Taking the 'P'

Each trade and profession has a favourite letter. Computing loves the ever-expanding K. In education we plump for the triple R, although how Reading, 'Riting and 'Rithmatic assist our understanding of spelling is a mystery. Franchising is naturally stuck with the F letter, and Marketing is generally full of P.

Franchise marketing is about shaping your PRODUCT or service to appeal to the PROSPECTS you have identified in your area, PACKAGING the concept then actively PROMOTING your offer at a suitable PRICE.

These basic principles apply across every franchise. Joining a franchise never absolves the owner from taking responsibility for, and contributing fully to, their own continuous marketing campaign.

Price is often the single biggest issue with any franchisee. Most would prefer their franchisor to offer products and services at the lowest possible price, while still managing to provide all the franchising services they demand, including national advertising, customer contacts and data collection, free phone facilities and franchisee training and support.

American franchisors are used to demands from their franchisees for lower cost products. Under considerable pressure from their network over 'high prices' and 'difficult trading conditions', an internationally known franchisor agreed, for a trail period of one month, that it would fulfil all orders at whatever price the franchisee could manage to obtain from customers.

The franchise network fully expected to show a huge sales increase with its new-found ability to sell at any price. The actual results confounded all their expectations. At the end of the period, sales turnover had actually dropped, and their profitability had taken a tumble. Alongside this, a number of long-term customers had rapidly changed to competing suppliers as they found themselves unhappy with the value of their existing stock being reduced at a stroke. Franchisees quickly realised that it was no easier to market a $4 product, than it was the original $10 offering.

The benefit of marketing a premium price product is more often based on what the customer believes they are buying, rather than simple value for money. Is a purchase from Harrods really worth more than the same item at M&S? With little difference in function or form, the premium price stems from the image statement made by the famous name in green and gold.

Differential pricing first began in the mid-nineteenth century. Passengers embarking on a slow boat to China would be offered the facility paying more for a cabin on the supposed cooler side of the vessel. Tickets for this service were endorsed with the instruction 'Port Out - Starboard Home' or 'POSH', spawning a new class of passenger, and later a new class of spice.

There is always the temptation to begin discounting when faced with a new entrant to your market, or a downturn in customer confidence. Reducing prices is the first step on what can quickly become a very slippery slope. Put simply, a discount of ten per cent on the selling price will require a twofold increase in sales turnover to retain the same profit margin. Before considering slashing prices, remember the adage 'turnover is vanity, profit is sanity'.

Increasingly we find that wealth and improved product knowledge has brought about an awareness in the consumer that in order to purchase quality products involves a cost penalty.

The flood of low-cost products from mainland China will not continue. Just as with Japan and Korea before, the change from agriculture to manufacturing will eventually result in demands for higher wages and improved conditions. For the moment consumers appear willing to accept a poor product provided the price is sufficiently low. Increase the low prices, and once more quality will become an issue.

Never believe those who speak glibly of 'high' quality service, or 'high' quality products. Quality needs no qualification. A Rolls Royce and a Ford are both quality vehicles, until one or the other breaks down. On the hard shoulder with the hazards flashing, they are simply a heap of tin. Each must meet the standard of performance expected.

That is where the real strength of the franchise is found. Only with a franchise is the concept of standardised performance carried across all outlets. However hard a non-franchise retailer or national service company may strive, in the end they still rely on the willingness of their employees to carry out each task correctly and to the required standard. Many who work for a wage are willing to do this, but those who work for themselves will have a far greater commitment to going that extra mile.

Every revelation in the media of poor service or unacceptable performance within your market provides improved growth potential for a well-run franchise but only if they fully conform to the standards set out in the operations manual.

The promotion of a franchise to the consumer aims to provide positive concepts about the business, emphasising the quality, value and service levels the purchaser may expect. This all comes together in the 'branding' of a franchise. It takes a considerable investment to build up an effective brand image, but it serves important functions for both seller and customer.

In our 'cash rich, time poor 'career environment, we have little freedom to inform ourselves fully of the features and benefits of products on offer. A familiar brand reassures us that the service will meet our needs.

I will happily turn towards our reliable burger franchise, even when faced with a six-fold price differential, rather than take an outside chance on an unknown 'Patpong diner' in a forsaken corner of Bangkok. Based on my UK experience I can be confident my burger will be fully cooked, and my ice produced from purified water.

Brands are built through promotion, and most of a franchise's promotional spend will revolve around the name and logo. Ideally names should be reasonably short and carry some indication of the business operation within it.

Research shows that almost half of all expenditure by branded franchises is spent on promotion. Business to consumer (B2C) will spend large amounts on 'above the line' advertising and PR. Business to business (B2B) will spend equally heavily on 'below the line' with point-of-sale material, sales promotions, and direct mail.

With any franchise the total fulfilment of the package is the deciding factor. Your franchise must deliver the product/service not just to one customer, but to every customer. Choosing when, where and how we deliver to the place the customer has chosen is the most difficult part of the franchise infrastructure.

Customers have become used to instant gratification, and the franchise that fails to meet these new expectations will suffer. Buyers expect good service, fast delivery, ease of buying and modern payment methods. Having a brilliant marketing concept for your franchise is fine, but not if your deliveries still take seven days, and avoid evening and weekends.

Effective call centres, warehousing, vehicle routing and delivery schedules cannot be bought off the shelf, and they need to be home grown. Those new to franchising should check their prospective franchise has a supply chain that works well enough and fast enough to meet customers needs.

Before investing in a franchise it makes sense to spend some time researching the ordering/service/delivery/payment systems, by making a number of trial purchases. If problems occur, consider whether you still want to invest. Much as you may wish to improve poor service, it is unlikely that your limited experience as a newly appointed franchisee will produce a dramatic alteration in overall performance.

When you begin asking consumers about their experiences with a franchise remember that most will limit their offer to non-specific comments ranging from 'very good' to 'okay'. Those less happy will usually provide a fully detailed and highly informative rant, often including mis-quoted references to Trade Descriptions and Advertising Standards. A satisfied customer will tell three others, whereas dissatisfied punters tell at least eleven of the friends.

With a well-developed franchise package ready for the market, it's now time to move on to the final stage and decide how you expect to gain prospects. Your franchisor must be able to offer you a profile of the ideal customer for your operation. Reject any operation that dares to tell you that its customer is 'absolutely anybody'. I would certainly doubt that your one-year-old son/grandson/nephew are anything like a prospect at this stage of development.

To market effectively requires an accurate identikit portrait of your ideal customer, in sufficient detail to enable you to spot one as they walk past. Prospects will respond better if you understand their issues and talk their language. Are your prospects boastful, aggressive, refined, snobbish, traditional, or shy? The communication you use should take account of this, and you should be able to sell extra services if you understand their actual needs and desires.

Pick up on your prospects day-to-day concerns, by studying the local media. If you can hold forth confidently on the issues that pre-occupy your potential customers, you sound like someone who knows their business and your own. This will provide a useful 'hook' on your initial approach.

Look carefully at competitors' advertising to see what features they emphasise and see if any gaps exist in their package. If delivery times are not mentioned then could you guarantee your performance? If no quality mark or recognised qualification appears, should not your franchise emphasise its membership of the British Franchise Association.