Subject-Retailing-II

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Keyur D vasava..

Module 1. Merchandise Management:

(A)PLANNING AND IMPLEMENTATION
1. CONCEPT OF MERCHANDISING
Merchandise Management
Merchandise 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 Management

Merchandise 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 investment 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, acquisition, 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 time 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 be sold. Control is required since the function of merchandise involves spending money for acquiring products it is 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 the 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 carried by a retailer largely determines the responsibilities of the merchandiser.
Merchandise to be carried: The buying for basic merchandise is fairly different from buying fashion merchandise. 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. Some organization may differentiate the role of the buyer and the role of a merchandisers separately.

THE MERCHANDISES ROLE & 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 managers Job.
This includes evaluated on the basis of net sale, maintain mark up percentage, gross margin % and stock 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 hands 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 & Signages 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, creates desire 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. The purchasing function has become a permanent and important preoccupation for the assurance of the 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, sale activity. The management of the organization largely adopts a new view regarding the purchasing function and the department of techno-material assurance, considering them not only expenses centers, but also, profit centers, or even, responsibility centers. The conceptual approaches regarding purchasing, buying, supplying or procuring are numerous and different and, the above mentioned terms are treated either as synonyms, or similar, or even as different words. The supplying delivering chain assures the interface of the organization with 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 of obtaining 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 data basis; - 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 the necessary equipments, materials, supplies and services, in order to use them within the production. Other authors (2) Consider the buying as being the goods purchasing and necessary services, at an optimal cost, 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 being determined for a short term; - buying is a function of purchasing the material resources directed to the exterior, the relationship 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 (raw materials, materials, components), by inputs which arent to be found in the finished products offered to the clients (articles for repairs, operation and maintenance, etc.) as well as by production, office and other service equipments. The function of buying does not include in the subject 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 purchase the goods and services necessary to the organization, process by means of which the suppliers and the marks are estimated, and also, those who are satisfying at an upper level - the needs of 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 the complete commands or contracts, of big value, or different from the previous ones. The buying may 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 the satisfaction produced by the previous purchase, the need is constant (e.g. consumables), and the suppliers are traditional.

2. The modified buying may be practiced when a part of the buying routine is modified (product, price, delivering conditions, etc.). 3. The new buying appears when the organization doesnt 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 supplier for the repeated buying will penetrate very hardly the market, speculating the weaknesses of the current supplier. Focusing the efforts in the situation of the new buying is made by offering some new viable solutions and supporting the buying centre in developing the technical specifications. In this case, the specialists in marketing offer consulting concerning the identifying of those members 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 set up 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 paying in 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 the buying efficiency; - reducing the afferent losses of stores, by optimizing the stores and avoiding the breaking of stores; - developing the relationships with the competent suppliers, by an accurate estimation of the actual and potential suppliers performances and forming some partnerships on a long term, identifying and developing of some alternative trusting sources, in order to reduce the dependence on a single source; - monitoring the tendencies of the market and maintaining the position of the organization, by identifying 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 the manufactured product, with positive effects in reducing the costs; - optimizing the inter functional relations of the purchasing department with the other departments of the organization, to harmonize the duties of the organization in order to carry out the 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 services
necessary to the enterprise, from adequate external sources, having as aim the fulfilling of the clients needs forming the market-target (6). the concept and the practice of the buying activity have known important changes as against the traditional concept, both in the organizational range and those of the relationships with the suppliers 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 to the semantic content of the terms, the focusing being directed to the image that has to be transmitted. As a result, the buying is considered a commercial act comprising the identification of 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 desired quantity, 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 and laborious 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 suppliers 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 which could be solved by buying a product or a service. Then, follows the definition of the characteristics of the products which will be bought to satisfy the identified need, by setting down the 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 the purchasing 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 to assure 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 the Obtaining 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 buyers signature.
THE CONVENTION is a document that confirms to the supplier the intention of the buying organization

to order the raw materials, products or services on a defined period oftime and, in specified conditions, defined by means of the both sides agreement. The clauses of the convention have to guarantee the future procuring of the products, which are 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 recent years 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 importance given to developing partnerships with suppliers.
Point 2 - The organizational buying behaviour process.

The organizational buying behaviour process is well documented with many models depicting the various phases, the members involved, and the decisions made in each phase. The 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 directly or indirectly in the buying process, i.e. the user, buyer influencer, decider and gatekeeper to who the role of initiator has also been added. The buyers in the process are subject to a wide variety and complexity of buying motives and rules of selection. The Matbuy model encourages marketers to focus their efforts on who is making what decisions based on which criteria.
Point 4 - Risk and uncertainty - the driving forces of organizational buying behaviour.

This is concerned with the role of risk or uncertainty on buying behaviour. The level of risk depends upon the characteristics of the buying situation faced. The supplier can influence the degree of perceived uncertainty by the buyer and cause certain desired behavioural reactions by the use of information and the implementation of certain actions. The risks perceived by the customer can result from a combination of the characteristics of various factors: the transaction involved, 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, types of buying situations and situational factors, geographical and cultural factors and time factors.
Point 6 - Purchasing Strategy.

The purchaisng function is of great importance because its actions will impact directly on the organizations profitability. Purchasing strategy aims to evaluate and classify the various items purchased in order to be able to choose and manage suppliers accordingly. Classification is along two dimensions: importance of items purchased and characteristics of 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 company will develop different relationships with suppliers depending upon the number of suppliers,

the suppliers share, characteristics of selected suppliers, and the nature of customersupplier relationships. The degree of centralization of buying activities and the missions and status of the buying function can help support purchasing strategy. The company will adapt its procedures to the type of items purchased which in turn will influence relationships with suppliers.
Point 7 - The future.

Two activities which will be crucial to the future development of organizational buying behaviour will be information technology and production technologies.
Point 8 - Conclusion.

Organizational buying behaviour is a very complex area, however, an understanding of the key factors are fundamental to marketing strategy and thus an organizations ability to compete effectively in the market place. 3. THE PROCESS AND IMPLICATIONS OF MERCHANDISE PLANNING
THE CONCEPT OF MERCHANDISE PLANNING: The retailers reason for existence or his vision and missions for being largely dictates the business strategy adopted. A part of this strategy is also the retail model that he chooses to operates in, which in turn determines the type of product, the price etc., that is retailed in the store. Therefore while the retailers business mission dictates merchandise planning the starting point of merchandise planning is in analysis. Merchandise planning can therefore, be defined as the planning and control of the merchandise inventory of the retail firm, in a manner which 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 the possibility of the right assortment of goods, with the adequate amount of depth, to be available at the stores where it is needed. The process of merchandise planning further enhances the possibility of increased stock turns, thereby releasing important working capital. From the point of view of the customer, it is beneficial as it increases the choice available to him and reduces the possibility of facing a situation when the store is out of stock of the merchandise needed.

The process of Merchandise Management Store (Format) Strategy> Business Strategy>>

Merchandise Strategy> Merchandise Planning >> 1) Product 2) Price 3) Range 4) Assortment 5) Space Sourcing>> 1) Make or Buy 2) Vendor identification 3) Negotiations 4) 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 the merchandiseinventory 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 the merchandiseinventory of the retail firm, in a manner whichbalances between the expectations 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 sales 2. Analyzing the economic conditions 3. Analyzing the sales potential 4. The marketing strategy of the competitors 5. Creating the forecast Stage II: Determining the merchandise requirements Determining the Merchandise Requirement
MERCHANDISE BUDGET

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 Merchandise Seasonal Merchandise Fad Merchandise Variety of Merchandise Width of Assortment Depth of Assortment Consistency

4 IMPLICATIONS OF MERCHANDISING PLANNING

Finance Purchase order and profitability Marketing Advertizing and sale s p r o m o t io n s W a re h o u s i ng & Logist ics M e rcha n d ise r e c e i v i ng a n d verifica t io n S t ore o p e r a t io n s S p a c e p l an n i ng a v o i d d u p l ic a t io n 4. CATEGORY MANAGEMENT

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 a marketing manager is better able to judge consumer buying patterns and market trends by focusing on the entire product category.

1. CATEGORY MANAGEMENT is a retailing concept in which the range of products sold by a retailer is broken down into discrete groups of similar or related products; these groups are known as product 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 strategic business 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 a business tends to alter the relationship between retailer and supplier: instead of the traditional adversarial 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 the sales of individual products. Suppliers are expected, indeed in many cases mandated, to only suggest new product introductions, a new planogram or promotional activity if it is expected to have 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 other 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 industry professionals 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 product offerings 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 grocery retailers will segment stores at least by size, and select product assortments accordingly. Wal*Mart's Store of the Community, implemented in North America is one of the few examples of where product offerings are 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 by the Partnering Group. The eight steps are shown in the diagram on the right; they are : 1. 2. 3. 4. 5. 6. 7. Define the category (i.e. what products are included/excluded). Define the role of the category within the retailer. Assess the current performance. Set objectives and targets for the category. Devise an overall Strategy. Devise specific tactics. Implementation.

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

5. THE CONCEPT OF NATIONAL BRAND, LOCAL BRANDS

(NATIONAL) local brands vs global brands

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

Local brands may appeal to those consumers who favor small, local producers over large national or 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 and advertising 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 positions 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 data suggests 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 not be surprising because few of today's global brands were originally designed to travel. Most of them originated long before the imperative to go global took hold. We can hypothesize that as a strong brand moves from its country of origin, it struggles to effectively meet different consumer needs and desires in the new territory. No matter how strong a brand might be on its home turf, it can be tough to win over local 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 they qualify as strong brands in their own right. The different ways in which a brand can be perceived as part of 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. GLOBAL BRANDS: W HO WILL WIN?

The question of whether local or global brands will ultimately prevail can be answered simply: yes! A brand is merely the relationship that is created between a product and its consumer. The company manages, and is responsible for, the consumers' total product experience. For its efforts, if effective, the consumer responds with his or her patronage. This is a relationship that requires consistent company investment 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 want consumer electronics from a neighborhood company. Sony and the like do me just fine, thank-you. At the same time, I look exclusively to local brands to deliver such things as my hometown news and perishables (milk, eggs, etc.) for example. The strength of my attachment can be equally powerful to both brands, as the opportunity for realtionship building is equally available to each type of brand. Consumers will continue to establish relationships with relevant brands that create meaningful interaction with them without regard to geography. Both local and global brands will continue to thrive and to fill their respective consumer needs. Brand managers must be strategic about how they manage the dynamics of the product - consumer relationship to best take advantage of whatever the particulars are of their circumstance.
OR

Global Branding Versus Local Marketing

Day by day, global branding is becoming a bigger challenge. Why? Because it's no longer possible to isolate a brand and its reputation. You might think you've created an excellent strategy for your brand in one local market, only to realize that the rest of the world has access to that same local communication. This exposure destroys any possibility 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 the growing difficulties that attend global brand building. Related to this complication are the internal issues that arise. For example, how can corporations handle the local and global mix in their marketing departments? Is every local marketing department now obsolete? Can local marketing be taken over by a single department of centralized marketing functions? Such issues are the result of the speed and spread of communications. The Internet has enabled every consumer to access every piece of communication in the world. Good old concepts like running test markets have been dramatically altered because of the increasing proximity among markets. True separation among markets has disappeared. When Coca-Cola selected Australia as the test market for the first non-Coca-Cola drink it had launched in years, most of the world watched the experiment, and almost as many people participated in the experiment 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 approaches. They're having to forego the strategy that provides local marketing teams with full autonomy. So, how should 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 now obsolete. I would separate local brand-building activities from global brand-building activities on the promotional side, as McDonald's has done. Ronald McDonald is the key in-store promotional figure. Very seldom do you see him on television commercials and, when you do, you see him publicizing in-store promotions. Ronald, very cleverly, has become McDonald's point of differentiation in each market. He celebrates Christmas in Northern Europe and the Chinese New Year in Hong Kong. He promotes McDonald's wine in 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 local adaptations of these, too. But you can see McDonald's local twists are substantially stronger in the in-store promotions than on television. The purpose of global brand management is to conceive of and control a brand's global direction, and this is done by defining and communicating the brand's core values. The execution of this communication lies in 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 adjusting their execution to communicate meaningfully with each local market. If a local event like the Chinese New Year is taking place, it's the local brand-builder's task to ensure the brand leveraging on it. Local brand building depends on an acute awareness of local trends; it's all about leveraging knowledge that the international 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 to work hand in hand.
OR Global brand

Benefits of global branding

In addition to taking advantage of the outstanding growth opportunities, the following drives the increasing 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 a brand 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 brands 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 labels, unique 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. SOURCING STRATEGIES
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 looking at the cost-savings when considering using foreign sourcing is somewhat shortsighted. Companies thinking 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 and the lower cost alternative. Obviously, not all countries are functioning at the same technological level. If a 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 many 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 lower 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 country may save money if it is sold overseas but if the company has plans to also sell that product in the area around 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 securing a supply of the goods and services needed to continue a steady production after foreign sourcing has been 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 lower production costs, to improve competitiveness 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 terms 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 are 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 without 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 and more of an administrative function. The purchase managements were the fall guys whose only aim was to keep feeding shop floor and avoiding stock out situation. Today the situation has changed totally. Procurement function is considered to be a strategic initiative and seen to be adding value to entire business process. Profile of the procurement managers has changed and expectations from these managers are different. Modern day procurement managers manage procurement and sourcing function both at strategic and operational levels. They are proactively engaged in building supplier networks, estimating, controlling and reducing costs besides performing other functions and ensuring service levels. Their job functions are increasing 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 procurement business process.
Procurement Function

Procurement function as explained above is one part of the sourcing function. In an ERP enabled environment, procurement function consists of detailed indenting process, procurement budget management, purchase order release, shipment schedule planning with seller coupled with ensuring compliance 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 with capital 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 procurement professional needs to have operational knowledge of logistical activities in supply chain network, the various agencies, knowledge of policies, customs rules, Taxation, commercial, logistical and customs documentation 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. The strategy involves integration of its objectives in line with or confirming to the objectives of stake holders in operations, finance. Marketing and distribution. Lastly sourcing strategy involves planning to competitive buying sources for its raw materials, components and services along with alternative variables. Procurement Process as described above, deals with operational zing business process of procurement function 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, there has 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. Complex business models at global scales coupled with market demands have necessitated companies to set up manufacturing or assembly facilities closer to markets as well as in locations where conversion costs are relatively cheaper. This necessitates that the business be supported by a solid vendor base which is able to ensure 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 introductions of products depend upon speedy development of new design supplier parts and the suppliers having to keep pace with changing designs and requirements. Lean Manufacturing and cost per unit concept is demanding that the managers keep looking to reduce the procurement cost as well as procurement logistics cost. By developing a relationship with suppliers in a collaborative mode, buyers are able to get supplier companies to hold inventories for them at buyer location 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 added services 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 have to 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 longer transactional.

OR

GOOD SOURCING STRATEGIES:

increase the Centers visibility court sources utilize the Internet for widespread posting of position announcements and for finding the hard-tofind potential candidates advertise in the print media consider hiring recruiting firms for more senior positions evaluate sourcing strategies

Sourcing strategy #1: Increase the Centers visibility

1 Recruitment initiatives today must be highly visible, accessible and interesting to job applicants. An essential 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 the Centers 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 their attractiveness as employers of talented and diverse workforces. 3 In some cases, these efforts to improve the work environment actually have been integrated as a concept termed great place to work. Great place to work not only has been adopted by many progressive organizations, 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 looking for signs of inclusion and acceptance in the organizational culture. If a Center is seen as an organization that offers real opportunities to diverse employees, where all employees are treated with respect and where senior 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 as diversity 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 positions, often because many potential candidates for senior vacancies fall into the passive market category. In other words, they are quite happy in their current positions. 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 may not be interested themselves, but may know of good former students and other professionals who might 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 hoping that those candidates might read the position 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 Centers mission and values, and its commitment to diversity. Tapping networks of board members and current staff 9 Board members may be good sources of names of potential candidates who are women or nationals of developing countries, particularly for senior scientific or management positions. In addition, current Center staff members may know of potential candidates or those who might know of potential candidates. 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: Utilize 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 and

cheaper than most traditional recruitment methods. Positions 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 sites appears 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 tools appears in Tips and Tools. They are not designed for finding job seekers per 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 position announcement and entice their application.

Sourcing strategy #4: Advertise in the print media

17 Placing position 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 Centers 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 #5: Hire a recruiting firm

20 This strategy is recommended for Centers filling senior management positions or other senior positions that are especially strategic for the organization. Centers that have used recruitment consultants in recent years generally have benefited significantly. Recruitment consultants bring a degree of objectivity that may be advantageous to some parts of the process such as checking references. 21 Although no single recruitment consultancy focuses solely on agricultural research or the sciences, some specialize in non-profit and international organizations. Costs and terms vary considerably. Types of recruiting firms

22 There are two categories of recruiting firms: contingency and retainer.

contingency firms typically present their candidates to a number of organizations, charging a fee when the candidate starts the job; and retainer firms charge a fixed fee, usually paid up-front. Retainer firms typically are used for senior management level and technical jobs that need specific or targeted recruitment to identify candidates.

23 Both types of firms typically charge 20 to 30 percent of the first year's salary, although some non-profit specialty firms are structured to work at a flat fee of 10 to 15 percent. It is possible to negotiate these fees volume and long-term relationships should mean better pricing arrangements. Briefing the recruiter 24 When a Center decides to engage a recruiting firm, it is essential to brief that firm comprehensively. This brief should include:

information on the Centers mission and values, its strategic objectives, its main activities, and thus the context of the position being filled; the position description, particularly ensuring that competency requirements are clearly specified; information about the Centers diversity policies and goals.

Recruitment contract 25 The recruitment contract should specify gender and diversity issues relevant to that specific position, such as:

requirements for sourcing a highly qualified/diversified candidate pool, including women and developing country nationals, and requiring the recruiter to report on applicants, shortlists and selection processes by gender and nationality.

Sourcing strategy #6: Evaluate sourcing strategies

26 There is not one best sourcing strategy in recruitment. All sourcing strategies, including courting candidates, 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.

RETAIL MARKETING MIX

The Retail communication mix

Communication is an integral part of the retailers marketing strategy. Primarily, communication is used to inform the customers about the retailer, the merchandise and the services. It also serves as a tool for building the store image. Retail communication has moved on from the time when the retailer alone communicated 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 customer view of the company. The retailer can use various platforms / channels for communication. The most common tools are: 1) Advertising 2) Sales Promotion 3) Public Relations

4) Personal Selling 5) 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 through mass 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 of the following objectives: 1) Creating awareness about a product or store 2) Communicate information in order to create a specific image in the customers mind in terms of the store merchandise price quality benefits etc. 3) Create a desire to want a product. 4) To communicate the stores 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, bargain days, midnight madness etc. 8) Help reinforce the retailers corporate identity. The retailers for advertising may use any one or a combination of the following mediums: 1) Press advertisements 2) Posters and leaflets, brochures booklets 3) Point of purchase displays 4) Advertising can also be done through mediums like radio, television, outdoor hoardings and the internet.

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 fixed percentage of sales. The biggest advantage of this method is that it is simple to apply and it allows he retailer 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 be based on wrong information and again there is little consideration for market conditions or growth opportunities.

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 these goals. Next, the management determines the cost for each task and adds up the total to arrive at the required budget. Here, he advertising expenses are linked to the retailers objectives and the effectiveness of 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 be allocated by the retailer for this purpose. While determining which method s to be adopted, a retailer needs to take into consideration the market that the firm is operating in , its current market position and how important advertising is in that market.
2.

MANAGEMENT OF SALES PROMOTION AND PUBLICITY

Sales Promotion
Demand-stimulating devices designed to supplement advertising and facilitate personal selling. 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 producers 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 its products 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. THE RETAIL COMMUNICATION 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 marketing concept is a philosophy, not a system of retailing or retail structure. It is founded on the belief that profitable retailing and satisfactory returns on investment 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 activities. 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. Television Cinema Radio Directories Packaging Hoardings/Posters Magazines Catalogues Brochures Internet

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. A feature in a paper, magazine sometimes seem more credible to readers than ads BUT it is restricted by editorial decisions by the media source used Money-off coupons Free gift Samples

Store Atmosphere

The combination of the stores physical characteristics (architecture, layout, signs and displays, colors, lighting, temperature, sounds, smells) together create an image in the customers mind

Retailers Community Building Websites

It offer opportunities for customers with similar interests to learn about products and services 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. Effective medium for influencing all stages of the decision making process, especially the decision to buy. High level of control. Good for small businesses with local markets complex products and services.

Direct Mail

Mail shots E-mail CD-ROMS

Email

Retailers inform customers of new merchandise, receipt of order or when order has been shipped
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. A feature in a paper, magazine sometimes seem more credible to readers than ads BUT it is restricted 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 quality pay attention to packaging give 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 activities team up with other local businesses and pass customers between you To get people to tell others about you, you must:

Personal Selling Presentations Meetings Telemarketing Trade fairs

Steps to develop a Communications Program.

1 .Identify target audience 2.Determine Promotion Objectives 3.Set Promotion Budget 4.Decide on Suitable Time-Span 5.Design the Message 6.Decide on Promotion Mix and Allocate Budget 7.Carry out Promotion Plan 8.Measure and Analyse Results
Identify Target Audience

Market research and market segmentation will help to identify the audience for your product or service. Information on how large the audience is, where they are located and hopefully some idea of their needs, attitudes 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 mixs effect on the customers decision-making process Long-term: ex) creating or altering a retailers 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 no money 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. advertising fireworks in January!

Decide on Message

The message and the medium used to convey that message will be affected by the type of product/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 stage in the buying process that needs to be influenced. The AIDAS model can illustrate this buying process:

Attention Interest Desire Action Satisfaction Ideally the message should get the attention of the consumer and take them through the stages until a purchase is made and satisfaction reached. In practice few messages take a consumer through the whole process, but are pitched at a certain level that meets the promotion 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 claimed benefits such as quality, economy, value, e.g. car ads. Emotional - stir up a positive/negative emotion that will motivate purchase, e.g. Andrex puppies. 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. The message format depends on the promotional medium used. For printed ads, careful decision for headline illustration, colour etc. For personal selling, decision as to choice of words, portfolio, dress, body language.
Decide on Promotion Mix

Each promotional element has a different communication capacity, is effective at different stages in the buying process and we have a different level of control over each one. Therefore the decision for choice of promotion mix will depend upon: Target audience objectives timing stage of product life cycle complexity of product

competition legal restraints monetary restraints etc.

Carry out a promotion Plan

A pre planned promotion should be done so that it is able to attract consumers and is successful. Various methods for promotion can be adopted Such As- advertising, sales promotion, 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 used or 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 retailers marketing strategy. Primarily, communication is used to inform the customers about the retailer, the merchandise and the services. It also serves as a tool for building the store image. Retail communication has moved on from the time when the retailer alone communicated 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 customer view of the company. The retailer can use various platforms / channels for communication. The most common tools are: 1) Advertising 2) Sales Promotion 3) Public Relations 4) Personal Selling 5) 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 through mass 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 of the following objectives: 1) Creating awareness about a product or store 2) Communicate information in order to create a specific image in the customers mind in terms of the store merchandise price quality benefits etc. 3) Create a desire to want a product. 4) To communicate the stores 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, bargain days, midnight madness etc. 8) Help reinforce the retailers corporate identity. The retailers for advertising may use any one or a combination of the following mediums: 1) Press advertisements 2) Posters and leaflets, brochures booklets 3) Point of purchase displays 4) advertising can also be done through mediums like radio, television, outdoor hoardings and the internet.

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 fixed percentage of sales. The biggest advantage of this method is that it is simple to apply and it allows he retailer 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 be based on wrong information and again there is little consideration for market conditions or growth opportunities. 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 these goals. Next, the management determines the cost for each task and adds up the total to arrive at the required budget. Here, he advertising expenses are linked to the retailers objectives and the effectiveness of 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 be allocated by the retailer for this purpose. While determining which method s to be adopted, a retailer needs to take into consideration the market that the firm is operating in , its current market position and how important advertising is in that market.
3.

BUILDING STORE LOYALTY

Store loyalty exists when a consumer regularly patronizes a particular retailer (store or nonstore) that he or she knows, likes, and trusts. In a market in which a segment of consumers is sensitive to product quality 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 store profitability, even when the store brand does not have a margin advantage over the national brand. In addition, this loyalty argument does not apply for the "cheap and nasty" private label strategy. Such a private label policy, on the contrary, reinforces rather than reduces price competition among stores. Indeed, the quality of the store brand must be above a threshold level to create this opportunity. It also follows that quality store brands, when carried by competing retailers, can be an implicit coordination mechanism that enables all the retailers to become more profitable. Finally, a quality store brand policy is 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 and loyalty, whereas the latter enable the retailer to raise prices and increase store profitability. Customer service represents a key element of retail strategy for maintaining a sustainable competitive advantage and building store loyalty, even during difficult economic times. Customers are becoming more demanding about the services they expect from retailers both online and in person. In light of the importance of customer service, we propose a framework to refine insights into several retail strategy components such as availability of service personnel, responsiveness to customers, personalization, proactiveness, and loyalty programs. These insights may be useful to both practitioners and academics alike. Retail strategies should generally accommodate the specific retail format being used (e.g., physical store, physical and online, or pure online). 4.

THE CONCEPT OF IMC

Integrated Marketing Communications (IMC) is the coordination and integration of all marketing communication tools, avenues, functions and sources within a company into a seamless program that maximizes 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 drive brand value primarily through communication efforts. Such efforts often include cross-functional processes that create and nourish profitable relationships with customers and other stakeholders by strategically 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 marketing communication tools, avenues, and sources within a company into a seamless program in order to maximize the impact on end users at a minimal cost. This integration affects all firm's business-tobusiness, marketing channel, customer-focused, and internally directed communications.

IMC Components
The Foundation - corporate image and brand management; buyer behavior; promotions opportunity analysis. Advertising Tools - advertising management, advertising 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, and customer relations management; public relations and sponsorship programs. Integration Tools - Internet Marketing; IMC for small business and entrepreneurial ventures; evaluating and integrated marketing program.

Integrated marketing is based on a master marketing plan. This plan should coordinate efforts in all components of the marketing mix. A marketing plan consists on the following steps:
1. Situation analysis 2. Marketing objectives 3. Marketing budget

Integrated marketing communications aims to ensure consistency of message and the complementary use of media. The concept includes online and offline marketing channels. Online marketing channels include any e-marketing campaigns or programs, from search engine optimization (SEO), pay-per-click, affiliate, email, banner to latest web related channels for webinar, blog, micro-blogging, RSS, podcast, Internet Radio, and Internet TV. Offline marketing channels are traditional print (newspaper, magazine), mail order, public relations, industry relations, billboard, traditional radio, and television. A company develops its integrated marketing communication programmer using all the elements of the marketing mix (product, price, place, and promotion). Integrated marketing communications plans are vital to achieving success. The reasons for their importance begin with the explosion of information technologies. Channel power has shifted from manufacturers to retailers to consumers. Using outside-in thinking, Integrated Marketing Communications is a data-driven approach that focuses on identifying consumer insights and developing a strategy with the right (online and offline combination) channels to forge a stronger brand-consumer relationship. This involves knowing the right touch points to use to reach consumers and understanding how and where they consume different types of media. Regression analysis and customer lifetime value are key data elements in this approach.

Importance of IMC

Several shifts in the advertising and media industry have caused IMC to develop into a primary strategy for marketers: 1. From media advertising to multiple forms of communication. 2. From mass media to more specialized (niche) media, which are centered on specific target audiences. 3. From a manufacturer-dominated market to a retailer-dominated, consumer-controlled market. 4. From general-focus advertising and marketing to data-based marketing. 5. From low agency accountability to greater agency accountability, particularly in advertising. 6. From traditional compensation to performance-based compensation (increased sales or benefits to the company). 7. From limited Internet access to 24/7 Internet availability and access to goods and services.

4 P's vs. 4 C's

NOT PRODUCT, BUT CONSUMER

You have to understand what the consumer's wants and needs are. Times have changed and you can no longer sell whatever you can make. The product characteristics have to match the specifics of what someone wants to buy. And part of what the consumer is buying is the personal "buying experience."

NOT PRICE, BUT COST

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

NOT PLACE, BUT CONVENIENCE

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

NOT PROMOTION, BUT COMMUNICATION

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 nontraditional mediums, such as word of mouth and how it can influence your position in the consumer's mind. How many ways can a customer hear (or see) the same message through the course of the day, each message reinforcing the earlier images? A major task that guides the way in creating an effective Integrated Marketing Communications plan is the promotions opportunity analysis. A promotions opportunity analysis is the process marketers use to identify target audiences for a companys goods and services and the communication strategies needed to reach these audiences. [8] A message sent by a marketer has a greater likelihood of achieving the intended results if the marketer has performed a good analysis and possesses accurate information pertaining to the target 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 on
promotions 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 major competitors are utilizing.

Module 2. Developing Retail Image

(A)STRATEGIES FOR CUSTOMER SERVICE
"Customer service is the ability to provide a service or product in the way that it 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 positive 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 OF SERVICE IN RETAIL

Importance of Customer Service in Retail

Even though discount department stores, dollar stores and customer-membership stores have replaced the old-fashioned department store, these establishments have to do more than provide lower prices and a vast selection 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 difference between keeping and losing a customer.

1. Employee Motivation
o

Improving sales and customer service shouldn't be left to just top management. Floor-level sales associates, customer service representatives and even stock workers can help fashion ways to keep shoppers coming back. Changing stock displays, offering point-of-purchase merchandise and making checkout lines flow smoothly can improve the customer experience. These issues, simple as they may seem, also affect a shopper's opinion of the store and how much it values customers. Cashiers and other employees who interact with customers on a daily basis are the front lines of customer service, putting them in a position to make suggestions how to better treat customers

Customer Loyalty
o

Customers who switch store or brand preference do so because of nonexistent or inadequate customer service, not product quality or price, according to research conducted by the Forum Corp. Good customer service makes the buyer feel welcome. Customers know they'll be treated fairly and any problems or concerns they have will addressed promptly, not swept under the rug. Having trained, professional and enthusiastic customeroriented sales associates is a solid practice for retail businesses, according to the Customer Service Training Center. Customers like to deal with customer service clerks or sales associates who are familiar with them, rather than having to explain themselves to a new employee every time they need assistance.

Adapting to Different Situations

o

Every customer has a different personality and needs, so a monotone cookie-cutter approach seldom works. Customer service representatives need to listen to a customer's problems 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 out what features they want in a product as well as their budget can save time later. Customers often appreciate the time and attention received from sales associates and customer service representatives.

Good Customer Service Means Free Publicity

o

When customer service approach goes above and beyond the call of duty, it not only assures a repeat customer, but may also attract new shoppers through word-of-mouth advertising. Happy customers as much as dissatisfied customers talk and post their experiences on Internet message boards. Potential customers listen to the opinions of other shoppers. Another consumer's experience carries more weight than a TV commercial. One satisfied 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 the difference between a customer defecting from one store or supermarket to another with similar prices. A friendly cashier, food sample giveaways or weekly theme changes may make 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 image that its stores carry in the minds of the consumers. This image is largely influenced by the service provided by the store and the experiences of the customers. A satisfied customer is bound to tell others about his experiences as will a dissatisfied customer. Word of mouth publicity is many times more effective than advertising. Positive word of mouth is the best advocate for the store while negative word of mouth can result in disaster. The level of customer service offered depends on the type of product sold and the type of retail outlet itself. In order to determine the service levels required by the retailer, he needs to understand his target audience their needs and lifestyles. FMCG products and groceries are categories which require little in store service. Consumer in modern supermarkets prefers to go through various brands, compare prices and offers and then arrive at a decision. The quality of the product and a fair price is often the prerequisite for such stores. Dissatisfaction with product quality and /or price may result in customer dissatisfaction and may force the consumer to go back to his neighborhood bania who not only offers free home delivery, but also credit facilities. On the other hand, in the case of a specialty store dealing in expensive jewelry, fashion apparel, furniture , expensive watches etc the concept of service changes completely . here, each individual customer will want 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 purchase. This is also true in case of multi brand outlets that deal in consumer durables. Many a times the reputation of the store and the service offered becomes an important criterion for the consumer to select such stores for making his purchase.

2. PROVIDING BASIC CUSTOMER SERVICES

To provide excellent customer service.
Here are some tips to follow to keep the customer feeling like they're number one and to keep them coming back again and again.

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

Wait on your customers on a first-come-first-served basis. It's annoying after waiting for one's turn, 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 they complain, 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've worked to reconcile the problem, ask the customers if everything is now okay and if there is anything else they need.

Give your customers your undivided attention, whenever possible.

Keep or improve upon the promises you make. If you make a promise the item will ship on Wednesday, your customer will be overjoyed to know her package actually shipped two days before, on Monday.

Exceed your customers' expectations in various ways. Circulate the manager to tables in the restaurant to check on customers' satisfaction with their meals. Provide squeaky clean restrooms. Offer a refund for the meal if there there is a problem. Offering a refund for the meal, or kindly offering to remake the meal, is something customers won't quickly forget and the gesture will keep them coming back regularly to your place of business.

End your conversation by thanking them for their business. Tell them you hope to see them again soon.

8 Rules For Good Customer Service

Good customer service is the lifeblood of any business. You can offer promotions and slash prices to bring in as many new customers as you want, but unless you can get some of those customers to come back, your business won't be profitable for long. Good customer service is all about bringing customers back. And about sending them away happy - happy enough to pass positive feedback about your business along to others, who may then try the product or service you offer for themselves and in their turn become repeat customers. If you're a good salesperson, you can sell anything to anyone once. But it will be your approach to customer service that determines whether or not youll ever be able to sell that person anything else. The essence of good customer service is forming a relationship with customers a relationship that that individual customer feels that he would like to pursue. How do you go about forming such a relationship? By remembering the one true secret of good customer service and acting accordingly; "You will be judged by what you do, not what you say." I know this verges on the kind of statement that's often seen on a sampler, but providing good customer service IS a simple thing. If you truly want to have good customer service, all you have to do is ensure that your business consistently does these things:

1) Answer your phone.

Get call forwarding. Or an answering service. Hire staff if you need to. But make sure that someone is picking up the phone when someone calls your business. (Notice I say "someone". People who call want

to talk to a live person, not a fake "recorded robot".) For more on answering the phone, see Phone Answering 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 good customer service is no exception. If you say, Your new bedroom furniture will be delivered on Tuesday, make sure it is delivered on Tuesday. Otherwise, don't say it. The same rule applies to client appointments, deadlines, etc.. Think before you give any promise - because nothing annoys customers more 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 then discovering that that person hasn't been paying attention and needs to have it explained again? From a customer'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 solve the problem.

4) Deal with complaints.

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

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 have one lying around. He found it, attached it to my watch band and charged me nothing! Where do you think I'll go when I need a new watch band or even a new watch? And how many people do you think I've told 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 (and isn't) regularly. Most importantly, give every member of your staff enough information and power to make those small customer-pleasing decisions, so he never has to say, "I don't know, but so-and-so will be back 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, or further needs. Whatever the extra step may be, if you want to provide good customer service, take it. They 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 genuine smile, people love to get more than they thought they were getting. And dont think that a gesture has to be large to be effective. The local art framer that we use attaches a package of picture hangers to every picture he frames. A small thing, but so appreciated.

3. DETERMINING CUSTOMER SERVICE LEVELS The Four Levels of Customer Service

Customer satisfaction is the key to building the clientele of any business. The more you satisfy your customers, the more your business can grow. In Consistently greats 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 existing ones. Furthermore, an angry customer tells many more people than does a satisfied one about an experience with a business. Higher levels of customer service can translate to higher margins.

Level One: Meet Customer Expectations

o

At level one, a business meets its customer's expectations. Customers are satisfied but are not loyal. They will quickly take their business elsewhere if a competitor provides better service.

Level Two: Exceed Customer Expectations

o

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

Level Three: Delight Customers

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

Level Four: Amaze Customers

o

Expending the effort to amaze customers can propel your business to new heights. By amazing them, you give customers a compelling reason to patronize your business and recommend it to their friends.

OR

Customer Service Level

Customer service level in a supply chain is a function of several different performance indices. The first one is the order fill rate, which is the fraction of customer demands that are met from stock. For this fraction of customer orders, there is no need to consider the supplier lead times and the manufacturing lead 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 of orders lost due to a stockout. Another measure is the backorder level, which is the number of orders waiting to be filled. To maximize customer service level, one needs to maximize order fill rate, minimize stockout 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 solution that 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 an index card system or a computer automated system. There is particularly designed software for customer relationship management that can be either installed directly into a computer or through a web based system that is accessible only online. CRM systems are useful as they facilitate the management of the entire prospect/customer details such as the names, addresses, phone numbers, call records and purchase history and more. The other uses of CRM consist of planning of appointments, schedule of call back times and other sales connected activities. Depending on the system, automated CRM can be just one user, or for numerous users to have access to customer accounts

A classic example could be the customer database containing complete information and details, which the business management and sales department personnel access. They utilize this information to cross sell diverse products to customers, depending on customer requirements, get in touch with them for latest product launches, etc. Another example would be, an enterprise may put together a database about its customers that explained relationships in detail so that management, salespeople, people providing service, and possibly the customer 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 so forth. There are many low-priced CRM systems that can be modified to the requirements of all businesses regardless of size as they designed to fit right into Microsoft Outlook. This makes them very simple to set up 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 and provide complete view of customer's behavior patterns, past and present transactions to sales people in order 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 gain loyalty and trust from customers. Personalized service and attention is a must in order to effectively drive up sales. To improve relationships between customers and company personnel CRM software uses all possible channels of feedback and interaction. Today, every media is exploited to achieve higher degree of interaction. Typical entry points are Toll free calls, Internet, Kiosk terminals and most popular lately is SMS. With Internet based interaction being popular, web-based CRM software is a must today. Companies today are looking at ways to provide more information through self-help services, which are typically online. 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 offer good ratings, reviews, or testimonials. Some customers do a particular company a great service by offering favorable word of mouth publicity regarding a product, telling friends and family, thus adding them to the number of loyal customers. However, customer loyalty includes much more. It is a process, a program, or a group of programs geared toward keeping a client happy so he or she will provide more business. 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 value trade-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 to use 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 in the middle. They want to give loyalty, but no ones earning it. Jill Griffin, customer loyalty expert and author of Customer Loyalty: How to Earn It, How to Keep It suggests the following process for earning and maintaining customer loyalty

Serve todays buyer. Todays buyer is smarter and more informed, and has also been trained to want
it his way. While this saying was born out of the fast food industry, the expectation now spans all industries. Consumers are transferring expectations from one area into every aspect of their purchasing behavior.

Know the loyalty password. Know what your customers want and what they expect. How do your
customers 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 wishes.

Get in the mind of your prospect. Positioning your business in your customers mind counts. Stand
out 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 quality hamburger. 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 it your way, they introduced the unanticipated (level 3). It is the unanticipated that will earn a business big points on the loyalty scoreboard. So how do you know what to add as your unanticipated? You guessed it: Listen to what your customer wants. It is important to realize, however, that after awhile, the unanticipated becomes the expected. Nowadays, everyone expects to be able to order a burger their own way, and new measures must be taken to maintain customer loyalty.

Manage your customer life cycle. Customers move up the loyalty ladder in the following manner:
suspect, prospect, customer, client and, finally, advocate. The business owners goal should be to move a one-time customer to a client (someone who buys a second time) and then to an advocate (someone who believes in and promotes your business to others).
OR

True customer loyalty is perhaps the greatest asset a company can develop. Loyal
customers provide repeat business andequally importantreferrals of new customers. Word-of-mouth advertising 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 customers are loyal customers, but that may not be the case. Other factorssuch as pricing or conveniencemay contribute 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 airline might 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 my home based strictly on location. Service was sloppy and frustrating, but I remained a customer for seven years before dissatisfaction drove me away. Based on my repeat business over several years, the pharmacist 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 those same 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 adjustment, act quickly. King Solomon observed, Fools mock at making amends for sin, but goodwill is found in the upright (Proverbs 14:9 NIV). Solomon also understood that Hope deferred makes the heart sick (Proverbs 12:13 NASB). Acting quickly to correct problems, with a cheerful spirit, strengthens customer relations. A customer that needs to pull teeth to receive satisfaction wont tell many good stories about your business, whereas those who receive prompt and easy corrections will 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 who is 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 the promised delivery date. Customers continued to order, but only because the price was the lowest in 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 others wholeheartedly? A good follow-up question would be, Have you ever recommended us to others? Focus on these two key questions, and avoid the temptation to develop a longer questionnaire. A sandwich shop offered a free drink for a week to customers willing to answer the questions. Responses were received in a closed container to encourage candor.The best way to evaluate 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 the reasons, and take immediate corrective action. 4. Consider rewarding customers who make referrals. A health club might offer a free membership 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: Youll obtain new customers, and youll have a convenient way to measure the effect of word-of-mouth advertising. A loyal customer is one who is willing to invest in the relationship by sticking with your business even if your price is not always the best, because they believe that, over time, you offer the best value for the money. These same customers will become the most effective sales team you could ever build, spreading the 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, youll 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 youll ultimately have to work even harder to replace them relatively quickly. To develop those early customers into loyal patrons, listen closely to them. Find out what they truly value from you and realize this often is not why they bought from you in the first place.

The band-aid phase

Very quickly, youll find yourself with happy and unhappy customers. Its inevitable. Your first inclination will likely be to slap Band-Aids on the bad relationships and hustle to adapt your product or service when unhappy customers stop buying. This can be a dangerous trap, though. Too much time spent fighting customer churn can easily pull resources 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 all means try to keep the revenue. If youre in a more secure position, keep your eyes on the future and do the following: 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 cant keep everyone happy. Pick and choose who you absolutely need to keep and cross your 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 rational choices about investment. If there is any repeat purchase behavior in your business, retaining customers fuels your cash flow engine. Its critical at this point to figure out why your best customers stay or rebuy, then do more of it. Then do even more of it. And then do some more. Dont take them for granted keep investing in the features or services 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. During downturns like the ongoing reession, high value customers in retention programs defect at much lower rates than your average customers in the same program. Theyll 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 you screw up. Ultimately, if you think early on about retention, youll look like a genius. At least 70 percent of your customers should be returning each year, making your growth plans both impressive and realistic. Youll have lots of referrals, taking the stress off your sales and/or marketing team. Your prospective VCs will have great due diligence calls. And youll be well positioned for a good multiple or a long run.

(B) STORE LAYOUT:

1.STORE LAYOUT MANAGEMENT, P LANNING A B ASIC STORE D ESIGN
Location

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

The retailer must plan out each and everything well, the location of the shelves or racks to display the merchandise, 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 to move 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 the owner or the store manager to have a watch on the customers. Diagonal floor plan works well in stores 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 plan gives a more sophisticated look to the store. Such layouts are often seen in high end stores.

4. Geometric Floor Plan

The racks and fixtures are given a geometric shape in such a floor plan. The geometric floor plan gives 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 to the 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 all, even from a distance. Dont 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 position of the dummies must be changed from time to time to avoid monotony. The trial rooms should have mirrors and must be kept clean. Do not dump unnecessary boxes or hangers in the dressing room. The retailer must choose the right colour for the walls to set the mood of the customers. Prefer light and subtle shades. The fixtures or furniture should not act as an object of obstacle. Dont unnecessary add too many types of furniture at your store. The merchandise should be well arranged and organized on the racks assigned for them. The shelves must carry necessary labels for the customers to easily locate the products they need. Make sure the products do 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 burned 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 LAYOUT 2. 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. The straight 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 retail stores. It offers excellent visibility for cashiers and customers. The diagonal floor plan invites movement and traffic flow to the retail store.

4. Angular Floor Plan The angular floor plan is best used for high-end specialty stores. The curves and angles of fixtures and walls makes for a more expensive store design. However, the soft angles create better traffic flow throughout the retail store. 5. Geometric Floor Plan The geometric floor plan is a suitable store design for clothing and apparel shops. 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 plans to create the most functional store design. The layout moves traffic towards the walls and back of the 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 in Hollywood; namely, image is absolutely everything. Atmosphere and irresistible visual merchandising displays are what attract customers. The store fixtures for your setting as well as special lighting techniques to accent products can make the all the difference between a purchase and a pass-by (like a drive by, but without guns). Like most worthwhile endeavors, planning the right retail store layout boils down to doing your homework. Take the time to view different floor plans and retail store designs. As a retailer, no one can afford to turn off a customer, and a well-planned retail store layout allows a retailer to maximize the sales for each foot of the allocated selling space within the store while at the same time reducing the opportunity 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 structures, fixture locations and customer traffic patterns. Each floor plan and retail store layout will depend on the type of products sold, the building location and how much the business can afford to put into the overall store 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 and customers 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 store fixtures 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 racks 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 angular varieties to create a highly functional and unique store design. This retail store layout by its very nature propels 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 store when coming to a decision. Also, remember to always keep your business space clean and orderly. All of these plans are effective in their own particular way, depending on the products and/or services being offered 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.THE CONCEPT AND PHILOSOPHY OF VISUAL COMMUNICATION AND V ISUAL MERCHANDISING

VISUAL COMMUNICATION as the name suggests is communication through visual aid and is described as the conveyance of ideas and information in forms that can be read or looked upon. Visual communication solely 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 explores the idea that a visual message accompanying text has a greater power to inform, educate, or persuade a person or audience. The evaluation of a good visual communication design is mainly based on measuring comprehension by the audience, not on personal aesthetic and/or artistic preference as there are no universally agreed-upon principles of beauty and ugliness. Excluding two dimensional images, there are other ways to express information visually - gestures and body language, animation (digital or analogue), and film. Visual communication by e-mail, a textual medium, is commonly expressed with ASCII art, emoticons, and embedded digital images. The term 'visual presentation' is used to refer to the actual presentation of information through a visible medium such as text or images. Recent research in the field has focused on web design and graphicallyoriented usability. Graphic designers also use methods of visual communication in their professional practice. 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 uses

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

A CONCEPTUAL MAP OF VISUAL COMMUNICATION

The study of visual communication theory is a multi-disciplinary, multi-dimensional effort. People who write on this topic come from mass communication, film and cinema studies, education, art, anthropology, psychology, philosophy, linguistics, semiotics, and architecture and archaeology among other fields. Although this brings a rich melange of viewpoints, which is an asset because of the insights that come from cross-fertilization, 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 would be easier to order a curriculum, as well as a graduate program of study, 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 identify 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 literature and the responses to the survey about theoretical roots, that there is an evolving and well-recognized body of visual communication theory and literature that crosses a variety of disciplines that could provide some sense of a coherent conceptual base. Such work clusters in the areas of visual literacy, visual thinking, visual perception, imagery, and representation. With more attention to this evolving body of literature, visual communication would have more visibility 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 drives much of the work in visual communication. While a central theory may be too much to hope for, there is still a need for the development of a more widely accepted model that better addresses the unique characteristics of visual communication. It is the purpose of this paper to address that issue and attempt to develop a map of the field that more clearly identifies the central theories and areas of study of visual communication. A CONCEPTUAL M AP OF VISUAL COMMUNICATION This paper will attempt to build on this work and map the field of visual communication using communication as the conceptual platform on which to build a model. One place to start mapping the field of visual communication is with the visual communication theory survey mentioned earlier. 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 literacy which is more contained. This list is important because it provides a view of the breadth of the field, as well as the areas deemed to be of more importance by these scholars. The following chart summarizes and groups the areas in terms of their most frequent mentions. The list below begins with the area followed by the related theories that were mentioned by the respondents. The most important theoretical foundation based on the frequency of mentions by these scholars was psychology. Next came meaning theories such as semiotics. Tied for third were the areas of aesthetics, mass communication theories, and cultural/critical studies. The last four major areas were cinema/film studies, communication theories, literary studies, and education. An outline of these categories ordered in terms of frequency of response would be:
VISUAL COMMUNICATION Theoretical Foundations

1. Psychology: perception: gestalt perception cognitive 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 gratifications Cultural/Critical Studies: ethics/social responsibility 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 literacy: learning theory media literacy critical viewing

development 8. Other theoretical approaches: historical linguistics ideation/creativity anthropological/ethnography/sociology chaos/complex systems
VISUAL MERCHANDISING is the activity of promoting the sale of goods, especially by their presentation 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 a product or service. It has become such an important element in retailing that a team effort involving the senior 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 customer friendly 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 implemented in 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 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 in 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 shortest possible time, and thus augmenting the selling process.
OR

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

STATUS OF VM IN INDIA: Unlike the western countries, where VM receives highest priority in commercial planning of a product, the Indian industrys understanding and practice of the concept of VM is inadequate. With phasing out of quantitative restrictions after the year 2004, the textile industry will have to compete purely on the competitive edge of the products and VM will be a helpful tool in projecting the uniqueness of the products and thereby increasing the market access and sales. It is high time that the Indian textile and clothing industry, therefore, understands and adopts the scientific and professional system of VM rather than the traditional practices of display of products and communication.

VISUAL COMMUNICATION

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

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

3. TECHNOLOGY ISSUES: SHOP LIFTING, PILFERAGE . SHOPLIFTING (also known as five-finger discount, or shrinkage within the retail industry) is theft of
goods from a retail establishment. It is one of the most common property crimes dealt with by police and courts. Most shoplifters are amateurs; however, there are people and groups who make their living from shoplifting, 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 take physical 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 as accidental hiding of a small item or forgetting to pay). That is one of the reasons that penalties for shoplifting are generally lower than those for general theft. However, in practice most stores are aware of the hazards of making a false arrest and are instructed to be sure there is no doubt (ambiguity) before they make the arrest. Trained staff know the basics, observe the person, observe the item, observe the concealment (theft), keep constant unrestricted contact with the shoplifter, wait until the shoplifter leaves the store - make the arrest. As for penalties being less for shoplifter vs for "general" theft, in most states there is no specific "shoplifting" law; rather, shoplifting is charged simply as "theft". If the dollar amount of the item stolen is low it is a lower (less serious) theft crime. If the dollar value is higher, it is a more serious 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 usually go into a store with the intention of stealing they simply see the opportunity to take something and do. 3. Many people assume that shoplifters have a mental disorder or that they must really need the items they are stealing in order to survive. But the truth is that's not why most people steal. Very few people have kleptomania (a compulsive urge to steal), and many people who steal have enough money to pay for the items. 4. Someone might shoplift for many reasons. But there's no way around the fact that shoplifting is stealing and in most places there are heavy penalties for it, including being arrested and possibly charged with a crime. 5. Some people may not realize how serious shoplifting can be. What might seem like an innocent prank can actually affect a person's future, including the chances of getting a job. Lots of teens find out the hard way that stores take shoplifting very seriously.

PILFERAGE.

A recurrent theft of small items of little value A crime of theft of little things, usually from shipments or baggage A crime of theft of little things, usually from shipments or baggage Theft of a few pieces or a small quantity of a relatively large shipment. Some standard marine insurance policies do not cover pilferage.

4. ISSUES WITH RFID AND RELATED TECHNOLOGY

RFID

Radio frequency identification (RFID) is a generic term that is used to describe a system that transmits the identity (in the form of a unique serial number) of an object or person wirelessly, using radio waves. It's grouped 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 toll booth, or paid for gas using SpeedPass, you've used RFID. In addition, RFID is increasingly used with biometric technologies for security. Unlike ubiquitous UPC bar-code technology, RFID technology does not require contact or line of sight for communication. 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 to

activate 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, depending upon its power output and the radio frequency used. When an RFID tag passes through the electromagnetic 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 is passed 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 data transmitted by the tag may provide identification or location information, or specifics about the product tagged, 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 moving objects. 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 chip can 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 or more antennas that emit radio waves and receive signals back from the tag. The reader then passes the information in digital form to a computer system.
CURRENT AND POTENTIAL USES OF RFID

Asset Tracking
It's no surprise that asset tracking is one of the most common uses of RFID. Companies can put RFID tags on assets that are lost or stolen often, that are underutilized or that are just hard to locate at the time they are needed. Just about every type of RFID system is used for asset management. NYK Logistics, a thirdparty 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 in process and to reduce defects, increase throughput and manage the production of different versions of the same product.

Supply Chain Management

RFID technology has been used in closed loop supply chains or to automate parts of the supply chain within a company's control for years. As standards emerge, companies are increasingly turning to RFID to track shipments among supply chain partners.

Retailing
Retailers 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 on the 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 convenient payment mechanism. One of the most popular uses of RFID today is to pay for road tolls without stopping. These active systems have caught on in many countries, and quick service restaurants are experimenting 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 within office buildings. The first access control systems used low-frequency RFID tags. Recently, vendors have introduced 13.56 MHz systems that offer longer read range. The advantage of RFID is it is convenient (an employee can hold up a badge to unlock a door, rather than looking for a key or swiping a magnetic stripe card) and because there is no contact between the card and reader, there is less wear and tear, and therefore less maintenance. As RFID technology evolves and becomes less expensive and more robust, it's likely that companies and RFID vendors will develop many new applications to solve common and unique business problems.
OR

RFID
(pronounced as separate letters) Short for radio frequency identification, a technology similar in theory to bar code identification. With RFID, the electromagnetic or electrostatic coupling in the RF portion of the electromagnetic spectrum is used to transmit signals. An RFID system consists of an antenna and a transceiver, which read the radio frequency and transfer the information to a processing device, and a transponder, or tag, which is an integrated circuit containing the RF circuitry and information to be transmitted. 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 pet owners name and address or the cleaning instruction on a sweater to as complex as instructions on how to assemble a car. Some auto manufacturers use RFID systems to move cars through an assembly line. At each successive stage of production, the RFID tag tells the computers what the next step of automated assembly is.

One of the key differences between RFID and bar code technology is RFID eliminates the need for lineof-sight reading that bar coding depends on. Also, RFID scanning can be done at greater distances than bar code scanning. High frequency RFID systems (850 MHz to 950 MHz and 2.4 GHz to 2.5 GHz) offer transmission ranges of more than 90 feet, although wavelengths in the 2.4 GHz range are absorbed by water (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 sales and visitors were registered online. Following on the biggest online Black Friday sales ever, online sales on Cyber Monday topped $1 billion, up 16 percent from last year, according to comScore. Meanwhile, brick-and-mortar Black Friday 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 technology are 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 their holiday shopping and to get the most of their holiday budgets. These shoppers don't just visit a store and make a purchase 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 media platforms. 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 and others. 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 access the 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 will be unprecedented. Just as we are optimizing the Web site, along comes the iPhone app, Facebook, iPad app. What next? 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 store visits or making your latest runway show available for viewing on iPad or the iPhone, retailers must keep up with the change. 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 their brand 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 modn advancements 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 owned bisnes 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 gets more sophisticated and the consumer's expectations will go up exponentially. It change faster, retail can keep 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 OF FRANCHISING
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of angloFrench derivation - from franc- meaning free, and is used both as a noun and as a (transitive) 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 parent company allows entrepreneurs to use the company's strategies and trademarks; in exchange, the franchisee pays 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 the parent 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, and according to the International Franchising Association the sector earns more than $1.5 trillion in revenues each year

Franchising is the preferred mode for doing a business where you just have to invest money with your location and run the show. You get well established brand name to work and support from the company for advertising and marketing the concept for your location (advertising and marketing will depend on the company. they might charge you some kind for percentage for such activities or may guide you and you will have to shell it out from your pocket). The returns depends on various factors like: 1. The brand you select. 2. Geography 3. Marketing activities 4. Management skills, etc Also, as far as returns are concerned, the jewelry industry does offer some kind of minimum returns guarantee, but this is not the normal practise among other franchisors. but the good thing is, the royalty they charged is totally dependent on your return. So if you are running the show quite well, you are the master of your own returns. The budget you mentioned, could attract lots of lucarative options that might suit your needs. Lots of information 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 is definitely 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 and area 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, and the franchisee, the proprietor that operates one or multiple store locations. Franchising agreements usually require the franchisee to pay an initial fee plus royalties equal to a certain percentage of the store's monthly or yearly sales. Initial fees vary significantly across each industry, ranging from $35,000 for an Applebee's restaurant to over $85,000 to open a Hilton hotel.[26] Royalty fees are also variable - for example, Intercontinental Hotels Group (IHG) franchisees are required to pay the company 5% of their yearly 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. Franchise agreements 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 Big Mac's at McDonald's) as part of the franchising agreement. Additionally, the franchisor provides training and support as well as regional and/or national advertising.

Advantages of the Franchising Model

Franchisees require less initial capital than independently starting a company and can use proven successful strategies and trademarks. Franchisees are provided with significant amounts of training, not common to most entrepreneurs. The franchisor benefits because it can expand rapidly without having to increase its labor force and operating 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 a 52.7% profit margin from franchisee-owned restaurants in 2007 while company-owned restaurants operated 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 and service, 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 overall earnings.

2. HISTORY OF FRANCHISING
The earliest signs of franchising in the United States dates back to the 1850's just after Isaac Singer invented the Singer Sewing Machine. During his search for an effective and affordable way to distribute his product for his company, the Singer Sewing Centre, Singer ran into problems that prevented his company from becoming successful. His first problem was a lack of capital for manufacturing his machines. Secondly, no one was willing to buy his sewing machines without first being taught how to use them, which required effort that most traditional retailers could not provide. Singer's solution was to charge licensing fees to business people who would own the rights to sell his machines in certain geographical areas. They would also be responsible for teaching consumers how to use his machines, thereby creating sales opportunities. Using the licensing fees to fund manufacturing, he was then able to afford to build his machines and then ship them directly to his newly formed distribution network. Singer's idea got noticed; and over the next several decades, many other companies began to copy and enhance 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 creating some of the largest franchise networks in the world. Today, there are thousands of successful franchise companies with outstanding business models that provide products and services to consumers and businesses all around the world!
OR

Franchising developed over time as an efficient way to do business and there were versions of franchising 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 a consideration, to hunt, hold markets or fairs, or otherwise conduct business on his domain. With the rights came 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 the early 1850s, Singer, who had improved an existing sewing machine model, wanted to find a wider distribution for his product but lacked the money to increase manufacturing. Another problem was that people wouldnt buy his machines without training, a service retailers werent able to provide. Singer's solution, to charge licensing fees to people who would own the rights to sell his machines in certain geographical 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 successful sewing machine to the public. Franchising was employed on a limited basis after the success of Singers sewing machine distribution method. Business format franchising (the licensing of the brand name/trademarks and of the entire business concept), which is the dominant mode of franchising today, came onto the economic scene after World War II and the subsequent baby boom. There was an overwhelming need for all types of products and 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' small San 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 had developed a high-volume production system which enabled them to provide fast service with consistent results and low cost. Kroc became their licensing agent and recruited franchisees, starting in the Chicago area. In 1961 he bought out the McDonald brothers interest and took the tile of senior chairman. By 1988, McDonalds had opened its ten thousandth restaurant and today there are over 30,000 McDonalds restaurants worldwide. As the number of franchised businesses grew, the need for legislation and consumer protections followed. The 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 entire industry. They adopted a Code of Ethics to establish a framework for the implementation of best practices in the franchise relationships of IFA members. The Code represents the ideals to which all IFA members agree to subscribe in their franchise relationships. The IFA works closely with the US Congress and the Federal Trade Commission on improving how the industry relates to the franchisees and has been integral to the expansion of franchising around the world. In 1978 the Federal Trade Commission enacted a law requiring all franchisors to submit to all potential franchisees a document called the Franchise Disclosure Document (FDD) prior to receiving money. The FDD 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 franchise agreement. A current list of franchise owners names and telephone numbers is a required component, allowing prospective franchisees the opportunity to research the franchisors claims. The purpose of the FDD is to provide sufficient information on a company to help the prospective franchisee to make a more informed 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. Since requirements may differ in each of these (currently 15) states, franchisors often move into these areas more slowly, if at all. Franchising has had an enormous impact on the U.S. economy. Entrepreneur magazine, Jan, 2005, quoted then president of the IFA, Don DeBolt, as saying that franchising accounts for almost half of all U.S. retail sales. A study released by the IFA in March 2004 and conducted by PricewaterhouseCoopers measured the direct and indirect impact of franchise businesses. The study showed that franchises directly employed 9,797,000 people in 2001, as many people that year as all manufacturers of durable goods and ahead of the financial, construction and information industries. Franchising is clearly a powerful model to help people realize their dreams. Its success is manifested in the number of operating franchises, the number of brand names built through franchising, the millions of customers 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 a proven 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 of sub-franchisees (or partners) from data available for 2004.[3] It will also be seen from the names of the franchise that the US is a leader in franchising innovations, a position it has held since the 1930s when it took 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 $1 trillion in U.S. sales annually (2001 study).[citation needed] Franchised businesses operated 767,483 establishments in the United States in 2001, counting both establishments owned by franchisees and those owned by franchisors:[4]
1. Subway (Sandwiches and Salads | Startup costs $84,300 $258,300 (22000 partners worldwide in 2004).

2. McDonald's | Startup costs in 2010, $995,900 $1,842,700 (37,300 partners in 2010) 3. 7-Eleven Inc. (Convenience Stores) |Startup Costs $40,500- 775,300 in 2010,(28,200 partners in 2004) 4. Hampton Inns & Suites (Midprice Hotels) |Startup costs $3,716,000 $15,148,800 in 2010 5. Great Clips (Hair Salons) | Startup Costs $109,000 - $203,000 in 2010 6. H&R Block (Tax Preparation and e-Filing)| Startup Costs $26,427 - $84,094 (11,200 partners in 2004) 7. Dunkin Donuts | Startup Costs $537,750 - $1,765,300 in 2010 8. Jani-King (Commercial Cleaning | Startup Costs $11,400 - $35,050, (11,000 partners worldwide in 2004) 9. Servpro (Insurance and Disaster Restoration and Cleaning) | Startup Costs $102,250 - $161,150 in 2010 10. MiniMarkets (Convenience Store and Gas Station) | Startup Costs $1,835,823 - $7,615,065 in 2010

The midi-franchises like restaurants, gasoline stations, trucking stations which involve substantial investment and require all the attention of a business. There are also the large franchises - hotels, spas, hospitals, etc. - which are discussed further in Technological Alliances. Two important payments are made to a franchisor: (a) a royalty for the trade-mark and (b) reimbursement for the training and advisory services given to the franchisee. These two fees may be combined in a single 'management' fee. A fee for "Disclosure" is separate and is always a "front-end fee". A franchise usually lasts for a fixed time period (broken down into shorter periods, which each require renewal), and serves a specific "territory" or area surrounding its location. One franchisee may manage several such locations. Agreements typically last from five to thirty years, with premature cancellations or terminations of most contracts bearing serious consequences for franchisees. A franchise is merely a temporary business investment, involving renting or leasing an opportunity, not buying a business for the purpose of ownership. It is classified as a wasting asset due to the finite term of the license. A franchise can be exclusive, non-exclusive or 'sole and exclusive'.

Although franchisor revenues and profit may be listed in a franchise disclosure document (FDD), no laws require the estimate of franchisee profitability, which depends on how intensively the franchisee 'works' the franchise. Therefore, franchisor fees are always based on 'gross revenue from sales' and not on profits realized. See Remuneration. Various tangibles and intangibles such as national or international advertising, training, and other support services are commonly made available by the franchisor.

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 United States are franchisee-worked. It should be recognized[citation needed] that franchising is one of the only means available to access venture investment capital without the need to give up control of the operation of the chain and build a distribution system 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 capital and resources of their 'franchisees' while reducing risk. Franchisor rules imposed by the franchising authority are usually very strict and important in the US and most countries need to study them to help the small or start-up franchisee in their countries to protect them.[citation needed] Besides the trademark, there are proprietary service marks which may be copyright - and corresponding 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 the least amount of risk. Within the next 10 years, franchising will comprise over 50% of the retail economy and employ millions of people, and will enable hundreds of thousands to realize the dream of successful business ownership and financial independence. Franchising is evolving. There will be even greater opportunities for wealth creation among both franchisees and franchisors as this evolution progresses. New franchises will be developed while the existing systems become more fortified and continue to grow. Today, there are greater opportunities for wealth 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 yourself, franchising is the vehicle to take you where you want to be in the 21st century.

3. TYPES OF FRANCHISING
1. The Product Franchise.
With this the manufacturer uses the franchise agreement to determine how the product is distributed by the person buying the franchise. A retail company can be provided with a franchise to distribute, for example, a range of tyres. The franchisee can utilize the brand name and the trademark owned by the manufacturer to 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 income from the purchase of the retailer, and/or the franchise fee, and the retailer gets the benefit of the brand and experience of the franchisor.

2. The Manufacturing Franchise.

The franchisee is permitted to manufacture the products under license and sell them using the originator's trademark and name. They also get the benefit of the national advertising of the product they manufacture. The company owning the product gets the franchise fee and sometimes a fee for every unit sold. Examples include 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 by the product owner for the franchisee to maintain. Vending machines are a classic example of this, where the 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 a recognized product and brand. Training is provided by the franchise owner and assistance in setting up the business. Supplies are purchased from the franchisor and the franchisee pays a royalty fee. Frequently the franchisor 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 High Street names. Franchising is a very popular way that many use to grow their already successful businesses, and a few end up going global. You need to get the right product and the right business in the right area, but if you achieve 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. The manufacturer grants a franchisee the authority to distribute goods by the manufacturer and allows the owner to use the name and trademark owned by the manufacturer. The franchisee must pay a fee or purchase a minimum inventory of stock in return for these rights. Examples of Product Franchises include: Mobil, 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 a proven method for operating a business using the name and trademark of the company. The company will usually provide a significant amount of assistance to the business owner in starting and managing the company. The franchisee pays a fee or royalty in return. Examples of Business Format Franchises include: McDonalds, Dunkin Donuts, Carvel, AMMCO and Fantastic Sams.

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

Types of Franchises
In recent years, the number of franchises has greatly increased due to modern technology and a stronger than 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. Your interests should play a large part in your choice because you will be working at getting your franchise business 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:

Automotive 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.

Miscellaneous - Vending, laundry and dry cleaning, transportation, wedding and event planning, etc. Pet Services - Pet food, pet supplies, pet care, and more. Photo and Video - Children's photography, team photography, trophies, DVD rental kiosks, video stores, etc. Printing and Packing - Shipping, imprinting, and copies. Retail Franchises - Party stores, apparel, convenience stores, electronics stores, hardware, eye care stores, pharmacies, sports stores, telecommunications, and much more. Senior Services - Assisted living, senior care, walk-in medical clinics, and more. Sports and Recreation - Sportswear, nutrition, fitness centers, children's fitness, massage and spas, campgrounds, etc. Travel Franchises - Cruise planning, hotel reservations, transportation, etc. Don't overlook cruise jobs material on JobMonkey.

4. ADVANTAGES AND DISADVANTAGES OF FRANCHISING

Advantages and disadvantages of franchising
Buying a franchise can be a quick way to set up your own business without starting from scratch. But there are also a number of drawbacks.
Advantages

Your business is based on a proven idea. You can check how successful other franchises are before committing yourself. You can use a recognised brand name and trade marks. You benefit from any advertising or promotion by the owner of the franchise - the 'franchisor'. The franchisor gives you support - usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice. You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same territory. Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation. You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network. Relationships with suppliers have already been established.

Disadvantages

Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor. The franchise agreement usually includes restrictions on how you can run the business. You might not be able to make changes to suit your local market. The franchisor might go out of business. Other franchisees could give the brand a bad reputation, so the recruitment process needs to be thorough You may find it difficult to sell your franchise - you can only sell it to someone approved by the franchisor. All profits (a percentage of sales) are usually shared with the franchisor.

OR

A. Advantages from the Franchisors 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 to franchisees. This capital injection provides an improved cash flow, a higher return on investment and 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 and development. Additionally, there will always be economies of scale with regard to purchasing power. 2. Operational: The franchisor can have a smaller central organization when compared to developing 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 since he has invested much time and money in the business, which means working hard to bring in better organizational and monetary results. This also reflects on more satisfied customers and improved sales effectiveness. 3. Strategic: To the franchisor, franchising means the spreading of risks by multiplying the number of locations through other peoples investment. That means faster network expansion and a better opportunity to focus on changing market needs, which in its turn means reduced effect from competitors. 4. Administrative: With a smaller central organization, the business maintains a more cost effective labour force, reduction of key staff turnover and more effective recruitment.

B. Advantages from a Franchisees 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 Franchisors 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 appropriate resources 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 spoiled by misfits until such time the franchisor is capable of selecting the right candidate for the business. 3. There is a risk that franchisees exercise undue pressure over the franchisor in order to implement new policies and procedures. 4. The franchisor has to disclose confidential information to franchisees and this may constitute a risk to the business.

D. Disadvantages from a Franchisees pint of view:

1. The requirement to pay the franchise fees and royalty to the franchisor, which in some cases can be exaggerated. 2. The transfer of all goodwill built in the local market to the franchisor upon expiration or termination of the franchise contract. 3. The necessity of abiding by the franchisors operating systems, standards, policies and procedures. 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 liabilities, 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 required 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 the business for franchising, the original owners have already build it up and have already made it successful. Franchising, for them, is a way to expand the business; it is not a way to build the business from a small one 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 will benefit the franchisee. 3) You may have exclusive rights to market the franchised products in your territory. One example is Starbucks Philippines. This one is franchised, yes, but the franchise belongs to just a single entity in the whole country. 4) A franchisee will enjoy the benefits of being supported by the franchisor. This is part of the franchise agreement. In return for the franchise fee the franchisee pays the franchisor, the latter commits to support, to 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 youre franchising a fast food or a food cart business) to selling the products or services to summarizing your numbers and producing 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 to sourcing 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 youre taken in by promises of quick profits with low franchise costs, chances are, you will just find yourself holding an 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 advertising fees. 3) When you buy a franchise, you are not free to do your own thing. You dont have much control on the products that are to be sold, the system that should be in place and, even, the location and general look of your business establishment. You are bound by the franchise agreement and you have to do everything to the letter. If youd 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 a legal counsel for this). The franchise agreement is pages long (40 pages? 50 pages? 60 pages?) and you will 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 WNERSHIPM ENTALITY Similar to a dealership, but with more emphasis in franchising, particularly where the franchise agreement is long-term, the Franchisee will have an attitude of being a business owner (not merely dealing with one product line among many) and is more likely to devote time, attention and capital to growing the business, following the approved system and not walking away from occasional business challenges. As one observer put it: The best fertilizer for growing a business is the owners foot firmly planted 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 competitive strength of the distribution system, is the presence of strong brand identification covering both the products offered and the retail businesses operated.

Assuming that a significant brand recognition factor can be established and maintained in the minds of consumers and Franchisees, the following benefits will flow for the Franchisor and its Franchisees. [Note that realization of these advantages has two primary drivers: (1) prominent identification of each retail business (not just the product) with the trademark and (2) a strong retail marketing campaign building brand identity in the consumers 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 the brand. Greater value for Franchisees when they resell their units or otherwise cash out. Greater value for franchised units irrespective of the owners personal involvement or skills (A McDonalds has a relatively constant value, due to the brand, independent of who the owner or manager 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 MAGE Both among prospective owners and with the consuming public, franchise systems generally have a superior image over other distribution approaches, particularly if there is uniformity as to retail presentation, marketing methodology, operational compliance, etc., precisely the things which are easier to achieve within a franchise framework. F RANCHISEEP ARTICIPATIONANDS UPPORT Although not unique to franchising, the franchise model (when well managed) often incorporates valuable Franchisee input and creative participation b y Franchisees. Since all of the participants are part of a single system with a common identity, Franchisees are more likely to participate in initiatives for the expansion and proper operation of the entire enterprise, sometimes producing new ideas as well as alerting the Franchisor to operational non-compliance problems created by other Franchisees in the systems. S YSTEM- WI DEM ARKETINGS UPPORTP AI DFORBYF RANCHISEES

Franchise systems typically include arrangements where Franchisees are required to contribute to a national marketing fund, and participate in local marketing co-operatives, supporting retail marketing, advertisements, promotions and public relations. I M PROVEDC O NTRO LO VERO PERATIONSATTHER ETAILL EVEL Franchising provides both a legal and institutional structure allowing detailed control over the individual units marketing and operational programs. If you believe that it is critical for each units success (as well as that of the system as a whole) that each unit follow recommended marketing and operational guidelines, franchising provides one of the strongest methods of achieving 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 state and/or federal enforcement activity, as well as claims for rescission, damages and attorneys fees (class action or otherwise) for noncompliance with franchise and/or business opportunity registration and disclosure laws. This exposure exists not only as to current dealers, but also is present (and, in fact, increased) with every new dealership that is awarded. At some point it may be appropriate to ask if a great company is being built on a foundation of sand.

DISADVANTAGES OF FRANCHISING
H IGHERL EGALE XPENSE The necessity of preparing agreements, Uniform Franchise Offering Circulars (UFOCs) and related documents, and filing them in various states (with attached audited financials) represents a significant expense, although the year-to-year expenses are generally less than those initially incurred 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 Franchisor provides only 9 days of pre-sale disclosure rather than the required 10, the Franchisee has an automatic rescission right, even though the missing day was not the cause of any loss.) For these reasons, an education program for franchising personnel (which we provide) and the assistance 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 may terminate or refuse to renew a franchise. While generally not preventing Franchisors from achieving termination or non-renewal, these laws do present a number of technical requirements that must be complied with. These requirements make inclusion of provisions for objective standards (for both system compliance and financial performance) for termination (and/or recovery of exclusive territories) particularly important. F RANCHI SEM ARKETINGC O NSTRAI NTS Advertisements, brochures, flip charts, video tapes, etc. offering the franchise (but not retail advertisements) 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 a formal document attached to the UFOC. C ONTROLI SSUES As with dealerships, there may be quality control and related issues, at least as compared to company-owned operations. B USINESSR ELATIONSHIPI SSUES 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 most will agree that committee management doesnt work and that there needs to be one captain for the ship, a wise Franchisor will work with his Franchisees, probably with the help of a franchise advisory council, in charting strategic directions, implementing marketing plans, etc. A Franchisor must be psychologically comfortable working with Franchisees who will understandably take the view that if were going to be in on the landing, wed like to be in on the takeoff too. N EEDTOD ELIVERP ERCEPTION( ANDR EALITY) OFC ONTINUEDV ALUE Franchisees (perhaps more than dealers and particularly if they are being asked to pay royalties and/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 retail level) as the Franchisor and will ask what their continued payments are buying them (What have you done for me lately?) P O TENTIALFORL OSSO FF REEDOM Unless carefully designed, awards of exclusive territories may generate legal and other problems 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 different markets (non-automotive), co-branding opportunities, mergers with existing competitive chains, etc. Appropriate franchise agreement provisions, and proper education of Franchisees, and management of their expectations, can largely avoid these issues. F INDINGQ UALIFIEDF RANCHI SEES As may be true with dealerships, but more importantly where the franchise relationship is long term, finding and educating (not just training) good Franchisees is vital. The ideal Franchisee combines entrepreneurial energy with the willingness to follow systems and act as a team player.

UNM ANAG EDGROWTH

Given franchisings demonstrated potential for rapid expansion (financed primarily by Franchisees), the potential downside is too rapid expansion, with the needs of the Franchisees outstripping the support capabilities of the Franchisor.

(B)

FRANCHISE PLANNING AND DEVELOPMENT

1. CONCEPT OF FRANCHISABILITY
In business, a relationship between a manufacturer and a retailer in which the manufacturer provides the product, 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 franchises. The vast majority of fast food chains are also run on the franchise principle, with the retailer paying to use the brand name. OR A right or license that is granted to an individual or group to market a company's goods or services in a particular territory under the company's trademark, trade name, or service mark and that often involves the use of rules and procedures designed by the company and services (as advertising) and facilities provided by the company in return 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 amount of analysis, AT Franchise Consultants has identified a series of 12 predictive criteria that assess the readiness 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 prospective
franchisees. Credibility can be reflected in a number of ways: organization size, number of units, years in operation, 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 adequately

differentiated from its franchised competitors. This can come in the form of a differentiated product or service, 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 franchisee in a relatively short period of time. Generally speaking, if a business is so complex that it cannot be taught to a franchisee in three months, a company will have difficulty franchising. Some more complex franchisors offset this handicap by targeting only franchise prospects that are already "educated"; in their field (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. Some
concepts (e.g., barbecue) do not adapt well over large geographic areas because of regional variations in consumer tastes or preferences. Others (e.g., medical practices) are constrained by varying state laws. Still other concepts work only because they are in a very unique location. And some work because of the unique abilities or talents of the individual behind the concept. Finally, some concepts are only successful based on years of perseverance and relationship building.

5. Refined and successful prototype operations - A refined prototype is necessary to demonstrate

that the system is proven, and is generally instrumental in the training of franchisees. The prototype also acts as a testing ground for new products, new services, marketing techniques, merchandising, and operational 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, and business practices in a comprehensive and user-friendly operations manual and/or computer-based training module.

7. Affordability - Affordability merely reflects a prospective franchisee's ability to pay for the franchise
in question. This criterion is as much a reflection of the prospective franchisee as it is of the actual cost of opening a franchise. For example, a multi-million dollar hotel franchise is affordable to real estate developers, whereas a franchise with a $100,000 start-up cost that targets prospects with clerical experience might not be.

8. Return on Investment - This is the real acid test of franchisability. A franchised business must, of
course, be profitable. But more than that, a franchised business must allow enough profit after a royalty for the franchisees to earn an adequate return on their investment of time and money. Profitability is always relative. It must be measured against investment to provide a meaningful number. In this way, the franchise 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 general
indicator of the success of any business, these trends are key to long-term planning. Is the market growing or 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 franchised and non-franchised competitors doing? And how will the competitive environment affect your franchisee's likelihood of long-term success.

10. Capital - While franchising is a low-cost means of expanding a business, it is not a "no cost" means
of 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 the expansion plan. If a company is looking to sell one or two franchised units, the necessary legal documentation may be completed at costs as low as $15,000. For franchisors targeting aggressive expansion, 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 to reach its expansion goals.

11. Commitment to relationships -Successful franchisors focus on building long-term relationships

with their franchisees that are mutually rewarding. Unfortunately, not all franchise organizations understand the link that exists between relationships and profits. Strong franchisee relationships enable the franchisor 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 their customers. 12. Strength of management - Finally, the single most important aspect contributing to the success of any franchise program is the strength of its management. AT Franchise Consultants has found that the single 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 on themselves. In addition to absorbing several new jobs for which the franchisor has little to no time, the franchisor 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-unit operations 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 your business is franchisable, request a free consultation with one of our Senior Consultants.

2. FRANCHISE FEASIBILITY 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 setting 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 easily correctible once the franchise system is operational.

There is the mistaken belief that has been endlessly perpetuated that "any" business can be franchised. This is not 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 activities. Sadly - many unprofitable businesses have proceeded to franchising. This may have been due to the belief that somehow when the business is franchised that it will magically be able to be 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 because of 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 any duty of care that they may have and this naturally leads to the question of making sure that franchise consultants 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 positive advice to franchisors (and in some cases 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 the 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 of 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 A FRANCHISE SYSTEM AND ASSESSING A POTENTIAL FRANCHISEE

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 the future franchise system, determine how it integrates with other elements, make changes based upon the information 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 elements you 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 growing the franchise system Competition both at the franchise and consumer level Potential conflicts between the franchisor and franchisee and methods to reduce or eliminate these problem areas Economic impact of franchising on the franchisor and franchisees including investment, cash flows 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 manuals, 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 inclusion into the system, their cost for development and implementation is determined and their impact on the revenue and expenses for the system, at all levels, are determined, can you properly determine the fee and other structural elements of the franchise system. Only then can you truly provide proper information to your 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 than independent business owners is that the franchisor is prepared to provide them with the necessary tools and structure. Where new franchisors shortcut the process, skip the necessary evaluations and the development of the underlying components and move directly into the development of legal documents, it is unlikely that the benefits of franchising can truly be realized for either them or the franchisees. Planning and evaluating the underlying system is the first step in providing franchisees with the tools they require to succeed.
OR

It is essential for someone who may be contemplating establishing a franchise system to be fully conversant 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 and the slogan recognisable and indicative of the products or services you provide? The last person to give you an unbiased opinion is yourself, then your partner. Your kids can be pretty blunt and can also let you know how the younger generation view your image.

Is everything systemised? Have you read the E-Myth Revisited by Michael Gerber. You need to systemise everything. You can pay to get this done but its expensive. Enterprise 21 can give you the guidelines 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 you to do some forward budgeting and costing. Have you done a personal appraisal on your skills as a Franchisor? Remember the skills you need as a successful Franchisor can be decidedly different from those required as a small business owner. List your personal skill sets and areas of lack and decide which of those you lack you can fix up with training. The others 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 small operation. As soon as you launch your franchise you have some potentially very valuable Intellectual Property. 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 are absolutely essential in producing the legal documents but most will not really have a clue as to how a business 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, potential purchasers of you established Franchise. Enterprise 21 are not solicitors. We have worked with many solicitors over the years and for the last 7 8 years we have actually constructed Franchise Agreements and Disclosure Documents then passed these to our 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 attitude development courses

Also included with this service is a full suite of ancillary documents essential to the commencement and operation of a successful franchise business system.

Module 4. Management and Operation of Franchise

(A) MANAGING FINANCE

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 creditors of the company.

Public Deposits : General public also like to deposit their savings with a popular and well established company 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 may retain 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 State governments which give long term loans at reasonable rate of interest. Some of these institutions are: Industrial Finance Corporation of India ( IFCI), Industrial Development Bank of India (IDBI), Industrial Credit and Investment Corporation of India (ICICI), Unit Trust of India ( UTI ), State Finance Corporations etc. These sources of long term finance will be discussed in the next lesson.

2. MEASURING FINANCIAL P ERFORMANCE OF A FRANCHISE

How can I find out the financial performance of franchises?

To their great surprise, prospective franchisees often cant get an answer to the most basic investment questions 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 other unit financial information in their disclosure documents and, the only way they are legally allowed to give you that information is in those documents. There are a number of good and valid reasons for franchisors not to provide this basic information. The information they get from the franchisees is unaudited and therefore may not be accurate. The differences in 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 of

brand recognition in new and older markets and a host of other reasons might make the information misleading. Providing the information in public documents would allow their competition to obtain information on their sales, cost of sales, margins, sales mix which also is a valid reason. For some, unit performance is so bad that if they included the results in the offering material, they would have a slim change of ever selling a franchise. Developing a financial projection for your future business is an important part of your evaluation of the franchisor. Even if the franchisor chooses not to provide the information you are looking for, with a little work, you can find most of it yourself. The FDD (Franchise Disclosure Document) has other hidden resources that, when combined with other research, can provide you with insight to profitability. Start with a careful reading of the franchisors 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 of information. 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. Call them and ask questions. They can share with you average revenue, profit margins, cost of goods, working capital requirements, return on investment, etc. Former franchisees can give you insight as to why they left the system and whether they made a return on their investment. While current and former franchisees are not obligated to give you information and just might not have the time to spend with you, they 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, that information is published somewhere on the franchisors web site.

Review all of the companys 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 also be 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 Bonds book, How Much Can I Make? The book contains earnings claims on many franchisors and you might find useful information on one of your franchisors competitors which you can use in making your financial model. The book is available in many bookstores or on the web at www.sourcebookpublications.com.

More and more franchisors are moving to provide prospective franchisees with financial and statistical information in their disclosure documents that will help prospective franchisees prepare more accurate projections for their local markets. Until all franchisors do, getting the information is a bit of work, but if you work with knowledgeable professional advisors you can usually create a fairly accurate profile of the franchise 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 model 2. Design a collection process with your franchisees in mind 3. Promote participation from the top down 4. Ensure the figures are correct 5. Compile and sort the data to identify the drivers of success 6. Communicate actionable information instead of statistics 7. Benchmark individual franchise results against network performance 8. Assimilate feedback and implement change

(B)
1.

LEGAL ASPECTS OF FRANCHISING

OVERVIEW OF FRANCHISE LAWS ACROSS THE GLOBE

Franchise Laws across the Globe
There are many countries which have developed comprehensive legislation to cover franchising in

their respective dominions. At the federal level in the United States, the Federal Trade Commission s Rules on Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures (1979) regulate the information a franchisor is required to supply the prospective franchisee in order to enable the franchisee to make an informed decision on the prospects of venturing into the business. The North American Security Administration Association (NASSA) has adopted a Uniform Franchise Offering Circular (UFOC) which delineates the information required to be disclosed to a prospective franchisee. Disclosure requirements under franchising are well-defined in the USA. In 2000, the Ontario Legislature in Canada adopted the Arthur Wishart Act which deals comprehensively with disclosure requirements as well as important aspects of the franchiseefranchisor relationship such as fair dealing by each party to a franchise agreement as regards its performance and enforcement, and the right of action for damages for breach of the duty of fair dealing. In the United Kingdom, there exists no operative franchise-related legislation. However different aspects 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 ethical conduct, disciplinary procedure, complaints procedure and appeals procedure. The Australian government has adopted a mandatory code of conduct and has also modified the Trade Practice Act 1974 to provide for franchising. The new code imposes comprehensive disclosure requirements and provides for mandatory mediation of franchising disputes and minimum standards for franchise agreements including, inter alia, a cooling period, refrain from seeking from a franchisee a general release liability, disclosing material facts and refrain from unreasonably 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 general description of franchising, provisions for the disclosure of necessary information (such as details of the assistance to be offered to franchisees, the nature, amount and conditions of repayment, if any, of the fee to be paid at the time of entering into a franchise agreement, etc.) at the time of the 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 deceptive customer inducement, which is considered an unfair trade practice. On 31 December 2004 the Ministry of Commerce of the Peoples Republic of China promulgated the Measures for the Regulation of Commercial Franchises which became the sole legal framework for franchising in China. The measures became operative on 1 February 2005 and provide detailed regulations for franchising, comprising of 42 articles over nine chapters covering a wide span of areas from the franchise agreement to disclosure requirements, special rules for foreign invested enterprises and legal liabilities.

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, commercial law relating to contracts and joint ventures and intellectual property law for protection of trade marks and know-how. Franchise arrangements are subject to an array of laws and regulations in addition to those regulating commercial contracts and intellectual property rights. There are no specific laws governing franchising in India. As a result a franchise agreement may be governed by different laws. Primarily a franchise agreement is a contract between the franchisor and the franchisee. The first law which comes into the picture is the Contract Act 1872 which governs contracts in India. A franchise agreement will be governed by the Indian Contract Act, 1872 and the Specific Relief Act, 1963 which provides for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract. If a party to the franchise agreement commits a breach of contract, the aggrieved party has the option to initiate a suit for specific performance in Indian courts and apply for relief in the form of a temporary or permanent injunction, which may be granted at the discretion of the court considering the balance of convenience and the interests of 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 franchise transactions. Additionally, laws and regulations applying to specific sectors of goods and services will 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 business operation. The international business environment demands a well-defined suitable legislation that is complete in all respects. The lack of a comprehensive legislation on franchising in India leads to the applicability of multiple laws to a franchise transaction. 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. However the application of different laws to one agreement makes it complex to decide various issues arising from the agreement. Ambiguities: Due to the necessary application of multiple legislation, ambiguities are created as to certain issues. For example, a franchisor would imagine that a certain issue is the franchisees responsibility under one law, whereas the franchisee would think the opposite based on a different 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. This proves to be detrimental to the smooth functioning of franchising operations in India and also makes time-bound operations involving new enterprises difficult.

Absence of Disclosure Requirements

Countries with specific franchising legislation make it imperative for parties to a franchise agreement to disclose certain factual information pertaining to the business of the parties. This ensures transparency and facilitates an informed decision. A franchisor should be required, by law, to make certain disclosure to the prospective franchisee wherein he is supposed to reveal detailed information regarding himself, his litigation and bankruptcy history, his financial position, the facilities he offers etc. In India, in the absence of effective disclosure norms, a prospective franchisee is rendered helpless as the franchisor is under no statutory obligations to make disclosures. In the absence of a specific statute governing the franchise agreement, the franchisor refrains from providing any information that is likely to prejudice or make a franchisee reconsider the business proposition of the franchisor. The lack of proper disclosure requirements provides a golden opportunity to a franchisor to abuse his position 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 was only held in 2009. India is, however, one of the biggest franchising markets because of its large middleclass of 300 million who are not reticent on spending and because the population is entrepreneurial in character. In a highly diversified society, (see Demographics of India) McDonalds is a success story despite its fare differing from the rest of the world. So far, franchise agreements are covered under two standard commercial laws: the Contract Act 1872 and the Specific Relief Act 1963, which provide for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract

4. TAXATION ASPECTS OF FRANCHISING

TAX ASPECTS OF FRANCHISING, written by Bruce S. Schaeffer, Esq., discusses the legal environment and

history 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 different treatment of franchisor and franchisee, area development agreements, and many other aspects of operating a franchise. It explores in depth the tax issues involved in franchise advertising, personal holding company and S corporation considerations, state and local taxation of franchises, and succession planning for franchisees. In addition, it covers such specific topics as

Franchising, its legal environment, the types of franchise arrangements, its history, and development The economics of a franchise, franchising in the 1980s and 1990s, 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 income, and more

Tax Aspects of Franchising allows you to benefit from:

Hundreds of hours of original research on specific tax planning topics from leading practitioners in this 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 same amount before trading starts. Can the cost of the franchise be offset against profit for cooperation tax? Is there any liability to personal income tax doing the above? What are the issues to consider with taxation? Is there any benefit in operating as a sole trader? (Other than lower accounting changes) How can I find an accountant that can give more detailed advice on the above? (E.g. what sort of accountant is needed?)

5. TERMINATION OF A FRANCHISE

Termination of the Franchise Relationship

A franchise relationship, as with a marriage, can come to an end. How can the two parties withdraw from a 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 will provide for the franchisee to be given the opportunity to remedy this breach before the franchisor will terminate. Where, at the end of an agreement for a fixed term, the franchisee, who may hold a right of renewal, may choose not to exercise that right. The franchisee may sell the business and the purchaser may be granted a new franchise agreement if that is permitted. The interests of the franchisor and franchisee on termination are similar, although viewed from a 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 a replacement franchisee. On the other hand, the franchisee will be concerned to recover as much as he can financially, and to minimise the extent to which his future business activities will be restricted by the fact that he was a franchisee.

THE CONSEQUENCES
Most well-drafted franchise contracts will spell out clearly what is to happen upon the termination of a franchise 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 the relationship 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 his franchise's know-how, trade secrets, and business methods so as to prevent the departing franchisee from unfairly making use of them in order to compete with the franchisor and the other 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 is maintained with the customers of the departing franchisee. In this respect, a well-drafted franchise contract will provide for the transfer of existing contracts between the franchisee and his customers to the franchisor together with any necessary financial adjustments. To complete the change of the visible public image reflecting the franchisors name and goodwill, the franchisee will be required to take certain steps such as: a) Make application to the appropriate authorities to cancel any trademark licence which may be recorded with them relating to the use by the franchisee of the franchisor's trademarks or service marks. b) When appropriate, change the fascia, dcor and shopfitting of premises and the livery of any vehicles. c) Return all advertising, packaging, marketing and promotional material associated with the franchise. d) Cease to use stationary, literature, etc. bearing the franchisors trademarks and service marks, 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 commonly known as covenants in restraint of trade and non-competition covenants. For example, it is customary for the franchisor to extract a promise from the franchisee in the franchise contract that the franchisee will not compete with the franchisor, or any other franchisees within a certain area and stated period after termination. The franchisor will be anxious to ensure that the franchisee does not disclose any confidential information imparted to him and/or use it in competition with the franchisor or any of his franchisees.

RESTRAINTS
Difficulties arise in relation to the imposition of restraints on the future business activities of the franchisee 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 should not break away and engage in unfair competition, making use of the knowledge acquired as a former franchisee. The fixing of reasonable periods of time and area of operation has to be done by reference to what is permitted 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 phone operation in a sparsely populated rural area.

SETTLEMENT
By and large, most terminations, even for breach, can be settled between franchisor and franchisee in a civilised way. Once the relationship has broken down an amicable parting is usually capable of achievement and will provide the best solution for a franchisee whose business may be bought, either by a franchisor or by a prospective 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 franchise contract 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 his equipment and stock. These would otherwise be of little use to him, given the nature of the noncompetition 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 not know 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 contract which has been professionally prepared by an experienced franchise lawyer and specifically for the franchise in question with the objective of covering such eventualities as are foreseeable in that particular franchise.
OR

The one part of the franchise contract which can be heavily weighted in favor of the franchisor, is the franchise termination clause! It is therefore imperative for the franchisee to have the contract reviewed by an experienced franchise lawyer, to ensure that the provisions contained therein also offers protection to the franchisee, in the event of the termination of a franchise. (Once business commences it may be very difficult 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 site be found within a specified period of time e.g. 180 days, then either party may terminate the agreement in writing and the franchisor should refund any monies paid to him. (Franchise fees may be structured for example as 25% on signing the franchise agreement, 25% on signing the business lease agreement and the remainder 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 the termination of a franchise will be automatic although the franchisee may be required to notify the franchisor of this fact in writing by the prescribed date in the agreement. However, if the franchisee has built up a successful business, he may wish to sell to a third party, who in turn will enter into a new agreement 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 outgoing franchisee will not be liable for any further royalties or contributions once the territory has been sold to a third party. * In the case of a force majeure such as earthquake, war etc., it may be impossible to continue with the business and the termination of a franchise must be mutually accepted in the termination clause of the franchise agreement. * In the case of insanity, infirmity or death of a franchisee, the termination may be sought by a personal representative or family member. However, the contract must grant them the right to continue with the business 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 franchisee must further consider his obligations to his landlord arising from his lease agreement. Should the business not 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 the termination 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 to minimize any restrictions placed on future business endeavors. Although nobody can be restrained from earning a living in the field of his experience, you may be prohibited from conducting a similar business from the same premises, or within a certain radius from one of the other franchisees in the group. You will also be prohibited from conducting a similar business anywhere 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 with a similar business. The nature of the business and the area in which it is being conducted (a densely populated city vs. a small town) 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 a franchise.

(C)MANAGING RELATIONSHIP
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. Upon 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 that 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 the 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 life cycle, it is fairly easy to see four distinct and different stages involved in the franchisor/franchisee relationship. 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. The introduction 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 the 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 the 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 by 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 mutual 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 and the 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/or brochures which explain new products or services which are being provided or implemented by the 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 this from 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 the 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/FRANCHISOR RELATIONSHIP

We have developed the following ten commandments for the successful franchisee/franchisor relationship. These commandments are based on the development of a friendly and strong interpersonal relationship between the franchisee and franchisor. These ten commandments include 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/her 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 others to succeed and to share the joys of success and prosperity. The franchisees have high demands of the 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 to be able to help the franchisor understand their strengths as well as their weaknesses. The franchisee 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 of 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 the 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 can 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 and want to be able to expand and grow in that business. The franchisor also needs to plan for growth so 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 wishing 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) (2) (3) (4) (5) Power Profit Prestige Pleasure 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 franchisor achieve 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 business 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 need 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 often 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 are located 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 the 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 and 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 FOR DEVELOPING THE FRANCHISEE / FRANCHISOR RELATIONSHIP

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 develop and strengthen the franchisee/franchisor relationship.

The franchisee needs to also work on the development of the franchisee/franchisor relationship. The 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 through proper 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 economic 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 problems 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, the 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 four 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 the civil 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 effort. 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 and even, on occasion, daunting. While you have the right and the obligation to enforce system standards, your franchisees often view themselves as an independent business (which they are) with the ability to call their own shots (which they are not). And while the relationship is contractual in nature, if you are ever forced to bring out the contract, the relationship is already in jeopardy. Thus, the franchisor must pay particular attention to the franchisor-franchisee relationship from the very start 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 of a 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 is 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 the child, 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 them for the education and training that will allow them to survive in this world. And as they grow older, they become 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 of their relationship, pushing a little around the edges, trying to change or influence the system that you have set for them--and perhaps breaking some of the rules. But they still live in your house, and what you say goes. 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 rarely home, and when they were, they let him do whatever he chose. At 15, we would sneak over to Mike's house 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 juvenile detention center. And I began to understand that sometimes being a great parent means you cannot be a good friend. Likewise, a franchisor needs to start by establishing the boundaries of the relationship. It is important that the franchisee understand that your first role as "guardian" is to guard the system and the brand so all franchisees 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 them from the start. At the same time, it is important to understand that, as a franchisor, discipline can no longer be meted out the 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 with alienated 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 professional manner. Being firm with franchisees, as opposed to managers, also means providing them with an explanation for your various "requests." Most franchisees have a key desire for their opinions to be heard. A franchisor should thus avoid making decisions in a vacuum and providing direction to franchisees without 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 occasional newsletter 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 our communications. But in a franchise context, that would be a big mistake. All too often, we have seen wellintentioned 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 will occur. Annual conventions, regional meetings and advertising councils all provide for this two-way communication. The accessibility of your senior staff is also vital. I have known the senior executives of some fastgrowing franchisors who will not go home for the night until they have personally returned every franchisee's call.

One of the most important tools at a franchisor's disposal is the franchise advisory council. As the franchisor, creating this council not only allows you to control the agenda, but also assures you a voice on it. The last thing you want to do is find out your franchisees have formed an organization without youthat's usually a sign something is wrong and they have excluded you from the process of resolving the grievance. 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 are some things you may choose not to share with your franchisees, the key to a long-term sustained relationship is trust. And trust starts with openness and honesty. Get caught in a lie once, and you have destroyed that trust forever. Lastly, to be effective, you have to genuinely care about the success of your franchisees. Good franchisee relationships start with a franchisor that is, first and foremost, committed to franchisee success. That commitment, 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 is almost nothing they won't do for you.

3. CONCEPT OF TRUST 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 it can 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 relationship is 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 be honest with you, to keep promises, to not take advantage of you, to not lie, cheat or steal from you. It's the glue 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 vice versa. 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 maintaining your relationship will result in mutual respect and connectedness built on the foundation of trust. So it's worth 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 associate ourselves with them in one or the other way. CONCEPT OF RELATIONSHIP-BUILDING

The term relationship is rooted from the word relation and is defined as a a mutual affiliation or connection between individuals or groups of people or entities.

Relationships are built where there is mutual understanding between or among individuals. However, this is not built overnight. Establishing a relationship has certain requirements for it to develop. This concept is especially true if the individuals have just initiated a mutual connection. For an existing relationship such as 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 the person. 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 our colleagues and customers.

Most relationships, if not all, are not always positive. There are times when the mutual bond of the individuals is tested by adversities and challenges. Taking care of a relationship is no different than nurturing a plant. Failed relationships are brought about by a weak foundation. Successful relationships are 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 relationship exists for a single person only. Shared interests between people form a relationship. Any common interests lead the way for building relationships.

Usually, we create a connection with someone who can offer something that we can relate to. With our family members and friends, we bond with them reciprocally because of love and care. In the workplace, you 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 does not exist where there is no constant interaction with another person. Trust and respect are also very important 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 a relationship or a bond with another individual is broken, mending it can be difficult. However, if the mutual connection is developed and sustained, the outcome can be remarkable. A well-built relationship can create an impact in our lives. Socialization skills are enhanced as we connect to people around us positively.

With good relationships, we are able to easily attain personal and career goals because we are surrounded with individuals who support us in many aspects. An organization successfully achieves its mission-vision when employees or the team members are in a harmonious relationship with each other. With good mutual 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 methods in doing it. But it all starts out in getting to know the people around you. Even at this initial step we already have our own styles in building relationships at work. The advantages of being able to socialize and get along well with people we work with are so outstanding that it can even easily bring the person up 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 and difficulties along the way. In the work setting, we strive to establish a professional affiliation with our colleagues, bosses, and our clients or customers. But in a more common situation, employee to employee relationship can go beyond professional aspect. This is because the daily encounter and interaction at work develops a bond of friendship among individuals that extends even after work. Since one of the essences of a relationship is constant communication, the sharing of daily work experiences and going through the challenges 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 working environment, it is more crucial to choose the people whom to offer your trust. The common clich people say that it is never a good thing to trust just about anyone is definitely true. If you easily give it trust to any individual 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 offering your 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. These individuals are also more than willing to offer you their trust that is why they act in manners that seem appealing 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 your greatest work contributions. Different individual talents and abilities allow us to create a connection with others 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 you possess the talent in connecting with people easily, you build a good connection with those who need motivation 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 needed confidence-boosting and sense of direction. As you use your talents to help people develop their full potentials 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 persons strengths, you are using the person and taking advantage 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 assigns you for a role that requires leadership skills, do not expect any form of reward for performing what was asked of you. In time, your outstanding work performance will be recognized.

RELATIONSHIP BUILDING ACTIVITIES

Healthy and productive work relationships are not formed merely by plain daily conversation and working hand in hand on work assignments. There should be an element of interest among individuals to keep the spark 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 promotes a solid relationship among members. Your can try these relationship-building activities in your workplace and 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 schedule regular weekly or monthly meetings to update each other with the work progress and projects. There are simple 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. It also 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 schedule it as a breakfast meeting, lunch meeting or discussion over coffee. And make sure to keep the atmosphere light, 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 and the minute-taker. A sharing of experiences and realizations paves way for a better understanding of each other. 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 accomplishments. This even serves as a motivation of the employees to be better than what they already are and deepens their 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 than enough to make work relationships stronger and better.

But this is not just true for achievements and successes. Even special events like an employees birthday is 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 team participation is encouraged. When these situations are done together, people easily bond because they get to socialize even in the middle of work. The more you do things together, the more productive the relationships become.

Introduce Perks and Fun Stuff in the Workplace

Creativity in work relationships makes the connection meaningful and colorful. It breaks the dullness and simplicity of connecting with each other at work. Throwing off surprises on ordinary workdays invites individuals 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 now and then, especially during times when pressure is building up due to a big project. You may want to come up with pizza Wednesdays or dress-down Fridays. The management can introduce a dress-your-office department contest with a specific theme.

5. FOSTERING LONG-TERM RELATIONSHIP

Build trust with our clients by demonstrating professionalism, expertise, and a strong relationship with our clients Construct wealth management and investment strategies to help the client work toward achieving their 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 essential to building that long-term relationship

Time does not stand still and family wealth management, estate planning, and excellent financial management 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 journey upon which we accompany you.
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It may seem odd at first, but as a homeowner it is in your best interest to have with a long-term landscaper in order for the arrangement to work. After all, this person will be designing and taking care of your yard at your expense. Since gardens and grounds are developed and maintained year after year, finding the right 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 comprehensive instructions.

Communication
The best relationship with your landscaper involves communication, and a lot of it, especially if your yard is large. The more work that is to be done, the more you will need to talk if you want things to be perfect. Talk about everything yard-related, from the plants that you want to the things that you do not want to see in 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 it will cost overall. Keep in mind that some charges may be for labor, others for materials, and still more for design.

Dedication
The longer you keep a great landscaper, the better the relationship will become. Just like a good marriage, your landscaper will learn what you like and do not like, and the communication process becomes much easier at this stage. If the landscaping service is great, do not hesitate to keep them coming back for more so 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 to leave 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, schedule your 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 speak up if the company begins work on something that you know you will not like. There is no point in paying for something that you will likely want to change in the near future.

Comprehensive Instructions
If you want your yards potential to be maximized, give very detailed instructions to your landscaper. He or she can tell you what is best, but they will want your input initially to learn your specific tastes and budget 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, your yard will look its best and you will be proud to entertain guests, visitors, friends, and family members outside. It is best to have a great relationship with your landscaper, and to keep the best landscapers on staff for as long as possible. Your yard will look great, and you will know that you are getting the most value for your money.
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