Monday, May 24, 2010

Local Store Advertising – Yellow Pages Dominate, Internet Advertising Lags

Yellow Pages remains the most common form of Local Store Marketing utilized by franchisees.

Yellow Pages advertising is utilized by 69% of respondents to the National Franchisee Survey , followed by Print advertising –newspapers (58%) and e-mail to an internal distribution list (57%.) Purchased e-mail lists (4%), Television (14%), Billboard (15%) and Website banner advertising (17%) are the least commonly utilized forms of local store advertising by franchisees.


Click to view accompanying table.



Looking at local store advertising correlated against number of years a local franchise has been in business presents what is, to me, a surprising pattern. Print Yellow Pages is utilized by 100% of respondents that have been in business for less than a year. Other forms of local advertising have almost no representation among these businesses during their first year of operation.

After a local franchise has been in operation for at least a year, we note significant usage of virtually all forms of local advertising. This appears to be a period when franchisees experiment with different forms of advertising during which Newspaper (69%) and Yellow Pages (62%) advertising are dominant. After four years in business, we begin to notice a reduction in the use of these other forms of advertising as noted by the increasing dominance of Yellow Pages advertising and a reduction in usage of all other forms of advertising. After ten years in business this migration appears to be complete. Local franchise owners once again rely on Yellow Pages advertising with 83% of respondents reporting its use. More notable, however, is the dramatic reduction in use of virtually all other forms of advertising.

If one looks at the most experienced store owners for guidance, it appears that they find Yellow Pages advertising to be most suitable for promoting their local businesses. While Internet advertising in all its forms retains a presence, the reduced use of these advertising methods suggests that Internet advertising may not yet produce the same measurable results as print media.

Despite the inroads made by the Internet, Social Media and other technologies, the responses we’ve received to date from the National Franchisee Survey suggest that local franchise owners are not yet comfortable with the use of new media. The most experienced store owners appear to rely on Yellow Pages advertising to the near exclusion of all other options.


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FranchiseFacts – Capturing the franchise experience

Perry Shoom, FranchiseFacts
Capturing the franchise experience!

Franchisee Survey in progress at www.FranchiseFactsUSA.com
If you are a franchise owner or store manager, please participate!

Understanding the Franchise Experience blog can be found at franchisefactsusa.blogspot.com

Tuesday, May 4, 2010

Women in Franchising – Better Educated, Risk Averse

Are women who own franchised businesses more or less successful than their male counterparts?

A recent NPR news item informed that women earn $0.77 for every dollar earned by men. That same day, an unrelated newspaper article described how women have a greater aversion to risk than men.

Li-Jun Ji, a professor at Queen’s University in Kingston Ontario, studies how decisions are made. According to Ms. Ji, men are “natural risk takers.” She suggests that “women tend not to get the same kick out of taking risks.”


“When it comes to a risky situation which usually involves some kind of uncertainty, women tend to perceive negative consequences to be more likely and perceive negative consequences to be more severe.”

Li-Jun Ji, professor, Queen’s University, Kingston, ON
Globe and Mail, April 24, 2010


Franchising, a risky business venture, falls into this category where Ms. Li suggests that women are more likely to “perceive negative consequences to be more severe.” Does this impact on those likely to get involved in franchising, and their relative success? Preliminary data from FranchiseFacts’ National Franchisee Survey (currently underway) was used to develop profiles for men and women who own a franchise.

Women, when opening a franchise, report as being more educated than their male counterparts but lacking a comparable level of prior business experience. These women are more likely than men to open their franchised business in a smaller population center (under 250,000 people) that is rural or suburban.

As franchisees, the vast majority (61%) of these women have owned their business for no more than four years whereas 70% of men have owned their franchised business for more than five years. Women also work fewer hours in their business.


Women
(46% of respondents)
Men
(54% of respondents)
Age 40-64 yrs -- 82% 40-64 yrs -- 78%
Education College/University or Higher - 84%
High School - 0%
College/University or Higher - 81%
High School - 4%
Years to Profitability Not yet profitable - 89% Under 1 yr - 25%
1-3 yrs - 27%
Not yet profitable - 25%
Prior Business Experience None - 11%
Bus Exp / No Mgmnt exp - 27%
Middle Management -
39%
Upper Management - 23%
None - 8%
Bus Exp / No Mgmnt exp - 14%
Middle Management -
39%
Upper Management - 39%
Years in Operation 1-4 yrs - 61%
5-10 yrs - 25%
10+ yrs - 9%
1-4 yrs - 29%
5-10 yrs - 41%
10+ yrs - 29%
Hours Worked Under 40 hrs/week - 18%
45+ hrs/week - 75%
Under 40 hrs/week - 10%
45+ hrs/week - 78%
Meeting Financial Expectations Meeting Expectations - 7%
Below Expectations - 93%
Meeting Expectations - 15%
Below Expectations - 77%
Investment of Money/Time greater than expected Agree - 57% Agree - 56%
Optimistic about long term growth of the business Agree - 11% Agree - 33%
My operation is superior to the local competition Agree - 52% Agree - 78%
Profitability Unprofitable - 81% Unprofitable - 31%
Local Population Small centers (under 250k) - 68% Large centers (250k+) - 66%
Density Urban - 32%
Suburban - 55%
Rural - 14%
Urban - 39%
Suburban - 51%
Rural - 10%


Women report as having a different perception of their business as compared to their male counterparts. Women are more likely to feel that their business does not meet their own financial expectations. They are also less optimistic about the long term growth potential of their business. Finally, women participating in the survey are less likely to believe that their own business is superior to that of their competition.

Being more risk averse, one might expect women to incur less debt and have lower business expenses. They would also be less likely to gamble on future growth. In a poor economy, these actions should result in a mitigation of business losses and possibly higher profits. The data I’ve reviewed suggests otherwise. More than 81% of women report that their business is not yet profitable, as compared with 31% of men. Possibly related to this, 61% of female respondents owned their business for less than four years. Their male counterparts report operating their business for a much longer period of time. Perhaps women entered franchising much later in the business cycle and, consequently, far more of them had not yet achieved profitability by 2009. If correct, one would expect the above statistics to look more favorable for women in 2011 and beyond.

The responses we’ve received to date from the National Franchisee Survey do suggest that Ms. Ji’s findings are consistent with what occurs in franchising if one considers some of the demographic results. Smaller population centers, and rural and suburban areas, are usually less costly areas to open a business and are more consistent with an aversion to risk. As more data becomes available, and covering more years, I hope to revisit this topic and rebuild the above profiles.

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FranchiseFacts – Capturing the franchise experience

Perry Shoom, FranchiseFacts
Capturing the franchise experience!

Franchisee Survey in progress at www.FranchiseFactsUSA.com
If you are a franchise owner or store manager, please participate!

Understanding the Franchise Experience blog can be found at franchisefactsusa.blogspot.com