24_Hours_Operation_-_Kfc

1 Executive Summary Busy lifestyle is the modern condition in the new generation in Hong Kong. People do not want to waste the time for food processing and dinner time is postponed to midnight. Therefore, most of the fast food restaurant has developed and the competition is increased. However, the fast food market become saturated, there have more than 10 catering group in over 1,000 restaurants in Hong Kong, it intensified market competition. Also, the financial tsunami has invaded the world on 2008. Therefore, the company should desire the strength to get more market share for business grow or just stay in the current status. (Number of Fast Food restaurant, 2011) This study aims to investigate KFC in order to suggest the marketing strategy for further development and expansion to KFC and the fast food industry. This study will focus on investigating KFC local fast food business to desire strategies in extend the operation hours to 24 hours, fight for more business, heightening brand loyalty, and enhancing providing quality food and service delivery to the customers in Hong Kong. 2 Introduction Nowadays, most of the café, restaurant and convenient shop even McDonald’s are running 24 hours in Hong Kong, it is showing the needs in the market. Fast Food restaurant means is food prepared and served quickly at a fast-food restaurant or shop at low cost. Fast food is a multi-billion dollar industry which is continuing to grow at a rapid pace in the early 21st century in many countries as fewer people cook at home. (Word iQ.com) Recently, there is a global working hours survey studied (OECD April, 2011), shows that Hong Kong is the Top 7 of the longest working hours being paid and unpaid per day in the world. In this survey we can see that many Hong Kong people need to work over normal working hours and seldom have dinner at home with family. Therefore, the consumer’s dining behavior has been changed and fast food restaurant demand increase in Hong Kong market. KFC, one of the major fast food restaurants in Hong Kong, when we facing the more and more competitors extend their operation hours, therefore, in our research, we will investigate if KFC should extend the operation hours to 24 hours to get more market share for business grow or focus on providing more high quality food and delivery services to the customers in Hong Kong. 3 Company Background KFC Corporation, known as Kentucky Fried Chicken, was established in 1930, based in Louisville, Kentucky, is the world’s biggest chicken restaurant chain; KFC also is part of Yum! Brands, Inc., the world’s largest restaurant company in terms of system restaurants, with more than 36,000 locations around the world. KFC is specializing in Original Recipe, Extra Crispy, Kentucky Grilled Chicken and Original Recipe Strips with home-style sides, Honey BBQ Wings, and freshly made chicken sandwiches. KFC arrived in Hong Kong since 1985. KFC (Hong Kong) has over 70 branches in Hong Kong and Macau with a team of more than 3,000 employees and serves over 3 million customers each month, it is the one of the major fast food restaurant in Hong Kong. 4 Management Problem Due to the main competitor McDonalds widely running 24 hours store, KFC facing a dilemma of the market share base on if KFC should extend the operation hours to 24 hours to increase the competitive advantage in fast food market in Hong Kong. 5 LITERATURE REVIEW With referring to the below cenus population statistic which conducted by the government, it is found that the age of 15 to 64 is the main population group among Hong Kong. The people which are at the age of 15 to 64 are having over 70 % among total of the population. That means, those people in the age group of 15 to 64 are the ones who have most influencing purchases power and they shall be our most potential customers. As a result, we have focus and target those groups of people as our potential customers that would be most likely to consume. Statistical Tables Table: Population by Age Group and Sex Age group Mid-2010 End-2010 Male ('000) Female ('000) Both sexes ('000) Both Sexes (% of total population) Male ('000) Female ('000) Both sexes ('000) Both Sexes (% of total population) 0 - 4 127.7 116.7 244.4 3.5 133.8 122.9 256.7 3.6 5 - 9 132.1 123.2 255.3 3.6 127.7 118.8 246.5 3.5 10 - 14 183.9 174.4 358.3 5.1 177.5 168.2 345.7 4.9 15 - 19 222.8 210.4 433.2 6.1 221.7 209.8 431.5 6.1 20 - 24 221.5 236.3 457.8 6.5 224.0 236.3 460.3 6.5 25 - 29 231.4 310.0 541.4 7.7 230.0 310.2 540.2 7.6 30 - 34 223.9 319.9 543.8 7.7 225.7 324.9 550.6 7.8 35 - 39 240.1 334.8 574.9 8.1 237.5 331.7 569.2 8.0 40 - 44 252.2 332.0 584.2 8.3 248.4 333.3 581.7 8.2 45 - 49 309.6 359.8 669.4 9.5 301.5 358.0 659.5 9.3 50 - 54 310.3 318.2 628.5 8.9 315.5 324.6 640.1 9.0 55 - 59 244.3 247.7 492 7.0 248.9 252.9 501.8 7.1 60 - 64 188.0 184.5 372.5 5.3 198.3 194.8 393.1 5.5 65 - 69 118.4 107.6 226 3.2 118.5 109.6 228.1 3.2 70 - 74 115.2 116.6 231.8 3.3 116.3 115.9 232.2 3.3 75 - 79 95.4 105.9 201.3 2.8 95.2 105.7 200.9 2.8 80 - 84 56.3 77.9 134.2 1.9 59.6 80.6 140.2 2.0 >= 85 37.4 81.4 118.8 1.7 39.5 84.5 124.0 1.7 All age groups 3 310.5 3 757.3 7 067.8 100.0 3 319.6 3 782.7 7 102.3 100.0 Age group Mid-2011 # Male ('000) Female ('000) Both sexes ('000) Both Sexes (% of total population) 0 - 4 133.3 123.1 256.4 3.6 5 - 9 126.6 118.0 244.6 3.4 10 - 14 173.1 163.5 336.6 4.7 15 - 19 216.3 205.8 422.1 5.9 20 - 24 217.5 228.3 445.8 6.3 25 - 29 230.5 310.7 541.2 7.6 30 - 34 226.5 329.9 556.4 7.8 35 - 39 237.6 332.3 569.9 8.0 40 - 44 245.2 333.6 578.8 8.1 45 - 49 298.9 358.6 657.5 9.3 50 - 54 316.6 326.4 643 9.0 55 - 59 256.1 259.4 515.5 7.3 60 - 64 204.5 200.7 405.2 5.7 65 - 69 120.2 112.8 233 3.3 70 - 74 114.7 112.9 227.6 3.2 75 - 79 96.0 107.0 203 2.9 80 - 84 60.9 81.4 142.3 2.0 >= 85 41.4 87.8 129.2 1.8 All age groups 3 315.9 3 792.2 7 108.1 100.0 Many authors attempted to explore comparison between KFC and McDonald’s in worldwide fast food restaurant market. Monika J A Schroder analysis Fast Food purchase behavior of customer between McDonalds and KFC. On the other hand, the theories of SWOT analysis and Marketing Mix will be applying and analyzing the information for our case study – Fast Food Restaurants and 24 Hours Operation. These theories are explained as below: 5.1 Fast food purchase behavior According to Monika J A Schroder (Monika J A Schroder2005), the principle attitudes held by the fast food target group members related the both McDonalds and KFC; perceived value of the brand itself; the nutritional value of the food served; the ethical principles underpinning the food products like health; and the overall quality of food products sold. To be simple, they are:- 1. Brand Value 2. Nutritional value 3. Ethical value 4. Food quality Consumer value inherent in fast food tends to include convenience, cheapness, consistency and reliability, the character of a filling snack or meal and a fun context. The value offering of fast food companies must be integrated, with particular emphasis on convenience, reasonable prices and quality product. High-grade and/or healthy ingredients, together with process-related types of added-value, such as organic or animal welfare friendly production, come at a price, and although expected by fast-food consumers, it is not clear that they are willing to pay extra of them. Further, consumer expectations of food ethics-related standards may increase and possibility become mainstreams, in which case fast-food retailer will be increasing affected. Knowing that there are continuing changes on consumers’ value towards fast food demand, it means that consumers nowadays are no longer fulfilled with only food and services, but also the added-value elements. We understand that consumers in Hong Kong are having long and irregular working hours; sometimes, if they may work overtime till 10:00 p.m. and would need to have a late dinner. As such, people may then need to go to the restaurants that have longer working hours. In order to gain the proposed sales, it is worth to study whether the extension of working hours of the fast food shop would be worthy to implement or not. 5.2 SWOT Analysis SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths (S), weaknesses (W), opportunities (O), and threats (T). Strengths and weaknesses are internal factors. Opportunities and threats are external factors. (Hill, T&R. Westbrook, 1997) SWOT Analysis is a useful technique for understanding KFC Strengths and Weaknesses, and for identifying both the Opportunities open to and the Threats that KFC face. As such, it is instrumental in strategy formulation and selection. Here are some definition and examples of SWOT. Figure 1 Strengths A firm’s strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. Examples of such strengths include:  Patent  Strong brand names  Good reputation among customers  Cost advantages from proprietary know-how  Exclusive access to high grade natural resources  Favorable access to distribution networks Weaknesses The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses:  Lack of patent protection  A weak brand name  Poor reputation among customers  High cost structure  Lack of access to the best natural resources  Lack of access to key distribution channels Opportunities The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include:  an unfulfilled customer need  arrival of new technologies  loosening of regulations  removal of international trade barriers Threats Changes in the external environmental also may present threats to the firm. Some examples of such threats include:  shifts in consumer tastes away from the firm’s products  emergence of substitute products  new regulations  increased trade barriers 5.3 Marketing Mix Marketing mix is a combination of marketing tools that are used to satisfy customers and company objectives. Consumers often call the marketing mix "the offering", and it is controlled by the 4Ps in marketing: These Four P's are the parameters that the marketing manager can control, subject to the internal and external constraints of the marketing environment. The goal is to make decisions that center the Four P's on the customers in the target market in order to create perceived value and generate a positive response. (Barlon, Kimuli, 2006) Figure-2 Product It is a tangible good or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are service based like the tourism industry & the hotel industry or codes-based products like cell phone load and credits. Typical examples of a mass produced tangible object are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system. Packaging also needs to be taken into consideration. Every product is subject to a life-cycle including a growth phase followed by an eventual period of decline as the product approaches market saturation. To retain its competitiveness in the market, product differentiation is required and is one of the strategies to differentiate a product from its competitors. Price The price is the amount a customer pays for the product. The business may increase or decrease the price of product if other stores have the same product. Promotion It represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements: advertising, public relations, personal selling and sales promotion. A certain amount of crossover occurs when promotion uses the four principal elements together, which is common in film promotion. Advertising covers any communication that is paid for, from cinema commercials, radio and Internet adverts through print media and billboards. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations (see Product above). Place A way of getting the product to the consumer and/or how easily accessible it is to consumers. Product Price Place Promotion  Brand name  Functionality  Styling  Quality  Safety  Packaging  Service & Support  Warranty  Pricing strategy  (skim, penetration, etc.)  Suggested retail price  Volume discounts and wholesale pricing  Cash and early payment discounts  Seasonal pricing  Bundling  Price flexibility  Price discrimination  Allowance  Financing  Leasing options  Distribution channels  Market coverage (inclusive, selective, or exclusive distribution)  Specific channel members  Inventory management  Warehousing  Distribution centers  Order processing  Transportation  Reverse logistics  Promotional strategy (push, pull, etc.)  Advertising  Personal selling & sales force  Sales promotions  Public relations & publicity  Marketing communications budget Summary of Marketing Mix decisions: (Lauterborn, R(1990)) Table-1 Limitations of the Marketing Mix Framework The marketing mix framework was particularly useful in the early days of the marketing concept when physical products represented a larger portion of the economy. Today, with marketing more integrated into organizations and with a wider variety of products and markets, some authors have attempted to extend its usefulness by proposing a fifth P, such as packaging, people, process, etc. Today however, the marketing mix most commonly remains based on the 4 P's. Despite its limitations and perhaps because of its simplicity, the use of this framework remains strong and many marketing textbooks have been organized around it. 5.4 Environment Analysis One of the KFC’s competitors, Mc Donald’s, has imposed 24 operation hours since 1987. It showed that during the late night time, its customers are mainly teenagers and some white-collars who work until late. Besides, in 2009, it started to promote this strategy again with the take away services. It aimed to capture the customers who watch football matches at night. 5.5 Concepts We will set the late dinner at 9:00pm, because of the normal time for most of the people; dinner served was between 7:00-8:30pm, so we think this is the generally accepted meanings of late dinner. 5.6 Hypothesis - People work Over time till late as habit in HK, they need more options on eating after worked. - Sales revenue increased after extended the operation hour. - Increase market segment on office lady or office boy except teenagers. 6 Management Question A) How important of 24 hours of fast food shop' B) How can KFC run 24 hours in Hong Kong' 6.1 Research Question Using the following research questions to build up our research direction and find out what people think of running 24-hours fast food restaurant, how much percentage was success and how much risk we should take: 1. Is KFC capable in running 24 hours operation' 2. What are the consumer behaviors to fast food restaurants in Hong Kong' 3. How people feel if KFC runs 24 hours operation' 4. Is McDonald successful in running 24 hours operation' 7. Value of Research A) KFC can easily find out that if imposing 24 operations hours would help or would not help for developing and expanding its business. B) The study result can be taken as a company’s reference for marketing strategy and marketing plan for further development. 8. Research Objectives A bustling city - Hong Kong has many fast food restaurants. It is undoubtedly that there is keen competition between them. To capture more business opportunities for KFC, it has to try every method to maintain and develop their business growth. One of the hypotheses is imposing 24 operation hours for extending their business hours to capture some different customers segment and satisfy Hong Kong people’s need. This study aims to make hypothesis methodology for evaluating KFC if to adopt a new marketing strategy - extension of the operation hours to 24 hours. According to the responders to the research program, we can identify the extension of the operation hours to 24 hours would help or would not help KFC for developing and expanding its business. Therefore, KFC can easily find out that if this hypothesis is suitable or not. 9. Research Design We will base on aim of research, design question, sampling and data collection methods to discuss documents analysis and bringing out ethical considerations. For whole section collecting, all will be use for analyzing advantage, disadvantage, risk and marketing mix for running 24 hours in KFC after getting data by questionnaire. There are 7 research design : 1,Question Crystallization; 2, Data Collection Method; 3, Time Dimension; 4, Topical Scope; 5, Research Environment; 6, Purpose of Study; 7, Perceptual Awareness. We will question Crystallization for this research because our research question is still fluid or undetermined, we have to use this Exploratory Study to expand our understanding and develop hypotheses or questions for our research 9.1Methodology In this research, we will use exploratory research. Exploratory research is effectiveness to formulate a problem or define a problem more precisely, identify alternative courses of action, d0evelop hypotheses, isolate key variables and relationships for further examination, gain insights for developing an approach to the problem, and establish priorities for further research. For examples, easily to getting in-depth answer through the processing, enhance the opportunity of getting additional information if KFC have competitive advantage in fast food market. Exploration can save time and money, so it should not be slighted. In quantitative research, unless a researcher is collecting his or her own data, interviewers or data collectors are rarely involved in the data interpretation or analysis stages. Although data collectors contribute to the accuracy of data preparation, their input is rarely sought in the development of data interpretations. But for this research, quantitative research is not suitable for us. We will use qualitative studies, which both the sponsor and the interviewer/data collector are often debriefed or interviewed, with their insight adding richness to the interpretation of the data. 9.2Target population Our target audiences are among 15-65 years-old who have purchasing power and affordable with acceptation of fast food restaurant or may have a potential to purchase 24hours fast food restaurant. 9.3Sampling strategy We will use Experience Surveys by questionnaire to seek consumer’s ideas about important issues or aspects of what product or services that fast food restaurant should provide 9.3.1 Sampling We will use Questionnaire survey by online and interviewing for sampling of our research. We will do questionnaire by online survey as random sampling; interviewing is used to obtain KFC customer in Yau Tsim Mong District where is large floating population everyday that we can select current customer in KFC in both male and female from age 15-65 who will not possible to do our online questionnaire or can provide insightful information on running 24 hours operation of KFC. We will use nonprobability sampling method on our Qualitative research. We propose to use Convenience sampling to choose participants who readily available or have spare time to answer our question. Due to the lack of time, we don’t have pilot test on the questionnaire for pre-test. 9.4Data collection strategy We will use Structured Interview in Group via Online modes to explore the range of consumer’s attitudes, opinions and behaviors, because we can do the research through the observation, we can know more about what issues of public interest and what is their common concern. In structured interviews, we can collect more direct comparability of responses, question variability has been eliminated and thus answer variable is assumed to be real. The interviewer’s neutrality can be maintained. 9.4.1 Questionnaire Survey “The types of information will take account of the people's or organizations' level of knowledge, attitude, personalities, beliefs, or preferences. Questionnaires are widely used to collect such information. Well designed questionnaires are highly structured to allow the same types of information to be collected from a large number of people in the same way and for data to be analyzed quantitatively and systematically. Questionnaires are best used for collecting factual data and appropriate questionnaire design is essential to ensure that we obtain valid responses to our questions.” (British Medical Journal, 2001). According to above author, the questionnaire is the best method for collecting data from a large number of people and easy to collect the data. For this project, online survey can be received the responses more quickly from Internet which easy to conduct the people through email and via web. This method is also cheaper because no costs are associated with purchasing paper or other materials for printing. The web-site system can analyze the result automatically. Therefore, time for analysis is reduced. This online survey can collect customers’ opinions for KFC operation and analyzing whether McDonald is successful on 24 hours operation or not. It focuses on customer’s behavior after 11:00p.m and what factors will be affected by the 24 hours operations. It can also find out which age and gender like to go to KFC at night. Therefore, the survey can be very helpful and collect accurate analysis. This online survey will be inviting to different type of people including friends and potential people and post on different forums which can easy to help collect the data. 9.5Data analysis strategy We will use Participant Observation to collect the consumer’s attitudes on overnight dining habits, so that we can test the hypotheses and adjust our data analysis if necessary. Our research is based on Qualitative research to find out how and why consumers have late dinner now. We attempt to understand the different meanings that people place on their experiences, hidden interpretations, understandings, and motivations on dining at fast food restaurant. During the analysis, we propose to use content analysis of written materials drawn from personal expressions by participants. In qualitative studies, the interviewer and the data collector will be the same people to obtain their insight adding richness to the interpretation of the data. We will use detailed interview guide based on structured interview to guide the question order and the specific way the questions are asked, but the questions generally remain open-ended. In structured interviews, we permit more direct comparability of responses, so that we can easier to compare the data, and we can maintain interviewer’s neutrality through structured interviews. 10 Scheduling and Budget 10.1Scheduling The estimated time for the whole research report is within 1.5 months. The beginning date is 1 November 2011. Time arrangement for the whole schedule as below: Steps Start Date End Date 1. Designing the questionnaire 1 November 2011 6 November 2011 2. Modifying the questionnaire 7 November 2011 9 November 2011 3. Carrying out the questionnaire 21 November 2011 25 November 2011 4. Collecting and analyzing the data 26 November 2011 1 December 2011 5. Preparing the report 1 December 2011 7 December 2011 6. Finalizing the report 8 December 2011 14 December 2011 10.2Budget In order to motivate customers to participate and increase the response rate, we propose to offer $10 KFC cash coupon for each participant. There is up to 200 cash coupons. Items Amount($) 1. Manpower for carrying out the questionnaire (No extra manpower is needed) 0 2. Printing fee for 200 copies of the questionnaire (each copy cost HK$ 0.3) 60 3. Manpower for collecting and analyzing the data (No extra manpower is needed) 0 4. $10 KFC cash coupon X 200 2,000 Total: 2,060 Therefore, the total estimated cost is HK$2,060. 11. Ethical Considerations As human beings were involved in the research, the ethical concern was the issue of voluntarism, confidentiality and privacy. The questionnaire stated explicitly that participation was voluntary. All data were stored with security codes and known by the researchers only. Besides, the data would be used in this research only and would be destroyed after the research was finished. APPENDICS Appendix 1 – Statistics of Completed Questionnaires Questionnaire 1. Your Personal information: Sex: 0 Male 0 Female Age: 0 15 or below 0 16 – 25 0 26 – 35 0 36 – 45 0 46 – 55 0 55 - 65 0 above 65 2. How frequency of eating after 11:00 p.m.' 0 No 0 Sometimes 0 Always 3. Where would you like to go for eating after 11:00 p.m' 0 Restaurant 0 Fast food Shop (e.g. McDonald, KFC) 0 Convenience Shop (e.g 7-Eleven, Circle K) 4. What is your main concern factor when you go for eating after 11:00 p.m.' 0 Price 0 Food quality 0 Service 0 Place 0 Speed 5. Have you ever been McDonald after 11:00 p.m.' 0 Yes 0 No (If you choose “No”, please go to Question 9 directly.) 6. How many times would you go to McDonald per month after 11:00 p.m' 0 1 time 0 2-5 times 0 6-10 times 0 More than 10 times 7. How much do you spend each time' 0 $10 or below 0 $11-$25 0 $26-$40 0 $41 or above 8. What is the main purpose of going McDonald after 11p.m' 0 Eating 0 Gathering 0 Reading 0Discussion 0 Using Free wifi 0 Other (Please state: ___________________________) 9. Do you think fast food shop is indeed on opening 24 hours' 0 Yes 0No 10. Do you agree that KFC should open for 24 hours' 0 Yes 0 No (Please state the reason: ____________________) 11. Please select the location if KFC run 24 hours in your favor. 0 Mong Kok 0 Tsim Sha Tsui 0 Causeway Bay 0 Tin Shiu Wai 0 Yuen Long 0 Tuen Mun 0 Other (Please state the location: _______________________) ~ END ~ BIBLIOGRAPHY  Barlon, Kimuli. (2006) "The concept of the marketing mix" Presentation on marketing management, vol 1, September, 2006 (online, Scholar Google)  Hammer, M. and Champy, J. (1993) Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business Books, New York, 1993, ISBN 0-06-662112-7  Hill, T. & R. Westbrook (1997). "SWOT Analysis: It’s Time for a Product Recall". 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