Service marketing is a creative and highly delicate process. It often does not has any tangible product to show for and hence it becomes even more important for organizations in the service industry to deliver best quality services and ensure customer satisfaction (Wilson et. al., 2012). There are various forms of businesses catering to the service industry. This includes restaurants, travel, telecommunication, hospitality, telecommunication and consulting.
There are various leading organizations that have been reigning over the service industry of the globe. Many of these organization are present throughout the globe by largely focusing on international expansions. In order to enter an international boundary, there are sundry entry strategies that need to adopt by businesses. These strategies include but are not limited to joint venturing, franchising, wholly owned subsidiaries, exporting or licensing (Lee & Carter, 2011). Businesses decide upon the most effective entry strategy after successfully analyzing the pros and cons of each.
This report throws light upon a leading hospitality organization C. Fun Parks which has resorts in over 8 countries of the world. There are various customer relationship management issues faced by the brand owing to their franchising system. This report highlights the merits and demerits of the franchisor-franchise relationships and also discusses certain recommendations to improve upon the customer relationship management strategies adopted by the brand.
When a business decides to expand to an international boundary, one of the leading entry strategies adopted by the business includes franchising. This strategy requires the franchisor to give rights to a franchise for using the brand name, logo and other global aspects of the business (Davies et. al., 2011). However, everyday operations of the business are controlled by the franchise. In return for the same, the franchise pays a fee to the franchisor despite making profits or incurring losses. The relationship between a Franchisor and Franchise plays a significant role in the success and growth of a particular business. It is a critical relationship that must be effectively initiated and developed over a period of time. The relationship is governed by a contract or an agreement.
This case study highlights upon the franchisor-franchise relationship between C. Fun Park and its various franchises in different countries of the world. There are different franchise models. First one is the product and trademark franchise wherein the franchisor grants the right to the franchise to buy its products and use its trade name. The second one is a business format franchise wherein the franchisor provides a tried and tested formula for doing business to the franchise and also provides training, advertising and other forms of assistance as required by the franchise. C. Fun Parks has adopted a business format franchise model. The franchising model has several merits and demerits for both the involved parties. These are listed as below:
Merits – Franchise
Collaborating with a brand
The major advantage for the franchise is the opportunity to collaborate with a brand that already exists in the market. Therefore, the brand comes with a set of customers and an underlying goodwill in the market. This makes it easy for the franchise to target new customers (Nyadzayo et. al., 2011). The positioning of the brand builds a trust in the minds of customers and hence they become more willing to avail services offered by the brand.
The franchise has the advantage of having the entire business formula ready. This is much easier than introducing a new idea and implementing the same in order to make profits. The business model, target customers, brand image, business process, organizational culture and even quality of services have already been defined. C. Fun Parks franchises only need to build upon the idea that already exists making it a relatively less risky venture.
Demerits – Franchise
Lack of control
One of the major demerits of the franchise is that they lack control over the venture. Even though they are the owners of the venture on paper, it is mandatory for them to follow the instructions provided by the owners. The ultimate decision-making authority lies with the owners of the business which reduces the sense of control that the franchises have over the brand.
Since a business formula has been provided to the franchise, they are offered less flexibility in terms of running the business. They cannot make changes in the business process or mold the business as per their requirements. This lack of flexibility may often lead to frustration. C Fun Parks franchises cannot introduce new attractions or vary the fees charged to customers as per their whims. Every new change that needs to be introduced, requires being approved by the owners of the business making it an extremely rigid structure.
Merits – Franchisor
One of the biggest advantage to the franchisor of the franchisor-franchise relationship is the large reach of the brand. Different franchises allow the brand to reach out to newer markets and hence the overall reach of the brand increases tremendously (Meek et. al., 2011). This assists the brand in reaching out to a large number of customers from different parts of the world. C Fun Park is well known in various countries owing to the franchising system adopted by brand founder Theodore Brooke.
The major reason behind adopting the franchising system by C Fun Parks was the inability to gather and manage a high number of resources. After introducing various company-owned resorts under the C Fun Parks brand name, Theodore Brooke realized that he does not possess the necessary resources that are required to establish more subsidiaries of the brand. This hindered the brand’s expansion process and hence the switch to franchising model was made.
Franchising of a particular brand shares the cost between the two entities reducing the burden on the owner to accumulate resources (Combs et. al., 2011). Therefore the model allows companies to enhance their reach and target new customers without taking a toll on the resources used by the firm.
Increased brand awareness
Opening franchises of a particular brand in various locations allow the brand to enhance its reach in different parts of the globe. This leads to increased brand recognition as well as improved goodwill in the market (Beckmann & Zeyen, 2014). C Fun Parks is well known in various countries owing to the increasing number of franchises opened by the brand. This global branding makes customers more aware of the brand.
Demerits – Franchisor
Preserving the culture is difficult
It is difficult for a particular brand to preserve the same organizational culture throughout all the franchises. Organizational culture is the backbone of business and hence it is imperative that it remains the same throughout all the subsidiaries of the brand. The franchising system makes it difficult for C Fun Parks to consistently monitor and ensure the same culture across different parts of the world.
As the case suggests that various franchises are facing difficulty in ensuring effective customer relationships. Every franchise is going through some trouble with regards to the management of the brand. This is one of the major demerits of the franchise system. The model makes it difficult for the owners and the top management of the firm to manage and control various different franchises of the brand (Salar & Salar, 2014). Therefore it is seen that managing all these franchises of C Fun Park is a tedious process and reduces the overall control of the owners.
There are various issues that are currently faced by C Fun Parks franchise. The occupancy rates have dropped to 85%. A lot of resources of the resorts remain unutilized and it is getting increasingly difficult to churn a profit from these resources. The number of cancellations has also increased significantly and the spending patterns of guests have seen a negative trend. Addressing these issues faced by C. Fun Parks is the need of the hour. Following recommendations have been made in order to cater to these problems and enhance overall productivity and profitability of the brand.
More frequent franchise meetings
At present, C Fun Parks franchises meet twice a year for a meeting in order to discuss the plan of action for six months. Therefore the first recommendation would be to organize more frequent meetings between the franchises of the brand. Virtual meetings could be conducted once a month while face to face meetings among the top management of all the franchises can be conducted once a quarter. This would lead to improved communication and effective addressing of problems faced by different franchises (DeKay, 2012).
Enhance decision-making authority of franchises
Franchises of C Fun Parks are located in different parts of the world. It is important to understand that the needs and demands of the customers in a particular area are best understood by the franchise located in the area. Therefore Theodore Brooke must try to enhance the decision making authorities given to the franchises. For example, all the franchises would be aware of their most and least profitable facility. Therefore, they must be provided with the discretion to decide about how they can handle their franchise.
Segmentation and targeting of customers are the basics of any business. The process of segmentation divides the market into various sections. Targeting of customers refers to the process of targeting the appropriate set of customers from different segments (Armstrong et. al., 2015). The target market of a particular business refers to identifying the customers whose needs the business aims to fulfill.
Demographic segmentation is the process of dividing the customers on the basis of their religion, age, income group, race, family size or ethnicity (Wedel & Kamakura, 2012). C Fun Parks resort predominantly targets families on vacations, couples of their honeymoon and youth for a quick getaway.
Psychographic segmentation divides the customers on the basis of lifestyle, values, attitudes, and interests (Boone & Kurtz, 2013). C Fun Parks targets customers who like to spend their free time peacefully. The park aims to provide entertainment and comfort to its customers.
Offer packages to customers – all services. Recreation
In order to best utilize resort facilities, C. Fun Park must offer packages to customers which involve various leisure activities. The resort must attempt at ensuring that these facilities are offered as a form of bundle pricing. This would encourage the customers to avail these facilities and enhance overall profitability of the resort. However, it is important to track bundle performance for long-term benefits (Yan & Bandopadhyay, 2011)
Cancellation charges must be levied.
It has also been noticed in the case the resort is facing various last minute cancellations which disrupt the entire booking planning process of the resort rooms. In order to address the issue, it is recommended that cancellation fees must be levied on the customer if they cancel the book in less than 24 hours before the arrival date. This would discourage customers from canceling their bookings last minute and switching to another hotel which may offer lower prices.
Focus on customer loyalty
Customer loyalty is a crucial aspect that plays a significant role in ensuring increased sales of the brand (Mohsan et. al., 2011). Therefore it is imperative that C Fun Parks enhance their focus on ensuring customer loyalty. In order to achieve this, wheel of loyalty can be implemented. The wheel of loyalty is as below:
The wheel of loyalty comprises of three important steps including:
- Build a foundation of loyalty: The foundation of loyalty includes targeting the right audience of the brand (Hill & Alexander, 2017). This is followed by providing them with excellent customer service and increased levels of satisfaction.
- Creating loyalty bonds: This can be achieved by rewarding the loyalty of customers by offering special services to loyal customers. The brand must focus on deepening the relationship with their customers through effective CRM.
- Reduce churn drivers: Churning in a business refers to the rate of attrition. Reducing churn drivers indicates get rid of factors which are responsible for customer attrition in the business (Prince & Greenstein, 2014). In order to achieve this C Fun Parks must identify and address the key churn drivers and implement strategies to remove them.
Relationship marketing refers to the process of building relationships with customers which are long-term and mutually beneficial (Christopher Payne & Ballantyne, 2013). C Fun Parks must focus on building relationships with their customers and using that relationship to market their service to the customers. Relationship marketing is a facet of customer relationship management that focuses on the long-term relationship building between the organization and the customer as opposed to short-term client acquisitions.
Event management in the resort
One of the issues referred in the case depicts the underutilization of the swimming pool. This can be addressed by organizing interesting events at C Fun Parks like pool parties, live music shows, and stand-up comedies. This would keep the guests interested and entertained. Such events would also improve spending patterns of customers by increasing sales of the restaurants and bars of the resort.
During lean seasons, the resort property could also be offered to event management firms in order to enhance the resort’s productivity. This would allow the effective utilization of resources and improved profitability of the resort.
Customer relationship management is the backbone of any successful business. CRM ensures the establishment of long-term relationships between customers and the brand (Kumar & Petersen, 2012). In order for C Fun Parks to retain clients and provide superior services to customers, it is imperative to use the right technology to manage customer relations effectively. Efficient CRM practices also make it easy for the sales team to approach existing customers again by building and maintaining long-term relationships with them (Rai, 2012).
Every customer’s details would be saved on an online portal. These details will assist the resort’s team to know the history of booking by the customer. For example, if the customer has visited before and requested for spicy food or garden view room, then the same detail can be kept in mind while servicing the customer again. This would also assist the marketing team to advertise the resorts strategically to customers (Peelen & Beltman, 2013). Improving CRM also involves wishing customers on their birthdays and anniversaries.
International expansion plays a significant role in the success of any business. Various strategies are adopted by brands in order to achieve the same. The entry strategy discussed in the case is of franchising. This report highlights various issues faced by the franchises of C Fun Parks. Recommendations to address the issues have also been made. It is crucial for the brand to understand the importance of effective CRM strategies adopted by a business.
Improving resort’s profitability, enhance customer satisfaction and encouraging customer loyalty is the need of the hour. In order to achieve the same, the brand must focus on improving internal communication, levying increased power to the franchises and inculcating unique marketing strategies to promote the brand to a large customer group. These strategies will not only lead to enhanced productivity of the resort but will also ensure improved goodwill in the market and increased the brand reach of C Fun Parks.
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