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Getting the Word Out: Building a Co-op Program
September 2008 Franchising World
Aim for flawless execution of your advertising plan, but be prepared to change strategies if your customer base shifts. By Chris Prasifka Economically-challenging times make franchisors and franchisees acutely aware of the cost of doing business. With commodity and labor costs on the rise and consumers’ disposable income in jeopardy, brands need to make their dollars work as hard as possible to drive traffic through the front doors of their businesses. In times like these, and in stable-market conditions, the allocation of franchise advertising funds to a brand’s various marketing initiatives can enable it to rise to the top of consumer preference or fall flat. It’s up to the franchisor and the franchisees to keep the latter from happening.
National Marketing
It’s important to note that franchisee support of the national marketing plan is critical. With Kahala’s brands, the marketing plans are developed with franchisee input along the way and finalized in collaboration with the brand’s franchisee advisory board. Before execution, we ensure that all parties are energized to roll out the plans across the community. • From situation analysis, pull out the significant opportunities and challenges as they relate to growing the business in a specific region. Be sure to exploit the niche that the competition doesn’t play in. • Define goals. Is the goal to increase market share in the region or to increase the region’s average check? The co-op should collectively determine what the end result of marketing efforts should be. Make sure the end result is measurable. • Develop a marketing plan that will best equip the organization to meet the goals. Refer back to situation analysis and key demographics to determine the best areas of focus. Differentiate the brand from its competition in a marketing plan whether it’s through price, experience, quality or something in between. Make sure prospective customers know what the brand has to offer. • Set the marketing plan in motion. • Monitor the plan’s success. The company should be able to track each initiative and understand the outcome so it can modify future initiatives for maximum impact.
Local-Store Marketing
Don’t Forget Those “Extras”
Most Importantly, Listen and Plan Together
Chris Prasifka is president of Kahala Franchise Corp. He can be reached at 480-362-4800 or cprasifka@kahalacorp.com.
Ultimately, advertising funds, often collected from franchisees as a percentage of gross sales, as well as from vendor contributions to market their products, are designed to promote and enhance the brand’s overall market position with the primary goal of driving customer traffic. While called advertising funds, these dollars can be broadly used for promotional opportunities, Web marketing, public relations and advertising, among other related activities. These funds also support the monetary obligations of the use of both agencies and in-house personnel in developing and executing marketing initiatives.
The allocation of advertising funds can be determined in a variety of different ways, but a balanced allocation of national, regional and local marketing is advantageous.
From a national level, the allocation of funds is dependent on the concept-brand in discussion. Brands with unique selling propositions beyond the traditional franchise concept could invest heavily in public relations initiatives as the time-value-money proposition of third-party endorsement is much stronger than traditionally-placed advertising. For a brand that focuses heavily on value-driven promotions, traditional advertising such as television, radio or newspaper may be more appropriate.
A strategically-driven brand should also include a small market research budget in the advertising fund allocation. It’s critical to know who the customers are, what their wants and needs are, and where their preconceived notions of the brand lie. From there, the marketing mix can be outlined. Most importantly, a franchise company must know its brand and its customers and develop a plan that’s just right for them.
There is a record of success in using advertising funds to support the redesign of stores. One can accumulate dollars over time to support the rollout of new boards all the way to complete remodels for an immediate and direct impact to the stores for little to no expense for franchisees.
Regional Marketing
Developing a regional marketing budget from the overall advertising funds can be advantageous to build market share in a specific region. As a collective force in a local market, a group of franchisees can envision great results together versus independently. If a franchise company determines that separating the advertising fund into a national fund and a regional fund is right for the business, the allocation of the regional marketing dollars is often determined by the franchisees who make up a cooperative advertising association, often known in the industry as a co-op.
A co-op marketing fund can be advantageous because what works in one part of the country or with one demographic may not work in another. These funds allow the franchisees to specifically advertise their geographically-designated market area or regional products that fare better in one demographic than nationally.
While a regional budget has its benefits, the co-op marketing should closely align with the nationally-driven efforts to ensure the best result for the investment.
How to Develop a Regional Marketing Plan
• Analyze a region’s specific situation. Look at the locations in the region and assess the core demographic makeup. The competitive landscape may be different than that at a national level. Make sure to understand who key regional players are in a category or industry.
Franchisees should also invest into their own advertising budget. These dollars often make up what the industry calls local-store marketing. Here, a franchisee focuses their allocated monies toward in-store merchandising, as well as community involvement to promote their individual store. This can include everything from hosting and sponsoring special events to distributing coupons and bag stuffers. The ultimate purpose of local-store marketing is to do just that: encourage customers to visit the store to boost the frequency of visits and increase the average check. Local-store marketing enables establishment to get the word out about its location, service and products to the public in a local trading area, while staying true to the franchise identity. If done properly, this can be a critical driver of increased frequency and sales.
A local-store marketing calendar, customizable marketing collateral and print-ready artwork takes the guesswork out of the equation for franchisees so the execution can be turnkey operation.
It’s easy to budget all of the dollars allocated to an advertising fund to the fun stuff. However, an advertising fund should also include the personnel resources required to pull together the marketing initiatives. There are differing opinions on this topic, but the decision to build internal marketing teams versus outsourcing marketing services to agencies or consultants is a critical decision the franchise company will need to make before allocating funds. Dedicating resources internally in areas of expertise from graphic design to public relations to general marketing can provide an advantage: the more intrinsically-engaged a marketing team is to the overall business objectives, the stronger the final outcome.
The right mix of advertising funds depends on the brand’s community and its customers. Some franchise organizations split the mix 50-50 or 33-33-33 as examples. Make those strategic decisions on how the dollars should be spent together to most effectively assist the community in serving more customers.
It’s also imperative to plan strategically, but act quickly. Follow a yearly marketing calendar to aim for flawless execution of the plan. However, should the market or the customer base change, be quick to adapt a new strategy that everyone can buy into. If the franchisor and its franchisees work hand-in-hand, the advertising funds can help build the market share, customer preference and sales trends that everyone desires.
