KFC

An analysis of the use of sales promotion in organization’s marketing plan

A case study of KFC in the UK

  1. ABSTRACT

The research analysis is titled An analysis of the use of sales promotion in organization’s marketing plan, using the firm of KFC as the case study. This research analysis will look at the sales promotion activity as a tool that will influence the sales of the product offerings in the KFC restaurant and make the sales sustainable in the long run. The research study, with the help of primary data with the help of questionnaires will provide that the sales promotion is indeed beneficial as a tool for the company to increase its sales. The paper will finally give its recommendation as to what sales promotion would best suit the company.

  1. CHAPTER I- Introduction

Promotion in the recent times of today has been one of the most important tools that the company has to its disposal, in order for more awareness of the brand and about the company’s product or service offering (Belch et al, 2008). The first promotional activities started way back in the 20th century, when the product development was not the only factor that led to the salability of the product. Increased competition and the lesser entry restriction saw the formation of numerous companies that produced similar offering or similar product to the customers. In the event of the above, there were very few options to the companies to stand out from the rest of the competition (Pines, 1999). One of the methods was to offer differentiated product or service offering and the other was to create a higher level of awareness of the product or the service in the eyes of the customer. Even in the former case, the differentiated product will only be known to the customer only if the company chooses to advertise the features of their offering. The above scenario meant that the customer’s awareness of the product or the service offering of the different companies can only be done if the company promotes the product or service to the market (Tellis & Tellis, 1998).

The above scenario gives the example of the need to do promotion. In the event of the numerous promotional tools and techniques that have been developed over the years like the Promotional Mix, which has the overall 5 main aspects like the Advertising, Personal Selling, Sales promotion, Public relations, and Direct marketing (Kotler et al, 2002), it becomes imperative for the company to form a strategy to cleverly strategize the limited financial and man power resources to devise a good balance of the promotional mix to have the maximum effectiveness of the same in the product, so that the best possible results can be obtained using the least possible resources of the company. By doing this, the company could have more revenues due to the aspect of the higher amount of the sales as more and more people buy or utilize the product and service offering.

  • Research Background

To do a thorough research study it is imperative to go look at the preliminary literature review on the related concepts that have been given by the scholars of the industry and the topic as it acts as a guide and provides a way on how to carry out the whole research study in a suitable manner. This research is based on analyzing the impact of sales promotion tools and techniques to a particular company incorporated by the various business houses on the customer’s individual purchasing behaviour. It is very important to understand that buying behavior which is related to the factors affecting the decision making of the buyer and how do sales promotion influences the decision of consumer purchasing behaviour. Scholars have said that marketing of goods and services starts with analysing the consumer needs and wants and their buying behaviour (Kotler and Kevin, 2012). The research will be a tri pronged strategy, taking a look at the Sales Promotion Activities, consumer perceptions of fast food industry and the KFC company in particular and the proper sales promotion mix that is required to be done by the company.

Sales Promotion Activities- Sales promotions can be directed at the customer, sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions. Some sale promotions, particularly ones with unusual methods, are considered gimmicks by many (Kerin, 2012).

The consumer acquaintance with regard to market is very important that serves as an important factor affecting the firms promotional mix decisions. It is not only confined to manufacturing firm but it is equally important for the retail businesses and the provider of services and nonprofit making organisations. Consumer apportions his total income on purchasing the products in such a manner to increase its utility and it is very difficult task to analyse the consumer behaviour and the factors affecting their buying decisions.  The reaction to this can be revealed through brand switching by the customers, increase in purchasing of the same products, or may react towards the category maximisation of the concerned brand. Thus it is important for the marketer to successfully understand the reason behind it (Homburg, et al., 2009).

Consumer Perceptions In relation To Sales Promotions- It has been generally observed that retail sales promotions tend to create a temporary rise in sales volume during the time for which promotions are made. Consumers tend to associate low prices with low quality goods. It has also been seen that when consumers tend to switch brands owing to sales promotions, they tend to switch up in quality.  In case of promotion of private labels, switchers come from another generic brands or private labels. People tend to perceive advertisements from higher end stores a higher score as compared to lower prestige stores. This indicates the fact that consumers’ perceived value , internal price standards, source credibility perceptions will be on a higher side when they encounter an advertisement from a store that does not continually makes price claims and is highly unique and distinctive in its price promotion behaviour. All these facts tend to point towards the fact that if a store always offers discounts then consumers tend to perceive the store’s offerings to be not regularly priced. Thereby the regular prices of the store tend to perceived by the fact that real prices must be much lower.

Having a good mix of the sales promotion- There are the different ways of doing a sales promotion Examples include contests, coupons, freebies, and loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates. Sales promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers). Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions. Each have different costs involved and have their own advantages and disadvantages, having a good mix of the same will allow the entire sales promotion to be successful as it will reach out to the different people based on their tastes.

  • Organisation Background

KFC (Kentucky Fried Chicken) is a fast food restaurant chain headquartered in Louisville, Kentucky, United States, which specializes in fried chicken. It is the world’s second largest restaurant chain overall (as measured by sales) after McDonald’s, with over 18,000 outlets in 120 countries and territories as of December 2012. The company is a subsidiary of Yum! Brands, a restaurant company which also owns Pizza Hut and Taco Bell.

The Kentucky Fried Chicken concept was introduced to Britain in 1965 when the first store opened in Preston. Since then KFC (GB) has expanded its UK & Ireland restaurant network to its current level of over 800 locations, some company operated and some franchised. The achievement of excellent restaurant standards has resulted in the British operation acting as a training base for many of the new KFC restaurants operating throughout Europe. In 2009, KFC (GB) was awarded 2nd place in Britain’s Top Employers (Britain’s Top Employers, 2009) and was in the top 50 of Britain’s Great Places to Work (Great Place to Work, 2013). in 1986, following the worldwide acquisition of KFC by PepsiCo, it was announced that the British operation, KFC GB Ltd had become a joint venture – a company owned by Trust house Forte and PepsiCo.

There are more than 800 KFC restaurants in the UK and Ireland (and growing) (KFC.co.uk). The KFC business employs over 8,000 people in the UK with the restaurant ownership split 40% equity and 60% franchised. System sales were over $1 billion in the UK and Ireland in 2009, having more than doubled in the past 5 years. KFC servesmore than 100 million meals per year.

The main driver of the growth of KFC is the opening up of the drive thru restaurants that can process more customers, without having to develop a lot of retail space. Generally the drive thru is the part of the retail restaurant, having a dedicated drive way.

  • Purpose of undertaking Research

This research will explore the potentialities associated with the sales promotion activities taken by KFC. The rationale of the research is to find the effectiveness of sales promotion of KFC in the UK. As the researcher is working in KFC in the UK, the researcher has organisational background knowledge and can collect data easily.  The following research questions will provide the firm base on which whole research study would be based and the analysis of such questions will provide the answers to the research questions. The sales promotion forms an essential part of the Promotional Mix of the company, under the sales promotion; there are the different types of the sales promotion targeting the trader and the customer. In the case of KFC, the trader is the franchisee operator and the customers are the end consumers of the product of the company (Singh, 2001).

The main purpose of the following research is to analyse the sales promotion activities of the KFC in the United Kingdom to see the effectiveness of the same in the increase of the consumption of the product offering of the company in the above region. With this, the research is going to look at the aspect that the any company has a limited budget or the cap at the amount of expenditure that it can spend on the promotional activities.

  • Rationale for Choosing this Topic

Sales Promotion of a product is one of the necessities for making your brand famous and getting it in front of the public. Sales Promotion is a key element of the promotional mix and it deals with one or two-way communication with the customer. A company may have the best product or service in the market, but unless they promote it successfully, nobody will get to know about it. According to Philip Kotler, “Promotion compasses all the tools in the marketing mix whose major role is persuasive communication.” (Kotler et al, 2004), within the promotion, the aspect of the sales promotion is of primal importance due to the fact that it directly helps in the increase of the sales of the product, and this is of very important aspect in the short term time frame or scenario to gain market share or gain market entry as a part of the overall strategic development of the company. It is as important to a non-profit company as it is to a profit-centric company. Some companies use promotional strategies to expand to other markets and others use it to hold-on to their present positions. It can also be used to reach target markets effectively (Ashworth & Voogd, 1994).

The overall Promotional strategies help in providing information and keep the buyer aware of the latest product in a particular segment. For example Warner Bros. Records had created a compact disc advertisement which was targeted at the baby-boomers generation. In explanation to this advertisement, Warner executive said “We believe that most boomers are unaware of our classic recordings of the 1950’s, 1960’s and 1970’s which are also available on a CD along with the current releases” (Schmoll et al, 2006) This ad informed baby-boomers that Warner had released not only contemporary recordings but some of its best albums as well. (Referencing Business 101- The basics). Promotional strategies help in differentiating the product from its competitors. For making a product different, they attempt to hold a “position” in the market which appeals to their target customers. Positioning concept communicates the distinctions about the price, quality, attributes and usage of a product.

Positioning strategies help in increasing sale volume. Sometimes these strategies focus on primary demand or sometimes on selective demand and sometimes specific segments are targeted. (Referencing Business 101- The basics). Sales stabilisation is another benefit which one would get from promotional strategies. Sales promotion materials like pens, calendars, etc. are distributed to stimulate sales, especially during off-seasons. Sale contests are held during off-seasons. Stabilisation of sales allows the companies to improve their financial position and their market planning (Hirsh & Lev, 1971). It also helps in reducing management and production costs (Dekimpe et al, 1995).Promotional strategies also help in guiding the development of financial goals (Webster, 1988). Financial goals can be related to sales targets and to expense budgets. Sales targets may change according to market conditions. If the company is spending more than what it is bringing in, then it may have serious problems in maintaining long-term business. (Referred from an article “The Importance of Promotional & Marketing Strategies” by Jeremy C Bradley, Demand Media).

The above benefits of the sales promotion and the concept of the promotion in general, led us to study further the concept of the aspect of having an effective mix of promotion of the sales promotion mix in the event of the different kinds of sales promotion that would be discussed further in the literature review of the dissertation.

  • Statement of Problem

KFC, the second largest fast food chain in the world would want to consolidate its position in the United Kingdom market by looking at the past sales promotion strategies that have been employed by the company, the customer perception of the above sales strategies would also be looked into the research paper having a good blend of the sales promotion strategies. The sales promotion effect on the customers would give us the idea of how effective is the sales promotion on the customers, with this we shall analyse whether the sales promotion and the cost that is gone into the implementation of the same is providing the returns that one would expect back. This returns would be from higher sales of the products and the offerings in the restaurant, higher amount of walk ins in the restaurant in the off peak hours and the quantity of the food that was ordered before and after the implementation of the sales promotion scheme. The study will also through light on what kind of the sales promotion scheme would work on the customers, as all kinds of sales promotion technique may not work well and may not have the same efficacy. Moreover, the company should have a point and rifle approach to tackle the largest target group, rather than a shot gun approach, where all kinds of the sales promotion schemes are used on the target market, this strategy, although it may give results, very costly to implement and sustain for a longer time duration.

  • Research Questions

Research questions will give this study a clear cut and a concise aspect of how to perform the quantitative and the qualitative research on the topic of the sales promotion of the KFC. The main research questions that would be answered in the paper is,

  • Which sales promotion strategies affect actual purchasing by the target potential segment in relation to KFC in UK?
  • Is the effect of sales promotion activities for a long term or short term with special reference to KFC
  • What is the ideal proportion of the different ways of sales promotion to have the optimum awareness of the brand, while keeping the costs low to reach out to the main demographics and target markets?
    • Main Aims and Objectives of the Research

The main aim of the concerned research work is to analyse the impact of the sales promotion activities and strategies on KFC. Beside this the research study so undertaken will also include following aims and objectives:

  1. To understand the buying behaviour of the individual and the factors that affects their buying pattern for KFC in UK.
  2. To analyse the market environmental factors affecting the consumers buying decisions for KFC in UK. .
  3. To identify various promotional activities undertaken by the marketer to influence the potential customer to the products for KFC in UK.
  4. To identify whether sales promotion tools and techniques incorporated by KFC enhances the sales potential in long term or short term for KFC in UK.

The above points would be taken up by answering the research questions that were asked in the previous section.

  • Scope of the Research

Due to the sheer magnitude of the number of outlets of KFC in the whole of Britain and due to the time and geographic constraints of covering a lot of these outlets within the course time of an 8 week MBA thesis, we shall restrict the KFC outlets in the urban region of London City. Our study would cover the research to the customers and the franchisee owners, which would form the part of the

  • Structure of the Dissertation

The entire dissertation or the thesis would consist of the six sections that are called henceforth as chapters. Each of the different chapters would broach on providing the reader of the dissertation a structured study that would help in the research study.

Chapter 1- Introduction- This would give the introduction of the topic that is going to be researched in the paper and the background of the research would also be provided. The background of the organization would be provided which would give the existing operations of the organization. The choice of the topic would be explained, thus giving the problem statement, along with the research questions that would be answered in the thesis. The questions would cover the broad aims and the objectives of the research. Having done that, the scope of the research would be explained, along with the research methods that we would like to put forth in solving our research problem.

Chapter 2- Literature review- The existing literature on the aspect of the sales promotion would be covered, which would mainly delve on the different types of the sales promotion techniques and the places that it would be used.

Chapter 3- Company History- This part would look into the organizational history of KFC, and the various promotional activities that it has undertaken in its history, along with an emphasis on the sales promotion aspect. The role of sales promotion and the organizational commitment would also be seen.

Chapter 4- Study Methodology- The study methodology would describe the research study along with the method of how we do them in the organization. The advantages of the different methods of the study would be discussed in a greater detail.

Chapter 5- Research Findings- The findings of the research and the results and the analysis of the questionnaire would be covered in this section. Graphical representation of the study would be given in this chapter, along with the relation of the findings correlated to the literature review that was discussed earlier.

Chapter 6- Conclusion & Recommendations- The final conclusion of the research would be discussed here, along with the future recommendations of the authors, based on the findings of the research. The short, medium and long term plans would be drawn along with an analysis on the costs involved in the implementation of the same in the particular company.

  • Summary of the chapter

This chapter would lay down the foundation of the entire study of the topic “An analysis of the use of sales promotion in organization’s marketing plan: A case study of KFC in the UK” The aim of the study and the description of the research and the company has been given the give the reader the brief insight into the topics that would be discussed further in the dissertation in a far greater detail.

  1. CHAPTER II- Literature Review
    • Introduction

This section will deal with the scholarly articles that have been published in the field of the sales promotion. Using the help of the above literature, we shall develop the research questions that are more targeted towards the effective sales strategies that affect actual purchasing by the target potential segment in relation to KFC in UK. The long term and short term benefits of the sales promotion to the development of the promotional activities of KFC in UK would be analysed with the reference of the above scholarly articles. The literature review would form the basis of the further analysis of the research question. This section would further discuss effective sales promotion schemes that are being used by the marketers in order to generate more sales.

For carrying out any research study it is important to go through the literature review on the related studies that have been conducted previously as it serves as a guide and provides a way on how to carry out the whole research study in a suitable manner. This research is based on analysing the impact of sales promotion tools and techniques incorporated by the various business houses on the individual purchasing behaviour. It is important to understand that factors affecting the decision making of the buyer and how do sales promotion influences the decision of consumer purchasing behaviour. Kotler and Keller, (2012) said that marketing of goods and services starts with analysing the consumer needs and wants and their buying behaviour. To formulate an effective sales promotion plan, it is thus essential to take into the cognisance of the numerous ways of the sales promotion techniques and this can be done only by having an in depth knowledge of the same.

The different ways of doing sales promotion are as follows- they are rebates, discounts, refunds, product combinations, quantity gift, lucky draw and the corresponding gift, instant draw by scratch card, 100 per cent financing at zero interest, giving samples, next purchase benefits, and contests. The efficacy, advantages and disadvantages of each of the above would also be discussed along with the future or new plans that are being formulated by the marketing gurus to have a unique selling proposition to the customers.

Also covered, would be the aspect of the utilization of the different sales promotion schemes, where we would look at the past experiences of the other companies along with their efficiency and efficacy in realizing their marketing goal, either in raising the awareness or to stimulate the sales of the product.

  • Consumers Response to Sales Promotion & its impact on sales

There are two very important factors that a marketer needs to keep in mind, while designing an effective sales promotion strategy one is the consumer response to sales promotion, and then the impact of the sales promotion on the sales of the particular offering that is given to the market. The study of the former, aids in the development of an effective strategy that would help in the long term retention of the brand and also the short term action of the consumer. The effectiveness of the sales promotion as discussed before is the amount of walk-ins or the amount of the extra sales that the sales promotion helps to create for the company. Higher retention of the brand helps in the formation of a loyal set of customers, who would prefer to utilize or use the company’s offerings over the other competition offerings.

Yet it has not been effectively able to achieve repurchase intentions in the psyche of the people. A study by Binod Shrestha (2012) in the Himalayan country of Nepal on the Fast Moving Consumer Goods sector, showed that in light of the developing market conditions, and the recent proliferation of the new big globalised brands of the world, the customer only got the price and quality benefits of buying the products in the case of sales promotion, but it did not bring about the repurchase intentions, which was what the company wanted. This was attributed, to the fact that the customers did not receive the hedonic benefits of the purchase, and the sales promotion did not bring about the element of the fun and satisfaction in the post purchase behavior. So, the usage of the sales promotions should be used with great care and overdoing it may not lead to the desired response of the customers.

In an another study by Ofoegbu & Udom (2012), the study of the Sales promotion used by telecommunication firms in Nigeria, showed that,using AIDA (Attention, Interest, Desire & Action model), customers were highly driven to use the sales promotion to decide on the purchase of the SIM card for communication. The study went on to say that loyalties of the customer switched when the incumbent did not provide enough sales promotion compared to the competitor, leading to the switching of the loyalties of the consumer. The authors advise us on making innovative, dynamic and differentiated sales promotions to attract new customers.

  • What is meant by Sales Promotion, and why is it needed in an organization

Sales promotion forms a part of the marketing activities of the firm and is thus classified under the overall seven aspects of the promotional mix. The sales promotion is mainly done to stimulate the sales of the slow moving products in a particular place.

According to Blattberg & Nesling, (1990), there are basically two types of the sales promotion performed by the company to the two different sets of stakeholders that interact with the company. One is the Trade Discount and the other is the customer discount. The difference between the two is the target of the sales promotion by the company.

  • Trade Sales Promotion
    • Need & Advantages

The trade sales promotion is given to the stockists or the retailers or the carry & forwarding agents (CFA), to incentivise them to keep more of one stock of the company’s products on their shelf compared to the competitor. This is generally true for the Fast Moving Consumer Goods (FMCG) sector, which, according to Roussos & Moussouri (2004), is characterised by high volume and multiple players in the market, where the capture of the retail space should be effectively done by the company in order to bolster up the sales of the product. In the semi product semi service sector that KFC effectively finds itself in, the trade discounts is on a different kind. KFC effectively runs on a franchisee systems, where the KFC company acts as a franchisor and the other parties act as the franchisee. Trade discounts are effectively used here to lower the operating cost of the franchisee, either by giving the necessary manufacturing implements to produce the food products, produced in the KFC, at a lower price.

Doing this is advantageous for the fledging or start up franchisees, as according to Klien (1995), this lowers the business running costs, which is one of the biggest concern for the franchisees. Due to the lower business costs, the franchisee can expand further, thus allowing more sales of the product, which is a win win situation for both the franchisor and the franchisee. Klien along with Kasulis et al (1999), also argue that the trade discounts to the franchisees also improve their purchasing power, which again would contribute to the proactive expansion of the market. Furthermore, the expansion also provides the additional revenue streams for the franchisee, which adds on to the loyalties of the franchisor, making this trade discount a lucrative model for improving the sales of the products of KFC.

Stanworth (1995) argues that one of the biggest factor important for a good franchisor franchisee relationship is the fostering of a proper goodwill between the two parties. Thus effective use of the trade credit by the company would generate a lot of good will and foster good relations between both the parties involved. This understanding would generate more sales and thus be beneficial for both the parties.

  • Types of Trade sales promotion
        • Trade allowances: These are the short term incentives that are offered by the company to induce a retailer to stock up on a product. The trade allowances incentivise the associate users of a particular product to use the product for their service (Tsao, 2010). For example, Hairdressers can go to the manufacturer to get a discount for buying in bulk. They can get shampoos and other hair products at a cheaper rate and sell them to consumers at full prices. Manufacturers with the best trade allowances will get the best displays in the hair salon. The consequence of this is the Channel stuffing (Lai et al, 2011). The channel stuffing is defined as the business practice where a company, or a sales force within a company, inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling to the world at large. In some areas, it is called as dumping (Kotler, 1970).
        • Dealer loader: An incentive given to induce a retailer to purchase and display a product. It’s generally in the form of a gift offered to a retailer by a manufacturer as a bonus for purchasing the manufacturer’s merchandise; also called dealer loader. This gift can be in the form of a premium or of a discount on inventory. The rationale of the same is to give the retailer an incentive to stock ones product rather than the other’s products and services (Feighery, 1999).
        • Trade contest: This is a contest to reward retailers that sell the most products of a particular company. Generally the amount of inventory that are given to each of the retailer is recorded, and the retailer taking the highest amount of the stocks in a particular region, is awarded certain gifts and incentives to the owner of the particular retail store. According to Michael & Ogwo (2013) in Nigeria, this contest is generally between the identically sized retail stores and there are many sub categories of the store based on the size and the location of the store to make it competitive to all the participants.
        • Training programs: dealer employees are trained in selling the product. Kirckpatrick (1998) argues that this is generally the case for more specialised products that are put for sale that requires some sort of knowledge that has to be passed on to the buyer. Examples of the same include medical equipments or business to business products that are sold in bulk. Another common product is the automobiles. Auto dealerships have been sending their employees to sales training for many years and traditional sales training is still indispensable for auto dealership salespeople (Dehejia & Wahba, 1999). As the internet has become more central to how customers search for vehicles, however, training for internet marketing has become an essential part of the sales process. Fortunately, a new breed of programs and trainers has emerged to fill this need for auto dealerships. The dealers who take advantage of training now will be the market leaders in the future. The fact that the sales process begins online impacts everything within the store from appointment setting and greeting to desk information and F&I all the specialised processes has made the aspect of dealer training an indispensible part of the trade promotion, so that the dealer can pay more.
        • Push money: also known as “spiffs”. An extra commission paid to retail employees to push products. They are the Cash incentive paid by a manufacturer or distributors to the retailers to stock up on a product and display it prominently to stimulate its sales. A spiff is a bonus, usually paid in cash, given out to a salesman for doing something special. Caliderero & Coughlan, (2007) argue that the usage of the cash incentive may be for pushing the oldest stock in the retail store. It is the ultimate form of the trader sales promotion, used by the company to finally get rid of an unsold inventory. Very prevalent in the auto industry (Rechtin, 2007).
        • Trade discounts (also called functional discounts): These are payments to distribution channel members for performing some function. Trade discounts and allowances are price reductions given to middlemen (e.g. wholesalers, industrial distributors, retailers) to encourage them to stock and give preferential treatment to an organization’s products. Haines (2007) gives us an example; a consumer goods company may give a retailer a 20% discount to place a larger order for soap. Such a discount might also be used to gain shelf space or a preferred position in the store. Trade discounts are often combined to include a series of functions, for example 20/12/5 could indicate a 20% discount for warehousing the product, an additional 12% discount for shipping the product, and an additional 5% discount for keeping the shelves stocked with the product. Trade discounts are most frequent in industries where retailers hold the majority of the power in the distribution channel (referred to as channel captains). Trade discounts are given to try to increase the volume of sales being made by the supplier. The larger the purchase, the larger the discount. It is important that these discounts are fair and offered to all channel members equally to avoid channel conflict (Celnicker & Seaman, 1989). One of the main challenges is diverting, which is when companies sell to channel members at a cheaper rate rather than pass on savings to consumers.
      • Consumer sales promotion
        • Need and advantages

The other kind of sales promotion, one that is directed at one of the most important stakeholder of the company is the aspect of customer sales promotion; this is a vast field, with the various kinds of the sales promotions. Trade schemes are effective for the retailer and the dealer to stock on ones product, but sales promotion activity aimed at the final consumer are called consumer schemes. These are used to create a pull for the product and are advertised in public media to attract attention (Lichtenstein et al, 1997). Maximum schemes are floated in festival times, like Easter or Christmas. Examples are buy soap, get diamond free; buy biscuits, collect runs; buy TV and get some discount or a free item with it and so on. Consumer schemes become very prominent in the ‘maturity or decline’ stages of a product life cycle, where companies vie to sell their own wares against severe competition.

The reasons of doing the consumer sales promotion are many and varied. As per Chandon et al (2000), the main aim of the consumer sales promotion is to increase and simulate sales of a particular product. As a discount, or the reduction of the marked price, allows for more people to buy the product at the lower price points. This aspect is true across the lower price points and may not work for a product which is status or luxury oriented.

Customer Sales promotions typically increase the level of sales for the duration they are floated. Usually, as soon as the schemes end, the sales fall, but hopefully, settle at a higher level than they were before the sales promotion started. For the company, it can be a means to gain market share, though an expensive way. For consumers, these can offer great value for money. But sustained sales promotions can seriously damage a brand and its sales, as consumers wait specifically for the sales promotion to buy and not otherwise. Therefore, sales promotions are to be used as a tactical measure as part of an overall plan, and not as an end itself.

  • Types of consumer sales promotion
        • Price deal: A temporary reduction in the price, such as 50% off. This is done to attract the customer to buy a product by means of giving reduction in the base price or the marked price of the goods. The price Deals are done by modifying either the manufacturer’s list price (determined by the manufacturer and often printed on the package), the retail price (set by the retailer and often attached to the product with a sticker), or the list price (which is quoted to a potential buyer, usually in written form). There are many purposes for discounting, including; to increase short-term sales, to move out-of-date stock, to reward valuable customers, etc (Cochrane, 1996). Some types of the same are the cents off deals, where, company offers a brand at a lower price. Price reduction may be a percentage marked on the package.
        • Loyal Reward Program: Consumers collect points, miles, or credits for purchases and redeem them for rewards. Bolton et al claim that they are structured marketing efforts that reward, and therefore encourage, loyal buying behaviour – behaviour which is potentially beneficial to the firm. The customers are identified by having Loyalty Cards, which have loyalty numbers identifying the customer and the purchases which are done by them. By presenting the card, the purchaser is typically entitled to either a discount on the current purchase, or an allotment of points that can be used for future purchases. Hence, the card is the visible means of implementing a type of what economists call a two-part tariff (Yi & Jeon, 2003). Where a customer has provided sufficient identifying information, the loyalty card may also be used to access such information to expedite verification during receipt of cheques or dispensing of medical prescription preparations, or for other membership privileges (e.g., access to a club lounge in airports, using a frequent flyer card).
        • Quantity Deals: These are price reductions given for large purchases. The rationale behind them is to obtain economies of scale and pass some (or all) of these savings on to the customer. In some industries, buyer groups and co-ops have formed to take advantage of these discounts. They are of two types- Cumulative quantity discounts, which are also called accumulation discounts, are price reductions based on the quantity purchased over a set period of time. The expectation is that they will impose an implied switching cost and thereby bond the purchaser to the seller. Non-cumulative quantity discount, which are price reductions based on the quantity of a single order. The expectation is that they will encourage larger orders, thus reducing billing, order filling, shipping, and sales personnel expenses (Eppen & Lieberman, 1981).
        • Price-pack deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra). Shannon (1996) argue that this is especially beneficial if the customer is enticed with more volume for the product than the competitors for the same price point. This makes the customer choose the company’s offering to the competitor. The basic difference to the discount is that the price remains the same, but the quantity offered to the customer is more.
        • Coupons: a coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product. Customarily, coupons are issued by manufacturers of consumer packaged goods or by retailers, to be used in retail stores as a part of sales promotions. They are often widely distributed through mail, coupon envelopes, magazines, newspapers, the Internet, directly from the retailer, and mobile devices such as cell phones (Bawa & Shoemaker, 1989). Since only price conscious consumers are likely to spend the time to claim the savings, coupons function as a form of price discrimination, enabling retailers to offer a lower price only to those consumers who would otherwise go elsewhere. In addition, coupons can also be targeted selectively to regional markets in which price competition is great. Coupons can be used to research the price sensitivity of different groups of buyers (by sending out coupons with different dollar values to different groups). In addition, Krishna &Shoemaker (1992) argued that buyers who take the effort to collect and use coupons are more price sensitive than those who do not. Therefore, the posted price paid by price-insensitive buyers can be increased, while using coupon discounts to maintain the price for price-sensitive buyers (who would not buy at a higher price).
        • Loss leader: the price of a popular product is temporarily reduced in order to stimulate other profitable sales. Hess & Gerstner (1987) maintain that one use of a loss leader is to draw customers into a store where they are likely to buy other goods. The vendor expects that the typical customer will purchase other items at the same time as the loss leader and that the profit made on these items will be such that an overall profit is generated for the vendor. “Loss lead” describes the concept that an item is offered for sale at a reduced price and is intended to “lead” to the subsequent sale of other items, the sales of which will be made in greater numbers, or greater profits, or both. It is offered at a price below its minimum profit margin—not necessarily below cost. The firm tries to maintain a current analysis of its accounts for both the loss lead and the associated items, so it can monitor how well the scheme is doing, as quickly as possible, thereby never suffering an overall net loss. This has also been done by companies like Gillette, where, Razor handles are given away for free or sold at a loss, but sales of disposable razor blades are very profitable (Bowman, 1955).
        • Free-standing insert (FSI): A coupon booklet is inserted into the local newspaper for delivery. FSI’s only reach consumers who subscribe to the publication and only a fraction of the subscribers use those coupon. FSI’s are known for low redemption rates (Bortner, 1986).
        • Checkout dispensers: On checkout the customer is given a coupon based on products purchased. This is especially successful if the company wants to make the customer do the repeat purchase. They can also be highly targeted, thus making them very specific. Humble (1989) showed that, for the supermarket and especially for the product manufacturers, the checkout counter coupon system is a terrific marketing tool, one that allows them to be highly specific in targeting to whom the coupons are given. That is a fact that may not be readily apparent to the average shopper. Because it works in tandem with a computerized price scanning system, checkout couponing would enable Coca-Cola, for example, to issue cents off coupons just to people who were buying Pepsi-Cola or RC Cola as the cashier rang up their purchases. Or vice versa. Or it would enable a baby powder manufacturer to issue a coupon just to those who were getting disposable diapers, for instance. Unlike the traditional scatter gun approach of using newspapers, magazines and flyers to distribute coupons, the checkout coupons are issued with rifle shot precision just to the customers a manufacturer wants to hit, such as those who are buying a competitor`s product.
        • On-line couponing: Coupons are available online. Consumers print them out and take them to the store. The growth of the online industry is fast catching up with the couponing system, and unlike coupons that are paper based, the redemption of the same can be done by filling up the coupon code at the time of the online payment. This makes it cost friendly, saves time for the customer to physically go to the store to redeem the coupon (Oliver & Shor, 2003).
        • Online interactive promotion game: Consumers play an interactive game associated with the promoted product. The advantage is two folds, one it raises the awareness, and due to the high involvement of the game, the recollection of the same is more. Another thing is that the rewards of the good performance of the game are tied to the higher incentives that make the consumer to get better discounts. Moreover the popularity and the competitiveness would make the aspect of the sales promotion more enticing to the customers.
        • Rebates: Consumers are offered money back if the receipt and barcode are mailed to the producer. The mail-in rebate (MIR) is the most common. A MIR entitles the buyer to mail in a coupon, a receipt and barcode in order to receive a check for a particular amount, depending on the particular product, time, and often place of purchase. This is advantageous, as Customers tend to notice price increases and react negatively. Grow & Chhatwal (2005) claim that rebates offer retailers the benefit of giving customers a temporary discount on an item, to stimulate sales, while allowing it to maintain its current price point. Rebates also allow companies to “price protect” certain product lines by being selective in which models or brands to be discounted (Khouja, 2006). This allows retailers and manufacturers to move some product at lower cost while maintaining prices of successful models. A straight price reduction on some models would have a domino effect on all products in a line.
        • Point-of-sale displays: Used to create the urge of “impulse” buying and selling your product on the spot. They are intended to draw the customers’ attraction to products, which may be new products, or on special offer, and are also used to promote special events, e.g. seasonal or holiday-time sales. POS displays can include shelf edging, dummy packs, display packs, display stands, mobiles, posters, and banners. Common items that may appear in POS displays year-round are batteries, soft drinks, candy, chewing gum, magazines, comics, tobacco, and writable CDs and DVDs. These displays are also useful in outlets with limited floor space, as there tends to be much wasted space around counters (Paynter & Edwards, 2009). The displays are normally covered with branding for the product they are trying to sell, and are made out of cardboard or foam board, and/or a covering over a plastic or Perspex/Plexiglas stand, all intended to be easily replaceable and disposable. This allows designers to make full use of colour and printing to make the display visually appealing. Some displays are fixed or non-disposable; these may include lighting to make the display more visible and may also contain a cooler, e.g. for drinks or ice cream. Some are no more than a metal basket, with no design on the outside, simply showing a price; these types of display are easier to refill. They are of different types-
      • Aisle interrupter: A sign that juts into the aisle from the shelf.
      • Dangler: A sign that sways when a consumer walks by it.
      • Dump bin: A bin full of products dumped inside.
      • Glorifier: A small stage that elevates a product above other products.
      • Wobblers: A sign that jiggles.
      • Lipstick Board: A board on which messages are written in crayon.
      • Necker: A coupon placed on the ‘neck’ of a bottle.
      • YES unit: “your extra salesperson” is a pull-out fact sheet.
      • Electroluminescent: Solar-powered, animated light in motion.
        • Sample Packs: Consumers get one sample for free, after their trial and then could decide whether to buy or not. Although an expensive method of targeting customers, conversions to sales can range between 20% to 90% for various brands according to Hardesty & Bearden, (2003). With effective sampling, marketers can create brand loyalty and assist in the launch of a product through the word of mouth.
        • Kids eat free specials: Offers a discount on the total dining bill by offering 1 free kids meal with each regular meal purchased (Horovitz, 2001). This makes it an incentive for the entire family to come to the point of purchase, and thus the sales would also be increased due to the group purchase behaviour (Restaurent, 2011).
      • Sales promotion strategies of KFC

KFC, true to its mission to serve price conscious customers, the most tasty and nutritious meal in a clean environment, have used a lot of sales promotion in the past and continue to do so presently. There are more than 100 existing deals on the online deals website all across the UK. The company has effectively used location specific coupon codes, to stimulate the sales of the different types of the foods that are there in offering to the customers.

Some of the sales promotion activities used are-

Loyalty Coupon- Customers are given stamps that can be peeled off from the cup of a regular coffee, every time they order from KFC. To promote more repeat purchases, KFC offers customers, a free regular coffee, after they collect 3 stamps and redeem it in the counter. It is valid till December, 2013 across all locations in Britain.

Survey Discount: On the purchase of any food in KFC, customers can fill an online survey, that gives them 20 per cent off on the next meal, this is recurring and the benefit for the company is that they get customer feedback, by incentivizing them. Has been around since June, 2013.

Sales Combo and Quantity Deals: KFC is offering combo meals and quantity discounts, by offering 10 pieces chicken, 1regular fries and a 1.5liter bottle Bargain bucket for 7.99 quid.

Free gifts: KFC have also given out free gifts along with their large meals like the Handy Holder that has been given with their trade mark family feast. They have also, tried to enamor the kids by giving the free toys along with their kids meal.

Freebies: have been given in the past, and there is an existing deal in the London metropolitan area, where the customer gets free Fries, along with the voucher from the Sun newspapeR

  • CHAPTER III- Research Methodology

The research methodology is the aspect of conducting a particular research in question to achieve or arrive at a particular solution of a problem. According to Stepenson and Lessinger (1930), “Research is the manipulation of things or symbols for the purpose of generalizing to extend, correct or verify knowledge aids in construction of theory or in the practice of art”.

  • Research Problem

The main research problem here is to know whether the sales promotion had any positive impact on the sales of the KFC in the United Kingdom and to analyses any particular sales promotion program had more benefit than the other sales promotion programs. This would also, look at the effectiveness and the awareness of the sales promotion and the brand in the minds of the customers.

  • Objectives Of The Study

Which sales promotion strategies affect actual purchasing by the target potential segment in relation to KFC in UK?

Is the effect of sales promotion activities for a long term or short term with special reference to KFC

Is the company having the ideal combination of the sales promotion schemes to achieve the maximum benefit in the lowest costs.

  • Hypothesis

Sales Promotion in KFC has a direct and a positive impact in the awareness of the brand and improved sales of its offering in the London geographical area.

  • Data Collection Method

The data collection for the research will be in the questionnaire survey form.

  • Research Methods

The research will use a quantitative research methodology. The research approach is positivist research approach in this research. In this research study, the utilisation of primary and secondary data will be done so as to collect the relevant data which can be further used in the data analysis part of the research study. The primary data will be collected with the help of questionnaires which will be given to the sample of respondents who are various customers and respondents in the industry. The questionnaire will be made on the basis of the strategies of marketing and the secondary data is to be collected for the accurate analysis of the research study (Creswell, 2008).

There will be two methods to conduct research- one is to have a look at the historic sales figures of the company, once during the time of the sales promotion and the other not during the times of the sales promotion to know the impact of 3 different variables, viz. sales, customer walk in and the average spending per customer.

The other method would be to have a field research, which is to interact with the customers, and take a survey of the questions that has to be probed.

  • Data Collection Sources

There are two types of the data collection sources- the primary and the secondary sources.

The primary source of the data is directly from the customers, which is through a closed ended questionnaire.

The secondary source is through the information that already exists in the internet and in the company records, like the sales figures the historic data for the walk ins etc (McDaniel et al, 2005). This is that primary data that was already recorded earlier for the every day analysis of the performance of a particular store or a branch or even the entire city or borough. Also, included to the sources is a kind of similar work that was done on the subject earlier, which will be heavily drawn from the literature sources that are available on the net.

  • Research Design

For the following research, there are the 2 variables that are required to check the success of a particular sales promotion on the minds of the consumer; they are the increase of the sales and the awareness and the recollection of the sales promotion to find the effectiveness of the sales promotion in the minds of the customers. The design of the questionnaire is to be kept closed ended to solve the problem to the point and to get a quantitative data on the entire aspect. The research Decisions and the design are done by taking the following points into cognizance-

  • Explain what is the nature of the study and the aspect of what the study wants to obtain.
  • The entire reasoning of undertaking the study.
  • The study location and the number of respondents it would cover.
  • The data types it would take to study.
  • The sample design nature.
  • The technique of how the data would be collected.
  • How the data would be analysed and the final reporting of the data.

The entire analysis would be confirmatory instead ofexploratory, as the research would confirm the effect of the sales promotion on the sales and the customer awareness of the product. The basis of the research design would determine the entire recommendation of the perfect mix of the sales promotion techniques that could be used for the company to derive the maximum benefits out of the sales promotion.

According to Muaz (2013), there are 6 different ways to classify the research designs, they are descriptive, correlation, semi experimental, experimental, review and meta analytic. The design which we would follow would be descriptive in nature, with the case study of KFC in the background, by performing the naturalistic observations of the realities in the field and finally by performing the survey on the determining variables to look at the root success factors.

  • Sampling Design

The data for the questionnaire would be collected by the interaction with the customers on their awareness of the different sales promotion activities that would be conducted, on site, by interaction with the customers that would go into the fast food restaurant to have their meal, the contact details (phone) would be collected with their consent and then a call would be given to the customers after a week to judge the retention or the awareness of the sales promotion scheme that is currently running in the KFC fast food restaurants. Thus this research would include the judging of the customers two times. The reason of doing the same would be the aspect of the probing the retention and thus the effectiveness of the sales promotion on the collective mindset of the average London customer. The questions asked would be qualitative, with the inputs from the customers on the basis of the level of perceptions of the different types of the sales promotion that are being used by the company in their fast food restaurant outlets. There would also be a study on the secondary data that is available on the internet, on the different perception rates and the effectiveness of the different strategies on the different product offerings in the competitive sphere. Qualitative study would be done to achieve a higher level of in depth understanding of the subject of the sales promotion strategy and the ability of it to generate the data quickly.

  • Sampling Technique

The study has taken the Systematic Random Sampling method, where the final of around 100 customers were randomly selected who visited the KFC fast food restaurant in London’s select areas. This forms the sample design, which takes care of the plan for getting a proper representation of the entire population as targeting the entire population visiting the KFC restaurant is impractical due to time and cost constraints. The random sampling had one major appropriation- care was taken to select equal representation of the demographics, so that all the target market could be analyzed and studied.

  • Scope Of Study

One of the major requirements of the firm being competent in the current business environment is to be profitable, and the only way in which the firm can be profitable is to have sustained sales and more patronage of a greater amount of customers.

Thus to ensure that the firm does not deviate from the profitable path, we have to constantly monitor, the best practices in promotion methods to attract and spread the awareness of the brand in the most cost effective way. As discussed extensively in the previous chapters about the advantages of the sales promotion, the scope of the survey is to find the best practices in the area of the sales promotion and to recommend a proper set of the sales promotion within the constraints of limited funds to have the highest sales and profitability.

The study will thus explore the mindset of the customers as to what draws them to the KFC restaurant, and which sales promotion technique can be used effectively to have the greatest benefit to the company, in the light of the tough competition that the firm faces from the likes of McDonalds, Burger King, etc.

  • Relevance Of The Study

As explained in the above section, one of the major aspects of the company is to maintain the high profitability and sustain higher sales compared to the competition. The literature review gives the example of the Telecom companies in Nigeria; using the sales promotion schemes to draw in more customers to their subscriber base. Thus sales promotion can also be used as a tool to have a higher leverage in the market entry to develop new customers, which would become loyal to the company and thus help in the capture of market share.

The study would also give the company new insights to the thought process of the consumer for their other strategies that can be used by the company to compile new strategic process (apart from the sales promotion), and thus be beneficial for the company in the long run.

  • Qualitative Research

The qualitative research would involve survey and the telephonic interviews of the customers. The qualitative research would be done for an initial explorative study and thus would be limited to the initial survey of the same. The rest of the research would be done by taking quantitative study and research

  • Quantitative Research

The quantitative research will include the collection of the quantitative data, for further analysis which would involve the representation of the data by the pie charts and the bar graphs to ensure the overall picture of the entire research problem can be obtained. The advantage of the quantitative analysis, is that it is less prone to the biases and errors of the researcher and there is a good amount of data to corroborate the findings.

  • Reliability

The reliability of the data is the backbone of a robust research. The reliability is linked to the survey reliability and the proper data analysis. In research methodology, the reliability is coupled with the stability of the test with the reliability coefficient akin to the finding of the correlation to find the relation with the two variables under study. For example, a greater reliability means that the relation of the two variables like the higher level of walk ins and the increased sales levels are concurrent and congruent with the more positive customer feedback on the sales promotion schemes.

  • Validity

Validity of a particular research, according to the authors, Kirk and Miller (1986), is concerned with the obtaining of the relevant and appropriate data on the research topic. For example, the interest level on a particular sales promotion of the customer has a higher validity than, something, say like the interest level of the customer at the overall ambiance of the restaurant (even if it is one of the determining factor of the customer’s arrival at the restaurant) as this aspect is far off to the aspect of the sales promotion influencing the salability or the awareness of the product to the effect of ambiance as it is an independent variable.

  • Ethical Issues

The ethical and professional considerations are very important and have to be considered for every aspect of the research study. The research work should be reliable, ethical and honest. The relevance of research also holds importance to the research study. The research data has to be confidential so as to avoid the violation of ethical issues. The research study has to consider the legal policies of the copyrights and patents in context to the collection of data for the further analysis of data in the research study (Schwab, 2009).

  • Data Analysis

The opinions of the respondents were received through the questionnaire and the sums of the responses were calculated. The questions were positioned on a Likert Type scale of five ranking from strongly agree, which carried a score of 5 to strongly disagree, which had a score of 1. The questions that were asked were strongly based on the aspect of the effect of a particular sales promotion scheme that was then running in the showroom, and any means in which it in the mind of the consumer could have been improved to a better promotion. Also, probed was the aspect of the retention of the sales promotion in the minds of the customer after a week of the visit to the store.

The analysis is on the higher retention levels and the greater propensity to consume and thell other about the promotional activities would thus draw heavy inference to the success of the sales promotion activity.

  • CHAPTER IV- Findings
    • Introduction

In this chapter, the questionnaire that has been designed by us using the aims and objectives of the research study would be thoroughly analyzed and sufficient tools of analysis would be used to come to a proper conclusion to the entire research problem. Here in this regard, a primary survey of the customers who visited the KFC store would be done, a total of 30 customers would be analyzed on a week’s basis, and they would be asked the questions from the questionnaire. The questions in the questionnaire would be revolving around the main aims and objectives of the research problem of the “sales promotion activities of KFC in UK and its impact on the sales and revenue of the organisation in UK.” The main points that one would look at analyzing the responses of the customers are the objectives of seeing what main promotional strategies used to affect the customers buying behavior towards the increase of the sales of KFC in the entire UK, by analyzing the sample size of the customers. The market environmental factors would also be looked into, that affect the consumers buying decision In the UK. The questionnaire would also look into the aspect of the impact of the various promotional activities undertaken by the marketer in the KFC to influence the customers to buy from KFC. Finally the aspect of the impact of the sales promotion in the short term and the long term to the buying decision of the customers would be looked into.

To fulfill the above pointers, a total of 14 questions were asked to the customer, excluding the basic questions of the demography of the customers like age and sex. Our sample size of the customers is of 30 respondents. We shall now see the questionnaire findings.

  • Findings of Questionnaires

We shall divide the findings to the different questions that were asked to the respondents of the questionnaire- The method of taking of the questionnaires were on the basis of the customers entering the store or the restaurant at the different parts of the day. We tried to maintain a wide array of the timing of the entry of the customers to the store, to interact with the different customers based on the timing of the day they entered.

  1. Gender

Out of the total of the 30 respondents, 18 of the 30 respondents were Males and the rest (12) were females. This translates to 60 per cent of the respondents as males and the 40 per cent of the respondents as females. This has been done to keep the percentage or the ratio of the respondents equal to the ratio of the total buying population in KFC.

GenderNumber of peoplePercentage
Male1860 per cent
Female1240 per cent
Total25100 per cent
  1. Age

A wide array of the demographics were taken and classified to 6 groups according the age. This was done in accordance to the, similarities seen in the sub groups and their classifications, and thus classified according to the generational cohorts. The basis of the fact is that the groups of the age groups make it easier to classify the people into groups that have similar outlook and the needs of the people are similar to a certain extent. This is because, the zeitgeist of the times that they lived in molded their thoughts and actions, even to their buying behavior.

There were 3 respondents that came to the category of pre teens and teens, or 10 per cent of the total respondents. There 9 respondents that came to the category of the Generation Y, characterized by more disposable income for themselves, this translated to 30 per cent of the total respondents, the highest age demographic group in the study, they came in with their friends, in a large group many a times. A close second is the adults, who are aged between 25 to 35 years of age, with 8 of the 30 respondents or 27 percent of the total population. The next major groups are the Generation Xers, who are the new families with more responsibilities, with 7 respondents, these are the people, who came with the kids and thus came to the restaurant as a family. The next age demographic showed a sharp dive, who were at the post middle aged, with ages between 46 to 55 years, with only 2 respondents out of the total of 30, translating to a mere 7 per cent. Even lower was the Baby Boomers generation, post the age of 56, with only one respondent or representing 3 per cent of the sample. The entire distributions of the respondents are given in the table below. The proportion of the females to males were more equal in the A, B and C category of the age demographics.

Age groupsCategoryRespondentsPercentage
A = (< 16 years)Pre teens and teens310 per cent
B = (16-24 years )Generation Y930 per cent
C = (25-35 years )Adults827 per cent
D = (36-45 years)Generation X723 per cent
E = (46-55 years)Post Mid aged27 per cent
F = (56&Above)Baby Boomers13 per cent
Total30100%

 

  1. Is this your first visit to KFC

When this was asked, all the 30 respondents replied in the negative, as they had been to the KFC at least once before.

  1. When was the last time you visited KFC?

As all the 30 had replied in the negative, that this was the first visit to KFC, the next question that was asked was when they had visited KFC before.  5 options were given to them a.    Within 3 daysb.Within a weekc.A fortnight agod.A month ago and e.More than a month / I don’t remember. The maximum number of the respondents responded that they visited the KFC restaurant again, within a week, 5 respondents or 17 per cent of the total visited within 3 days, with 3 of them visiting the outlet every day, all the 3 people were of the generation Y age group. 4 respondents, mentioned that they don’t remember when they visited the restaurant or they visited it more than a month back, all of them were beyond the age group of 40, and visited the outlet only along with their family. The frequency of the visit was not affected by the gender, but the numbers of females beyond the age of 45 were very less.

Frequency of visitRespondentsPercentage
A =  Within 3 days517 per cent
B =  Within a week1033 per cent
C =  A fortnight ago827 per cent
D =  A month ago310 per cent
E =  More than a month / I don’t remember412 per cent
Total30100%

 

  1. Did you order from the promotional offer

When asked, all the 30, if they ordered from the promotional schemes, a staggering 26 respondents replied in the affirmative, and 4 of the rest replied in the negative. In the age demographics, strangely all 4 of the negatives, were of the age group of 45 to 50 years, this means that the customers, ordered what they wanted, or were price insensitive and were not affected by the incentives of the sales promotion activities.

Use of sales promotionRespondentsPercentage
A = Yes2687 per cent
B = No413 per cent
Total30100%

 

  1. What was the average value of your bill?

This was taken by all the respondents, to gauge their spending of the same by the customers. The average expenditure of the respondents was around 7 Pounds, on an individual basis.

The data was taken and tabulated

Age groupsCategoryRespondentsPercentage
 A = <4 pounds413 per cent
 B = 4 – 8 Pounds1447 per cent
 C = 8 – 12 Pounds827 per cent
 D = 12 + Pounds310 per cent
Total30100%

As we can see, a majority of the consumers, lay in the average consumption zone of 4 to 8 pounds, interestingly, out of the 4 respondents who did not avail the sales promotion offers of the KFC, 3 respondents spent less than 4 pounds, and the other 1 spent between 4 to 8 pounds, all below the average of 7 pounds.

  1. What was the amount of the bill, when you last came to the store?

This is a further and a deeper analysis, of the expenditure of the customers, which was done by looking at the Management Information Systems (MIS) by the customers name and the mobile number of the customer. As, all of them had visited the restaurant once beforehand, it was easy to check and compare the past value of the purchases, when there was no sales promotion, and now, when there was sales promotion.

The results were very encouraging. There was on an average, more than 10 per cent increase in the expenditure due to the time of the sales promotion. The overall average expenditure of the customers was around 6 pounds, doing a cumulative of the last purchases. The same in the current purchase was 7 pounds, showing an increase of 1 pound, which is, a whopping increase of 17 percent in expenditure. If we use the same analogy, the average expenditure per customer on an average jumped by 17 per cent, contributing an increase of expenditure of 17 percent, without the increase of the walk ins.

  1. How would you rate the promotional offer?

The customers ware asked this question, to gauge the interest level of the customers to the sales promotion offer. In terms of rating, there were no respondents that rated the sales promotion as poor. There were 5 respondents who rated it below average, and 6 as average. The 4 respondents who did not avail the sales promotion scheme, rated the sales promotion scheme between 2 and 3 (below average and average). 1 out of 3 respondents were quite happy with the sales promotion deal that they got, and rated the same as good. A very encouraging part was that 30 per cent of the respondents opined that the sales promotion scheme was excellent and gave a rating of 5 on 5.

Rating scaleRespondentsPercentage
A = 1 Poor00 per cent
B = 2 Below Average517 per cent
C = 3 Average620 per cent
D = 4 Good1033 per cent
E = 5 Excellent930 per cent
Total30100%

 

  1. What according to you is a hallmark of a good offer?

The customers were given 4 options of what the respondent felt was a good sales offer. This was about their perception of the offers that would give the market perception of what they felt was the best offer. The four options given to them were, Low price, More quantity, option of receiving free gifts or loyalty discounts in the form of rebates or incentives for the next purchase. The answers are given below

Rating scaleRespondentsPercentage
A = Low Price (Discounts)1240 per cent
B = More Quantity827 per cent
C = Free Gifts310 per cent
D = Loyalty Discounts723 per cent
Total30100%

The above meant that the maximum number of people preferred the low price that is they wanted to have the benefit of the offer in terms of saving the money. This means that they are very price sensitive, and the caution to the company is that the same customers may be willing to shift to another company offering a higher discount. This may start a price war detrimental to both the companies and the market, with the customer being the only winner in such cases.

  1. Have you told anyone about our offer, if yes then how many?

When asked whether the customers told other by word of mouth to other customer, many replied in the affirmative, 19 out of the 30 customers said yes, that they had told others about the offer, and when asked how many they told, the average number of people, were about 7, mostly their friends and families. The younger generation, the generation Y and the teens were more proliferating, with some telling more than 20 people through social media.

  1. Do you plan to visit the restaurant, when the offer is not there?

When asked this question, 26 people said yes, that they would visit the restaurant even when there would be no sales promotion activity, translating to 87 per cent of the total respondents. And 4 said that they would not visit the restaurant and would wait for other sales promotion activities.

  1. Which offer do you recollect?

This would test the recollection of a particular offer to see the effectiveness of a particular sales promotion scheme on the target market. This would mean that the company could plan their sales promotion scheme to have the highest number of people accessing the same, due to the high retention and awareness of the same. The options given to the customer were regarding the old offers that were there in the KFC at one time and they are as follows- a. Buy one get one freeb.Kids eat freec.Rebate on the next purchased.Combo meal discounte.Discounts on movie ticket.

Among the above, 10 customers recollected the Buy one get one free, that was advertised and they availed the offer during that time. Only 2 customer, that too the preteens remembered the Kids eat free special,  Rebate on the next purchase was recollected only by 3 customers, the major sales promotion activity was the Combo meal discount, which was remembered by 12 customers, due to the long duration of the scheme, only 3 customers remembered the Discounts on movie ticket.

The last two questions probed the buying behavior of the customers that entered the restaurant. One of the questions was

  1. What affects your buying decision

They were asked the buying decision of the customers, as the main factor that decided whether they bought something or not. The three options that were given to them were, a. Price, b. Taste and c. Time of the day. Interestingly 15 customers or one out of two respondents gave the price as the most important factor among the 3. 7 customers gave the taste as important and 8 customers gave as the taste.

This has huge implications to the sales promotion activities of the company, as the customers are highly price sensitive, and thus the sales promotion schemes can sway the customers to buy the products from KFC, from the others. This again has to be taken with a hint of caution, as a price war would be detrimental to the profitability and the health of the company.

  • CHAPTER V- Analysis & Discussion
    • Introduction

This chapter would look into the overall analysis of the findings of the above research of the questionnaire, we would go on a question to question basis to have the implications of the sales promotion on the overall marketing and the health of the company like KFC. We would look at the limitations of the study and give the final recommendations

  • Analysis

The ratio of the males to females was left similar to the overall proportion of the customers that visit KFC. The age groups were also relatively kept proportional to get the best idea of the entire proportion. The very fact that all 30 of the respondents had visited KFC before means that all the respondents had been to the KFC and thus knew about the offerings of the company, and what it gives to the customers.

When was the last time you visited KFC?

High proportion of the weekly users meant that the customers were fairly regular, and the sales promotion schemes would be able to increase the frequency of the usage by a good margin, as the same would incentivize the customers to visit the store more often.

Did you order from our promotional offer?

This was one of the most important questions that, would determine the success of the promotional strategies of the company as the means to attract the customers, 87 per cent of the customers ordering from the sales promotion schemes meant that the promotion was a success, as many form the respondents would not have ordered if not for the sales promotion schemes

If yes (or no) what was the approx. value of your bill? What was the amount of your bill last time you came to the store?

The very fact that the customers are spending more from the last time, despite the sales promotion scheme means that the sales promotion, encourages the customers to spend more and fuel more sales. The average expenditure per customer on an average jumped by 17 per cent, contributing an increase of expenditure of 17 percent, without the increase of the walk ins.

How would you rate the promotional offer?

A better rating means that there is a higher interest level of the offer in the eyes of the customers, and thus a higher interest level would mean that more and more customers would want to avail the offer, thus increasing the walk ins of the store. More walk ins means that there are more customers that would spend on the offerings of the KFC restaurant, thus increasing the sales level of the store.

What according to you is the hallmark of a good offer?

This would mean that, making or tailoring a particular offer to the likes of the majority of the respondents, would increase the delight of the majority, and thus increase the amount of people availing the offer, increasing the amount of walk ins to the store and thus the sales would increase, increasing the profitability of the company, and finally increasing the market share of the company, as the customers would choose, this over the other competitors in the market.

Have you told anyone about our offer? How many?

This is very encouraging, as the method of propagation is done on a word of mouth basis, and virtually costs nothing for the company. The promulgation of the information leads to more and more people trying out the product due to more awareness, thus leading to higher sales of the KFC.

Do you plan to visit the restaurant again, when there is no such offer?

The premise of the question rests on the fact that the sales promotion is not a continuous thing, as the promotion costs money for the company. Thus knowing the fact that the sales promotion, led to the increase of customer base is moot, if the same customers do not decide to come at a later date when there is no such activity.

The high response to yes means that a good majority would stay loyal to the brand, which is what the company would want, having a long term relationship with the customer is very crucial as this leads to the development of brand loyal customers that would stay with the company regardless of the sales promotion schemes and would be more price insensitive.

Which offer of KFC do you still recollect?

The implication of the above is that the longer duration of the schemes helps in the longer retention of the same by the customers, also another factor that would contribute to the longer retention of the schemes is that of the attractability of the schemes. The kids free special was not recollected by the adults as it did not target them, but it was remembered by the families, as it favoured them majorly. The buy one get one scheme had higher cost implication to the company, but was very attractive to the customers, and hence the high awareness.

  • CHAPTER VI- Recommendation, Implementation & Limitations
    • Reflection & Recommendations

The main result of the research analysis is the aspect of the positive co relation of the sales promotion strategies and its linkages to increasing sales as well as increased walk ins of the customer. We have seen from the present data of the consumers as well as the past data that the average spending of the customer goes up during the time of the sales promotion scheme. Also the company has the advantage of better awareness of the product offerings by the target market, which was due to the increased word of mouth promulgation by the satisfied customers with respect to the sales promotion.

The main recommendation here is that the customers should be given the best sales promotion with the highest perceived benefit to the customers. This means that the customer should truly believe that he or she is getting the best deal in the market, this aspect will attract a lot of customers to the fast food chains.

Now, with respect to the best form of sales promotion that the company should follow, is that of the loyalty incentives by means of the rebates or next purchase discounts. This is because, the study has shown two things regarding to the buying behavior of the customers-

  1. Customers coming to the KFC restaurant are very price sensitive.
  2. Customers are more likely to purchase again if they have a reason to do so.

Combining both of the above means that we need to incentivize the next purchase of the customer by giving cash discounts in the form of rebates to the customers.

The advantage of the above, is that, one the company will have repeat purchases, one that come to the company time and again, till the time the customers becomes loyal to the restaurant. At such times, the company need not have incentives to draw the customer, they can themselves be drawn to the restaurant out of their own volition.

The second advantage is that despite the literature review quoting that the cost incurred by the company is quite high, in case of rebates, it is not as much as the cash discounts or buy one get one kind of sales promotion. Plus there is a chance of a higher trade offs, of repeat purchases, thus increasing the repeat purchase rate, from the now average of a fortnight to weekly or twice in a week purchase.

The next section will deal with the implementation of a particular sales promotion recommendation, which is the loyalty discounts or rebates.

  • Implementation Plan

If one does the cost and trade off analysis, the costs incurred by the company will give higher benefits in terms of more sales per customer and higher walk ins due to repeat purchases.

The implementation will follow the said structure, in form of steps-

Step 1- Identification of the customers who are more enticed by the discounts, this can be done by using the MIS data, within the back end office of the company by analyzing the purchase behavior of certain customers.

Step 2- Install a printer that produces the discount coupons for the next purchase, at the billing counter.

Step 3- If the customer, who falls into the desired target group, defined in step 1, thenprint a higher discount coupon, to make the customer visit again. Vary the percentage of the discounts, on the basis of the purchase behavior of the customer. More price sensitive customer- more discounts, less price sensitive customer lesser discounts.

Step 4- Have an algorithm to fix, the discount according to the buying behavior of the customer, if the price sensitive customer shows lesser price sensitivity due to more loyalty to the brand, the customer can be taken off the target list, thus saving the cost that it incurs to bring in the customer due to the higher discounts that it offers.

Step 5- One major, point to note is the gradual reduction, of the discount should be done to prevent buyer dissonance along with the loyalty rebate. Additional sales promotion techniques can be used, like giving a freebie, like extra shake, or free soft drinks, to entice the customer, without incurring the heavy costs of giving large price discounts.

  • Limitations Encountered

The main limitation of the research study is given below-

  • Since, we are taking the responses from the customers, there may or may not be the correct information flow, as many may not give the correct information just because thay don’t have enough time or the patience to answer all te questions of the questionnaire.
  • The other limitation is the aspect of the unwillingness of the customer to give their contact detail, to call back on a later date to judge their sales promotion retention in their memory.
  • The study was done on a very short time frame of 8 weeks, which is not a long study time to arrive conclusive recommendations, and a lot factors on the seasonality of the time of taking the questionnaire. For example, sales may be down during the time of Lent, when the devout Christians abstain from taking meat during that time.
  • There can be many other factors, like ambience and hygiene that may be primal factors for better walk ins and higher sales, rather than the concept of the sales promotion only. A sandbox effect may take place with the aspect of sales promotion only as the sales determining factor.

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APPENDIX

    1. Questionnaire – To customers at the KFC Outlet

Name:                                                                               Age:                                        Sex:

  1. Is this your first visit to KFC
    1. Yes No
  2. If No, When was the last time you visited KFC?
    1. Within 3 days
    2. Within a week
    3. A fortnight ago
    4. A month ago
    5. More than a month / I don’t remember
  3. Did you order from our promotional offer?
    1. Yes No
  4. If yes (or no) what was the approx. value of your bill?
  5. What was the amount of your bill last time you came to the store?
  6. Was there a promotional offer, there when you last came to our restaurant?
    1. Yes No
  7. How would you rate the promotional offer? (1- Poor, 5- Excellent)
    1. 1 2      c. 3      d. 4      e. 5
  8. What according to you is the hallmark of a good offer?
    1. Low price?
    2. More quantity?
    3. Gifts?
    4. Loyalty Discounts?
  9. Have you told anyone about our offer?
    1. Yes No
  10. If yes, then how many?
  11. Do you plan to visit the restaurant again, when there is no such offer?
  12. Yes No
  13. Which offer of KFC do you still recollect,
  14. Buy one get one free
  15. Kids eat free
  16. Rebate on the next purchase
  17. Combo meal discount
  18. Discounts on movie ticket
  19. What affects your buying decision?
    1. Price
    2. Taste
    3. Time of the day
  20. What time do you generally enter the KFC?
    1. Morning
    2. Mid day
    3. Evening
    4. Night

 

 

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