mba retailing

8/2/2019 MBA Retailing

http://slidepdf.com/reader/full/mba-retailing 1/137

Subject-Retailing-II ………………………………………….. Keyur D vasava..

Module 1. Merchandise Management:

(A)PLANNING AND IMPLEMENTATION

1. CONCEPT OFMERCHANDISING

Merchandise ManagementMerchandise Management involves a process by which a retailer attempts to offer the right quantity of the

right merchandise in the right place at the right time along with meeting the financial goals of the company.

Merchandise Management requires a systematic as well as adherence to the concept of Marketing.

Key Aspects of Merchandise ManagementMerchandise is being acquired for meeting demand in future, so forward planning is necessary in relation to

changing consumption tastes and demand.

It is required to handle the acquired Merchandise appropriately to ensure that it will be sold in perfect

condition.

All aspects of the process should be monitored to ensure the adequate financial returns from the investmen

decision of buying merchandise.

Basis of retail merchandising

Product and merchandising management is key activity in the management of retail business.

The primary function of the retailing Is to sell Merchandise.

One of the most strategic aspects of the retail business is to decide the merchandise mix and quantity to

be purchased.

Merchandising can be termed as the planning, buying and the selling of merchandising .

Define Merchandising as “The analysis, planning, acquisit ion, handling and control of merchandise

investments of a retail operation.”

Merchandising is the core of retailing.

The function of merchandising is an integral part of retailing and also one of the most challenging

functions.



AMA define “The planning involved in marketing the right merchandise at the right place at the right t im

in the right quantities at the right price.”

Achieving these five Right is the key to successful merchandising and many a times, this remains an

elusive goal for most retailers.

Merchandising management can be termed as“Planning, analysis, acquisition, handling and control of

the merchandise”

Analysis : because retailers must be able to correctly identify their customers before they can ascertain

consumer desires and their needs/requirements for making a good buying decision.

Planning is important because merchandise to be sold in the future must be bought now.

Acquisitions because the merchandise needs to be procured from others, either distributors or

manufactures.

Handling involves seeing that the merchandise is where it is needed and in the proper condition to besold.

Control is required since the function of merchandise involves spending money for acquiring products it

necessary to control the amount of money spent on buying

Factors Affecting the Merchandising Function

Merchandising does not function in isolation.

It is affected by various factors like the organization structure, the size of the retail organization and th

merchandise to be carried.

Rarely are any two stores organized in the same way.

The function of the merchandising is vary from one organization to another.

Size : The needs of the individual retailers vary from those of large chain store operation.

The merchandiser to be carr ied by a retailer largely determines the responsibilities

of the merchandiser.

Merchandise to be carried: The buying for basic merchandise is fairly different from buying fashionmerchandise.

A merchandisers who I handling fashion products will need to spend more time in the market, and

looking for the products which is more suitable for the customers.

Organization structure that the retail organization adopts also affects the merchandising function. Som

organization may differentiate the role of the buyer and the role of a merchandisers separately.



THEMERCHANDISESROLE& RESPONSIBILITIES

Planning: Thought the merchandising may not be directly involved in the actual purchase of

merchandise.

They formulate the policies for the areas in which they are responsible.

Forecasting sale for the forth coming budget period and can estimate the consumer demand and the

impact of changes in the retail environment.

Directing: Guiding and training buyers as and when the need arises, is also a function of the

merchandiser.

The buyers have to be guided to take additional markdowns for products which may not be doing too

well in the stores.

Co-coordinating: Merchandise managers supervise the work of more than one buyer.

They need to coordinate the buying effort in terms of how well it fits in with the store image and with

the other products being bought by other buyers.

Controlling: assessing the buyers performance, is a also part of the merchandise manager’s Job.

This includes evaluated on the basis of net sale, maintain mark up percentage, gross margin % and stoc

turn

Role of the Buyer

Buyers play an important role in the retail industry. they select and order merchandise to be sold.

Buyers may be responsible for buying for a department, an entire store, or a chain of stores

1. Developing the merchandising strategies for the product line

2. Planning and selecting merchandise assortments

3. Vendor Selection

4. Pricing of the merchandise

5. Inventory Management



Retail Store Design & Visual Merchandising

Store design and layout tells a customer what the store is all about and it is very strong tool in the han

of the retailer for communicating and creating the image of the store in the mind of the customers.

The design and layout of the store are a means of communicating the image of the retail store.

The environment which is creates in the retail store, is a combination of the exterior look of the store,

the store interiors, the atmosphere in the store and the events, promotions and the themes.

Exterior Store Design & Interior Design

Exterior

Location

Parking

Ease of access

The building architecture

Health and safety standards

Store windows, lighting

Interior

Fixtures

Flooring & Ceilings

Lighting

Graphics & Signage’s

Atmospherics

Visual merchandising“Can be termed as the orderly, systematic, logical and intelligent way of putting stock on the floor”

VM is the art of presentation, which puts the merchandise in focus. It educates the customers, createsdesire and finally augments the selling process.

METHODS OF DISPLAYS

Color Dominance.

Coordinated Presentation.



Presentation by price.

2. BUYING FUNCTION IN DIFFERENT ORGANIZATIONAL SET UP

1. The Concept and the Importance of the Purchasing Function within the

Organization

Most of the managers watch the enterprise as a producer and products and services offered,being less conscious about the responsibilities resting upon the purchasing activity. Thepurchasing function has become a permanent and important preoccupation for the assurance othe organization profit, taking into account the fact that the buying activity of raw materials,materials, etc. can influence the financial results, - as well as, the production, innovation or, salactivity. The management of the organization largely adopts a new view regarding thepurchasing function and the department of techno-material assurance, considering them not onexpenses centers, but also, profit centers, or even, responsibility centers.

The conceptual approaches regarding purchasing, buying, supplying or procuring are numerouand different and, the above mentioned terms are treated either as synonyms, or similar, or eveas different words. The supplying – delivering chain assures the interface of the organizationwith the suppliers – in order to plan, get, store and deliver the necessary materials, goods and

services, so that the organization may satisfy the clients’ requests – in the conditions ofobtaining the profit and those of respecting the social orders.

The functions of the supplying– delivering chain are:

- It contributes to the expressing, communication and applying the strategies of the organization

- It contributes to creating and improving the systems regarding the buying; creating the databasis;

- obtaining the materials, goods, services;

- Delivery of the goods to the clients by means of the distribution, transport, storage;

- following and controlling the chain of buying, delivering, storing, distributing and transporting;

- Contribution to an efficient activity.



The organizational buying

(1) may be defined as that function of the organization that includes buying, renting, etc. of thenecessary equipments, materials, supplies and services, – in order to use them within theproduction. Other authors

(2) Consider the buying as being the goods purchasing and necessary services, at an optimalcost, from competent and sure sources. In the specialty literature

(3) they are suggesting the usage of three different terms:

- supplying is an internal function of the organization, the relationship with the supplier beingdetermined for a short term;

- buying is a function of purchasing the material resources directed to the exterior, therelationship with the supplier being determined for a middle term;

- buying’ marketing is a function of administrating the material resources for a long term.

The subject of buying is formed by inputs which are to found in the finished products (rawmaterials, materials, components), by inputs which aren’t to be found in the finished productsoffered to the clients (articles for repairs, operation and maintenance, etc.) as well as byproduction, office and other service equipments. The function of buying does not include in thesubject of buying the obtaining of human resources (that constitutes a management function of the human resources), the obtaining of funds (financial – bookkeeping function).

As a conclusion, the buying process is that they are using to take decisions in order to purchasethe goods and services necessary to the organization, process by means of which the suppliersand the marks are estimated, and also, those who are satisfying – at an upper level - the needsof the organization are chosen. The organizational buying process is set up by more stages,being a simple one, in case of the repeated supply, of routine, or laborious, in case of thecomplete commands or contracts, of big value, or different from the previous ones. The buyingmay be done in three types of situations: repeated, modified and new.

Types of purchasing

1. The repeated buying means that the buying process is repeated on the basis of thesatisfaction produced by the previous purchase, the need is constant (e.g. consumables), andthe suppliers are traditional.



2. The modified buying may be practiced when a part of the buying routine is modified (productprice, delivering conditions, etc.).

3. The new buying appears when the organization doesn’t have any experience in purchasing

the product or the respective service.

The efforts made by the enterprise is different in each case of the buying type. A new supplierfor the repeated buying will penetrate very hardly the market, speculating the weaknesses of thcurrent supplier. Focusing the efforts in the situation of the new buying is made by offering somnew viable solutions and supporting the buying centre in developing the technical specificationsIn this case, the specialists in marketing offer consulting concerning the identifying of thosemembers of the buying centre who have the maximum influence in the buying decision.

The buying function of the enterprise is materialized in a packet of objectives, which are also seup in criteria for substantiation the buying decision.

The main objectives of the modern buying are the following

- availability of the goods and services at the adequate moment, in order to avoid the not payingin time the clients’ orders and contracts - generating lack of profit and image;

- obtaining of an advantageous mixture of quality, price, service and time, for increasing thebuying efficiency;

- reducing the afferent losses of stores, by optimizing the stores and avoiding the breaking ofstores;

- developing the relationships with the competent suppliers, by an accurate estimation of theactual and potential suppliers’ performances and forming some partnerships on a long term,identifying and developing of some alternative trusting sources, in order to reduce thedependence on a single source;

- monitoring the tendencies of the market and maintaining the position of the organization, byidentifying of new sources and new directions in the practice of supplying the organizations;

- capitalizing the advantages of the standardization and simplification of the components of themanufactured product, with positive effects in reducing the costs;

- optimizing the inter functional relations of the purchasing department with the otherdepartments of the organization, to harmonize the duties of the organization in order to carry outhe planned objectives;

- accomplishing an efficient buying function;

- developing the professionalism in the range of buying.



The concept of buying determines the activities for procuring the goods and servicesnecessary to the enterprise, from adequate external sources, having as aim the fulfilling of theclients’ needs – forming the market-target

(6). the concept and the practice of the buying activity have known important changes as again

the traditional concept, both in the organizational range and those of the relationships with thesuppliers and the operational concepts.

In the literature of specialty, in order to denominate the concept of buying (purchasing,provisioning) notions as “achat” and “approvisionnement” (French) and “purchasing “ or“procurement” (English) are used. .

To be noticed, the fact that the West-Europeans and Americans do not pay a great attention tothe semantic content of the terms, the focusing being directed to the “image” that has to betransmitted. As a result, the buying is considered a commercial act comprising the identificationof needs, selection of suppliers, negotiation of price and other conditions, and also following the

orders until their delivery

(7).The buying function is in fact, the activity for procuring good quality materials, at a desiredquantity, with a good price, and from a good source

2. The Buying Decision Process

The buying process, indifferent if it is new, repeated or modified, it is a complex andlaborious one, necessitating the roaming of some stages.

The main phases of the buying process are:

1. Appearance and identification of need;2. Determining the specifications;3. Determining the sources and obtaining the offers;4. Estimation of offers;5. Buying;6. Estimation of the product and supplier’s performances.

Steps

1. Problem recognition

2. Buying Authority Assignment

3. International External Search Procedure

4. Decision Making

5. Order Placement and Defense



The stages of the buying process are influenced by a series of factors, like as:

. Micro and macro medium factors;

. Corporatist culture;

. Personnel factors;

. Factors of inter human relationships.

The first phase of the decision buying process is the recognizing of a problem or a need whichcould be solved by buying a product or a service. Then, follows the definition of thecharacteristics of the products which will be bought to satisfy the identified need, by setting dowthe specifications of the product. These determine the characteristics of the desired product,dimensions, performances, etc. After all these, an analyse of the value - in order to compare thpurchasing costs with the utility - , the value of using the desired product, are to be done.

The following phase is to determine the sources (suppliers) and obtain the tenders.In this phase, the enterprise has to take strategic decisions regarding the suppliers which are toassure the optimal solve of this problem.

In order to select the suppliers, the following criteria should be taken into account:

. The number of suppliers (one, two or more);

. The proximity of the sources (local, national, external);

. The size of sources;

. The origin of the market (internal or external).

The identification of the suppliers - which are existing on the market - supposes theObtaining of information outside and inside the enterprise:

. Producers and traders’ personal catalogues;

. Firm annuals – sources of “Golden Pages” type;

. Specialty publications;

. Data bases;

. Fairs and exhibitions;

. Sale agencies;

. Buying agencies;

. Specialized organizations.

The order has to contain a certain quantity of information; so that, the informative

Elements of the order are, as a rule, the following:

. The name and address of the requested organization;

. The name of the buyer;

. The number and date of the order;

. The name and address of the organization;



. Referring to the price of the offer;

. The denomination of the products;

.quantity;

. Unit price;

. Total value;

. The currency or money for buying;. The date of delivery;

. Assembling conditions;

. Conditions and methods of payment;

. Date of buyer’s signature.

THE CONVENTION is a document that confirms to the supplier the intention of the buying organizatioto order the raw materials, products or services on a defined period oftime and, in specifiedconditions, defined by means of the both sides’ agreement. The clauses of the convention haveto guarantee the future procuring of the products, whichare in fact, the object of the convention:

The elements of a convention are:

. Products definition and destination;

. Quality criteria or reference to a specification;

. Delivery term;

. Availability of the convention;

. Estimated quantities;

. Transport and package conditions, delivery and payment conditions;

. Cancellations or annulments, refusal of deliveries;

. Definition of the contracting sides.

OR

Point 1 - Introduction.

The need for an understanding of the organizational buying process has grown in recentyears due to the many competitive challenges presented in business-to-business markets.Since 1980 there have been a number of key changes in this area, including the growth of outsourcing, the increasing power enjoyed by purchasing departments and the importancegiven to developing partnerships with suppliers.

Point 2 - The organizational buying behaviour process.

The organizational buying behaviour process is well documented with many modelsdepicting the various phases, the members involved, and the decisions made in each phaseThe basic five phase model can be extended to eight; purchase initiation; evaluations



criteria formation; information search; supplier definition for RFQ; evaluation of quotations; negotiations; suppliers choice; and choice implementation (Matbuy, 1986).

Point 3 - The buying centre.

The buying centre consists of those people in the organizational who are involved directlyor indirectly in the buying process, i.e. the user, buyer influencer, decider and gatekeeper who the role of ‘initiator’ has also been added. The buyers in the process are subject to awide variety and complexity of buying motives and rules of selection. The Matbuy modelencourages marketers to focus their efforts on who is making what decisions based onwhich criteria.

Point 4 - Risk and uncertainty - the driving forces of organizational buying behaviou

This is concerned with the role of risk or uncertainty on buying behaviour. The level of risdepends upon the characteristics of the buying situation faced. The supplier can influencethe degree of perceived uncertainty by the buyer and cause certain desired behaviouralreactions by the use of information and the implementation of certain actions. The risksperceived by the customer can result from a combination of the characteristics of variousfactors: the transactioninvolved, the relationship with the supplier, and his position vis-a-vis the supply market.

Point 5 - Factors influencing organizational buying behaviour.

Three key factors are shown to influence organizational buying behaviour, these are, typeof buying situations and situational factors, geographical and cultural factors and timefactors.

Point 6 - Purchasing Strategy.

The purchaisng function is of great importance because its actions will impact directly on

the organization’s profitability. Purchasing strategy aims to evaluate and classify thevarious items purchased in order to be able to choose and manage suppliers accordingly.Classification is along two dimensions: importance of items purchased and characteristicsof the supply market. Actions can be taken to influence the supply market.

Based on the type of items purchased and on its position in the buying matrix a companywill develop different relationships with suppliers depending upon the number of supplier



the supplier’s share, characteristics of selected suppliers, and the nature of customer-supplier relationships. The degree of centralization of buying activities and the missionsand status of the buying function can help support purchasing strategy. The company willadapt its procedures to the type of items purchased which in turn will influencerelationships with suppliers.

Point 7 - The future.

Two activities which will be crucial to the future development of organizational buyingbehaviour will be information technology and production technologies.

Point 8 - Conclusion.

Organizational buying behaviour is a very complex area, however, an understanding of thkey factors are fundamental to marketing strategy and thus an organization’s ability tocompete effectively in the market place.

3. THE PROCESS AND IMPLICATIONS OFMERCHANDISEPLANNING

THECONCEPT OFMERCHANDISEPLANNING:

The retailer’s reason for existence or his vision and missions for being largely dictates the business strategyadopted. A part of this strategy is also the retail model that he chooses to operates in, which in turn determinesthe type of product, the price etc., that is retailed in the store. Therefore while the retailer’s business missiondictates merchandise planning the starting point of merchandise planning is in analysis. Merchandise planning catherefore, be defined as the planning and control of the merchandise inventory of the retail f irm, in a mannerwhich balances the expectations of the target customers and the strategy of the firm.

Merchandise planning is beneficial to the customer and to the retailer. It benefits the retailer as it enhances thepossibility of the right assortment of goods, with the adequate amount of depth, to be available at the storeswhere it is needed. The process of merchandise planning further enhances the possibility of increased stock turnthereby releasing important working capital. From the point of view of the customer, it is beneficial as it increasethe choice available to him and reduces the possibility of facing a situation when the store is out of stock of themerchandise needed.

The process of Merchandise Management

Store (Format) Strategy>

Business Strategy>>



Merchandise Strategy>

Merchandise Planning >>

1) Product

2) Price3) Range4) Assortment5) Space

Sourcing>>

1) Make or Buy2) Vendor identification3) Negotiations4) Placing the order

Allocation of merchandise to stores

Performance monitoring & evaluation

Store Operations Planning

OR

Merchandise planning can be defined as theplanning and the control of themerchandiseinventory of the retail firm, in a manner whichbalances between the

expectations of the targetcustomers and the strategy of the retail firm.Merchandise planning can be defined as theplanning and the control of themerchandiseinventory of the retail firm, in a manner whichbalances between theexpectations of the targetcustomers and the strategy of the retail firm.

The Process of Merchandise Management



The Implications of Merchandise Planning



The Process of Merchandise Planning

Stage I: Developing the sales forecast

Stage II: Determining the merchandise requirements

Stage III: Merchandise- The open to buy



Stage IV: Assortment Planning

Stage I: Developing the sales forecast

1. Reviewing past sales2. Analyzing the economic conditions3. Analyzing the sales potential4. The marketing strategy of the competitors5. Creating the forecast

Stage II: Determining the merchandise requirements

Determining the Merchandise Requirement

MERCHANDISEBUDGET

sales plan stock support plan Planned reductions Planned procurement Gross margin

ASSORTMENT PLAN

Product range and models

Merchandise Hierarchy



Types of Merchandise

Staple/ Basic Merchandise

Fashion MerchandiseSeasonal MerchandiseFad MerchandiseVariety of Merchandise

Width of AssortmentDepth of AssortmentConsistency

4 IMPLICATIONS OF MERCHANDISING PLANNING



Finance– Purchase order and profitability

Marketing– Advertizing and sale s pro motions

Warehousing & Logistics– Merchandise receiving and verification

Store operat ions– Space planning avo id dup l icat ion

4. CATEGORYMANAGEMENT

Category management

Marketing strategy in which a full line of products (instead of the individual products or brands) is

managed as a strategic business unit (SBU). It is based on the concept that amarketing manager is bette

able to judge consumer buying patternsand market trendsby focusing on the entire product category.

1. CATEGORY MANAGEMENT is a retailing concept in which the range of products sold by a retaileis broken down into discrete groups of similar or related products; these groups are known asproduct categories (examples of grocery categories might be: tinned fish, washing detergent,toothpastes). It is a systematic, disciplined approach to managing a product category as a strategicbusiness unit.[1]

2. Each category is run as a "mini business" (business unit) in its own right, with its own set of turnover and/or profitability targets and strategies. Introduction of Category Management in abusiness tends to alter the relationship between retailer and supplier: instead of the traditionaladversarial relationship, the relationship moves to one of collaboration, with exchange of information, sharing of data and joint business building.

3. The focus of all supplier negotiations is the effect on turnover of the category as whole, not just thsales of individual products. Suppliers are expected, indeed in many cases mandated, to onlysuggest new product introductions, a new planogram or promotional activity if it is expected tohave a beneficial effect on the turnover or profit of the total category and be beneficial to the

shoppers of that category.[2] 4. The concept originated in grocery (mass merchandising) retailing, and has since expanded to othe

retail sectors such as DIY, cash and carry, pharmacy, and book retailing



Category management lacks a single definition thus leading to some ambiguity even among industryprofessionals as to its exact function. Three comparative mainstream definitions are as follows:

Category management is a process that involves managing product categories as business units and

customizing them [on a store by store basis] to satisfy customer needs. (Nielsen)[4]

The strategic management of product groups through trade partnerships which aims to maximize sales

and profit by satisfying consumer and shopper needs (Institute of Grocery Distribution)[5]

.. marketing strategy in which a full line of products (instead of the individual products or brands) is

managed as a strategic business unit (SBU). (Business Dictionary)[6]

The Nielsen definition, published in 1992, was a little ahead of its time in that customising productofferings on a store by store basis is logistically difficult and is now not considered a necessary part of category management; it is a concept now referred to as micromarketing. Nevertheless, most groceryretailers will segment stores at least by size, and select product assortments accordingly. Wal*Mart's Sto

of the Community, implemented in North America is one of the few examples of where product offeringare tailored right down to the specific store

The category management 8-step process

The industry standard model for category management is the 8-step process, or 8-step cycle developed bythe Partnering Group. The eight steps are shown in the diagram on the right; they are :

1. Define the category (i.e. what products are included/excluded).2. Define the role of the category within the retailer.3. Assess the current performance.

4. Set objectives and targets for the category.5. Devise an overall Strategy.6. Devise specific tactics.7. Implementation.

The eighth step is one of review which takes us back to step

5. THE CONCEPT OFNATIONALBRAND, LOCAL BRANDS

(NATIONAL) local brands vs global brands

National brands must compete with local and private brands.National brands are produced by ,widelydisputed by, and carry the name of the manufacturer.

Local brands may appeal to those consumers who favor small, local producers over large nationalor global producers, and may be willing to pay a premium to "buy local"



The private label producer can offer lower prices because they avoid the cost of marketing andadvertising to create and protect the brand. In North America, large retailers such as Loblaws,Walgreen and Wal-Mart all offer private label products.

On the other hand, marketing and advertising may give consumers the impression that the national brand

is superior to a local- or private-branded product.

Five reasons local brands have the home-field advantage

Few brands establish dominating posit ions in multiple countries. Moreover, we've observed that brands

that are distributed across multiple countries tend to have weaker overall relationships with consumers

than brands that stick close to home.

The chart above is based on an analysis of over 10,000 brands measured as part of BrandZ™. The datasuggests that brands that compete in more countries tend to have weaker "Bonding" scores overall. For

most brands, much of their strength and equity comes from their original home markets. This should notbe surprising because few of today's global brands were originally designed to travel. Most of themoriginated long before the imperative to go global took hold. We can hypothesize that as a strong brandmoves from its country of origin, it struggles to effectively meet different consumer needs and desires inthe new territory. No matter how strong a brand might be on its home turf, it can be tough to win overlocal customers who have grown up with their own beloved brands.

The Global Brand Survey findings suggest that local brands have the home-field advantage, provided thequalify as strong brands in their own right. The different ways in which a brand can be perceived as part the local culture include the following:

Meeting unique local needs or tastes Nostalgia – being a brand people grew up with Local operational or logistical advantages Strong community ties Cultural identity

OR

LOCAL VS. GLOBALBRANDS: WHO WILL WIN?

The question of whether local or global brands will ultimately prevail can be answered simply: yes! Abrand is merely the relationship that is created between a product and its consumer. The companymanages, and is responsible for, the consumers' total product experience. For its efforts, if effective, theconsumer responds with his or her patronage. This is a relationship that requires consistent companyinvestment and care to remain responsive and profitable. While global brands have some obvious scale



and breadth advantages, local brands have the benefit of proximity and geographical (and often product)focus. These two variables balance each other, sustaining both local and global brands together.

In addition, consumers often look to different types of brands for different things. I'm not sure that I wantconsumer electronics from a neighborhood company. Sony and the like do me just fine, thank-you. At th

same time, I look exclusively to local brands to deliver such things as my hometown news and perishable(milk, eggs, etc.) for example. The strength of my attachment can be equally powerful to both brands, asthe opportunity for realtionship building is equally available to each type of brand.

Consumers will continue to establish relationships with relevant brands that create meaningful interactionwith them without regard to geography. Both local and global brands will continue to thrive and to filltheir respective consumer needs. Brand managers must be strategic about how they manage the dynamicsof the product - consumer relationship to best take advantage of whatever the particulars are of theircircumstance.

OR

Global Branding Versus Local Marketing

Day by day, global branding is becoming a bigger challenge. Why? Because it's no longer possible toisolate a brand and its reputation.

You might think you've created an excellent strategy for your brand in one local market, only to realizethat the rest of the world has access to that same local communication. This exposure destroys anypossibility of separating your local branding strategy from your global branding strategy.

This unavoidable exposure of your local brand-building strategy in the international arena is part of thegrowing difficulties that attend global brand building. Related to this complication are the internal issuesthat arise. For example, how can corporations handle the local and global mix in their marketingdepartments? Is every local marketing department now obsolete? Can local marketing be taken over by asingle department of centralized marketing functions?

Such issues are the result of the speed and spread of communications. The Internet has enabled everyconsumer to access every piece of communication in the world. Good old concepts like running testmarkets have been dramatically altered because of the increasing proximity among markets. Trueseparation among markets has disappeared.

When Coca-Cola selected Australia as the test market for the first non-Coca-Cola drink it had launched iyears, most of the world watched the experiment, and almost as many people participated in theexperiment from outside the test market. This might very well have been the strategy's intention.However, if the objective was to test a new product in a local market, the strategy clearly failed.

Global communication is more or less forcing brand builders around the world to adjust their approachesThey're having to forego the strategy that provides local marketing teams with full autonomy. So, howshould we handle the brand challenge?



First of all, the local brand is not dead. But some of the activities that are used to promote it are nowobsolete. I would separate local brand-building activities from global brand-building activities on thepromotional side, as McDonald's has done. Ronald McDonald is the key in-store promotional figure. Verseldom do you see him on television commercials and, when you do, you see him publicizing in-storepromotions.

Ronald, very cleverly, has become McDonald's point of differentiation in each market. He celebratesChristmas in Northern Europe and the Chinese New Year in Hong Kong. He promotes McDonald's winein France and McDonald's Filet-o-Fish in Australia. But he never appears in globally accessible media.McDonald's' global messages come through television commercials. The corporation produces localadaptations of these, too. But you can see McDonald's local twists are substantially stronger in the in-storpromotions than on television.

The purpose of global brand management is to conceive of and control a brand's global direction, and thiis done by defining and communicating the brand's core values. The execution of this communication liein devising and consistently applying a specific style, tone, and image.

The role of local brand management is to refine the communication of the brand's core values by adjustintheir execution to communicate meaningfully with each local market. If a local event like the ChineseNew Year is taking place, it's the local brand-builder's task to ensure the brand leveraging on it. Localbrand building depends on an acute awareness of local trends; it's all about leveraging knowledge that theinternational marketing department has no access to or sympathy with.

The global marketing department is the strategic group. The local team is the tactical group. Both need towork hand in hand.

OR

Global brand

Benefits of global branding

In addition to taking advantage of the outstanding growth opportunities, the following drives theincreasing interest in taking brands global:

Economies of scale (production and distribution) Lower marketing costs Laying the groundwork for future extensions worldwide Maintaining consistent brand imagery Quicker identification and integration of innovations (discovered worldwide) Preempting international competitors from entering domestic markets or locking you out of other

geographic markets Increasing international media reach (especially with the explosion of the Internet) is an enabler Increases in international business and tourism are also enablers



Global brand variables

The following elements may differ from country to country:

Corporate slogan

Products and services Product names Product features Positionings

Marketing mixes (including pricing, distribution, media and advertising execution)

These differences will depend upon:

Language differences Different styles of communication Other cultural differences

Differences in category and brand development Different consumption patterns Different competitive sets and marketplace conditions Different legal and regulatory environments Different national approaches to marketing (media, pricing, distribution, etc.)

Local brand

A brand that is sold and marketed (distributed and promoted) in a relatively small and restricted

geographical area. A local brand is a brand that can be found in only one country or region. It may be

called a regional brand if the area encompasses more than one metropolitan market. It may also be abrand that is developed for a specific national market, however an interesting thing about local brand is

that the local branding is more often done by consumers than by the producers. Examples of local brand

in Sweden are Stomatol, Mijerierna etc.

National Brand

Brand name used by a manufacturer whenever that product is sold. For example, Del Monte is a national brand

for food products. In contrast, many marketers offer products under a variety of brand names called private labeunique to each distributor or retailer. National brand marketing requires greater advertising expenditure on the

part of the manufacturer to compete with lower-priced private label brands. If consumer preference for the

national brand is strong, then pricing can be high enough to support the additional advertising and provide the

desired profit margin. National brands are often perceived to be of higher quality and can therefore demand a

premium price. Many national brands are now experiencing a loss of market share to private label brands as a

result of the narrowing quality gap



6. SOURCINGSTRATEGIES

A growing trend in business today has been foreign sourcing. Generally, this sourcing involves allowing a

foreign company to handle elements of a company's production and/or service process. Most companies

simply view foreign sourcing as a way to save money because these countries charge considerably less in

labor costs than American, Canadian, or even European firms for the same work. However, simply lookin

at the cost-savings when considering using foreign sourcing is somewhat shortsighted. Companies thinki

of engaging in this type of sourcing should look carefully at the big picture to identify some of the other

potential advantages that can go with foreign sourcing in addition to lower costs.

Instead of being viewed as a separate cost-saving measure, foreign sourcing needs to be thought of as

part of the overall supply chain strategy of the company. To that end, the decision needs to be evaluated

in a number of different ways. The following sections will outline these items in additional detail.

First, companies must look at the technology differences between their current country of production an

the lower cost alternative. Obviously, not all countries are functioning at the same technological level. If

company's production involves proprietary information or processes that need to be protected, such as a

pharmaceutical firm's creation of a specific drug, then foreign sourcing may pose problems because man

countries have lax laws regarding the protection of intellectual property. Furthermore, if the production

requires either a high level of technology or has a need for frequent technology updates, then those low

labor costs may be negated by the added expense of bringing and keeping technology up-to-date in the

area.

Another issue is the company's overall marketing strategy. Manufacturing a product in a low-cost countr

may save money if it is sold overseas but if the company has plans to also sell that product in the areaaround the manufacturing facility, then further consideration may be needed. Decision-makers will need

to evaluate their competition, not only now but also in the future since what may be true today may

change dramatically in the next 2 to 5 years.

Besides these two issues, the company must also keep in mind other possible changes that could save

them money. Many companies mistakenly turn to foreign sourcing as their only means of lowering

production costs, but it is most effective as part of a comprehensive expense reduction process.

Companies need to carefully review all areas of production-related spending if companies are to receive

the maximum benefits possible from foreign sourcing.

Finally, the company must create a supply management strategy that will govern the methods of securin

a supply of the goods and services needed to continue a steady production after foreign sourcing has be

set in action. For example, if a U. S. based company can only supply certain raw materials, then the

strategy must factor in the additional costs of bringing those materials to the foreign plant. Likewise, the

strategy needs to evaluate vendors that would be local to the foreign area since using nearby suppliers

could save further costs on shipping if the quality remains high.



The bottom line when it comes to foreign sourcing is that it is not simply a stand-alone, quick-fix to lowe

production costs, to improve competit iveness in the global market, and to increase profits. Instead,

foreign-sourcing needs to be a carefully thought out decision that is evaluated in terms of the company's

existing goals and strategic, long-term business model. A failure to think of foreign sourcing in these term

generally results in disappointing results.

Even if foreign sourcing is implemented, companies need to continually evaluate their decision and

analyze whether or not it is helping them meet their overall objectives. Because market environments ar

increasingly unstable than ever before and because responding to changes in those environments is

critical to a business's success, manufacturers cannot afford to continue a foreign sourcing policy withou

regularly tracking its benefits for the firm's profit margin.

OR

Sourcing Strategies & Procurement Processes

Not long ago, purchase function was seen to be a desk job, monotonous paper work, dull and passive andmore of an administrative function. The purchase managements were the fall guys whose only aim was tokeep feeding shop floor and avoiding stock out situation.

Today the situation has changed totally. Procurement function is considered to be a strategic initiative anseen to be adding value to entire business process. Profile of the procurement managers has changed andexpectations from these managers are different.

Modern day procurement managers manage procurement and sourcing function both at strategic andoperational levels. They are proactively engaged in building supplier networks, estimating, controlling anreducing costs besides performing other functions and ensuring service levels. Their job functions areincreasing becoming cross functional together with supply chain and manufacturing functions.

Procurement process and paper work is today managed by the ERP systems which drive the procurementbusiness process.

Procurement Function

Procurement function as explained above is one part of the sourcing function. In an ERP enabledenvironment, procurement function consists of detailed indenting process, procurement budgetmanagement, purchase order release, shipment schedule planning with seller coupled with ensuringcompliance with documentation and system updating processes. All these processes are driven by ERP.



Procurement function deals not only with procurement of raw materials and components, but also withcapital equipments, project procurement, spare parts procurement for after market, managing rejections,defective returns, warranty replacement process with suppliers too.

Vendor development is a key function in procurement. Sourcing and vendor development are some of the

skill sets required to be developed by Procurement team.

Procurement function works closely with procurement logistics or inbound supply chain. A procurementprofessional needs to have operational knowledge of logistical activities in supply chain network, thevarious agencies, knowledge of policies, customs rules, Taxation, commercial, logistical and customsdocumentation besides knowledge of commercial trade rules and terms.

Procurement process and sourcing strategy

Though interlinked closely, both procurement process and sourcing strategy are not one and same.

Sourcing strategy deals with planning, designing and building a reliable and competitive supplier base,determining the strategy for procurement, defining pricing strategies and supply chain requirements. Thestrategy involves integration of its objectives in line with or confirming to the objectives of stake holdersin operations, finance. Marketing and distribution. Lastly sourcing strategy involves planning tocompetitive buying sources for its raw materials, components and services along with alternativevariables.

Procurement Process as described above, deals with operational zing business process of procurementfunction and ensuring performance.

Shift in Sourcing Strategic approach

Having realized that suppliers play a key important role in the supply chain network of the business, therhas been a change in the way organizations perceive and approach supplier relationships.

Several factors have contributed to the shifting of the perceive value of supplier partnerships. Complexbusiness models at global scales coupled with market demands have necessitated companies to set upmanufacturing or assembly facilities closer to markets as well as in locations where conversion costs arerelatively cheaper. This necessitates that the business be supported by a solid vendor base which is able tensure supplies at all locations.

Advancement in technology and R & D capability enhancement is leading to shorter product life cycles.

New versions and product innovation means products become obsolete faster. Besides new introductionsof products depend upon speedy development of new design supplier parts and the suppliers having tokeep pace with changing designs and requirements.

Lean Manufacturing and cost per unit concept is demanding that the managers keep looking to reduce theprocurement cost as well as procurement logistics cost. By developing a relationship with suppliers in acollaborative mode, buyers are able to get supplier companies to hold inventories for them at buyerlocation and postpone taking inventory ownership up to the point of consumption. Today preferred



suppliers follow the buyer into countries where buyer is setting up facilities and take on value addedservices including managing warehousing in the spirit of customer relationship management.

Therefore managements have realized the fact that to be able to develop global business model, they havto develop supplier partnerships and work with collaboration spirit and invest in developing the supplier

capabilities as well as invest into building the relationship. Supplier management is no longertransactional.

OR

GOOD SOURCING STRATEGIES:

increase the Center’s visibility court sources

utilize the Internet for widespread posting of position announcements and for finding the hard-to-find potential candidates

advertise in the print media consider hiring recruiting firms for more senior positions evaluate sourcing strategies

Sourcing strategy #1: Increase the Center’s visibility

1 Recruitment initiatives today must be highly visible, accessible and interesting to job applicants. Anessential first step is increasing the visibility of CGIAR Centers, thus creating a pool of women and men

worldwide who will be watching the Centers for news of job openings.

“Great place to work”2 It is strategically important to build a reputation as a diversity-friendly organization. The image that theCenters convey to the world affects recruitment, not only in the short term but in the long term.Progressive organizations worldwide are continuing to develop and improve practices that optimize theirattractiveness as employers of talented and diverse workforces.

3 In some cases, these efforts to improve the work environment actually have been integrated as a conceptermed “great place to work”. “Great place to work” not only has been adopted by many progressiveorganizations, it even has been trademarked. This gives an idea of the standards now required if CGIAR

Centers are to compete for top staff in the marketplace.

4 Many women and other minorities report that they find the trailblazer role exhausting. They are lookingfor signs of inclusion and acceptance in the organizational culture. If a Center is seen as an organizationthat offers real opportunities to diverse employees, where all employees are treated with respect and whesenior management is composed of a mix of people, chances are diverse applicants will seek it out.



5 This need to increase visibility requires awareness of the extent to which the Center is presented asdiversity friendly by its:

position announcements and Web site postings.

Sourcing strategy #2: Court sources

6 Courting refers to approaching and encouraging potential candidates but it also includes approaching

people who might know of (or be able to influence) potential candidates. This is fairly common practice

for filling senior posit ions, often because many potential candidates for senior vacancies fall into the

passive market category. In other words, they are quite happy in their current posit ions.

Cost versus benefit

7 Courting sources can be very time consuming, particularly for senior staff members involved in the

recruitment. They may need to write to professors or other professionals with good networks who maynot be interested themselves, but may know of good former students and other professionals who migh

be interested.

8 With courting, Centers know that as a consequence of their efforts, they have interested specific

candidates. This is far superior to just hopingthat those candidates might read the posit ion

announcement somewhere. In addition, courting sources indirectly (i.e. through an intermediary) has a

longer-term benefit: it increases the pool of influential people who understand the Center’s mission and

values, and its commitment to diversity.

Tapping networks of board members and current staff9 Board members may be good sources of names of potential candidates who are women or nationals o

developing countries, particularly for senior scientif ic or management positions. In addition, current

Center staff members may know of potential candidates or those who might know of potential candidate

In particular, new staff members may have a host of good contacts unknown to the Center.

10 Networking is a most powerful sourcing strategy. It can be highly effective if a broad range of staff

members access their networks to identify and encourage potential candidates.

Sourcing strategy #3: Uti lize the Internet

11 To be a successful recruiter in the electronic age, it is necessary to know how to make creative use of

the resources readily available on the Internet. The reach of the Internet is massive.

12 Keeping in mind that the CGIAR Center candidate pool is generally Internet/e-mail savvy, the Internet

opens channels into talent pools never before available. At the same time, using the Internet is faster an



cheaper than most traditional recruitment methods. Posit ions posted on Internet sites can remain for

periods of 30 to 60 days, or more, and are accessible 24 hours a day. Candidates anywhere in the world

can view detailed information about the job and the Center, and they can respond electronically.

Recommended Web sites for CGIAR Recruitments

13 The compilation of sites found in Tips and Tools will enable Centers to reach more women and

developing country nationals specifically, and scientists and management professionals generally. The

sites are organized by type. It is recommended that Centers carefully review these resources, selecting

those most relevant for each position announcement, aiming for a balance of developed and developing

countries and predominantly female and predominantly male pools.

14 A list of recommended recruitment Web sitesappears in Tips and Tools.

Internet research tools for finding the hard-to-find

15 Some positions are harder to fill than others and many online job banks are too general to be of great

value to the CGIAR Centers. Offered here are tools for using the Internet to search for the names and

contact information of low-profile candidates with highly specialized skills. These Internet tools, such as

“flipping”, “x-raying” and “peeling”, allow for digging deeper and more precisely and can be used when

advertising and networking fail to bring in an adequate pool of candidates.

16 Information about Internet research toolsappears in Tips and Tools. They are not designed for f inding

job seekersper se ; rather they are designed to help the recruiter find potential candidates who have the

specific skills required. Identifying names and contact information is only the first step. Once identified,

the recruiter must provide the posit ion announcement and entice their application.

Sourcing strategy #4: Advertise in the print media

17 Placing posit ion announcements in newspapers and periodicals remains an important way to reach

candidates and can easily work in combination with Internet recruitment. Many newspapers also place

their print announcements on their Internet sites. In addition, the print announcement can direct

candidates to the Center’s Web site for more information about the job and the Center.

18 Prices vary, but tend to be high. It is recommended that Centers request information about the

regional and gender readership of each journal.

19 It is also recommended that Centers monitor the effectiveness of various media, requesting that

applicants indicate how they learned about the vacancy.



Sourcing strategy #6: Evaluate sourcing strategies

26 There is not one best sourcing strategy in recruitment. All sourcing strategies, including courtingcandidates, using the Internet, using print media and using recruiting firms need to be under constant

review. Many organizations overlook new sources, continuing with the traditional ones. The result:recycling of the same sort of applicants.

27 For every hire, Centers need to know:• where/how applicants discovered the vacancy;• where/how short-listed candidates discovered the vacancy; and• where/how the successful candidate discovered the vacancy.This provides exceptionally valuable guidance about where/how to target future recruiting action.

28 This information needs to be compiled in terms of factors such as seniority/nature of position,discipline area, scope of recruiting (i.e. global/regional/national). Consideration also needs to be given to

other factors, such as:

Did the Center succeed in attracting a good pool of women candidates? Did the Center succeed in attracting a good pool of candidates from developing countries?

(B) RETAIL MARKETING AND COMMUNICATION

1. RETAILMARKETINGMIX

The Retail communication mix

Communication is an integral part of the retailer’s marketing strategy. Primarily, communication is usedto inform the customers about the retailer, the merchandise and the services. It also serves as a tool forbuilding the store image. Retail communication has moved on from the time when the retailer alonecommunicated with the consumers. Today, consumers can communicate or reach the organizations.Examples of this include toll free numbers, which retailers provide for customer complaints and queries.Another example is the section called Contact Us on the websites of many companies.

It is believed that every brand contact delivers an impression that can strengthen or weaken the customerview of the company. The retailer can use various platforms / channels for communication. The mostcommon tools are:

1) Advertising2) Sales Promotion3) Public Relations



4) Personal Selling5) Direct Marketing

The tools are illustrated in Figure below

Retail Communication Mix >>

Sales promotion>> Advertising >> Direct marketing>> Personal Selling >> Public Relations

Let us now examine each of these tools in detail:

Advertising can be defined as any paid form of non-personal presentation and communication throughmass media. It is popularly believed that one of the main aims of advertising is to sell to a wide mix of consumers and also to induce repeat purchases. However, a retailer may use advertising to achieve any othe following objectives:

1) Creating awareness about a product or store2) Communicate information in order to create a specific image in the customer’s mind in terms of thestore merchandise price quality benefits etc.3) Create a desire to want a product.4) To communicate the store’s policy on various issues.5) Help to identify the store with nationally advertised brands.6) Help in repositioning the store in the mind of the consumer.7) To increase sales of specific categories or to generate short term cash flow – by way of a sale, bargaindays, midnight madness etc.8) Help reinforce the retailer’s corporate identity.

The retailers for advertising may use any one or a combination of the following mediums:

1) Press advertisements2) Posters and leaflets, brochures booklets3) Point of purchase displays4) Advertising can also be done through mediums like radio, television, outdoor hoardings and theinternet.

Determining the Advertising / Promotional budget

While there is no definite formula for determining the advertising or the overall promotion budget the

following are the main methods that may be employed to determine the advertising budget. ‘

The percentage of Sales method:

This is perhaps the most commonly used method for determining the budget. Here, the budget is a fixedpercentage of sales. The biggest advantage of this method is that it is simple to apply and it allows heretailer to set an affordable limit on promotional activity. This method however, takes little considerationof the market conditions of any special advertising needs.



The Competitive Parity Method

Here the budget is based on the estimated amount spent by the competition. There is risk that it could bebased on wrong information and again there is little consideration for market conditions or growthopportunities.

The research approach or the Task and objective Method

The budget is determines on the basis of a study of the best forms of advertising media and the costs of each. The retailer formulates advertising goals and then defines the tasks necessary to accomplish thesegoals. Next, the management determines the cost for each task and adds up the total to arrive at therequired budget. Here, he advertising expenses are linked to the retailer’s objectives and the effectivenessof some forms of advertising can be measured and compared to costs.

The incremental Method

The budget is simply based on the previous expenditure.

What can be afforded?

The budget allocated for advertising or for promotion is based on the basis of the money that can beallocated by the retailer for this purpose.

While determining which method s to be adopted, a retailer needs to take into consideration the marketthat the firm is operating in , its current market position and how important advertising is in that market.

2. MANAGEMENT OFSALESPROMOTION ANDPUBLICITY

Sales Promotion

• Demand-stimulating devices designed to supplement advertising and facilitate personalselling.

• Sales promotions include such things as coupons, in-store displays, premiums, trade shows,in-store demonstrations, and contests.

• The target for these activities may be middlemen, end users, or the producer’s own salesforce

Types of Sales Promotion

• Trade promotions, directed to members of the distribution channel.• Consumer promotions, aimed at consumers.• Consumers got 3.3 billion coupons for packaged goods alone in 1996.

Advantages of Sales Promotion



• It can produce short-term results.• Competitors are using sales promotions.• Sales promotions are attractive to price-conscious consumers.• Can enhance/facilitate retail salesmanship which is often of low quality.

Key Reasons for Sales Promotion

• Stimulating end-user demand.• Sampling program for new/improved product

• Improving the marketing performance of middlemen and salespeople.• Sell more, win a holiday trip.

• Supplementing advertising and facilitating personal selling.• Displays, promotional giveaways

Managing Sales Promotion

• Select from wide range of techniques, depending on your objectives• Select promotional devices based on:

• Nature of target audience• Your promotional objectives: Push vs. Pull.• Cost of device-- sampling can get costly.• Current economic conditions-- coupons, rebates work best in recessionary period.

• Evaluating Sales Promotion:• Much easier than with advertising.• Usually clear start, finish, goal.

Public Relations• A tool designed to influence favourably attitudes towards an organization, its products and

policies.

• Public relations is often overlooked by management because of:

• Organization structure; not in marketing.

• Inadequate definitions; loosely defined.

• Unrecognized benefits; many non-believers.

Publicity

Publicity is a form of public relations that includes any communication about an organization or itsproducts that is presented by the media but is not paid for by the organization.

Strengths of Publicity• Can announce new products, recognize employees, report good results, breakthroughs.

• Key Benefits:



• Lower cost than advertising or personal selling.

• Increased readership; advertising ignored often.

• More information.

• Timeliness.

Weaknesses of Publicity• Some loss of control over message.

• Limited exposure; only happens once.

• Not free; preparation costs.

3. THERETAILCOMMUNICATION MIX

Retail Marketing

The retail marketing concept is the acceptance by the retailer that it is the “customer”

and not “demand” that lie at the core of the retail organization. The retail marketingconcept is a philosophy, not a system of retailing or retail structure.

It is founded on the belief that profitable retailing and satisfactory returns on investmen

can only be achieved by identifying, anticipating and satisfying customer needs and

desires.

It is an attitude of mind that places the customer at the very centre of retailing activities



Communications Mix

Communication Mix is the range of approaches and expressions of a marketing idea

developed with the hope that it be effective in conveying the ideas to the diverse

population of people who receive it.

It is designed to achieve a variety of objectives for the retailer, such as building a brand

image of the retailer in the customer's mind, increasing sales and store traffic, providing

information about the retailer's location and offering, and announcing special activit ies.

Retailers communicate with customers through various means. These elements in the

communication mix must be coordinated so customers have a clear, distinct image of the

retailer and not be confused by conflicting information.

Many retailers use rules of thumb to determine the size of the promotion budget.

Marginal analysis, the most appropriate method for determining how much must be

spent to accomplish the retailer's objectives, should be used to determine whether the

level of spending maximizes the profits that could be generated by the communication

mix.

The main elements that make up the promotions/ communications mix are:



PAID IMPERSONAL COMMUNICATION

Advertising

It is an Effective medium for creating awareness and interest. Low control over response

TelevisionCinemaRadioDirectoriesPackagingHoardings/PostersMagazinesCatalogues

BrochuresInternet

Sales Promotion

Effective medium for creating awareness, interest and credibility.

Little control.

Publicity can be highly credible if it is well thought - out and it is extremely cheap. Afeature in a paper, magazine sometimes seem more credible to readers than ads BUT it irestricted by editorial decisions by the media source used

Money-off couponsFree gift Samples

Store Atmosphere

The combination of the store’s physical characteristics (architecture, layout, signs anddisplays, colors, lighting, temperature, sounds, smells) together create an image in thecustomers’ mind



Retailers’ Community Building Websites

It offer opportunities for customers with similar interests to learn about products andservices that support their hobbies and share information with others

PAID PERSONAL COMMUNICATION

Personal selling

In this salespeople satisfy needs through face to face exchange of information. Effectivemedium for influencing all stages of the decision making process, especially the decisionto buy.

High level of control.

Good for small businesses with local markets complex products and services.

Direct Mail

Mail shots

E-mailCD-ROMS



Email

Retailers inform customers of new merchandise, receipt of order or when order has beeshipped

M-Commerce (mobile commerce)

UNPAID IMPERSONAL COMMUNICATION

Publicity

It is communication through significant unpaid presentations about the retailer, usually a

news story, in impersonal media.

Effective medium for creating awareness, interest and credibility.

Little control.

Publicity can be highly credible if it is well thought - out and it is extremely cheap. Afeature in a paper, magazine sometimes seem more credible to readers than ads BUT it irestricted by editorial decisions by the media source used

UNPAID PERSONAL COMMUNICATION

Word of Mouth

Effective medium for creating interest and desire for your product or service and it is

extremely cheap.



Give excellent service and produce good qualitypay attention to packaginggive customers something to pass onto friends such as business cards

give customers incentive to bring new customers e.g. special discounts

become part of local community activitiesteam up with other local businesses and pass customers between you

To get people to tell others about you, you must:

Personal SellingPresentationsMeetings

TelemarketingTrade fairs

Steps to develop a Communications Program.

1 .Identify target audience2.Determine Promotion Objectives3.Set Promotion Budget4.Decide on Suitable Time-Span5.Design the Message6.Decide on Promotion Mix and Allocate Budget7.Carry out Promotion Plan8.Measure and Analyse Results

Identify Target Audience

Market research and market segmentation will help to identify the audience for yourproduct or service. Information on how large the audience is, where they are located andhopefully some idea of their needs, att itudes and preferences and the benefits they



require from your product or service.

Determine Promotion Objectives

The objectives of the promotion mix must be:

Realistic, Attainable ,Attributable. Measurable

Specific goals related to the retail communication mix’s effect on thecustomer’s decision-making process

Long-term: ex) creating or altering a retailer’s brand image Short-term: ex) increasing store traffic

Determine Promotion Budget

Allocate your budget wisely; money spent on a bad promotion is worse than spending nmoney on promotion. You must also be able to justify this cost in your business plan.

Decide on Suitable Time Span

A decision must be reached on the time scale of the Promotion campaign. This will

depend on the objectives of the campaign, the medium used and the allocated budget.The timing of the campaign is also important e.g. advert ising fireworks in January!

Decide on Message

The message and the medium used to convey that message will be affected by the type oproduct/service, the cost, legislation, what the competition is doing etc. Most

importantly, it will be affected by the desired response from the consumer and the stagein the buying process that needs to be influenced.

The “AIDAS” model can illustrate this buying process:



AttentionInterestDesire

Action

Satisfaction

Ideally the message should get the attention of the consumer and take them through thestages until a purchase is made and satisfaction reached. In practice few messages take aconsumer through the whole process, but are pitched at a certain level that meets thepromotion objective.

The message content should include a unique selling proposition (USP), i.e. a benefit,motivation, identification etc. that appeals to the audience. This appeal could be: -

Rational - appeals to audience's self interest. Show that product produces claimedbenefits such as quality, economy, value, e.g. car ads.

Emotional - stir up a posit ive/negative emotion that will motivate purchase, e.g. Andrexpuppies.

Moral - directed to the audience's sense of what is right, e.g. support for social causes.

The message format should be strong in order to catch the attention of the audience. Th

message format depends on the promotional medium used. For printed ads, carefuldecision for headline illustration, colour etc. For personal selling, decision as to choice ofwords, portfolio, dress, body language.

Decide on Promotion Mix

Each promotional element has a different communication capacity, is effective atdifferent stages in the buying process and we have a different level of control over eachone. Therefore the decision for choice of promotion mix will depend upon:

Target audienceobjectivestimingstage of product life cyclecomplexity of product



competitionlegal restraintsmonetary restraints etc.

Carry out a promotion Plan

A pre planned promotion should be done so that it is able to attract consumers and issuccessful.

Various methods for promotion can be adopted

Such As- advertising, sales promot ion, personal selling, e-mail, direct mail etc

Measure and Analyze Results

It is important to measure in some way the effectiveness of your promotion campaign.Measuring and analyzing the outcome of the promotion campaign will help in the

development of future campaigns. It may be that you need to change the medium usedor the time - span etc, of the next promotion campaign



Retail Communication Mix

Communication Methods



Steps in Developing a Retail Communication Program

Retail and Vendor Communication Programs

Vendor

• Long-term objectives• Product focused• National• Specific product

Retailer

• Short-term objectives• Category focused• Local• Assortment of merchandise

OR

Communication is an integral part of the retailer’s marketing strategy. Primarily, communication is used

to inform the customers about the retailer, the merchandise and the services. It also serves as a tool forbuilding the store image. Retail communication has moved on from the time when the retailer alonecommunicated with the consumers. Today, consumers can communicate or reach the organizations.Examples of this include toll free numbers, which retailers provide for customer complaints and queries.Another example is the section called Contact Us on the websites of many companies.



The percentage of Sales method:

This is perhaps the most commonly used method for determining the budget. Here, the budget is a fixedpercentage of sales. The biggest advantage of this method is that it is simple to apply and it allows heretailer to set an affordable limit on promotional activity. This method however, takes little consideration

of the market conditions of any special advertising needs.

The Competitive Parity Method

Here the budget is based on the estimated amount spent by the competition. There is risk that it could bebased on wrong information and again there is little consideration for market conditions or growthopportunities.

The research approach or the Task and objective Method

The budget is determines on the basis of a study of the best forms of advertising media and the costs of

each. The retailer formulates advertising goals and then defines the tasks necessary to accomplish thesegoals. Next, the management determines the cost for each task and adds up the total to arrive at therequired budget. Here, he advertising expenses are linked to the retailer’s objectives and the effectivenessof some forms of advertising can be measured and compared to costs.

The incremental Method

The budget is simply based on the previous expenditure.

What can be afforded?

The budget allocated for advertising or for promotion is based on the basis of the money that can beallocated by the retailer for this purpose.

While determining which method s to be adopted, a retailer needs to take into consideration the marketthat the firm is operating in , its current market position and how important advertising is in that market.

3. BUILDINGSTORELOYALTY

Store loyalty exists when a consumer regularly patronizes a part icular retailer (store or nonstore) that heor she knows, likes, and trusts. In a market in which a segment of consumers is sensitive to product qual

and consumers' brand choice in low-involvement packaged goods categories is characterized by inertia,quality store brands are often used by retailers to generate store differentiation, store loyalty, and storeprofitability, even when the store brand does not have a margin advantage over the national brand. Inaddition, this loyalty argument does not apply for the "cheap and nasty" private label strategy. Such aprivate label policy, on the contrary, reinforces rather than reduces price competit ion among stores.Indeed, the quality of the store brand must be above a threshold level to create this opportunity. It alsofollows that quality store brands, when carried by competing retailers, can be an implicit coordinationmechanism that enables all the retailers to become more profitable. Finally, a quality store brand policy profitable only if a significant portion of shoppers buys the national brand. This establishes the



complementary roles of store brands and national brands. The former create store differentiation andloyalty, whereas the latter enable the retailer to raise prices and increase store profitability. Customerservice represents a key element of retail strategy for maintaining a sustainable competitive advantageand building store loyalty, even during difficult economic times. Customers are becoming moredemanding about the services they expect from retailers both online and in person. In light of theimportance of customer service, we propose a framework to refine insights into several retail strategycomponents such as availability of service personnel, responsiveness to customers, personalization,proactiveness, and loyalty programs. These insights may be useful to both practit ioners and academicsalike. Retail strategies should generally accommodate the specific retail format being used (e.g., physicastore, physical and online, or pure online).

4. THECONCEPT OFIMC

Integrated Marketing Communications(IMC) is the coordination and integration of all marketingcommunication tools, avenues, functions and sources within a company into a seamless program thatmaximizes the impact on consumers and other end users at a minimal cost

What is IMC?

Integrated marketing communications (IMC) is a process for managing customer relationships that drivebrand value primarily through communication efforts. Such efforts often include cross-functionalprocesses that create and nourish profitable relationships with customers and other stakeholders bystrategically controlling or influencing all messages sent to these groups and encouraging data-driven,purposeful dialog with them. IMC includes the coordination and integration of all marketingcommunication tools, avenues, and sources within a company into a seamless program in order tomaximize the impact on end users at a minimal cost. This integration affects all firm's business-to-

business, marketing channel, customer-focused, and internally directed communications.

IMC Components

The Foundation - corporate image and brand management; buyer behavior; promotions opportunity analysis.

Advert ising Tools - advert ising management, advert ising design: theoretical frameworks and types of appeals;

advertising design: message strategies and executional frameworks; advertising media selection. Advertising also

reinforces brand and firm image.

Promotional Tools - trade promotions; consumer promotions; personal selling, database marketing, andcustomer relations management; public relations and sponsorship programs.

Integration Tools - Internet Marketing; IMC for small business and entrepreneurial ventures; evaluating andintegrated marketing program.



You have to understand what the consumer's wants and needs are. Times have changed and you can nolonger sell whatever you can make. The product characteristics have to match the specifics of whatsomeone wants to buy. And part of what the consumer is buying is the personal "buying experience."

NOTPRICE,BUTCOST

Understand the consumer's cost to satisfy the want or need. The product price may be only one part of theconsumer's cost structure. Often it is the cost of time to drive somewhere, the cost of conscience of whatyou buy, the cost of guilt for not treating the kids, etc.

NOTPLACE, BUTCONVENIENCE

As above, turn the standard logic around. Think convenience of the buying experience and then relate thato a delivery mechanism. Consider all possible definitions of "convenience" as it relates to satisfying theconsumer's wants and needs. Convenience may include aspects of the physical or virtual location, accessease, transaction service time, and hours of availability.

NOTPROMOTION, BUTCOMMUNICATION

Communicate, many mediums working together to present a unified message with a feedback mechanism to make the communication two-way. And be sure to include an understanding of non-traditional mediums, such as word of mouth and how it can influence your position in the consumer'smind. How many ways can a customer hear (or see) the same message through the course of the day, eacmessage reinforcing the earlier images?

A major task that guides the way in creating an effective Integrated Marketing Communications plan isthe promotions opportunity analysis. “A promotions opportunity analysis is the process marketers use toidentify target audiences for a company’s goods and services and the communication strategies needed toreach these audiences.” [8] A message sent by a marketer has a greater likelihood of achieving the intenderesults if the marketer has performed a good analysis and possesses accurate information pertaining to thetarget audience. There are five steps in developing a promotions opportunity analysis: [9]

Conduct a communication market analysis

Competitors Opportunities

Target markets Customers Product positioning

Establish communication objectives

Develop brand awareness Increase category demand



Change customer belief or attitude Enhance purchase actions Encourage repeat purchases Build customer traffic Enhance firm image Increase market share Increase sales Reinforce purchase decisions

Create communications budget Several factors influence the relationship between expenditures opromotions and sales:

The goal of the promotion Threshold effects Carryover effects Wear-out effects Decay effects Random events

Prepare promotional strategies

Match tactics with strategies

Throughout these steps, marketers should consistently review and analyze the actions and tools that majocompetitors are utilizing.

Module 2. Developing Retail Image

(A)STRATEGIES FORCUSTOMERSERVICE

"Customer service is the abili ty to provide a service or product in the way that i t has been promised"

"Customer service is about treating others as you would like to be treated yourself"

"Customer service is an organization's ability to supply their customers' wants and needs"

"Customer Service is a phrase that is used to describe the process of taking care of our customers in a posit ive

manner"

"Customer Service is any contact between a customer and a company, that causes a negative or positive

perception by a customer"



"Customer service is a process for providing competitive advantage and adding benefits in order to maximize the

total value to the customer"

"Customer Service is the commitment to providing value added services to external and internal customers,

including attitude knowledge, technical support and quality of service in a timely manner"

"Customer service is a proactive attitude that can be summed up as: I care and I can do."

1. IMPORTANCE OFSERVICE IN RETAIL

Importance of Customer Service in Retail

Even though discount department stores, dollar stores and customer-membership stores have replaced thold-fashioned department store, these establishments have to do more than provide lower prices and a vaselection of goods. The way store personnel and management treats a customer has gained importance.With competition from online retailers and auction sites, good customer service often makes the differenbetween keeping and losing a customer.

1. Employee Motivationo Improving sales and customer service shouldn't be left to just top management. Floor-leve

sales associates, customer service representatives and even stock workers can help fashionways to keep shoppers coming back. Changing stock displays, offering point-of-purchasemerchandise and making checkout lines flow smoothly can improve the customerexperience. These issues, simple as they may seem, also affect a shopper's opinion of thestore and how much it values customers. Cashiers and other employees who interact withcustomers on a daily basis are the front lines of customer service, putting them in a positioto make suggestions how to better treat customers

Customer Loyalty

o Customers who switch store or brand preference do so because of nonexistent orinadequate customer service, not product quality or price, according to research conducted

by the Forum Corp. Good customer service makes the buyer feel welcome. Customersknow they'll be treated fairly and any problems or concerns they have will addressedpromptly, not swept under the rug. Having trained, professional and enthusiastic customeroriented sales associates is a solid practice for retail businesses, according to the CustomeService Training Center. Customers like to deal with customer service clerks or salesassociates who are familiar with them, rather than having to explain themselves to a newemployee every time they need assistance.



Adapting to Different Situations

o Every customer has a different personality and needs, so a monotone cookie-cutterapproach seldom works. Customer service representatives need to listen to a customer'sproblems and then determine a solution. Simply showing the customer the latest sales item

will only waste time. The few extra minutes it takes to talk with the customer and find outwhat features they want in a product as well as their budget can save time later. Customeroften appreciate the time and attention received from sales associates and customer servicrepresentatives.

Good Customer Service Means Free Publicity

o When customer service approach goes above and beyond the call of duty, it not onlyassures a repeat customer, but may also attract new shoppers through word-of-mouthadvertising. Happy customers as much as dissatisfied customers talk and post theirexperiences on Internet message boards. Potential customers listen to the opinions of othe

shoppers. Another consumer's experience carries more weight than a TV commercial. Onesatisfied customer can bring many new shoppers to your door.

Little Things Mean a Lot

o With all the competition in the retail world, it's often the little things that make thedifference between a customer defecting from one store or supermarket to another withsimilar prices. A friendly cashier, food sample giveaways or weekly theme changes maymake a shopping experience more pleasant and positively affect a shopper's retail decision

OR

In the age of intense competition, a retail organization, however big or small is concerned with the imagthat its stores carry in the minds of the consumers. This image is largely influenced by the serviceprovided by the store and the experiences of the customers. A satisfied customer is bound to tell othersabout his experiences as will a dissatisfied customer. Word of mouth publicity is many times moreeffective than advertising. Positive word of mouth is the best advocate for the store while negative wordof mouth can result in disaster.

The level of customer service offered depends on the type of product sold and the type of retail outletitself. In order to determine the service levels required by the retailer, he needs to understand his targetaudience – their needs and lifestyles. FMCG products and groceries are categories which require little istore service. Consumer in modern supermarkets prefers to go through various brands, compare pricesand offers and then arrive at a decision. The quality of the product and a fair price is often theprerequisite for such stores. Dissatisfaction with product quality and /or price may result in customerdissatisfaction and may force the consumer to go back to his neighborhood bania who not only offers frehome delivery, but also credit facilities.

On the other hand, in the case of a specialty store dealing in expensive jewelry, fashion apparel, furnitu, expensive watches etc the concept of service changes completely . here, each individual customer wilwant attention and will have certain expectations of service, due to the price that he is willing to pay for



the product. The salesperson very often, acts as a counselor and advises the customer on the purchaseThis is also true in case of multi brand outlets that deal in consumer durables. Many a times thereputation of the store and the service offered becomes an important criterion for the consumer to selecsuch stores for making his purchase.

2. PROVIDINGBASICCUSTOMERSERVICES

To provide excellent customer service.

Here are some tips to follow to keep the customer feeling like they're number one and to keep themcoming back again and again.

Understand that your customer is the most important person who'll walk through the door, call onthe phone, or send you an email. Make him first priority. If you can't get to him right away, tellthem you'll get to him as soon as you can, and offer thanks for his waiting. If you need to put acustomer on hold on the phone, ask him if it's alright for them to be placed on hold and that you'llbe right with them.

Wait on your customers on a first-come-first-served basis. It's annoying after waiting for one'sturn, to be passed over by you to wait on a customer who's been there a shorter time than you.

Ask customers for their feedback on the products or service you're providing, on a regular basis.

Listen to your customers. Understand who they are and any unmet needs they might have. If theycomplain, empathize with their problem, apologize, and do what you can to solve it. Offer

compensation for their having suffered the problem at your business, if appropriate. After you'veworked to reconcile the problem, ask the customers if everything is now okay and if there isanything else they need.

Give your customers your undivided attention, whenever possible.



to talk to a live person, not a fake "recorded robot".) For more on answering the phone, see PhoneAnswering Tips to Win Business.

2) Don't make promises unless you will keep them.

Not plan to keep them. Will keep them. Reliability is one of the keys to any good relationship, and goodcustomer service is no exception. If you say, “Your new bedroom furniture will be delivered on Tuesdaymake sure it is delivered on Tuesday. Otherwise, don't say it. The same rule applies to clientappointments, deadlines, etc.. Think before you give any promise - because nothing annoys customersmore than a broken one.

3) Listen to your customers.

Is there anything more exasperating than telling someone what you want or what your problem is and thediscovering that that person hasn't been paying attention and needs to have it explained again? From acustomer's point of view, I doubt it. Can the sales pitches and the product babble. Let your customer talk

and show him that you are listening by making the appropriate responses, such as suggesting how to solvthe problem.

4) Deal with complaints.

No one likes hearing complaints, and many of us have developed a reflex shrug, saying, "You can't pleasall the people all the time". Maybe not, but if you give the complaint your attention, you may be able toplease this one person this one time - and position your business to reap the benefits of good customerservice.

5) Be helpful - even if there's no immediate profit in it.

The other day I popped into a local watch shop because I had lost the small piece that clips the pieces of my watch band together. When I explained the problem, the proprietor said that he thought he might havone lying around. He found it, attached it to my watch band – and charged me nothing! Where do youthink I'll go when I need a new watch band or even a new watch? And how many people do you think I'vtold this story to?

6) Train your staff ( if you have any) to be always helpful, courteous, and

knowledgeable.

Do it yourself or hire someone to train them. Talk to them about good customer service and what it is (anisn't) regularly. Most importantly, give every member of your staff enough information and power tomake those small customer-pleasing decisions, so he never has to say, "I don't know, but so-and-so will bback at..."



7) Take the extra step.

For instance, if someone walks into your store and asks you to help them find something, don't just say,"It's in Aisle 3". Lead the customer to the item. Better yet, wait and see if he has questions about it, orfurther needs. Whatever the extra step may be, if you want to provide good customer service, take it. The

may not say so to you, but people notice when people make an extra effort and will tell other people.

8) Throw in something extra.

Whether it's a coupon for a future discount, additional information on how to use the product, or a genuinsmile, people love to get more than they thought they were getting. And don’t think that a gesture has tobe large to be effective. The local art framer that we use attaches a package of picture hangers to everypicture he frames. A small thing, but so appreciated.

3. DETERMINING CUSTOMERSERVICELEVELS

The Four Levels of Customer Service

Customer satisfaction is the key to building the clientele of any business. The more you satisfy yourcustomers, the more your business can grow. In Consistently great’s Weblog, Brian Tracy identifies four

levels of customer satisfaction which are achieved by providing corresponding levels of customer service

Benefits of Good Customer Service

o It's expensive to find new customers, so a business should invest in retaining its existingones. Furthermore, an angry customer tells many more people than does a satisfied oneabout an experience with a business. Higher levels of customer service can translate tohigher margins.

Level One: Meet Customer Expectations

o At level one, a business meets its customer's expectations. Customers are satisfied but arenot loyal. They will quickly take their business elsewhere if a competitor provides betterservice.



Level Two: Exceed Customer Expectations

o At this level, a business surprises customers by going beyond their expectations. This levecan be achieved through a superior product or by showing more care for the customer thanis necessary. Customers at this level become more loyal and may be willing to pay more.

Level Three: Delight Customers

o Service at this level can reach customers on an emotional level, making it difficult forcompetitors to steal them. You reach level three by showing customers that you care abouthem.

Level Four: Amaze Customers

o Expending the effort to amaze customers can propel your business to new heights. Byamazing them, you give customers a compelling reason to patronize your business andrecommend it to their friends.

OR

Customer Service Level

Customer service level in a supply chain is a function of several different performance indices. The firstone is the order fill rate, which is the fraction of customer demands that are met from stock. For thisfraction of customer orders, there is no need to consider the supplier lead times and the manufacturinglead times. The order fill rate could be with respect to a central warehouse or a field warehouse or stock

at any level in the system. Stockout rate is the complement of fill rate and represents the fraction oforders lost due to a stockout. Another measure is the backorder level, which is the number of orderswaiting to be fi lled. To maximize customer service level, one needs to maximize order fill rate, minimizestockout rate, and minimize backorder levels. Another measure is the probability of on-time delivery,which is the fraction of customer orders that are fulfilled on-time, i.e. within the agreed-upon due date.

4. RELATIONSHIP MANAGEMENT



Relationship Management Objectives

Understanding relationship dynamics* It's You They Buy* Creating empathy* Using personal disclosure

* Effective questioning, not third degree* Uncovering unspoken needs* Dealing with disagreement* Steering not pushing* Gaining new confidence

CRM is stands for Customer Relationship Management. CRM is an industry term for software solutiothat assists companies to run customer relationships in an organized and controlled way.

In other words, CRM is the common term used to explain the managing of prospects all the way through

the complete sales process. It is an entire data system that can either be manipulated by hand, such as anindex card system or a computer automated system. There is particularly designed software for customerrelationship management that can be either installed directly into a computer or through a web basedsystem that is accessible only online. CRM systems are useful as they facilitate the management of theentire prospect/customer details such as the names, addresses, phone numbers, call records and purchasehistory and more. The other uses of CRM consist of planning of appointments, schedule of call back timeand other sales connected activities. Depending on the system, automated CRM can be just one user, orfor numerous users to have access to customer accounts



A classic example could be the customer database containing complete information and details, which thbusiness management and sales department personnel access. They utilize this information to cross selldiverse products to customers, depending on customer requirements, get in touch with them for latestproduct launches, etc.

Another example would be, an enterprise may put together a database about its customers that explainedrelationships in detail so that management, salespeople, people providing service, and possibly thecustomer directly could access information, match customer needs with product plans and offerings,remind customers of service requirements, identify what other products a customer had purchased, and soforth.

There are many low-priced CRM systems that can be modified to the requirements of all businessesregardless of size as they designed to fit right into Microsoft Outlook. This makes them very simple to seup and little training needs to be given to the sales force and others to efficiently utilize them.

The aim of CRM is to offer the ability to communicate with customers through any media they want and

deliver information to customers in real-time. While doing this, the CRM Software should analyze andprovide complete view of customer's behavior patterns, past and present transactions to sales people inorder to suggest the best possible solution/product to the customer.

In today's demanding business scenario, personalized focus and attention to every customer is vital to gailoyalty and trust from customers. Personalized service and attention is a must in order to effectively driveup sales. To improve relationships between customers and company personnel CRM software uses allpossible channels of feedback and interaction. Today, every media is exploited to achieve higher degree interaction. Typical entry points are Toll free calls, Internet, Kiosk terminals and most popular lately isSMS.

With Internet based interaction being popular, web-based CRM software is a must today. Companiestoday are looking at ways to provide more information through self-help services, which are typicallyonline. These are help-desk centers, info downloads or new product updates into your mailbox, etc.

5. DEVELOPING CUSTOMER LOYALTY

The term customer loyalty is used to describe the behavior of repeat customers, as well as those that offergood ratings, reviews, or testimonials. Some customers do a particular company a great service byoffering favorable word of mouth publicity regarding a product, telling friends and family, thus addingthem to the number of loyal customers. However, customer loyalty includes much more. It is a process, aprogram, or a group of programs geared toward keeping a client happy so he or she will provide morebusiness.

Customer loyalty can be achieved in some cases by offering a quality product with a firm guarantee.Customer loyalty is also achieved through free offers, coupons, low interest rates on financing, high valutrade-ins, extended warranties, rebates, and other rewards and incentive programs. The ultimate goal of customer loyalty programs is happy customers who will return to purchase again and persuade others touse that company's products or services. This equates to profitability, as well as happy stakeholders.



According to a recent issue of American Demographics, “American consumers find themselves caught inthe middle. They want to give loyalty, but no one’s earning it.” Jill Griffin, customer loyalty expert andauthor of Customer Loyalty: How to Earn It, How to Keep It suggests the following process for earning

and maintaining customer loyalty—

Serve today’s buyer.Today’s buyer is smarter and more informed, and has also been trained to “wanit his way.” While this saying was born out of the fast food industry, the expectation now spans allindustries. Consumers are transferring expectations from one area into every aspect of their purchasingbehavior.

Know the loyalty password.Know what your customers want and what they expect. How do yourcustomers define value? What are their expectations? The best way to find this out is by listening.Customers are constantly telling you what they want. The key is listening and implementing those wishe

Get in the mind of your prospect. Positioning your business in your customer’s mind counts. Stanout from the crowd. Think of your product or service on three levels: basic, expected and unanticipated.Go back to the “have it your way” Burger King sandwiches. The basic product (level 1) is a good qualityhamburger. The expected product (level 2) is a good quality hamburger on a fresh bun with lettuce,tomato, pickle and condiments. When Burger King was the first in the industry to add the option “have ityour way,” they introduced the unanticipated (level 3). It is the unanticipated that will earn a business bigpoints on the loyalty scoreboard. So how do you know what to add as your unanticipated? You guessed iListen to what your customer wants. It is important to realize, however, that after awhile, the unanticipatebecomes the expected. Nowadays, everyone expects to be able to order a burger “their own way,” and nemeasures must be taken to maintain customer loyalty.

Manage your customer “life cycle.”Customers move up the loyalty ladder in the following mannesuspect, prospect, customer, client and, finally, advocate. The business owner’s goal should be to move a“one-time customer” to a client (someone who buys a second time) and then to an advocate (someone whbelieves in and promotes your business to others).

OR

True customer loyalty is perhaps the greatest asset a company can develop. Loyalcustomers provide repeat business and—equally important—referrals of new customers. Word-of-mouthadvertising may be one of the oldest and most effective methods of developing new customers.

Customer loyalty is difficult to build and measure. Some business owners assume that all repeat customeare loyal customers, but that may not be the case. Other factors—such as pricing or convenience—maycontribute to repeat sales. The deeper and more important issue is to determine why customers come

back before you conclude that they are truly loyal.

For example, I fly regularly with one particular airline, based entirely on schedule and pricing. The airlinmight conclude that I am a loyal customer, but I am not. If a competitor offered a lower price or better



schedule to a destination where I was traveling, I would switch. I used to shop at a pharmacy near myhome based strictly on location. Service was sloppy and frustrating, but I remained a customer for sevenyears before dissatisfaction drove me away. Based on my repeat business over several years, thepharmacist could have wrongly concluded that I was a loyal customer.

Wise business owners develop ways to build true loyalty that not only holds customers but also turns thosame customers into a word-of-mouth marketing department. Several simple steps will help you get

started.

1. First, anytime your product or service falls short and a customer wants a refund or adjustmen

act quickly. King Solomon observed, “Fools mock at making amends for sin, but goodwill isfound in the upright” (Proverbs 14:9 NIV). Solomon also understood that “Hope deferred makesthe heart sick” (Proverbs 12:13 NASB). Acting quickly to correct problems, with a cheerful spiritstrengthens customer relations. A customer that needs to pull teeth to receive satisfaction won’t temany good stories about your business, whereas those who receive prompt and easy correctionswill become sold on your business. Look at every customer complaint as an opportunity to build a

stronger relationship.2. Consistent follow-through in every aspect of service is the key to success. Jesus said, “He whois faithful in a very little thing is faithful also in much” (Luke 6:10 NASB). A distributor of promotional items gave less attention to smaller orders, and often shipped these orders after thepromised delivery date. Customers continued to order, but only because the price was the lowest town. Others, who were fed up with late deliveries, sought new suppliers for future orders.Referrals, if any, were always prefaced with the caveat: “The price is good, but the service stinks.

3. One question will determine if you have been successful in developing true customer loyalty. Ask

your regular customers, “Would you recommend our product or service to otherswholeheartedly?” A good follow-up question would be, “Have you ever recommended us toothers?” Focus on these two key questions, and avoid the temptation to develop a longerquestionnaire. A sandwich shop offered a free drink for a week to customers willing to answer thequestions. Responses were received in a closed container to encourage candor.The best way toevaluate responses to your two-question survey is with blunt honesty. If more than one-third of respondents would not endorse your business, you need to dig below the surface, understand thereasons, and take immediate corrective action.

4. Consider rewarding customers who make referrals. A health club might offer a freemembership month; a carpet cleaner might clean one room for free; and a pizza store might give a$5.00-off coupon for each new customer referral. Your business will benefit in two ways: You’llobtain new customers, and you’ll have a convenient way to measure the effect of word-of-mouthadvertising.

A loyal customer is one who is willing to invest in the relationship by sticking with your business even ifyour price is not always the best, because they believe that, over time, you offer the best value for themoney. These same customers will become the most effective sales team you could ever build, spreadingthe good news about your business to everyone in their network.

OR



Key steps for developing customer loyalty

The shotgun phase

In the early days of your business, you’ll sell anything to anyone in order to keep the doors open. You

need customers to prove to your investors that your ideas and plans are sound.

The feedback you get from early customers is priceless, but understand if you are signing customers of any type, your retention will suffer and you’ll ultimately have to work even harder to replace themrelatively quickly.

To develop those early customers into loyal patrons, listen closely to them. Find out what they truly valufrom you – and realize this often is not why they bought from you in the first place.

The band-aid phase

Very quickly, you’ll find yourself with happy and unhappy customers. It’s inevitable. Your firstinclination will likely be to slap Band-Aids on the bad relationships and hustle to adapt your product orservice when unhappy customers stop buying.

This can be a dangerous trap, though. Too much time spent fighting customer churn can easily pullresources away from R&D investment or revenue generation.

Your response, of course, is highly dependent on your cash position. If you are fighting for survival, by ameans try to keep the revenue. If you’re in a more secure position, keep your eyes on the future and do thfollowing:

1) Segment – Identify which customers have the potential to stay in your top 20 percent for a long time.

2) Focus – Understand exactly what these customers want and give most of it to them

3) Make Tough Choices – Explicitly decide which customers will get lip service

Remember, you can’t keep everyone happy. Pick and choose who you absolutely need to keep and crossyour fingers on the rest.

The lovefest phase

Once you hit cash flow positive or 12-18 months of cash reserves, you can start making more rationalchoices about investment. If there is any repeat purchase behavior in your business, retaining customersfuels your cash flow engine.

It’s critical at this point to figure out why your best customers stay or rebuy, then do more of it. Then doeven more of it. And then do some more. Don’t take them for granted – keep investing in the features orservices they actually use. Ask them why they stay, and more importantly, why they leave.



At the same time, put programs in place that recognize great customers and reward their loyalty. Duringdownturns like the ongoing reession, high value customers in retention programs defect at much lowerrates than your average customers in the same program. They’ll also refer more, contribute more content(like reviews or forum posts), and be less likely to complain to the 10,000 people they influence if youscrew up.

Ultimately, if you think early on about retention, you’ll look like a genius. At least 70 percent of yourcustomers should be returning each year, making your growth plans both impressive and realistic. You’llhave lots of referrals, taking the stress off your sales and/or marketing team. Your prospective VCs willhave great due diligence calls. And you’ll be well positioned for a good multiple or a long run.

(B) STORELAYOUT:

1.STORELAYOUT MANAGEMENT, PLANNING ABASICSTOREDESIGN

Location

Make sure your store is in a prime location and is easily accessible to the end-users. Do not open a store aa secluded place.

Floor Plan

The retailer must plan out each and everything well, the location of the shelves or racks to display themerchandise, the position of the mannequins or the cash counter and so on.

1. Straight Floor Plan

The straight floor plan makes optimum use of the walls, and utilizes the space in the most judicious manner. The straight floor plan creates spaces within the retail store for the customers tomove and shop freely. It is one of the commonly implemented store designs.

2. Diagonal Floor Plan

According to the diagonal floor plan, the shelves or racks are kept diagonal to each other for theowner or the store manager to have a watch on the customers. Diagonal floor plan works well instores where customers have the liberty to walk in and pick up merchandise on their own.



3. Angular Floor Plan

The fixtures and walls are given a curved look to add to the style of the store. Angular floor plangives a more sophisticated look to the store. Such layouts are often seen in high end stores.

4. Geometr ic Floor Plan

The racks and fixtures are given a geometric shape in such a floor plan. The geometric floor plangives a trendy and unique look to the store.

5. Mixed Floor Plan

The mixed floor plan takes into consideration angular, diagonal and straight layout to give rise tothe most functional store lay out.



Tips for Store Design and Layout

The signage displaying the name and logo of the store must be installed at a place where it is visible to aeven from a distance. Don’t add too much information.

The store must offer a positive ambience to the customers. The customers must leave the store with a

smile. Make sure the mannequins are according to the target market and display the latest trends. The clothes

should look fitted on the dummies without using unnecessary pins. The posit ion of the dummies must bechanged from time to time to avoid monotony.

The trial rooms should have mirrors and must be kept clean. Do not dump unnecessary boxes or hangersin the dressing room.

The retailer must choose the right colour for the walls to set the mood of the customers. Prefer light andsubtle shades.

The fixtures or furniture should not act as an object of obstacle. Don’t unnecessary add too many types ofurniture at your store.

The merchandise should be well arranged and organized on the racks assigned for them. The shelves mucarry necessary labels for the customers to easily locate the products they need. Make sure the productsdo not fall off the shelves.

Never play loud music at the store. The store should be adequately lit so that the products are easily visible to the customers. Replace burne

out lights immediately. The floor tiles, ceilings, carpet and the racks should be kept clean and stain free. There should be no bad odour at the store as it irritates the customers. Do not stock anything at the entrance or exit of the store to block the way of the customers. The

customers should be able to move freely in the store. The retailer must plan his store in a way which minimizes theft or shop lifting.

i. Merchandise should never be displayed at the entrance or exit of the store.ii. Expensive products like watches, jewellery, precious stones, mobile handsets and so on must be

kept in locked cabinets.iii. Install cameras, CCTVs to have a closed look on the customers.iv. Instruct the store manager or the sales representatives to try and assist all the customers who

come for shopping.v. Ask the customers to deposit their carry bags at the entrance itself.vi. Do not allow the customers to carry more than three dresses at one time to the trial room.

OR

Basic Retail Store Layouts - Presentation Transcript

1. BASIC STORE FLOOR LAYOUT2. Straight Floor Plan The straight floor plan is an excellent store layout for most any type of retail

store. It makes use of the walls and fixtures to create small spaces within the retail store. Thestraight floor plan is one of the most economical store designs.

3. Diagonal Floor Plan The diagonal floor plan is a good store layout for self-service types of retailstores. It offers excellent visibility for cashiers and customers. The diagonal floor plan invitesmovement and traffic flow to the retail store.



4. Angular Floor Plan The angular floor plan is best used for high-end specialty stores. The curvesand angles of fixtures and walls makes for a more expensive store design. However, the soft anglecreate better traffic flow throughout the retail store.

5. Geometric Floor Plan The geometric floor plan is a suitable store design for clothing and apparelshops. It uses racks and fixtures to create an interesting and out-of-the-ordinary type of store

design without a high cost.6. Mixed Floor Plan The mixed floor plan incorporates the straight, diagonal and angular floor plansto create the most functional store design. The layout moves traffic towards the walls and back ofthe store.

Which retail store layout is best for your business?

When setting up a retail store layout it is imperative to remember that the situation is much like it is inHollywood; namely, image is absolutely everything. Atmosphere and irresistible visual merchandisingdisplays are what attract customers. The store fixtures for your setting as well as special lightingtechniques to accent products can make the all the difference between a purchase and a pass-by (like adrive by, but without guns).

Like most worthwhile endeavors, planning the right retail store layout boils down to doing yourhomework. Take the time to view different floor plans and retail store designs. As a retailer, no one canafford to turn off a customer, and a well-planned retail store layout allows a retailer to maximize the salefor each foot of the allocated selling space within the store while at the same time reducing theopportunity for theft. When planning your retail store layout, the amount of selling space will be one of the most difficult and important factors to determine.

What are some of the different retail store layouts?

Retail store layouts generally indicate the size and location of each department, any permanent structuresfixture locations and customer traffic patterns. Each floor plan and retail store layout will depend on thetype of products sold, the building location and how much the business can afford to put into the overallstore design. Below are some floor plans to consider.

1-Straight Floor Plan This is one of the most economical retail store layouts for almost any type of retail store. It deftly utilizes

the walls and store fixtures to create small spaces within the retail store. The straight floor plan is one of the most economical store designs.

2-Diagonal Floor Plan This plan is best suited for self-service types of retail stores. It offers excellent visibility for cashiers andcustomers and encourages movement and traffic flow throughout the store.

3- Angular Floor Plan



This particular retail store layout works best in high-end specialty stores. The curves and angles of storefixtures and walls are more costly, but worth it because the resulting soft angles create better traffic flow

4-Geometric Floor Plan

This is a suitable retail store layout for most clothing and apparel shops because it combines display rack

and fixtures to create an interesting and unusual type of store design that is not too costly.

5- Mixed Floor Plan This floor plan incorporates several elements of other plans; namely the straight, diagonal and angularvarieties to create a highly functional and unique store design. This retail store layout by its very naturepropels traffic towards the walls and back of the store.

So whichever retail store layout you choose, pick wisely and focus on the particular needs of the storewhen coming to a decision. Also, remember to always keep your business space clean and orderly. All ofthese plans are effective in their own particular way, depending on the products and/or services beingoffered for sale. Take your time in making up your mind as the success of your retail enterprise whatever

it may be, depends on your selection.

2. PLANNING INTERIORS AND LAYOUTS

3.THECONCEPT AND PHILOSOPHY OFVISUALCOMMUNICATION AND VISUALMERCHANDISING

VISUAL COMMUNICATION as the name suggests is communication through visual aid and is described athe conveyance of ideas and information in forms that can be read or looked upon. Visual communicationsolely relies on vision, and is primarily presented or expressed with two dimensional images, it includes:signs, typography, drawing, graphic design, illustration, colour and electronic resources. It also exploresthe idea that a visual message accompanying text has a greater power to inform, educate, or persuade aperson or audience.

The evaluation of a good visual communication design is mainly based on measuring comprehension bythe audience, not on personal aesthetic and/or artistic preference as there are no universally agreed-uponprinciples of beauty and ugliness. Excluding two dimensional images, there are other ways to expressinformation visually - gestures and body language, animation (digital or analogue), and film. Visualcommunication by e-mail, a textual medium, is commonly expressed with ASCII art, emoticons, andembedded digital images.

The term 'visual presentation' is used to refer to the actual presentation of information through a visiblemedium such as text or images. Recent research in the field has focused on web design and graphically-oriented usability. Graphic designers also use methods of visual communication in their professionalpractice. Visual communication on the World Wide Web is perhaps the most important form of communication that takes place while users are surfing the Internet. When experiencing the web, one use



the eyes as the primary sense, and therefore the visual presentation of a website is very important for userto understand the message or of the communication taking place.

A CONCEPTUALMAP OFVISUALCOMMUNICATION

The study of visual communication theory i s a mul ti -discipl inary, multi -dimensional effort.

People who write on this topic come from mass communication, fi lm and cinema studies,

education, art , anthropology, psychology, philosophy, linguistics, semiotics, and architecture

and archaeology among other f ields.

Although thi s brings a ri ch melange of v iewpoints, which is an asset because of the insights tha

come from cross-ferti l ization, it causes some problems academically for those who teach visual

communication because of the lack of any sense of common theory and the difficulties of

interaction. This is not to suggest that there is or should be a central, core theory that organizes

the field , however, it w ould be easier to order a curri culum, as well as a graduate program ofstudy, if there were some notion of at least the important areas and theories that need to be

covered in a study of visual communication.

In a recent project undertaken by this author to identi fy the theoretical roots of visual

communication, (Moriarty, 1995) one of the respondents observed that, "There are no key

theories in visual communication." The study concluded, however, that from both a review Fof

the l iterature and the responses to the survey about theoretical roots, that there is an evolving

and well-recognized body of visual communication theory and l iterature that crosses a variety

of disciplines that could provide some sense of a coherent conceptual base. Such work clusters

in the areas of visual l i teracy, vi sual thinking, visual perception, imagery, and representation.Wi th more attention to this evolving body of l i terature, visual communication would have mor

visibil ity and recognition as an academic field of its own.

Furthermore, that study found that most scholars responding to the survey were frustrated by

the verbal language metaphor which dr ives much of the work i n visual communication. While

central theory may be too much to hope for, there is sti l l a need for the development of a more

widely accepted model that better addresses the unique characteristics of vi sual communicatio

It is the purpose of this paper to address that issue and attempt to develop a map of the field

that more clearly identi fies the central theories and areas of study of visual communication.

A CONCEPTUAL MAP OF VISUAL COMMUNICATION

This paper w il l attempt to build on this work and map the field of vi sual communication using

communication as the conceptual platform on which to bui ld a model. One place to start

mapping the field of visual communication is with the visual communication theory survey

mentioned earli er. In that study a total of 16 theoretical areas was mentioned as providing

grounding for visual communication study. This illustrates the difference between visual



communication and visual l iteracy w hich is more contained. This l ist is important because it

provides a view of the breadth of the field , as well as the areas deemed to be of more importan

by these scholars.

The following chart summarizes and groups the areas in terms of their most f requent mentions

The li st below begins with the area fol lowed by the related theories that w ere mentioned by therespondents. The most important theoretical foundation based on the frequency of mentions by

these scholars was psychology. N ext came meaning theories such as semiotics. Tied for thi rd

were the areas of aestheti cs, mass communication theori es, and cul tural/ criti cal stud ies. The la

four major areas were cinema/ fi lm studies, communication theori es, li terary studies, and

education. An outl ine of these categories ordered in terms of frequency of response would be:

VISUALCOMMUNICATION Theoretical Foundations

1. Psychology:

perception: gestalt perception

cognit ive and information processing: schema theories

2. Meaning theories:

semiotics/ semiology: signs, symbolism

3. Visual Communication/ Philosophy:

imagery

representation

pictorial perception

4. Aesthetics:

graphic design

fine arts: visual arts

Mass Communication:

photography

advertising



broadcasting

journalism/ news: uses and gratifi cations

Cultural/ Criti cal Studies:

ethics/ social responsibil i ty

ideology

stereotyping: gender (feminist studies), racial

5. Cinema/ Film/ Video Studies:

formalists

movement/ kinesthics

6. Communication Theories:

rhetoric

persuasion

diffusion

interpersonal

Literary Studies:

postmodern

reader response

narrative

7. Education:

visual li teracy: l earni ng theory

media literacy

cri tical viewing



development

8. Other theoreti cal approaches:

historical

linguistics

ideation/ creativi ty

anthropological/ ethnography/ sociology

chaos/ complex systems

VISUAL MERCHANDISING is the activity of promoting the sale of goods, especially by their presentat ion in

retail outlets .(New Oxford Dictionary of English, 1999, Oxford University Press). This includes combining

products, environments, and spaces into a stimulating and engaging display to encourage the sale of aproduct or service. It has become such an important element in retailing that a team effort involving thesenior management, architects, merchandising managers, buyers, the visual merchandising director,industrial designers, and staff is needed

Purpose

Retail professionals display to make the shopping experience more comfortable, convenient and customefriendly by:

Making it easier for the shopper to locate the desired category and merchandise. Making it easier for the shopper to self-select. Making it possible for the shopper to co-ordinate & accessorize. Informing about the latest fashion trends by highlighting them at strategic locations.

Merchandise presentation refers to most basic ways of presenting merchandise in an orderly,understandable, ’easy to shop’ and ‘find the product’ format. This easier format is especially implementein fast fashion retailers.

VM helps in:

Educating the customers about the product/service in an effective and creative way.

Establishing a creative medium to present merchandise in 3D environment, thereby enabling longlasting impact and recall value.

Setting the company apart in an exclusive position.



Establishing linkage between fashion, product design and marketing by keeping the product inprime focus.

Combining the creative, technical and operational aspects of a product and the business.

Drawing the attention of the customer to enable him to take purchase decision within shortestpossible time, and thus augmenting the selling process.

OR

Visual Merchandising (VM) is the art of presentation, which puts the merchandise in focus. educates the customers, creates desire and finally augments the selling process. This is an arewhere the Indian textile and clothing industry, particularly, the SMEs lack adequate knowledge aexpertise. This inadequacy is best reflected in poor presentation/display and communication various national and international exhibitions. Therefore this Programme has been conceived to this gap.

VM he lps in:

educating the customers about the product/service in an effective and creative way. establishing a creative medium to present merchandise in 3D environment, thereby enabli

long lasting impact and recall value. setting the company apart in an exclusive position. establishing linkage between fashion, product design and marketing by keeping the product

prime focus. combining the creative, technical and operational aspects of a product and the business. drawing the attention of the customer to enable him to take purchase decision within shorte

possible time, and thus augmenting the selling process.

STATUS OF VM I N I NDI A:

Unlike the western countries, where VM receives highest priority in commercial planning of product, the Indian industry’s understanding and practice of the concept of VM is inadequate. Wiphasing out of quantitative restrictions after the year 2004, the textile industry will have to compepurely on the competitive edge of the products and VM will be a helpful tool in projecting thuniqueness of the products and thereby increasing the market access and sales. It is high time ththe Indian textile and clothing industry, therefore, understands and adopts the scientific anprofessional system of VM rather than the traditional practices of display of products ancommunication.

VISUALCOMMUNICATION

Name, Logo, and Retail Identity• Institutional Signage•Directional, Departmental, and Category Signage•Point-of-Sale (POS) Signage• Lifestyle Graphics

VISUALMERCHANDISING



Is the artistic display of merchandise and theatrical props used as scene-setting decoration inthe store.

3. TECHNOLOGY ISSUES: SHOPLIFTING, PILFERAGE.

SHOPLIFTING (also known as five-finger discount, or shrinkage within the retail industry) is theft ofgoods from a retail establishment. It is one of the most common property crimes dealt with by police andcourts.

Most shoplifters are amateurs; however, there are people and groups who make their living fromshoplifting, and they tend to be more skilled. Generally, criminal theft involves taking possession of property illegally. In the case of shoplifting, though, customers are allowed by the property owner to takephysical possession of the property (holding it in their hands or in a shopping cart controlled by them, for

instance). This leaves areas of ambiguity that could criminalize some people for simple mistakes (such asaccidental hiding of a small item or forgetting to pay). That is one of the reasons that penalties forshoplifting are generally lower than those for general theft. However, in practice most stores are aware ofthe hazards of making a false arrest and are instructed to be sure there is no doubt (ambiguity) before theymake the arrest. Trained staff know the basics, observe the person, observe the item, observe theconcealment (theft), keep constant unrestricted contact with the shoplifter, wait until the shoplifter leavesthe store - make the arrest. As for penalties being less for shoplifter vs for "general" theft, in most statesthere is no specific "shoplifting" law; rather, shoplifting is charged simply as "theft". If the dollar amountof the item stolen is low it is a lower (less serious) theft crime. If the dollar value is higher, it is a moreserious theft crime.

Shoplifters generally fall into TWO CATEGORIES:

1. Professional shoplifters. These people usually take expensive items, like clothing and jewelry,that they can resell easily.

2. Amateur or casual shoplifters. Most shoplifters are in this group. Casual shoplifters don't usuallgo into a store with the intention of stealing — they simply see the opportunity to take somethingand do.

3. Many people assume that shoplifters have a mental disorder or that they must really need the itemthey are stealing in order to survive. But the truth is that's not why most people steal. Very fewpeople have kleptomania (a compulsive urge to steal), and many people who steal have enoughmoney to pay for the items.

4. Someone might shoplift for many reasons. But there's no way around the fact that shoplifting isstealing — and in most places there are heavy penalties for it, including being arrested andpossibly charged with a crime.

5. Some people may not realize how serious shoplifting can be. What might seem like an innocentprank can actually affect a person's future, including the chances of getting a job. Lots of teens finout the hard way that stores take shoplifting very seriously.

PILFERAGE.



A recurrent theft of small items of li tt le value

A crime of theft of lit tle things, usually from shipments or baggage

A crime of theft of lit tle things, usually from shipments or baggageTheft of a few pieces or a smallquantity of a relatively large shipment. Some standard marine insurance policiesdo not cover pilferage

4. ISSUES WITH RFIDAND RELATED TECHNOLOGY

RFID

Radio frequency identification (RFID) is a generic term that is used to describe a system that transmits th

identity (in the form of a unique serial number) of an object or person wirelessly, using radio waves. It'sgrouped under the broad category of automatic identification technologies.

RFID is in use all around us. If you have ever chipped your pet with an ID tag, used EZPass through a tolbooth, or paid for gas using SpeedPass, you've used RFID. In addition, RFID is increasingly used withbiometric technologies for security.

Unlike ubiquitous UPC bar-code technology, RFID technology does not require contact or line of sight focommunication. RFID data can be read through the human body, clothing and non-metallic materials.

COMPONENTS

A basic RFID system consists of three components:

An antenna or coil A transceiver (with decoder) A transponder (RF tag) electronically programmed with unique information

The antenna emits radio signals toactivate the tag and to read and write data to it.

The reader emits radio waves in ranges of anywhere from one inch to 100 feet or more, dependingupon its power output and the radio frequency used. When an RFID tag passes through theelectromagnetic zone, it detects the reader's activation signal.



The reader decodes the data encoded in the tag's integrated circuit (silicon chip) and the data ispassed to the host computer for processing.

The purpose of an RFID system is to enable data to be transmitted by a portable device, called a tag,which is read by an RFID reader and processed according to the needs of a particular application. The da

transmitted by the tag may provide identification or location information, or specifics about the producttagged, such as price, color, date of purchase, etc. RFID technology has been used by thousands of companies for a decade or more. . RFID quickly gained attention because of its ability to track movingobjects. As the technology is refined, more pervasive - and invasive - uses for RFID tags are in the works

A typical RFID tag consists of a microchip attached to a radio antenna mounted on a substrate. The chipcan store as much as 2 kilobytes of data.

To retrieve the data stored on an RFID tag, you need a reader. A typical reader is a device that has one ormore antennas that emit radio waves and receive signals back from the tag. The reader then passes theinformation in digital form to a computer system.

CURRENT AND POTENTIALUSES OFRFID

Asset Tracking

It's no surprise that asset tracking is one of the most common uses of RFID. Companies can put RFID tagon assets that are lost or stolen often, that are underutilized or that are just hard to locate at the time theyare needed. Just about every type of RFID system is used for asset management. NYK Logistics, a third-party logistics provider based in Secaucus, N.J., needed to track containers at its Long Beach, Calif.,distribution center. It chose a real-time locating system that uses active RFID beacons to locate container

to within 10 feet.

Manufacturing

RFID has been used in manufacturing plants for more than a decade. It's used to track parts and work inprocess and to reduce defects, increase throughput and manage the production of different versions of thesame product.

Supply Chain Management

RFID technology has been used in closed loop supply chains or to automate parts of the supply chainwithin a company's control for years.

As standards emerge, companies are increasingly turning to RFID to track shipments among supply chainpartners.



RetailingRetailers such as Best Buy, Metro, Target, Tesco and Wal-Mart are in the forefront of RFID adoption.These retailers are currently focused on improving supply chain efficiency and making sure product is onthe shelf when customers want to buy it.

Payment Systems

RFID is all the rage in the supply chain world, but the technology is also catching on as a convenientpayment mechanism. One of the most popular uses of RFID today is to pay for road tolls withoutstopping. These active systems have caught on in many countries, and quick service restaurants areexperimenting with using the same active RFID tags to pay for meals at drive-through windows.

Security and Access Control

RFID has long been used as an electronic key to control who has access to office buildings or areas withioffice buildings. The first access control systems used low-frequency RFID tags. Recently, vendors haveintroduced 13.56 MHz systems that offer longer read range. The advantage of RFID is it is convenient (aemployee can hold up a badge to unlock a door, rather than looking for a key or swiping a magnetic stripcard) and because there is no contact between the card and reader, there is less wear and tear, andtherefore less maintenance.

As RFID technology evolves and becomes less expensive and more robust, it's likely that companies andRFID vendors will develop many new applications to solve common and unique business problems.

OR

RFID

(pronounced as separate letters) Short for radio f requency id entification, a technology similar in theory tbar code identification. With RFID, the electromagnetic or electrostatic coupling in the RF portion of theelectromagnetic spectrum is used to transmit signals. An RFID system consists of an antenna and atransceiver, which read the radio frequency and transfer the information to a processing device, and atransponder, or tag, which is an integrated circuit containing the RF circuitry and information to betransmitted.

RFID systems can be used just about anywhere, from clothing tags to missiles to pet tags to food --anywhere that a unique identification system is needed. The tag can carry information as simple as a petowners name and address or the cleaning instruction on a sweater to as complex as instructions on how toassemble a car. Some auto manufacturers use RFID systems to move cars through an assembly line. Ateach successive stage of production, the RFID tag tells the computers what the next step of automatedassembly is.



One of the key differences between RFID and bar code technology is RFID eliminates the need for line-of-sight reading that bar coding depends on. Also, RFID scanning can be done at greater distances thanbar code scanning. High frequency RFID systems (850 MHz to 950 MHz and 2.4 GHz to 2.5 GHz) offertransmission ranges of more than 90 feet, although wavelengths in the 2.4 GHz range are absorbed bywater (the human body) and therefore has limitations.

RFID is also called dedicated short range communication (DSRC).

ROLE OF TECHNOLOGY IN CHANGING FACE OF RETAILING

Technology is changing the face of retail this holiday.

Everyone has heard that e-commerce is the ultimate winner of this year's holiday shopping season. Record salesand visitors were registered online. Following on the biggest online Black Friday sales ever, online sales on CyberMonday topped $1 billion, up 16 percent from last year, according to comScore. Meanwhile, brick-and-mortar BlacFriday sales grew only 0.3%, according to ShopperTrak, a firm that counts store visits.

These numbers reflect technology as a driver of changing consumer behavior. Social media and mobile technologare also examples of game changers that are playing a key role this holiday shopping season.

This holiday, unlike in years past, consumers are putting the new technologies to use in assisting them with theirholiday shopping and to get the most of their holiday budgets. These shoppers don't just visit a store and make apurchase on the spot. They're behaving differently this time around. They:

Listen to and converse with their peers and favorite brands on Facebook, Twitter and other social mediaplatforms.

Visit a retailer's Web site at home, at work and on the run via mobile devices. Connect with their favourite brands through multiple channels such as a store visits, desktop computers,

iPhone apps, iPad, 1-800 numbers and more. Check in with peers and friends through Facebook or Foursquare.

Involve their friends and communities in the shopping process through sites like ShopSocially, Polyvore aothers.

Use smart phones to compare prices, locate a store, get great deals or just learn more about a product. Browse and purchase with a mobile phone and iPad. Visit a store to check out the product first-hand, then purchase online.

By 2013, according to Mary Meeker of Morgan Stanley as cited by Internet Retailer, more consumers will accessthe Internet by mobile devices than by desktop or laptop computers. Social networks and mobile commerce —along with other technologies — will be game-changers in the retail business. The sheer speed of the change willbe unprecedented. Just as we are optimizing the Web site, along comes the iPhone app, Facebook, iPad app. Whnext?

It is mission-critical that retailers understand how each technology plays a role in the lives of today's consumers.Whether it is mobile bar code scanning to enable customers to obtain additional product information during storevisits or making your latest runway show available for viewing on iPad or the iPhone, retailers must keep up with tchange. As Jack Welch exhorted us, "Face reality as it is, not as it was or as you wish it to be."

So ... which fashion retailers do you think are doing the best job adopting the new technologies to deliver on theirbrand promises to customers? How are they making it work? Let's us hear your thoughts in our comments section

OR



well the techonology of retail has made us more reliant and more productive. whith the modnadvancements of our time we have become computers and can no longer function without one.

in the olden days the technology was little but the retail was still good because it was a famaly ownedbisnes that was in a town that all the citzens went to.

The role of technology in society, retail give the look of evolution. Retailing reveals that technology getsmore sophisticated and the consumer's expectations will go up exponentially. It change faster, retail cankeep up the convergence of a few key technologies is enabling that change gives us the best preview of what can happen in the next five to eight years.

Module 3. Retail Franchising

(A) RETAIL FRANCHISING

1. CONCEPT OFFRANCHISING

Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-

French derivation - from franc - meaning free, and is used both as a noun and as a (transit ive) verb. For the

franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid investment and

liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a

greater incentive than a direct employee because he or she has a direct stake in the business.

Businesses for which franchising works best have the following characteristics:

Businesses with a good track record of profitability. Businesses which are easily duplicated.

Franchising is a business model in which many different owners share a single brand name. A parentcompany allows entrepreneurs to use the company's strategies and trademarks; in exchange, the franchisepays an initial fee and royalties based on revenues. The parent company also provides the franchisee with

support, including advertising and training, as part of the franchising agreement.

Franchising is a faster, cheaper form of expansion than adding company-owned stores, because it costs thparent company much less when new stores are owned and operated by a third party. On the flip side,potential for revenue growth is more limited because the parent company will only earn a percentage of the earnings from each new store. 70 different industries use the franchising business model, andaccording to the International Franchising Association the sector earns more than $1.5 trillion in revenueeach year



Franchising is the preferred mode for doing a business where you just have to invest money with yourlocation and run the show. You get well established brand name to work and support from the companyfor advertising and marketing the concept for your location (advert ising and marketing will depend on thcompany. they might charge you some kind for percentage for such activities or may guide you and youwill have to shell it out from your pocket).

The returns depends on various factors like:

1. The brand you select.2. Geography3. Marketing activities4. Management skills, etc

Also, as far as returns are concerned, the jewelry industry does offer some kind of minimum returnsguarantee, but this is not the normal practise among other franchisors. but the good thing is, the royaltythey charged is totally dependent on your return. So if you are running the show quite well, you are themaster of your own returns.

The budget you mentioned, could attract lots of lucarative options that might suit your needs. Lots ofinformation can be found on net or I can personally help you out with this.

Buying a space and giving it on lease will just give you fixed returns, but starting your own franchise isdefinitely a better option than that.

A lot of the work of a franchise concept is done for you when you buy into a already existing franchise.However many people consider the work of selecting the site developing a franchise concept.A franchise concept is one of the first stages of franchise development where such things as product andarea of service are decided.

If you are looking for a unique franchise concept you might want to look at WSI.This franchise focuses on a new white collar business approach that is sure to be profitable.

The franchising business model consists of two operating partners: the franchisor, or parent company, anthe franchisee, the proprietor that operates one or multiple store locations. Franchising agreements usuallrequire the franchisee to pay an initial fee plus royalties equal to a certain percentage of the store'smonthly or yearly sales. Initial fees vary significantly across each industry, ranging from $35,000 for anApplebee's restaurant to over $85,000 to open a Hilton hotel.[26] Royalty fees are also variable - forexample, Intercontinental Hotels Group (IHG) franchisees are required to pay the company 5% of theiryearly sales[26], while Applebee's franchisees pay 4% of monthly sales and IHOP franchisees pay a 4.5%royalty fee of weekly sales.[27] The franchisee also covers the costs of actually starting and operating the

store, including legal fees, occupancy or construction costs, inventory costs, and labor. Franchiseagreements usually have a term of between 10 and 20 years, depending on the company.

The parent company authorizes the franchisee's use of the company's trademarks (for example, selling BiMac's at McDonald's) as part of the franchising agreement. Additionally, the franchisor provides trainingand support as well as regional and/or national advertising.



Advantages of the Franchising Model

Franchisees require less initial capital than independently start ing a company and can use provensuccessful strategies and trademarks.

Franchisees are provided with significant amounts of t raining, not common to most entrepreneurs.

The franchisor benefits because it can expand rapidly without having to increase its labor force andoperating costs, using much less capital. Franchised stores have a higher margin for the parent company than company-owned stores because of

minimal operating expenses in maintaining franchised stores. For example, DineEquity, Inc.(DIN) earned 52.7% profit margin from franchisee-owned restaurants in 2007 while company-owned restaurantsoperated at a mere 6.7% profit margin.[28]

Drawbacks of the Franchising Model

Franchising stores reduces the amount of control that the parent company has over its products andservice, which may lead store quality to vary greatly from store to store.

Franchisees must pay a percentage of their revenues to the parent company, reducing their overallearnings.

2. HISTORY OFFRANCHISING

The earliest signs of franchising in the United States dates back to the 1850's just after Isaac Singerinvented the Singer Sewing Machine. During his search for an effective and affordable way to distributehis product for his company, the Singer Sewing Centre, Singer ran into problems that prevented hiscompany from becoming successful.

His first problem was a lack of capital for manufacturing his machines. Secondly, no one was willing tobuy his sewing machines without first being taught how to use them, which required effort that mosttraditional retailers could not provide. Singer's solution was to charge licensing fees to business peoplewho would own the rights to sell his machines in certain geographical areas. They would also beresponsible for teaching consumers how to use his machines, thereby creating sales opportunities. Usingthe licensing fees to fund manufacturing, he was then able to afford to build his machines and then shipthem directly to his newly formed distribution network.

Singer's idea got noticed; and over the next several decades, many other companies began to copy andenhance his business model. At first, companies like Coca-Cola introduced franchising into their bottling

and manufacturing areas in order to reduce financial risk.

Later, companies such as McDonald's and Burger King took franchising to a whole new level by creatingsome of the largest franchise networks in the world. Today, there are thousands of successful franchisecompanies with outstanding business models that provide products and services to consumers andbusinesses all around the world!

OR



Franchising developed over time as an efficient way to do business and there were versions of franchisin

employed in Europe centuries ago. The origin of the word franchise goes back to Anglo-French, meaning

freedom, liberty , and from Middle French, franchir, to free, and earlier from Old French franc , free.*

In the middle ages the local titled land owner would grant rights to the peasants or serfs, probably for aconsideration, to hunt, hold markets or fairs, or otherwise conduct business on his domain. With the rightcame rules and these rules became part of European Common Law.

Isaac M. Singer (1811-1875) gets credit for starting the modern use of franchising in the U.S. During theearly 1850s, Singer, who had improved an existing sewing machine model, wanted to find a widerdistribution for his product but lacked the money to increase manufacturing. Another problem was thatpeople wouldn’t buy his machines without training, a service retailers weren’t able to provide. Singer'ssolution, to charge licensing fees to people who would own the rights to sell his machines in certaingeographical areas, provided money for manufacturing. These licensees became responsible for teaching

people how to use his machines, which created opportunities to bring the first commercially successfulsewing machine to the public.

Franchising was employed on a limited basis after the success of Singer’s sewing machine distributionmethod. Business format franchising (the licensing of the brand name/trademarks and of the entirebusiness concept), which is the dominant mode of franchising today, came onto the economic scene afterWorld War II and the subsequent baby boom. There was an overwhelming need for all types of productsand services, and franchising provided a way to quickly grow businesses.

It was Ray Kroc (1902-1984), a milk shake mixer salesman who discovered the McDonald brothers' smaSan Bernardino, California hamburger stand in 1954, who is credited with unleashing the wave of

franchising we know today. He found they were buying so many of his mixers because they haddeveloped a high-volume production system which enabled them to provide fast service with consistentresults and low cost. Kroc became their licensing agent and recruited franchisees, starting in the Chicagoarea. In 1961 he bought out the McDonald brothers’ interest and took the tile of senior chairman. By 198McDonald’s had opened its ten thousandth restaurant and today there are over 30,000 McDonald’srestaurants worldwide.

As the number of franchised businesses grew, the need for legislation and consumer protections followedThe International Franchise Association (IFA) was founded in 1960 as a membership organization of franchisors, franchisees and suppliers with the purpose of providing help and guidance to the entireindustry. They adopted a Code of Ethics to establish a framework for the implementation of best practice

in the franchise relationships of IFA members. The Code represents the ideals to which all IFA membersagree to subscribe in their franchise relationships. The IFA works closely with the US Congress and theFederal Trade Commission on improving how the industry relates to the franchisees and has been integrato the expansion of franchising around the world.

In 1978 the Federal Trade Commission enacted a law requiring all franchisors to submit to all potentialfranchisees a document called the Franchise Disclosure Document (FDD) prior to receiving money. TheFDD provides detailed information on the franchise company, including its history, the officers, any



litigation history, estimated investment, an overview of the business concept, and a copy of the franchiseagreement. A current list of franchise owners’ names and telephone numbers is a required component,allowing prospective franchisees the opportunity to research the franchisor’s claims. The purpose of theFDD is to provide sufficient information on a company to help the prospective franchisee to make a moreinformed decision. It is also to be presented in a manner that is consistent, straight forward and relatively

easy to understand.

In addition to federal requirements, a number of registration states established their own set of requirements for franchisors to meet before being allowed to sell franchises in these states. Sincerequirements may differ in each of these (currently 15) states, franchisors often move into these areasmore slowly, if at all.

Franchising has had an enormous impact on the U.S. economy. Entrepreneur magazine, Jan, 2005, quotethen president of the IFA, Don DeBolt, as saying that franchising accounts for almost half of all U.S. retasales. A study released by the IFA in March 2004 and conducted by PricewaterhouseCoopers measuredthe direct and indirect impact of franchise businesses. The study showed that franchises directly employe

9,797,000 people in 2001, as many people that year as all manufacturers of durable goods and ahead of thfinancial, construction and information industries.

Franchising is clearly a powerful model to help people realize their dreams. Its success is manifested inthe number of operating franchises, the number of brand names built through franchising, the millions ofcustomers served every day, and the tremendous opportunity it represents to franchisees.

OR

Businesses for which franchising works best have the following characteristics:

Businesses with a good track record of profitability. Businesses which are easily duplicated.

As practiced in retailing, franchising offers franchisees the advantage of starting up quickly based on aproven trademark, and the tooling and infrastructure as opposed to developing them.

The following US-listing tabulates[2] the early 2010 ranking of major franchises along with the number osub-franchisees (or partners) from data available for 2004.[3] It will also be seen from the names of thefranchise that the US is a leader in franchising innovations, a position it has held since the 1930s when ittook the major form of fast-food restaurants, food inns and, slightly later, the motels during the first

depression. Franchising is a business model used in more than 70 industries that generates more than $1trillion in U.S. sales annually (2001 study).[citation needed ] Franchised businesses operated 767,483establishments in the United States in 2001, counting both establishments owned by franchisees and thosowned by franchisors:[4]

1. Subway (Sandwiches and Salads | Startup costs $84,300 – $258,300 (22000 partners worldwide in

2004).



Franchise brokers help franchisors find appropriate franchisees. There are also main 'master franchisors'who obtain the rights to sub-franchise in a territory.

According to the International Franchise Association approximately 4% of all businesses in the UnitedStates are franchisee-worked.

It should be recognized[citation needed ] that franchising is one of the only means available to access ventureinvestment capital without the need to give up control of the operation of the chain and build a distributiosystem for their services. After the brand and formula are carefully designed,and properly executed,franchisors are able to sell franchises and expand rapidly across countries and continents using the capitaand resources of their 'franchisees' while reducing risk.

Franchisor rules imposed by the franchising authority are usually very strict and important in the US andmost countries need to study them to help the small or start-up franchisee in their countries to protectthem.[citation needed ] Besides the trademark, there are proprietary service marks which may be copyright - ancorresponding regulations.

The Future in Franchising

The growth of franchising is inevitable, because of the inescapable logic of the underlying concept.Franchising clearly offers aspiring, new business owners the best possible chance of succeeding with theleast amount of risk.

Within the next 10 years, franchising will comprise over 50% of the retail economy and employ millionsof people, and will enable hundreds of thousands to realize the dream of successful business ownershipand financial independence.

Franchising is evolving. There will be even greater opportunities for wealth creation among bothfranchisees and franchisors as this evolution progresses. New franchises will be developed while theexisting systems become more fortified and continue to grow. Today, there are greater opportunities forwealth creation among both franchisees and franchisors than ever before.

The future of franchising is as bright as ever and if you are ready to take the step and go into business for yourse

franchising is the vehicle to take you where you want to be in the 21st century.

3. TYPES OFFRANCHISING

1. The Product Franchise.

With this the manufacturer uses the franchise agreement to determine how the product is distributed by thperson buying the franchise. A retail company can be provided with a franchise to distribute, for examplea range of tyres. The franchisee can utilize the brand name and the trademark owned by the manufacturerto distribute or sell the car tyres. The owner of the store will pay the manufacturer a franchising fee or



agree to purchase a minimum inventory to sell on to their customers. The manufacturer gets the incomefrom the purchase of the retailer, and/or the franchise fee, and the retailer gets the benefit of the brand anexperience of the franchisor.

2. The Manufacturing Franchise.

The franchisee is permitted to manufacture the products under license and sell them using the originator'strademark and name. They also get the benefit of the national advertising of the product they manufacturThe company owning the product gets the franchise fee and sometimes a fee for every unit sold. Exampleinclude the food and beverage industry.

3. The Business Franchise Venture.

The franchisee purchases and distributes the products for the franchise owner. A client base is provided bthe product owner for the franchisee to maintain. Vending machines are a classic example of this, wherethe franchisee purchases the vending machines and distributes and services them, taking their share of the

takings of the machines.

4. A Business Format Franchise

This opportunity is very popular, and involves providing the franchisee a proven business model using arecognized product and brand. Training is provided by the franchise owner and assistance in setting up thbusiness. Supplies are purchased from the franchisor and the franchisee pays a royalty fee. Frequently thefranchisor will sell the franchisee the products or raw materials to provide the same quality of product.Most well known fast food franchises are of this type, and also many jewelers and other ubiquitous HighStreet names.

Franchising is a very popular way that many use to grow their already successful businesses, and a fewend up going global. You need to get the right product and the right business in the right area, but if youachieve that and build the right model, then you can create a very successful franchise opportunity.

OR

Product Franchises.

Manufacturers use the product franchise to govern how a retailer distributes their product. Themanufacturer grants a franchisee the authority to distribute goods by the manufacturer and allows theowner to use the name and trademark owned by the manufacturer. The franchisee must pay a fee orpurchase a minimum inventory of stock in return for these rights. Examples of Product Franchises includMobil, Goodyear, Baskin Robbins, and Ford Motor Company.

Business Format Franchising.



This is the most popular form of franchising. In this approach, a company provides a franchisee with aproven method for operating a business using the name and trademark of the company. The company wilusually provide a significant amount of assistance to the business owner in starting and managing thecompany. The franchisee pays a fee or royalty in return. Examples of Business Format Franchises includ

McDonalds, Dunkin Donuts, Carvel, AMMCO and Fantastic Sam’s.

Manufacturing Franchise.

These types of franchises provide an organization with the right to manufacture a product and sell it to thpublic, using the franchisor's name and trademark. This type of franchise is found most often in the foodand beverage industry, but can be applied to other industries. Examples of Manufacturing Franchisesinclude: Coca-Cola, and Sealmaster.

Types of Franchises

In recent years, the number of franchises has greatly increased due to modern technology and a strongerthan ever attitude of business entrepreneurship.

This means that there are now many kinds of franchise business opportunities to choose from. While many of

them do require a brick and mortar building, many of them also can be run from your home.

You have many possibilities, and this enables you to start looking along the line of your interests. Yourinterests should play a large part in your choice because you will be working at getting your franchisebusiness established for many hours a day. It will most likely be much more than a 40-hour week.

Here is an overview of the many types of franchises that are available:

Automot ive Franchises - General shops; specialty shops - transmissions, muffler, tires, detailing, rentals,etc.

Beauty Franchises - Tanning, nail salons, hair salons, weight loss, cosmetics, etc. Business Opportunities - franchise opportunities Business Services - Medical billing, paralegal services, payroll, taxes, business management, consulting,

pre-employment screening, and much more. Children Related - Tutoring, fitness, photography, games, and more. Cleaning and Maintenance - Commercial and home cleaning, carpet, rental, air duct and HVAC systems,

etc.

Computer and Internet - Technical services, computer games Education Franchises - Business coaching, tutoring for children, science programs, and more. Financial Services - Credit repair, financing, tax preparation, and more. Food & Drink Franchises - Pizza shops, juice bars, coffee shops, restaurants, fast food, and more. Health & Fitness - Nutrition, diet centers, fitness classes, senior fitness, drug testing, tanning centers, and

more. See also fitness jobs on JobMonkey. Home Related - Handyman, furniture repair, lawn care, security, remodeling, insulation, roofing, painting

pest control, etc.



OR

A. Advantages from the Franchisor’s point of view:

1. Financial: Franchising creates another source of income for the franchisor, through payment of franchise fees, royalty & levies in addition to the possibility of sourcing private label products tofranchisees. This capital injection provides an improved cash flow, a higher return on investmentand higher profits. Other financial benefits that the franchisor enjoys are reduced operating,distribution and advertising costs. Of course that also means more allocated funds for research andevelopment. Additionally, there will always be economies of scale with regard to purchasingpower.

2. Operational: The franchisor can have a smaller central organization when compared todeveloping and owning locations themselves. Franchising also means uniformity of procedures,which reflects on consistency, enhanced productivity levels and better quality. Effective quality

control is another advantage of the franchise system. The franchisee is usually self motivated sinche has invested much time and money in the business, which means working hard to bring in bettorganizational and monetary results. This also reflects on more satisfied customers and improvedsales effectiveness.

3. Strategic: To the franchisor, franchising means the spreading of risks by multiplying the numberof locations through other people’s investment. That means faster network expansion and a betteropportunity to focus on changing market needs, which in its turn means reduced effect fromcompetitors.

4. Administrative: With a smaller central organization, the business maintains a more cost effectiv

labour force, reduction of key staff turnover and more effective recruitment.

B. Advantages from a Franchisee’s point of view:

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 “turn-key” 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 opportunity to learn the latest developments and changes in the local and global market from

the franchisor and focus entirely on developing the sales revenues.7. The benefit of operating under a recognized trade name/trademark, which can have better

marketing results.8. The franchisee has access to accumulated business experience and technical know-how in

managing the business.9. A unified store design which leverages the business reputation in marketing the concept.



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

C. Disadvantages from a Franchisor’s point of view:

1. Considerable capital allocation is required to build the franchise infrastructure and pilot operation

At the beginning of the franchise program, the franchisor is required to have the appropriateresources to recruit, train, and support franchisees.

2. At the beginning of the franchise program there is a broader risk that the trade name can be spoileby misfits until such time the franchisor is capable of selecting the right candidate for the busines

3. There is a risk that franchisees exercise undue pressure over the franchisor in order to implementnew policies and procedures.

4. The franchisor has to disclose confidential information to franchisees and this may constitute a risto the business.

D. Disadvantages from a Franchisee’s pint of view:

1. The requirement to pay the franchise fees and royalty to the franchisor, which in some cases can bexaggerated.

2. The transfer of all goodwill built in the local market to the franchisor upon expiration ortermination of the franchise contract.

3. The necessity of abiding by the franchisor’s operating systems, standards, policies and procedure

4. Reduced corporate profit margin due to payment of royalties and levies.

OR

Advantages of being a franchise owner

Access to specific vendors has already been established Built-in customer base Built-in support network Business niche has already been identified Greater clout, connections, and/or assistance for obtaining financing Less time and energy is potentially involved in the start-up process Lower risk generally involved Many decisions are made for you Pre-established guidelines for business operations already exist which provide you with a working

structure Recognized business name and reputation Training provided



Disadvantages of being a franchise owner

Access to specific vendors has already been established and interactions with others might be restricted Business agreement can be terminated Business longevity is directly related to the success of the entire company

Business niche has already been identified and potentially cannot be altered directly by you Franchise problems (e.g., tax liabili ties, lawsuits) that arise, but that aren't directly related to your own

branch of operation, can actually directly impact you Growth of the business is potentially restricted by the entire franchise Many decisions are made for you which can equate to you having less control over such factors as which

employees to hire, what products to sell/ services to offer, the layout of the store, etc Potentially more costly, both in upfront costs, as well as from royalty payments, etc that might be requir Pre-established guidelines for business operations already exist which you are required to follow and not

deviate from Renewable agreement might contain different terms than the original one

OR

Advantages of Franchising:

1) The business you are franchising is already successful and is a proven idea. Usually, before offering thbusiness for franchising, the original owners have already build it up and have already made it successfulFranchising, for them, is a way to expand the business; it is not a way to build the business from a smallone to a big one.

2) The brand name is already recognized and name-recall is already very easy. Plus the franchisor or the

owner of the franchise will take it upon himself to promote the franchised name or product, which willbenefit the franchisee.

3) You may have exclusive rights to market the franchised products in your territory. One example isStarbucks Philippines. This one is franchised, yes, but the franchise belongs to just a single entity in thewhole country.

4) A franchisee will enjoy the benefits of being supported by the franchisor. This is part of the franchiseagreement. In return for the franchise fee the franchisee pays the franchisor, the latter commits to supporto train, to share ideas and even manpower to the franchisee.

5) Systems are already in place. From getting the supplies to cooking the food (if you’re franchising a fasfood or a food cart business) to selling the products or services to summarizing your numbers andproducing your financial reports, the systems are already there for you. You just need to follow them.

6) You will get to leverage on the good name and purchasing power of your franchisor when it comes tosourcing your supplies from suppliers.



Disadvantages of Franchising:

1) You may be exposed to fraud. If you fail to investigate the background of the franchisor or you’re takein by promises of quick profits with low franchise costs, chances are, you will just find yourself holdingan empty bag (after paying the franchise fee).

2) Costs may be higher than if you start your own business from scratch. Other than the initial cost of acquiring the franchise, you may also pay an agreed percentage of your sales and marketing or advertisinfees.

3) When you buy a franchise, you are not free to do your own thing. You don’t have much control on theproducts that are to be sold, the system that should be in place and, even, the location and general look ofyour business establishment. You are bound by the franchise agreement and you have to do everything tothe letter. If you’d rather do things your own way, this may raise issues .

4) If something bad happens to your franchisor or if the franchisor will suddenly get a bad reputation for

poor quality, undelivered goods or services, etc., you and your franchised business may also be affected.Worse, if your franchisor suddenly goes out of business, you will go out of business as well.

5) More legal considerations (which will drive your initial cost higher because you will need to hire alegal counsel for this). The franchise agreement is pages long (40 pages? 50 pages? 60 pages?) and youwill need all the expert advice you can get to ensure that you are not getting the short end of the bargain.Costly or not, better hire your own lawyer when reviewing the franchise agreement.

OR

ADVANTAGES OF FRANCHISING

O W N E R S H I P M E N T A L I T Y

Similar to a dealership, but with more emphasis in franchising, particularly where the franchiseagreement is long-term, the Franchisee will have an attitude of being a business owner (notmerely dealing with one product line among many) and is more likely to devote time, attentionand capital to growing the business, following the approved system and not walking away fromoccasional business challenges.

As one observer put it: “The best fertilizer for growing a business is the owner’s foot firmlyplanted on the premises.”

B U IL D I N G T H E V A L U E O F T H E B R A N D

Critical to retail success of each unit in a distribution scheme, as well as the overall competitivestrength of the distribution system, is the presence of strong brand identification covering boththe products offered and the retail businesses operated.



Assuming that a significant brand recognition factor can be established and maintained in theminds of consumers and Franchisees, the following benefits will flow for the Franchisor and itsFranchisees. [Note that realization of these advantages has two primary drivers: (1) prominentidentification of each retail business (not just the product) with the trademark and (2) a strong

retail marketing campaign building brand identity in the consumer’s mind.]

Easier franchise sales (both individual units and area development arrangements).

• Clustering units to achieve dominant local presence.• Easier retail sales for franchised and company-owned units.• Higher initial franchise fees.• Higher royalty levels.• Ability to leverage brand identity and require Franchisees to finance marketing campaigns.• Higher wholesale and retail prices for product.• Fewer “breakaways” from the system.• Regional and national market penetration, with establishment of dominant market share• Greater value when the Franchisor goes public or otherwise realizes the value attached to thebrand.• Greater value for Franchisees when they resell their units or otherwise “cash out.”• Greater value for franchised units irrespective of the owner’s personal involvement or skills (AMcDonald’s has a relatively constant value, due to the brand, independent of who the owner ormanager of a particular unit is).• Easier access to lenders and other financing sources.• Easier access to desirable locations and favorable lease terms.• Increased barriers to entry by competitive concepts.

I M A G E

Both among prospective owners and with the consuming public, franchise systems generallyhave a superior image over other distribution approaches, particularly if there is uniformity as toretail presentation, marketing methodology, operational compliance, etc., precisely the thingswhich are easier to achieve within a franchise framework.

F R A N C H I S E E P A R T I C I P A T I O N A N D S U P P O R T

Although not unique to franchising, the franchise model (when well managed) often incorporatevaluable Franchisee input and creative participation b y Franchisees. Since all of the participanare part of a single “system” with a common identity, Franchisees are more likely to participate initiatives for the expansion and proper operation of the entire enterprise, sometimes producingnew ideas as well as alerting the Franchisor to operational non-compliance problems created bother Franchisees in the systems.

S Y S T E M - W I D E M A R K E T I N G S U P P O R T P A I D F O R B Y F R A N C H I S E E S



Franchise systems typically include arrangements where Franchisees are required to contributeto a national marketing fund, and participate in local marketing co-operatives, supporting retailmarketing, advertisements, promotions and public relations.

I M P R O V E D C O N T R O L O V E R O P E R A T I O N S A T T H E R E T A I L L E V E L

Franchising provides both a legal and institutional structure allowing detailed control over theindividual unit’s marketing and operational programs. If you believe that it is critical for eachunit’s success (as well as that of the system as a whole) that each unit follow recommendedmarketing and operational guidelines, franchising provides one of the strongest methods ofachieving that objective.

A V O ID A N C E O F L E G A L E X P O S U R E

To the extent that your system is currently a “quasi-franchise,” you face exposure to both stateand/or federal enforcement activity, as well as claims for rescission, damages and attorney’sfees (class action or otherwise) for noncompliance with franchise and/or business opportunityregistration and disclosure laws. This exposure exists not only as to current dealers, but also ispresent (and, in fact, increased) with every new dealership that is awarded. At some point it mabe appropriate to ask if a great company is being built on a foundation of sand.

DISADVANTAGES OF FRANCHISING

H I G H E R L E G A L E X P E N S E

The necessity of preparing agreements, Uniform Franchise Offering Circulars (UFOCs) andrelated documents, and filing them in various states (with attached audited financials) represena significant expense, although the year-to-year expenses are generally less than those initiallyincurred in setting up the structure and related documents. Basic documents, once prepared,can be filed in many states with generally minor changes.

T E C H N I C A L L E G A L C O N S T R A IN T S - F R A N C H I S E A W A R D P R O C E S S

Franchise laws are particularly technical in their application (for example, if a Franchisorprovides only 9 days of pre-sale disclosure rather than the required 10, the Franchisee has anautomatic rescission right, even though the missing day was not the cause of any loss.) Forthese reasons, an education program for franchising personnel (which we provide) and theassistance of an in-house legal compliance person is highly useful.



T E C H N I C A L L E G A L C O N S T R A IN T S - R E G U L A T I O N O F T H E R E L A T I O N S H I P

Franchise laws in a number of states regulate the circumstances in which a Franchisor mayterminate or refuse to renew a franchise. While generally not preventing Franchisors fromachieving termination or non-renewal, these laws do present a number of technical requirementhat must be complied with. These requirements make inclusion of provisions for objectivestandards (for both system compliance and financial performance) for termination (and/orrecovery of “exclusive” territories) particularly important.

F R A N C H I S E M A R K E T I N G C O N S T R A I N T S

Advertisements, brochures, flip charts, video tapes, etc. offering the franchise (but not retailadvertisements) must be pre-cleared with state agencies and cannot contain earnings claims.Information regarding possible financial results for operating units can only be presented in aformal document attached to the UFOC.

C O N T R O L I S S U E S

As with dealerships, there may be quality control and related issues, at least as compared tocompany-owned operations.

B U S I N E S S R E L A T I O N S H I P I S S U E S

Perhaps more than with dealers, Franchisees typically view themselves as, to some degree,partners with the Franchisor in the development and possible success of the system. While mowill agree that committee management doesn’t work and that there needs to be “one captain fo

the ship,” a wise Franchisor will work with his Franchisees, probably with the help of a franchiseadvisory council, in charting strategic directions, implementing marketing plans, etc. AFranchisor must be psychologically comfortable working with Franchisees who willunderstandably take the view that “if we’re going to be in on the landing, we’d like to be in on thtakeoff too.”

N E E D T O D E L I V E R P E R C E P T I O N ( A N D R E A L I T Y ) O F C O N T I N U E D V A L U E

Franchisees (perhaps more than dealers and particularly if they are being asked to pay royaltieand/or marketing fund contributions throughout a long-term contract) can be expected, after

some period, to feel that they know as much about running the business (at least on the retaillevel) as the Franchisor and will ask what their continued payments are buying them (“Whathave you done for me lately?”)

P O T E N T I A L F O R L O S S O F F R E E D O M

Unless carefully designed, awards of “exclusive territories” may generate legal and otherproblems when a Franchisor seeks to expand through alternative channels of distribution



(Internet, mail order, etc.), special venues (units in Wal-Mart, K-Mart, etc.), access differentmarkets (non-automotive), co-branding opportunities, mergers with existing competitive chainsetc. Appropriate franchise agreement provisions, and proper education of Franchisees, andmanagement of their expectations, can largely avoid these issues.

F I N D I N G Q U A L I F I E D F R A N C H I S E E S

As may be true with dealerships, but more importantly where the franchise relationship is longterm, finding and educating (not just training) good Franchisees is vital. The ideal Franchiseecombines entrepreneurial energy with the willingness to follow systems and act as a “teamplayer.”

U N M A N A G E D G R O W T H

Given franchising’s demonstrated potential for rapid expansion (financed primarily byFranchisees), the potential downside is too rapid expansion, with the needs of the Franchiseesoutstripping the support capabilities of the Franchisor.

(B) FRANCHISE PLANNING AND DEVELOPMENT

1. CONCEPT OFFRANCHISABILITY

In business, a relationship between a manufacturer and a retailer in which the manufacturer provides the produc

sales techniques, and other kinds of managerial assistance, and the retailer promises to market the

manufacturer's product rather than that of competitors. For example, most automobile dealerships are franchise

The vast majority of fast food chains are also run on the franchise principle, with the retailer paying to use the

brand name.

OR

Aright or license that is granted to an individual or group to market a company's goods or services in a particula

territory under the company's trademark, trade name, or service mark and that often involves the use of rules anprocedures designed by the company and services (as advertising) and facilities provided by the company in retu

for fees, royalties, or other compensation; also : a business granted such a right or license franchise >



12 Criteria of Franchisability

While it is impossible to determine the franchisability of a business concept without a significant amountof analysis, AT Franchise Consultants has identified a series of 12 predictive criteria that assess thereadiness of a company for franchising and the likelihood that it will achieve success as a franchisor.

1. Credibility - To sell franchises, a company must first be credible in the eyes of its prospectivefranchisees. Credibility can be reflected in a number of ways: organization size, number of units, years inoperation, look of the prototype unit, publicity, consumer awareness of the brand, and strength of management, to name the most prominent.

2. Differentiation - In addition to credibility, a franchise organization must be adequatelydifferentiated from its franchised competitors. This can come in the form of a differentiated product orservice, a reduced investment cost, a unique marketing strategy, or different target markets.

3. Transferability of knowledge - The next criteria of franchisability is the ability to teach a system

to others. To franchise, a business must generally be able to thoroughly educate a prospective franchiseein a relatively short period of time. Generally speaking, if a business is so complex that it cannot be taughto a franchisee in three months, a company will have difficulty franchising. Some more complexfranchisors offset this handicap by targeting only franchise prospects that are already "educated"; in theirfield (e.g., a medical franchise targeting only doctors).

4. Adaptability - Next, measure how well a concept can be adapted from one market to the next. Somconcepts (e.g., barbecue) do not adapt well over large geographic areas because of regional variations inconsumer tastes or preferences. Others (e.g., medical practices) are constrained by varying state laws. Stiother concepts work only because they are in a very unique location. And some work because of theunique abilities or talents of the individual behind the concept. Finally, some concepts are only successfu

based on years of perseverance and relationship building.

5. Refined and successful prototypeoperations - A refined prototype is necessary to demonstratthat the system is proven, and is generally instrumental in the training of franchisees. The prototype alsoacts as a testing ground for new products, new services, marketing techniques, merchandising, andoperational efficiencies.

6. Documented systems- All successful businesses have systems. But in order to be franchisable,these systems must be documented in a manner that communicates them effectively to franchisees.Generally speaking, a franchisor will need to document its policies, procedures, systems, forms, andbusiness practices in a comprehensive and user-friendly operations manual and/or computer-based traininmodule.

7. Affordability - Affordability merely reflects a prospective franchisee's ability to pay for the franchiin question. This criterion is as much a reflection of the prospective franchisee as it is of the actual cost oopening a franchise. For example, a multi-million dollar hotel franchise is affordable to real estatedevelopers, whereas a franchise with a $100,000 start-up cost that targets prospects with clericalexperience might not be.



8. Return on Investment - This is the real acid test of franchisability. A franchised business must, ocourse, be profitable. But more than that, a franchised business must allow enough profit after a royaltyfor the franchisees to earn an adequate return on their investment of time and money. Profitability isalways relative. It must be measured against investment to provide a meaningful number. In this way, thefranchise investment can be measured against other investments of comparable risk that compete for the

franchisee's dollar.

9. Market trends and conditions- While not an indicator of franchisability as much as a generalindicator of the success of any business, these trends are key to long-term planning. Is the market growinor consolidating? How will that affect your business in the future? What impact will the Internet have?Will the franchisee's products and services remain relevant in the years ahead? What are other franchisedand non-franchised competitors doing? And how will the competitive environment affect your franchiseelikelihood of long-term success.

10. Capital - While franchising is a low-cost means of expanding a business, it is not a "no cost" meansof expansion. A franchisor needs the capital and resources to implement a franchise program. The

resources required to initially implement a franchise program will vary depending on the scope of theexpansion plan. If a company is looking to sell one or two franchised units, the necessary legaldocumentation may be completed at costs as low as $15,000. For franchisors targeting aggressiveexpansion, however, start-up costs can run $100,000 or more. And once the costs of printing, audits,marketing, and personnel are added to the mix, a franchisor may require a budget of $250,000 or more toreach its expansion goals.

11. Commitment to relationships -Successful franchisors focus on building long-term relationshiwith their franchisees that are mutually rewarding. Unfortunately, not all franchise organizationsunderstand the link that exists between relationships and profits. Strong franchisee relationships enable thfranchisor to sell franchises more effectively, introduce needed changes into the system more easily, and

motivate franchisees and their managers to provide a consistent level of products and services to theircustomers.

12. Strength of management - Finally, the single most important aspect contributing to the successof any franchise program is the strength of its management. AT Franchise Consultants has found that thesingle most common contributor to the failure of start-up franchisors is understaffing or a lack of experience at the management level. Oftentimes, new franchisors will try to take everything onthemselves. In addition to absorbing several new jobs for which the franchisor has little to no time, thefranchisor needs to exhibit expertise in fields in which he or she may have little or no experience:franchise marketing, lead handling, franchise sales, ad fund management, training, and multi-unitoperations management.

An appropriate first step in the decision to franchise is an examination of the question of whether or not a

business concept is actually "franchisable". Any organization seriously considering franchising should

undertake this analysis before implementing a franchise strategy. For further information on whether you

business is franchisable, request a free consultation with one of our Senior Consultants.

2. FRANCHISEFEASIBILITY STUDY



Franchise feasibility study is conducted to determine the degree to which a company can become a successful

franchisor.

OR

It is astounding that "Lip Service" is often paid by a prospective new franchisor to the concept of conducting real

and effective due diligence both into the concept of 'franchiseability" of an existing business and the related

question as to whether THIS business should be franchised - although the concept itself may pass the

"franchiseability" test.

The decision to franchise a business should be an objective one based on a wide range of factors which should be

subject to what is known as a Franchise Feasibility Study"

A whole range of issues should be examined including the availability of a wide range of resources, management

considerations and so on.

The problem lies with the inter-action of 2 parties with a vested interest in getting into franchising. An all too

ready businessperson (the future franchisor) who is predisposed to franchising as an expansion alternative and

often will not listen to any negative findings and the franchise consultant whose living depends on sett ing up and

selling franchises. In my experience both of these interests often override sound commercial and strategic advice

These 2 forces either means that the true deep franchise feasibility is not done at all or adverse findings are

ignored or misunderstood - or even worse - the parties convince themselves that the negative matters are easilycorrectible once the franchise system is operational.

There is the mistaken belief that has been endlessly perpetuated that "any" business can be franchised. This is n

true in practice. And her I am assuming that this is said to apply to a business that is already commercially

successful in its core business activit ies. Sadly - many unprofitable businesses have proceeded to franchising. Thi

may have been due to the belief that somehow when the business is franchised that it will magically be able to b

profitable - and in other cases the business has been franchised with full knowledge that the businesses core

activity will not be profitable - no matter what model is adopted. It is difficult to give any credibility to the

argument that I have heard surprisingly often that franchising will in fact allow a business to be successful becausof management and hands on control issues - the numbers will not work - because the franchise fees will, offset

any operational improvement.

The simple fact is that many people proceed to franchising when they should not - and often with disastrous

consequences. Perhaps it is time that there be legal sanctions when people have clearly been proven to have

recklessly offered franchise business. This would be a sanction in addition to others built in to either common law



or specific franchise legislation where this exists. It is also time to consider the role of advisors in carrying out an

duty of care that they may have and this naturally leads to the question of making sure that franchise consultant

and advisors are regulated in some way to place a duty of care on them in advising business to precede to

franchising. I am not in favour of over regulation but feel that the culpability of franchise consultants and advisor

who are so often underqualified or not qualified at all - and give posit ive advice to franchisors (and in some case

franchisees) with reckless disregard for the consequences and seemingly with legal impunity.

I repeat my view that it is only technically correct to say that that any profitable business can be franchised. By th

way - on this argument any business (whether profitable or not) can be franchised. Whatever the merits of this

argument - it is academic - because the key point here is that ANY businesses must first pass a rigorous process o

seeing whether the move to franchising stands up to diligence and passes the "feasibility test"

If it is objectively found not to be feasible - then that is the end of the matter - and the feasibility study may have

identified alternative expansion options available. And these should then be subject to their own feasibility

studies.

The second and equally important question is that even if the business model is franchiseable- it doesn't follow

that that the business under consideration - THIS business "should be franchised".

3. DESIGNING AFRANCHISESYSTEM AND ASSESSING APOTENTIALFRANCHISEE

Designing the franchise system

You should view the feasibility examination as a 30,000-foot high look at your future franchise system.

The process of designing and developing a franchise program will bring you down to ground zero.

The design and development of a franchise system will requires that you evaluate each element of thefuture franchise system, determine how it integrates with other elements, make changes based upon theinformation collected and begin the development of the tactical elements you will require.

The process will differ for each company and each industry but the elements will contain similarities. If the feasibility examination was conducted properly, you will be able to build and expand on the elementsyou reviewed during the feasibility process.

Some of the broad strategic and tactical elements will include:

Existing management's capabilities and other staff that you will require in managing and growin

the franchise system

Competition both at the franchise and consumer level

Potential conflicts between the franchisor and franchisee and methods to reduce or eliminate thes

problem areas

Economic impact of franchising on the franchisor and franchisees including investment, cash flow

and return on investment



Financing requirements and exit strategies for the franchisor and franchisees

Market strategy including market approach, targeted markets, critical mass requirements,

franchisee profile, structure of the franchise relationships used, selection criteria as well as

marketing, closure and sales compliance strategies.

System information and management including accounting, IT and point of sale systems, among

others and the use the system makes of the information available Policy formation including, real estate, advertising, territorial rights, supply chain management,

terms of the franchise offering, equipment, signage, etc Training programs and manuals including what is included in the training programs and manual

participants who will attend training, other training required or offered, costs for training,

locations, procedures, training staff, etc Monitoring mechanisms including site selection and development, operating standards, financial

management, sales and marketing, trademark usage, in-system operating and qualitative

evaluation, competitive analysis, etc Support programs including headquarters support, field support, ongoing visits, contact reports,

research and development, motivation programs, franchise relations programs, system

communication, etc Ongoing services and programs including cooperatives, advisory counsels, etc

This is only a preliminary list but only after these and a host of other elements are evaluated for inclusioninto the system, their cost for development and implementation is determined and their impact on therevenue and expenses for the system, at all levels, are determined, can you properly determine the fee andother structural elements of the franchise system. Only then can you truly provide proper information toyour legal counsel for the development of the required franchise legal documents.

The reason usually given for why franchisees are better prepared to operate their new businesses thanindependent business owners is that the franchisor is prepared to provide them with the necessary toolsand structure. Where new franchisors shortcut the process, skip the necessary evaluations and thedevelopment of the underlying components and move directly into the development of legal documents, is unlikely that the benefits of franchising can truly be realized for either them or the franchisees. Planninand evaluating the underlying system is the first step in providing franchisees with the tools they require succeed.

OR

It is essential for someone who may be contemplating establishing a franchise system to be fullyconversant with all the legal requirements and terminology early in their investigation process.

If you have an existing business that meets the criteria of a Franchisable concept, there are a number of steps you need to take before you visit your (or our) solicitor.

Stand back from your business and look at it as a consumer would. Is the name, the logo, the colours andthe slogan recognisable and indicative of the products or services you provide? The last person to give yoan unbiased opinion is yourself, then your partner. Your kids can be pretty blunt and can also let you knohow the younger generation view your image.



Is everything systemised? Have you read the “E-Myth Revisited” by Michael Gerber. You need tosystemise everything. You can pay to get this done but it’s expensive. Enterprise 21 can give you theguidelines and templates to help you.

What infrastructure have you in place? How many Franchisees can you install with your existing support

group? How many Franchisees can you support with one Franchisee Support Manager? This will help yoto do some forward budgeting and costing.

Have you done a personal appraisal on your skills as a Franchisor? Remember the skills you need as asuccessful Franchisor can be decidedly different from those required as a small business owner. List yourpersonal skill sets and areas of lack and decide which of those you lack you can fix up with training. Theothers you need to clearly define and plan to employ those who can perform these duties professionally.

Your legal structure for a Franchise system also needs to be a little more complex than a normal smalloperation. As soon as you launch your franchise you have some potentially very valuable IntellectualProperty. This needs to be safeguarded and your financial assets also need to be protected just in case the

worst happens. You accountant (if they are good) should be able to help in this area.

Most people might now call on their solicitor. We feel strongly that this is not the best move. Solicitors aabsolutely essential in producing the legal documents but most will not really have a clue as to how abusiness operates from the psychological viewpoint of the Franchisor, the Franchisees and the public. Every business is dependant upon marketing. How to market the products, the Franchises, potentialpurchasers of you established Franchise.

Enterprise 21 are not solicitors. We have worked with many solicitors over the years and for the last 7 – 8years we have actually constructed Franchise Agreements and Disclosure Documents then passed these tour solicitors for “legalisation”. We believe that the legal documents should be simple, written in non

legal terminology where possible and reflect a win-win scenario.

We prepare all of the necessary systems and legal documentation for you, including, but not limited to:

Franchise Agreement and Disclosure Document (to solicitor approval level), Sales and marketing for sourcing Franchisees, Franchisee Selection systems, Non-technical training, Franchisee Sales and Marketing systems and techniques, Administration systems, and Successful att itude development courses

Also included with this service is a full suite of ancillary documents essential to the commencement andoperation of a successful franchise business system.



Module 4. Management and Operation of Franchise

(A) MANAGINGFINANCE

1. SOURCES OF FINANCE



SOURCES OF LONG TERM FINANCE

The main sources of long term finance are as follows:

Shares:

These are issued to the general public. These may be of two types: (i) Equity and (ii)

Preference. The holders of shares are the owners of the business.

Debentures:

These are also issued to the general public. The holders of debentures are the creditorsof the company.



Public Deposits :

General public also like to deposit their savings with a popular and well establishedcompany which can pay interest periodically and pay-back the deposit when due.

Retained earnings:

The company may not distribute the whole of its profits among its shareholders. It mayretain a part of the profits and utilize it as capital.

Term loans from banks:

Many industrial development banks, cooperative banks and commercial banks grant

medium term loans for a period of three to five years.

Loan from financial institutions:

There are many specialised financial institutions established by the Central and Stategovernments which give long term loans at reasonable rate of interest. Some of theseinstitutions are: Industrial Finance Corporation of India ( IFCI), Industrial DevelopmentBank of India (IDBI), Industrial Credit and Investment Corporation of India (ICICI), UnitTrust of India ( UTI ), State Finance Corporations etc. These sources of long term

finance will be discussed in the next lesson.

2. MEASURINGFINANCIALPERFORMANCE OF AFRANCHISE

How can I find out the financial performance of franchises?

To their great surprise, prospective franchisees often can’t get an answer to the most basic investmentquestions – How much money does the average franchisee make? How much money can I expect to earn

The reason for this is that close to 70% of all franchisors choose not to include any sales, costs or otherunit financial information in their disclosure documents and, the only way they are legally allowed to givyou that information is in those documents.

There are a number of good and valid reasons for franchisors not to provide this basic information. Theinformation they get from the franchisees is unaudited and therefore may not be accurate. The differencein the units themselves including diversity in size and types of markets, the size of established locations,the differences in maturity of the open locations, variations in the strengths of local competition, impact o



brand recognition in new and older markets and a host of other reasons might make the informationmisleading. Providing the information in public documents would allow their competition to obtaininformation on their sales, cost of sales, margins, sales mix which also is a valid reason. For some, unitperformance is so bad that if they included the results in the offering material, they would have a slimchange of ever selling a franchise.

Developing a financial projection for your future business is an important part of your evaluation of thefranchisor. Even if the franchisor chooses not to provide the information you are looking for, with a littlework, you can find most of it yourself.

The FDD (Franchise Disclosure Document) has other “hidden” resources that, when combined with otheresearch, can provide you with insight to profitability.

Start with a careful reading of the franchisor’s FDD.

If they operate company owned locations, information on unit performance might be gleaned from the

audited financial statements and the notes contained in the document.

Review items 5 and 6 which include information on initial and continuing fees charged by the franchisor.Often these are based upon some sales performance requirements or level.

Item 7, the estimate of your initial investment and the attached notes are often a treasure trove ofinformation. Franchisors routinely include tidbits of information on unit performance in the notes which

an accountant experienced in franchising can use to help you make projections.

The FDD will provide you with the names and contact information of current and former franchisees. Calthem and ask questions. They can share with you average revenue, profit margins, cost of goods, workincapital requirements, return on investment, etc. Former franchisees can give you insight as to why theyleft the system and whether they made a return on their investment. While current and formerfranchisees are not obligated to give you information and just might not have the time to spend with youthey can provide you with the most relevant information you can get.

There are places outside of the franchise system to also look.

If your franchisor is a public company, financial information is likely in their SEC filings. In most cases, thainformation is published somewhere on the franchisor’s web site.



Review all of the company’s press releases and stories that have been written about the company.Franchisors will often provide sales and other financial information and trends to reporters. You will alsobe able to see how your franchisor is staking up against the franchised and non franchised competition -something that is critical for you to know.

Purchase a copy of Robert Bond’s book, How Much Can I Make? The book contains earnings claims onmany franchisors and you might find useful information on one of your franchisor’s competitors which ycan use in making your f inancial model. The book is available in many bookstores or on the web atwww.sourcebookpublications.com.

More and more franchisors are moving to provide prospective franchisees with financial and statisticalinformation in their disclosure documents that will help prospective franchisees prepare more accurateprojections for their local markets. Until all franchisors do, getting the information is a bit of work, but ifyou work with knowledgeable professional advisors you can usually create a fairly accurate profile of thefranchise you are looking at.

Designing a financial benchmarking system for your franchise

Here are eight steps to benchmarking your franchise:

1. Make benchmarking part of your business model2. Design a collection process with your franchisees in mind3. Promote participation from the top down4. Ensure the figures are correct5. Compile and sort the data to identify the drivers of success6. Communicate actionable information instead of statistics7. Benchmark individual franchise results against network performance

8. Assimilate feedback and implement change

(B) LEGAL ASPECTS OF FRANCHISING

1. OVERVIEW OFFRANCHISE LAWS ACROSS THE GLOBE

Franchise Laws across the Globe

There are many countries which have developed comprehensive legislation to cover franchising



their respective dominions. At the federal level in the United States, the Federal TradeCommission ’s Rules on Disclosure Requirements and Prohibitions Concerning Franchising andBusiness Opportunity Ventures (1979) regulate the information a franchisor is required to supplythe prospective franchisee in order to enable the franchisee to make an informed decision on thprospects of venturing into the business. The North American Security Administration Associatio(NASSA) has adopted a Uniform Franchise Offering Circular (UFOC) which delineates theinformation required to be disclosed to a prospective franchisee. Disclosure requirements underfranchising are well-defined in the USA.

In 2000, the Ontario Legislature in Canada adopted the Arthur Wishart Act which dealscomprehensively with disclosure requirements as well as important aspects of the franchisee-franchisor relationship such as fair dealing by each party to a franchise agreement as regards itsperformance and enforcement, and the right of action for damages for breach of the duty of fairdealing.

In the United Kingdom, there exists no operative franchise-related legislation. However differentaspects are governed by norms laid down by the British Franchise Association (BFA), the

regulatory body of the franchise industry in the United Kingdom. These include a code of ethicalconduct, disciplinary procedure, complaints procedure and appeals procedure.

The Australian government has adopted a mandatory code of conduct and has also modified theTrade Practice Act 1974 to provide for franchising. The new code imposes comprehensivedisclosure requirements and provides for mandatory mediation of franchising disputes andminimum standards for franchise agreements including, inter alia, a cooling period, refrain fromseeking from a franchisee a general release liability, disclosing material facts and refrain fromunreasonably withholding consent to transfer of the business.

In April 2002, the Japan Fair Trade Commission (JFTC), the competition authority of Japan,

published new guidelines on franchising. These guidelines contain three parts - a generaldescription of franchising, provisions for the disclosure of necessary information (such as details the assistance to be offered to franchisees, the nature, amount and conditions of repayment, ifany, of the fee to be paid at the time of entering into a franchise agreement, etc.) at the time ofthe offer of a franchise and a part on vertical restraints between a franchisor and its franchisees.Under the guidelines, the failure to provide necessary information shall constitute deceptivecustomer inducement, which is considered an unfair trade practice.

On 31 December 2004 the Ministry of Commerce of the People’s Republic of China promulgatedthe Measures for the Regulation of Commercial Franchises which became the sole legalframework for franchising in China. The measures became operative on 1 February 2005 andprovide detailed regulations for franchising, comprising of 42 articles over nine chapters coveringa wide span of areas from the franchise agreement to disclosure requirements, special rules forforeign invested enterprises and legal liabili ties.



2.NEED FOR AN EXCLUSIVE FRANCHISE LAW

Need for a Franchise Law in India

A healthy legal environment is of great importance for franchising and should include provisions

pertaining to all areas that fall within the ambit of franchising. This includes, inter alia, commerclaw relating to contracts and joint ventures and intellectual property law for protection of trademarks and know-how. Franchise arrangements are subject to an array of laws and regulations inaddition to those regulating commercial contracts and intellectual property rights. There are nospecific laws governing franchising in India. As a result a franchise agreement may be governed bdifferent laws.

Primarily a franchise agreement is a contract between the franchisor and the franchisee. The firslaw which comes into the picture is the Contract Act 1872 which governs contracts in India. Afranchise agreement will be governed by the Indian Contract Act, 1872 and the Specific Relief Ac1963 which provides for both specific enforcement of covenants in a contract and remedies in thform of damages for breach of contract. If a party to the franchise agreement commits a breach contract, the aggrieved party has the option to initiate a suit for specific performance in Indiancourts and apply for relief in the form of a temporary or permanent injunction, which may begranted at the discretion of the court considering the balance of convenience and the interests o

justice. An order granting or rejecting an injunction may be appealed by an aggrieved party.

Laws relating to taxation, property laws, insurance law and labour laws also apply to franchisetransactions. Addit ionally, laws and regulations applying to specific sectors of goods and serviceswill also apply depending on the franchised.

The following are the reasons why a comprehensive franchise law is required in India:

Application of Multiple Legislation

A well-defined legal structure is indispensable for the effective functioning of any businessoperation. The international business environment demands a well-defined suitable legislationthat is complete in all respects. The lack of a comprehensive legislation on franchising in Indialeads to the applicability of mult iple laws to a franchisetransaction.

This poses the following problems:

Complexities: Parties to a contract normally prefer agreements with a simple approach and

encompassing all the required law procedures and rules required to be complied with. Howeverthe application of different laws to one agreement makes it complex to decide various issuesarising from the agreement.Ambiguities: Due to the necessary application of multiple legislation, ambiguities are created as tcertain issues. For example, a franchisor would imagine that a certain issue is the franchisee’sresponsibility under one law, whereas the franchisee would think the opposite based on adifferent law.Time-Consuming: Referring to multiple laws consumes a lot of time at the initial stages of a



transaction as well as other points of time when the agreement is sought to be enforced. Thisproves to be detrimental to the smooth functioning of franchising operations in India and alsomakes time-bound operations involving new enterprises difficult .

Absence of Disclosure Requirements

Countries with specific franchising legislation make it imperative for parties to a franchiseagreement to disclose certain factual information pertaining to the business of the part ies. Thisensures transparency and facilitates an informed decision. A franchisor should be required, bylaw, to make certain disclosure to the prospective franchisee wherein he is supposed to revealdetailed information regarding himself, his lit igation and bankruptcy history, his financial positiothe facilities he offers etc. In India, in the absence of effective disclosure norms, a prospectivefranchisee is rendered helpless as the franchisor is under no statutory obligations to makedisclosures.In the absence of a specific statute governing the franchise agreement, the franchisor refrainsfrom providing any information that is likely to prejudice or make a franchisee reconsider thebusiness proposition of the franchisor. The lack of proper disclosure requirements provides agolden opportunity to a franchisor to abuse his posit ion of importance as he is virtually under no

statutory obligation to make the requisite disclosure.

3.LAWS APPLICABLE TO FRANCHISING IN INDIA

Franchising of goods and services, foreign to India, is in its infancy. The first International Exhibition waonly held in 2009. India is, however, one of the biggest franchising markets because of its large middle-class of 300 million who are not reticent on spending and because the population is entrepreneurial incharacter. In a highly diversified society, (see Demographics of India) McDonalds is a success storydespite its fare differing from the rest of the world.

So far, franchise agreements are covered under two standard commercial laws: the Contract Act 1872 andthe Specific Relief Act 1963, which provide for both specific enforcement of covenants in a contract andremedies in the form of damages for breach of contract

4. TAXATION ASPECTS OFFRANCHISING

TAX ASPECTS OFFRANCHISING, written by Bruce S. Schaeffer, Esq., discusses the legal environment andhistory of franchising in the United States before analyzing the tax and legal aspects of franchising.

This Portfolio examines federal and state regulation of franchises, start-up considerations, the differenttreatment of franchisor and franchisee, area development agreements, and many other aspects of operatina franchise. It explores in depth the tax issues involved in franchise advertising, personal holdingcompany and S corporation considerations, state and local taxation of franchises, and succession planningfor franchisees.

In addition, it covers such specific topics as



Franchising, its legal environment, the types of franchise arrangements, its history, anddevelopment

The economics of a franchise, franchising in the 1980’s and 1990’s, and franchising since 2000 Franchise transfers and retransfers, along with coverage of the legislative history, characterization

and recognition of receipts by the franchisor

A general overview of multiple unit transactions, pooled advertising funds, passive royalty incomand more

Tax Aspects of Franchising allows you to benefit from:

Hundreds of hours of original research on specific tax planning topics from leading practitioners ithis area

Invaluable practice documents Plain-English guidance from world-class experts Real-world and in-depth analysis that lets you explore various options Time-saving access to relevant sections of tax laws, regulations, court cases, IRS documents and

more Alternative approaches to both common and unique tax scenarios

TAXATION OF A FRANCHISE

The cost of a franchise includes:

A licence fee Training Equipment And initial stock of materials

Assuming the franchise is brought by a sole trader, and then sold to a limited company for the sameamount before trading starts. Can the cost of the franchise be offset against profit for cooperation tax? Isthere any liability to personal income tax doing the above? What are the issues to consider withtaxation? Is there any benefit in operating as a sole trader? (Other than lower accounting changes) Howcan I find an accountant that can give more detailed advice on the above? (E.g. what sort of accountant isneeded?)

5. TERMINATION OF AFRANCHISE



Termination of the Franchise Relationship

A franchise relationship, as with a marriage, can come to an end. How can the two parties withdraw froma relationship in which they have freely shared each other's business plans and secrets with a degree of fairness? How can the franchisor ensure that the departing franchisee does not become a competitor to

himself and the franchisees remaining in the system?

A franchise relationship is one, which should be capable of subsisting over a long period of time.Nevertheless there will be occasions when it comes to an end. This can arise in a number of ways-

There may be a breach of the franchise agreement by the franchisor. There may be a breach of the franchise agreement by the franchisee. Usually the agreement wil

provide for the franchisee to be given the opportunity to remedy this breach before thefranchisor will terminate.

Where, at the end of an agreement for a fixed term, the franchisee, who may hold a right ofrenewal, may choose not to exercise that right.

The franchisee may sell the business and the purchaser may be granted a new franchiseagreement if that is permitted.

The interests of the franchisor and franchisee on termination are similar, although viewed from different angle. Each is concerned to safeguard his commercial and financial interests.

The franchisor will be concerned to safeguard his commercial interests so that he can appoint areplacement franchisee.

On the other hand, the franchisee will be concerned to recover as much as he can financially, anto minimise the extent to which his future business activit ies will be restricted by the fact that hwas a franchisee.

THE CONSEQUENCES

Most well-drafted franchise contracts will spell out clearly what is to happen upon the termination of afranchise contract for whatever reason.

The post-termination provisions of a franchise contract can usually be broken down into two categories.

The first category will deal with those aspects which are concerned with the serverance of therelationship and the protection of the franchisors name and goodwill.

The second category will deal with the method by which the franchisor will seek to protect hisfranchise's know-how, trade secrets, and business methods so as to prevent the depart ingfranchisee from unfairly making use of them in order to compete with the franchisor and theother franchisees.

GOODWILL

The objectives of the first category are usually secured in the following way-



The franchisor will be anxious to ensure that customer contact and continuity of service ismaintained with the customers of the departing franchisee. In this respect, a well-draftedfranchise contract will provide for the transfer of existing contracts between the franchisee andhis customers to the franchisor together with any necessary financial adjustments.

To complete the change of the visible public image reflecting the franchisors name and goodwil

the franchisee will be required to take certain steps such as:

a) Make application to the appropriate authorities to cancel any trademark licence whichmay be recorded with them relating to the use by the franchisee of the franchisor'strademarks or service marks.b) When appropriate, change the fascia, décor and shopfitting of premises and the livery oany vehicles.c) Return all advertising, packaging, marketing and promotional material associated withthe franchise.d) Cease to use stationary, literature, etc. bearing the franchisors trademarks and servicemarks, trade names and other reference to the franchise.

e) Return operations manuals.f) Cease to use the franchisors system.g) Cease to use the franchisors copyright material.

PROTECTION

The objectives of the second category are usually secured in the following way-

The franchise contract will contain promises on the part of the franchisee which are commonlyknown as covenants in restraint of trade and non-competition covenants. For example, it iscustomary for the franchisor to extract a promise from the franchisee in the franchise contractthat the franchisee will not compete with the franchisor, or any other franchisees within a certaarea and stated period after termination.

The franchisor will be anxious to ensure that the franchisee does not disclose any confidentialinformation imparted to him and/or use it in competition with the franchisor or any of hisfranchisees.

RESTRAINTS

Difficulties arise in relation to the imposition of restraints on the future business activities of thefranchisee and the extent to which they may become competitive with the business of the franchisor and

his other franchisees.

It should be appreciated that to some extent each franchisee is concerned that a fellow franchisee shouldnot break away and engage in unfair competition, making use of the knowledge acquired as a formerfranchisee.

The fixing of reasonable periods of time and area of operation has to be done by reference to what ispermitted by law, the nature of the business and its area of operation. Obviously, the criteria applied for a



retail shop in a densely populated city will be different from those which apply to a mobile phoneoperation in a sparsely populated rural area.

SETTLEMENT

By and large, most terminations, even for breach, can be settled between franchisor and franchisee in acivilised way.

Once the relationship has broken down an amicable parting is usually capable of achievement and willprovide the best solution for a franchisee whose business may be bought, either by a franchisor or by aprospective franchisee who is interested in taking it on.

SALE OF STOCK

Where property does not play a significant part in the operation of a particular franchise, the franchisecontract may nevertheless require the franchisee to sell to the franchisor all his equipment, stock of

products, etc.

Such provisions operate for the benefit of both parties.

They enable the franchisor to ensure that the franchisee is divorced from the franchise system.

The franchisee, on the other hand, is able to obtain a fair price (if the content is properly drafted) for hisequipment and stock. These would otherwise be of little use to him, given the nature of the non-competition and restraint of trade covenants which are invariably found in franchise contracts.

As we have seen, the end of a franchise relationship need not be as traumatic as some people appear to

believe. If the franchise is subject to a well-drafted contract, there is no reason why both parties should nknow precisely where they stand in such a situation and be able to part amicably.

However, this subject does provide yet another illustration of the need by both parties to have a contractwhich has been professionally prepared by an experienced franchise lawyer and specifically for thefranchise in question with the objective of covering such eventualities as are foreseeable in that particularfranchise.

OR

The one part of the franchise contract which canbe heavily weighted in favor of the franchisor, is the

franchise termination clause! It is therefore imperative for the franchisee to have the contract reviewedby an experienced franchise lawyer, to ensure that the provisions contained therein also offers protectioto the franchisee, in the event of the termination of a franchise . (Once business commences it may be vedifficult to terminate the agreement without being liable for ongoing royalties.)



Termination by Mutual Consent

* The franchisee may cancel the agreement within the cooling off period (may vary from 7 to 21 days)

* You may enter into a franchise agreement before you find a suitable site from which to conduct the

business. A franchisor can not force you to accept a site which he may have found. Should no suitable sitbe found within a specified period of time e.g. 180 days, then either party may terminate the agreement inwriting and the franchisor should refund any monies paid to him. (Franchise fees may be structured forexample as 25% on signing the franchise agreement, 25% on signing the business lease agreement and thremainder on the day the business starts trading.)

* The franchisee may choose not to exercise his option to renew at the end of a fixed term, so thetermination of a franchise will be automatic although the franchisee may be required to notify thefranchisor of this fact in writing by the prescribed date in the agreement. However, if the franchisee hasbuilt up a successful business, he may wish to sell to a third party, who in turn will enter into a newagreement with the franchisor. The franchisee must ensure that his contract stipulates that the franchisor

will not unreasonably withhold his consent for such a transfer of a franchise, and that the outgoingfranchisee will not be liable for any further royalties or contributions once the territory has been sold to athird party.

* In the case of a force majeure such as earthquake, war etc., it may be impossible to continue with thebusiness and the termination of a franchise must be mutually accepted in the termination clause of thefranchise agreement.

* In the case of insanity, infirmity or death of a franchisee, the termination may be sought by a personarepresentative or family member. However, the contract must grant them the right to continue with thebusiness whilst undergoing suitable training to qualify as a franchisee or until they find a suitable buyer

for the business.

NOTE: If your franchise agreement is terminated by mutual consent with your franchisor, the franchiseemust further consider his obligations to his landlord arising from his lease agreement. Should the businesnot be on-sold, the franchisee should enlist the help of the franchisor in attemptingto recover as much of his capital investment (shop fitting, signage, stock etc.) as possible.

Restraint of Trade

The franchisor will have a restraint of trade clause in the agreement, which will come into effect upon thetermination of a franchise. The franchisor will want to protect his trade secrets and business methods and

to prevent the departing franchisee from becoming a competitor, whilst the franchisee will want tominimize any restrictions placed on future business endeavors.

Although nobody can be restrained from earning a living in the field of his experience, you may beprohibited from conducting a similar business from the same premises, or within a certain radius from onof the other franchisees in the group. You will also be prohibited from conducting a similar businessanywhere else, if it has the same look and feel and can be associated with the original franchise business.This is quite understandable, but your legal counsel must look out for anything unreasonable which may



have a negative impact on your future should you wish to discontinue with the franchise and continue wia similar business.

The nature of the business and the area in which it is being conducted (a densely populated city vs. a smatown) will also determine to what extent restraint of trade can be enforced. A competent franchise lawyer

or franchise consulting firm can assist both franchisor and franchisee in the orderly termination of afranchise.

(C)MANAGINGRELATIONSHIP

1. DYNAMICS OF FRANCHISEEFRANCHISOR RELATIONSHIP

A new and exciting relationship exists today between the successful franchisee and successful

franchisor. This relationship is centered on trust, ability to work together, and the desire to

achieve common goals. This relationship has become an interdependency and seeks to provide

support for both the franchisee and franchisor in their business dealings.

The Four Phases of the Franchising Relationship

When learning how to ride a bicycle, we learn that there two major operations which are essential

to its proper functioning:

(1) steering power and

(2) pedal power.

We can ask the question which one is more important, the steering power or the pedal power. Upo

further investigation it is apparent that both are important and both are interdependent. For the

bicycle to properly function and go in the correct direction, or turn the right way, it is required tha

we use both the steering power and the pedal power to get where we want to go.

The same is true with franchising. We could ask which one is more important, the franchisee or th

franchisor. Both are equally important in the final success of the franchisor operation.

Probably the most critical factor involved in the ultimate success of a franchise organization is the

relationship which exists between the franchisor and the franchisees. By following the franchise lif

cycle, it is fairly easy to see four distinct and different stages involved in the franchisor/franchiseerelationship. THESE FOUR CRITICAL STAGES INCLUDE:

(1) Introduction (built on trust, shared desires, and interdependence)

(2) Growth

(3) Maturity



(4) Decline/development

Introduction

The first or introduction stage of the relationship between the franchisee or franchisor occurs when

the potential franchisee seeks the initial meeting or communication with the franchisor. Theintroduction stage requires the franchisee and the franchisor to get to know each other better. Like

most personal or professional relationships, each party is generally hoping to develop mutual

respect, mutual trust, and a shared desire for success and profitability.

The franchisee often finds that the relationship begins with extreme optimism, possibly blind faith

and an expectation that this business will be their life work.

The franchisor will also be putting forth its best face because it is also hoping to develop a positive

relationship with the franchisee and interest the franchisee in putting forth the effort to develop a

successful franchise unit.

The franchisor is meeting to qualify the franchisee and to see if they can award the potential

franchisee the right to become a franchisee. It is during this initial stage that understanding,

rapport, and communication begins to develop. It is during this stage that the potential franchisee

decides to become a franchisee and to spend the next major portion of his/her life developing this

specific business practice.

The Growth Stage

As the business begins with a grand opening, the growth stage of this franchise operation also

begins. From the time the franchisee has signed the franchise agreement and begins the training

program to become a qualified operator, the franchisee-franchisor relationship bonds and grows.The training and grand opening is a very emotional time for the franchisee and allows the

franchisor and franchisee to work very closely and for everyone to get to know each other better.

Time is taken during the day to become extensively involved in serious training activity while at

night time the opportunity to interact and socialize is present for the franchisees' and the

franchisors' staff.

This assistance provided by the franchisor to the franchisee with training, hiring of new staff, the

grand opening, advertising, promotion, and becoming a master of the daily operations increases th

bond and the strength of the franchisee/franchisor relationship. This time of positive interaction

provides the mortar to build the structure of a strong interpersonal relationship.

The franchisor will now also provide a support staff, both at home as well as in the field, to help th

franchisee as they go through new learning experiences and have new questions about the

operations of the business. The franchisor needs to be able to communicate with the franchisee and

many do this through the use of newsletters, brochures, and 800 hotlines. The franchisee, in turn,

utilizes the franchisor and their field staff to help train new employees and to help learn how to

improve the operations of the existing business.



If the franchisee finds the support systems of the franchisor insufficient, then the first problems

arise in the franchisee/franchisor relationship. The franchisor needs to be immediately informed b

the franchisee if such problems do arise. The franchisee should go immediately to the franchisor

directly and explain the problems and the circumstances. The franchisor, in turn, should provide

proper relief and support for the franchisee to insure continuation growth and success of the

franchise business.

Maturity

The third phase of the franchisee/franchisor relationship is often called the maturity stage. In this

phase, the franchisor and franchisee know what to expect from each other and have developed a

working relationship with each other. They have almost reached a plateau upon which their mutua

interdependence and interaction coexists. They generally enjoy working with each other, helping

each other, and receiving support from each other. If the relationship grew well during the growth

stage, then a mutual friendship and mutual understanding has grown.

The focal point of the maturity stage centers around the communication between the franchisee anthe franchisor. When the communication is strong and open, any problems which arise are often

easily overcome. This communication is also facilitated by the annual franchise meeting, as well as

regional or district meetings. These meetings are often accompanied by company newsletters and/o

brochures which explain new products or services which are being provided or implemented by th

franchisor.

The major problem of the maturity stage exists when a franchisee feels that "continuous value" is

no longer being received from the franchisor. Many franchising organizations provide "continuous

value" to the franchisees simply through the use of their advertising and marketing programs.

However, several franchisees require additional support in areas of operation and expanding or

penetrating the target market. Franchisees want help to insure success in growth. They expect thisfrom the franchisor and as they continuously receive this, then generally a very strong bond of

friendship and professional respect is developed.

It is generally during the maturation stage (2-5 years after opening) that the franchisee begins to

question the importance of the franchisor and the services being received. If the services are not

present and if the franchisor is not providing value-added to the franchise business, then the

franchisee begins to seriously question the importance of the franchisor and the payment of royalty

fees. This becomes a major cause of frustration and strain between the franchisor and franchisee.

This then brings into question the worth and the value of the franchise organization and leads to th

ultimate question, should I stay in franchising?

Decline / Development

The fourth and final phase of the franchisee/franchisor relationship centers around the decline or

disillusion of the franchise business. When this occurs the franchisee generally seeks termination

and asks to be relieved of any contractual obligations.



During the declining stage, the franchisee generally starts to relax their compliance with the rules,

regulations, and standards which have been established by the franchisor. Franchisees who have

become disenchanted with the franchisor often seek to terminate the franchise. If the franchisor

does not allow that, then the franchisee, generally, begins to run down the business and to destroy

the image and name of the franchise organization.

Alternately, the franchisor may realize the problem and seek to provide remedies as solutions. The

franchisor may improve the communication and may be able to provide greater services and more

value to the franchisee. The franchisor may develop additional promotional, marketing, and

advertising programs which enhances the franchisee's opportunity for success. The franchisor then

has the opportunity to turn around the franchise business and to instill within the franchisee, once

again, the desire for mutual success and prosperity.

THE TEN COMMANDMENTS OF THE FRANCHISEE / FRANCHISORRELATIONSHIP

We have developed the following ten commandments for the successful franchisee/franchisor

relationship. These commandments are based on the development of a friendly and stronginterpersonal relationship between the franchisee and franchisor. These ten commandments includ

the following:

(1)Share a vision

(2) Be professional

(3) Be supportive

(4) Be communicative

(5) Develop an advertising umbrella

(6) Develop "total" training programs

(7) Listen

(8) Plan for growth

(9) Help franchisees to be profitable

(10) Help franchisees to be a VIP

Share a Vision

One of the greatest opportunities a franchisor has is to share the personal vision of opportunity and

success which the franchise system offers the potential franchisee. The sharing of this vision

becomes a life-long project for the franchisor. In response, the franchisee also needs to share his/he

vision. This vision is also one of opportunity and success. The franchisee's vision also is a part of



oneself and generally includes a high desire to receive the rewards of one's work. This shared vision

will become the focal point of the franchisee/franchisor relationship as they build to mutually

develop these visions in a harmonious and successful franchise experience.

The Professional

Both the franchisor and franchisee need to be professional in their personal and professional

interactions. The professional is the individual who seek to help others but also seeks to be the best

that they can possibly be in what they are doing. The professional is an individual who wants other

to succeed and to share the joys of success and prosperity. The franchisees have high demands of th

franchisor including an excellent product or service and an outstanding operations program. They

demand professionalism. The franchisor also expects a high degree of work and profits on the part

of the franchisee. Neither one is desirous of settling for mediocrity or incompetence.

Be Supportive

Both the franchisor and the franchisee need to be supportive one to another. The franchisee needs be able to help the franchisor understand their strengths as well as their weaknesses. The franchise

should support not only the franchisor but other franchisees who may be struggling or also seek

advice and support from franchisees. The franchisor should provide support services in the fields o

marketing, management, and financial services.

Be Communicative

One of the greatest strengths of a franchisor is to be able to communicate with franchisees. At the

same time, the franchisee is desirous of being part of future plans. The franchisee often seeks to

develop new products or services which might enhance the growth and prosperity of the business.

The individuals need to communicate with each other through phone, mail, and newsletters.

Develop an Advertising Umbrella

The franchisee desires effective and efficient advertising both on a local and national basis. The

franchisee is seeking for advertising that they alone could not provide. The franchisee is seeking th

marketing coverage which will enhance image and awareness of the product or service being

offered. The franchisor needs to be able to provide this service and help the franchisee build the

name and image of the company.

Develop "Total" Training Programs

Training is an important and essential ingredient of a strong franchisee/franchisor relationship.

Almost all franchisees need the initial training to know how to correctly develop and operate the

business. In addition, refresher courses, as well as new training programs should be provided to

help improve the abilities of the franchisees and the franchisees' staff. Franchisees often are

desirous of obtaining self-improvement programs for themselves as well as for their staff. The

franchisor needs to be able to provide training and improvement programs which will enhance the

abilities and capacities of the franchisee.



Listen

Some say there are three primary reasons for the success of a franchisee/franchisor relationship --

these include:

(1) the ability to listen,

(2) the ability to listen, and

(3) the ability to listen.

Franchisees want to be heard. They want the franchisor and their staff to take the time so that they

may be heard and understood. They desire to be part of the team and of the franchisor family

organization. The ability to listen may be one of the strongest characteristics which a franchisor ca

develop. This enhances the bonding between the franchisor and the franchisee and allows greater

communication and strength to develop in the franchising program.

Plan for Growth

Not surprisingly, both the franchisees and franchisor want the company to grow. Some franchisees

are desirous of becoming multi-unit franchisees after opening their first store. They would like to

open a second or third store nearby in the same city or county. Franchisees enjoy their business an

want to be able to expand and grow in that business. The franchisor also needs to plan for growth s

that they, as well as the franchisees, can get caught up in the excitement and development of a

vibrant and growing organization. Growth is an elixir to the desires and appetites of people wishin

to become better.

Help Franchisee to be Profitable

The franchisee will look at the bottom line in determining their success or failure relative to their

franchising organization. This bottom line is the profit which the franchise business generates. The

franchisor needs to be aware that the franchisee is profitable and is in the process of increasing

those profits. If this is not the case, then additional support, service, and training needs to be

provided to those franchisees.

Help Franchisee to be a VIP

Almost all of us want to be important and successful. We want to be able to be part of our

community and part of the society in which we live. In some cases, the franchisees are desirous of being able to join the local clubs and business groups. At times the franchisors need to be able to

provide newspaper columns and public relations announcements for the local newspapers which

will enhance the image and name of the business.

FRANCHISEE / FRANCHISOR MOTIVATORS



The major motivating forces behind all franchisees and franchisors may be separated into the five

P's of basic human needs:

(1) Power

(2) Profit

(3) Prestige

(4) Pleasure

(5) Prominence

Power. Franchisees and franchisors both seek for power. This is not power over each other but

rather personal power in the ability to be successful. The franchisee needs to help the franchisorachieve this power. The franchisor needs to work with the franchisee so that they too may have

power and success in their business operations. Franchisees want both the ability and power to

control and run their own lives.

Profit. One of the main overarching reasons why franchisees initially enter the franchising field is

profit. Many individuals have heard that franchising provides successful opportunities for busines

practices. This is true. They associate that with success and great profits. While this is true in many

cases, this is also false in other cases. There are profits associated with franchise businesses, yes.

However, it is important to realize that these profits are the results of hard work, dedication, and

long hours. Profits are available in franchise businesses. Both the franchisor and the franchisee nee

to remember the profit motive so that they can help each other fulfill this desire.

Prestige. One of the underlying supports of almost all people is the needs for prestige or

recognition. Prestige is something which everyone desires or craves. Deeply rooted in each

individual is the desire to be wanted, needed, and recognized. If this desire is not fulfilled then ofte

a gulf develops and grows between the franchisee and franchisor organization. This gulf may easily

be bridged by recognition by the franchisor through praise, training, encouragement, and

continuous communication.

Pleasure. All of us, at some time, seek pleasure. At times this is simply to relieve oneself from the

boredom of day-to-day operations and the day-to-day recurrence of similar problems. For this, and

many other reasons, the franchisor often provides annual conferences and conventions that arelocated in recreational, tourist, or exotic places. Many franchisors travel to Nashville, New Orleans

Acapulco, Las Vegas, San Francisco, or Cancun to meet with their franchisees and allow them the

opportunity to stretch, relax, and train all at the same time. The franchisor also needs to see that th

franchisee receives pleasure from the daily work situation. This is one of the reasons why

franchisors insist on cleanliness in the business surroundings because it is more pleasurable and

enticing for proper work and customer sales.



Prominence. Some people just want to standout and be widely known. We desire to be popular an

appreciated. We seek for recognition. Franchisees can receive this from be a franchisee. As the

franchise grows so will the prominence of the people associated with it.

SUGGESTIONS FORDEVELOPING THEFRANCHISEE/ FRANCHISORRELATIONSHIP

There are certain practices which a franchisor can do to enhance and develop the

franchisee/franchisor relationship. These include but are not limited to the following:

FRANCHISOR

(1) Develop a strong training program

(2) Distribute a house organ to franchisees

(3) Hold national and regional meetings

(4) Distribute advertising materials to franchisees

(5) Develop a franchise advisory council (FAC)

(6) Conduct contests for franchisees (and spouse)

(7) Develop 24-hour toll-free hotline

(8) Provide headquarters representative visit to each franchisee at least once every three months

(9) Develop award structure for franchisee achievers

(10) Provide bonus systems for franchisees

(11) Develop and promote advertising packages and flyers

(12) Provide franchisee to franchisee training and consulting

(13) Provide headquarter retreats for franchisees

These are simply some successful motivation aids and guidelines for the proper development of a

franchisee/franchisor relationship. The franchisor may use some or all of these ideas to help develo

and strengthen the franchisee/franchisor relationship.



The franchisee needs to also work on the development of the franchisee/franchisor relationship. Th

following are some guidelines and practices which the franchisee may use to help enhance the

franchisee/franchisor relationship:

FRANCHISEE

Participate in all training opportunities

Contribute to house organ or newsletters

Attend all national or regional meetings

Participate in all FAC franchise advisory council activities

Participate in all contests and incentive programs for franchisees

Become involved in advertising and promotional committee activities

Use headquarters representatives for training and evaluation

Use hotline phone services when appropriate

Seek and achieve franchisor awards

Obtain and use promotional advertising materials

Be a participant in franchisee to franchisee consultations

Go to headquarters organization for fireside chats

It is not easy to develop a strong franchisee/franchisor relationship. This takes hard work on the

part of both parties. The franchisee needs to recognize the limitations which the franchisor has for

spending enormous funds and resources on pleasurable activities. The franchisee can become

involved in committees and activities which enhance this relationship.

Dispute Resolution

From time to time problems will arise and exist between a franchisor and

franchisee. These problems or disputes may initially be solved throughproper management and communication between the franchisee and

franchisor. However, when these problems grow bigger and have not been

properly handled, then very strong feelings and hostilities may develop between the franchisee and

franchisor.

The franchisee may get to the point that they believe that they would rather terminate the

relationship than continue. When this occurs, the franchisor must make some very important



decisions relative to how to handle this situation and what to do. The franchisor must realize that

litigation and arbitration may become very expensive, lengthy, and unpredictable as primary

methods of dispute resolution. The court system may feel for the franchisee because of the economi

power of the franchisor regardless of the franchise agreements or contracts. The basic legal method

of dispute resolution would generally be: (1) mediation, (2) arbitration, and (3) litigation or court

action.

The mediator is an individual who meets with both parties and analyzes the evidence and problem

which each party presents. The mediator will discuss possible alternative solutions with each party

and finally come up with a final conclusion or recommendation. Each party then has the right to

accept or refuse this suggested resolution.

Arbitration is a system where an individual, the arbitrator, meets with both sides to discuss the

merits of their position. The arbitrator will listen to each side, as well as bring them together to

understand their agreements and disagreements. The arbitrator then makes a final decision. Both

parties, prior to starting arbitration, have generally agreed to follow and accept the arbitrators

decision regardless of the final ruling.

The court system is a "court of last resort." Generally, both the franchisor and franchisee seek not

to use this method of dispute resolution. It is very costly and the decisions are not easy to

predetermine.

The civil court system in the United States provides the opportunity for either the franchisor or the

franchisee to seek redress from harms that the other has done. This allows the franchisee to

terminate or to receive compensation for injury or harm which they have experienced in the

franchising system. The final decision is rendered by a judge or jury and this decision must be

accepted by both parties. This is a very time consuming and expensive process.

Probably the best method of dispute resolution is that of mediation. When this does not work, it is

generally best to choose arbitration. Many franchisors now require, through their franchise

agreement, that the final method of dispute resolution will be that of arbitration. In many cases, th

franchisee has agreed to this upon signing the franchise contract.

SUMMARY

Probably the most crucial aspect of the development of a strong and vibrant franchising system is

the strength of the franchisee/franchisor relationship. This relationship generally goes through fou

different stages including:

(1) introduction,

(2) growth,

(3) maturity, and

(4) decline/development.

These stages explain the different phases that franchisees go through as they mature in their

franchising relationships and programs.



In addition, there are certain guidelines and commandments which the franchisee and franchisor

should follow in developing and strengthening the franchise relationship. Franchising is a vibrant

and strong economic opportunity. It may be greatly weakened by inappropriate relationships

between the franchisor and franchisee.

The final dispute resolution system generally focuses upon the use of a mediator, arbitrator, or thecivil courts system of the United States of America. Hopefully, the relationship will never get to the

point wherein formal methods of dispute resolution will be required.

Franchising can be exciting. It can provide an tremendous opportunity for both the franchisee and

franchisor. But like everything else in life, the strength of this relationship requires work and effor

When both parties work at developing the franchisee/franchisor relationship, then the franchise

system will grow and everybody will prosper.

OR

As new franchisor, you may find the nature of your relationship with your franchisees to be unique andeven, on occasion, daunting. While you have the right and the obligation to enforce system standards, yofranchisees often view themselves as an independent business (which they are) with the ability to call theown shots (which they are not). And while the relationship is contractual in nature, if you are ever forcedto bring out the contract, the relationship is already in jeopardy.

Thus, the franchisor must pay particular attention to the franchisor-franchisee relationship from the verystart if he or she is to create a long-term and mutually prosperous undertaking.

The Nature of the Relationship

Time and time again, we have often heard people compare the franchisor-franchisee relationship to that oa marriage. They will talk about the "honeymoon" period and how the franchisor and franchisee are in"partnership" together for a common purpose. And while this analogy may have some merit, our feeling that a marriage is exactly what the franchise relationship should not be.

Unlike partnerships, franchising is much more like a parent-child relationship. The franchisee, like thechild, will go through a variety of growth phases during the course of their life.

When children first come on the scene, they are typically very dependent on their parents, relying on themfor the education and training that will allow them to survive in this world. And as they grow older, theybecome less dependent, and you begin to allow them some latitude--first playing in the yard and

eventually crossing the street on their own. As they get older still, they will begin to test the boundaries otheir relationship, pushing a little around the edges, trying to change or influence the system that you havset for them--and perhaps breaking some of the rules. But they still live in your house, and what you saygoes. It is simply a question of how forcefully you choose to put your foot down.



How to be a Good Parent

When I was young, I remember being envious of one of the kids on my block. Mike's parents were rarelyhome, and when they were, they let him do whatever he chose. At 15, we would sneak over to Mike'shouse and drink beers and smoke cigarettes. I thought he had the best parents in the world. But when my

mother found out, I was grounded for a month.

Before I had served my mother's "sentence," Mike had found his way into a real sentence--at a juveniledetention center. And I began to understand that sometimes being a great parent means you cannot be agood friend.

Likewise, a franchisor needs to start by establishing the boundaries of the relationship. It is important thathe franchisee understand that your first role as "guardian" is to guard the system and the brand so allfranchisees can continue to thrive. Thus, one of your most important roles as a franchisor is that of disciplinarian. To do that, you need to clearly communicate the rules and your intention to enforce themfrom the start.

At the same time, it is important to understand that, as a franchisor, discipline can no longer be meted outhe way you may have when you owned all your operations yourself. If you try to give a franchisee the"it's my way or the highway" speech that worked so well before, you'll quickly find yourself withalienated franchisees--the first step on the road to real trouble.

Franchisees are business owners, and as such, require you to communicate with them in a professionalmanner. Being firm with franchisees, as opposed to managers, also means providing them with anexplanation for your various "requests." Most franchisees have a key desire for their opinions to be heardA franchisor should thus avoid making decisions in a vacuum and providing direction to franchiseeswithout a clear explanation of why the direction is being given.

Effective Communication is the Key

The key to being a good franchisor starts with communication. And that means more than the occasionalnewsletter and a visit from the field representative.

In today's technology-centered society, it is all too tempting to rely on the internet for all ourcommunications. But in a franchise context, that would be a big mistake. All too often, we have seen welintentioned e-mails ignite a firestorm when they are misinterpreted.

Relationships are built with dialogue, so it's important that you encourage dialogue in every aspect of the

relationship. Good franchisors are careful to create multiple venues where constructive dialogue willoccur. Annual conventions, regional meetings and advertising councils all provide for this two-waycommunication.

The accessibility of your senior staff is also vital. I have known the senior executives of some fast-growing franchisors who will not go home for the night until they have personally returned everyfranchisee's call.



One of the most important tools at a franchisor's disposal is the franchise advisory council. As thefranchisor, creating this council not only allows you to control the agenda, but also assures you a voice oit. The last thing you want to do is find out your franchisees have formed an organization without you-that's usually a sign something is wrong and they have excluded you from the process of resolving thegrievance. Whatever comes next is usually not pretty.

To be effective, the communication needs to be more than frequent. It needs to be honest. While there aresome things you may choose not to share with your franchisees, the key to a long-term sustainedrelationship is trust. And trust starts with openness and honesty. Get caught in a lie once, and you havedestroyed that trust forever.

Lastly, to be effective, you have to genuinely care about the success of your franchisees. Good franchiseerelationships start with a franchisor that is, first and foremost, committed to franchisee success. Thatcommitment, more than anything else, needs to permeate the franchisor organization at every level.

If your franchisees do not sense your commitment, the relationship can quickly become adversarial. If, on

the other hand, your franchisees see you breaking your back to help them achieve their success, there isalmost nothing they won't do for you.

3. CONCEPT OFTRUST IN STRENGTHENING MUTUAL RELATIONSHIP

Lack of Trust In a Relationship

Trust is one of the most important ingredients and the foundation of a successful relationship. Lack of itcan cause serious problems and is actually the most common reason why relationships end.

Trust is something that must be earned and maintained with action, not just words. Without it relationshiis like a house without a foundation - shaky at best.

Rebuilding Trust In a Relationship

Rebuilding trust can be difficult. In practical sense trust means that you place confidence in someone to bhonest with you, to keep promises, to not take advantage of you, to not lie, cheat or steal from you. It's thglue of the relationship. To lose it usually means a lot of pain, confusion, anger, and sadness.

If you lose trust, you will put a question mark in front of everything your partner says or does. And viceversa. So what do we do if we don't want to end the relationship? How do we earn trust and be trustful

again?

Here are some suggestions:

Be honest Take responsibility for your own actions and decisions Talk, communicate, listen. Unaswered questions and doubts can linger on for years Say what you are going to do and do what you say



Give trust back Let go of the past. Learn to stop draging the past into the present

Give it time, don't expect an overnight change

Rebuilding trust will take time, it won't happen over night. But investing in strengthening and maintainin

your relationship will result in mutual respect and connectedness built on the foundation of trust. So it'sworth it.

4.RELATIONSHIP BUILDING PROCESS

What is Relationship-Building?

In every aspect of life we are in, whether getting involved in the social activities, building our career path, or

socializing with family and friends, we interact with various type of individuals. Such interaction may occur with

familiar people with whom we are in close contact like our family and friends or with new acquaintances. We

may also build a connection over a period of time with our work colleagues or members in a club. The fact that

we interact with people everyday means that we are building a relationship with these individuals as we associat

ourselves with them in one or the other way.

CONCEPT OFRELATIONSHIP-BUILDING

The term ‘relationship’ is rooted from the word ‘relation’ and is defined as a a mutual affiliation orconnection between individuals or groups of people or entities.

Relationships are built where there is mutual understanding between or among individuals. However, thi

is not built overnight. Establishing a relationship has certain requirements for it to develop. This concept especially true if the individuals have just initiated a mutual connection. For an existing relationship suchas that of family members, it simply needs to be fostered and nurtured.

There are various kinds of relationships that we all engage in and are rooted from a particular need of theperson. For personal and emotional needs, we have family relationships, romantic relationships, and



friendships. To meet our professional needs and demands, we form business relationships with ourcolleagues and customers.

Most relationships, if not all, are not always positive. There are times when the mutual bond of theindividuals is tested by adversities and challenges. Taking care of a relationship is no different thannurturing a plant. Failed relationships are brought about by a weak foundation. Successful relationshipsare strengthened and hardened by the test of time.

Essentials of a Relationship

For a relationship to be born, it must be between and among individuals and entities. No relationshipexists for a single person only. Shared interests between people form a relationship. Any common intereslead the way for building relationships.

Usually, we create a connection with someone who can offer something that we can relate to. With ourfamily members and friends, we bond with them reciprocally because of love and care. In the workplaceyou maintain a relationship with the organization by making a contribution and in return, you get

rewarded or compensated for it. Employees form a relationship because of shared ideas and work interests.

Communication is another factor that plays an important role in forming relationship. A relationship doenot exist where there is no constant interaction with another person. Trust and respect are also veryimportant aspects in a relationship.

Benefits of Building Good Relationships

It may appear easy to build relationships with people but the process is actually challenging. Once arelationship or a bond with another individual is broken, mending it can be difficult. However, if themutual connection is developed and sustained, the outcome can be remarkable. A well-built relationshipcan create an impact in our lives. Socialization skills are enhanced as we connect to people around uspositively.



With good relationships, we are able to easily attain personal and career goals because we are surroundedwith individuals who support us in many aspects. An organization successfully achieves its mission-visiowhen employees or the team members are in a harmonious relationship with each other. With good mutu

associations, an individual personally finds contentment and satisfaction in many things.

IN THE PROCESS OF CREATING connections with our work associates, we have different ways and methodin doing it . But i t all starts out in gett ing to know the people around you. Even at this initial step wealready have our own styles in building relationships at work. The advantages of being able to socializeand get along well with people we work with are so outstanding that it can even easily bring the person the higher level in the hierarchy and contribute to a huge success in the business.

We employ different strategies but we aim for a relationship that can survive through the odds anddifficulties along the way. In the work setting, we strive to establish a professional affiliation with ourcolleagues, bosses, and our clients or customers. But in a more common situation, employee to employeerelationship can go beyond professional aspect. This is because the daily encounter and interaction at wodevelops a bond of friendship among individuals that extends even after work. Since one of the essencesof a relationship is constant communication, the sharing of daily work experiences and going through thechallenges together deepens the bond of the people.

In order to achieve not just a professional but also a genuine and healthy relationship in our career, here

are some helpful strategies to guide you in your relationship-building process.

Choosing Who to Trust

While we are encouraged to be in a cordial relationship with everyone at work for a comfortable workingenvironment, it is more crucial to choose the people whom to offer your trust. The common cliché peoplesay that it is never a good thing to trust just about anyone is definitely true. If you easily give it trust to anindividual in the workplace, you are risking yourself to a situation wherein good relationships will not be

formed.

Give your trust to the people you closely work with. Even at that, it is a lot wiser to be pickier in offeringyour trust to these people. Trust those who are sincere in their actions and intentions at work with you.



Trust those who unfailingly meet your expectations. Trust those who are most honest in their work. Thesindividuals are also more than willing to offer you their trust that is why they act in manners that seemappealing for the value of trust.

Using Talents and Strengths to Build Productive Relationships

An effective strategy in building relationships at work is applying your skills and strengths as one of yougreatest work contributions. Different individual talents and abilities allow us to create a connection withothers in various ways.

If you have the knack for positivity and maximizing other talents, you can easily form relationships with

coworkers who are hungry for learning, developing, or aiming to finish an important project. If youpossess the talent in connecting with people easily, you build a good connection with those who needmotivation and those who wish to create healthy and productive relationships.

A self-assurance talent empowers you to establish that relationship easily. You attract people who neededconfidence-boosting and sense of direction. As you use your talents to help people develop their fullpotentials in their career, you are also building healthy and productive bonds with them in the process.

Be Mutually Active in the Relationship

The nature of any good quality relationship is a give-and-take process. You decide to affiliate yourself with trusted work colleagues because you know that both of you can benefit from the bonding at work.However, if the motive is to benefit from the person’s strengths, you are using the person and takingadvantage of the situation. Such motive surely ruins a relationship.

A genuine relationship does not always expect anything in return for any favor given. If your boss assignyou for a role that requires leadership skills, do not expect any form of reward for performing what wasasked of you. In time, your outstanding work performance will be recognized.



RELATIONSHIPBUILDINGACTIVITIES

Healthy and productive work relationships are not formed merely by plain daily conversation and workinhand in hand on work assignments. There should be an element of interest among individuals to keep thespark of the relationship alive. People would want to look forward to reporting to work because there is a

pool of nice and friendly individuals who make work a fun and exciting thing.

Part of creating high quality and healthy, meaningful relationships at work is to create a variety of socialization activities and creative ways of dealing with work. Also, working together as a team promota solid relationship among members. Your can try these relationship-building activities in your workplacand notice the positive changes in your people and the work atmosphere.

Small Group Discussion

Office meetings are common ordinary means of huddling a team together. So, a manager must scheduleregular weekly or monthly meetings to update each other with the work progress and projects. There aresimple variations in the way meetings are held. You can use it as an open forum session or a pep talk session for your members. This allows self-disclosure of individuals toward the rest of the colleagues. Italso enhances open communication which is needed in a good relationship.

To break free from the conventional approach, meetings may be held outside the office. You can schedulit as a breakfast meeting, lunch meeting or discussion over coffee. And make sure to keep the atmospherelight, even if the agenda is grounded heavily on work matters.

In the meeting agenda, you may include some assignments for each member apart from the facilitator andthe minute-taker. A sharing of experiences and realizations paves way for a better understanding of eachother. Maybe someone can be assigned as an ice breaker to set a positive mood.

Celebrate Achievements Together

Nothing feels so better in your career than being recognized and acknowledged for your accomplishmentThis even serves as a motivation of the employees to be better than what they already are and deepenstheir loyalty to the company. But what better way to do it than celebrate achievements together? For a



successful project, delight the team to a rewarding treat. The feeling of being appreciated is more thanenough to make work relationships stronger and better.

But this is not just true for achievements and successes. Even special events like an employee’s birthday more fun when celebrated together in your office. Promotions also deserve a celebration. Throw off parties as a simple get-together.

A good strategy is to celebrate monthly company-wide birthday celebrations. Make sure that teamparticipation is encouraged. When these situations are done together, people easily bond because they geto socialize even in the middle of work. The more you do things together, the more productive therelationships become.

Introduce Perks and Fun Stuff in the Workplace

Creativity in work relationships makes the connection meaningful and colorful. It breaks the dullness andsimplicity of connecting with each other at work. Throwing off surprises on ordinary workdays invitesindividuals to get more interested and thrilled in coming to work.

In a team, you can assign an events organizer who will schedule the various perks and fun stuff every nowand then, especially during times when pressure is building up due to a big project. You may want to comup with pizza Wednesdays or dress-down Fridays. The management can introduce a dress-your-officedepartment contest with a specific theme.

5. FOSTERING LONG-TERM RELATIONSHIP

Build trust with our clients by demonstrating professionalism, expertise, and a strong relationshipwith our clients

Construct wealth management and investment strategies to help the client work toward achievingtheir goals

Create a set of carefully selected tools to make decisions based on the best available information Make the right investment choices based on client needs, resources, and risk tolerance Commit to investing quality time and effort on behalf of our clients, a commitment that is essenti

to building that long-term relationship

Time does not stand still and family wealth management, estate planning, and excellent financialmanagement are an evolving process within an ever-changing financial, economic, and tax environment.



Building your asset base enables you to do what you want for yourself and your family and it is a journeyupon which we accompany you.

OR

It may seem odd at first, but as a homeowner it is in your best interest to have with a long-term landscapein order for the arrangement to work. After all, this person will be designing and taking care of your yardat your expense. Since gardens and grounds are developed and maintained year after year, finding theright person and keeping him or her on staff translates to a better looking landscape. The right type of relationship should involve a lot of communication, dedication, careful attention, and comprehensiveinstructions.

Communication

The best relationship with your landscaper involves communication, and a lot of it, especially if your yaris large. The more work that is to be done, the more you will need to talk if you want things to be perfectTalk about everything yard-related, from the plants that you want to the things that you do not want to sein your yard. If you want something special, bring it up early and often.

Communicate about price as well. Know in advance what you are going to pay up front, and how much iwill cost overall. Keep in mind that some charges may be for labor, others for materials, and still more fodesign.

Dedication

The longer you keep a great landscaper, the better the relationship will become. Just like a good marriageyour landscaper will learn what you like and do not like, and the communication process becomes mucheasier at this stage. If the landscaping service is great, do not hesitate to keep them coming back for moreso that you do not risk sub-par yard treatment with the next company.

Careful Attention

Unless you are very familiar with your landscaper and his or her employees, it is not recommended toleave them alone at your home. While the vast majority are likely legitimate and honestly there to work,you cannot take the chance that you will get the one group who is out to steal from you. Instead, scheduleyour landscaping for a day when a responsible adult will be home.

Pay close attention to the work as well, especially if you are paying by the hour. Do not hesitate to speakup if the company begins work on something that you know you will not like. There is no point in payingfor something that you will likely want to change in the near future.



Comprehensive Instructions

If you want your yard’s potential to be maximized, give very detailed instructions to your landscaper. Heor she can tell you what is best, but they will want your input initially to learn your specific tastes andbudget range. Go into detail about what you want, and what you can realistically afford. Then, you can

allow your landscaper to define what is available and doable. When the two of you work together, youryard will look its best and you will be proud to entertain guests, visitors, friends, and family membersoutside.

It is best to have a great relationship with your landscaper, and to keep the best landscapers on staff for aslong as possible. Your yard will look great, and you will know that you are getting the most value for youmoney.

……………………………………………………THANK YOU…………………………………………………