Assignment Help on KFC
The hot food market in Australia today is merely dominated by a few fast food chains, which are operating world wide to generate the most possible revenues. Kentucky Fried Chicken (KFC) is one of these giants and has already successfully expanded throughout the world. (http://www.kfc.com). Focused mainly on chicken menus and variances of it, KFC puts itself in a distinct corner of the fast food market, which is now recognised to decline. (http://strategis.ic.gc.ca). The reason for this decline is mainly because people in Australia are getting more and more ‘healthy food’ conscious and want to eat accordingly, which most fast food companies cannot satisfy. The largest fast food chain in the world, McDonald’s, already responded to this change in the social environment and is now offering a wide range of low-fat and nutritious-rich products with great success. (http://www.mcdonalds.com).
One might ask, what happen to the ‘traditional’ fast food products, why is this market declining? Is there a way for the fast food companies to respond? This report discusses changes in the social and demographic environment in Australia that led to a more healthy food conscious population, which is affecting the fast food chains in a currently negative way, but which also provides them opportunities to expand in new market areas. The report also discusses in particular what KFC can and must do in order to gain a competitive advantage.
A market in this context refers to a number of all actual and potential buyers of a product (Kotler et al 2003). These buyers have a need to satisfy their needs through exchange (Graphic 1). These needs make up the demand for particular products and services. Several components must be considered, as all these components have a direct or indirect impact on KFC’s success.
Changes in the below described components over the last couple of years have led to big changes in people’s attitudes towards healthy food. It explains why Australians today want to eat healthy and nutritious-rich food in order to keep themselves healthy and that KFC must adjust their range of product and their company image to appeal to these new expectations, people have. (http://www.marketresearch.com).
KFC operates in a larger macro environment of forces that creates opportunities, but also threats. (Kotler et al 2003). A company such as KFC usually cannot influence trends in the macro environment, as they affect people and organisations on a larger scale. However, KFC has to carefully examine macro environmental trends and must create competitive responses to such trends. There are six major macro environmental forces KFC has to take into account.
Demographic forces include the study of the human population in terms of size, density, location, age, sex, race, occupation and other statistics. (Kotler et al 2003). All these factors are creating a complex picture about the population in Australia. However, there are some key statistics, which are important for KFC.
Australian has a population of almost 20 Million, which are to 70% congregate around the eastern and southern seaboard. (Kotler et al 2003). Another important demographic statistic is the ageing Australian population. In 2001, a male was expected to live for 77.0 years and a female had a life expectancy of 82.4 years (http://www.abs.gov.au). This is important for KFC, as they must target older people as well, instead of teenagers and young adults only.
Most Australians are living in one of the major cities, which makes it possible for KFC to target a high percentage of Australians within a relative small area (Kotler et al 2003).
These forces are affecting consumers buying power and the level of their spending (Kotler et al 2003). The Australian economy is currently one of the strongest, as GDP is rising 3% – 4% per year, and the interest rates are constantly low. (http://www.rba.gov.au). This makes it a favorable place for investors and companies, as Australians are still confident in the economic future outlook, and are therefore willing to spend more on healthy food. (http://www.rba.gov.au).
The natural environment involves natural resources that are needed as inputs, or which are affected by companies’ activities. This includes shortage of raw materials, increased cost of energy, increased pollution and government intervention in natural resource management. (Kotler et al 2003). KFC is affected by all four factors, and must develop a natural resource strategy, which will result in a decrease of waste and energy used and in a favorable public image for KFC.
An example of how to develop such a strategy might be ‘The Body Shop’, who developed a business strategy and an environmental policy, in order to lower the level of waste material and energy, and to increase the number of environmental friendly products. (http://www.thebodyshop.com.au).
These forces affect new technologies, which are creating new product or market opportunities for KFC. (Kotler et al 2003). New technologies are affecting KFC in various ways. With the development of new cooking equipment and computers, KFC was able to increase productivity in each of their outlets.
On the other hand, the increased gain of knowledge about food and the respective development in nutritious food products helped KFC to improve their product range and to gain an insight in their products. What is most important about these developments for KFC is that this information have also been soaked up by the public, who in turn is now demanding healthier food (http://www.dpi.qld.gov.au).
Australia consists of laws, regulations, government agencies and pressure groups that influence and set the legal borders within which KFC can operate. Government agencies such as the Australian Competition and Consumer Commission (ACCC) are introducing regulations to define and prevent unfair competition. Consumers are also protected by the Trade Practices Act, which deals with anti-competitive practices and consumer protection. (Kotler et al 2003).
Currently, there are no limits of, for example, how much fat fries can contain. However, with an increase of overweight population, such regulations might be introduced in Australia, which KFC will have to implement in order to comply with the law (http://www.abs.gov.au).
Cultural forces are affecting society’s basic values, perceptions, preferences and behaviours. Generally, Australians believe in working, getting married, giving to charity and being honest. (Kotler et al 2003). These fundamental believes are shaping attitudes and behaviours in everyday life. They are passed on by families, schools, churches and organisations.
Over the last couple of years, federal campaigns, a numerous of documentations and reports revealed, that overweight and obese people are a major concern in Australia. (http://www.abs.gov.au). This resulted in an increased awareness of healthy food habits and how to avoid being overweight. KFC must respond to this increased level of awareness by creating a new, healthy image and a new range of food.
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