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KFC’s Localization Strategies in China

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KFC’s Localization Strategies in China

Importance of Localization

Localized strategy is characterized by modified products for a certain market area. Localization seeks to adjust products and marketing strategy to the particular attributes of individual markets. The aim of localization is to boost income and the allocation of the market by focusing efficiently on customers in a new particular and exclusive market. It permits organizations to contend fast and assertively with local competition while the global product is still in its early growth (Nagel 2012).

Introduction

KFC is one of the global companies that has adapted to localization to make their profit in the foreign country. KFC adapted localization strategy in China by changing the flavor of food to cater to the taste of local people. They have also adopted promotion localization, product localization, price localization and management localization that suits their clients in China.

Background of KFC

With its headquarters in the USA, KFC is considered to be among the leading international fast food restaurants. There exist KFC eateries worldwide, and they offer various services. KFC is a subordinate of YUM, and it has outlets in different countries including China, South Africa, the USA, Hong Kong, Japan, Singapore, the United Kingdom and Australia. The founder of Kentucky Fried Chicken was Col. Karland Sanders in 1930; he established his first franchise in the year 1952. In 1969, KFC went public and later in 1986 it was sold to PepsiCo. PepsiCo spun off its restaurant holdings as Trico Global Restaurants Inc. and in 2002 it converted its identity to Yum! Brands Inc. Currently, Kentucky fried chicken is one of the largest fast food chains globally. It mainly sells chicken, sandwiches, wraps and salads. Although it focuses mainly with frying chicken, Kentucky Fried Chicken also sells chicken baked foods and deserts and side dishes online; Apart from North America, in other countries it sells foods like pork ribs  and others parts and Hamburgers or kebabs (Kurtz 2012).

KFC made its entry in China Market in 1987 through Beijing. In 1996, KFC had opened its 100th store in Beijing. KFC was the initial global ready meals restaurant to invest in Beijing. Kentucky fried Chicken and other ready meals restaurant were greatly successful in the huge Chinese towns. KFC is considered as a part of Chinese people lives, which has changed their children’s experience.

Reasons for localization.

Culture differences                                            

Culture is referred to as a structure of values and norms that are shared among individuals that when assembled together constitute a way of living. Different home culture and motivation for home workers may not be alike to that of the local country making it hard to apply to same incentives and expect the same results. Due to the different culture of China KFC opted to localize its products to suit the Chinese people (Reuvid & Li 2005).

Customer demand

The second reason for localization of KFC in China is to meet it customers demand. The Chinese are becoming more health and nutrition conscious therefore KFC has adapted to more healthy food to suit their clients’ preferences (Dunne 2006).

Brand image

Another reason of localization is brand image; KFC has localized its products image to meet their clients’ interest. In each brand, KFC has incorporated the Chinese culture; by growing the Chinese brand KFC has put the Chinese flavor into its brand growing. By doing this KFC will leave a more definite trace of localization (Ghemawat 2007).

Lower cost.

KFC has adapted localization in China to lower cost.  Due to cost lowering the KFC can meet all its clients’ needs.

Culture integration

Many researchers argue that cultural integration plays an important role in international marketing. In China the taste of the food is crucial, therefore, KFC has localized its food to satisfy the taste of the Chinese (Yu, Chan & Ireland 2006).

Market environment

KFC has localized in China to suit the market environment; they have achieved this by introducing food that is familiar with the locals. KFC has also localized to compete effectively with the local markets.

Localization practices

Research shows that companies that have international organizations consider how far to loacalize their marketing strategies to the home situations. The marketing strategy of KFC in China included:

Product

 To market a product is the initial aspect that deals with what is required of the items or services and they way they are linked to the clients’ liking. Products are frequently made to meet  what the client wants. The product is chosen in accordance to the five kinds, styling, brand name, eminence, elements and packaging. KFC has adopted product localization to satisfy its clients in China.

The KFC restaurants globally together with those in Beijing use the “CHAMPS” plan, to uphold good qualities and standard of their dishes. China is increasingly becoming health and nutrition conscious. Therefore, they have put up a unique commission comprising of nutritionist and doctors, hoping that Kentucky fried chicken can instigate and increase additional food that are Chinese- culture with a high dietary value. Therefore, KFC has put more effort to satisfy their clients in China by providing fresh foods that are familiar with the Chinese. KFC has done this by introducing foods like fried rice, noodles and Chicken congee in their menu to match with the Chinese taste. By doing this, KFC have distinguished its products from other fast foods that are recognized globally. KFC has also adapted the localization method to enable them compete with the local Chinese market (Singh 2012).

KFC has also made sure that they have not demolished the local culinary by adding various Chinese ingredients to their cooking procedures. KFC has, for example, introduced Chinese- style spicy chicken sandwich and another product known as old Beijing Roast Chicken that is not found in other foreign countries. Apart from the two products KFC has also introduced flavours that comprise of Chicken congee and popcorn chicken spices for Chinese people (Chow 2007).

Promotion

Promotion is the various ways of sponsoring the product. The four aspects of promotion are promoting sales, advertising, exposure and individual selling. Kentucky fried Chicken has adapted the aspect of promotion as its major way to convey all those who love Chicken to its unique delicacy.

Advertisement

In China, KFC has adapted the advertising campaign to go with the client’s taste. In China, there exists a Cartoon edition of “We Do Chicken Right” commercial. KFC has also introduced a promotion campaign known as Chicy, that is written as Qiqi in Chinese to go along with the Chinese children preferences (Jing 2000).

Publicity

To boost the recognition of the brand and prompt the level of sales, KFC has introduced sets of meals that are periodical and special prices to promote some of the special food constantly. They have also introduced meals designated for children. Another step that KFC has taken in the promotion is taking part in charitable events that include donating money and clothes to the Chinese. In its localization strategy, KFC has also set up a website for its China’s clients (Singh 2012).

Price

Price marketing is the way of pricing a product. Pricing is the solitary aspect in the marketing mix that an organization receives income. Strategies of pricing are connected with aspects of living standard, size of the inhabitants, age, and buying guide of its purchaser market. Pricing depends with the economy of the country.

As KFC was the initial ready meal restaurant in Beijing, it benefited from the benefit of the initial move, and they were able to put up the price at any comparing prices directly with entrants in the similar market. They therefore chose to put up the charges at the average to soaring level at a particular moment. Even after KFC set their prices at the medium level the Chinese could still pay for the food because their GDP growth rate at that time was high (LIU 2008). Chinese people were ready to spend money at KFC as they believed that their food was of the high standard. Due to this KFC is not willing to lower their prices instead choosing to keep it that way and wait the economy to grow (Yeh 2006).

Management

In China, KFC has made an effort to train local staffs as they know the national policies and have an understanding of the home competitive environment and market aspects. In their entire market segment, KFC has made sure that there are trained eight local leadership teams with wide market experience to make the correct judgment within a short time. KFC has also adapted this strategy to avoid communication barriers between cultural differences. To implement the localization strategy, KFC has laid down a framework that includes the Chinese characteristics of two departments that include, the HR and training department and the operation department (Prasad 2012).

In China, KFC has localized its business strategy by using raw materials that are produced locally, thus stimulating the growth of different industries that produce the raw materials. China’s suppliers provide materials for packing and food. KFC has also localized the management by introducing local supplier brand and new concept of management. By doing this KFC, developed a partnership with the Chinese people. KFC has also encouraged foreign suppliers to put up local factories in China. The suppliers supply China with localized products that are imported from foreign countries (China 1999). 

Issues facing Localization

More competitors integrating localization

KFC monotony in China is threatened by the emergence of other fast food chains that are adopting localization strategy. Fast food chains like Mc Donald are localizing their promotion, distribution and marketing strategies to suit the needs of the local people. Their food and services are of high quality as they expect huge potentials in fast food industry in China.

Distributors- negative media coverage

Another challenge faced by KFC localization in China is the negative media publicity. Some of the KFC distributors have been accused not to observe hygienic values. The negative coverage has greatly affected KFC as a brand as it is recognized globally.

Management- communication

Communication is the main barrier of KFC localization in China. Due to the language barrier KFC has faced many challenges in implementing its localization strategy.

Recommendation

KFC should pay more attention to customer’s demand so as to compete with other fast foods chains in China.  By satisfying the client’s demands, KFC should adapt culture integration this will enable it to blend well with the Local people.They should also maintain hygiene practices in their outlets to keep up with the competitive market. KFC should also maintain hygiene as it builds the image of the brand, with a bad hygienic reputation KFC risks losing its valued clients to other fast food chains. KFC should also maintain the quality of the food and also its safety as the Chinese people pay attention to both the quality and safety. They should also adapt a well- organized market plan as it will be easier for KFC to succeed.

Conclusion

In conclusion, the success of KFC in the Chinese market shows that for an organization to succeed in China they should adopt good management of differentiation and localization. KFC’s adoption of localization and differentiation has played a huge part in its success in China. The success of KFC has also been stimulated by good image that the company has created in China; another reason for the Success of KFC is a good relationship that KFC has built a relationship with the local people. The localization KFC’S product has also enabled it to compete with other fast foods in China. KFC has been able to meet its clients’ needs especially the children who are among its loyal customers.

References

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