Posted: June 22nd, 2015

The importance of brand management for franchising company in marketing competition.

The importance of brand management for franchising company in marketing competition.

 

1.0 Introduction

 

Franchising as a marketing expansion strategy has been adopted by several global corporations, which aims to obtain predetermined financial return through the granting of licenses to franchising companies. This business format has been widely used in order to establish a global trend. According to Dant (2010) it shows that there are beyond 2000 franchise system in US and 901,093 franchisees employing around 18 million worker, thus created an economic output of over 2.1 trillion dollars which equals to 40.9% of the US retailing sector. Hence, as a profitable and useful business model, it attracted more attention and the studies of this model. Many studies consider the franchising would be one of most profitable and effective to achieve the goal in a new marketplace as it could use the existing intangible and tangible resources from the successful business mode(M’zungu, 2010).

 

There is a steady shift that stressing the exchange of tangible goods, customer focus, to the view of the exchange of intangible resources, such as branding, specialized skills, expertise and the relationships of customers. That indicated that intangible resources were becoming more important for an organization(Lisa Wood, 2000). As for franchising company, one of the significant component for this business format is related to the values that attach in the brand, which indicated that franchising companies not only just want to share the mature business mode from franchisors, but also using their existing brand reputation to obtain customers base rapidly. Hence, the brand effect is meaningful for the franchising company to positioning itself and obtain competitive advantages instantly in a local market.

 

However, most previous research focuses on the influence of the relationship between franchisees and franchisors rather than consider the significance of brand management for a franchisee. This research aims to franchisees and franchisors to develop the understanding of brand management, which might beneficial to making marketing strategy. Consequently, this research would fill the gap by explain the relationship between brand management and the competitiveness of franchising company.

 

 

1.1. Research aims and objectives

 

This research focuses on the franchise business model. The goal of this research to understand the importance of brand management for franchising company and analysis the factors could affect the competitiveness of franchising and brand management which combine the marketing strategy and brand theory together. The final objective is to develop the franchising business model.

 

1.2. Research questions

 

Question 1: What factors could help franchising company to obtain advantage in market competition?

Question 2: What is the impact of branding on the competitiveness of franchising company in market?

Question 3: How important the brand management for franchise business model?

 

2.0. Literature review

 

2.1. Franchising business

 

According to Michael(2003), franchising has been considered as a technique that enable assemble resources together in order to get first-mover advantages. This concept is based on the principle of maximizing the utilization of resources. Oxenfeldt and Kelly (1968–1969) firstly introduced the resource scarcity, which require a business format to solve this problem. Hoffman and Preble, (1991) also confirm that Comparing to establish a new company, franchise system enables the franchisor rapid market penetration with a low cost. In this system, franchises start to adjust the “counterpart” of business mode to adapt the different market environment. Moreover, Domingo Ribeiro and Gary Paul Akehurst (2014) indicated that the key reason of franchise join this business mode is that facilitates to rapidly establish business partnership and enlarge business sizes. However, it might need them pay more attention to collaboration with their business partners. In the process of collaboration, the relationship between franchisors and franchises would be crucial to the business development. Pardo-del-Val(2014) posed a question of whether should franchisee maintain standardization or have more flexibility on company operation. They think the answer is that standardization or flexibility should depend on the maturity of the business format. Furthermore, Domingo Ribeiro and Gary Paul Akehurst(2014) also proposed the brand franchise concept the approved the vital role of a brand in marketing competition. Therefore, brand management would become more important factors for franchising companies with the increasingly competitive environment.

 

2.2. The factors contributing to franchisees competitiveness

 

Previous studies conducted by Altinay et.al (2014) has emphasized the significance of franchising partnership between franchisees and franchisors, which affect the competence and competitiveness of a franchising company. Specially, Coleman (1990) pointed out that franchisor’s confidence that come from the trust and commitment relationship progresses would contribute to developing the its capability to deal with uncertain and unpredictable risks from external marketing environment. Franchisees duplicate the business model that include production technologies, promotion strategy, management operation, etc. as the basic competitiveness in a market. Therefore, it is necessary to establish an effective communication and good relationship with franchisors to guarantee a reliable back up for itself.

 

However, Pil Hahm (2008) demonstrated that franchises are facing to expanding difficulties as the higher degree competition in the market, which requires franchisees to evolve the original business mode such as adopting new production technologies and adjusting the promotion strategy. Therefore, the adjustment of business strategy that bases on the original concept and the market situation could be essential factors to strengthen its competitiveness in order to adapt the high degree of competition markets. Nevertheless, this statement might related the question of standardization or flexibility that Pardo-del-Val(2014) proposed. Therefore, it might relate to the relationship between franchisees and franchisors and depend on the maturity of the business system.

 

Another factor could contribute to the competitiveness is related to the branding. O’Neill(2008) stated that the branding could be an effective way to gain competitive differentiation, especially for franchisees, it has use the right to the symbol, name of the brand to gain the customer attention rapidly, which attempt to get competitive priority with existing brand popularity in a market. Brand equity as an intangible resource has been recognized that could directly determine the customer buying behaviors. For franchising company, mature and successful brand image would be a prominent advantage in a marketing competition.

 

2.3. Brand management for franchising company

 

Referring to brand management, M’zungu(2010) indicated that the main purpose of brand management is to protect brand equity in order to maintain the brand value as a consistent competitive advantage in a marketplace. Brand equity is viewed as a multidimensional concept, which consists of brand loyalty, brand awareness, perceived quality and brand associations (O’Neill et al. 2008). These four aspects could affect the purchasing behavior in a large extent.

 

To take scope of the branding effect to an organization, PDCL model: positioning the brand, communicating the brand message, delivering brand performance and leverage brand equity would be adopted to explain the approach of brand building, which could be a conceptual foundation for brand management. However, this model only considered how to improve communication with customers rather than consider the customer psychology from their perspective. In term of the brand management, Oriol Iglesias and Eduard Bonet(2012) proposed that brand managers not only take customer response in account, but also need to consider the relevant stakeholders involve in the creation and interpretation of brand. It indicated that stakeholders such as employees could be an important role in the process of brand building.

 

Even though the PDCL model include the communicating the brand message, it needs to specifically explain the communication way of a brand through some activities such as advertising. Advertising is an effective and common way that aims to raise the brand awareness of customers. Malik et al.(2013) demonstrated that advertising could affect the people’s emotional, psychological and behavioral aspects, thereby involving their decision-making. Furthermore, Kuksov, et al.(2013) commented that advertising enable attach of extra identity to a product through the symbol, design style, and celebrity effect. Thereby contributing to form a unique brand identity in the perception of customers. Both of two authors claimed that advertising effectiveness is meaningful to brand building, but they ignore the impact of other factors such as quality, price and customer involvement.

 

Brand management not only related to the promotion activities, but also associating with the brand commitment. Bumann and Zeplin (2004) claim that to build a strong brand, it needs to include more elements such as quality, price and customer involvement than appealing on advertising or other promotion activities. The quality and price of products or services would affect a brand image with high customer involvement on this aspect. For franchising company, it already has relatively fixed price and quality, but there is a question of how to guarantee these characteristics: price and quality as a brand commitment consistently under the increasing competition market. Therefore, brand management need consider the commitment of product or service

 

In terms of the brand value in marketing competition for franchises, according to the Nyadzayo et al. (2011) that Brand building has significant meaning for Business to Business market in the context of business to customers, which is an effective way to establish partnership and against competitors and enhance market shares. To be more specific, franchise is a communication intermediary between franchisors and customer, therefore, good brand equity could help franchises to gain priority of customer decision-making compare to other business format, thereby enhancing the competitiveness through the branding advantages. However, even through the brand equity play a vital role in the marketing competition, the crucial point for a franchising company is to place more emphasis on brand management consistently. Jevons et al.(2005) pointed out the importance of business network, an increasing attention on collaboration among the business partners would be a foundation to maintain a strong brand image and the consistency of brand communication.

 

To summarize, brand management could contribute to strengthening the competitiveness for a franchising company. However, it has been approved that two variables: franchisees -franchisors partnership and strategy adjustment also has the significant impact on competitiveness building. To assess the importance of brand management, it firstly requires evaluating the brand effectiveness in the marketing competition. The literature review roughly explains the factors could affect brand management, but it did not find a specific model or theoretical framework for franchising companies.

 

3.0. Methodology

 

This research will adopt interpretivism research philosophy as it aims to explain the significance of brand management for franchising business model. The purpose of this research is to investigate the importance of brand management for a franchising company. Therefore, it requires collecting a subjective data of samples. Furthermore, this research would focus on collecting a lot of qualitative data with the semi-structure interview from existing journal and the research paper. All of the points have mentioned indicate that requires interpretivism research philosophy (Saunders et al. 2012).

 

It would be an explanatory research as the research nature and undertaking the inductive research methods, which might because this research aims to develop a business model by a specific focus on the brand management. As a secondary research, this research is to investigate the relationship of between brand management and the competitiveness of the franchising company. As for this research, it will firstly investigate the factors that could affect the competitiveness of franchising through the qualitative approach and the importance of brand management with the qualitative approach. This research would review the qualitative data from prior literature such as journal and research paper to collect the interviewees’ opinion such as brand managers and franchisees. The quantitative data would be collected through the statistics of web-based questionnaires. Consequently, the data and information would be collected through the survey. Due to the limit time and cost, it is impossible that to collect primary data and information. Therefore, the survey strategy that available in journal articles or website would be useful information sources. In terms of the sampling, this research would collect the data and information in two retailer industry: fast food restaurant and supermarket industry as the two industries are frequently adopting the business model of franchising and highly require the brand management theory.

 

In order to interpret the data and information, the quantitative data would be transferred and described through a range of statistical techniques, which give a direct expression of the relationship among the variables. For example, the data would be summarized through descriptive statistics such as mean, parameters and the standard deviations for the different industry. Nevertheless, it might require to an analysis of literary description base on the theoretical framework.

 

3.1. Limitation and advantages

 

This research has highly focused on the type of business model, which would contribute to understanding the characteristics of the franchise. This research will use mixed research approach that could interpret the data and information comprehensively. The limitation for our research that it is a secondary research, the information and data of this research are collected from prior literature. These findings might not be useful for our research, and it is difficult to measure the validity of findings. Therefore, it is difficult to calculate the deviation in the process of data analysis. Furthermore, the sample would focus on two types of industry: supermarket and fast food restaurant industry. Therefore, it might not represent the all the franchising companies.

 

4.0. Conclusion

This research focus on the importance of brand management for franchising companies. Base on the previous studies, it would adopt mix research methods: quantitative approach to investigating the factors could affect competitiveness of franchising company and qualitative approach to explore the relationship between brand management and competitiveness of franchising company. It would be difficult to add a new concept on the mature business model. Therefore, the theoretical framework and methodology might require modification and improvement for further research.

 

Dates Objectives
1st April Research Proposal submission.
Afterwards—Mid-May Sampling selection;

Questionnaire collection.

Submit Ethical Approval Form

Afterwards—Late-June Collect the information of semi structure interview from Journal articles.

Completion of Introduction section

writing Literature Review

Afterwards—Early-July Completion of data collection;

Completion of Literature Review section

Afterwards—Mid-July Start writing up Methodology Chapter;

Data analysis;

Writing Findings, Discussion and Conclusions Chapters.

Afterwards—Late-July Completing Finding, Discussion and Conclusions.

Writing References section

Afterwards—Early-August Attach appendices.

Submission of First Draft.

August Finalize and Submission of Dissertation.

Time Chapter

Word count:2403

References

 

Altinay, L., Brookes, M., Yeung, R. and Aktas, G. (2014). “Franchisees’ perceptions of relationship development in franchise partnerships” Journal of Services Marketing. 28(6), 509-519.

 

Bhimrao M. Ghodeswar, (2008) “Building brand identity in competitive markets: a conceptual model” Journal of Product & Brand Management. 17(1),4 – 12.

 

Burmann, C. and Zeplin, S. (2005). “Building brand commitment: A behavioural approach to internal brand management” Brand Management, 12(4), 279-300.

 

Dant, R., Grünhagen, M. and Windsperger, J. (2011). “Franchising Research Frontiers for the Twenty-First Century” Journal of Retailing. 87(3), 253-268.

 

Domingo Ribeiro and Gary Paul Akehurst(2014) “franchising in service” The Service Industries Journal. 34(9–10), 751-756.

 

Hahm, S. and Khan, M. (2001). “Co-Branding Strategy in the Restaurant Industry” Journal of Hospitality & Leisure Marketing, 8(1-2), 45-61.

 

Jevons, C., Gabbott, M. and de Chernatony, L. (2005) “Customer and brand manager perspectives on brand relationships: a conceptual framework” Journal of Product & Brand Management, 14(5), 300-309.

 

Kuksov, D. Shachar, R. and Wang, K. (2013). “Advertising and consumers’ communications” Marketing Science. 32(2), 294-309.

 

Lisa Wood, (2000) “Brands and brand equity: definition and management”, Management Decision. 38 (9), 662 – 669.

 

Malik, M. Ghafoor, M. Iqbal, H. Ali, Q. Hunbal, H. Noman, M. and Ahmad, B. (2013). Impact of Brand Image and Advertisement on Consumer Buying Behavior. World Applied Sciences Journal, 21(1), 117-122.

 

Michael, S. C. (2003). “Determinants of the rate of franchising among nations” Management

International Review. 43(3), 267-291.

 

M’zungu, S., Merrilees, B. and Salinas, G. (2010). “Brand management to protect brand equity: A conceptual model” Brand Management, 17(8), 605-617.

 

Nyadzayo, M., Matanda, M. and Ewing, M. (2011). “Brand relationships and brand equity in franchising” Industrial Marketing Management. 40(7), 1103-1115.

 

O’Neill, J., Mattila, A. and Xiao, Q. (2006). “Hotel Guest Satisfaction and Brand Performance” Journal of Quality Assurance in Hospitality & Tourism. 7(3), 25-39.

 

Pardo-del-Val, M., Martínez-Fuentes, C., López-Sánchez, J. and Minguela-Rata, B. (2014). “Franchising: the dilemma between standardisation and flexibility” The Service Industries Journal, 34(9-10), 828-842.

 

Steven A. TaylorKevin CeluchStephen Goodwin, (2004) “The importance of brand equity to customer loyalty” Journal of Product & Brand Management.13 (4),217 – 227.

 

Vázquez, L. (2007). “Determinants of contract length in franchise contracts” Economics Letters. 97(2), 145-150.

 

 

 

 

 

 

 

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