Franchising

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FRANCHISING

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Franchisee-Advantages

1. Avoiding the unnecessary trial and error period in starting and operating a new business.

2. Lower financial risk, compared to other ventures, because investment costs are lower and profit margins are higher.

3. Business Format Franchising complete packages ensure a ready to go “turnkey” franchised unit.

4. Managing a small business whilst depending on the power of the franchisor company which has a bigger organization.

5. The franchisee has an opportunity to run a proven business concept with a successful operational track record.

6. The franchisee has access to accumulated business experience and technical know-how in managing the business.

7. Easier purchasing, storing, and product display systems.

2

Franchisee Disadvantages

 Value of brand name determined by franchiser(owner of brand)

 Introduction of new products determined by franchiser

 Your reliability tied to the rest of the system

 Some of the profit need to give to the franchiser

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ADVERTISING

Major Advertising Media

Newspapers

Magazines

Radio

Television

Outdoor Media

Yellow Pages

Internet

5

Newspapers

Advantages Disadvantages

 Geographic selectivity

 Short-term advertiser commitments

 News value and immediacy

 Year-round readership

 High individual market coverage

 Co-op and local tie-in availability

 Short lead time

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 Limited demographic selectivity

 Limited color

 Low pass-along rate

 May be expensive

Magazines

Advantages Disadvantages

 Good reproduction

 Demographic selectivity

 Regional/local selectivity

 Long advertising life

 High pass-along rate

 Long-term advertiser commitments

 Slow audience build-up

 Limited demonstration capabilities

 Lack of urgency

 Long lead time

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Advantages

Radio

 Low cost

 Immediacy of message

 Short notice scheduling

 No seasonal audience change

 Highly portable

 Short-term advertiser commitments

 Entertainment carryover

Disadvantages

 No visual treatment

 Short advertising life

 High frequency to generate comprehension and retention

 Background distractions

 Commercial clutter

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Television

Advantages Disadvantages

 Wide, diverse audience

 Low cost per thousand

 Creative opportunities for demonstration

 Immediacy of messages

 Entertainment carryover

 Demographic selectivity with cable

 Short life of message

 Consumer skepticism

 High campaign cost

 Little demographic selectivity with stations

 Long-term advertiser commitments

 Long lead times for production

 Commercial clutter

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Outdoor Media

Advantages Disadvantages

 Repetition

 Moderate cost

 Flexibility

 Geographic selectivity

 Short message

 Lack of demographic selectivity

 High “noise” level

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Advantages

Internet

Disadvantages

 Fast growing

 Ability to reach narrow target audience

 Short lead time

 Moderate cost

 Difficult to measure ad effectiveness and ROI

 Ad exposure relies on

“click through” from banner ads

 Not all consumers have access to Internet

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