domingo, 15 de mayo de 2016

Design of a franchise market intelligence system

The less systemized part of any business, especially small businesses and start ups, it's usually the constant process of researching the market place. Almost everybody has something to say, including wives, girlfriends, accountants, attorneys, suppliers, the cousin of the owner of the company that "knows a lot of franchises" and everybody pass through their own lens the weak information they know and return it to the environment in an unclear and unreliable form.

I think it is specially in this issue where small business strategy should draw on the lessons of the military strategy or that of the security forces, and although it seems a bit subversive, of highly scientific and developed urban guerrilla tactics and counter-insurgency used from inside the governments. In all these cases there are very well mounted "apparatus" of research, interpretation and data detection that sometimes do not seem to matter, but, when well processed, can be decisive in the battle.

Having a specially-mounted-franchise-intelligence-department inside the company can be very expensive, so modern business strategy seeks to transmit a work philosophy to the whole staff, to make everybody act as "secret agent" on the street, not simply detecting the entry of a new competitor, but rather interpreting the overall conditions that made possible that income. And in this matter can be highlighted all the franchisees, who can in this way provide highly important intelligence to the chain.

If this working philosophy is not carried in the blood, competition can take advantage of our staff to counter-investigate us, even when we don't know that we are being used in this way (many "great" managers tend to be more "big mouths" of that allowed by religion). Many companies often disinform their managers, knowing this behavior from their main competitors.

The truth is that the information of "the street" is as valuable as natural resources were two hundred years ago. So you have to get it and care for it, because it is the most extraordinary source of competitive advantage that exists today.

The information that must process a franchise intelligence system is of two types:

  • Primary information. It is the one that we go specifically to seek on a particular topic, usually through the traditional techniques of quantitative, qualitative, motivational, semiologic, ecc. research.

  • Secondary information. It is the one that already exists within the franchisor company, or within the franchises or suppliers, and you have to "learn to read" using less common techniques, such as "content analysis", typical of military strategy . The sources of this information are numerous: fairs and exhibitions, customer complaints, sales reports, invoices for repairs and maintenance, municipal organizations censuses, registration in political parties, business magazines, industry publications, reports of imports and exports to meet the movements of competition, advertising competition strategy, radio and TV news programs, business forums and conferences.

From the radio station that paid the gas stations employees to detect which FM were listening motorists who stopped to load gasoline, to the analysis of the waste to know how the household consumption is made, through systematic analysis of commercial advertising and data collection when entering in a fair or exhibition, the mechanisms to meet the primary information are often structured and easily "programmable". But not so with secondary information where it is necessary to have the "murderer instinct" of secret agents to find a pearl among so much data.In this case, the analyst must debug information, separate what does not add value, objectively filter, search for coherence, read between the lines. The systematic work in this direction leads to amazing results.

The franchise market intelligence system should be structured on the basis of the following seven pillars:

1. Analysis of the consumer. Changes and evolution in the type of clientele, identification of sources of consumer dissatisfaction, purchasing motivations, use of products and services, images of themselves as consumers, relative and sporadic consumers and nonusers, comprehensive analysis of key customers, competition consumer analysis.

2. Analysis of products and substitutes. Positioning of current and future products, studies of new uses for the current product, overall assessment of competitive products, estimation of demand for new products, acceptance and testing new products.

3. Analysis of advertising and promotion. Analysis of packaging, labels, brand names of owned products and competitors; graphics and audiovisual adds studies, reading habits, audience and viewers, media, promotion effectiveness in retail outlets and events (fairs, exhibitions, conferences).

4. Analysis of potential markets. Study of the likely growth of geographical areas, development of new products and new markets, and the same analysis for our competitors.

5. Analysis of distribution and sales. Study of current methods of sale, comparative analysis with competitors, optimal sizing of franchise territories, sales forecasts by area, evaluation of franchise employees, employee compensation, customer flow analysis (flux, traffic, traffic induced), channel and points of sale marketing analysis, for our chain and for those of competitors.

6. Analysis of prices. Comparative studies with competition, pricing study for launching new products.

7. Analysis of public and institutional relations. Study of the image of the franchise in the territory, opinions and attitudes towards the brand by different audiences in the territory, study of the insertion of the brand name in the community.

Processing this information may give the determinants of the franchise evolution and clarify the competitive strategies followed by the main operators in the sector. Franchisees should be the best "secret agents" of the brand.

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