This paper examines the managerial and marketing implications of KFC introducing a drive-through service in China. It reviews the competitive landscape — primarily KFC's rivalry with McDonald's — and profiles the key customer segments KFC targets in the Chinese market. The paper outlines KFC's strategic priorities, including brand awareness, product differentiation, pricing, and cost-based approaches, while identifying economic, environmental, and technological factors that influence the drive-through rollout. Consumer attitude components — cognitive, affective, and conative — are also analyzed to assess customer receptiveness to the new service format. The paper concludes that China's expanding middle class, rising vehicle ownership, and growing appetite for Western fast food make drive-through expansion both feasible and strategically sound for KFC.
The following pages focus on discussing the managerial implications of KFC opening a drive-through service in China. There are several reasons that support the company's investment in this market. China's production potential allows companies that outsource some of their processes and activities to benefit from reduced production costs. Although the quality of products and services produced in China is expected to be similar to that of products made in Europe and the United States, complaints from customers around the world about Chinese-made goods have led to some reluctance among certain companies.
Another advantage of the Chinese market is its great potential and its characterization by continuous development and expansion. Economic improvements in the region have allowed Chinese consumers to benefit from higher incomes, meaning that a greater share of their earnings is spent on eating out — a trend that clearly favors KFC.
The company's investment in the Chinese market can also be attributed to the profit prospects this market offers. KFC's international image must not be neglected when analyzing its position in China. KFC is one of the brands that represents Western civilization, which some Chinese customers are drawn to. The fast food dining style is becoming increasingly appealing to Chinese consumers who find it difficult to set aside time for traditional meals due to the growing hours they spend at work or in school. Therefore, it is recommended that KFC take advantage of the opportunities provided by the Chinese market.
The main competitor of KFC on the international level is McDonald's, and the same situation applies in China. The two fast food chains provide similar products and services and target the same customer segments. They also practice similar prices. Differentiation between the two companies is achieved through the introduction of new products and the development of diverse promotional campaigns.
The main product categories offered by McDonald's include burgers, sandwiches, chicken, breakfast items, salads, snacks, beverages, coffee, desserts, and shakes. Its menus include the Dollar Menu, Extra Value Meals, Happy Meals, and Mighty Kids Meals.
McDonald's promotional strategy differs by country and is adapted to each market's characteristics. In the United States, promotions tend to focus on popular dishes such as barbecue and bacon, while in Asian markets they center on different offerings. These promotions are based on thorough market analysis conducted in each country (Annual Report, 2009).
Like KFC, McDonald's expands its business through franchises. Both companies selected this strategy for its advantages: expansion costs are significantly lower, and the company can generate substantial profits with reduced investment levels. However, a key disadvantage of the franchise model is that it gives the parent company reduced control over franchisee operations.
McDonald's strong financial position allows it to make significant investments in the Chinese market, making it difficult for KFC to build a clear competitive advantage. Both companies are cost-efficient, which means it is unlikely that either can introduce dramatically divergent pricing strategies.
KFC must also account for smaller competitors — namely local restaurants that serve traditional Chinese food. These establishments benefit from a loyal customer base built over time and can satisfy customer segments that KFC struggles to reach, such as older consumers. However, their market position and limited financial resources prevent them from offering consistently competitive prices.
Consequently, KFC's primary focus is on counteracting McDonald's, since smaller local restaurants lack the capacity to develop and sustain cost-effective strategies at scale. The image of McDonald's is stronger than that of KFC on the international level, which means KFC must develop competitive advantages that allow the company to exploit this gap and improve its global profile.
The main customer segments targeted by KFC are individuals aged 20 to 35 with medium incomes and busy lifestyles. These individuals prioritize career and education, spending a great deal of time at work. This lifestyle leaves little time to prepare meals or dine at sit-down restaurants with slower service, making fast food restaurants a practical preference.
However, there are notable concerns associated with this type of food. Most people worry about the nutritional quality of fast food products. Fast food consumption is widely considered unhealthy and linked to a range of health problems. In countries such as the United States and the United Kingdom, fast food has become a widespread phenomenon with serious consequences for population health and lifestyle, prompting governments to develop awareness campaigns regarding fast food and its effects (French & Crabbe, 2010).
As a result, customers in China are increasingly interested in purchasing higher-quality fast food products. This customer segment is growing and presents considerable potential, suggesting that KFC should focus its strategy on meeting these expectations (Jing, 2000).
Secondary customer segments include individuals aged 36 and older who enjoy eating out but cannot afford expensive restaurants. KFC offers an alternative by providing diversified menus at mid-range prices. Nevertheless, KFC must work on expanding its product and service range to satisfy a broader customer base.
The following characteristics have been identified among KFC's existing and potential customers in China:
Given the nature of the fast food industry and the competitive position of McDonald's, KFC must develop a push strategy to improve its standing in the Chinese market. The company must build and implement strategies driven by intensive advertising and promotional activity in order to gain competitive advantage. The most important factors included in the company's strategy are:
"Push strategy, awareness, differentiation, and pricing"
"Drive-through logistics, location, and combined outlet concept"
"Cognitive, affective, and conative attitude components"
"Drive-through expansion supported by market conditions"
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