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Service and Relationship Marketing

Introduction

The case study selected for this report is Customer Relation Management (CRM) at C. Fun Parks. It is a concept that was formed in the year 1985 by Theodore Brook. The purpose was to provide the people with a short break so that they can take away their doubts and offer them a secure place for visiting, where everything is given with entertainment and comfort. Fun Parks made different resorts, and when they identified that the resources are restricted and blocked and this might hinder them in expansion, then they launched the concept of franchising might provide them with a solution. In the current scenario, there are around 85% of the resorts that are managed and owned by franchisees. They conduct franchising meeting twice a year and in the last meeting franchisee, Brook formed a CRM plan. In the opinion of the franchisee, there was a lack of clear CRM strategy and vision, and it portrayed an ad hoc way in the systems of CRM.

This report examines the current literature on the association between franchisor-franchisee, its advantages and disadvantages for every party to the association based on the case study, and also discuss different ways through which the satisfaction and loyalty of franchisee can be improved. This report also discusses and recommends on the major strategies of the franchise by employing to form long term associations and enhance customer bonds with the organisation.

Discussion

Examining the relationship of franchisor-franchisee

There have been several studies that have examined the franchisees’ satisfaction and their relationship. Abtin & Pouramiri (2016) identified that franchising could be identified as the form of relational exchange that is based on the categorisation of long-term and complicated association in which the sole exchange of ineffective significance is compared with the implied authorisation for sustaining the association. The implied authorisation is based on the assumption that the franchises have to offer by giving benefits to other members of the network. For franchisors, these types of benefits might be based on the resources that are related to human capital and financial resources that franchisees need to provide by facilitating the growth. It also serves as a medium of catering to the issues of the agency that are linked with the operation of an extensive network. For franchisees, it helps to access a demonstrated concept of business and also the brands that are linked with the goodwill that include post-opening support and training. When the franchisors and franchisees begin their association; they have to make sure that they believe in the goals that are related positively among them (Mayer, 2002). There are different possible domains of conflict that serve the relationship effectively by managing its successful management catering to the critical and complex challenge for franchisors.

Franchisers ongoing support

A study by Shaw (2016) conducted that showed that it is essential to judge the quality of continuous support by providing them more willingness and giving those recommendations about the franchise system to the potential franchisees. Sheth (2017) identified that the franchisees have different expectations and need to give support to the franchiser. It was identified that though the performance of franchisers is assessed at various level, the quality of support also makes a significant contribution. Siemieniako & Gębarowski (2016) showed that the assistance of service that includes training and operational guidelines create an impact on the intention and satisfaction to be available in the franchise system.

Fairness of the franchisers

The study of Yoganathan et al. (2015) dealt mainly with the concept of franchising in which now procedural fairness is essential. Many authors also have used perceived justice based on the association between franchisor and franchisee. The variables are measured based on the consideration of franchisers that demonstrate fairness in the agreement and that also promote franchisees’ satisfaction.

Communication with franchisers

Verma et al. (2016) conducted a study in which he identified that the relationship between the two parties could be improved through close participation. The most important thing that is a concern for franchisees is about the well-being and formation of a friendly environment that helps the franchisees to create an impact on the decisions that might affect them. Rahman et al. (2015) came to the findings that partnerships are more important in revealing a positive association between communication and participation and also stated that the distributors have to be more satisfied in their relationships with suppliers.

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Merits and demerits in franchisor and franchisee relationship

The merits of this relationship are quite a lot that includes the reduction in the risk of failure of business through franchising. The services and products are already tested in the market, so there is no need to conduct market testing again. The trademark and brand name have also been recognised initially; then there is no need to invest more on the promotion and advertising. Typically, the franchisors provide support to the business by giving them training, help in setting up a business, and give them continuous advice. There is no previous experience needed as the training is provided by the franchisor and the franchisee establishes required skills. It also makes the financing of business more accessible and banks give loan to them due to good reputation in the market. The business can get advantage by getting ideas and communicating with them in order to get support from other franchisees and functional association with the suppliers is created.

The demerits are that the cost might be higher as per the expectation. The start-up cost of purchasing the franchise and service fees for continuous management is more and have to be paid by the franchisee. The agreement that is made initially includes the limitations of running the business. There are chances that other franchisees might demonstrate a bad reputation. Hence the process of recruitment must be reliable. There is also a restriction in the selling of franchise, and it can only be sold to someone, once authorised by the franchisor (Huang, 2015).

Different ways in which franchisee loyalty and satisfaction can be improved

The success of franchisees can be accomplished based on the efforts and contribution of both franchisor and franchisee. The franchisors look the franchisees as their customers and need to ensure that the satisfaction and loyalty of franchisee can be maintained. In this contemporary environment, it is not easy to maintain the perceived expectations of franchisees and ensure satisfaction. The high level of satisfaction can be achieved if the franchisors have a strong commitment to franchisees. The franchisors make sure that there is a proper infrastructure available to the franchisee with the sufficient resources and time that help them to celebrate success and also endurance in the network of the franchise (Hart, 1988).

The franchisor has to make sure that the loyalty and satisfaction of the franchisee have been improved by developing an effective strategy in the improvement in associations with different franchisees. It needs to ensure commitment and success at the time of agreeing on the franchise.  This might give insights to the franchisors to make better and effective decisions. The loyalty and satisfaction can be increased among the franchisees if the franchisees give proper feedback based on the initiative results among the franchisees for the promotion of open culture and trust within the network. The related information has to be shared in different meetings of the convention, roadshows, and franchisee gathering in order to make them active in the process of progress and transformation in the network. With time, it was realised that franchisees need a voice and therefore, there was a “franchisee representative council” was formed that include chosen franchisees involving in the decisions and discussion. 

How the franchise improves customer satisfaction and loyalty

As per the study of Giannakis et al. (2015) in which it was examined that the cost of advertising and marketing of the franchise business might cost the businesses more than five times for gaining the new customers as compared to the existing ones. The customers have 90% fewer chances to purchase the services and products if they get to know that they are not appreciated and valued. Considering these facts, the franchise businesses need to concentrate on the retention of existing customers and gain more customers. The franchisees have to take initiatives and take some steps in getting in touch with the customers by serving two aims. The first aim is about maintaining the exposure of franchise business by creating a brand image of the business in the minds of customers. The frequent connections with the customers also allow the franchisees to identify the needs of customers by customising the services and products as per the trends of the market (Hart Christopher, 1988).

Franchise business needs to be in touch with the customers through an effective strategy of communication because ongoing communication serves as the key in increasing the loyalty and satisfaction of customers (Jones et al., 2015). The franchisees also need to assess that how the customers are using the services and products offered by the franchises and this can be done through casual calls, surveys, and look for other ways by adding value in the services and products. The reviews from the customers can also be obtained by different franchise business and they can get the reviews through SMS, Facebook and Twitter. They can also create awareness about their services and products through regular email updates and newsletter published periodically. It provides an opportunity for franchisor businesses to get ideas and also different practical tips about the use of products and services of the businesses and enhance sales ultimately (Gummesson, 2017).

Another way of getting in touch with the customers is by giving them special offers that might help build the loyalty towards the brand for a franchise business. The existing customers might also give suggestions to the franchisor businesses like they can offer special promotional packages and discounts. They can also start a loyalty program of customers that give incentives to the customers to get retained with the business and use services continuously. The customer referral program can also be started that provide a discount to the customers, once they give a lead to the new customer. These kinds of initiatives help to enhance the association among the customers and help to enhance brand integrity (Grönroos, 2017).

Issues identified in the case

The first issue that is identified from the case is about the little decision making of the franchisees over the park. At Fun Park, the general manager of the park needs to follow the program of professional hospitality management and also a system of quality management that needs to be applied in the organisation.

The second issue that was highlighted in the case was that though, 70% of the franchisees have able to enhance the satisfaction of customers, but the sales and profitability are not up to the mark in last three years for Fund Park.

The third issue was about the occupancy rate that has been dropped by 85% because the rate was higher in the previous years.

Another issue is about the delay in the selection of short break and leaves the decision at the last minute for the booking of the holiday. Moreover, there are also different French guests who are famous for their impulsive behaviour and a big chunk of people who do not reserve a place and ask for a place to sleep.

Another issue is that the guest at the time of their stay, spend less in the restaurant, convenience stores, organised activities, and services. It was identified that all the facilities were not profitable for Fun Park. 

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Recommendations

Based on the first issue of little decision making of the franchisees, it is recommended that the franchisors need to invest more in the system by getting a valuable brand name, specialising in the chain of the franchise, and developing larger headquarters in order to make the system more decentralised. Fun Park needs to gain more knowledge that might enhance autonomy in different areas of operations, like customer service. If there will be more autonomy in the decision making, then there will be more value of trust that assures the performance of the franchisee.

The recommendation for the second issue that was about lower sales and profitability; though Fun Park was more focused on customer service. For Fun Park, this a good thing that they are focused on customer service, but the increase in revenue and profitability is also a prime objective of the franchisee. Fun Park needs to come up with a proper promotional strategy for marketing its services, provide different discount vouchers and promo codes, and launch a program of customer loyalty. In this way, Fun Park will be able to retain its existing customers and attract new ones, and ultimately sales and profitability of the park will be increased.

The third issue is that the occupancy rate has been declined; that is a matter of concern for Fun Park. The occupancy rate has to be increased by Fun Park by giving and offering different facilities to the guests. If the guests are satisfied with the services, they will recommend the park to other closed ones and in this way, Fun Park will be able to increase the occupancy rate. The management of Fun Park also needs to assess the reasons the decline of occupancy rate because it was higher earlier and make efforts in improvement (Payne & Frow, 2017).

Another problem of last-minute booking can be reduced when Fun Park will give early-bird discounts to the guests who will book the facilities and in this way, most of the guests will book the facilities beforehand. Furthermore, the facilities of Fun Park given to the guests have to be profitable for the park as well as give benefits to the guests. The services like restaurants and convenience stores should be included in the room looking like a sort of package to the customers. In this way, people have to use these services and ultimately give profit to the company.  

Conclusion

The different types of benefits are based on the resources that are related to human capital and financial resources that franchisees need to provide by facilitating the growth in the relationship between franchisor and franchisee. It was also identified that the performance of franchisers are assessed at various level and the quality of support also makes a significant contribution. The most important thing that is a concern for franchisees is about the well-being and formation of a friendly environment that helps the franchisees to create an impact on the decisions that might affect them. The franchisor has to make sure that the loyalty and satisfaction of the franchisee have been improved by developing an effective strategy in the improvement in associations with different franchisees. Franchise business needs to be in touch with the customers through an effective strategy of communication because ongoing communication serves as the key to increasing the loyalty and satisfaction of customers. Furthermore, there are different issues that Fun Park was facing as per the case like little decision making, the decline in occupancy rate, last minute booking, unprofitable services, and lack of sales and profitability despite the focus on the customer service. These issues were highlighted and also related recommendations were examined for addressing these issues. 

References

Abtin, A., & Pouramiri, M. (2016). The impact of relationship marketing on customer loyalty enhancement (Case study: Kerman Iran insurance company). Marketing and Branding Research, 3, 41-49.

Giannakis, D., Harker, M. J., & Baum, T. (2015). Human resource management, services and relationship marketing: the potential for cross-fertilisation. Journal of Strategic Marketing, 23(6), 526-542.

Grönroos, C. (2017). Relationship marketing readiness: theoretical background and measurement directions. Journal of Services Marketing.

Gummesson, E. (2017). From relationship marketing to total relationship marketing and beyond. Journal of services marketing.

Hart Christopher, W. L. (1988). The Power of Unconditional Service Gurantees. Harvard Business Review, 54-62.

Hart, C. W. (1988). The Power of Uncondirional Service Guuranrees. Harvard Business Review, 66(4).

Huang, M.H., 2015. The influence of relationship marketing investments on customer gratitude in retailing. Journal of Business Research, 68(6), pp.1318-1323.

Jones, M. A., Reynolds, K. E., Arnold, M. J., Gabler, C. B., Gillison, S. T., & Landers, V. M. (2015). Exploring consumers’ attitude towards relationship marketing. Journal of Services Marketing.

Mayer, K. J. (2002). Human resource practices and service quality in theme parks. International Journal of Contemporary Hospitality Management.

Payne, A., & Frow, P. (2017). Relationship marketing: looking backwards towards the future. Journal of Services Marketing.

Rahman, S. A. U., & Masoom, M. R. (2015). Effects of Relationship Marketing on Customer Retention and Competitive Advantage: A Case Study on Grameen Phone Ltd. Asian Business Review, 1(2), 97-102.

Shaw, S. (2016). Airline marketing and management. Routledge.

Sheth, J. (2017). Revitalizing relationship marketing. Journal of Services Marketing.

Siemieniako, D., & Gębarowski, M. (2016). B2B Relationship marketing management in trade fair activity. Cambridge Scholars Publishing.

Verma, V., Sharma, D., & Sheth, J. (2016). Does relationship marketing matter in online retailing? A meta-analytic approach. Journal of the Academy of Marketing Science, 44(2), 206-217.

Yoganathan, D., Jebarajakirthy, C., & Thaichon, P. (2015). The influence of relationship marketing orientation on brand equity in banks. Journal of Retailing and Consumer Services, 26, 14-22.

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