International Marketing: Definition and Effects of Environmental Factors on KFC Marketing Management Strategy
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International marketing is the conceptualization of both goods and services and the activities involved with either production or marketing of the aforementioned commodities or services both inside and outside the marketing niche of the company’s country of operation. This means that the process involves shifting from making and executing decisions in a single country to conducting the activity in multiple countries as well (Arnold & Quelch, 1998).
It should be noted that international marketing is not confined to the movement of goods and services from one country to another; but instead, it involves the production as well as the distribution activities. Notably, the marketing strategies of the internationalized company are formulated and developed in the home country before they are extended to the international markets, where their respective operational activities are conducted. Notwithstanding, the key decisions, which affect marketing activities as well as other relevant areas of the company’s operations, are conducted from the company’s country of origin.
Unlike international marketing, global marketing involves marketing operational activities which are coordinated and integrated across a variety of multiple numbers of potential markets. It should be noted that global marketing does not encourage the activities, which conform to centralization of key decision making criterion. This means that immediate managers of a company can use similar strategy to aid in the marketing activities of the firm within all countries upon which the operations are conducted (Arnold & Quelch, 1998).
Unlike, in global marketing, whereby there is evident standardization of both goods and services within all potential distribution channels, in international marketing, strategies, as well as commodities, are altered in order to match up with numerous forms of cultures, as well as marketing environments (Arnold & Quelch, 1998). Thus, it is safe to assume that those companies, which conduct their activities upon a diverse level of cultures, will embrace the activities of international marketing; while those companies, which conduct their operations within similar form of environments, are likely to embrace activities of global marketing.
Consequently, within the setting of an international marketing environment it is assumed that there are numerous factors which play a significant role in influencing the marketing strategies, commodity positioning in the market, as well as the different methodologies associated with pricing of the aforementioned commodities. Considerably, it is assumed to be the duty of marketing managers to formulate the platforms, upon which effective and efficient strategies can be used in order to tackle hurdles, which may be experienced in the course of implementation process of international marketing activities (Arnold & Quelch, 1998).
Thus, marketing managers are required to establish numerous hurdles as well as opportunities, which can be brought forth by the aforementioned facets right before developing the necessary strategies. In the course of formulating marketing strategies for companies it is required that marketing managers are conversant with the different aforementioned environmental facets, which affect effective implementation of international marketing activities.
These environmental factors include the cultural environment, the immediate political environment, the economic environment, as well as the government regulations of the country, upon which operational activities of the company are taking place.
Effect of Environmental Factors on the Marketing Management Strategies of Kentucky Fried Chicken (KFC)
Company’s Profile and Background
KFC is the world’s largest chicken restaurant. It consists of ten thousand chain locations in more than 80 countries across the globe. The company has employed more than two hundred thousand employees in all of its locations. In 1964, both John Brown and Messy Jerry purchased KFC for $2 million, and thus, transforming it into a corporation form of business entity. In 1986, the copmany was purchased by Pepsi Company and was later changed into KFC (Kentucky Fried Chicken). In 1992, the company established its operations into the foreign market of Japan and in the preceding year opened another chain in China (Grimes, 2012).
Notably, KFC is a subsequent entity of Tricon global restaurant, which is considered to be the world’s largest restaurant operational group.
Subsequently, the restaurant is considered to have perfected the art of embracing the distinctive diverse cultures across the globe; thus, the success it enjoys in returns till date. The company has embraced the “CHAMPS” philosophy, which advocates for consistent quality service to the potential customer in order to keep up with their loyalty to the brand. Currently, KFC controls about 50% of the total fast-food market share; hence, dpicting a large customer base. In this regard, it is fair to stipulate that KFC has beaten all odds to venture into both local and international markets for the purpose of making vast volumes of returns (Grimes, 2012).
Given the fact that the company was first established in the United States, the paper focuses on the operational activities of the firm in India, as well as China, because both are foreign markets, where KFC faces different environmental setting challenges.
KFC in the United States: Environmental Effects
Cultural Setting in India
KFC entered the Indian market in 1995 and now possesses about 107 chains in more than 21 cities in the nation. The company was much aware of the diverse cultural uniqueness of the Indian population, and thus, introduced such vegetarian products as Veg-Zinger and Veggie Snacker. However, it is noted that the business overlooked certain cultural aspect of the Indian market. For instance, the need to protect and embrace animals is a prevalent phenomenon amongst the Indian population, and probably, it is this form of misunderstanding that KFC has been perceived in the media channels, as having an unfriendly relation with PETA, as well as the Prevention for Food Adulteration Act of 1954 (Gupta, 2003).
The aforementioned act allows for certain limitations of MSG ingredient, whenever preparation of chicken was conducted. However, this was adhered by the firm altogether. PETA, People for Ethical Treatment of Animals, is also perceived to have organized different protests across the nation in regards to cruelty against chickens by the firm. On a positive note though, the Company has continued to record immense levels of sales due to the cross-cultural appreciation of the Indian market. This distinctive culture has allowed the potential Indian market population to embrace the demand for the fast-food items (Gupta, 2003).
This is depicted by the frequent visits made to the fast-food joints on average by Indian population. It is also fair to assume that Indians are slowly embracing the American culture; thus, there is an opportunity of the extensive growth to the business. In this case, marketing strategies have emulated the different trends in the eating habits of the population.
India is considered to be one of the most established democracies across the globe. This has ensured that such international firms as KFC enjoy initiated and implemented policies regarding the operations as well as ownership of business entities. The Indian government has ensured that the processes needed in establishing and attracting foreign investment are more expansive and rewarding in nature. Such government incentives as non-tariff barriers, as well as subsidies to international businesses, have contributed positively to the growth of KFC to the current 21 states of India. It should be noted that the home country of KFC is the USA, which is a stable democratic country. This means that the successful operations of the firm at the home-base are further replicated to international markets to yield more success (Nichani, 2005).
India is a fast-developing country, where extensive portion of its resources remains untapped and unorganized in that matter. Statistically, about 70% of the potential markets in India are untapped; thereby, making it a viable ground for KFC to contemplate even further expansion of its services to the remaining section of the country at large (Nichani, 2005). The Indian population is fast transforming from the low-income household budgets to the middle-income household budgets. This means that most of the country’s population is willing and able to afford fast-food stuff like KFC fried chicken. This proves a vast potential for the company’s growth into making even higher sales volume; thus, returns in that matter.
Just like most governments, the Indian government has provided limitations to the manner, in which licenses are offered to the potential fast food joints in the country. This phenomenon has been put in place by the government in order to encourage such business activities as franchising. Furthermore, the government has put in place regulations to govern the pace, at which fast-food points and chains are emerging in the market due to the health concerns. Such health concerns as cardio-vascular, as well as cholesterol-related, illnesses are imminent attributes of the fast-food stuff; hence, the control regulation (Nichani, 2005).
KFC in China: Environmental Effects
KFC restaurant has gained an extensive operational ground in China since its inception in Beijing in 1987. Most of the successes stories associated with KFC in China rest on the assumption that the company had understood the culturee of the Chinese people in an effective manner. The business is perceived to have adopted such facets as localization of the foreign market, alterations of the product outlooks, tailoring product advertising campaigns to suit the locals, as well as providing distinctive meanings to commodities they offer to the locals in order to allow for a smooth transition of cultural aspect from one country to another (Zhou & Hui, 2003).
Notably, KFC’s marketing management has understood the significance of incorporating Chinese cultural aspects in the course of their advertising in order to conform to the local expectations. In this manner, in the course of entering the Chinese market, it is clearly evidently that the Chinese population was pleased with the introduction of the western-style of living, which advocated for a fair ambience, as well as qualitative food. With the assumption that the Chinese population embraces chicken products more than beef, KFC was allowed the chance to test its expertise and experience in preparing quality chicken. Consequently, the company has embarked on serving traditionally-prepared chicken in China. Such traditional products as Old Beijing Chicken Roll, as well as Sichuan Spicy Chicken, are some of the products, which have continued to attract a large customer base; hence, increasing the company’s profits and returns (Hofstede, 1980).
Another significant feature to note about the incorporation of the Chinese culture into the marketing management activities of KFC rests on its building ambivalence. For instance, the arrangements, as well as the decorations of the chains in China, adopt such Chinese traditional symbols as the kites, shadowgraphs, as well as the Great Wall. This décor has been embraced in order to catapult characteristics, as well as identification with the Chinese culture (Hofstede, 1980).
China is a developed economy and is considered to be developing even further to the greater scales. The average growth rate of its GDP is 8% per annum. This economic transformation has allowed the Chinese people to improve on their standard of living. This phenomenon is highly associated with the formulation of a socialist market economy in 1978. Subsequently, the formulated economy allowed easier foreign investments, given the fact that forces of market were allowed to take over the control of the market (Wang, 2000).
Another significant point worth mentioning rests on the assumption that the overall national wealth, as well as the resultant increase in household income, paved the way for a positive growth in the consumer-behavior patterns, which was climaxed in the pre-Mao era. Thus, it is safe to note that the resultant increase in household income; hence, disposable income, lead to the positive awakening of individual buyers as their resultant consumption as well as the willingness to participate in material pleasure have vehemently increased (Wang, 2000). This means that the Chinese population has embraced the western way of living, as more consumer goods are purchased as opposed to the traditional staple foodstuffs.
This immediate transformation of perception of the Chinese population towards foodstuff is the basis, upon which multinational companies have continued to use to make future investment decisions. It should be noted that with the advent and improvisation witnessed in the Chinese service economy, such fast-food joints as KFC were given a chance to invest and make fair returns.
China is considered to be one of the most respectable democracies across the globe. This is evidently clear by the manner, in which elections are conducted. Thus, the prevalence of political risk is minimal. It should also be noted that the politics in China plays a less significant role in determining the manner, in which the foreign investments are to be conducted. This peaceful and hospitable political environment has catapulted the interests of multinationals to incest in the country (Wang, 2000).
More significantly, it is the political opportunity that availed to multinationals by the political class through welcoming of western investors into the country. Given the fact that poultry business is one of the agricultural modernization plans for China, the political class has welcomed the move by KFC to invest widely in the country (Wang, 2000).
The Chinese government provides more support in terms of subsidies and lower tariffs to companies, which invest in the country’s technological sector as compared to the service industry. KFC being a service-based company enjoys a small level of support in that matter. The policies developed to put up an investment in the country are mostly old and irrelevant to the current market; yet, the government adheres to the stringent licensing allocation policies. This has slowed down the expansion activities of the firm into the different states within the country (Hofstede, 1980).
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