The Right Stuff About Buying a Franchise - Lesson 6 - Marketing Follies
Without sufficient energy given to marketing your new franchise, your financial returns will be no better than your fellow franchisees. If your rewards are less than the average, it is unlikely you will be able to get ahead.
One of the few levers you may be able to pull is marketing, usually represented by the four Ps of price, product, promotion, and place. For most franchisees, price will normally be set by your franchisor. Similarly, your degree of control over product selection will also probably be highly constrained. I have already spoken about the significance of place, or location, in Lesson 1. It remains a hugely important variable in the success or failure of your business.
This leaves promotion. While I am compelled to contribute a fixed percentage of revenue to a central advertising fund, local marketing efforts are pretty much up to me. This may also be true for you.
I've tried several promotional strategies. Around this time last year, I ran an Australia Day promotion coinciding with our national holiday. I had signs made for the store and distributed almost 20,000 brochures in the local area. It was a dud. I gave away a 20 percent discount only for a short-term loss of profit. Long-term benefits to the franchise through greater local recognition remain unclear.
Next, I attempted to win a competition run by one of my suppliers for the highest increase in sales for their travel books. While my sales grew by almost 400 percent in the month of the competition, I was merely a runner-up. One store increased their sales by more than 1,000 percent, although I remain intrigued by the reality that their equivalent sales of the same books in the previous years must have been close to zero. In other words, I've learnt that while I may be highly motivated and strongly focused to win such competitions, there are others in the franchise system whose knowledge about the keys to victory is based on years of ensuring that they stay in front.
I have tried hard to encourage more of the book spend among employees in the local business district to remain in the area. I created a local loyalty card that complimented the loyalty program of my franchisor. In particular, I thought that this would appeal to local school teachers and similar educators who tend to buy more books than others from different professions. Again, while incremental sales have undoubtedly been enhanced, this strategy has not provided the more significant improvements I had sought.
Arguably, the bargain-hunting book buyer is a different animal to the normal member of the book buying family. For this reason, I have held several sales in the surrounding area. While this strategy worked relatively well prior to Christmas, the most important retailing period of the year, it has been less successful since that time. One attempt cost me thousands of dollars after I chose a rotten location. Another was lucky to break even.
The big wahu of all promotional strategies was the exclusive deal I made to sell books at the three Donald Trump events scheduled for various states in Australia last November. I spent weeks to win this deal, subsequently signing an exclusive deal with the local promoter. I paid him $7,500 for the privilege, and ordered more than 4,000 books to sell at the events. I was sure I had a huge winner on my hands. In addition, I was negotiating with Trump University to sell their range of Trump wealth-creation products at these events.
When Wall Street tanked, ticket sales stalled. The promoter went bust, taking my money with him. Donald Trump had been paid almost $2 million in fees to attend, however the promoter's inability to come up with the final payment caused Trump to cancel his visit and pocket the money. I am but one of the 650 creditors of this disaster.
Given that I tend to have the perseverance of a bulldog, I actually attempted to resurrect the tour, offering to sell the tickets at more realistic prices, allow those who had already bought tickets to come for free, and to split any profits arising from the tour with Trump, suggesting that his share go to charity. While I didn't know if I would make any money myself, I truly wanted to do something for those folks who'd already paid an average of $350 for their tickets. It would also have been nice to sell some of the thousands of books I'd ordered.
So, there you have it. Promotional strategies from the realistic to the ridiculous. It remains the nature of marketing that we must, to paraphrase Built to Last, try a lot of stuff and keep what works. In the absence of the kinds of marketing research available to executives in large corporations, franchisees must feel their way cautiously along the dark promotional path.
This is especially challenging during tough times, since marketing dollars are one of the few costs over which we have some semblance of control. The overwhelming temptation is to back off and spend as little as possible. While I wouldn't recommend spending money that you cannot afford to lose, both new and existing franchisees must promote their businesses frequently and with gusto. Set your budget at the outset, keep thinking creatively, and look around for new approaches that may provide a competitive advantage for your franchise.
Dr Dave Poole owns a franchised retail bookstore in Sydney, Australia. He is also a popular corporate speaker and has taught leadership and corporate strategy at business schools in Australia, the United States, and China. Co-author of two popular management books, Dave Poole was recently the successful CEO of a major industry association for the real estate development sector. His speaking topics include "Making Your Small Business Work in Tough Times", "Abundance Leadership", and "Communicating Passionately and Persuasively." He holds a bachelors degree in marketing, an MBA and masters degree in management, and PhD from the School of Management, University of Technology, Sydney. For more information, please see http://www.stratleadership.com
Article Source: http://EzineArticles.com/?expert=Dr_Dave_Poole