Since the first appearance of fast food restaurant of Kentucky Fried Chicken (KFC) in Super Bowl Saigon Trade Center at the end of 1997, fast food has gradually come into the culinary culture of Vietnam.
Following franchising from the Group Yum!, a well-known Brand of Thailand, so far, the system of KFC restaurants has grown to more than 140 restaurants which are available in more than 19 provinces and cities in Vietnam. KFC also creates a lot of jobs for over 3,000 people and it is the leader in fast food industry of Vietnam ( KFCVietnam 2016)
Smart Strategies in difficult periods
KFC faced many difficulties in accessing the Vietnam market, as consumers were unfamiliar with the concept of “fast food” and the taste of it. Therefore, KFC continuously suffered losses during the 7 years since opening the store. The number of KFC stores grew very slowly, and after 7 years KFC just opened only 17 stores. This growth was slow because the distribution system of the KFC expanded mainly in leasing retail space for. Nonetheless, the fee to open and hire stores was expensive; it is difficult to have more stores. To overcome the initial difficulties, KFC had taken important strategies about products, prices and distribution systems
In the first step to penetrate the Vietnam market, KFC used reasonable, careful pricing tactics to penetrate the market. They also used low prices to attract a large market share before competitors caught up. In addition, KFC identified a clear distribution strategy, hitting psychology of young people, who were keen on Western cuisine.
Potential, targeted customers of KFC were young people. This age group mostly in generation Y who were between 18 and 24 years old. Nevertheless, they also could belong to Under 35 group, the cognitive age, the ‘young-again’ market that had feelings, thoughts to buy young (Blackwell et al 2007, p.193). This was also the goal of long-term business strategy of KFC, which was consistent with the structure of Vietnam’s young population. KFC was the fast food products were most widely used by student groups and students in Vietnam.
We could be seen that targeted customers of KFC was the youth by the TVC below:
KFC had expanded their network, mainly targeted to large cities such as Hanoi, Sai Gon, Da Nang, Hue and so on where had convenient transportation, commercial centers, supermarkets, amusement parks . Obviously this strategy was effective. 2006 was the boom period of the fast food chain KFC in HCMC where people started to eat more fast food because of its taste and its convenience.
How KFC satisfy its customers ?
According to resource scarcity theory, to know more about local area,” franchisee could contribute reliable knowledge about local market trends and conditions to a franchise organization”.
When entering Vietnam market, KFC has changed the taste, size, design of products to suit the tastes of Vietnamese. The important point in the product development strategy is to create differentiation versus other products, so that consumers can perceive which product of KFC brand , Lotteria or Jollibee. KFC has its own differences in the mix of 11 spices, creating a special taste for fried chicken.
Besides the traditional dishes such as fried chicken and hamburgers, KFC has added a number of items processed with Vietnam tastes such as Crispy Chicken with Lemon Leaf, Crispy Chicken without Bones, Soft Bread, mixed Cabbage, especially some dishes of chicken rice. With the expansion into other materials, KFC has created excitement and curiosity for domestic consumers ( KFCVietnam 2016)
KFC is currently the market leader in Vietnam Fastfood industry with market share of 79%
However, KFC is still confronted with the fierce competition from rivals Lotteria, and other potential competitors, especially the newcomer: McDonald’s. Consequently, KFC needs to make provisions for the future.
Published by:Tung Nguyen
Blackwell, R, D’Souza, C, Taghian, M, Miniard, P & Engel, J 2006,” Consumer behaviour: An Asian Pacific Approach”, Thomson, Australia.
Khan,M.A 2014, “Restaurant Franchising: Concepts, Regulations and Practices”, Apple Academic Press, USA
KFCvietnam 2006, “ KFC Vietnam”, About us, Retrieved 15th May 2016