on their Jaccard scores and attributes with higher Jaccard scores are considered as the category drivers in the market. In the case of our market research regarding Viability of KFC in Bhubaneswar, we have tried to analyze and find out the category drivers in Fast food industry in Bhubaneswar market. The attributes that we have considered for our analysis are:
Taste Location Hospitality Best price for quality (Value for money) Customization Menu Diversity Trust Hygiene factors.
KFC and its rank is compared with that of its competitors for capturing the brand preference. The Competitors that we have considered are: Dominoes Pizza hut Subway McDonald
Findings of Jaccard Analysis From the analysis, we observed that Taste, Price and Hygiene are the factors that got the higher Jaccard scores over others. Thus, we ranked these three as:
Also we can conclude that KFC is lagging behind other brands in these category drivers and Dominoes is the clear favourite among the customers of Bhubaneswar with McDonald coming as close second (although there is no McDonald in Bhubaneswar, still customers are preferring its existence over KFC).
SWOT ANALYSIS
SWOT ( Strength , Weakness , Opportunity and Threat ) analysis is done to understand the relative strengths and weakness of elements/attributes. In case of our market research the below 8 attributes were considered for SWOT analysis. Taste Location Hospitality Best Price for taste Trust the ingredients Customization for Item Menu Diversity Hygiene
Findings of SWOT Analysis : For detail calculation of SWOT scores refer Appendix B.
From the results it is clear that KFC has scored low in Taste, Hygiene, location, Hospitality and Best price for taste attributes. Point to be carefully noted here that Taste , Hygiene and Best price for taste are category drivers in fast food industry as determined by Jaccard analysis. KFC however fared well in Trust the ingredients, customization of item and menu diversity.From the above results, the strengths, weakness, opportunity and threat for KFCs compared to its competitors in various attributes are inferred as given below
Strengths
Weakness
Opportunities
Menu Diversity
Threats
From the Jaccard analysis, its clear that KFC scores very low in the primary Category drivers. This means, people dont associate KFC with the attributes that drives the fast food category.
KFC occupies the lowest share of consumers mind as compared to other Fast food chains that were being studied.
Taste which is the most important attribute that drives the fast food category is the weakness for KFC.
CONCLUSION
From the qualitative and quantitative analysis it can be concluded that It is not feasible for KFC to open its outlet in Bhubaneswar The main areas where KFC need to improve upon in building a brand in Bhubaneswar is a. Indianise the taste of its food items
Appendix B :
SWOT analysis
KFC Base Taste Location Hospitality Best Price for taste Trust their ingredients Customization of an item Menu Diversity Hygiene Brand Avg. 60 11.60 8.80 9.83 10.10 8.80 7.87 9.07 10.12 9.52
Attribute Dominos Pizzahut SUBWAY McDonanld Avg. 60 60 60 60 14.23 14.90 12.55 13.72 13.40 10.98 11.00 9.67 10.55 10.20 12.10 12.57 10.35 11.65 11.30 12.23 12.45 10.73 11.98 11.50 10.27 10.68 8.65 10.35 9.75 9.62 9.78 7.92 9.32 8.90 10.77 11.30 9.25 11.12 10.30 12.55 12.93 10.83 12.57 11.80 11.59 11.95 9.99 11.41 10.89
Table that shows the difference between relative attribute distance and relative brand distance
Taste Location Hospitality Best Price for taste Trust their ingredients Customization of an item Menu Diversity Hygiene
KFC -0.43 -0.03 -0.10 -0.03 0.42 0.34 0.14 -0.31 0.00
Domino s 0.13 0.08 0.10 0.03 -0.18 0.02 -0.23 0.05 0.00
Pizzahut 0.44 -0.26 0.21 -0.11 -0.13 -0.18 -0.06 0.07 0.00
SUBWA Y 0.05 0.37 -0.05 0.13 -0.20 -0.08 -0.15 -0.07 0.00
McDonanl d -0.20 -0.16 -0.16 -0.03 0.09 -0.10 0.30 0.25 0.00
Appendix C :
JACCARD analysis
The findings from Jaccard Analysis and the Jaccard Scores are tabulated below:
Attributes Taste Location Hospitality Best Price Trust Customization Menu Diversity Hygiene Factors Jaccard Score 0.373626374 0.311111111 0.324786325 0.329113924 0.274509804 0.214689266 0.296296296 0.352941176
The scores of respective brands in the above mentioned attributes are tabulated below:
Attributes Jaccard KFC Dominoes Pizzahut SUBWA McDonal
Score Taste Location Hospitality Best Price Trust Customization Menu Diversity Hygiene Factors 0.373626374 0.311111111 0.324786325 0.329113924 0.274509804 0.214689266 0.296296296 0.352941176 0.290909 0.27907 0.234043 0.204082 0.333333 0.181818 0.3 0.226415 0.4 0.326086957 0.361702128 0.444444444 0.285714286 0.285714286 0.234042553 0.392156863 0.442308 0.340909 0.409091 0.3125 0.268293 0.194444 0.365854 0.4375
Appendix E :
Questionnaires
QID2
1|2
MC
SAVR
TX
>50
YToxOntzOjc6IlFS
QID4
1|2|3|4|5
MC
SAVR
TX
QID9
1|2|3
MC
SAVR
TX
9. Do you think fast food has the adverse effect on health? Yes No Can't Say
YToxOntzOjc6IlFS 1 QID10 1|2|3|4 MC SAVR TX
10. How frequent you go out for fast food in a week? Never Once a Week Twice a Week Almost everyday
YToxOntzOjg6IlFS 1 QID11 1|2|3|4 MC SAVR TX
11. How much money (in Rs) on an average do you spend per week on fast foods? < 100 101-500
501-1000 >1000
12. Choose you preference of fast food restaurant? (1- Most Preferred, 5- Least Preferred) 1 KFC Dominoes Pizza Hut SUBWAY Mc Donald
1 SingleAnsw er QID13 1|2|3|4|5|6|7|8 1|2|3|4|5 Matrix Likert
13. Specify the reason why you want to re-visit a particular fast food restaurant ? (1- Most Preferred, 5- Least Preferred) 1 Taste Location Hospitality Best Price for Taste Trust their Ingredients Customization of an Item Menu Diversity
YToxOntzOjEw O YToxOntzOjEw O
Hygiene Factors
5
YToxOntzOjEw O YToxOntzOjEw O
14. Which of these attributes do you attribute with any of the following barnds. KFC Taste Location Hospitality Best Price for Taste Trust their Ingredients Customization of an Item Menu Diversity
YToxOntzOjEw O YToxOntzOjEw O YToxOntzOjEw O
Dominos
Pizza Hut
SUBWAY
McDonalds
Hygiene Factors
1 SingleAnsw er
QID15
1|2|3|4|5|6|7|8|9
1|2|3|4|5
Matrix
Likert
15. Specify your level of preference for below fast food items? (1- Most Preferred, 5-Least Preferred) 1 2 3 4 5 Chinese fast food (Chowmin, etc.) Burgers Pizzas Sandwiches Pastas
1 Indian Fast Food (Kebabs, Street foods etc.) Cookies & Chocolates Others