Summary:
- Success Formulas age, losing their value
- To regain growth, you have to identify with market trends – not reinforce old Lock-ins
- KFC is losing sales due to a market shift, but its response is not linked to market trends
- KFC’s plan to invest heavily in its old icon is Defend & Extend management
- Market to what it takes to regain new customers, and lost customers, not what your current customers (core customers) value
- The Status Quo Police have driven a very bad decision at KFC – more poor results will follow
- You have to market toward future needs, not what worked years ago.
Who’s Colonel Sanders? According to USAToday, in “KFC Tries to Revive Founder Colonel Sanders Prestige” 60% of American’s age 18 to 25 don’t know. For us older Americans, this may seem amazing, because we were raised on advertising that promoted the legend of a cooking Kentucky Colonel who “did chicken right” creating the recipe for what became today’s enormous Kentucky Fried Chicken (KFC) franchise. But it’s been a very, very long time since “the Colonel” left KFC in the 1980s, declaring that the chain, then owned by Heublein, didn’t make chicken so “finger lickin’ good” any longer. Were he alive today, the famed Colonel – who became a caricature of himself before death, would be an astounding 120 years old! Now most people don’t have a clue who’s picture that is in the red logo – if they notice there’s even a picture of someone there.
KFC is the largest chicken franchise, with 15,000 stores. But size has not been any help as the chain has lost its growth. Last quarter’s same-store sales fell 7%. A clear sign a deadly growth stall has started that bodes badly for the future! People have stopped going to KFC outletd. So management needs to do something to bring new customers into the stores – in American and globally. In a remarkable display of defending the Status Quo, leadership’s recommended solution for this problem is to put a heavy marketing blitz into “educating” consumers about the Colonel, and the oompany’s history!
Are we to believe that knowing about some long dead company founder will drive customers’ decisions where to eat lunch or dinner next week? Or next year?
I don’t know why people are eating less KFC, but it’s a sure bet it’s NOT because the Colonel has faded from the limelight. Times have changed dramatically. Everything from the acceptance of fried food, to concerns about chicken raising, to menu variety, to store appearance, and alternative competitive opportunities have had an impact on sales at KFC. What KFC needs is to understand these market trends, recognize where consumers are headed with their prepared food purchases, and position the company to deliver what consumers WANT this year and in the future. If KFC finds the trend – even if it’s not chicken – it can regain its growth. KFC needs to give the market what it wants – and is that a heavy education about a dead icon?
KFC is trying to turn back the clock. It is looking internally, historically, and hoping that by promoting the Colonel it can regain the glorious growth of previous decades. KFC leadership is remaining firmly committed to its old and clearly tiring Success Formula (the one that is producing declining sales and profits.) So it is holding fast to its menu, its preparation methods, its store appearance, its “brand” image and now even its iconic founder that is irrelevant to this current generation and any international consumer!
Does anyone really think reviving the Colonel – a white haired senior
citizen in his heyday -will create double digit growth? Or bring in
those young people between ages 18 and 25? There’s not one shred of
market input which says this is the way to grow KFC. Only a belief that
somehow future success will come from an attempt to replay what worked
when the Success Formula was created over 40 years ago.
In a telling quote from the article “KFC’s trying to paint a new picture — actually asking its core consumers to paint it for them.” The marketers are actually hoping a contest to re-sketch the lost icon will drive people to “reconnect” with the franchise. What’s worse, clearly they are hoping to appeal to the “core” customers – current customers – rather than find out why lost customers left, and what new customers might want to encourage a switch to KFC. They are “focusing on their core” rather than figuring out what the market wants.
Add on top of this that management has admitted it expectsmost (possibly all) future growth to come from international expansion, and you really have to question how focusing marketing on the Colonel makes any sense. Why would people in Europe, South America, India, China or elsewhere have any connection to a character more attuned to America’s civil war than today’s global economy and international high-energy brand images?
This is the kind of decision that is driven by a strong Status Quo Police. Of all the options, from changing the menu and name, to developing a new icon, to creating a new image for the alphabet soup that is KFC (most young people don’t even relate KFC to the original name – and international customers have no connection at all) – all the things that could be based on market trends – leadership went down the road of doing more of the same.
It’s a sure bet we’ll be reading about further declines in KFC over the next year. There will be a big store closing program. Then a quality program to improve customer service and cleanliness. Layoffs will happen. Some kind of lean program to tighten up the supply chain and cut costs. Revenues will probably decline another 15-25%. Exactly what McDonald’s did about 6 years ago when it sold Chipotle’s to “refocus on its core.” Management will talk about how its “core” customers relate well to the Colonel, and they are sure if given time the marketing will return KFC to its old glory.
And the only people who will enjoy this are the Status Quo Police. For the rest of us, it’s watching another great company fall victim to its past, rather than migrate toward a better, high growth future.
Read my Forbes.com column “Fire the Status Quo Police” for more insight to how consumer branded companies hurt long-term viability by maintaining brand status quo rather than migrating with market trends.