Vertical Marketing Systems - forget Franchises

When distribution channels unite for the better good, the aggregate sum is supposed to be greater.  Vertifical Marketing Systems encourage one channel to dominate control to ensure brand consistency.  The obvious example of this is Franchising.

One brand, one image, one system, one service philosophy...

Don't be fooled.  One controller means one man calls the shots!

I believe that Franchises are a legalized form of slavery in the developed world.  Masters, as they are aptly called, order its subordinates around like a genie in a bottle.  "Your wish is my command" is the motto of many franchisees as they are forced to comply with constant demands - whatever, whenever, and for whatever reason - with little consideration for their costs.  These legitimate schemes use the sales concept of marketing because a holistic approach would mean that they would need to consider the needs of parties beyond themselves.  They setup supply chain silos and integrative marketing systems that facilitate purchases from exclusive 'authorized' suppliers which the franchisor just so happens to have a vested interest in.  So they reap the rewards of derived demand, at the expense of the little man.

Let's take a look at the four P's of marketing now:

PRICE
Ironically, Masters impose a system of 'loyalty' payments that does not guarantee a profit for its franchisees.  Any submission to increase prices is severely criticized and scrutinized as the franchisor has little to gain by inflating the price point - he's already made his money, so forget about anyone else.  Too bad about your overheads and lack of profit, cut the staff and you need to work more hours.  It also makes you wonder how the competition is surviving when there are so many points of parity.  Inevitably, there will be a break point between price and loyalty.
PLACE
The carefully worded and completely biased contract between Franchisor and (Sub)Franchisee defines the location as 'Territory'.  So you'd think you were safe, until the Franchisor opens another store right next to yours with no consideration to the effect on your sales, as his sales are relatively inelastic.
PROMOTION
Whow, now here's where they let the cat loose!  Masters get franchisees to spend mega dollars on upgrading stores because they need a different colour of paint, a curve instead of a straight line, a special glowing light in the window that can only be supplied by XYZ company - who happens to offer the Master attractive rebates.  And this is all in the name of market positioning.  Or how about Advertising funds that disappear, are unaudited and may be linked to photos of the Master taking a ride on the latest yacht?
PRODUCT (Including SERVICE)
This is the Franchise's saving grace.  And this is what ordinary people are willing to pay for - superior quality and a value proposition like no other in the marketplace.  It is this belief that leads to the misconception that Franchises are a good idea.  Just being a retail customer is the best option.

Sooner or later the penny drops and decent, hardworking citizens will wake up to the fact that there is no ethical value in the Franchise system.  It is all about making the one at the top richer, with no regard for plebs.  And if franchisees kick up a fuss with government authorities and control boards (toothless wonders anyway) the Master will just get rid of them by not renewing their agreement to continue operations, not allowing them to sell or finding ways to issue breaches to commandeer their business.  The carnage is enormous, including suicide, huge legal bills, neverending debt and devastating financial loss of hard-earned nest eggs and payouts from previous employments.

If you are thinking of buying a franchise - BUYER BEWARE !!!!!!!!!!

Current example of differentiation in the marketplace

Competition is fighting back the Supermarket Warlords - questioning who we can trust.  SME's supporting each other.  Everyone likes the benefit of low cost, but can consumers be convinced to pay more for 'permeate free'?

Pura is educating consumers of the benefits of this 'new' attribute using the Marketing-Mix of social media, internet and TV.  Their website has a section dedicated to it.  They are using endorsement by Australian Champion Barista, David Maikin, to help build the brand.  He suggests that coffee is better with permeate free milk.


The jury is out...

Source: First Froots E-newsletter 8th July 2012

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When is Milk Really Milk?

Pura Milk have got on to the front foot in the milk price war and have launched an advertising campaign highlighting the fact that their range of white milk is free of permeates, which is a watery waste product from the manufacture of cheese and butter. One does not have to be too smart to allege that the supermarket home brands may well contain permeates.

The addition of permeates in milk does not have to be included on the labeling which is bad news for consumers. Although permeate has no known health issues, it is added back into milk to reduce costs. Surely the consumer has a right to know what is in the food they buy?

We applaud Pura for making this stand.

May we also highlight that no milk sold by First Froots has permeates added.

Other brands available besides Pura are:-

    Fleurieu

    Paris Creek

    Moo View Raw Milk