Case Study: Subway
Subway is a fast food restaurant that serves salads and sandwiches-famously known as submarine sandwiches. It is located in 98 countries placing it among the fastest growing fast food chains in the world and also the largest single-brand fast food chain restaurant in the world (Swift 10). Their main office is situated in Milford, Connecticut. The company has a target of increasing to 2,010 the number of their restaurants in Ireland and United Kingdom only. Its owners are the Doctor associates who are also the head of operations. In addition to their main product, the sub, the subway also serves products including muffins, donuts, and wraps but these vary according to the market and the country the restaurant is situated in.
Subway’s main competitors are McDonalds and the Yum! Brands. McDonalds, by virtue of being ahead of Subway in revenue by the end of 2010, Subway is ranked the most popular fast food chain in America. Yum! Brands are ranked as the largest restaurant operator in the world placing Subway as the second largest. Other chief competitors include Pizza hut, KFC, Eat and Greggs.
Subway is ranked as the leading in the sub and sandwich restaurants. It does include healthier foods in its menu helping to distinguish it from the traditional fast food restaurants by the fact that it gives much attention to diabetes and obesity. This has been one of the main attractions of customers to Subway (Siriwardena, 4)
Subway chains are well positioned to address the threats that face them, leveraging their strength while adequately dealing with their opportunities and weaknesses. Subway has an advantage in its opportunities as it can grow stronger in the sandwiches market as the consumer interest is swiftly shifting to this market. Subway has been positioning its market by focusing their attention to building a brand that is based on a “freshness” platform. This has been a major boost in expanding their market globally with customers viewing the Subway chains as a place for healthy and tasty food. This positioning fits very well with the market mix as it serves to make the restaurant part of the customer’s consideration set every day.
Strength and Weaknesses
Subway has much strength over its competitors but it also does have weaknesses. It’s main strengths are using non-traditional channels, a menu that contains healthy, fresh and fast foods, having a globally recognized brand, being in partnership with the American Heart Association, having a globally recognized brand, the size and number of its channels and stores, menu offerings that are customizable, low start up cost for franchisees and franchisee training being brief, structured and designed to guarantee fast success and start-up (McCarty, pr 2).
Subways weaknesses include an outdated décor with some franchisees being unhappy, inconsistent service delivery from store to store, having no control of the franchise saturation in certain market zones and a high employee turnover (McCarty, pr 2)
Opportunities and Threats
Every business has threats and opportunities that it should look at before entering a market. Some of Subway’s threats include: stiff competition from its competitors, law suits, food contamination especially in spinach, risk of economic downturn, sabotage, interest costs and litigation or unrest in the franchisees.
Subways opportunities in the market are many if well exploited. These opportunities include improving the customer service model, improving the relations of its franchisees, updating their décor as a way of encouraging dine-in business, expansion of its channel opportunities to also include event wagons, constant refreshing and revising of the menu offerings with an expansion in the dessert offerings, expanding to include even the drive-through business and establishing partnership with manufactured and movie producers with the objective of promoting their products through co-branding opportunities and also the children’s menu packaging (McCarty, pr2)
Due to the increase in demand for healthier foods by the consumer population, Subway aims to target the customers who are obesity and diabetes conscious. In recent years, there has been a decrease in the demand for fries and hamburgers for healthier options. This is where the Subway stands to benefit as there is increased demand for sandwiches. The sales of sandwiches have been on the increase with a growth of 15% annually. This growth is now even better than the 3 percent that is for steaks and burgers (CIM. 6).
Subway mainly targets the younger generation that is nutrition conscious with four categories being the major targets. These are the singles, the newly married people, grownups that are still living with their parents and the families with young children. The principle and status of the younger generation place emphasis mainly on healthy diets (Moeen, 5).
The market mix usually consists of the four P’s. These are the Place, Product, Price, and Promotion. The Price should look at issues of level, discrimination, and discount. The Promotion is involved with sales promotion, advertising, and personal selling. The Product deals with the brand, packaging, display and the design. Lastly the Place deals with service, warehousing, stockholding, and transportation. These are usually the available tools that can be used to target customers (Lancaster and Reynolds, 10). This market mix fits with the positioning strategy of the Subway restaurant and can be of great help in dealing with the competition that the chain faces from its competitors.
Looking at the Product, Subway has a wider menu that includes dinners, pasta, salads, desserts and soups. In addition, their products are fresh and of a better quality than their competitors. Their main sandwich, the BMT, is a classic. In 1997, another menu called the 7 under 6 menu was introduced. It features seven different submarine sandwiches with 6 grams of fat or less
The Subway uses an upscale pricing which is a bit higher than that of the normal subs in the market but with a differential view on value pricing with the emphasis on the high quality of their products. In terms of place, Subway targets to open 2,010 fast food chains in Ireland and the United Kingdom only by sometime in 2011. Subway has location preferences in areas with more customer satisfaction. They do close their franchisees that are predatory and poor and upgrade those shops that are stripped down to quasi deli restaurants (Swift, 17). Subway does their advertising mainly through the national television on major cable and broadcast networks during sports, late programming, and prime time. They also do advertise on radio, in print, menu translate and using posters.
In light of all these, it is clear that Subway restaurant is a well-run restaurant with a strong marketing strategy that aims to deliver quality service that satisfies the customer’s interest. Their approach to the market is also encouraging with their emphasis on healthier foods being commendable as it reduces the risk of diseases such as diabetes. Their positioning fits with their market mix ensuring that they can get maximum profits in the markets they are involved in. There are a few things though that if changed would ensure that they offer even much better service enabling them to maximize on their profits.
Subway should put more emphasis on their strategic brands without attempting to focus on value addition to their main recipe because it would have the effect of distracting their target customers (Swift 50). They can also add new product lines especially if they are willing to target markets with ethnicities and immigrants. More awareness should be done on their breakfast offerings to ensure that the restaurant stands out from its competition.
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Mccarty, Michael. Fast Food Market Forecast-The Subway Example of Strategic Product Positioning. August 21, 2007. 23rd Nov. 2011< http://ezinearticles.com/?Fast-Food-Market-Forecast—The-Subway-Example-of-Strategic-Product-Positioning&id=735770>
CIM. Marketing Environment, 4th ed. London: BPP professional education, 2005.
Swift, Jonathan. Marketing, 4 th ed. London: Holder & Stoughton, 2005.
Moeen, Hiba. Marketing Strategy in Subway. October 13, 2010. 23rd Nov. 2011< http:marketingmaniacs.net/2010/10/marketing-strategy-in-subway.html>