The Franchising

Market Process
Chapter 5

Presented by: Nina Isabel Diaz
INTRODUCTION
STRATEGIC PLANNING IN FRANCHISING

4 Essential Factors:
1. How it will support the franchise systems operations

2. How it will foster communications with franchisees

3. What financial results the firm and its franchisees can anticipate

4. How it will market its franchise once the franchise program is in
place

Core Marketing issues:
1. Business image

2. Determining the market direction

3. Recruitment and selection of franchisees

4. Grand opening and ongoing advertising programs in support of the
local franchisees units

Business Image
It is the image that the franchisor packages for public
consumption
is the key attraction for potential franchisees and customers to
the franchise systems product and service
The image must be distinctive, appealing, have appropriate
graphics, colors, logo, trademarks and exterior and interior
designs and colors to project the image sought by the franchise
system.

Determining the market direction
-is a crucial decision in the early stages of the development of a
franchise system.

Franchisors tend to cluster franchised locations internal to
established market areas because these markets, are known
to be successful for franchised firms


Recruitment of franchisees
-should be based on the profile of the type of people desired, their
goals and aspirations, skills, financial capability, motivation and
level of commitment required of a franchisee owner-operator.

Types of people that will plunge into Franchising:

The immigrant
The Mompreneur
The Baby Boomer
The Professional Woman
The Gen-Yer

Ongoing advertising and grand openings
Constitute extremely important services provided by the
franchisor

The Changing
Marketplace
Problems in Applying Strategic Planning to
Smaller Business
Typical Characteristics of Smaller Firms:

Limited resources are available to achieve business objectives
Scale of operation is smaller
Government regulations and compliance requirements can
significantly increase operating expenses
Business performance is highly susceptible to changes in
customer buying behavior
Minor changes in operating efficiently can affect availability of
resources and business profitability
Firms are often without specialized staff to address legal,
accounting and other needs of business
Owner often lacks objectivity needed to evaluate and plan
activities efficiently
Business often fails to have sufficient working capital, financial
controls or materials or inventory on hand

Franchise Organization
Mission
Hierarchy of Objectives and
Strategies
Determine Niche(s) suitable to
Company Strengths
Marketing Strategies for Continuity
and Growth
Steps in Strategic Market Planning
Steps in Strategic Planning
Franchise Organization Mission
Franchise business exists with the aim of accomplishing
something within and through its economic environment
Methods to be used to accomplish the overall mission should
be clearly set fort by the franchisor before any franchisees are
recruited
A franchisor must answer and ask the following questions to
formulate a carefully prepared mission statement.
What is my business?
Who is my customer?
What are the needs of my customer?
What do I want my business to be in the long run?


Hierarchy of Objectives and
Strategies
Formulate a detailed set of supporting objectives for the major
functions of the business and the distribution network being
established, maintained or developed
Objectives should be determined for functions and then
arranged them in hierarchy according to importance
Specific plans to implement the marketing strategy need to be
spelled out to provide many quantifiable target results



Determining Niche(s) Suitable to Company
Strengths
Involves choosing a propitious niche within which the
franchise can target its operation in its industry
Niche maybe a segment of the total line of products and
services offered by competitors within the industry
It maybe predetermined group of customers targeted
according to characteristics such as: size of group,
income level and location
Products and Services
A franchised business opts to expand in order to achieve
synergistic results for the business.
A franchisor considering expansion involving both new
customer group and new product/service can be done
through conglomeration
A franchised firm looking to expand will consider
combinations of niches that supplement or reinforce one
another in a synergistic way
Marketing Strategies for Continuity and
Growth
Strategy Type Business Profile Characteristics
Initiator Entrepreneurial; growth oriented; high
risk taking
Knowledge of current customer
needs/wants in order to stimulate
demand for product/services;
access to capital; good timing
Early Imitator Has good market sense; introspective;
risk-taking; willing to commit change
without full knowledge of cost/benefits of
product development
Flexibility in relation to current
product and or production; speed
and efficiency in making necessary
product/modifications; ability to
differentiate product/service from
that of competition
Follower Externally dedicated to market, yet
internally focused on production; seeks
to produce high-volume or high value
product/services
Knowledge of market pricing and
demand levels; desire to maximize
market share based on known
strengths of firm
Market Segmenter Seeks niche or opportunity for market
skimming; market dedicated, but lacking
capacity for high volume at present;
willing to take only minimal risk
Goal of discrete segments with
promise of strong demand;
flexibility; concentration of firms
resources
Four Market-Focused Business Strategies
THREATS AND
OPPORTUNITES
TARGET MARKET
PRODUCT/SERVIC
ES MIX
ACTION PLAN
AND TACTICS
MARKET
INTELLIGENCE
AND RESEARCH
OBJECTIVES
Steps in Market Strategy Making
Market Research and Intelligence
It can be viewed from both internal and external
perspective:

Internal market information is data from controllable activities of
the franchise system.

External market information needs are outside the realm of
activities controlled by the franchise system.



Generic Categories of Goods and
Services
Four generic categories to classify consumer goods:

Convenience goods or service
Homogenous shopping goods or service
Heterogeneous shopping goods or service
Specialty products

Characteristics of a service

Perishability means that a particular service cannot be
inventoried or stored for a period of time.

Intangibility refers to the lack of tangibility of a product or
service such as what can be seen, touched, smelled, tasted or
heard prior to purchase. Some services offer tangibility with the
intangible.

Variability means the random, or unwanted, levels of quality
that the customer can receive as they purchase, receive, and
consume the service.

Inseparability refers to the simultaneous production and
consumption of a service.
Life Cycle

1
st
state: The Introduction is a period of slow, gradual
sales growth.

2
nd
stage: The Growth stage the life cycle curve takes a
dramatic upward surge.

3
rd
stage: The Maturity stage this occurs when the rate of
sale growth slows and ultimately, sales level off.

4
th
stage: The Decline stage during this stage it is typical
for sales volume to drop as demand shifts to other products.


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