29 June 2015
Economies of scale in business equal benefits in various areas
There are many benefits of being part of a franchise group but the one thing that underlies most of them is the economy of scale that is created by a large group with a common goal. A large collection of small businesses can achieve more collectively than they can individually. This is what allows Taskforce to offer such high value to its franchisees.
These economies of scale can be applied to both national and local marketing. The benefits of large networks can also be applied to bulk purchasing of tools, equipment and supplies to benefit franchisees, suppliers and the consumer.
Many people wonder how a national advertising campaign could benefit a local business as much as local advertising. This is where - with the right formula - you can have the best of both worlds.
When it comes to national advertising there are probably not as many options as you would think in Australia. Television, online advertising and sports sponsorships are the only truly national options for such a vast country, with online having the added benefit of narrowly targeting certain demographics, locations or time frames.
Although TV networks have national coverage it is difficult to be consistent nationally because not all areas receive all the networks. The only exception is advertising on pay TV, where you are guaranteed to reach an even proportion of households all across Australia.
Radio has a similar issue. Although there are national providers such as Austereo, national advertising deals have to be tailored to specify which stations should be included so the funds can be distributed accordingly. This substantially limits the benefits possible through economies of scale.
When it comes to sports there are only a handful that have a truly national following that is constant from state to state. In Australia these are limited to Cricket, Soccer, V8 Supercars, Basketball, Netball, Hockey and international events such as the tennis and a handful of Olympic disciplines. The likes of AFL and Rugby are extremely strong in select states and weak in others, so you need the budget to get on board with both to cover your market Australia-wide.
Electronic Sports Billboards
One of the game-changers for marketing in sport has been the introduction of electronic billboards. These provide an opportunity for many more boundary line advertisers to get on board with highly visible, dynamic signage. This is something that has been around in Europe for around a decade with AFL and NRL recently catching on. Nevertheless, most sports that have electronic billboard space for advertisers have the problems with sate-by-state popularity that be discussed above.
V8 Supercars provide a different dynamic than balls sports. Because the same teams compete at every meeting, the same sports audience is captured at every race meeting. The V8 Supercars have also had developments in the electronic billboard space with virtual signs now added digitally to the TV coverage.
This leaves online. We all know how fast this space has developed and is continuing to develop in both reach and in its tools to accurately target an audience. The rapid changes in this area make it important to constantly evolve your campaigns as well as develop hard-working data-analysis and targeting tools.
Local Area Marketing
Local area marketing costs can also be reduced by a franchise group for things like flyer drops, merchandise and the cost of advertising on many local websites with a national footprint, such as YellowPages and Truelocal.
When it comes to suppliers, the benefits for a franchisee are available in any area that they purchase business-related materials. Of course, a franchisee can use their Taskforce benefits for their personal lives, too. For example, a handyman might decide to build a dog kennel on the weekend. They can use their special Taskforce pricing with Bunnings to get lower prices than regular consumers. Basically, anything that can be bought in bulk can be bought for a cheaper price by a Taskforce franchisee without having to buy large amounts of the material.
On the business side it can include discounts on tools and lower prices on vehicles and equipment. Most importantly, it includes a reduction in prices on all consumables. This means more competitive pricing, winning more work and more profit for the franchisee.
Other everyday expenses of the franchisee and their families, such as utilities, phone, and cable TV, will become target areas for Taskforce in the future. We could even look into getting you special rates on your groceries.
In total, through the marketing and supplier benefits, a national franchise can provide thousands of dollars worth of benefits for a franchisee every month, providing the franchisee takes advantage of the economies of scale at their disposal.
That is why a franchise should definitely be on your radar next time you are looking to start a small business or buy an existing one.