1. Nobody’s Unpredictable Consolidated Report: Value Understanding Ecuador, El Salvador and Jamaica Buenos Aires, January 2009

2. Nobody’s Unpredictable Introduction

3. 134408 Promociones Segmento Teen. © 2008 Ipsos Introducción 3 A tough economic environment is foreseen for the next years in the CaribLA region and around the world. Several developed markets around the world have already shown signs of an economy in recession. We expect that the effects of this economic slow down get stronger in the next months in our region. As for our industry, several of our competitors have been strengthening their “value menu” or are already positioned in the “value” or low price QSR. KFC needs to understand the current situation of this consumer who is more price sensitive and develop a consumer based value strategy. The strategic framework to understand and propose a value platform should be based on the YRI Insight model, where consumers use brands as jobs (further explanation will be provided on the model)..

4. Nobody’s Unpredictable Objectives

5. 134408 Promociones Segmento Teen. © 2008 Ipsos Overall Objectives 5 Develop a list specific insight related to specific jobs (YRI model) that could serve as communication insights for future value campaigns. As well as a base of consumer knowledge that help us build a Value consumer platform.

6. Nobody’s Unpredictable Methodology and Sample

7. 134408 Promociones Segmento Teen. © 2008 Ipsos Methodology and sample 7 The study was carried out on the basis of 12 (twelve) prolonged duration focus groups (4 per country), segmened as follows: All groups were moderated and analyzed by a team of experts who specialize in qualitative research techniques. All groups were accessible for observation from a one way viewing room provided for that end. Focus group dates: From January 12th through January 27th, 2009 #CountryGenderAgeCharacteristics Others Characteristics SEL 1 Quito, Ecuador Women20-25 High Users of QSR, Heavy users of KFC No kids Medium 2Men20-25 3 Moms30-40 Heavy Users of QSR, Heavy users of KFC with at least one kid no older than 13 years old 4 5 Kingston, Jamaica Women20-25 High Users of QSR, Heavy users of KFC No kids Medium 6Men20-25 7 Moms30-40 Heavy Users of QSR, Heavy users of KFC with at least one kid no older than 13 years old 8 9 San Salvador, El Salvador Women20-25 High Users of QSR, Heavy users of KFC No Kids Medium 10Men20-25 11 Moms30-40 Heavy Users of QSR, Heavy users of KFC with at least one kid no older than 13 years old 12

8. 134408 Promociones Segmento Teen. © 2008 Ipsos Methodology and Sample 8 Additionally, 2 (two) focus groups were added in Jamaica GroupSexAgeSELCharacteristicsCountry 1 Male35 -55D Light consumers (last 3 months) / Ex KFC heavy consumers (6 months) Kingston, Jamaica 2

9. Nobody’s Unpredictable Main Learnings

10. 134408 Promociones Segmento Teen. © 2008 Ipsos Main Learnings 10 In terms of the global economic crisis context, we detected that the concerns in El Salvador and Jamaica have to do with the local crisis situation which they have been perceiving across time with the price increases and salaries which, in comparison, have increasingly lost their purchasing power. In this sense, people have adopted an attitude of compensation and savings, removing from their food expenses those products that they perceive as “luxury” items. Within this scenario, the elements that collaborate in sustaining the bond with the fast food category are the discount coupons and the combos for sharing  these are allies that aid them to continue consuming and which alleviate their sense of loss. In this sense, every action that is made in the line of proposals to alleviate the crisis must be clearly consolidated as an ally, that allows them not to lose / gives new meaning to something that was part of their normal pre-crisis life. Inversely, the reduction in the portions of food served is felt as a real loss and generates hostility. The crisis situation presents an opportunity for KFC not only because its actions would work from a tactical point of view but also from a strategic viewpoint given that the brand has the opportunity to consolidate itself as an ally. At present, the KFC brand is highly valued, In Ecuador, in particular, the image held of the brand is of high international prestige – given the brand’s origin – in addition to the value assigned at a local level for the work it does on the menu. This brings the brand closer to the consumer, not only in terms of accessibility and tradition, but because it shows a clear and close bond with the consumer. From this perspective, a consolidated and conclusive value equation emerges: quality – satisfactory size – price in line with the other two. This is an aspect that also emerges in Jamaica and El Salvador though not with the same emphasis.

11. 134408 Promociones Segmento Teen. © 2008 Ipsos Main Learnings 11 In Jamaica and El Salvador, within the context of the reigning crisis, in one segment the brand appears to have lost some value. This is reflected on certain doubts regarding: quality (raw chicken) – inadequate size – high price. The sensation of losing purchasing power in addition to a brand that is not perceived as an ally during tough times, translate into the brand’s loss of value and its becoming the target of the hostility generated by the sense of the possible loss of the category. On the other hand, the need for the brand to update itself emerges as relevant because, even though it does not show grave brand related weaknesses, it does lack traits to generate greater appeal and involvement. In this sense, to succeed in lowering the brand’s functionality aspect and enriching it with emotionality and closeness appears to be an interesting route to growth.

12. Nobody’s Unpredictable Analysis of the Results

13. 134408 Promociones Segmento Teen. © 2008 Ipsos In the Context of the World Crisis 13 OPINION  At present, the global crisis appears to not have a correlation with the local one.  Nevertheless, it does generate sensations of uncertainty and fear of having to renounce or limit their consumption habits as well as fears related to the economic difficulties they may have to face  At present, the global crisis appears to not have a correlation with the local one.  Nevertheless, it does generate sensations of uncertainty and fear of having to renounce or limit their consumption habits as well as fears related to the economic difficulties they may have to face CURRENT SITUATION  Prices have not changed  In general consider that, up to now, it has only affected the USA  Hold that the crisis has still not reached the country  They don’t feel it has affected them up to now  Some believe that it could come at some point during the year FEARS SENSATIONS PERCEPTION With certain attitudes that oscillate between:  Tranquility, serenity inasmuch as they still don’t perceive the effects of the crisis.  Cautious and attentive to when it comes.  Precaution once it is felt: in terms of savings as well as reduction of purchases of everything that is not considered a basic need.  Consumption habits continue being the same  Others have the sensation that it is more of a threat: which is announced every year but never happens

14. 134408 Promociones Segmento Teen. © 2008 Ipsos In the Context of the World Crisis 14 In El Salvador as well as in Jamaica, the perception is of a local economic crisis: “We are undergoing a difficult economic situation.” An aspect which is perceived through the price hikes and the sensation that their purchasing power is increasingly lessened. In this sense, they attempt to counteract these effects by taking on an active attitude. “Prioritize expenses.” In this sense, they attempt to counteract these effects by taking on an active attitude. “Prioritize expenses.”

15. 134408 Promociones Segmento Teen. © 2008 Ipsos In the Context of the World Crisis 15 In this context, the strategies used to resolve the problem: Mothers Young Caution with the household budget. Go to the basics “You stop buying some things, soft drinks, treats.” Lower relevance of brands “You choose the cheapest, even if it is not a good brand.” Seek to save or to suppress the expense of non essential items (clothing, shoes) Aim at optimizing expenses so as not to have to generate big changes in their habits. “Cheaper.” “look for promotions / offers.” Ways of compensating within their housewife role – efficient home manager. To be able to keep the categories that identify them arise as a relevant aspect. Intelligent shopper

16. 134408 Promociones Segmento Teen. © 2008 Ipsos In the Context of the World Crisis 16 Therefore, Where does the room for opportunity emerge in this context of concrete or possible crisis? Aid them to sustain consumption through: Variety of options / promotions New proposals  Don’t remain static / offer more tempting alternatives. Without denying the crisis context, provide a fun /recreational / pleasant space  a place to meet up with / share with loved ones. To become an oasis that is accessible.

17. Nobody’s Unpredictable The Restaurant Category

18. 134408 Promociones Segmento Teen. © 2008 Ipsos The Reference framework: The Restaurant Category 18 In all of the countries under study, the activity … Implies a subjective context in which entails the following sensations: The restaurant consolidates itself as a place in which self gratification is promoted. Eating away from home / restaurants “Tranquility.”“Union.”“Joy.”“Distraction.” Elements which translate into a pleasurable experience

19. 134408 Promociones Segmento Teen. © 2008 Ipsos The Reference framework: The Restaurant Category 19 It is a place that is … From two points of view Gratifying in itself To be able to share / enjoy with others (peers, friends, family) To be able to satisfy their own individual desire “you have options, variety.” It is a space that facilitates the sharing / gathering in that the customers are serviced / attended to. The possibility of choosing between different menu alternatives is something that brings pleasure in addition to an added value that gives them … “A different flavor from the food you eat at home.” The possibility of choosing between different menu alternatives is something that brings pleasure in addition to an added value that gives them … “A different flavor from the food you eat at home.”

20. 134408 Promociones Segmento Teen. © 2008 Ipsos The Reference framework: The Restaurant Category 20 Eating at restaurants also implies: An aspect that emerges with great emphasis among the mother segment as, for them, it implies an added value of enjoyment because … “I don’t have to cook.” “I take a break from cooking, washing up” The restaurant offers the housewife a role exchange, given that the restaurant takes up the role of giver and allows the housewife to place herself in a position of receiver  gratifying and pleasurable “To be attended to.” The restaurant offers the housewife a role exchange, given that the restaurant takes up the role of giver and allows the housewife to place herself in a position of receiver  gratifying and pleasurable “To be attended to.” Breaking away from the routine

21. 134408 Promociones Segmento Teen. © 2008 Ipsos The Reference framework: The Restaurant Category 21 On the other hand, in addition to the subjective implications already mentioned and, with greater emphasis in the male segment and in Jamaica, in general: Emerges as a highly relevant issue “One has to feel full.” This is a demand that implies an infantile position and which is manifested rationally as: “I can pay for it if the amount makes it worth it.” This is a demand that implies an infantile position and which is manifested rationally as: “I can pay for it if the amount makes it worth it.” To fully satisfy hunger As a basic and primary issue  “To feel satisfied.”

22. 134408 Promociones Segmento Teen. © 2008 Ipsos Consumption Occasions 22 Regarding consumption occasions, we detected gender related differences: Women Men Higher preponderance of situations in which the emphasis is placed on the nucleus / the affective bond To celebrate To compensate the kids Weekend union After church (El Salvador) When they don’t feel like cooking / didn’t have the time To go out with friends Accent is placed on social / group. Preponderance of situations in which the category functions as a solution When there is no time Being far away from home To satisfy appetite To study with a group When living alone Or else … To relax Greater accent is placed on the individual / functional.

23. 134408 Promociones Segmento Teen. © 2008 Ipsos The Choice 23 As a tendency, in all countries: The choice of restaurant has to do with the type of food desired Availability of money “The cost.” An aspect which, in one segment in El Salvador… “We look for family promotions.” “The refill option” (Male segment) Moment / Situation / Company “Depends on who you are going with” “if you go without the kids, you go to a more peaceful place.” “When it rains, we prefer to go to a totally closed place.” Which may be places for normal or special occasions. One segment points out: “The service.” ; “That it is not too full.” (Mother segment, El Salvador) One segment points out: “The service.” ; “That it is not too full.” (Mother segment, El Salvador)

24. 134408 Promociones Segmento Teen. © 2008 Ipsos The Choice 24 In Summary: The Restaurant Category presents a relevant imagery in that it is the creator / facilitator of very attractive emotional / gratifying context. Predominantly in the male segment, we detected a more basic / primary bond in which physical satisfaction (feeling full) is emphasized.

25. Nobody’s Unpredictable The Subcategory: Fast Food

26. 134408 Promociones Segmento Teen. © 2008 Ipsos The Fast Food Restaurant Category 26 In all segments, at its very essence, the category is associated with: “Fast.”“Easy.” “If I am late and have to get going quickly.” Associations linked to speed and time savings lie on the basis  possibility of satisfying hunger in short time But, at the same time, other aspects are highlighted as well, particularly in Ecuador “Enjoyment.” “Fun.” “Cozy environment.” “Friendliness.” These are relevant emotional aspects that are, however, detected rather weakly in Jamaica and El Salvador OPPORTUNITY Strong functional basis

27. 134408 Promociones Segmento Teen. © 2008 Ipsos The Fast Food Restaurant Category 27 Then, another strong aspect emerges… Which allows for the relationship to be sustained beyond some of the rational aspects presented by one female segment in El Salvador “Fattening” “Junk food.” To counteract this, in Ecuador, mentions are made regarding the food being: “healthy.” “Safe.” The appetite appeal “I like it a lot.” Aspects which are reinforced by the light / healthy alternatives offered: “The salads.”

28. 134408 Promociones Segmento Teen. © 2008 Ipsos In this sense, the fast food restaurants offer a suitable environment in sync with restaurants with an added value that has to do with accessibility and a sensation of relaxation. “It doesn’t matter if you’re not dressed up, you can’t go to an expensive restaurant like this.” In this sense, the fast food restaurants offer a suitable environment in sync with restaurants with an added value that has to do with accessibility and a sensation of relaxation. “It doesn’t matter if you’re not dressed up, you can’t go to an expensive restaurant like this.” The Fast Food Restaurant Category 28 As elements that stand out in the category, the following arise: “Variety.” “Innovation.” “Promotions.” “Accessible prices.” “With amusement / games for children.” (Mother seg) “Good service.”

29. 134408 Promociones Segmento Teen. © 2008 Ipsos The Fast Food Restaurant Category 29 Therefore, in some sense … Are seen as a pleasurable place where the customer does not feel questioned / observed It consolidates itself in their mind as an own space – almost like home – but with an attractive added value: It resolves the food issue Offers attention Does not demand extra effort Within a framework of: Hygiene – Cleanliness – Saftey It consolidates itself in their mind as an own space – almost like home – but with an attractive added value: It resolves the food issue Offers attention Does not demand extra effort Within a framework of: Hygiene – Cleanliness – Saftey Fast Food restaurants

30. 134408 Promociones Segmento Teen. © 2008 Ipsos Questioned Aspects – El Salvador 30 Preponderantly in El Salvador, the following aspects of the category are questioned: “Uncomfortable chairs” “The size has been reduced and the price has increased” “The quality has diminished” “Not all have a place in the bathroom to change baby diapers.” (Mother segment) In detriment of the pleasure and enjoyment of the context / environment. Places the finger on the pain related to a sense of loss The appetite appeal aspect is weakened Its role as an ally to mothers is weakened.

31. 134408 Promociones Segmento Teen. © 2008 Ipsos Specific Occasions in which Fast Food restaurants are visited 31 Even though there is consensus in visiting these restaurants most often on weekends, differences do emerge depending on the segments, namely: Prep. Female segment Prep. Male segment Prize: “When the kids have gotten good grades.” “When I want to give myself a treat.” “Gatherings with friends.” “Birthdays.” “When there is no time.” “At work.” “Studying at night.” Relaxed and enjoyable environment which is perceived as highly gratifying “In a restaurant, the kids don’t eat and neither do we.” Relaxed and enjoyable environment which is perceived as highly gratifying “In a restaurant, the kids don’t eat and neither do we.” Strongly functional ally. Felt as a resolution. Strongly functional ally. Felt as a resolution.

32. 134408 Promociones Segmento Teen. © 2008 Ipsos Specific Occasions in which Fast Food restaurants are visited 32 In the mother’s segment, Fast food restaurants are perceived as strong allies in their maternal role Giving their children gratification “The kids go to have fun, they enjoy themselves, they like it.” “I don’t like going to a place where they are just sitting down there bored” To feel gratified “For the tranquility of both, they play and let us eat in peace.” A space which stands as an ally for relaxation/ a relaxed moment. It offers a space for their children’s entertainment which translates into maternal enjoyment.

33. 134408 Promociones Segmento Teen. © 2008 Ipsos The Economic Situation and its Effect on the Relationship 33 In both Jamaica and El Salvador, mentions are made regarding: “The prices have gone up.” The price hike they perceive weakens the bond. “We used to go four times a week, now we go only twice a week.” Even though, particularly in El Salvador, the following strategies are used: “We look for the ecocombos or a bigger sized combo and refill and we share” To share and save on those things that are seen as more superfluous / not basic The coupons are important allies. “I don’t buy the toys.” “Combos for more people.” “Use the discount coupons.”

34. 134408 Promociones Segmento Teen. © 2008 Ipsos The Economic Situation and its Effect on the Relationship 34 In this sense, the following emerges as interesting routes to approach … Work on proposals that allow for the relationship with the category to be sustained based on: In order to promote the image of the brand as an ally which understands the consumer and gives him/ her the opportunity to gratify him/herself. Discount coupons Special promotions In a context that allows for sharing.

35. 134408 Promociones Segmento Teen. © 2008 Ipsos Summary of the Category 35 In all countries, fast food restaurants combine: FUNCTIONALITY AND EMOTIONALITY Economic accessibility Restaurants in general VS. Aspects which make frequent visits possible While, at the same time: Prep. Male Seg. Value the convenience and capacity to “fill themselves up” Prep. Mothers Seg. Value them as a space for their own and their children’s enjoyment. In a relaxed / undemanding context “you can go dressed as you wish.” In a relaxed / undemanding context “you can go dressed as you wish.”

36. Nobody’s Unpredictable KFC’s Image

37. 134408 Promociones Segmento Teen. © 2008 Ipsos KFC Image 37 In all countries, It emerges as a clear reference of the fast food category “KFC is the first one that pops into my mind.” (Jamaica) Prep. in Ecuador the inclusion of some “typical national foods” is valued. With a clear tradition and long standing presence in the local market (prep. Jamaica and Ecuador): “it is a tradition.” “It’s a company that has been around for years and who doesn’t like to go to KFC.”

38. 134408 Promociones Segmento Teen. © 2008 Ipsos KFC Image 38 Another essential attribute which is also pointed out is: From which the following attractive elements emerge: From these multiple aspects, the brand image that emerges is that of a brand that engages / involves. “It’s a prestigious brand / a good brand.” “Trustworthy”“Safety.”“Unique flavor.” In addition, the mother’s and the women’s segments point out relevant emotional benefits: “feels comfortable”“Cozy.”“The family environment.”

39. 134408 Promociones Segmento Teen. © 2008 Ipsos KFC Image 39 In this context, preponderantly in Ecuador, we detected … Consolidates a close bond with the consumer which is reinforced through the perception of a proactive brand which seeks to satisfy its consumers and this translates into a value equation: Increasingly higher quality services In the context of an accessible price Consolidates a close bond with the consumer which is reinforced through the perception of a proactive brand which seeks to satisfy its consumers and this translates into a value equation: Increasingly higher quality services In the context of an accessible price Offers healthy and varied products with a unique flavor. Typical national dishes and economical Its tradition in the market A close relationship

40. 134408 Promociones Segmento Teen. © 2008 Ipsos KFC Image 40 On the other hand, the tendency in Ecuador and, partially, in Jamaica and El Salvador, highlight is placed on: “Economical products.”“Variety of promotions.” Which work on closeness / accessibility due to price; a aspect which, added to the size of the portions … Facilitate consumption for a large group Makes sharing possible and, thus, make the brand an ally of the gregarious spirit and the need for saving

41. 134408 Promociones Segmento Teen. © 2008 Ipsos KFC Image 41 Then, in El Salvador (more partially) and with greater emphasis in, the following issues are brought up: “I don’t think I am given the amount I am paying for.” “KFC is expensive if you really want a full meal.” We detected a clear sensation of loss which does not help them to escape the local reality / economic crisis In this segment, recuperating value is possible through the offer of proposals that collaborate to build the brand’s image as an ally  In economic as well as emotional terms. It is important for the loss not to see itself reflected on reduced amounts of the product. Special discounts? Coupons? Special discounts? Coupons? The sensation of possible loss of the category generates hostility.

42. 134408 Promociones Segmento Teen. © 2008 Ipsos KFC Image 42 At the same time … Work on routes that make KFC a brand that is an ally Not only as a tactical measure to help it maintain volume, But also so that it… results in a strategic opportunity for building brand values CLOSE – UNDERSTANDS – STANDS BY YOU – CONTAINS

43. 134408 Promociones Segmento Teen. © 2008 Ipsos KFC Image 43 Therefore, Partial: The value equation … Partial (More isolated) Satisfactory quality and portions Suitable price Satisfactory quality and portions Suitable price Low satisfaction due to portions High price With some sensations of low satisfaction aspects “the chicken is raw.” Low satisfaction due to portions High price With some sensations of low satisfaction aspects “the chicken is raw.”

44. 134408 Promociones Segmento Teen. © 2008 Ipsos KFC Image 44 In this context, an interesting aspect to be worked on arises: Mothers Segment Proposals that appeal to the gregarious spirit Groups of students Groups of friends With emphasis on the possibility of sharing as a functional – emotional benefit Young Segment Proposals that continue to strengthen the ally role Accessible amusement for children Proposals for mothers Emphasis on the family.

45. 134408 Promociones Segmento Teen. © 2008 Ipsos The D SEL Segment Jamaica 45 A specific analysis was carried out with the D SEL segment of ex heavy consumers in Jamaica. We detected…: Clear valorization of the KFC brand “I love the taste, the seasoning, it’s always wonderful.” The concrete obstacle they find is the reduction of their purchasing power “if I have money, I spend it on KFC.” The concrete obstacle they find is the reduction of their purchasing power “if I have money, I spend it on KFC.” This lack of access is felt as the customer’s eroded power. KFC’s image has not been eroded This lack of access is felt as the customer’s eroded power. KFC’s image has not been eroded

46. 134408 Promociones Segmento Teen. © 2008 Ipsos KFC Personality 46 Personality “ The coronel.” “Adult 50 – 60 yrs old.” “Polite, courteous.” “Clean, pulchritude.” “Traditional.” “Attentive.” “Does not discriminate based on class.” Ecuador: “Gringo but has Ecuadorian habits.” Presents clear values though it lacks aspects that would lend it dynamism – modernity. They make explicit some desired optimizations: “it needs to be more extroverted, expressive, creative.” Presents clear values though it lacks aspects that would lend it dynamism – modernity. They make explicit some desired optimizations: “it needs to be more extroverted, expressive, creative.”

47. Nobody’s Unpredictable Thank You!!!!! Buenos Aires, Enero de 2009