Retail Branding and Franchising Working Hand In Hand

According to the American Marketing Association’s definition of a brand, a retail brand identifies the goods and services of a retailer and differentiates them from those of their competitors. A retailer’s brand equity is exhibited in consumers responding more favourably to its marketing actions than they do to competing retailers.

Retail branding equity is one of those terms used by marketers when they want to make it seem like they are talking about something that is far more complex and important than it actually is. In actual fact, it is just about the amount of brand exposure that you have in a given market. Having high retail brand equity is when your brand is the premier brand of a particular marketplace. Although this is a simple concept to grasp, achieving it is not an easy task.

One of the main reasons on why achieving high branding equity is so difficult is because of saturated markets in the economy. With the exception of several new industries, a lot of the major and minor industries have been around for a long time. There is always one or two giants in the market who have the highest retail brand equity while other smaller firms are left to fend for themselves and claim as much remaining share as possible.

Retail Branding and Franchising Working Hand In Hand

An example is the convenience store industry. Giants like 7-Eleven and Cheers by NTUC FairPrice in Singapore, have left traditional provision stores (also known as mom & pop stores) less significant in the industry. It is difficult to compete with these giants because they are able to reap economies of scale in inventory procurement and marketing, providing customers with lower pricing and reaching out to a larger crowd.

This is also true for just about every industry including the online industry. Not everyone can defeat Microsoft and Yahoo quite handily to become Google. It takes a special company with special people and a whole lot of luck along the way.

It is impossible to build a high level of retail brand equity fast. You will have to be willing to go extremely slow in your estimation. The key is to be patient and you should not pursue a strategy in the marketplace that solely relies on you building a high retail branding equity.

Now, you might wonder, since building retail brand equity isn’t easy, are there other less challenging strategies? Well, there are actually a lot other strategies around.

Bottom feeders exist in every market, and many of them can do relatively well in terms of net profits. These firms do not have retail branding equity except amongst hardcore bargain shoppers. Well, this path can be an option but by doing this, you are giving up the possibility to dominate the particular industry you are in. Therefore, if you want to conquer the industry, you need to spend the time to acquire retail branding equity. Franchising your business could be the key in building retail brand equity, while shortening the time taken to conquer your industry.

How can we start building retail brand equity by leveraging on franchising? Researchers have studied a multitude of retailer attributes that influence overall image of the retail brand. These include the variety and quality of products, services and brands sold; the physical store appearance; the appearance, behavior and service quality of employees; the price levels, depth and frequency of promotions etc. I would consider five categories that would seem more important.

Retail Branding and Franchising Working Hand In Hand

The location of outlets is one of the key factors determining the success of the franchise. In other words, having the right location is important in terms of convenience to the customer. It is equally important to the franchisee because a wrong judgement in the location is almost impossible to correct. Therefore, outlet selection must be done to choose the ideal location appropriate for the business as different business has got different location needs.

The decision for the location should consider these three factors:

  • Customer Profile
    Customer plays an important role in every business. The target market will determine where the outlet should be located. It is important that the locations sees a lot of target customers and has various magnets (attractions) that are able to attract these target customers.For example, children enrichment centres usually locate themselves at a strong human traffic area with accessible public transport so that their target market (students) will gain easy access to the destined location.
  • Physical Location
    Physical location refers to the geographical area study of various locations that are suitable for consideration. The main influences on physical location are major and minor qualifying factors.Major qualifying factors are factors which are within the control of the franchisor/franchisee. Take a florist as an example. It would be wise for the florist to be located in shopping malls, hospitals or within walking distance from the nearest transportation interchange instead of libraries.Minor qualifying factors are factors which are out of the franchisor’s/franchisee’s control. To reduce the risk of suffering from these minor qualifying factors, the franchisor or franchisee got to take precautions.
  • Sales Potential
    It is critical for the franchisor to do a thorough due diligence into the sales potential as it can affect the survival of the franchise outlet. A good proxy will be to understand the competition around the immediate location.

In-Store Atmosphere
The response which an atmosphere elicits from customer differs along three main dimensions of pleasantness, arousal, and dominance.

An enjoyable in-store atmosphere provides substantial pleasant utility to customers and encourages them to visit more often, stay longer, and buy more. Even though it also improves customers’ perceptions of the quality of merchandise in the store, the customers tend to associate it with higher prices.

The look and the feel of the franchise outlet should have some similarities with the headquarters’. Guidelines, such as the colour schemes and design of the outlet, placement of the logo, philosophy of the company and corporate posters, are usually being passed down by the franchisor. This ensures retail brand equity for the brand as a whole.

Using the most well-known McDonald’s as an example, all McDonald’s outlets have got their interior layout and displays standardised with the theme colour – yellow and red. Other features include Ronald McDonald’s benches, which are usually placed near or outside the restaurant.

Target Audience
Different business delivers their services and products to different target audience. It is important to know which group of audience your business is targeting at.

In Singapore, there are high-end grocery stores located in the central districts which target affluent and expatriates crowd as their audience. These grocery stores usually have got specialty items such as imported food products. Whereas there are hypermarkets which target budget conscious crowd as their audience.

Retail Branding and Franchising Working Hand In Hand

Cross-Category Product/Service Assortment
Consumers’ perception of the range of different products and services offered by a retailer under one roof significantly influence store image. The benefits of a wide assortment are clear.

Go beyond the consumers’ expectations. For a pharmacy, consumers’ would only expect to find medical drugs and first aid supplies. But when a pharmacy goes beyond customers’ expectations to meet their other needs, like selling daily necessities like cosmetics, shampoos, food and even household appliances, consumers’ satisfaction can be enhanced. There is now a higher chance of consumers’ finding what they need as compared to a conventional pharmacy.

Within-Category Brand/Item Assortment
Granting consumers’ more choices will increase their satisfaction level. The ultimate taboo for a retailer is to limit consumers’ choice. Expand the range of products; explore to find consumers’ most preferred brands.
Give consumers’ choice! A regular cosmetic drugstore would carry various brands of cosmetics, a wider range as compared to a particular cosmetic flagship store. Even though both retailers carry the same category of products, the cosmetic drugstore has a higher chance of satisfying a customer because when she looks for a particular type of product, she is able to choose between different brands in the drugstore, but in the cosmetic flagship store she is only limited to one brand.

Consumer perceptions of the brand image can help develop strong and unique retail brand associations in the consumers’ minds. This is the ultimate goal for any franchisors, whose greatest asset is in their brand name.
It influences the amount of satisfaction the consumers gain from patronising the retail brand. This will lead to consumers’ brand loyalty, which the retailers themselves can benefit from in both short run and long run. By influencing consumer preferences and shopping behaviour in these ways, retailers’ image becomes an important base for building retail brand equity.

With a reputable brand image among customers, the retail brand becomes more valuable. The values of some of the world’s best known brands have been estimated in the billions of dollars – a value that rarely appears on the company’s balance sheet. Since there is so much to gain, why aren’t more retailers doing a better job in building retail brand perception among their customers? Why aren’t the millions of dollars retailers spent annually in advertising, promotions, signage and events build stronger brand images for their chains? The truth is, many retailers spend too much of their precious marketing resources selling the products in their store rather than selling the brand name of their store. We have to understand that the retailer’s products are not the only items of value. It is the brand of the retail store that sets itself apart from other retail destinations, in other words their competitors. Therefore it is important for retailers to market themselves beyond the products they carry.

Retail branding is crucial because it influences consumers’ behaviour, taste and preferences. It is more than making prices of your products wallet-friendly. Price alone is a weak strategy for product promotion unless there’s something attached to it, like a recognisable label or a glamorous status that can win over a consumer’s heart.

“A product is something made in a factory; a brand is something that is bought by the customer. A product can be copied by a competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless.” – Stephen King, WPP Group, London.

At the end of the day, it is your brand that is left in the hearts of consumers.

Gary Loh

Gary Loh is the Director of Purpleclay Consulting Pte Ltd, which is a franchise consultancy firm and grant application specialist. Purpleclay Consulting has assisted many promising franchise brands for local and overseas expansion, as well as assisting these brands in winning various business accolades and awards. This company is an approved SCOPE-IP Business Consultant under the Intellectual Property Office of Singapore (IPOS) and an I-Advisor under International Enterprise Singapore
(IE Singapore).

1 Comment

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