Category: Business Report

Introduction

With the rise in globalization, cultures spread across the globe both far and wide. Concepts that have for years been bound to the western world are now getting out to the rest of the world. As a result, American companies are continuously finding the overseas as a lucrative opportunity for their expansion strategies. The fast food culture is one of such cultures that have made the rest of the world as attractive as the western world for industry players in the fast food sector. Kentucky Fried Chicken is one of such companies, and in this case the venture is in Kazakhstan, a fast developing nation. A marketing mix strategy dictates how a company exploits the potentials of a given market for the best performance. In most instances, companies have to understand the dynamics of that given market before deciding on what would best work as a marketing mix. The main factors to be considered include the socio economic, legal, political and socio-cultural factors in the new market. These questions will be discussed in the paper with respect to Kentucky Fried Chicken in Kazakhstan.

Determinants of the Marketing Mix Strategy

Marketing mix strategy involves the formulation of a marketing mix for a given market. In this case, KFC needs to chart out a strategy for the entry into Kazakhstan and the main factors are as discussed below.

Differing Customer Needs

Kazakhstan has a population of approximately 18 million people, spread out over 130 ethnic groups (Cummings 2005). It means that the populace is quite diverse and that the tastes and preferences of the potential consumers are likely to differ. What it means for the company is that diversity will be a key factor in their product aspect for the marketing mix. Other than ensuring high product quality, the product assortment will have to be also quite high to meet the diverse tastes of the population.

Marketing Objectives and Strategies

Kazakhstan has a middle income economy with great potential of becoming a high income nation at some point in the future. With a total GDP of over $250 billion, the country can be said to do quite well economically (Cummings 2005). It, however, does not necessarily imply that the entire population belongs to the high income bracket and as such the company must consider the pricing strategies carefully. While the marketing objectives may penetrate the market and generate maximum income, market presence and brand building should be the main focus and therefore, the pricing must be relevant and reasonable to the population. The country has a relatively low Gini coefficient of 28.8 implying that the income distribution disparities are not bad. The pricing must, thus, be strategized to ensure that both the high and low end markets are catered to in terms of quantity. The high end consumers are likely to buy larger quantities while the low end consumers stick to the lower quantities based on what they can afford. The taste with regards to quality is mostly uniform given that the nation classifies itself as a middle income nation and thus, the people are generally drawn to the expensive things in life.

Transport Costs

Kazakhstan is a very vast area. The country has over 2.7 million square kilometres, meaning that there would be need to cover a lot of area. With a population of over 18 million on such a vast area, the population density may be challenging to the company. KFC will have to open too many locations or invest in convenient delivery options for the consumers (Lovelock 1999). Either way, transport will be by far the most expensive part of the operations as there are barely 10 people per square kilometre in the country.

Promotional Objectives

As a new market entrant, the main objectives for the company in Kazakhstan will be to inform the consumers of the its existence and set the company apart from any existing competition. It means that the company will need a strategy that introduces it to the consumers extensively and persistently, while also stating their advantages over the competition with regards to matters that are relevant to the consumers such as quality, originality or the uniqueness of the products among other things.

Labour Costs

Kazakhstan has a relatively lower population with a high adult literacy rate of about 99% (Baydildina, et al. 2000). It means that the labour costs may be comparatively high given that the company will be hiring professionals in the industry (Hunt 1977). As a result, the marketing mix will have to put into consideration the fact that this country does not provide the absolute advantage in terms of labour costs.

Likelihood of Automation

Just as in other fast developing nations, the possibility of an eventuality of embracing technology in terms of business automation is quite high. It means that the company may at some point reduce its expensive labour forces and replace them with specialized equipment like automatic vending machines among others. As such, the marketing mix should incorporate a likelihood of reduced operational costs in the future.

Aesthetics

Being a middle income economy that is fast becoming high income one, the people are basically more inclined towards luxurious products. As a result, the branding and positioning of the company’s premises must exude great class and style and the ambience must be the best, as well. It is basically the only way to ensure that the potential consumers are convinced of the company’s brand quality.

Comparison of Selected Marketing Mix Strategy with that in the Home Market

KFC is the American fast food company that has positioned itself as a premium company with high product quality and thus, high end consumers at most. Its success may be explained by the fact that the company is largely famous and that its presence in the American market is boosted at the moment. Also, the United States has already a high income economy with relatively cheap labour and a very high population density (Cummings 2005). With this in mind, there are three major aspects that would be noted in comparing the marketing mix at home with that in Kazakhstan.

Infrastructure

Kazakhstan is a developing nation with high ratings on the infrastructure. The country has high speed trains, high quality highways and extensive road and railway networks connecting all the cities and the neighbouring countries. They also have high speed Internet and other communication systems making it a well developed nation. It means that the infrastructure is highly efficient. In the US, the company thrives due to the high speeds of communication and transportation for orders and deliveries. It means that with respect to the influence of the infrastructure, the marketing mix strategy in Kazakhstan is similar to that at home.

Costs

The US has much higher population than Kazakhstan, implying that the labour is much easier to find. In Kazakhstan, the population is not only very low but also the literacy levels are very high (Baydildina, et el 2000). Consequently, cheap labour is relatively inaccessible and the people are mostly professionals and must be compensated accordingly. The marketing mix strategy at home, thus, thrives on the availability of cheap labour while in Kazakhstan the company’s management must consider that the labour will not come cheap at all.

Another consideration in this comparison is the cost of deliveries or operating multiple locations. The people are spread out far and wide, implying that deliveries will be made across large distances and stores will have to be opened in many areas to cater for the sparsely distributed populations.

Factors for a Future Marketing Strategy

Once the market entry is complete, the company may have to adjust the marketing mix to focus on brand building and market domination in Kazakhstan. It means that the future holds a lot of changes that will be dictated by a variety of factors, as discussed below.

PEST Culture

Politically, Kazakhstan is relatively stable and has been that way since its independence. It, however, does not mean that there are not any risks. As a former Soviet Union member, the country is still growing in terms of its political framework in a way that it may change at one point to the next. However, it does not have to stop the company from doing business. With such attractive foreign policies, foreign investment has been set out as a clear path for the country’s growth and as such, it is expected that foreign businesses will continue to thrive for the sake of the country’s economy (Anderson & Coughlan 1987). Thus, peace is not a problem given that the government understands the importance of peace to the foreign businesses.

Economically, the nation is growing steadily implying that there is a chance of reaching the standards of the developed nations. As such, the company should expect to improve its marketing mix to cater for an increasingly wealthy clientele with a need for the best product and service quality.

Socially, the population is very diverse with an increasing number of foreigners as well. It means that the company must ensure that it can cater to an ever increasing dynamism with regards to the tastes and preferences of the populace (Sanlier, et el 2011). Also, the fact that globalization continues to modify the cultural perspectives of the people all over the world means that eventually the company will have to ensure consistency across its international ventures for purposes of reliability and customer loyalty regardless of location.

Technologically, the company will have to embrace concepts like automation among others to ensure that they are up-to-date with the changes in business technologies. It may reduce operational costs by reducing the required number of staff in the outlets, thus affecting the business objectives by freeing capital for use in other departments.

Legally, the company always has to pay attention to consumer and safety laws. Like with the recent obsession with organic and non organic foods, as perceptions change, the company will have to change its policies to accommodate the regulations of the Kazakhstan government with regards to the food industry (Swinnen & Maertens 2007).

Environmentally, this country is significantly conscious about going green and as such it should be a great part of the company’s objectives to be as environmentally friendly within its operations and strategies as possible. It may involve areas such as packaging, the use of renewable energy and recycling among other things.

Conclusion

A marketing mix strategy dictates how the company draws itself out to the consumers within a specific market. On one hand, the needs and objectives of the company must be put into consideration in deciding the factors that determine the marketing mix strategy of the company. On the other hand, the needs and expectations of the consumers and the market environment, within which the company intends to operate, are also critical to the success of the business and must be taken into consideration when crafting the marketing mix strategy. KFC has both opportunities and threats in venturing into Kazakhstan and thus, they are the best served if they seek to maximize their potential by capitalizing on the factors of the Kazakhstan market. Such factors include a great political and economic environment, a diverse socio cultural environment and globalization that is opening the people up to international perspectives and western desires.

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