Pricing Strategy of KFC

SMART PRICING

KFC

GOH HUI CHIN
A18HA0044

SCAN FOR VIDEO
PRESENTATION

BACKGROUND ECO-FRIENDLY RESTAURANT
https://www.youtube.com/watch?v=XmVc8q3iJ_g

 Fast food restaurant that specializes in fried chicken VIDEO HERE !!!!
 Founded by Colonel Harland Sanders in North Corbin, Kentucky,
KENTUCKY FRIED CHICKEN
United States (1952) Vision
 World’s second largest restaurant chain (as measured by sales)
 KFC located globally in 150 countries with 22621 locations To be the leading integrated food service
group in the Asia Pacific region based on
(updated as December 2019)
 Malaysia first branch: Jalan Tunku Abdul Rahman (1973) consistent quality products and
 QSR Brands (M) Holdings Bhd: Company that operates KFC exceptional customer-focused service

restaurants in Malaysia, Singapore, Brunei and Cambodia. Mission
 Up to 600 branches of restaurant in Malaysia To maximize profitability, improve
shareholder value and deliver sustainable
Main Selling Point
growth year after year

First Branch in Malaysia

PRICE SEGMENTATION ******************************************* PRICE FORMAT

Comparing with other countries • Price format is the form of expression of a price.
• KFC express most of the price in “just-below” format.
• Most of the KFC product implies RM xx.90 to make the

price level to appear lower. At the same time, this
price format bring a positive effect on sales.

Product Price Convert to RM Malaysia Price

3-pc Combo BND 9.70 (Brunei) RM 29.84 RM 20.20

Zinger Burger SGD 5.35 (Singapore) RM 16.44 RM 10.80

Signature Box THB 149 (Thailand) RM 20.53 RM 19.50

By comparing similar products of KFC in Malaysia
with other country, we can notice that the price
is quite similar. However, the price in Malaysia is
slightly lower than other country.

KFC globally enters market using ***************************** FIXED PRICE STRATEGY

SKIMMING STRATEGY  Fixed Price: Price of goods or services that is not

 Skimming Strategy: Setting a price so high that most subjected to bargaining.
 With fixed price strategy, the price of the goods or
potential customers will decline to buy the new product.
 KFC price their product at high price at first to target the services will not change for any individual.
 Advantages of fixed price strategy:
middle to upper class people.
 After that, they trick down the price. KFC also offers more  Less stressful
 Quick transaction
economy meals. By these, KFC gradually shift their target  In Malaysia, all the KFC’s products sold with a fixed price.
 Including Sabah and Sarawak (East Malaysia),
customer to middle and lower class people.
 This action enable penetrating to both side of the market the price of KFC remain constant.
 All the prices shown in the menu are inclusive with 6%
(Upper class and Lower class)

From service tax.
High Price ******************************************************

UPPER KFC specializes fried chicken’s recipe is made by 11 herbs and
spices. Although the recipe is not patented, instead the recipe is
CLASS available online, KFC still remain as one of the leading brand in fast

MIDDLE food industry. This is because of their:

CLASS • Advanced Management Experience - High Quality Product

LOWER To • Advanced Supply Chain - High Supplier Quality
Low Price • Advance Technology - High Restaurant Quality
CLASS • Strong Financial Support

COMPETITION BASED PRICING *************************************** Parity pricing

 Examination of competitors’ price  Match the price level with the competitors’ price
 Before this KFC almost monopoly the fried chicken in the  Other than the price of their main selling point (Fried

fast food market in Malaysia. Hence, we can say that KFC chicken), KFC price its product with parity pricing.
offer the cheapest fried chicken.  For example, the price of burgers is comparable with
 However, now McDonald’s also offer fried chicken “Ayam
Goreng McD”. Even KFC faced the biggest competitor, it the burgers in McDonald’s.
remain offering the cheapest fried chicken.

Below are the price shown in Food Panda Apps:

We can notice that KFC offer a better deal on As shown in
fried chicken set. Although the price for both 5 pcs Food Panda
and 9 pcs fried chicken is a bit more expensive than Apps, the
that of McDonald’s offering. But KFC price included price of KFC
burger set is
with 2 types of side dishes and beverage. almost same

as the
competitor’s

offering.

BUNDLE PRICING COMBO
(MIXED BUNDLING STRATEGY)
 Bundling Pricing: Package several of their products or
RM 15.30 + RM 0.80 RM 19.60 services together as a single combined unit and offer
+ RM 3.00 + RM 3.00 with a lower price.
(Saving RM 2.50,
= RM 22.10 With free drinks)  KFC implement this strategy by bundling up different
types of product together. The products will then be
sold at a lower price.

 For example, the Dinner Plate Combo. When the
customer bought the combo set, he/ she may save
RM 2.50 and even get a free drinks. Instead of buying
all the items separately, a customer would consider
buying in combo as it is definitely a better deal.

 KFC provides different type of combo to increase the
variety of choices for the customers.

OPTIONAL PRICING When customer make
(OPTIONAL PRICING STRATEGY) orders via KFC application,

 This strategy used by companies to attempt to it will show suggestions
increase the amount customers spend as they start for add-on item.
to buy.
Available
 When KFC’s customers buy the items on the basic add on
menu, they can choose to add one something else. items

 For example, they can add on a snacks or beverage
such as a cheesy wedges, chicken nuggets or French
fries.

 The optional items can increase the customer’s
satisfaction by offering more variety of food.

FAST FOOD COMPETITORS FAST FOOD –
INDUSTRY FRIED CHICKEN

As one of the leading fast food organization, KFC This statistics shows the results of MARYBROWN’s
faced a lot competitors in Malaysia. a survey on the visited fast food
There are variety of choices available in restaurants in Malaysia in 2018. BACKGROUND
Malaysia. However, all of the fast food
restaurant have their own main selling point. • Malaysia local brand
For example,
of fast food, which
 - Fried Chicken
also specialized in
 McDonald’s and Burger King– Burger
 Pizza Hut and Domino’s - Pizza Fried Chicken
 Subway – Healthy and fresh burger • Founded in year 1981
• Funders: Dato Lawrence Liew & Datin

Nancy Liew
• Malaysia first local fast food chain
• More than 138 restaurant in Malaysia
• Target people with localized taste buds

(Malaysia food taste)
• Featured product: Nasi Marrybrown

KFC’S STRENGTH 1of2 VIDEO HERE !!!!

As one of the leading fast food organization, there are a OTHER SERVICES PROVIDED BY KFC
few strength in the pricing strategy possess by KFC https://www.youtube.com/watch?v=cUCvJTPePAs
company. Marrybrown could learn from KFC practice in
order to expand their business. FEEDBACK AND REWARD

PROMOTION  On the KFC’s receipt, there will be a request for
feedback. Customers can enjoy 10% discount when
 Promo code offer, Example: SELFCOLLECT, KFCRAYA30 purchasing Dinner Plate Combo for the next time
 Special day offer, Example: On 20.02.2020, KFC launch a once they complete the feedback.

special promotion. People can get 2 snack plate for only  With this, customer can gain a
RM20. With this promotion, huge number of customer discount for the next
queue to enjoy this promotion. purchase. KFC gain the feedback
 Due to COVID-19, KFC launch lots of promotion to attract so that they can improve their
people. The promotion mostly to encourage delivery service and also able to retain
service to decrease the chances of people going out. the customer’s loyalty.

 This is a win-win situation for
both the customer and also the
company.

KFC’S STRENGTH 2of2 CUSTOMER VALUE FOR KFC

IMPROVING IN EXISTING MENU ******************************************** An online survey with the purpose to find out what is the
factor the customer value the most for KFC was carried out.
 KFC will launch new menu after some periods. 50 respondent was included in this survey.
 New menu serve as a new attraction point for
4% 12% New flavour available Based on the result,
customer to visit KFC again and again. 4% 4% Convenience we notice that
 For example, latest menu of Nasi Kari Atuk and Provide delivery services PROMOTION is the
12% Signature Fried Chicken largest attraction
Korean Soy Garlic Drumette Promotion point for Malaysian
8% Food variety customer. 21
CONVENIENCE 42% Food Quality Assurance respondents (42%)
Well-Known Brand choose Promotion as
 Huge number of outlet 14% the criteria which
(over 600 restaurant in Malaysia) they value the most.

 Strategic location such as bus station, airport, OBJECTIVE CORE QUALITY FEATURE REPUTATION
shopping mall PERFORMANCE STYLING SUPPORT
HEDONIC/AESTHETIC Signature Fried
 KFC also provide delivery services at various platform. PERFORMANCE Chicken New flavour Well-known
For example, KFC application and Food Food Variety available Brand
Panda SOCIAL (updated menu)
PERFORMANCE Food Quality
PERFORMANCE Assurance Promotion
RELIABILITY Provide delivery
PRODUCT services, Convenience
CONVENIENCE

SUMMARY REFERENCES

We can conclude that KFC is smart at pricing. • https://dinein.kfc.com.my/news/kfc-malaysias-first-eco-friendly-restaurant
They practices a few type of pricing strategy,
which are • https://www.studocu.com/my/document/universiti-utara-malaysia/international-
business/mandatory-assignments/kfc-competitors-and-the-way-how-they-overcoming-the-
1. Skimming Strategy challenges/5809443/view
2. Fixed Price Strategy
3. Competition-Based Pricing • KFC Corporation – Introduction Strategy in Malaysia. (2016, Jul 03). Retrieved from
4. Mixed-Bundling Strategy https://phdessay.com/3973-2/.
5. Optional Pricing Strategy
• Lim K.S., Daisy, Shirlin, Low T.Q.. “High Competence Faced by KFC Malaysia”. International
We can notice that with its smart pricing, the Journal of Tourism & Hospitality in Asia Pacific.
business is running well. Although KFC faced a
lot of competitors, it remain as the leading fast • Mohd Izwan Mohd Azman, Abdalla Yousef Elbakoush, Hasrul Hashom, and Muhammad
food brand in Malaysia. It also gain a good Subhan. (2014).Indonesian and Malaysian Consumers: Are they different in preference? A
reputation among Malaysian. comparative study of KFC Malaysia& KFC Indonesia’s marketing strategy. Retrieved from
https://www.researchgate.net/profile/Mara_Ridhuan/publication/296674969_Human_right
s_disclosure_before_and_after_the_global_financial_crisis/links/56d7d19608aee1aa5f75d0
25.pdf#page=282

• Malaysia - visited fast food restaurants 2018. 9 October 2018. Statista Research
Department. Retrieved from https://www.statista.com/statistics/561040/malaysia-visited-
fast-food-restaurants/

• Nasir, Hasni Mohd. “Marrybrown – the World's Local Eatery.” The Star Online, 31 Decenber
1969. Retrieved from: www.thestar.com.my/business/business-
news/2004/01/31/marrybrown--the-worlds-local-eatery.

• Teoh Pei Ying. “First of its kind KFC Green Outlet Opens in Nilai” New Straits Times, 12 June
2015. Retrieved from: https://www.nst.com.my/news/2015/09/first-its-kind-kfc-green-
outlet-opens-nilai.