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eFAQ: Keys to Building Your Brand
Managing Brand Family

February 2008

Franchise Marketing: Keys to Building Brand Value

Whether your company delivers professional services or wholesale goods, something is to be learned from the disciplined approach successful franchise businesses take to branding.

Buying a franchise is similiar to buying a ready-built home. When you invest in a franchise, you get a total business package with the brand rights to a proven marketing methodology. If you purchase a new home, built to spec, you don’t level it the moment you move in. Same is true with a franchise brand.

A business worth putting money into has a strong, recognizable identity that is unique and memorable in the minds of its consumers. That’s part of the success formula that franchisees and investors buy into. When franchisees stray from the tried and true, they decrease their ability to capitalize on the sweat equity that has made the franchise "top-of-mind" with its market. This is an expensive stray.

When brand strategy is effective, marketing is more efficient. Money and time is saved on outreach activities.

In addition, from a financial perspective, brands are considered intellectual capital, part of a company’s business assets. Standardized valuation procedures have been devised by Damodaran, Financial World, Houlihan Valuation Advisors, Market Facts, Young & Rubicam, CDB Research & Consulting and other financial giants, to assess the financial worth of brands. For example, 2006, the Coca-Cola brand was assessed at $67 billion; in 2008, the Microsoft brand was valued at $65 billion; and in 2007, the Google brand valued at a cool $17.8 billion.

Keys to Building Your Brand

Here are keys to increasing the value and performance of your brands. We will also look at examples of brands that performed optimally and others that went awry:

Consistent Core Values
There’s power in brand communications that continuously reinforce the basic values supporting the brand intent. For example, MacDonald’s supports family values, McConald's therefore provides easy food service for busy parents as well as recreation for their kids. Fully equipped indoor playrooms remain consistent to MacDonald’s core values, allowing parents to quickly and inexpensively feed the family, then relax while energetic children expend kid-energy. After 40 years of consistent growth, McDonald's overall system-wide sales continued to grow in 2007 at a strong 14.2% pace.

“Through rapid growth and extensive advertising, McDonald's in the early 1970s became the nation's largest fast-food chain and an easily recognizable feature of the American cultural landscape.

And the supreme ruler of McDonaldland, Ray Kroc, became a figure of national stature. In 1972, when more than 2,200 McDonald's outlets racked up $1 billion in sales, Kroc received the Horatio Alger award from Norman Vincent Peale.“ --

Brand Extension

This is the term used to signify leveraging brand equity by applying values from a well-known parent brand to an offspring brand. With consistent use of core values, parent brands may be successfully extended to brand offspring, creating a common ground that allows the offspring to capitalize on a parent’s success. This brand strategy reduces brand building and marketing costs for both the parent and the offspring.

For example, in 2003 Mars, the candy bar maker, created its new food division, Masterfoods USA. One of the first products Masterfoods released was the Snickers Marathon Long-Lasting Nutritious Energy Bar. With the tagline, “new look, same great taste you expect from Snickers,” the Marathon Bar was launched into the rapidly growing health bar market.

Despite going head-to-head with established competitors Nestle’s PowerBar and Hersey’s SmartZone, Snickers Marathon became one of the the top five fastest-selling energy bars in America within two years.

“One key to success, said Masterfoods USA President Robert J. Gamgort, is …. A lot of our growth has been through our core brands and (product) line extensions….”

When Brand Extension Goes Awry

Companies use brand extensions to win new audiences and make the most of their promotional spend. However, it is critical not to tarnish the original brand with conflicting values between the parent and offspring brands.

Some ideas are better left unsaid. Several years ago, McDonalds, marketed a “Burger with the Grown-up Taste” called the Arch Deluxe burger, to appeal to adults with sophisticated taste. McDonald’s is well-known as a fast food restaurant, with friendly service, not gourmet cuisine. The Arch Deluxe burger just didn’t fit in. McDonald’s was accused of losing touch with its customers and the product was taken off the menu, a poor performing cousin to the Big Mac.

Clear positioning and consistent messaging is as crucial to the expansion of a franchise as it is to a professional services firm, or even to a B-to-B product business.

In the case of a franchisor-franchisee relationship, it is the cooperative dedication to consistency that leads to the success of both wings of the business. If a franchisee takes some portion of the brand, but goes renegade with some other portion of the brand, like the Arch Deluxe burger did, the audience will conclude that the company they know and love is losing touch. And, in fact, it may have.

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