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Judgment
Franchising may be described as a form of marketing whereby a business owner grants individuals the right to a trademark for the purpose of undertaking a commercial operation ((Rosado-Serrano, Paul, & Dikova, 2018). In our example is a franchise beauty salon. One of the advantages that accrues to a franchise beauty salon is customer loyalty. In todays world, most customers want to be associated with a specific brand and in this case, the franchise beauty salon is not an exception. The franchisor also assists the business through making suppliers available and logistics of supplies easier. The situation of the franchise beauty salon is losses as a result of price distortion. Prices of services rendered at the beauty shop do not seem to break even with the costs incurred as a result of conducting business. This is as a result of the harsh economic conditions that prevail in todays world.
Although, the customer base is good and the business seems to have maintained and attracted more customers, profit margins are still thin. The situation of poor profits in the beauty salon may be caused by various factors. First, the government...
The cost of supplies is also high and the firm may need to dig into its coffers and pay more for supplies. The firm is also required to follow various guidelines of the owner of the franchise - including the quality of services, the quality of supplies, and the location of the shop which could also be attracting high leasing prices while at the same time ensuring constant traffic.
When other firms in the same industry change the prices of their commodity to win more customers as suggested by the 4Ps of marketing, the beauty salon is not mandated to do the same because it follows the guidelines of its owners. This means that the beauty shop may be less competitive. The strategies may be termed as rigid and unfulfilling. The other problem is that the firm has to split profits between itself and the franchisor since they use his trademark. Other players in the not so perfect market may end up acquiring more customers using a better pricing strategy.
The task at hand is to maintain customers or at least attract a few others to enjoy services at the beauty salon. The factors that need to be kept in consideration is pricing and quality. The firm may engage its owner and present claims about the consistent losses made, and establish whether prices…
References
Brandoni, S.M. (2018). Competitive Business Management. Taylor and Francis.
Rosado-Serrano, A., Paul, J., & Dikova, D. (2018). International franchising: A literature review and research agenda. Journal of Business Research, 85, 238-257.
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