Marketing Report on Subway-sub of the Day

6/18/2010

SUBW AY

MARKETING REPORT ON SUB OF THE DAY A SUBWAY PRODUCT

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Table of contents:

TABLE OF CONTENTS:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not found INTRODUCTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not found SEGMENTATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not found SWOT Analysis: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not found TARGET MARKET: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not found BRAND POSITION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not found BRAND DIFFERENTIATION: . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not found PRICING: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Error: Reference source not found RECOMMENDATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not found CONCLUSION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not found REFERENCES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Error: Reference source not found

Marketing Planning and Strategy

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INTRODUCTION: It was the Bridgeport, Conn, where the subway had its first opening in the year 1965 in the mid summer by Fred De Luca who was a 17 year old young man with his family friend Dr. Peter Buck. The main investment which was made was thousand dollars by Dr. Peter Buck as Mr. Fred De Luca was unable to pay his tuition at his college time and it was the suggestion and loan given to him to open a sandwich shop so that Mr. Fred De Luca can pay his college tuition, the restaurant was named as the Pete’s Super Submarine and also known as the Doctors Associates inc. At present there are 32,996 Franchises in 91 countries with more than 1, 50,000 employees working for the subway. Today it is holding more than US 9.05 billion dollar sales worldwide. Subway is having its major head offices located in Connecticut and Milford. The other five regional offices located are in the continents of Asia, Australia and North America having their franchises located in Amsterdam, Australia, New Zealand and Netherlands are being operated through the Brisbane and Australia. For the gulf the operation is done from Lebanon and Beirut. For the America the operations are provided from the Florida and Miami. And for the Asian continent the operation is done from Singapore and India. The main products which the Marketing Planning and Strategy

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subway provided at the beginning were the hot sandwiches, cold sandwiches, pizzas and burgers. They also offer a variety of cookies and muffins with different flavors. The main course of the subway was the submarine sandwiches, year by year subway added the special items to its menu with the beverages as a part of its course and beverages like coco-cola, and Pepsi were served. The coco-cola company helped the subway to pay for its roll out toaster ovens for the subways across the North America. It was the option given to the customers to prefer the roasted sandwiches in a way to increase the competition against the rivals. The menu of the subway restaurant merely varies from country to country and store to store and market. All these variety of menus are considered by the country optional program, store optional program and the market optional program. But the main course menu is carried out in every store. There are a variety of submarine sandwiches measuring in different sizes like foot long, four inches, six inches and also a variety of sausages, peppers, olives, onions, pickles and lettuce. (Facts and History) Once there was a time where the BMT sandwiches was popular up on all the sandwiches, BMT stands for the Brooklyn Manhattan Transit, but later it was pronounced as Biggest Meatiest Tastiest sandwiches. It contains the combination of ham, salami and pepperoni. This variety was popularly consumed as the cold sandwich in the United Kingdom. Mainly adults from the age 18 to 34 were targeted; the food items considered was healthy and supervised under hygienic condition and according to the people’s specifications like their likes and dislikes in the product menu. Subway is now making around 2 million different sandwiches available for different customers around the globe. The main competitors for the subway are the KFC, Mc Donald’s, Pizza Hut, Burger King, Hardee’s, Popeye’s and many other sandwich shops. From the past few years it is noted that most of the employees at the companies prefer to eat the small breakfast Marketing Planning and Strategy

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lunch as they can get that from the subway as a guilty free lunch. (Melago, 2007) To increase the flow of the people to the subway restaurant subway launched a new “sub of the day” brand in the year 2006 of January, which includes the cheapest sub menu every day. This brand main motto was to attract more people to its subway with the lower cost item which used to be the costlier product. The advertising was made through air, wall posters, and promotional staff flyers that use to deliver the message through hand. All these were made to attract the non users to come and try the new subway. This method of publicity caused the campaigning successful and increases the customer flow to the subway. This technique of renaming and re-launching the new products generate the customers flow to the subs. All awareness was made not only for the sales, but to get a brand advertising, all these made a positive sign for the subway and these made the other rivals to follow the same method to adopt the popularity through different names like Mc Donald’s used the “Deli every day” brand with same objective as the Subway used. The “Deli every day” is the rename of the Mc Donald’s “Deli sandwich”. Due to the popularity of the subways “sub of the day” the founder Mr. Fred De Luca to announce it as a global subway standard instead of the daily special brand. (Gillian Mc Ghee, 2008) SEGMENTATION: There are different attributes and factors which are under the influence of target market for the services which the subway offers to its market. Here many variables influence the market segmentation for “sub of the day”. Coming to the segmentation strategy it is essential to know what the customer is considering from the services provided by the subway. The segmentation strategies can be described more effectively in many different variables which results in the marketing segmentation, there are Marketing Planning and Strategy

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different forms of segmentations available like the democratic, geographic, behavioral and psychographic segmentation. (Gillian Mc Ghee, 2008) The psychographic segmentation is something depending on the interest, activities, attitudes and hobbies of the customers towards the products and the dignity of loyalty maintained. What the people look around is the cheaper cost food item which suits the pockets of the many college going adults as the concept is something related to the value for money. This segmentation strategy is considered under a light, medium and heavy group and is based on different types of social classes. The behavioral segmentation is based on the various responses generated through the utilization of the product. This segmentation is purely related to attitudes. It also relate to what a customer is getting benefited from, there are different variables which do occurs at different situations like the demand for the turkeys are more at the time of Christmas timing and different items at different situations. The approach is basically described in two ways one is the benefit part and the other is usage. The demographic segmentation is something related to the age group, gender, life cycle and income. And according to subway it majorly acts on the principle of concentrating on the age group in between 18 to 39 years mostly the people are either studying or working. We can observe the change in the products which are consumed by different age groups. So it is a strategy that involves the promotion of the item which meets the requirements of different age groups. The segmentation of gender comes under dressing, clothing and other facts. The other popular way for attraction is the discount offers made on the products which directly appeals the customers of low incomes. The geographic segmentation is related to various strategical segments like the country, location, towns and cities. This strategical segmentation is totally based on the regions where the choice of holding a different variety of customers are noticed and are sub categorized for the easy Marketing Planning and Strategy

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access. The segmentation divides the markets into various groups of geographic areas with people having different characters and behaviors. If we take the preference of what the other region customers prefer like the Asian, European, united states of America the subway worldwide sell the burgers which are aimed at the private markets, for example if we choose that the burgers are made from the lamb from the Asian continent and if we take India as a place where beef is not preferred due to the religious matter it is the importance given to the preference. In the American continent there is an extensive usage of the chilly sauce, so different regions have different taste and acceptability of the products. Benefit segmentation is something which is difficult for satisfying the customers need. It is the best way to satisfy customized products for example if we take the two different individuals buying the same product with different reasons of purchasing them. For this reason there is a need of market segmentation. Market segmentation is that which divides the customers in various different groups and needs. Many of the segmentations are related to the buyer behavior. There is some distinction between the buying functions and those are get reflected by the democratic, psychographic, geographic profiles. Many of the segmentations analysis are purely based on the different type of cluster analysis. There are better ways to identify which segmentation is more important, and are different techniques involved in the cluster. There are different segment codes applied to segments. The use of segmentation is useful while having limited resource availability for deploying. This kind of segmentation makes the firms to use fewer resources satisfying a variety of customers with the products availability ranging in different advertising activity. Through the segmentation least profitable customer is identified through focusing on the products and the services. Also improvement in the loyal relationships makes the services improvement through the products. Whole usage of the resources and meeting the Marketing Planning and Strategy

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customer’s needs accordingly. There is a chance of getting benefited through lowering the cost of the products and their services offered. Grouping the people in a set of factors which includes the size, organization, the kind of lifestyle that the people are having and their behavior and kind of attitude all this comes under the geographic location. (Gillian Mc Ghee, 2008) SWOT Analysis: Strengths: Subway made its presence over ninety one countries with 32,996 stores which shows its potential growth in the market. Subway is in the list of largest chain restaurants in the world. It offers a wide range of sandwiches. According to subway (Subway FAQ's) there are more than two million subways sandwich combinations are available. It gained customer repetition as it supplies a nutrition food, preparation of the sandwich is just in front of the customer to choose his own selection of breads, sauces and toppings. It supports the franchise right from beginning for training, advertising, development of product, cooperates in purchasing and run time support. Subway offers submarine sandwiches and salads, daily fresh made breads; it even concentrates on religious beliefs, everywhere in the world the same menu items, with the taste is provided, which made its own brand recognition. As the subway shop fits with small area simple kitchens, offering a reasonably comfortable price for single and combo deals. Subway with its pricing strategy it reached customer expectations giving them low price fast food sandwiches satisfying their individualism to eat what they wish. Weakness: The decoration of the sandwiches is not so classy, some of its franchises are not happy from its management. Service deliver Marketing Planning and Strategy

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process varies from one store to other store. There is a high turnover behind the employees; there is no proper command on franchised shops. (Mccarty) (Subway FAQ's). There are many legal disputes with the franchisees which lead to experience a break in the contract and sometimes the sales figures are miss-leaded by the franchisees as the business practice is shady. And some customers have a bad perception on ‘ sub club card ‘ which is miss leading the customers to think that Subway sacrificed the quality of product and services for its low priced strategy, with this ‘sub of the day’ even encounter business lose. (Case Analysis of Subway Sandwich) Opportunities: Subway consistent growth makes it as a global business. The more stylish decoration of the sub will fetch as added advantage to its sales. The customer service system need to be same makes Subway unique in the market. As it is giving more opportunities to expand its franchises like helping and in terms of finance and motivation, at the same time need to concentrate for a better relationship with franchises, making them to try in new selling methods like drive through and quick home deliveries and offer some desserts along with the menu, the menu items to be revised frequently and update it with new offerings. Develop good relationship with media partners for improved promotion and co branding prospects. (Mccarty) (Subway FAQ's) Threats: New litigations from franchisee holders, stores need to be maintained with a great concentration to rescue the food items like spinach, salad ingredients and breads. As this industry in a huge competition Subway always need to update with the market standards. There are some other reasons like sabotage; economic downturn and law suits obligation are the major threats to the Subway sandwich restaurants. (Mccarty) Marketing Planning and Strategy

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TARGET MARKET: Subway identified its target market as “Demanding Young People Who Know Their Own Minds” (Subway on a roll; Who were we targeting?, 2008). The youngsters who like to have nutrition food rather than pizzas, burgers and fries. Subway defines its target audience for sub of the day who are in between the age of eighteen to thirty-nine agree any five statements mentioned: the youngsters who believe that they won’t be influenced by any other views, those audience who wants to be received by other people as they are, the youngsters who likes to follow for a life with novelty, challenge and change, who would like to try with different varieties of food products, the target audience to keep learning with items for whole life, the youngsters who do not bother for their future and wants to cheer up the present life and target audience who wants to be well informed, be organized in life. (Subway on a roll; Who were we targeting?, 2008) The youngsters who all with the above or some of the above qualities and who expects and alternative food culture rather than the trash culture, sub of the day is the best alternative to those who don’t want to be compromise for their individuality and values. Subway offers varied food chains, which is a specification of target audience healthy food list subway at the same time taking care of consumer’s preference when offering regular sub sandwiches, salads, wraps, snacks, desserts with low fat options, with these more than two million verities of sandwich options. Further to attract these target audience subway for its sub of the day is priced £1.99, attracted the adults to treat them self, subway research towards the eating habits of the target audience Marketing Planning and Strategy

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their food habits are irregular they are spoiled for the variety of food choices, these customers are intended to choose what they wanted and how structured they want it, they have high expectations with low loyalty. Subway sandwiches offered to its customers as per their specifications, in front of the customer according to his choice. Subway is offering its customers the choice of “point to order”, so that new customers won’t confuse for their selection. It is the exact opposite way of delivering the service by its competitors like KFC, Mc Donald’s, Burger King, Popeye’s and others. BRAND POSITION: Providing a healthy fast food chain for a healthier and hygienic food is a brand value strategy. Subways are well advantaged and positioned throughout the strengths and weakness and also the threats that cause the effects to its strategy. We can discuss about the strengths, weakness, threats and different opportunities available. Coming to strengths the main strength of subway is its size and number of stores and its channels located across the globe. The listing of the healthy items includes the fresh and fast food items that reflect the menu, use of distribution channels for the growth of its shops. Maintaining a good relation with the American heart association and getting worldwide recognitions due to its healthy supply of food and offering to all ages. User friendly menu listings and preferences serving, low cost setup for the franchisee, and a instant startup of the franchisee under a specified training. The weaknesses that are derived from the strengths are that some of the franchisee is not happy with response they are getting from the main office. There is a deviation in the services provided from store to store. The revenue generation is less and the payment given to the employee is increasing spontaneously. The opportunities obtained through these are in rapid growth of the global business. Improving the customer related services and also expanding the Marketing Planning and Strategy

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distribution channels to other private agencies, offering a variety of packed desserts, and the business franchisee relations. Daily updating the menu through revised offerings. Expanding the services through the partnerships, movie producers and toy manufacturers for advertisements. Getting advertised through the films and other media increases the promotion of the films and also increases the brand value branding opportunities. There are also threats attached that are enforcing the legal rights by the franchisee. Contamination of the food items, if no proper care is taken the contaminations could be degradation of vegetable items, etc., the competition against the rivals in maintaining the standards and price quotes. There could be a national economic crisis, upon the demand on consumers, product consumptions and launching of new menu items. (patelh, 2004) BRAND DIFFERENTIATION: There is makeover in a new positioning of the subway for its marketing place, mainly in distinguishing from the competitor’s value. The differentiation makes the subway to look at its customers’ needs. Building a superior value of position makes the identification more competitive. The differentiation comes for the product like providing no oily food, fresh tomatoes, mayo’s and other items. Providing a healthy fast food at lunch and dinner timing reduces the effect of increasing the weight. This made the people to sign more franchises and the people’s attraction towards the health increased eventually. Positioning depends on some of the functional like rectifying the problem, making the customers to get profit and also by the symbolic function where the enhancement of the self image, identifying their social fulfillment. “Subway differentiates itself in term of healthy sandwiches as an alternative to fast food” (Kotler, 2006) Subway launched its new brand “sub of the day” in which there is different price £1.99. This offers the cheapest meal of the day to Marketing Planning and Strategy

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attract the people. This launching of the new brand made the other competitors to launch their own different brands with lower price options. Once if there is market segmentation which is identified through the identification of the segmentation getting positioned, it is the product which is perceived by the customers. Opportunities and competition are identified accordingly. The release of the product is totally depending upon the brand name, as there was an increase in the product positioning of the “sub of the day”. There is also increase in the brand billing, later subway came in the limelight and is having Burger king and Mc Donald as its major competitors. PRICING: There are mainly five pricing strategies, they are creaming pricing or skimming pricing, penetration pricing, market oriented pricing, psychological pricing and target pricing. Subway to sub of the day product, it chosen the psychological pricing strategy, this makes appositive thinking in customer mind for the product it sells, the sub of the day for £1.99 instead of £2. Even though it is only 1 pen difference which won’t make a big difference to the customer pocket, but it impacts the customer perception that he is spending less than £2. This pricing strategy fetched subway a competitive edge in its industry making McDonalds t rebrand one of its products ‘deli sandwich’ to ‘deli of the day’ with reduced price of £1.99. The effect of subway with ‘sub of the day’, on Burger King and Hardees even made them to introduce the sub sandwich and refreshed their menu items. It is clearly understood that subway pricing strategy made its competitors think and restructure their pricing strategy and menu cards. Subway with low price daily special ‘sub of the day’ it gives an opportunity to its new customers to do a trail then make to attract and try again and again, likewise subway improving its customer repetition, with this sub way improved its product promotion and which in turn helped in building successful brand promotion as well as Marketing Planning and Strategy

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brand name building and improved sales constantly. As it started capturing the business in quick service restaurants it become one major role players in this industry and competing top QSR leader like McDonalds, Burger king, Hardees etc,. Subway differentiating its product from its competitors with an increased quality of the product, and it improved the brand and product positioning with product differentiation. Hence the improved product positioning and the branding created a perceived value for subway product quality. Subway competitive value is dependent on their pricing strategy, it proven by the customer satisfaction for the product quality to the price as the pricing strategy is well estimated to capture the market, subway become one of the threat points to the other competitors SWOT analysis, which is practically understandable as Mc Donald’s rebrand of his ‘deli sandwich’ to ‘deli of the day’, by comparing all the above aspects subway added value meal combos to it menu card. (gregson, 2009)

RECOMMENDATIONS: Subway for its product ‘sub of the day’, in QSR (quick Service Restaurant) industry the important factor to success is management. Therefore to get the estimated success rate bottom line employees to top level management even need to have regular trainings to manage any aspects of the store. Well trained employees will give confidence for doing the competitive edge in the industry. It needs to maintain the customer expectations to his previewed value. Subway should have more clear market Marketing Planning and Strategy

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position to maintain its success. And it should give clear message to its management, what position they want to maintain in this industry. As the industry itself in a mature stage, it is little tuff to maintain low cost strategy. Even though it concentrate on product differentiation also need to give same importance to marketing differentiation and it should maintain control on cost effectiveness. Subway for its successful progression it should maintain franchise operation effectively, as a part of its objectives it should promote to establish more franchises around the world. It should monitor the franchises operations for a win-win position. Further to maintain same growth, maintain the franchises holders happy, better take feed backs and advices from the franchises consistently. As ‘sub of the day’ hit the market for its pricing strategy and healthy fast food strategy it is advisable to keep continue and further more campaigning is needed. As the sub of the day product is segmented demographically even better to understand the local markets and the combination preferences and tailoring the menu items fetches more business, better offer new items according to the local tastes. At present most of the places subway having a very less seating capacity, seating arrangements need to be considered to provide more seating capacity. As ‘sub of the day’ hit the target audience their expectation level will raise from basic t little high examples like some dessert varieties and break fasts. Subway can promote its sandwich as customizable and healthy to eat food to those who really care for the diet. (Key Sucesses Factors of the Top Global Franchises, 2009), CONCLUSION: Subway identified its target market with proper segmentation strategy and delivered up to the expectations of the customers to achieve customer satisfaction. Subway segmented its market using demographic segmentation, as the age group with their life style not expects much time for full time lunch, subway as a fast Marketing Planning and Strategy

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food sandwich seller providing ‘sub of the day’ sandwich with psychological pricing strategy. Subway with its segmented market again segmented according their expectations like some of them would like to have nutrition food, some of them would like to choose their own ingredients like different top up sauces and desserts. Subway keeping it in view giving an option to choose their own ingredients starting from choosing a bred to sauce which is highly satisfy its customers. With this Subway able to give a competitive edge making it one of them who play a major role in this industry and even these competitors rebranded their products and some of them introduced same strategy.

REFERENCES:

Facts and History. (n.d.). Retrieved June 6th, 2010, from http://www.subway.co.uk: http://www.subway.co.uk/business/franchise/facts_and_history.aspx

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Gillian Mc Ghee, F. D. (2008, Jan 30). Subway on roll - Strategic excellence: Brand development. Retrieved June 6th, 2010, from http://www.docstoc.com: http://www.docstoc.com/docs/24518031/Subway-on-a-roll gregson, A. (2009, June 26). Pricing strategies for small business. Retrieved June 8th, 2010, from http://www.scribd.com: http://www.scribd.com/doc/16820831/Pricing-Strategies-for-Small-Business Key Sucesses Factors of the Top Global Franchises. (2009). Retrieved June 7th, 2010, from http://www.franchisedirect.com: http://www.franchisedirect.com/top100globalfranchises/the2009report/158/767/ Kotler, P. &. (2006). Marketing Management. In Marketing Management,12th ed (p. p.319). New Jersey: Pearson Education Ltd.,. Mccarty, M. (n.d.). Fast Food Market Forecast - The Subway Example of Strategic Product Positioning. Retrieved June 5th, 2010, from http://ezinearticles.com: http://ezinearticles.com/?Fast-Food-Market-Forecast---The-Subway-Example-ofStrategic-Product-Positioning&id=735770 Melago, P. (2007, Feb 14th). Which Sub Shop Makes a Better Sandwich. Retrieved June 7th, 2010, from http://www.associatedcontent.com: http://www.associatedcontent.com/article/143046/quiznos_vs_subway_which_sub_s hop_makes.html patelh. (2004, November 23rd). subway sandwich chain franchise. Retrieved June 8th, 2010, from http://www.studyzones.com: http://www.studyzones.com/uploadzone/Coursework/22885x1179/Subwaysandwich-chain-FRANCHISE Subway FAQ's. (n.d.). Retrieved June 5th, http://www.subs.sg/aboutus/aboutus_faq.html

2010,

from

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Subway on a roll; Who were we targeting? (2008, Jan 30th). Retrieved June 2010, 6th, from http://www.tunaweb.comS: http://www.tunaweb.com/meas08/casestudy/Subway%20-%20Brand %20Development.pdf

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