service marketing - kfc
DESCRIPTION
Service Marketing - KFCTRANSCRIPT
Specific Tactics for creating Service Atmospheres MKT412
Kentucky Fried Chicken: Background
KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food
restaurants based in Louisville, Kentucky, in the United States. KFC has been a brand and
operating segment, termed a concept of Yum! Brands since 1997 when that company was spun
off from PepsiCo as Tricon Global Restaurants Inc.
KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus
is fried chicken, KFC also offers a line of grilled and roasted chicken products, side dishes and
desserts. Outside the USA, KFC offers beef based products such as hamburgers or kebabs,
poutine, pork based products such as ribs and other regional fare.
The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952,
though the idea of KFC's fried chicken actually goes back to 1930. Although Sanders died in
1980, he remains an important part of the company's branding and advertisements, and "Colonel
Sanders" or "The Colonel" is a metonym for the company itself. The company adopted KFC, an
abbreviated form of its name, in 1991. Newer and remodeled restaurants will adopt the new logo
and name, while older stores will continue to use the 1980s signage. Additionally, Yum!
continues to use the abbreviated name freely in its advertising.
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Specific Tactics for creating Service Atmospheres MKT412
Type Wholly owned subsidiary
Industry Restaurants
Founded 1930 (original)(North Corbin,
Kentucky)
1952 (franchise)(South Salt Lake,
Utah)
Founder(s) Harland Sanders
Headquarters Louisville, Kentucky, U.S.
Key people Roger Eaton, President
Harvey R. Brownlea, COO
James O'Reilly, VP for Marketing
Products Fried chicken, grilled chicken,
related Southern foods
Revenue $520.3 million USD (2007)[1]
Employees 24,000 (2007)[1]
Parent Yum! Brands
Website KFC.com
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Question 1:
Who is the firm’s target market?
Answer:
Target marketing tailors a marketing mix for one or more segments identified by market
segmentation. Target marketing contrasts with mass marketing, which offers a single product to
the entire market.
Two important factors to consider when selecting a target market segment are the attractiveness
of the segment and the fit between the segment and the firm's objectives, resources, and
capabilities.
Target Market Selection
The target customers of KFC are mixed. It basically target higher class as well as middle class
people. There are different types of customers like economic customers who make purchase
decision based primary on the price, personalized customer consumers who desire to be
pampered and attended to and who are much less price sensitive, apathetic customers consumer
who seek convenience over price and personal attention.
Attractiveness of a Market Segment
The following are some examples of aspects that should be considered when evaluating the
attractiveness of a market segment:
• Size of the segment (number of customers and/or number of units)
• Growth rate of the segment
• Competition in the segment
• Brand loyalty of existing customers in the segment
• Attainable market share given promotional budget and competitors' expenditures
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• Required market share to break even
• Sales potential for the firm in the segment
• Expected profit margins in the segment
Market research and analysis is instrumental in obtaining this information. For example, buyer
intentions, sales force estimates, test marketing, and statistical demand analysis are useful for
determining sales potential. The impact of applicable micro-environmental and macro
environmental variables on the market segment should be considered.
Note that larger segments are not necessarily the most profitable to target since they likely will
have more competition. It may be more profitable to serve one or more smaller segments that
have little competition. On the other hand, if the firm can develop a competitive advantage, for
example, via patent protection, it may find it profitable to pursue a larger market segment.
Suitability of Market Segments to the Firm
Market segments also should be evaluated according to how they fit the firm's objectives,
resources, and capabilities. Some aspects of fit include:
• Whether the firm can offer superior value to the customers in the segment
• The impact of serving the segment on the firm's image
• Access to distribution channels required to serve the segment
• The firm's resources vs. capital investment required to serve the segment The better the firm's
fit to a market segment, and the more attractive the market segment, the greater the profit
potential to the firm.
Target Market Strategies
There are several different target-market strategies that may be followed. Targeting strategies
usually can be categorized as one of the following:
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• Single-segment strategy - also known as a concentrated strategy. One market segment (not the
entire market) is served with one marketing mix. A single-segment approach often is the strategy
of choice for smaller companies with limited resources.
• Selective specialization- this is a multiple-segment strategy, also known as a differentiated
strategy. Different marketing mixes are offered to different segments. The product itself may or
may not be different - in many cases only the promotional message or distribution channels vary.
• Product specialization- the firm specializes in a particular product and tailors it to different
market segments.
• Market specialization- the firm specializes in serving a particular market segment and offers
that segment an array of different products.
• Full market coverage - the firm attempts to serve the entire market. This coverage can be
achieved by means of either a mass market strategy in which a single undifferentiated marketing
mix is offered to the entire market, or by a differentiated strategy in which a separate marketing
mix is offered to each segment.
A firm that is seeking to enter a market and grow should first target the most attractive segment
that matches its capabilities. Once it gains a foothold, it can expand by pursuing a product
specialization strategy, tailoring the product for different segments, or by pursuing a market
specialization strategy and offering new products to its existing market segment. Another
strategy whose use is increasing is individual marketing, in which the marketing mix is tailored
on an individual consumer basis. While in the past impractical, individual marketing is becoming
more viable thanks to advances in technology.
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The comparison of KFC in the worldwide units
Yum! Brand the parent to KFC was started in October 7, 1997
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Question 2:
What does the target market seek from the service experience?
Answer:
The target market seeks several things from the service experience. If those are fulfilled
customers feel satisfied if not customer dissatisfaction occur. The target customer of KFC
expects the following things from the service experience.
1. Knowledgeable and available staff: While a customer is making the buying decision,
they want knowledgeable assistance, available when they want it. Customers place a high
value on accurate information and want to be served by employees who know the product
inside and out.
2. Friendly people: Customers not only want product-savvy sales people, they want them
to be friendly and courteous. Your staff should value each customer more than any
individual sale.
3. Good value: This is where price factors in. But customers surveyed see price as only one
component of the bigger picture of “value” that includes the service, information and
follow-up they also receive.
4. Convenience: The service rule here is simple: make it easy! Says Gross, “Customers
want merchandise that is well organized, attractively displayed and easy to find. That’s
how today’s customers define convenience, and the easier you can make the shopping,
the more money you will be lugging to the bank.”
5. A fast finish: This final item is where too many businesses fall flat, right at the finish
line. While customers are in the process of deciding to buy or not, they are proceeding on
your time. They want thoughtful help making the right decisions. But once the buying
decision is made, get out of their way because now you are working on their time, and
they want to complete the transaction and be on their way as quickly as possible. At the
cash register, there is no time for making additional suggestions.
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If these are effectively fulfilled, customers show a desire to stay or further explore the service
otherwise they will avoid it.
Service Environment
Facility exterior is the physical exterior of the service facility that includes the exterior design,
signage, parking, landscaping and the surrounding environment.
Facility interior is the physical interior of the service facility that includes the interior design,
equipment used to serve customers, signage, layout, air quality and temperature.
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Question 3:
What atmospheric elements can reinforce the beliefs and emotional reactions that buyers
seek?
Answer:
Due to the intangibility of services, service quality is difficult for consumers to objectively
evaluate. As a result, consumers often rely on the tangible evidence that surrounds the service to
help them form their evaluations. The role of physical evidence in the marketing of intangibles is
multifaceted. Physical evidence can fall into three broad categories:
a. Facility exterior,
b. Facility interior,
c. Other tangibles.
Facility exterior is the physical exterior of the service facility that includes the exterior design,
signage, parking, landscaping and the surrounding environment.
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Facility interior is the physical interior of the service facility that includes the interior design,
equipment used to serve customers, signage, layout, air quality and temperature.
Other tangibles are the part of firm’s other physical evidence such as business cards, stationary,
billing statements, reports, employee appearance, uniforms and brochures.
The use of physical evidence to create service environments and its influence on the perception
and behaviors of individuals is referred to as environmental psychology. The Stimulus-
Organism-Response (SOR) model was developed by environmental psychologists to help
explain the effects of the service environment on consumer behavior. The SOR model consists of
three components:
a. A set of stimuli,
b. An organism component and
c. A set of responses or outcomes.
In a service context, the different elements of the firm’s physical evidence, such as the exterior,
interior design, lighting and so on that compose the set of stimuli. The organism component
which describes the recipients of the set of stimuli within the service encounter includes
employees and customers. The responses of employees and customers to set of stimuli and
influenced by three basic emotional states:
a. Pleasure - displeasure,
b. Arousal - nonarousal,
c. Dominance - submissiveness.
The pleasure - displeasure emotional state reflects the degree to which consumers and
employees feel satisfied with the service experience.
The arousal - nonarousal emotional state reflects the degree to which consumers and employees
feel excited and stimulated .
The dominance - submissiveness emotional state reflects the degree to which consumers and
employees feel in control and able to act freely within the service environment.
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Ideally, service firms should utilize physical evidence to build environment that appeal to
pleasure and arousal states and creating atmosphere that create submissiveness.
Theory asserts that customers and employees are exposed to the set of stimuli that make up the
firm’s perceived Servicescape and the responses to these stimuli are moderated by emotional
states. Customers and employees internally respond to the firm’s environment at different levels
– cognitively, emotionally and physiologically.
Cognitive responses are the thought of individuals and according to the model include beliefs,
categorization and symbolic meaning. Beliefs that states consumers’ opinions about the
provider’s ability to perform the service. Categorization that states consumer assessment of the
physical evidence and a quick mental assignment of a firm to a known group of styles or types.
Symbolic meaning that inferred from the firm’s use of physical evidence.
Emotional responses to the firm’s physical environment on an emotional level instead of an
intellectual or social level. Positive emotions that create atmospheres in which employees love to
work and customers want to spend their time and money.
Physiological responses are often described in terms of physical pleasure or discomfort. Typical
physiological responses involve pain and comfort. Like, environments in which music is played
very loudly that create discomfort for the customer; the lack of a nonsmoking section may cause
some customers in breathing and further discomfort. Instead of being arousing, environments
that are brightly lit may cause eye discomfort. All these responses determine whether a customer
will approach and explore the firm’s offering or avoid and leave the premises to minimize the
amount of physiological discomfort.
Ultimately, individuals base their perceptions of a firm’s facilities on their interpretation of
sensory cues. The following section discusses how firms can utilize the senses of sight, sound,
touch and taste in creating sensory appeal that enhances customer and employee attraction
responses.
Sight Appeals:
Sight appeals can be defined as the process of interpreting stimuli that appeal to consumers are
size, shape and colors. Consumers interpret visual stimuli in terms of visual relationships,
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consisting of perceptions of harmony, contrast and clash. Harmony refers to visual agreement
and is associated with quieter, plusher and more formal business settings. In comparison, contrast
and clash are associated with exciting, cheerful and informal business settings.
Size perceptions are the actual size of the firm’s facility, signs and departments conveys
different meaning to different markets. In general, the larger the size of the firm and its
corresponding physical evidence, the more consumers associates the firm with importance,
power, success, security and stability. For many consumers, the larger the firm, the lower the
perceived risk associated with the service purchase. Such consumers believe that larger firms are
more competent and more likely to engage in service recovery efforts when problems do arise.
Color perceptions are the color of the firm’s physical evidence often makes the first impression,
whether seen in the firm’s brochure, the business cards of its personnel or the exterior or interior
of the facility itself. The psychological impact of color upon individuals is the result of three
properties: hue, value and intensity. Hue refers to the actual color such as red, blue, yellow or
green. Value refers the lightness and darkness of the colors. Darker values are called shades and
lighter values are called tints. Intensity refers the brightness or dullness of the hue. KFC focus on
red color basically because it is the symbol of appetite.
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The location of the Firm which is dependent upon the amount of customer involvement
necessary to produce the service. While low customers contact services should consider locating
in remote sites that are less expensive and closer to sources of supply, transportation and labor,
high customer contact services have other concerns.
The Firm’s Architecture that states the architecture of the firm’s physical facility is often a
three way trade off among the type of design that will attract the firm’s intended target market,
the type of design that maximizes the efficiency of the service production process and the type of
design that is affordable. The firm’s architecture conveys a number of impressions as well as
communicates information to its customers such as the nature of the firm’s business.
The Firm’s Sign has two major purposes: to identify the firm and to attract attention. The firm’s
sign is often the first “mark” of the firm that customer notices. All logos on the firm’s remaining
physical evidence such as letterhead, business cards and note cards should be consistent with the
firm’s sign to reinforce the firm’s image.
The Firm’s Entrance and foyer areas can dramatically influence customer perceptions about the
firm’s activities. Worn carpet, scuffed walls, unprofessional network, torn and outdated reading
materials and unskilled and unkempt personnel form one impression. In contrast, neatly
appointed reception areas, the creative use of colors, distinctive furnishings and friendly and
professional staff create a much different and more positive impression.
Sound Appeals:
Sound appeals have three major roles: mood setter, attention grabber and informer. Proactive
methods for purposely inserting sound into the service encounter can be accomplished through
music and announcements. Music helps set the mood of the consumers’ experience while
announcements can be used to grab consumers’ attention or to inform them of the firm’s
offerings. Sound can also be a distraction to the consumers’ experience; consequently, sound
avoidance tactics should also be considered.
Music in which studies have shown that background music affects sales in at least two ways.
First, background music enhances the customer’s perception of the store’s atmosphere, which in
turn influences the consumer’s mood. Second, music often influences the amount of time spent
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in stores. In one study, firms that played background music in their facilities were thought to care
more about their customers. Studies have shown that in addition to creating a positive attitude,
music directly influences consumer buying behavior. Playing faster tempo of the music increases
the pace of consumer transactions. Slowly down the tempo of the music encourages customers to
stay longer. Still other studies indicate that consumers find music distracting when considering
high involvement purchases, yet found that low involvement purchases made the choice process
easier.
Sound Avoidance which plans the firm’s facilities, it is as important to understand the
avoidance of undesirable sounds as it is to understand the creation of desirable ones. Desirable
sounds attract customers and undesirable sounds distract from the firm’s overall atmosphere.
Other tactics for eliminating unwanted noise include installing durable hallway carpets to
eliminate the distracting sounds of clicking heels, strategically placing loud central air
conditioning units in areas away from those where the firm conducts the majority of its business
and also installing lower ceilings and sound absorbing partitions so that unwanted sounds can be
reduced even further.
Scent Appeals:
Sense of smell is our most accurate level of recall. So, scent appeal is an important factor to
consider. What we smell is significantly more influential on our moods and emotions than any
other sense. Our sense of smell is the strongest of all human senses and the closest sense linked
to memory and emotion. Research has shown that people remember 35% of what they smell,
compared with only 5% of what they see, 2% of what they hear and 1% of what they touch. This
Research clearly shows that scent enhances consumer product memories.KFC which provides
pleasurable scents often induce customer to make more purchases and can affect the perception
of products that don’t naturally have their own scent. KFC provides pleasurable scents for
making a friendly environment for the employees to work effectively and for the customers KFC
provides pleasurable scents that attract themselves to come more in KFC.
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Taste Appeals:
Taste appeal the final sensory cue, are the equivalent of providing the customer with samples.
Within the service sector, the usefulness of the taste appeals when developing the service
atmospheres is depend upon the tangibility of the service. Service firm such as carwash, dry
cleaners and restaurants may use taste appeals to initially attract customers. While sampling
firms the firm’s services, the customer will have opportunity to observe the firms physical
evidence and form perception regarding the firm and its performance capabilities. Consequently,
firms that use samplers should view this process as an opportunity rather than as catering to a
bunch of people who want something for free.
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Question 4:
How do these same atmospheric elements affect employee satisfaction and the firm’s
operations?
Answer:
Cognitive Responses:
Cognitive Responses are the thought processes of individuals and, according to the model,
include beliefs, categorization, and symbolic meaning. In the formation of beliefs, the firm’s
environment acts as a form of non-verbal communication and influences a customer believe
about the provider’s ability to perform the service. Through the physical evidence, employees
form beliefs about the firm based on the overall perceived servicescape. Beliefs that states
consumers’ opinions about the provider’s ability to perform the service. Categorization that
states consumer assessment of the physical evidence and a quick mental assignment of a firm to
a known group of styles or types. Symbolic meaning that inferred from the firm’s use of physical
evidence.
Emotional Responses:
Emotional Responses do not involve thinking; they simply happen, often inexplicably and
suddenly. Specific songs, for example, may make individuals feel happy, feel sad, or recreate
other past feelings that were associated with the particular piece of music. Scents have similar
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effects on individuals. Obviously, the goal of effective physical evidence management is to
stimulate positive emotions that create atmospheres in which employees love to work and
customers want to spend their time and money.
Physiological Responses:
Physiological Responses are often described in term of physical pleasure or discomfort. Typical
physiological responses involve pain and comfort. Environments in which music is played very
loudly may lead to employee discomfort and movement away from the source of the noise. The
lack of a nonsmoking section may cause some employees dificulty in breathing and further
discomfort. Instead of being arousing, environments that are brightly lit may cause eye
discomfort. In contrast, a dimly lit restaurant may cause eye strain as employee’s struggle to
serve customers menus. All these responses determine whether a employee will approach and
explore the firms offering or avoid and leave the premises to minimize the amount of
physiological discomfort. Because of the duration of time spent in the firm’s facility, employees
might find the physical environment particularly harmful appropriate ambient conditions such as
temperature and air quality are direct related to employees’ willingness to continue to work, their
productivity while at work, their job satisfaction, and their positive interaction with co-worker.
• Ambient conditions
– Temperature, air quality, noise, music, odor
• Space/Function
– Layout, equipment, furnishings
• Signs, symbols, and artifacts
– Signage, personal artifacts, style of decor
• Sound appeals
– mood setter, attention grabber, informer
– music, announcements, and sound avoidance
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• Scent appeals
– pleasurable scents vs foul odors
• Taste appeals
– the equivalent of providing the customer with free samples
Question 5:
Does the suggested atmosphere development plan compete effectively with competitors’
atmospheres?
Answer:
The effective management of physical evidence is particularly important to KFC. Due to the
intangibility of services, consumers lack objectives sources of information when forming
evaluations. As a result, customers often look to the physical evidence that surrounds the service
when forming evaluation.
A firms physical evidence includes, but is not limited to, facility exterior design elements such as
the architecture of the building, the firms sign, parking, landscaping, and the surrounding
environment of the firms location, interior design elements such as size, shape, and colors, the
firm entrance and foyer areas, equipment utilized to operate the business, interior signage,
layout, air quality and temperature, and other physical evidence that forms customer perception,
including business cards, stationary, billing statements, reports, the appearance of personnel, and
the firms brochures.
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From a strategic perspective the importance of managing the firms physical evidence steams
from the firm’s ability to: (1)package the service, (2)facilitate the flow of the service delivery
process, (3)socialize the customers and employees alike in terms of their respective roles,
behaviors, and relationship, and(4) differentiate the firm from its competitors.
From a theoretical perspective, the firm’s environment influences the behavior of consumers and
employees alike due to the inseparability of many services.
When designing the firm’s facilities, consideration needs to be given to weather the firm is a
remote service, an interpersonal service, or a self service. The subsequent design should reflect
the needs of the parties who are dominating the service production process.Decession about
facility location , layout, product design, and process design in particular may re3sult in different
outcomes, depending on weather the customer is actively involved in the production process..
Finally, numerous tactical decisions must be made by KFC when designing the firm’s
environment. Individual’s base perception of the firms services on sensory cues that exist in the
firms environment. Specific tactical decision must be made by KFC about the creation and
sometimes the avoidance of the scent appeals, sight appeals, sound appeals, touch appeals, and
taste appeals. The design and management of the KFC sensory cues are critical to the firm’s
long-term success.
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