Internal and External Analysis of Franchise

Penny Thomas, an Ivey graduate with the help of her daughter, who also is an Ivey graduate, decides to purchase a license to open a Marble Slab franchise in the Great Toronto Area. After paying her fees of $25,000 to the company, she starts thinking of her marketing plan for her grand opening that she has two weeks to hand to the Marble Slab head-quarters in Calgary . So she hired a marketing consultant (me) to help her. First, the corporate capabilities of the company had to be defined, financial capabilities, Marketing capabilities, Operational capabilities and the available human resources. After comprehensively studying the internal capabilities of the company, the external forces affecting the business are analyzed. The two external forces categories discussed in the report are the economical factors in the area, the social factors. Politically and technologically didn’t have an effect on the business. After that, the direct and indirect competitions of Thomas were examined and then plans were made to compete with them. The direct competitions were Baskin Robins and Dairy Queen. The indirect competitions were McDonald’s, Star Bucks, grocery and convenience stores. After carefully examining all these influential forces, a consumer analysis of the three best potential target markets were women, young adults and families was set up. And the target Market of Women was found most suitable for Thomas’s business because women are the primary caregivers, dominant shoppers in the community and they are more health conscious than males. Once the target market was chosen, a marketing 4P’s plan was constructed. Product wise, Marble Slab franchise had plenty of options to choose from, from milk shakes to ice cream cakes. But the primary product that Thomas should use while promoting the grand opening is the Child’s size ice cream with one mixin because it is popular and it appeals to women’s concerns because it is small and tasty. Then prices were determined for only catering, because Marble Slab is a franchise and it wasn’t allowed for Thomas to change any of the prices. She only had power over the catering prices, so calculations of the breakeven points of the three different catering options were conducted and the best catering choice was the Sundae Bar option. After that, the location of the store was determined by studying each area’s population and traffic. And the area that was chosen was the Toronto Annex area, although with a low population, it had a lot of foot traffic from students (almost half of students being female) and near a busy shopping street. Following the location of the business, different promotional options (billboards, radio, etc.) were examined and the most suitable, affordable combination of promotions for the grand opening were chosen. In conclusion, this marketing situation was studied comprehensively and the following results of the marketing report project that the grand opening is going to be successful along with the years to come.

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The Marble Slab Creamery has been a well-known name in the market for ice cream since it first opened in Houston, Texas in 1983. Now Marble Slab has 400 branches worldwide in which, Penny Thomas had been blessed to be a part of when she purchased the right to open up a franchise in the Greater Toronto Area. Thomas is going to have a grand opening in May 2008 and needs a marketing plan to get approved by the headquarters in Calgary, Alberta about how she will handle the grand opening. The following marketing report breaks down the corporate abilities and the external analysis of Thomas’s company, also it discusses the consumer analysis and the competitive analysis. After deciding on the right target market, the report discusses Marble Slab’s marketing plan which include product, price, promotion and placement.
Corporate Capabilities: Marble Slab enjoys many financial abilities, being one of 400 franchises; Penny Thomas shares the same purchasing power of the franchisor. This is really helpful because Thomas would get a great deal of help from the Marble slab company by providing penny with connections that she can use to increase the store’s success and it would save her time now that she got all the connection and purchasing power she needs. Another ability and privilege that comes with a franchise is that the financial risk of any financial disaster is reduced and the consequences wouldn’t be as severe because the store is backed up by a large well-established company that acts as a safety net for Penny Thomas’s store, which is helpful and the store can feel more secure. On the other hand, marketing budget was set at $10,000, which can cover all the costs of the grand opening adequately, which is good for the starting company because budget is tight for any new project and efficiency is a key player in making the starting of this store follow more smoothly. Marketing capability wise, Penny Thomas enjoys Marble Slab’s already existing prominent name, so the store isn’t a new store that the target market must discover and learn about. Therefore, the franchisor made Thomas’s promotional task easier, and many existing Marble Slab customers will come to this location. As well, Marble Slab is already known for its high quality products that many customers around the 37 Ontario locations enjoy and crave. Thomas’s operational activities offer a great deal of mainly quality, freshly made ice-cream, with the option of letting the customer customize their purchases with a choice of toppings blended into their ice-cream flavour of choice, these choices include fruit pieces, candy and specialty nuts. These blends were made by a Marble Slab employee on a marble granite slab it also serves kosher, low-diet frozen yogurt, sundaes, floats, soft drinks and ice-cream cakes. All these activate differentiate Marble slab from any competition giving them a competitive advantage that leads to more sales. Moving on to human resources, Thomas is blessed with the degree from Richard Ivey school of business, help of her daughter who also graduated from Ivey and valuable 25 years worth of experience working for the Hudson Bay company and she was familiar with her father’s past A&W restaurant that he owned. This helps her greatly, because she knows what to expect and she is a very wise women in the field of business. She is also enjoying the expertise and network of the Marble Slab’s company, that helps her get started with the help of her network and make her avoid wrong decisions that were made in the past. Marble Slab’s employees must be well trained to handle all the machines and blending techniques so they can achieve the whole Marble slab’s experience that the customer expects. Employees are also highly hygienic because the work requires lots of hand work.
External Analysis: The economy this year is going through a difficult recession in the United States. Which raises fears on how the Canadian economy will get affected later with the decline in Canadian exports and the commodity prices, only one wonders how the recession will hit Canada. But the consumer spending and the Canadian GDP are still growing. This instability raises fears for the business, maybe hurting it in the future because if the recession does hit, less consumers will be able to afford the quality of Marble Slab so sales will decline. Also because Marble Slab deals with dairy products, cocoa and sugar commodities, in which always fluctuate in price and never stable depending on supply and demand of the market. That may hurt or help the business because prices might fall to less than expected, increasing the marginal profit or increasing to more than expected, decreasing the marginal profit. Socially, Thomas’s business is expected to decline in winter months, because of Canada’s long harsh winters, because less people get a craving for good ice cream in the winter months than in the summer. Ice cream is also became a popular snack within the people, with the average Canadian consuming 8.4 litters annually in 2007. Also, the company’s good quality products give the store an advantage of having people to like to show off in a way Marble Slab’s ice cream while they are eating it with their friends. Also, there is growing health a trend growing that pushes people to look for healthier ways to snack such as frozen yogurt, in which Marble Slab’s serves their customers.
Competitive Analysis: Marble Slab’s direct competitions in the market are Baskin Robins and Dairy Queen. Baskin Robins always had a strong presence in the Canadian Market. They have their stores present in good locations with high traffic for customer’s convenience. They serve 31 original high quality flavours, with the same price range as Marble Slab. Baskin Robins also enjoys a fortune of resources and promotional power. Though Baskin Robins has all these features, they don’t give their customers the option of customizing their purchase like Marble Slab does. Marble Slab can compete with them by keeping the prices in the same range while emphasizing to the target market the option for customers to customize their purchases. This way Marble Slab would have a competitive advantage over Baskin Robins. Baskin might respond to this by introducing the same option we offer or decreasing their prices. The other direct competition to Marble Slab is the world-wide restaurant of Dairy Queen, which served the same category of products with the option of customized purchase to their customer as marble slab does, but Dairy queen also sells hot food items such as hotdogs, burgers and fries. On top of that, they targeted the family markets because they also offer friendly-kid options. Dairy Queen is present in high traffic areas such as malls. Marble Slap therefore, has to try to avoid competing with Dairy Queen by targeting a market other than families, and at the same time focus on the quality of Marble Slab’s products and show customers that they may be paying more but the quality they are gaining is much more than Dairy Queen. Dairy Queen might respond to this by increasing the quality of their products and focusing on the hot foods that they serve and promote it more to attract more customers. For competitive positioning map (see Exhibit #1).
In addition to Marble Slab’s direct competition, Marble Slab has three indirect competition; McDonald’s, Starbucks and Grocers and convenience stores. McDonald’s is the world’s largest fast food chain restaurant. Other than hot foods, they offer soft-serve dessert items such as ice cream, milk shakes and the Mcflurry. McDonald’s is present in high traffic areas and offers a drive thru for customers in a hurry. They have cheap prices that anyone can afford in Canada, but also serve low quality products. McDonald’s may seem like tough competition but it is not because it serves limited options for its customers. Marble Slab should focus on their quality and the unique Marble Slab way of making their products and making it more accessible for customers by adding a drive thru option. McDonald’s wouldn’t respond because their main goals aren’t about frozen desserts, they care more about their hot foods. A second indirect competition to Marble Slab is Starbucks, which is a premium retailer of coffee dessert and fresh food items. Starbucks gives its customer a cozy atmosphere and wireless internet. Like Marble Slab, it offers high quality products for premium prices. Marble Slab already serves better quality choices and options of ice cream which gives a competitive advantage to Marble Slab. Marble Slab can also compete with Starbucks by giving the same cozy atmosphere in the restaurant but also suitable for younger children. Starbucks will respond to this by introducing new drinks which will appeal to children. The third indirect competition is the mass produce ice cream companies that distribute to grocers and convenience stores. These products appeal to a lot of people because they vary in prices and they are really accessible for customers because they are sold in grocery or convenience stores. Problem with this is that they are not always fresh and full of ingredients that keep the product fresh which can be harmful to the customer. Marble Slab can compete with this by selling their mixes and their ice creams at a number of grocery and convenience stores in the future. For competitive positioning map(see Exhibit #1).
Consumer Analysis There are three target market options that will probably appeal to Marble Slab, families, young adults and women. Families with children under 15 years of age are the best potential customers. Children represent the bottom of the population pyramid, which means that they are more than any other target market. Families eat ice creams when they go out with their children and the children ask their parents to buy them ice cream to satisfy their sweet tooth. Families are willing to buy mostly on weekends at locations near parks while taking the kids out, and inside malls while shopping. The second target market are young adults that age from 15-24 years of age who have some or full independence, and can spend their disposable income on social interactions. Young adults find ice cream a popular after a long day at work or at school or just simply to chill out. Young adults are influenced to buy from Marble’s by seeing famous people or their idles eat Marble slab’s Ice cream. Young Adults would purchase an ice cream from shopping centres while they are shopping or beside a high school or a college when they are on break or after class. As good as the young adults target market sounds, it is very competitive because there is already a lot of ice cream outlets targeting this group. Which leads to the last target market… Women, which are the best target Market for Thomas’s Marble Slab creamery. Because women are the caregivers and dominant grocery shoppers in our society, they also do more shopping than men in general, and they are more health conscious, which is good for the stores low-fat snacks. Women are influenced to purchase from Marble Slab when seeing skinny models satisfying their taste buds by enjoying their tasty Marble Slab snack, while still keeping their bodies’ fit. Women are everywhere, they can purchase from shopping malls, streets, gyms, parks and colleges at any time of the day, any day of the week, but mostly weekends. And women spend alot of time at malls so Marble Slab would be a great snack for them.
4P’s {Product} Marble Slab is a franchise that differentiates itself from other ice-cream outlets because it serves their customers high quality, top of the line products. With the option of customizing their purchases by choosing different flavour blends and mixins which included, fruit pieces, candies and specialty nuts. Mixins were blended by employees on a marble granite slab. Also Marble Slab offers Kosher for the Jewish customers and a wide variety of different milkshakes, frozen yogurt, sundaes, milkshakes, floats, ice cream cakes, soft drinks and newly added fat-free frozen yogurt. The product that Thomas should focus and promote the most is Child’s size ice cream because it is fairly popular and it appeals to her target market which is women, because it is a small portion with less calories and very tasty.
{Price} Marble Slab is a franchise; therefore it doesn’t have any power of changing of prices.(For unit contributions of products see exhibit 3) It requires Thomas to sell 7764 units of Child’s size ice cream to break even and start making a profit. (see exhibit 2). Child’s size ice cream is the product that will be promoted with the promotion of the grand opening, because it appeals to women’s needs; it’s small and tasty. But the company gave Thomas the flexibility of prices in catering. Thomas should choose the Sundae bar catering option because it gets the most profit selling less units to break even than the other options. Sundae Bar needs 57 customers to breakeven the costs while the Ice Cream social needs 59 customers to break even and start making a profit.(see exhibit 4) The portable Slab option is unaffordable because there is only $685 left from the $10,000 budget that was set for the promotion, and $2,500 are needed for additional equipment.(exhibit 5) Thomas should keep her price at the average which is $6.95 per person because price wars may lead to bankruptcy and because she is located in a busy area beside a university and a shopping street. Therefore, will get a lot of catering offers because it is where a lot of students and women who are either shopping or hanging around or at university would probably come and party on birthdays and other occasions.
{Placement} Thomas should open her Marble Slab restaurant in the Toronto Annex Area. Although it has a smaller population of any of the four options, The Annex area has a lot of traffic from the university that is there and it is very close to Bloor Street, which is a major shopping street. This location is the most appropriate for the Creamery because Thomas’s target market is women. And women are the primary shoppers in society and the university probably has a high percentage of females attending it. So this location is located in the heart of where many women walk for either shopping or going to class. The location will also help have a more successful grand opening because it is exposed to people who go thru that busy area. {Promotion}To effectively promote the new store for the grand opening, Thomas should spend $2,120 on two street level media unit, in the Toronto Annex area , because the street media would be exposed to the people shopping and in university, showing them that a light, low fat snack from Marble Slab would be delicious while shopping or after class. In addition, Thomas should purchase two 10×20 feet billboards costing $2950 that would be located in high traffic roads. These billboards and street media should show a visual image of the creaminess, lightness and taste of a super premium Ice cream, preferably a child’s size ice cream with one mixin, because it is small in calories and it would be best to promote. The advertisement will have a beautiful athlete physically-fit model eating from it. That way it will appeal to the target market’s taste buds and show that you can stay healthy and fit while still eating delicious food. Thomas should also spend $645 on a daytime radio commercial for 30 seconds and $650 on a radio commercial at breakfast time. Thomas should purchase those times because morning time is the most time that people tune in to listen to the radio while they are eating breakfast or driving to work. And the other commercial at daytime is effective, because it is when most people are awake and thinking of things to eat to get on with their day. Both types of promotion should emphasize the good quality, freshness and low fat in Marble Slab’s products. All this adds up to $9315, which is less than the budget of $10,000 with an excess of $685. (See Exhibit 5)
Confidently, this report will satisfy Penny Thomas’s wants and needs. This report discussed in detail the corporate capabilities, consumer analysis, competition analysis and the external analysis of the franchise. And from studying all these factors, the most suitable product, location, price and promotion were chosen for the grand opening of this franchise within the budget of $10,000. In conclusion, this marketing plan was designed to boost the business’s success from the start of the grand opening and for the many years to come. Surely, the Marble Slab’s headquarters will approve of this report and would be anxious to see the results when the grand opening is on May 2008.