6/18/2010

SUBW MARKETING REPORT ON SUB OF

AY THE DAY A SUBWAY PRODUCT

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Table of contents:

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INTRODUCTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source
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SEGMENTATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source
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SWOT Analysis: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source
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TARGET MARKET: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source
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BRAND POSITION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source
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BRAND DIFFERENTIATION: . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not
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PRICING: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Error: Reference source
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RECOMMENDATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source not
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CONCLUSION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Error: Reference source
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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

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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

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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

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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

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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

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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

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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)

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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

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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

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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

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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

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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

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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

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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

Marketing Planning and Strategy Subway Page 16

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-of-
Strategic-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/Subway-
sandwich-chain-FRANCHISE

Subway FAQ's. (n.d.). Retrieved June 5th, 2010, from http://www.subs.sg:

http://www.subs.sg/aboutus/aboutus_faq.html

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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