Case Analysis: Yum!

China
Objectives: 1. To understand some key marketing terms in the case 2. To elaborate on the success and strategies of YUM! China 3. To analyze the marketing problems of YUM!

1. Some Key Terms

Product localization:

- Adaptation to local conditions (similar to standardization) Product standardization:

- Products/services in all markets are homogenous (uniform) in its marketing mix (4Ps); design, taste, costs, promotions packaging, warranty etc.

Franchising:
- A method of business / marketing expansion through licensing and rights of distribution for a fee.
- Franchisors sells rights to franchisees

Supply Chain: - the system of organizations, people, technology,

activities, information and resources involved in moving
a product or service from supplier to customer.

Quality: - Defined as the total features of the product or service that satisfies needs; or freedom from defects TQM: - Marketers involved in organization-wide process of continuous improvement to produce better products, services, business process

Customer Perceived Value (CPV):

- Customers evaluate differences between

benefits and costs of product against other

choices

2. Success of KFC
Analysis
Adapted to changes in the marketing mix (7Ps;) People / Physical Evidence / Process Innovative business model that is very localized and

efficient
Good internal distribution systems that allow KFC to cut costs Know-how of retail expansion and management Lesser threats from Mcdonalds etc.

Success of KFC
Value proposition: - A statement that provides all total customer benefits of the product
Freshness of Product 50 range of Chinese KFC products Efficient and polite services Home delivery services within an hour

Personalized marketing chicken taste for you

Delightful dining

2. Strategies for YUM!

Generic Strategies (Michael Porter)
Differentiation strategies

Marketing Strategies
Marketing Mix adaptation strategies
Mass targeting strategies Extensive distribution networks

Market penetration of retail stores

Product and Market Development strategies

3. Problems for YUM!

Analysis
Complex legal environment of different provinces will decrease quality of KFC Little franchises will decrease opportunities to increase stores The Chinese KFC products are not long-term cash cows Many supplier levels increase risks and costs in the supply chain Too many stores cannibalize each other

Access to remote locations difficult

Mcdonalds always a threat in recession