RetailingRetailing

ObjectivesObjectives To Understand the Functions of To Understand the Functions of

Retailers in the Marketing ChannelRetailers in the Marketing Channel To Identify the Major Types of To Identify the Major Types of

RetailersRetailers To overview the Major Types of To overview the Major Types of

Franchising Franchising To identify Strategic Issues in To identify Strategic Issues in

RetailingRetailing

RetailingRetailing Retailers implement and conclude Retailers implement and conclude

the actual sale of products to the the actual sale of products to the final consuming units, the ultimate final consuming units, the ultimate user.user.

Possession Utility

Time, place, form & information utility

Importance Of RetailingImportance Of Retailing

Impact on the Economy … Impact on the Economy … - 18% of employment (24 mil - 18% of employment (24 mil 2005)2005)

Distribution Functions Distribution Functions - Time, Place- Time, Place

Marketing Functions Marketing Functions - Information & Possession Utility- Information & Possession Utility

A Retailing CareerA Retailing CareerA Retailing CareerA Retailing Career

Retail Career

Salary

CareerProgression

Geographicmobility

Women inretailing

SocietalPerspective

Prerequisites for Prerequisites for SuccessSuccess

Prerequisites for Prerequisites for SuccessSuccess

Success

HardWork

Analytical

Skills

Creativity

Decisiveness

Flexibility

Initiative

Leadership

Organization

RiskTaking

StressTolerance

Perseverance

Enthusiasm

Retailing: Major Types of Product Retailing: Major Types of Product (Retail Stores & Services)(Retail Stores & Services)

General Merchandise RetailersGeneral Merchandise Retailers - Department Stores --Discount Store- Department Stores --Discount Store

- Supermarket -- Superstore--- Supermarket -- Superstore--HypermarketHypermarket

- Warehouse Club --- Catalog - Warehouse Club --- Catalog ShowroomShowroom

Specialty RetailersSpecialty Retailers - Limited Line- Limited Line

- Off Price Retailers- Off Price Retailers - Category Killers- Category Killers

- C- Convenience stores onvenience stores

In-Store

Department StoreDepartment StoreDepartment StoreDepartment Store

Chain operationsChain operations Wide variety & Wide variety &

selectionselection Full service - delivery, Full service - delivery,

credit, returns, repair credit, returns, repair Examples:Examples:

– Boscov’s, Macy’sBoscov’s, Macy’s– Bloomingdale’sBloomingdale’s

Chain operationsChain operations Wide variety & Wide variety &

selectionselection Full service - delivery, Full service - delivery,

credit, returns, repair credit, returns, repair Examples:Examples:

– Boscov’s, Macy’sBoscov’s, Macy’s– Bloomingdale’sBloomingdale’s

SupermarketsSupermarkets - Large, self service - Large, self service stores with wide variety of food & stores with wide variety of food & some nonfood productssome nonfood products

Low mark ups & profit margins, Low mark ups & profit margins, Departmentalized with Centralized Departmentalized with Centralized checkout, Ex: Albertson’s, Safewaycheckout, Ex: Albertson’s, Safeway

SuperstoresSuperstores –Very large outlets that carry –Very large outlets that carry food and nonfood products found in food and nonfood products found in supermarkets, plus most routinely supermarkets, plus most routinely purchased consumer productspurchased consumer products

Hyper-markets: Hyper-markets: A Sure - Fire Hit, BombsA Sure - Fire Hit, Bombs

.Average sizeAverage size(in square feet(in square feet))

EmployeesEmployees

Annual sales per storeAnnual sales per store(in millions)(in millions)

Gross profit marginsGross profit margins

Stock-keeping units(Number of differentkinds of items stocked)

70,000 70,000

200 - 300200 - 300

$10 - $20$10 - $20

18% - 19%18% - 19%

60,000 -60,000 -80,00080,000

150,000150,000

300 - 350

$20 - $50$20 - $50

15% - 16%

100,000100,000

230,000230,000

400 - 600400 - 600

$75 - $100

7% - 8%7% - 8%

60,000 -70,000

DiscountStore

SuperCenter Hypermarket

Specialty StoresSpecialty Stores Deep Selection Deep Selection (Product line)(Product line) Fashion response leader Fashion response leader Personalized servicePersonalized service Narrow VarietyNarrow Variety (Product line) (Product line) High markupHigh markup Ex: The GAP, a SPA, bookstoreEx: The GAP, a SPA, bookstore

– Wallpapers to Go, Wallpapers to Go,

Convenience Convenience StoresStores

Limited varietyLimited variety Shallow selectionShallow selection Fast service, High Fast service, High

markupmarkup Examples: Examples: 7-11, Wawa 7-11, Wawa

Circle K, SheetzCircle K, Sheetz

STOP & GO

Other Types of In-Store Other Types of In-Store RetailingRetailing

General mass merchandiserGeneral mass merchandiser– Catalog showroomCatalog showroom– Warehouse clubWarehouse club

Specialty mass merchandiserSpecialty mass merchandiser– Off-price retailerOff-price retailer– Category Killer Category Killer

- Ex. Toys R US - Ex. Toys R US

Category KillersCategory KillersCategory KillersCategory KillersJust For Feet, the category killer in the athletic footware and apparel sector founded in 1977, cruised through the 1990s. However, Just For Feet has suffered financial setbacks from alack of adapting tochanges in the evolvingretail landscape.

The Wheel of RetailingThe Wheel of Retailing

HighHigh: status,: status,margin, pricemargin, price

(Specialty store)(Specialty store)

HighHigh: status,: status,margin, pricemargin, price

(Specialty store)(Specialty store)

ConventionalConventionaldepartmentdepartment

storesstores

ConventionalConventionaldepartmentdepartment

storesstores

MassMassmerchandisemerchandise

retailersretailers

MassMassmerchandisemerchandise

retailersretailers

LowLow: status, margin: status, marginprice, serviceprice, service

(Wholesale clubs)(Wholesale clubs)

LowLow: status, margin: status, marginprice, serviceprice, service

(Wholesale clubs)(Wholesale clubs)

- retailers usually enter the market with low service, low retailers usually enter the market with low service, low margin & price operations but evolve into higher service, margin & price operations but evolve into higher service, cost & price merchants.cost & price merchants.

Maybry’s

Maybry’s

at the Mall

at the Mall

Wheel of Retailing

High Prices &Markups, Many services, ExpensiveSurroundings,

Low prices &Low markups, few services, (austere) surroundings

Small general stores

Department stores 1890 -1910

Entry of Discount stores

Department Stores

1955 -1970

Factory outlets

“Members Only”

discount outlets

Categorykillers

Low prices & markups, few services, austere 1990s

Enter Department stores

HistoryHistory

In 1936,at age 30, Paul D'Amour , a bread In 1936,at age 30, Paul D'Amour , a bread route salesman for the Wonder Bread Baking route salesman for the Wonder Bread Baking Co. purchased the Y Cash Market in Mass.Co. purchased the Y Cash Market in Mass.

In 1947, it was incorporated, Big Y® Foods, In 1947, it was incorporated, Big Y® Foods, Inc. In 1952, they leased a 10,000 square Inc. In 1952, they leased a 10,000 square foot store (Springfield)foot store (Springfield)

In the 1980’s it was a technology leader in In the 1980’s it was a technology leader in scanning, information systems & security.scanning, information systems & security.

Progressive Grocer, Mar. 2003

MARCH 25, 2003MARCH 25, 2003 -- -- It expanded its online shopping It expanded its online shopping service to include Unlimited Choices, a program to give service to include Unlimited Choices, a program to give

customers access to more than customers access to more than 30,000 additional 30,000 additional productsproducts such as ethnic & special dietary foods & A such as ethnic & special dietary foods & A wide assortment of non-food items, including toys, books, wide assortment of non-food items, including toys, books, housewares and gifts not carried in a typical Big Y store. housewares and gifts not carried in a typical Big Y store.

A typical 55,000 square foot Big Y store carries A typical 55,000 square foot Big Y store carries some 35,000 different items.( bigy.com)some 35,000 different items.( bigy.com)

Their goal is to exceed their customers' evolving expectations by seeking better ways to create and deliver world class service and value.

3 Major Types of Non 3 Major Types of Non Store RetailingStore Retailing

A. Direct SellingA. Direct Selling (face to face)(face to face)

B. Direct MarketingB. Direct Marketing(non personal mediums)(non personal mediums) C. Automatic Vending C. Automatic Vending

A. Forms of Direct SellingA. Forms of Direct Selling

Direct SellingDirect Selling

Bank Retailing Bank Retailing

Sales Visits

B. Forms of Direct MarketingB. Forms of Direct Marketing

Catalog MarketingCatalog Marketing

Direct-Response Marketing

$388

Television Home Shopping Telemarketing

On line Retailing (E-Tailing): On line Retailing (E-Tailing): AdvantagesAdvantages

Not location bound

InteractiveConvenient

Shopbots

Forms of Direct MarketingForms of Direct Marketing

E-tailing was about 20 billion dollars in 2000 and E-tailing was about 20 billion dollars in 2000 and estimated to rise to over 100 billion by 2005.estimated to rise to over 100 billion by 2005.

Percentage of Sales Online Percentage of Sales Online by Retail Segmentby Retail Segment

Source: Investor’s Business Daily, Wednesday, September 5, 2001, p. A6.

Internet Retailing: DisadvantagesInternet Retailing: Disadvantages

Forms of Direct MarketingForms of Direct Marketing

Examination Privacy/Security

C. Forms of Automatic VendingC. Forms of Automatic Vending

The use of machines to dispense The use of machines to dispense products includes items such as products includes items such as candy, chewing gum, soft drinks, candy, chewing gum, soft drinks, cigarettes, newspapers, and coffeecigarettes, newspapers, and coffee

Advantages: small amount of space Advantages: small amount of space needed and no sales personnelneeded and no sales personnel

Disadvantages: high costs of Disadvantages: high costs of equipment and frequent servicingequipment and frequent servicing

Strategic Retailing Issues:The Marketing Mix

#1 Customers

Product Price

Place Promotion

Merchandise AssortmentStore AtmosphericsCustomer Service

Location,Location,Location!

Retail List PriceDiscountsCredit

AdvertisingPersonal SellingPublicity SalesPromotion

Strategic Issue #1. Strategic Issue #1. Retail Store Location Retail Store Location

Three most important words in retailing:

Location … location … location!Three most important words in retailing:

Location … location … location!

Factors affecting locationFactors affecting location Intended target marketIntended target market Type of productsType of products Suitability of site for Suitability of site for

customer accesscustomer access Characteristics of existing Characteristics of existing

retail operationsretail operations

Strategic IssuesStrategic Issues #1. Location Dynamics #1. Location Dynamics

Consumers want convenience, a Consumers want convenience, a subjective measurementsubjective measurement

Convenience Measurements Convenience Measurements - Distance- Distance - Parking- Parking- Time- Time - Traffic - Traffic

congestioncongestion

= Convenience= Convenience

LOCATION sets the LOCATION sets the trading trading areaarea

Free standing structureFree standing structure Central Business District (CBD)Central Business District (CBD) Shopping Malls Shopping Malls (avg. age 23 yrs 2002)(avg. age 23 yrs 2002)

- Neighborhood shopping center- Neighborhood shopping center

- Community shopping center- Community shopping center

- Regional shopping center- Regional shopping center Non Traditional Shopping CenterNon Traditional Shopping Center - Factory Outlets- Factory Outlets

- Mini warehouse mall- Mini warehouse mall

Consumer Shopping Consumer Shopping PatternsPatterns

% of Retail Chains’ % of Retail Chains’ Customers Customers also shopping atalso shopping at

Retail Chains Sears Penny K-MartRetail Chains Sears Penny K-Mart

SearsSears X 66 81 X 66 81

PennyPenny 75 X 80 75 X 80

K-MartK-Mart 69 60 X 69 60 X

Source: Scarborough Research, “Cross Shopping Patterns,” Stores (June 1986), p. 13.

Locate near to competitors for comparison shopping

Strategic Issue #2Strategic Issue #2 Merchandise Merchandise AssortmentAssortment

Retail buyers must match their Retail buyers must match their product selection, quality, price with product selection, quality, price with constantly changing consumer wants.constantly changing consumer wants.

Scrambled merchandising- adding Scrambled merchandising- adding unrelated products to generate traffic unrelated products to generate traffic & higher margins& higher margins

Types of Merchandise Types of Merchandise ChangeChange

- The retail store merchandise must - The retail store merchandise must change as consumer wants changechange as consumer wants change

Product Selling CyclesProduct Selling Cycles

Fad…..a relatively short term selling life Fad…..a relatively short term selling life cycle - (under six months) cycle - (under six months)

Fashion….a relatively enduring selling Fashion….a relatively enduring selling lifecycle - (over 1-2 years) lifecycle - (over 1-2 years)

Strategic Issue #2Strategic Issue #2 Merchandise Assortment Merchandise Assortment

Plus:Plus:

StoreLocation

StorePromotions

StoreLayout/Image

StorePersonnel

StoreServices

StoreHours

TargetedCustomers

Many consumers value finding bargains.

Store AtmosphericsStore Atmospherics

The sum total of all store stimuli, The sum total of all store stimuli, interior & exterior physical interior & exterior physical characteristics that appeal to emotions characteristics that appeal to emotions (psychological field)(psychological field)

Components: Ambient factors, Components: Ambient factors, Design and Social Factors. Design and Social Factors.

Ambient Factors Ambient Factors ((Perceptions)Perceptions)

- lighting- lighting - sounds - sounds

- smell- smell

Store AtmosphericsStore Atmospherics Design FactorsDesign Factors ( (Perceptions)Perceptions)

- - Floor covering - CeilingsFloor covering - Ceilings - Wall - Wall coverings - Dressing Rooms - coverings - Dressing Rooms - Displays/Fixtures - AislesDisplays/Fixtures - Aisles

- Color - Layout- Color - Layout

- Cleanliness - Signage- Cleanliness - Signage

- Furnishings - windows - Furnishings - windows

Social factors: Social factors: In store serviceIn store service (sales personnel social & emotional labor)(sales personnel social & emotional labor)- Courteous - Courteous Rude behavior Rude behavior- Knowledgeable - Knowledgeable Low information Low information- Service Service Insincere Insincere- Employee dress norms (casual ??)Employee dress norms (casual ??)

Make it convenient & pleasurable for Make it convenient & pleasurable for customers to shop and pay for customers to shop and pay for merchandisemerchandise

Store AtmosphericsStore Atmospherics

Body Scan computers: personal service, selling & awareness?

In Store Pre sale In Store Pre sale ServiceService

Personal Service ClimatePersonal Service Climate- Calls - Calls forfor a highly motivated, experienced & a highly motivated, experienced & well paid work force well paid work force

- Retail jobs often pay poorly, are not - Retail jobs often pay poorly, are not challenging and produce high turnoverchallenging and produce high turnover

8%

30%

33%

29%

7 - 12 months

1 - 2 years

3 - 5 years

5 + years

Average length of employee tenure with retailers

Estimates: 2005

Post-Sale ServicesPost-Sale Services

Complaints and adjustmentsComplaints and adjustments

Credit PoliciesCredit Policies

Product maintenanceProduct maintenance

Product informationProduct information

Pick up/DeliveryPick up/Delivery

Strategic Issue Strategic Issue

Retailer AdvertisingRetailer Advertising

Location + Merchandise + Location + Merchandise + Services + Atmospherics + ? Services + Atmospherics + ? Store Image

Advertising Medium(s)Advertising Medium(s)Newspapers - Television - Radio - Newspapers - Television - Radio -

Magazine - Direct Mail - Videos-WebMagazine - Direct Mail - Videos-Web

Ideal Stores: Ideal Stores: What factors are most hat factors are most important in deciding where to shop? important in deciding where to shop? surveyed women said:surveyed women said:

Price and ValuePrice and Value

Quality and Selection of MerchandiseQuality and Selection of Merchandise

ServiceService

Shopping EnvironmentShopping Environment

44%

34%

11%

11%Source: Newspaper Advertising Bureau Inc. (1986)

Retail PositioningRetail Positioning Identifying an underserved market niche, or Identifying an underserved market niche, or

segment, and serving it through a strategy segment, and serving it through a strategy that distinguishes the retailer from others that distinguishes the retailer from others in the minds of consumers in that segmentin the minds of consumers in that segment

Target Market - Middle class familyTarget Market - Middle class family Position - Price Leadership Position - Price Leadership

– ““Every Day Low Prices”Every Day Low Prices”– ““Rollback” gimmickRollback” gimmick– ““Special Buys”Special Buys”

Example : Wal-Mart

Segmentation, targeting and Segmentation, targeting and positioningpositioning

Sam Walton computerized operations Sam Walton computerized operations to lower costs to lower prices to meet to lower costs to lower prices to meet target market needs with four target market needs with four different retail concepts:different retail concepts:

1.1. Wal-Mart discount storesWal-Mart discount stores2.2. SupercentersSupercenters3.3. Neighborhood MarketsNeighborhood Markets4.4. Sam’s ClubSam’s Club

Packaged Retail Packaged Retail EnvironmentsEnvironments

Functional AdvantagesFunctional Advantages - Focus on customer satisfaction- Focus on customer satisfaction

- Integrate “total” product offerings- Integrate “total” product offerings ResultResult

- Added value to product- Added value to product

- Consumer loyalty increases- Consumer loyalty increases

Examples: Disneyland, Sea Cruises, Destination Resorts

Potential Channel Conflicts

RetailersRetailers SuppliersSuppliers

Exclusive DistributionExclusive Distribution Intense Distribution Intense Distribution

Store LoyaltyStore Loyalty Brand Loyalty Brand Loyalty

High Markup +Volume Low Markup/High High Markup +Volume Low Markup/High VolumeVolume

Love - Hate RelationshipLove - Hate Relationship

Perception as an Excellent CompanyPerception as an Excellent Company       Company               Executives          AnalystsCompany               Executives          Analysts -------------------------------------------------------------------------------------------------------------------------------------------- BJ's (BJ)                   44%                81%BJ's (BJ)                   44%                81% Costco (COST)                54%               100%Costco (COST)                54%               100% Dillard's (DDS)             63%                  6%Dillard's (DDS)             63%                  6% Federated (FD)              33%                56%Federated (FD)              33%                56% --------------------------------------------------------------------------------------------------------------------------------------------

J.C. Penney (JCP)           40%                24%J.C. Penney (JCP)           40%                24% -------------------------------------------------------------------------------------------------------------------------------------------- Kmart (KM)                  33%                 0%Kmart (KM)                  33%                 0% -------------------------------------------------------------------------------------------------------------------------------------------- Kohl's (KSS)                46%                94%Kohl's (KSS)                46%                94% -------------------------------------------------------------------------------------------------------------------------------------------- May (MAY)                   46%                50%May (MAY)                   46%                50% -------------------------------------------------------------------------------------------------------------------------------------------- Saks (SKS)                  52%                 6%Saks (SKS)                  52%                 6% -------------------------------------------------------------------------------------------------------------------------------------------- Sears (S)                   57%                11%Sears (S)                   57%                11% --------------------------------------------------------------------------------------------------------------------------------------------

Target (TGT)                 69%                89%Target (TGT)                 69%                89% Wal-Mart (WMT)              75%                94%Wal-Mart (WMT)              75%                94%

Chain Store Age,2001,p. 4c (Jan/Feb 01 Survey)

Consumer Relevancy Awards Consumer Relevancy Awards

Consumer Relevancy Consumer Relevancy Awards,… Criteria:Awards,… Criteria:

Easy to shop/accessEasy to shop/access Price/ValuePrice/Value Product AssortmentProduct Assortment ServiceService Enjoyable Shopping Enjoyable Shopping

experienceexperience

Consumer Rankings of Consumer Rankings of store attributes:store attributes:

1. Cleanliness1. Cleanliness 2. Courtesy & Respect2. Courtesy & Respect 3. Easily visible prices3. Easily visible prices 4. Well packaged 4. Well packaged

products to avoid products to avoid damagedamage

5. An “honest” price 5. An “honest” price

Consumer Relevancy Award Consumer Relevancy Award Winners Winners (2001)(2001)

Department StoresDepartment Stores Grocery ChainGrocery Chain Drug Store ChainDrug Store Chain Electronic StoresElectronic Stores Specialty StoreSpecialty Store Clothing, shoes & Clothing, shoes &

accessoriesaccessories Discount Store ChainDiscount Store Chain Overall . . . . . . . . . . Overall . . . . . . . . . .

..

J C PennyJ C Penny PublixPublix CVSCVS Best BuyBest Buy Barnes & NobleBarnes & Noble GAPGAP Wal-MartWal-Mart ??? ???

Level of Customer Service?High - - - Low

Sales Personnel?Hurried - - - Apathetic

Product Selection?Broad - - - Narrow

Store Image?Conservative - - - Modern?

Consumer Profile?SexAge

EducationIncome

RESEARCHRESEARCHKnowing Your CustomerKnowing Your Customer

Retail StoreCharacteristics

Dual Wage Earners and Their Effect Dual Wage Earners and Their Effect on Hours Spent Shoppingon Hours Spent Shopping

Dual Wage Earners and Their Effect Dual Wage Earners and Their Effect on Hours Spent Shoppingon Hours Spent Shopping

1965 1980 1995

Year

200%

100%

12

8

4

0Fa

mili

es

wit

h D

ua

l In

com

es

(1

965

- 1

00

%)

Sh

op

pin

g H

ou

rs

pe

r Mo

nth

Dual incomes rose ...

… and shopping

hours dropped

SOURCE: Vision for the New Millennium . . .(Atlanta: Kurt Salmon Associates, 1997). Used with permission

HypothesisHypothesis Matching high arousal scent and high Matching high arousal scent and high

arousal music conditions will lead to arousal music conditions will lead to enhancedenhanced

(a) pleasure,(b) store environment, (c) (a) pleasure,(b) store environment, (c) impulse buying and (d) satisfaction, impulse buying and (d) satisfaction, compared to mismatched conditions (ie. compared to mismatched conditions (ie. high/low or low/high).high/low or low/high).

Matilla,A.&J.Wortz, Jrl of Retailing,Sumr2001

Congruency of scent and Congruency of scent and music as a driver of in-store music as a driver of in-store

behaviorbehavior

Applied Research In Retailing

ExperimentExperimentVariablesVariables

For Scents:For Scents:– Lavender = low arousal scentLavender = low arousal scent– Grapefruit = high arousal scentGrapefruit = high arousal scent

For Music:For Music:– Slow tempo classical = low arousal music Slow tempo classical = low arousal music – Fast tempo classical = high arousal musicFast tempo classical = high arousal music

                               

Survey MethodSurvey Method– 343 customers were asked/270 participated343 customers were asked/270 participated– Most were female and under 20Most were female and under 20– 62% said they purchased something in the store62% said they purchased something in the store

• Matching conditions produced higher responses than the mismatching conditions.• Ex) When low arousal music was paired with low

arousal scent, the perceived pleasure was higher than when low arousal music was paired with high arousal scent.

+

Focus Group InterviewConsumer Summary (1 of 2)

Overall EvaluationOverall Evaluation

MerchandiseMerchandise PositivePositive NegativeNegative

Selection Selection - -

Quality Quality + (Mixed) - + (Mixed) -

PricesPrices + - + -

StoreStore

VarietyVariety + - + -

PersonnelPersonnel + - + -

AppearancesAppearances + +

Focus Group InterviewConsumer Summary (2 of 2)(2 of 2)

Overall EvaluationOverall Evaluation

StoreStore PositivePositive NegativeNegative

HoursHours - -

MerchantsMerchants + + - -

Bloomsburg TownBloomsburg Town

ConvenienceConvenience + +

ParkingParking - -

AtmosphereAtmosphere + +

MallsMalls + +

Bloomsburg Retailing Viewed Bloomsburg Retailing Viewed From Three Distinct Perspectives:From Three Distinct Perspectives:

Older” ConsumersOlder” Consumers Working ConsumersWorking Consumers

- limited expenditures- limited expenditures - economy is causing minimum- economy is causing minimum

- buy basics- buy basics purchases purchases

- sees average/good- sees average/good - sees limited variety- sees limited variety

varietyvariety - mobile, parking is - mobile, parking is inconvenientinconvenient

- captured “in town”- captured “in town” - willing to travel to get it- willing to travel to get it

marketmarket

College StudentCollege Student

- spending limited amounts- spending limited amounts - waits to go home- waits to go home

- sees poor variety- sees poor variety - very selective- very selective

- can walk to stores- can walk to stores

Retail Information System (RIS) Retail Information System (RIS) and Merchandise Management and Merchandise Management

IssuesIssuesCompany

Goals

HumanResources

Information

Accountingand FinancialInformation

OperatingInformation

PromotionInformation

MerchandiseInformation

System

Technology updates:

Computer Body Scanner

Internet Strategy

Database Marketing

RFID

FranchisingFranchising

A franchiser licenses (to the A franchiser licenses (to the

franchisee) the right to franchisee) the right to

distribute/sell specified distribute/sell specified

products (trademark s) products (trademark s)

according to operational according to operational

guide-lines (Time, place, guide-lines (Time, place,

price, supplies, etc.)price, supplies, etc.)

Develops & controls Develops & controls

marketing strategiesmarketing strategies

Franchising: AdvantagesFranchising: Advantages

Less Capital RequiredLess Capital Required Use the Experience of OthersUse the Experience of Others Assurance of CustomersAssurance of Customers Rapid Product DistributionRapid Product Distribution Smaller Probability of FailureSmaller Probability of Failure Advertising AssistanceAdvertising Assistance Highly Motivated Highly Motivated

owner/operatorsowner/operators

Franchising: DisadvantagesFranchising: Disadvantages

Controlled by Franchiser Controlled by Franchiser (Power)(Power)

Cost of FranchiseCost of Franchise Hard Work and Long HoursHard Work and Long Hours Reduced Personal ControlReduced Personal Control