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Pitch Exclusive: KFC Vs McDonald’s – The big fight

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Pitch Exclusive: KFC Vs McDonald’s – The big fight

The burger category in India is witnessing a lot of action from the two key players, McDonald’s and KFC. Early this year, KFC focused on getting a bigger bite of the value market with the launch of Streewise range. A few months later, McDonald’s launched its premium range of burgers and wraps - the McSpicy range. While value segment was McDonald’s forte, KFC’s strength was premium products. This year, both the burger chains have got into each other’s space to get a larger share of the market.

Product, price and promotion
The latest episode of the wrestle between the two is the launch of McSpicy range of burgers from McDonald’s in April this year. The McSpicy Chicken burger from McDonald’s is quite similar to KFCs Zinger in terms of product, price and packaging. McSpicy Chicken burger is McDonald’s first burger with whole muscle crispy chicken. As Amit Jatia, Vice Chairman McDonald’s India (West and South) stated at the McSpicy launch, “We have introduced Paneer and whole-muscle chicken on our menus for the first time.” Interestingly, this crispy chicken used in MCspicy Chicken is very similar to the crispy chicken, which has been KFC’s trademark chicken and is also used in the Zinger burger. Even the description about this burger in the menu emphasizes on two elements - juicy and crispy (apart from the spicy factor) which has been KFC’s USP for all its chicken products. Talking about the MCspicy Chicken burger, Naresh Gupta, National Planning Director, Cheil Worldwide SW Asia, says, “McDonald’s seems to be acknowledging that KFC has a differentiated product and people are liking the KFC non-mince meat, sumptuous bite Zinger Burger.”

Purnendu Kumar, Vice President, Retail & Consumer Goods, Technopak Advisors says, “I think this is natural that you outdo your competition not only by doing your own things better but also by offering products, which may be popular in the market but you don’t have currently.”

The pricing of the two burgers - McDonald’s McSpicy and KFC’s Chicken Zinger is quite similar too. While a McSpicy Chicken costs Rs 111, KFC’s Chicken Zinger costs Rs 101 (prices inclusive of tax). In fact, this is the first time that McDonald’s has introduced a burger costing over Rs 100.

Experts also feel that, the veg burger of McSpicy range - McSpicy Paneer is launched to compete with KFC’s Veg Zinger which was launched in 2010 and has been doing very well. Sample this: Market reports suggest that after the launch of Veg Zinger, the contribution of veg products in the KFC revenues has doubled to 10 per cent as compared to five per cent earlier. McDonald’s McSpicy will now be a competition to Veg Zinger.

The other two products of the MCspicy range include: Big McSpicy Chicken Wrap and Big McSpicy Paneer Wrap. The launch of Spicy range has helped McDonald’s. According to market reports, Spicy range contributes 23 per cent of McDonald’s sales (as of May 2011) which is equal to the contribution of entry-level products. Going forward, the company is expecting its higher-priced menu to contribute 40 per cent to overall revenues. KFC has been quick to respond and launched Hot Chicken Zinger in April only. Though, KFC’s Marketing Director, Dhruv Kaul denies that launching Hot Zinger was in response to McDonald’s McSpicy. He says, “Focusing on competitive movements and pressure is something that we don’t do. We have experimented a lot with products and flavours and we keep adding to those from time to time. We already have the hot flavour range with Hot Wings and Hot&Crispy Chicken. So Hot Zinger is a part of the hot flavour range. What is happening outside of our products is up to you to judge.” Is Kaul hinting that the MCspicy range from McDonald is inspired by KFC’s Hot range? Well your guess is as good as ours!

And the competition is not just in the high end of the market, the value segment has also witnessed action. The launch of Streetwise range starting at Rs 25 is KFC’s attempt to compete in the value segment which is dominated by McDonald’s with its Happy Price Menu (starting at Rs 20).

Even at the promotion level, there is some heat between the two burger chains. Last year, KFC introduced Veg Zinger TV commercial, which subtly attacked McDonald’s’ very popular Aloo Tikki Burger. The TVC showed young boys hanging out at a KFC outlet and looking sad. When questioned by a KFC staff, one of the guys, sadly replies, “Hamare pyaar ke beech men Aloo ki Tikki aa gayi”. To this, the KFC staff enthusiastically tell the boys about the new Veg Zinger and the product shot emphasizes on the quality and taste of the burger. The TVC ends at the shot of the vegetarian girls happily enjoying Veg Zinger at KFC along with the boys. The VO: “Hamare pyaar ke beech men Aloo ki Tikki aa gayi” was a clear hint at McDonald’s Aloo Tikki burger.

KFC’s steady catch up
The happenings in this market over the last two years shows how KFC has been catching up quickly with McDonald’s. Unlike McDonald’s which has been a hit among consumers since its launch, KFC had a tough start in the country when it entered first in 1995. But the brand’s second coming has been good and the retail food chain is steadily catching up. As per the company, it has been growing over 70 per cent over the last few years. Cheil’s Gupta feels that the reason for KFC’s increasing success is its differentiated menu, and outstanding product quality. “The whole promise of crunchy outside, juicy inside is really delivered, and this keeps calling consumers’ back. Also, they have a decent vegetarian offering (rather oxymoronic if you have to eat greens at KFC, but this is India), and this means that the veg veto that used to hurt KFC then, has been over ruled,” he adds.

KFC’s launch of Krushers and other drinks has also helped the brand gain more popularity amongst consumers. Kaul says, “Our range of beverages including Krushers, sparklers, crunchies have got a very good response from the youth.” Technopak’s Kumar says, “KFC has been very innovative in terms of its offering, rice meals, and veg meals and that has really helped the brand grow.”

The (positive) side effects
Experts feel that increased competition between the two players is actually good for the category. This will mean more choices for consumers and will also lead to some segmentation in the market. KFC’s core audience is teenagers and young working adults while McDonald’s core TG is kids. Cheil’s Gupta agrees, “It always takes more than two players to make the category grow. McDonald’s made a big splash and made its Softie as its EDLP (Every Day Low Price) store attractor. They have now expanded the Softie to full blown desserts. KFC took humble cold drink and turned it into Shakes and Mojitos. Together, they have become the magnets for consumers to experience McDonald’s and KFC. This is what Barista and CCD and Costa have done to coffee bars.”

However, there is one aspect that both the players haven’t much focussed on so far i.e. healthy food. “The challenge may come from the health conscious segment if the healthy eating trend becomes large. But I don’t think there is any immediate threat for them,” says Gupta. The consumers are getting health conscious and in such a scenario having more grilled and low fat options may help both the brands to add a few extra bucks in their top and bottom lines. And could be helpful if in the long run consumers take a complete health turn.

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