Kfc Microeconomics Analysis

Microeconomics

Kentucky Fried Chicken (KFC) Company

History

KFC is the second biggest fast food chain on the planet with more than 18000 outlets. The headquarter is situated at Louisville Kentucky. KFC was the one of first fast food affix to grow globally. It established by Harland Sanders. He began his profession by offering singed chicken at roadside eatery. He concluded his own mystery formula 11 herbs &spices after the principal business of weight cooker on July 1949. The principal franchisee opened at Utah in 1952 by his capability of eatery diversifying idea. At 1987, KFC turn into the primary western fast food chain that opened in China. Presently, China is the KFC 's most astounding productive market which earned about $250 million

More broadly, price is the sum of all the values that consumers exchange for benefits of having or using the product or services. Pricing strategies of KFC are different in the different countries due to different exchange rate, inflation, and different tax policies in the different countries.

KFC uses every Day Low Price (EDLP) pricing strategy. This strategy emphasizes the continuity of retail prices at a level somewhere between the regular nonsale price and the deep-discount sale price of high/low retailers (Levy, M. & Weitz, B. A. 2011). KFC is said to use this strategy because KFC is promoting a new KFC Lunch treats for everyday value at only RM4.95 for a set KFC famous bowl and a carbonated drink.

One more strategy for KFC should be to price discriminate customers based on age. Teenagers, especially students, have relatively inelastic demands due to the popularity of KFC in that age group, so for them, KFC could raise the price slightly to increase profits. For customers of older age groups, however, the demand is very elastic, so KFC should lower the price for these customers to attract more

KFC is adapted to monopolistic competition which involves a lot of firms competing such as McDonald, Wendy’s and Popeye and there is no barrier for new firms to exit or entry the fast food industry. However, KFC promote their dishes in some way different with others rival by using product differentiation. They are independence because they do not care how their rivals react. Non-price competition, competition in term of product promotion or product development which affect the demand of KFC. Their packaging depends on three criteria: heat retention, moisture removal, and grease absorption and mostly made of recycle paper (Wishnu S 2013). They using the slogan ‘So good’ to create awareness of public and build healthier image. KFC with its secret blend 11 herb & spice fried chicken differentiate from others fast food restaurant to maintain the customer loyalty. Moreover KFC using non-hydrogenated palm oil that contains insignificant amount of trans fat and it is 100% cholesterol free (KFC 2013).In Malaysia KFC spend about RM12 million in advertising, marketing and promotions and expected to drive sales up by 10-15 percent. The smiling colonel Sanders reminds the public about KFC instantly. However, If KFC keep increasing its price, they will losing their customer but not all of them due to