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Insights

YUM! CHINA

Situation

With a portfolio of over 5,000 restaurants in more than 800 cities, Yum! China is one of the leading companies in the quick-service restaurant industry. Besides KFC and Pizza Hut, Yum! operates East Dawning, a Chinese fast food chain, and Little Sheep a highly popular hot pot chain. 

Challenge

The leisure market is expanding and changing rapidly. To maintain a dominant position, Yum! must be able to anticipate changes and recognise potential for growth. In doing so, it gathers substantial amounts of market research data. But traditional analysis methods have failed to provide a sufficiently sophisticated level of insight into the business changes in the market.

In particular, Yum! needs to be able to:

  • Measure the relative perception and performance of each of its brands
  • Understand in depth the specific local market for each of its properties and the performance of each outlet against that market
  • Understand how to target its efforts to maximise internal investment

Solution

Through the widespread use of IBM SPSS Statistics within the market research department, researchers have been encouraged to develop models to facilitate more accurate prediction and support better decision making. They are able to combine data from multiple sources: surveys, geo-demographic, marketing, sales data and so on, then present these to decision makers in easily digestible formats.

Results

  • A precise understanding of the performance and placement of its brands in the market to guide advertising and marketing strategy
  • Increased accuracy in predicting future turnover when acquiring new properties to convert to restaurants
  • A rolling program of a list of changes to one of its major restaurant chains in response to a better understanding of the market, both nationally and locally

Big organisations must be able to see the big picture, especially when that picture is made up of a mosaic of different sources of information. Yum!'s portfolio of brands is a roll call of many of the China’s familiar names in leisure such as KFC, Pizza Hut and Little Sheep. It is essential that Yum! is able to see both the big picture, and in great clarity, all the small pictures from which it is composed.

Over many years, Yum! had built up a dedicated market research department to service the needs of its internal clients. Whenever any research is commissioned, the market research team obtains raw data from its fieldwork agencies, from which it produces its own tables and reports. The team had even run some more advanced statistical analysis on a mainframe system, for example to perform regression, correlation or cluster analysis. But because of the effort involved, none of this could be done on a daily basis.

With IBM SPSS Statistics, Yum's head of market research, realised that the benefits of statistical modeling techniques could become an everyday occurrence if the program could sit on the desktop alongside all the other tools his people used. He introduced it to his team, taught them, as non-statisticians, how to apply some of the models, and encouraged them to play with their data. 

That was five years ago. Now, IBM SPSS Statistics is an integral and vital part of their research process. The first thing the researchers point out is that they are not "statisticians". But the ease with which they can apply statistical techniques for refining and simplifying data within SPSS Statistics means that they can apply a freshness and sharpness of focus to the vast amounts of data they handle. 

A PRECISE UNDERSTANDING OF THE PERFORMANCE AND PLACEMENT OF ITS BRANDS IN THE MARKET TO GUIDE ADVERTISING AND MARKETING STRATEGY

By applying cluster and factor analysis to a usage and awareness study on convenience food, it has been possible to transform an enormous number of tables of figures into a simple series of instantly comprehensible radar charts that are as simple to read as a clock face. The model is able to impute whether an attribute is positive or negative to the consumer, rather than make false assumptions. Presented as a series of PowerPoint charts, brand managers can see instantly how their brand is performing along three dimensions: brand standing, product attributes and brand personality.

Yum’s head of market research explains:  "Before this, we did not know, and nobody else knew either. Previously, we would only be looking at actuals. You would assume a low score was a bad thing. But now we can say, 'no the market is saying that is not important'. An attribute can be differently important in different markets. From this, you can dig down and look at what it is that attracts different people to different brands."

INCREASED ACCURACY IN PREDICTING FUTURE TURNOVER WHEN ACQUIRING NEW PROPERTIES TO CONVERT TO RESTAURANTS

Realising that this brand had different appeal in different markets, a rolling program of research was commissioned to assist it in opening up new markets and in refocusing the brands to different sectors. SPSS Statistics cluster analysis was used on the initial phase to determine the three most significant "need states" of its customers: price/value, quality and family-friendly. Further research established other discriminatory factors. Specific improvements were identified, and a rolling program of refurbishment is now putting these into action.

A ROLLING PROGRAM OF SPECIFIC CHANGES TO ONE OF ITS MAJOR RESTAURANT CHAINS IN RESPONSE TO A BETTER UNDERSTANDING OF THE MARKET, BOTH NATIONALLY AND LOCALLY

Researchers have also applied SPSS to a combination of the research data they held from hundreds of millions of customers and the geo-demographic data available from public sources in the China. Using cluster analysis on location data, the unit has been able to carry out spatial analysis, and map out in considerable detail the profile of the local market of each operating unit. A model has also been developed to predict to within 80 to 85 percent accuracy, the potential turnover of each new acquisition.

"This is typical of the way we use SPSS every day at Yum!," concluded Yum’s head of market research. "So much so we don't think of SPSS as being anything out of the ordinary. But it has affected the whole way we do analysis."