A Case Study of Kfc’s Cross-Cultural Marketing in China

Summary: In 2007, KFC had opened 2000 outlet stores in china, leaving rival MacDonald’s far behind, achieving high praise from Chinese consumers and defeating challengers again and again. From the perspective of cross-culture, this paper tries to analyze the marketing strategy of the American fast food chain stores in china and give multinational food and beverage companies suggestions. Key words: KFC, fast food, cross-cultural marketing

1. KFC's success stories and their status in China In 1987, KFC entered the ancient capital of Beijing, China, which has a long food culture and the world's largest population. KFC opened the first restaurant in at Qianmen of the downtown area. As a starting point, KFC began to constantly experiment and learn to adapt to Chinese society and market, and gradually forming a management model with Chinese characteristics. Till 2007, KFC had opened 2000 restaurants. This paper analyzes KFC’s performance in China from four perspectives: product innovation, pricing strategies, channels and public relations

1) KFC's product innovation strategy Facing the fierce competition in China’s fast-food industry, KFC attaches great importance to product innovation. China is still in the procedure of opening to the world, common people are extremely curious about the new things. Meantime, Chinese have a high sense of cultural identity, especially to the traditional foods. Using the Western “skin” to surround the Chinese “core” reflects KFC’s cross-cultural marketing success in product innovation strategy.

From the Mexican Chicken Meatloaf to the Old Beijing Chicken Volume, KFC continuously make breakthrough and innovation combined with the characteristics of Chinese culture, not only providing consumers with a variety of choices, but also bring the fast food industry a wide range of competition, in which KFC consolidates its leading position in China’s fast food industry.

2) KFC's pricing strategy In the Chinese market, McDonald's uses the price strategies much more often than KFC, while KFC uses the new products strategy more often than McDonald’s. KFC maintains the price level almost immobile. From the cross-cultural perspective, China is a large power distance society, people place great importance on the relationship between personal image and consumer prices. KFC’s holding constant prices is beneficial to maintain its image among consumers without fluctuating with the prices.

At the same time, as a Western-style fast food, KFC takes into account Chinese consumption habits of collective tendencies, using the "Take-away Family Bucket" to promote rather than the single products promotion as McDonald's, also receiving a good effect.

3) KFC's distribution strategy From the perspective of cross-cultural marketing, apart from the existing process design flaws, as a result of China's distinctive power distance and masculine orientation, Chinese employees have a widespread impulsive tendency, difficult to concentrate on the completion of some minor trivial matters, but these are fatal to the food industry. Sudan Red Pollution event was just a good example.

If attentively check the real source, these chemical pollution will not flow into KFC, and impossibly occurred again. This taught multinational corporations in China a lesson: the key to implement real good system to the enterprise is not the hard working of executives, but the quality of the grassroots. In other words, the key of the success of multinational corporations lies in the possibility of the recruitment of attentive staff to control quality in society with a widespread impulsive tendency. 4) KFC's public relations strategy

However, when in reflection of KFC’s supply chain management not playing the desired effect, what should be sure is KFC’s crisis public relations has a lot to be learned by domestic enterprises. In Sudan Red Pollution event, KFC mainly took four modes of measures, and each mode contains a certain amount of cross-cultural marketing content:

a. Making full use of media resources and high officials public relations Crisis Public Relations means when the business encounter trust, image crisis or work errors, the enterprise try to get the public's forgiveness and understanding, and then restore the affected business image through a series of activities. As the media has a great impact on the public, crisis public relations to a large extent focus on the media.

In the Sudan Red event, KFC held press conferences several times, even the low profile Sam Su, president of China Yum Group, specially went to Beijing to have lunch in KFC restaurant. Taking measure like this in a country where it is characterized by power distance was just to assure the consumers, which played a significant role in restoring consumers confidence.

b. Finding the source to make consumers learn the truth In this incident, KFC on one hand reviewed its own supply chain management, on the other hand assisted relevant department to trace the source, and finally succeeded in finding the Sudan Red source. Despite still being questioned to "pass the buck," KFC made the truth public, consumer sentiment quieted a lot. In such a country where a masculine tendency is apparent, people are prone to get to know the fact. Knowing it was not KFC's own problems, people put more spearhead to KFC’s suppliers rather than KFC.

c. Admitting its own mistakes, using the authority to testify itself KFC issued a circular to announce the investigation of Sudan Red event had been completed, all the problematic condiments had been properly handled, and the alternatives were ready. Meanwhile, KFC reiterated that all related products had been sent to the state recognized professional department to conduct a comprehensive test.

The test results confirmed that all products were free of Sudan Red component. Consumers can eat safely. KFC's admitting mistakes cooled the temper of consumers, laying the foundation of getting through the crisis. In China, using the evidence of reports of relevant state departments is the most direct and effective way to convince consumers and restore the confidence of consumers.

d. Diverting the attention of consumers to create a calm atmosphere After holding a press conference to announce that all products are free of Red, KFC quickly claimed the compensation program made to consumers. Being assisted by Hefei consumer’s association and lawyer Sun Weidong, KFC tried to promote mediation with consumers. Meantime, KFC quickly launched public relations campaign around China. In Shijiazhuang, KFC launched the Happy Dolls KFC Cup First Kids Basic Gym TV Competition; in Dalian, KFC launched the" KFC Hamburg eating Competition;

KFC promoted the dessert---a new Thai Princess Coconut Tarts around China. KFC quickly moved the attention of consumers through a series of news and its turnover rapidly recovered. In the country where people have a strong sense of collectivism, creating such an atmosphere of calm and the attitude of positively taking social responsibility to a large extent softened the antagonism of consumers.

2. Conclusions and suggestions The competition of local Chinese fast food and Western fast-food is already an old topic, but for what there has not been one like the Jollibee Philippines born in mainland China succeeding in repelling foreign fast food. The reasons are various, from the cross-cultural marketing perspective, local Chinese fast food can learn from KFC’s success as follows.

1) Proper brand positioning In China, KFC is taking a "Western fast food is just close to you" line to create medium and low class social gatherings and recreational areas. KFC on the one hand is stressing its focus on the chicken food without denying itself as a "foreign fast food," on the other hand is stressing that they concentrate on the combination of the Chinese and Western food, which not only meets the desire of the consumers who want to try new products, but also takes care of the patriotic sentiment of Chinese consumers.

As a result, KFC is widely recognized. Can China's local fast foods also emphasize their Chinese characteristics then? If one day they expand to the United States, can they emphasize the "Chinese taste", while meantime introduce the combination of local and foreign products to cater for U.S. consumers?

2) Timely introduction of new products for Chinese tastes In fact, the speed of KFC introducing new products is no faster than McDonald's, but why every time KFC's new products are more impressive? It is inseparable that they try every effort to satisfy Chinese taste. China is collective tendentious country, people have very strong patriotic psychology and exceptionally love the taste of their own. That is why when the Mexican Chicken Meatloaf is replaced by the Old Beijing Chicken Volume, consumers show their great concern, while when the same period McDonald's launched the Corn Soup, consumers show little interest. Will China's local fast foods prepare to work hard on the new flavors of new products to attract local consumers?

3) Appropriate marketing channels and public relations activities As to the channel selection, the selection of KFC outlet store address is under great care and includes several steps: Collecting the information of this region

Dividing business districts according to the information Researching the main consumers gathering point in the business district Determining consumers’ flow lines Additionally, its product supply chain control is also very distinctive, while which is just the flaw of many Chinese fast food chains stores--- they can not provide standardized supply chains and products.

In terms of public relations activities, the public relations activities of Chinese local fast food Wing Wah Chicken which has defeated by KFC become pales in comparison. Wing Wah Chicken labeled itself “Honor China” and declared “compete against Western fast food”, “open outlet stores where foreign fast food stores open”. Therefore, some media titled "War between Foreign Chicken and Local Chicken” to promote Wing Wah Chicken. Using the gimmicks of reviving the national economy really made a lot of Chinese fast food restaurant achieved night fame.

However, in today's context of global economic integration, local fast foods need a scientific spirit and do an unspeculative working attitude. Wing Wah Chicken only left some slogans without noteworthy details. The level of public relations activities was vividly reflected in the details.

In summary, Chinese fast food chain stores need to learn KFC’s experienced cross-cultural marketing, being established in the local community. I believe that one day the local fast food can do as Jollibee Philippines did.

References “China’s Most Contributive Multinational Corporations in 2007,” Executive, January 1, 2008. “KFC’s Special Customer,” Journal of Beijing Petroleum Managers Training Institute, June 9, 2007. Guo Qi, “A Comparison between Chinese and Western Fast Food Industry,” Market Forum, March 12, 2008. Li Benhui, “Learning from Yum Group’s Chain Operation and Innovating A New Model in China’s Catering Industry,” Market Modernization, May 1, 2008. Li Jiang, “KFC and Foreign Fast Food,” Art & Design, May 24, 2008. Li Wentao, “On KFC’s Localization in China according its Brand Positioning,” Enterpriser World, April 1, 2008. Lin Guanghai, “Crisis Management of Enterprises,” Corporation Research, February 5, 2007.

Long Weili, “Yum Group Changes for China,” Foreign Investment in China, January 1, 2008. Xing Mei, “Crises Management in P&G’s Withdrawal from the Counter and KFC’s Success,” Money China, September 1, 2006. Yao Hongyu, “Inspiration from KFC’s Success,” Landbridge Horizon, February 1, 2007.