Ph.

D Ho Nhut Quang
THE FRANCHISING
MARKET PROCESS
1 CHAPTER 5
LEARNING EXPECTATIONS
• Learn steps involved in strategic market
planning

Ph.D Ho Nhut Quang

• Learn about strategic planning in franchising
through examining the market function and
activities.
• Understand how a hierarchy of objectives and
strategies can be developed within a franchise
organization
• Learn how to develop a marketing mix for the
franchise
• Understand the role and use of channels of 2
distribution.
CONCEPTS
 Marketing is the delivery of customer
satisfaction at a profit.

Ph.D Ho Nhut Quang

 Marketing Strategy: consists of
 Identifying one or more target markets
 Creating Marketing Mix
 Marketing Mix: 4 Ps

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STRATEGIC PLANNING IN FRANCHISING
• A firm which wants to enter franchising should
know how to answer the following questions:

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– How does it support the franchise system’s
operations?
– How will it foster communications with franchisees?
– What financial results that the firm and its
franchisees anticipate?
– How will it market its franchise once the franchise
program is in place?

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SUPPORT PROGRAM PROVIDED BY THE
FRANCHISOR

• Market Research
• Marketing Surveys

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• Site selection
• Operational layout and store design
• Lease negotiation
• Operations manual
• Training Program for franchisees
• Possible financial assistance.

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FRANCHISOR’S MARKETING
RESPONSIBILITIES
• 1. Building Business Image of the franchisor for
both potential franchisees and consumers

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– To attract them to the franchise system’s products
and services.
– Image should be distinctive and appealing
– Image should link them to some graphics,
representative colors, logo, trademarks, exterior and
interior designs, etc.
– EX: McDonald’s uses: red, yellow, blue to support the
image of a family restaurant; use M-logo.

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FRANCHISOR’S MARKETING
RESPONSIBILITIES
 2. Determining market direction
 Where will the first expansions take place?

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 What is the location plan?
 How will consumers be served?

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3. RECRUITMENT OF FRANCHISEES
• Based on the profile of the type of people desired,
their goals and aspirations, skills, financial
capability, motivation, and level of commitment

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required the franchisee’s owner.
• The Franchisor should communicate potential
franchisees with the franchise system’s unique
features, its benefits, core competencies,
competitive advantages, etc.
• Types of people who are likely to become
franchisees in the U.S: the Immigrants, the
Mompreneur, The Baby Boomer, Professional
Woman, Gen-Yer 8
4. ONGOING ADVERTISING AND GRAND
OPENINGS TO SUPPORT THE FRANCHISEES
 Supportive Advertising program
 Advertising may run on the regional or national

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base.

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STEPS IN STRATEGIC PLANNING
 Step 1: Writing the Franchise Organization
Mission Statement

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 Step 2: Determining Hierarchy of Objectives and
Strategies
 Step 3: Determining Niche(s) suitable to
company’s strength (Marketing Research)
 Step 4: Establishing Marketing Strategies for
continuity and growth

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FRANCHISE ORGANIZATION MISSION
 Mission statement must provide a shared sense
of opportunity, challenge, motivation for the
owners, franchisees, and employees of the

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franchise organization.
 Mission statements must address the customer,
not the product.
 EX: our mission is to bring to you the feeling of being
protected, softly warming and stylish with our shoes
products.

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MISSION STATEMENT
Market Oriented Characteristics of a
good mission
statement

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Realistic

Specific

Fit Market Environment

Distinctive Competencies

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Motivating
 CLASS DISCUSSION
Group Company Products Competitive
 Write down mission
Name statements based
/Services on the
Advantages
following
1 and information.
7 Prudential Life Insurance Good Sales Services
VN

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2 and 8 Hong Thanh Shoes Durable, reasonable
Ltd. prices
3 and 9 Tan Hiep Soft drinks Low price, Product
Phat Corp. Differentiation
4 and 10 Viet Tien Male Shirts Acceptable price, Style
Corp.
5 and 11 Nguyen Kim Electronic goods Good After Sales
Ltd. Services, attractive
promotion program
6 and 12 Hoan Long Computers, Product Diversification,
Computer Laptop, IT devices High service quality 13
Ltd.
DETERMINING OBJECTIVES
 What to do to be successful in the franchise
business in terms of:

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 Marketing
 Finance
 Human Resources
 Operations

 Arrange the objectives in the hierarchy of

importance.

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WRITING OBJECTIVES
 Objectives are what the firm should do to achieve
the set goals.

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 Goals are what the firm wants to achieve in
future.
 EX: Goals: increase sales by 35 % next year

  Objectives:
 Introduce and sell products in new markets: Soc
Trang and Yen Bai.
 Reduce price
 Sales promotion will be in form of free gifts for goods
A and B.
 Write two PR articles 15

 Recruit new employees

CLASS DISCUSSION
Group Company Products/ Goals next
 Identify objectives
Name of the marketing
plan
services based
year
onand
1 ,7 the13following information:
Prudential VN Life Insurance Sales increases
by 35% next year

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2 and 8 Hong Thanh Shoes Increase market
Ltd. share by 10%
3 and 9 Tan Hiep Phat Soft drinks Enter 4 new
Corp. local markets
4 and 10 Viet Tien Corp. Male Shirts Sales increases
by 30%
5 and 11 Nguyen Kim Electronic goods Open 5 new
Ltd. stores in other
cities
6 and 12 Hoan Long Computers, Develop 3 new
Computer Ltd. Laptop, IT product styles. 16
devices
DETERMINING NICHE(S) SUITABLE TO
COMPANY STRENGTHS
 The early days of franchise business, choose a
propitious niche within which the franchise can
target its operations in its industry.

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 The niche may be:

 A segment of the total lines of products and

services, not all.
 A segment of customer targets who share the
same characteristics such as: age, income
level, location, religion, etc.
 In long- term, when Franchises grow and gain
experience, the franchisor may add more
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products and services.
PRODUCTS AND SERVICES
 A franchised firm can opts to create synergies
when it stands together with another business of
complementary products and services.

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 EX: having a restaurant inside a franchised motel.
 As the franchises business moves further away
from its present customers or its current products
and services, the benefits of syrnergy diminish

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TYPES OF MARKETING STRATEGIES FOR
CONTINUITY AND GROWTH
 1. Initiator Strategy:
 Applied by market leaders with highly innovative
businesses.

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 Expensive and needs large amount of capital
available.
 2. Early Imitator Strategy:
 Applied by market challengers
 Try to expand numbers of franchised units and
enter additional markets; push competitions and
accept challenges
 Require operational consistency, effective
advertising, better field services to existing 19
franchisees, high quality training.
MARKETING STRATEGIES FOR CONTINUITY
AND GROWTH

 3. Follower Strategy
 Applied by the market followers

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 Accommodating strategy
 Appropriate in short-term when market
demand is strong.
 Develop strategies that “follow” the market
leaders in the industry.
 4. Market Segmenter

 Applied by market nichers

 Choose market segmentation and direct the
strategies to them. 20
STEPS IN MARKET STRATEGY MAKING
 1. Setting objectives
 2. Market Research and analyze threats and

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opportunities (SWOT)
 3. Identify Target Markets

 4. Design Product/ Service Mix (Marketing

Strategies)
 5. Action plans and Tactics

 6. Collect Market Intelligence and do research

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PRODUCT MIX DECISIONS

Width - number of

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different product lines

Length - total number of Product Mix -

items all the product
in product lines lines & items
offered

Depth - number of
versions of each
product 22
MARKET RESEARCH AND INTELLIGENCE
 Research questions:
 What do your customers want?

Ph.D Ho Nhut Quang

 What is your competition really doing?
 Do you have a competitor plan?
 What foes it take to truly promote your business
model and product or service line?

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DEVELOPING THE MARKETING MIX
Product Price
“Goods-and-service” Amount of money
combination that a that consumers

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company offers a have to pay to
target market Obtain the product

Target
Customers

Intended
Positioning

Activities that Company activities

persuade target that make the
customers to buy product available
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the product
Promotion Place
GENERIC CATEGORIES OF GOODS
CONSUMER PRODUCTS
Convenience Products
 Buy frequently & immediately
 Low priced
 Mass advertising
 Many purchase locations
i.e Candy, newspapers
Specialty Products
 Special purchase efforts
 High price
 Unique characteristics
 Brand identification
 Few purchase locations
i.e Lamborghini, Rolex
Homogeneous Shopping
Products
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 Buy less frequently
 Higher price
 Fewer purchase locations
 Comparison shop
i.e Clothing, cars, appliances
Unsought Products
 New innovations
 Products consumers don’t
want to think about these products
 Require much advertising & 25
personal selling
i.e Life insurance, blood donation
SHOPPING GOODS AND SERVICES
 Homogeneous Shopping goods or services:
 Buy less frequent than convenience goods

Ph.D Ho Nhut Quang

 Price is the motive for purchase
 Various brands
 Customers shop for best bargain
 Heterogeneous Shopping Goods or Services

 Innovative goods with new versions

 Price is a low-order concern to the buyer
 Ex: cars, flower, coffee shops, etc.

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Type of goods Place/Location Pricing Promotion
or services Strategy Strategy Strategy
Convenience Intensive Odd-even Brand Loyalty
themes; full
communication
mix used;
intensive

Ph.D Ho Nhut Quang

advertising
Homogeneous Intensive Odd-even; low Intensive
shopping price advertising;
Brand conscious;
focus on building
customer traffic
Heterogeneous Limited selective Full range; focus Full range of
Shopping usually not on communication
price mix;
differentiation;
focus on building
customer traffic
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Specialty Selective to Prestige price; Limited ; Niche
Shopping excusive skimming is Focus; image
possible building
WHAT IS A PRODUCT?

A Product is anything that can be offered to a

market for attention, acquisition, use, or

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consumption and that might satisfy a want or
need.
 Includes:
 Physical Objects
 Services
 Events
 Persons
 Places
Organizations
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
 Ideas
WHAT IS A SERVICE?

 A Service is a form of product that consist of activities,

benefits, or satisfactions offered for sale that are

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essentially intangible and do not result in the ownership
of anything.
 Examples include:
 Banking
 Hotels
 Tax Preparation
 Home Repair Services

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CHARACTERISTICS OF SERVICE
 Perishability
 Can not be stored or inventoried

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 Intangibility
 Can not be touched or smelled
 Variability
 Various levels of quality provided.
 2 employees can perform the same service
differently even although following the same
directions.
 Inseparability
 Service must be produced and consumed at the
same time. 30
 PRODUCTS, SERVICES, AND EXPERIENCES

Tangible Good Service With

Pure Tangible With Hybrid Offer Accompanying Pure Service

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Good Accompanying Minor Goods
Services

Auto With Airline Trip With

Soap Accompanying Restaurant Accompanying
Repair Services Snacks Doctor’s Exam

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PRODUCT LIFE CYCLE
 Four stages:
 Introduction
 Growth

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 Maturity
 Decline
 Strategies to prolong the PLC:
 Expanding into complementary segments of the
market
 Changing the packaging or image
 Finding new uses of the product (new benefits or
functions)
 Finding new ways to deliver the goods 32
 Finding new markets
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