Business Research Report: What is the impact of KFC’s Standardised Marketing in China

on its Business Performance?

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Contents
1. Introduction ................................................................................................................................. 3
2. Critical Literature Review: ......................................................................................................... 4
3. Conclusion ................................................................................................................................ 16
Usefulness, potential Implications and Impact ............................................................................. 20
Research Recommendations ......................................................................................................... 23
Reflection ...................................................................................................................................... 24
References ..................................................................................................................................... 26

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1. Introduction

KFC a subsidiary of Yum! Brand is the world’s most popular chicken restaurant, which

was established in 1930. The American multinational is headquartered in Kentucky and over the

period of more than 8 decades, it has expanded its operations in more than 120 countries through

its 20,000 restaurants worldwide (About KFC, 2017). The company opened its first restaurant

in China in 1987; and over the span of three decades, it has a total of around 5,000 restaurants

within China. It signifies the growing popularity of KFC in this market and it can be attributed to

KFC marketing strategies (Ping, 2017). The company aims at taking the total numbers of

restaurant to 15,000 outlets and offers great lessons for global executives, who seek to determine

the effectiveness of any particular business model of business strategy in emerging market.

It is evident from available data that since its existence, it has opened an average of one

restaurant on daily basis and aims at a pan China presence rather than only focusing on large

cities. The operations and services of KFC outlets are present in 1,100 Chinese cities. By the end

of 2015, the company commands around a fourth of total Chinese fast food market to a share

corresponding to 23.9% (Barton, 2016). In this market, the company has demonstrated an

impressive performance by its numbers of outlets, items of menu and local taste. In this context,

a few of questions are worth exploring including what elements are responsible for KFC’s

performance in Chinese market, how its marketing strategies helped in a better reach to customer

and become a preferred brand over other fast-food chains.

In China KFC contain a larger number of items in its portfolio in comparison to other

markets like USA as it includes local tastes too. The total numbers of items in its menu goes

above 50 plus items in comparison to 30 items in American menu. In addition to number of

dishes, KFC has also redesigned its menu as per different spice-level depending upon

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preferences of any particular region (Barton, 2016). All these attempts has helped the company

in rebranding the image of KFC and in China it is perceived as being delicious and safe, high

quality and fast, healthy and nutritious.

In this paper, a critical analysis about KFC’s marketing strategies has been undertaken, so

that its effectiveness in Chinese market can be identified and summarised. A summary of KFC’s

marketing strategies is likely to help in understandings its strength and weakness in this market.

This would be done with the help of following questions:

 To compare the effectiveness of marketing strategies of KFC in China and other Asian
nations particularly in Japan.
 To study and analyse the effectiveness of marketing strategies of KFC in China.

 To examine the impact of standardized vs. localised marketing strategies of KFC on its

success or failure in China.

 To present recommendations to the company to improve its marketing strategies as per

the Chinese culture and market.

2. Critical Literature Review:

The section of literature review is driven with the purpose of identifying the effectiveness

of KFC’s marketing strategies in Chinese market. In order to serve this purpose, the section

covers a critical analysis of marketing strategies adopted by KFC in Chinese market in terms of

standardisation versus localisation. In addition, the section of literature review also presents a

brief analysis of KFC’s marketing strategies in Japan, as both the countries share a high degree

of cultural similarities, and this allows making a comparison.

Shih (2010) has undertaken a study and has suggested that marketing strategies have a

huge impact on brand equity and purchase decisions of buyers and it may affect decisions in

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either way; positively or negatively. According to the author, marketing activities such as price,

packaging, country of origin, promotional events aims at influencing the ultimate buyers’

decisions Shih (2010). It should be noted here that a company needs to take external factors into

consideration while developing its marketing strategy and one of the crucial factors can be

identified as culture.

The Main Characteristics of Chinese Fast-food Market

Shuailing and Zhi (2015) have discussed about three significant characteristics that play

imperative role in the Chinese fast food market. These are primarily concerned with the

geographical and developmental differences of the country, usage of nutritional ingredients and

the cultural norms followed in China. The economic level of people and development of a

specific region have huge influence on the fast food industry of a country. China is a

geographically vast country, where the eastern, central and western regions considerably differ

on the basis of development and income levels of people (Shuailing and Zhi 2015). It is learned

that fast food sales are higher in the eastern and southern parts of the country due to higher

income levels of people; whereas the central China is developing at a rapid pace.

In a study, Zhuang and Jiang (2016) suggest that in China, people have more focus on

nutritious and healthy food. Their style of cooking is more inclined to maintain the nutritional

factor of the ingredients used to prepare a dish. They generally use ingredients like grains, beans

and vegetables which is a healthy diet. Moreover, Chinese people are too particular about table

manners and eating habits. They take low calorie food that is prepared with traditional methods,

which can also be seen in the fast food items in China (Zhuang and Jiang, 2016). The Chinese

eating and cooking habits are in absolute contrast with the western countries, which is high

calorie food. Chinese people are quite specific about the symbolization, customs and culture they

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follow. They have strong perceptions about colours and symbols, which can also be seen in their

eating habits. For instance, red colour is a symbol of good luck and fortune in Chinese and

eastern communities, while it is a symbol of blood and revolution in western countries.

Standardization vs. Localisation: Theoretical Perspective

In the dynamic business environment, globalization of businesses has raised the need of

extensive discussion on standardization and localization approaches in order to cater foreign

customers. According to Haron (2016) multinational organizations must operate with similar

approach in all its international and national marketplaces. They should specifically focus on

offering standardized products and services to all customers, regardless of their geographical

locations and cultural aspects. In contrast to this opinion, a couple of professionals believe that

every market has its unique characteristics and requirements, which are essential to consider for

invading sustainability and substantial customer base (Haron, 2016). Every country and its

markets are different from the other, where people have varied values, culture and preferences,

and their purchase decision is influenced by these factors.

Akaka & Alden (2010) state an organization decides to operate in any specific market; it

has to decide which approach it wants to follow; standardization or localization. The researchers,

who support the strategy of standardization, view that it is a process of offering domestic product

standard to the international market. Standardization is a product of larger marketing incentive,

future oriented technology and convergence of consumer preferences (Akaka & Alden, 2010).

Many global companies follow the standardization approach due its various merits like

economies of scale, transfer of experience, uniform global image and easier control and

coordination.

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 According to Zaiem & Zghidi (2011) this strategy involves marketing of standardized

products in all target markets that allows a company to produce or manufacture goods at large

scale and quantities. This enables the company to achieve a competitive niche in both domestic

and international markets, with higher profits. Moreover, it also allows the company to attain

better amalgamation and coordination of strategic activities in varied international marketplaces

(Zaiem & Zghidi, 2011). The company learns and understands new techniques and practices

which help it to operate in other markets with enhanced knowledge. Standardization gives a

company a consistent global image as the products and services employ the same product

dynamics, service and marketing all over the globe.

Despite various merits, Whitelock (2007) have discussed about some significant

disadvantages of standardization. The restrictions and policies of government may confine a

company’s efforts to standardize the product line in a specific market. Every nation has its pace

of development and infrastructure, which may or may not support the marketing tactics of a

company (Whitelock, 2007). There is a great and natural possibility of difference in customers’

preferences views, needs, and demands; and any company that wants to sell product in a market

essentially needs to comprehend the characteristics of that market.

On contrary, according to Subramaniam & Hewett (2004) localisation is the process of

altering a product or service according to the needs and preferences of the target market.

Localization is a wide concept that includes adaptation and customization of a product in sync of

the target market requirements. Adaptation can be termed as the essential changes required in the

product to make it relevant in the target market; whereas customization is the optional alterations

made in the features of domestic market dictated product, which can make it more suitable for

the customers in foreign market (Subramaniam & Hewett, 2004).

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 However, there are considerable disadvantages of localization, which loosens its grip as

the most suitable strategy. The strategy limits the transfer of knowledge as the experience and

resources used in one market cannot be used in other market. Economies of scale are achieved by

large quantity production and marketing activities, which is not possible in localization. In this

strategy, every market has its specifications to cater that leads to higher cost and new strategic

planning every time (Subramaniam & Hewett, 2004). Additionally, it restricts the control and

synchronization of overseas organizational activities because of variation in product’s quality

standards, marketing techniques, promotional strategies and branding. One of the vital demerits

is that a company is unable to achieve a global image due to its customization of products.

An analysis of KFC marketing strategies in China tends to suggest that it follows

localisation strategy. The base of KFC’s Chinese marketing strategies can be identified and

analysed in terms of localisation. This is because; unlike its traditional model of KFC outlets in

the USA and other developed market, in China the company aims at serving local needs. In order

to serve this purpose the brand has hired Chinese managers with the intention of developing

partnership with local companies (Whitelock, 2007). This was likely to help the company in

getting an insight of regional dishes and flavours that appealed the most to domestic consumers.

Viswanathan & Dickson (2007) opines that companies follow localisation approach as

they know that the attributes like language, culture, climate, race, perceptions and more of

different markets will have large impact on their sales activities. A few authors consider

localization a gainful approach because it better responds to the local needs and preferences,

resulting in enhanced sales. One of the major advantages of localization is that it offers an

accelerated local business development as companies attain advantage over local businesses in

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the market (Viswanathan & Dickson, 2007). The companies concentrate on customers in the

newly targeted market leading to enhanced revenue and market share.

SWOT Analysis of KFC

A SWOT analysis profile of KFC in Chinese market demonstrates following trends:

Strength: KFC was the first western fast-food company to enter Chinese market and this

provided them with an untapped market. They had the first mover advantage as McDonalds enter

after three years and by that time KFC has promoted itself as a preferred fast food destination.

The menu of KFC also played a positive role in its popularity in Chinese market as chicken is not

unknown to this culture (Deresky & Christopher, 2012). The number of outlets is near about

5000 and it has certainly help the company in a better expansion and reach to Chinese

consumers.

Weakness: The company has to rely heavily on local partners for utility services and quality

products. KFC has developed itself as a restaurant that promotes local taste and it has increased

its dependency on local players. This may have a negative impact on overall standardisation of

the product and service quality (Ken and Kate, 2013).

Opportunity: China is home of more than 1 billion of people and is one the fastest growing

economy of the world. KFC commands a fourth of fast-food market share in Chinese market and

it has a huge opportunity to increase its market share as the company has strong network and

local supplier base (Ken and Kate, 2013). It should be noted here that poultry industry is one of

the top priorities of Chinese government to promote agricultural modernisation plans and this

gives an upper hand to KFC, as the restaurant deals with the same product.

Threats: The presence of high competition in this market can be seen as one of the threats for

KFC. It has a more focus on localisation and as a part of this strategy; the company offers more

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than 50 items in its menu. Due to promotion of local taste, it may have to face competition from

local vendors too and this may affect the current business model of KFC (Ken and Kate, 2013).

It is worth pointing here that rise in competition along with excessive emphasis on localisation

may be counterproductive for KFC in Chinese market.

KFC’s Overall Marketing Mix Strategy

In the dynamics of business, it is imperative for an organisation to develop effective

strategic plan in order to penetrate a new market. A well planned marketing mix helps a

company to attain the desired niche in the target market as the four P’s of marketing are the

deciding factors for success and sustainability. Product, price, place and promotion form the

model that gives direction to the actions of marketing teams so that their product and services

can meet the needs and demands of the target consumer groups.

Product

The product strategy focuses on offering products according to the local consumer needs

and buying behaviour of the target market. Companies have to understand the cultural aspect of

the target market and provide products that match their values and expectations. In China, KFC

significantly pays attention to the cross cultural aspect as Chinese people welcome new things,

but also, are very much rooted to their values.

With the help of cross cultural marketing, the company always offers new products,

which are the combinations of Chinese flavours and western appearances. According to Idrac

(2013) the other marketing tactics used by KFC in the Chinese market, like packaging style of

products, flavours, time of launching and others have been planned after considering the local

culture of the country.

Price

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 The price strategy of a company in a specific market is influenced by various attributes

like consumers’ perceptions, preferences, buying behaviour, paying capacity, market structure

and so on. As Chinese people perceive that there is a positive association between prices of

products and status of people, they are generally ready to pay high prices for certain products. It

is observed that KFC raise prices of its products quite often in the Chinese market.

However, due to the global financial crises, KFC reduced prices in order to attract

customers and maintain the market share. KFC essentially targets the young crowd in the

Chinese market, who accept the change and innovation faster as compared to others to (Idrac,

2013). The company pays vital consideration to the buying attitude of Chinese population while

deciding the price strategy.

Place

Place strategy is a significant strategic decision taken by a company. Marketing and sales

activities of a company are essentially influenced by several internal and external factors like

language, region, and government policies and so on (Bell and Shelman, 2011). KFC plans its

place strategy after extensive research on the political risks, financial conditions, population

factors, and cultural factors. KFC opens its restaurants and creates product menus and

decorations according to the local consumers’ tastes, preferences and demands.

Promotion

With the help of promotional activities, a company can develop better communication

and dialect with the potential customer groups. Marketers use print and media advertising, public

relations, word of mouth, point of sale and various other techniques to promote their products

and services. KFC conducts promotional activities according to the Chinese culture and norms,

keeping in mind their values and preferences (Bell and Shelman, 2011). It must be noted that, the

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promotional action of any company does not offend the value and traditions of the target market.

In such situation, it becomes challenging for an organisation to sustain and achieve its goals.

Although from a product perspectives, 4P’s of marketing are said to be appropriate to

assess the marketing mix of a firm, yet it has come under by researchers due to their limitations

to assess an actual marketing context. Moller (2006) has further explained the roles of additional

3P’s in his study and this can be studied with regard to KFC business strategy in Chinese market

too. This is because; KFC is a fast-food chain restaurant and service is one the crucial parameters

to overall satisfaction level of the customers (Moller, 2006). An analysis of additional 3P’s

including physical evidence, process and people of KFC in Chinese market can be presented as

following:

Process: It is one of the elements of marketing mixes that indicates towards the way of service

delivery including lead time, modifying and customising service to fit the need of local customer.

KFC has a well-defined process of ordering the products, accuracy of timing to get served the

product with the same taste around the world and China is no exception in this context (Lin,

2011).

People: The author states that the most successful companies of the world has the ability to put

the right people at the right job and this has been done effectively by KFC in Chinese market.

The company believes in adaptation of Chinese culture to serve the customers and it has been

done through recruiting local staffs for kitchen and administrative requirements at front desk. It

has given a touch of local culture at the same time the process is managed as per the global

standard of quality and customer satisfaction (Lin, 2011).

Physical Evidence: Lin (2011) states that the term refers to elements of marketing mixes that

customer can actually see or experience, when they use a service. It contributes to an overall

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experience of customer satisfaction and their repurchase decision (Lin, 2011). A study of KFC in

China shows that the company has aptly responded to this element of marketing mix through its

appropriate ambiance, layout and branding strategy. In the entire Chinese market, they have been

able to offer the same ambience for customers, so that the customers enjoy it thoroughly

irrespective of locations within the country.

In addition to above discussed strategies of 7P’s of KFC in Chinese market, the

importance of brand strategy has been emphasised by Todar (2014), who observes that China is a

challenging market for a new company to enter. The author further argues that the nature of

challenges varies as per the nature of the company operations. Being a fast food company, there

are possible strategies that KFC can follow in the Chinese market in order to reap higher results.

Some possible strategies that KFC tends to follow in Chinese market can be discussed as

following:

Brand strategy: In china, people are technology savvy as well as economically advanced. They

prefer quality over price when making a purchase decision, which generates the necessity of

strong brand image, brand value and innovative marketing. The Chinese fast food companies

must focus on brand development with effective brand positioning and marketing so that it can

achieve competitive niche in the market place (Todar, 2014). The companies must concentrate

on providing superior quality to customers in order to win the maximum customer base. With

delivering value beyond satisfaction and stable service quality, companies can successfully attain

sustainability and growth in the Chinese market.

Cultural strategy: The role cultural strategy has been investigated by Chavan and Berad (2015)

in their study and the authors state that it is necessary for fast food companies in China to focus

on culture and traditional aspect of food culture of the country. It has been observed that

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companies find it challenging to strike balance between cultural and modernized features when it

comes to food products. Cultural strategy involves an effective integration of corporate resources

for the development of cultural brands with building competitive cultural values and creating an

engaged brand culture. A fast food company must invest in marketing its products on the cultural

lines to achieve interest of customers. It is observed that with the change in times, people are

again turning towards cultural association in products Chavan and Berad (2015). Thus

organizations must invest substantially in research and development activity and develop

products on the basis of cultural values and traditional tastes in order to attract more customers in

the target market.

Chain Business Strategy: Chain business strategy proves to an effective approach to achieve

scale effect in the fast food industry. In the chain business strategy, companies emphasize on the

quality and quantity aspect of the product. Unified purchases, unified distribution, unified

decision and unified management are the four essential attributes of a successful chain business

strategy. Aimin & Shunxi (2012) have suggested that effective chain strategy is responsible in

achieving larger scale, specialization, standardization and centralization of operations resulting in

higher benefits and lower expenses. An organization following the chain strategy must the scale,

amount and speed to open maximum number of outlets so that sales can be increased rapidly and

profits can be garnered uninterrupted (Aimin & Shunxi, 2012). KFC follows chain business

strategy all over the world, with all the necessary attributes, which are responsible for its

successful operations.

Talent strategy: Peng (2012) states that talent is always an asset to an organization. A

multination company is supposed to significantly invest in training and developing their

workforce for successful planning and implementing strategies, as well as effective operations at

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each level. The Chinese fast food industry is no exception, where there is a need to develop

efficient business model, services, production technology and so on for sustainable operations

and presence in the market (Peng, 2012). A talented human resource is responsible for

innovation in strategies and product line and expansion of business in new market place.

Marketing Strategy of KFC in Japan

Keillor, Hausknecht, & Parker (2001) have undertaken a study and have highlighted the

role of local culture on success of marketing strategies. The authors argue that a firm tends to

become more successful if it offers a mix of standardization and localization, as it helps in

creating a global image, but with the local taste (Keillor, Hausknecht, & Parker, 2001). An

analysis of KFC marketing strategy in Japan indicates that the company has been able to manage

and create an image of local player with a joint venture of Mitsubishi Corporation (MC). In

Japan, KFC is considered to be synonyms of Christmas, even if the country has less than 1% of

Christian population. Unlike China, the company created a culture and brand image that has been

more attractive to Japanese young generation. It can be argued that KFC Japan has been

successful in its marketing strategy of globalization, as during last Christmas an estimated 3.6

million Japanese families treated themselves with KFC menu. It has been argued by researchers

that the genesis of Japan’s KFC tradition is nothing but a tale of corporate promotion strategy.

“KFC on Christmas” in Japan can be termed as another sign of rising globalization, where the

culture of one nation spread in another nation.

A comparison with KFC’s Chinese strategy with Japanese suggests that in both the

nations KFC has attempted to promote local taste over foreign taste of America. For this

purpose, they have hired local people, who give a local touch to the company. However, the

penetration of KFC in Chinese market is more than Japanese market and they are not related to

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any specific season or event like Japan. It is evident that in Japan, KFC is more associated with

Christmas and but in China it is a yearlong preference. In both the national localisation strategy

has been promoted by the company, but in Japan a mix of globalisation is promoted for cultural

transformation. This element is not present in Chinese marketing strategy as local culture of

China is more prevalent than a migrated one.

3. Conclusion

After analyzing various aspects of strategic operations of KFC in China, it is learned that

the company has invested significantly on the country’s social, economic and political

environment before forming marketing strategies. The marketing approach adopted by the

company is considerably influenced by the consumer behaviour of Chinese people, who are

conscious about the brand image, brand quality, additional services, status, efficiency and others’

perception about the product (Starvish, 2011). It is found that to serve the Chinese customers,

KFC adopts the policy that primarily emphasize on the eating environment, consumer demand

and preferences and satisfaction. The company also follows differentiation in its products, with

superior quality, services and image.

KFC is an international brand, which follows standardization approach, but at the same

time, it ensures that in the market like China, it strikes a perfect balance of standardization and

localization approach. It is observed that Chinese consumers appreciate innovation and novelty

in products and services. Keeping in mind the consumer behavior of Chinese people, KFC

consistently invests in delivering new products and services to its customers in China in order to

achieve a competitive niche (Starvish, 2011). The statistics reveals that in the recent times, KFC

has been able to attain leading position in the Chinese market due to its rapid growth and

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sustainability, which has been achieved by its effective promotion, distribution and pricing

strategies.

In addition to this, KFC focuses on developing a successful marketing mix for the target

market in order to expand its consumer base. The effective market segmentation, market

targeting, market positioning, and adaption and differentiation strategies are responsible for the

company’s sustainable growth in the Chinese market. In the current times, china is the most

lucrative market for any company to penetrate. With the rapid growth in the economic and social

environment of China, Chinese people have become more aware and brand conscious, which

makes it a challenging market as well (Ping, 2017). Also, it is not easy to attract Chinese

customers as they are not price conscious but quality conscious. Their perspective to judge a

product or service largely varies from other consumers in world. They are very sensitive

regarding their values, custom and culture; hence companies have to design their strategies and

products according to the Chinese customers’ tastes and preferences. Chinese people also

consider promotional tactics as important part of their buying decision (Ping, 2017). The

companies, which have better promotional strategies and well organized marketing team, are

more likely to attract Chinese customers.

It is learned that Chinese people are digitally sound and socially connected. In order to

make buying decisions, they rely on other’s experience with the brand and others’ perception

regarding the product quality and services. They make buying decision on the basis of word of

mouth publicity as well, which makes it important for companies to be socially active and

digitally accessible for Chinese people in order to enhance sales rate (Rexaline, 2017). China is a

wide market, and companies can instantly increase returns and profits if they implement and

follow strategies that suit the Chinese values and consumer behaviour.

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 Most companies rely on international expansion for maximizing sales, profit and

sustainable growth. The companies entering in any new market have to decide on the extent of

localization they can adopt in combination of its uniqueness and standardized product features.

KFC has more than 4800 outlets all over China, which is an evidence of the company’s

consistent growth strategy (Rexaline, 2017). KFC has essentially focused on the concept of

localization in China, where it was redeveloped to meet the local customers’ preferences. In

other western countries, KFC follows limited menu, low prices and take away outlets, which is

not efficient enough for the Chinese market. In China, it added more items in menu, identified 16

cities as key operational centres, created its own distribution network for efficient supply system,

employed trained staff for better services and logistics and owned all its outlets rather than

franchise in order to achieve higher control.

KFC also paid special attention to the outlet set up in China as people are more family

oriented there. The outlets are bigger and more spacious so that families and groups can enjoy

their time. The menu items are also large in number and more than 50 new items are introduced

every year so that innovative items can be served to customers (Barton, 2016). The company

prepares the food items in China as per the local taste and flavours of China to please the

Chinese customers.

China is geographically vast country, which requires an empirical research and analysis

in order to decide important sites for opening an outlet. In the large cities of the country,

McDonalds is the major competitor of KFC. In order to avoid competition, KFC targeted small

cities of China for developing a strong network and capture significant market. With rapid

expansion and increasing number of outlets, the company needed a well-organized and strong

network for distribution, supplies and logistics (Barton, 2016). To fulfil the requirement, KFC

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developed its own distribution system, including building warehouses to facilitate uninterrupted

and fast supply of raw material and other necessary items. Building a distribution system of its

own, KFC is able to have greater control over the market, consumer needs as well as other

aspects like food safety. The company is involved in catering the best services and solution to

problems in the minimum time, which is also its specialized feature in China.

KFC needs a large human resource to operate its large number of outlets all over the

country. KFC constantly involves in efficient workforce planning and human resources strategies

to employ trained and efficient staff, which can serve the customers. Statistics reveals that the

company entails 1000 new managers and 30,000 new staff members every year, who can work

efficiently with the growing business operations (Barton, 2016). The well trained and skilled

human resource is an asset to an organization as it adds to its consistent growth and progress.

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Section B:

Usefulness, potential Implications and Impact

The research was undertaken to understand the effectiveness of standardisation marketing

strategy as a crucial factor of KFC success in China. It is evident from the analysis and

conclusion that standardisation has worked for KFC, but with a single element of marketing mix,

which is process. In the contradiction of common views that fast food restaurants should follow

the strategy of standardisation across the globe to get success in different cultures, it has found in

this study that factor of localisation is preferred over standardisation when it comes to taste. This

trend is not only evident from China, but also the neighbour nation like India. It should be noted

here that fast food restaurant McDonald’s made a mistake in India while serving beef, which is

considered to be an issue of religion by the majority of the population (Deresky & Christopher,

2012). However, the company could realise that showing consistency with local culture is the

key of successful business and changed to menu to suit Indian culture.

It is worth pointing here that KFC did not make the same mistake and could aptly understand the

significance of localisation strategy and could foster the same with local menu. A study of KFC’s

marketing strategies in China tends to demonstrate the significance of local administrations and

its CEO’s Samuel (Sam) Su long term planning to make it the most successful restaurant of

China. It can be explored through further studies in this direction that the CEO promoted local

culture and ensured that the brand is not seen as foreign presence but as a part of local

community (Haron, 2016). The CEO had a clear idea that China does not have the same culture

as the USA has and culture of individualism cannot be promoted in this culture. Therefore, the

company attempted to adopt the best fast-food model in terms of service delivery, process and

people, but adapted towards serving the needs of Chinese consumer.

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A close analysis of KFC’s marketing strategy in Chinese market tends to demonstrate that KFC

succeeded in China as got the first mover advantage in fast food industry. In addition, the

company’s top management and local authorities decided that it would not look like a KFC in a

number of ways including its product, physical evidence and people.

An environmental analysis of KFC related to legal aspects suggests that barriers of entry to this

industry are generally low in China. It should be noted here that the country agreed to reduce

agriculture tariffs according to priority of the USA and it had a positive impact on poultry form.

Besides this, an additional factor of expansion of fast food industry in this nation can be

identified as cheap labour supply, which increased the presence of fast food restaurants across

the country (Idrac, 2013). The marketing mixes of KFC have been designed as per the need and

preference of Chinese customers and this worked as a significant factor for its successful

operations.

The research collects data and information to understand the reasons behind the different views

of authors about choice of business strategy in a particular market. It deals with the question of

standardisation versus localisation and in the specific context of China and India; it has been

found that localisation work better than standardisation. On the other hand, the case of Japan

suggests otherwise, as here a foreign culture has been promoted and KFC can relate itself with

Christmas. In this context, it is implied from findings of the work that selection of a business

strategy in terms of standardisation versus localisation depends upon an organisational ability to

identify its target market and understanding the cultural perspectives.

Another reason for under taking this study was improving the knowledge and understanding of

industrial factors that promoted fast food restaurants in China. While exploring this factor, it can

be found that in 2005, Measures for the Administration of Commercial Franchises was issued by

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Ministry of Commerce and it helped abolishing franchise uncertainties. The new regulations

have positive impact on the expansion of fast food industry in this market and it has grown

rapidly over the period of last decade (Wang, Wang, Xue &, Qu, 2016). It implies that lowering

the barriers of entry in fast food industry may increase the level of competition in the market, but

given the size and high brand image of KFC it has an upper edge, even if competition goes up. It

signifies that Chinese success of KFC should not only be related to its internal capabilities and

ability to adopt local culture, but external factors have also created positive impact.

In a study Khalili (2014) states that ‘at intercultural level’, it is important for a company to

understand the elements of local culture and value the local customs. In this regard, the author

has identifies a few certain values of Chinese culture including collectivistic, high context,

hierarchical, relationship-oriented, face saving and religious. The author further argues that

standardisation is an approach where a firm offers the same product/service across with globe

without many changes (Khalili, 2014). However, this strategy may not be equally successful for

a fast-food restaurant chain due to variations of taste and preferences of customers towards local

foods and items. The same can be identified and related with marketing strategy of KFC in

Chinese market, as the company follows localisation strategy. It is important to understand the

major characteristics of Chinese fast food market so that strategic adoption of KFC can be better

analysed.

The success of KFC in Chinese market offers a lot of learning for other players of fast food

industry and these can be summarised in terms of joint venture with local players, first mover

advantage, demographic changes, and think global, but act local (Ken & Kate, 2013). The

findings of this research can be used for formulating a marketing plan for KFC or any other fast-

food restaurant chains in the global market. This is because; the study develops an insight of

22
factors affecting success of a business in international market and how these factors should be

identified and addressed.

Research Recommendations

While exploring the possible answers of present research question a few areas have been

identified that need further study to develop a better understanding. Among these areas, it would

be interesting to explore the role of culture in promoting localisation strategy in Chinese market.

It should be noted here that culture is a critical component of external business and it has a huge

impact on buying behaviour or final decisions of customers. In this regard, it would be quite

pertinent to identify and measure the factors of variations between Chinese and the USA culture

and how it has affected the overall marketing strategy and practices of KFC business.

Another area of study that requires further investigation can be expressed in terms of

understanding the role of brand image in success of KFC in Chinese market. It should be noted

here that the company has adopted localisation strategy to encourage its long term goals in this

market and it has been successful in applying the same. However, it is worth exploring here that

how the element of brand was combined with localisation strategy in order to get advantage of

KFC’s global presence and a strong brand image. This would highlight the impact of brand

loyalty among customers in Chinese market.

In addition, a significant research can be undertaken to understand the marketing strategies and

marketing model of KFC in comparison to McDonald’s in the same market. This would help in

exploring the possible causes of McDonald’s limited growth in Chinese market even after

adoption of localisation strategy. It should be noted here that McDonald’s has been able to create

a greater impact in Indian market, but not in Chinese market. In the same way, KFC has been

able to create a greater impact in Chinese market, but not in Indian market. An analysis of their

23
marketing strategies tends to suggest that both of them have fair idea of localisation strategy and

have been successfully implemented in their respective markets, but outcomes are different in

different markets. In the context of aforementioned performances in the different markets, it

would be interesting to know that up to what extent localisation can be termed as the key of

success for fast-food chains. This can be done with the help of presenting the case of two global

fast food restaurant giants KFC and McDonald’s in two different markets China and India.

Reflection

After completion of this project, I can feel an improvement in my written presentation skill,

which has become more clear, comprehensive and convincing. It has helped me in planning and

organising the work in such a manner that meets the ultimate objectives of the work. The biggest

learning that I can derive from this project is a need of organised thoughts that does not only

limit the scope of the study but also helps in focusing on key aspects of research question, while

avoiding the insignificant areas. It has also improved my learning about marketing strategies and

their application for relevant cultural context. The project teaches me about the importance of

culture in adoption of strategy in terms of standardisation versus localisation.

The set of knowledge and skills that has been developed by this project can be identified,

analysed and expressed in terms of striking a balance between descriptive and analytical skills. I

could figure out that an analysis should be followed by descriptive details, as it makes the

information more meaningful. On the other hand, it enhances my knowledge about key elements

of marketing strategies and their roles in success of a business in any particular region. It shows

that an organisation has to deal with external and internal factors of business that may work as

strength or weakness for any industry or firm. In these circumstances, a firm is required to

24
identify its relative position in the market and adopt the strategy that best suits its capabilities in

the marketplace.

The knowledge and skill acquired through this project are likely to help in improving my

professional capabilities. This would assist in enhancing my chances of employability in

marketing filed as I have basis ideas of report writing and presentation and it is considered as one

of the requirements to become a good manager. My knowledge about Chinese fast food industry

and identification of potential factors of success would create an edge to work in this industry.

The project has improved my abilities to back my ideas or opinions with the help of empirical

evidences and gives a sense of authenticity.

It is expected by a marketing professional to explore the new opportunities for a firm in new a

market, and this project has developed a basis idea of doing the same. It offers learning about

factors and key consideration for a company to enter a market and how these should be managed

in order to become successful in the marketplace.

It can be stated that the project has made me more aware and attentive about change in business

strategies as per the demand and preferences of target group. This would help me in identifying

the most suitable target market and catering their needs in the most effective manner. The

knowledge acquired through this project would be helpful in developing a marketing plan for any

business firm and it also helps me in getting an insight of the nuances of business organisations.

This has improved my overall understanding about socio-cultural factors and their impact on

organisational performance. It is important for marketing personnel to understand the possible

impact of culture on the performance of a business so that s/he can create marketing plans that

are consistent with local culture.

25
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