6005 A1 Subway
6005 A1 Subway
6005 A1 Subway
Table of Contents
1. Summary....................................................................................................................2
2. Company Overview....................................................................................................3
3. Current marketing situations......................................................................................3
3.1 Product............................................................................................................................3
3.2 Price.................................................................................................................................4
3.3 Place................................................................................................................................4
3.4 Promote...........................................................................................................................5
4. Target marketing strategies.......................................................................................5
4.1 Product strategies............................................................................................................5
4.2 Price strategies:...............................................................................................................6
4.3 Promotion strategies:......................................................................................................7
4.4 Placement strategies:......................................................................................................8
5. External Analysis........................................................................................................9
5.1 Market Situation..............................................................................................................9
5.2 Competitor Situation.....................................................................................................11
5.3 Macro-Environment Situation........................................................................................13
6. SWOT analysis..........................................................................................................14
6.1 Strengths:......................................................................................................................15
6.2 Weaknesses:..................................................................................................................16
6.3 Opportunity:..................................................................................................................17
6.4 Threat:...........................................................................................................................18
7. Market segmentation...............................................................................................18
7.1 Demographic segmentation...........................................................................................19
7.2 Geographic segmentation..............................................................................................19
7.3 Psychographic segmentation.........................................................................................20
7.4 Behavioural segmentation.............................................................................................20
8. Additional steps.......................................................................................................20
9. Conclusion................................................................................................................21
10. Reference.............................................................................................................22
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1. Summary
This report illustrates the marketing analysis of Subway in both Australia and the
world. We will first introduce the internal and external current situation and
environment of Subway and analyse its competitors. Besides, we will propose
executable strategies on the current status of Subway which we have studied. We
will also use macro-environmental conditions to analyse the market of Subway
gradually. Their government, economy, social culture, technology and law because
these are the main factors that pre-analyse the market and lay the foundation for
entering the market. Then, we will conduct a SWOT analysis to distinguish the
advantages and disadvantages of the brand in the opportunity and threat markets.
Finally, Subway's breakdown is the last part of this report. We will discuss the four
main features of geography, population, psychographics and behaviour. For these
four market segments, we use a single variable and multiple variables to investigate
the current and potential markets in Australia.
2. Company Overview
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Subway is a multinational fast food chain that originated in the United States by Fred
DeLuca, in August 1965. It mainly sells sandwiches and salads. It is the fastest
expanding and largest single-brand chain in the world. At present, it has more than
26,000 franchise stores in more than 80 countries and has become a leader in the
international fast food industry (Lalita, 2013). In recent years, it has been selected as
the number one franchise system by the American "Entrepreneur" magazine
(Noreen, 2010). Subway features healthy food and open service, and is loved by
consumers around the world. Subway is sweeping the world, and as a force that
cannot be ignored in the fast food industry.
Since the subway entered Australia in 1988, the development process has been
tortuous. At first, it was widely praised locally for its fast, healthy and interest, but
then it received huge doubts due to food safety issues. Currently, there are 1,209
restaurants in Australia. (Wiki, 2020)
3.1 Product
The characteristics of Subway's products are: fashionable, healthy, nutritious, low-fat
and fresh. The shop provides a variety of fresh vegetables for customers to choose
from. Foods rich in carbohydrates, protein, minerals and vitamins help customers
seek more balanced dietary choices. Subway guarantees to provide fresh, nutritious
and delicious food. In North America, the fat content of seven Subway sandwiches is
less than 6 grams.
Entering any Subway restaurant in the world, customers can see the unified
decoration design, unified menu, feel the unified service concept, and taste the
global unified, pure-style Subway cuisine. These unique features of Subway make
people directly associate sandwiches with Subway in their minds.
Focusing on core products is the biggest competitive advantage of Subway products.
Because the products are made on-site in front of consumers, consumers can
choose bread, sauces, vegetables, and meat at will. There are only 15 submarine
sandwiches on the Australian Subway’s menu, but consumers can match up to 2
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million choices (Noreen, 2010). For example, two consumers order the same chicken
steak sandwich at Subway, but after adding personal creativity to the ordering
process, the tastes are completely different.
3.2 Price
As it provides low-calorie healthy food, Subway is priced slightly higher than its
competitors, but the loyal customers of Subway can see that the price of Subway
has not changed much in the past ten years, even raw material prices has raised.
The reason why it can do this is inseparable from its procurement system (Wang,
2013). Subway has independent purchasing company who can negotiate with many
suppliers. In the past ten years, Subway has more and more branches, logistics and
distribution costs have been declining, and the increase in purchase volume has also
strengthened the bargaining power of purchases (Spethmann, 2006).
3.3 Place
In Subway's franchise system, each area has a headquarters to summarize
information and make overall arrangements. Each area is divided into several small
areas; each area is equipped with a development agent, responsible for regional
market development and franchisee supervision. This step-by-step monitoring
system is very effective for large franchise networks such as Subway.
The initial start-up cost of Subway is relatively low in the franchise chain industry.
The initial franchise fee is only 10,000 US dollars, including brand use, shop
guidance, and training (Wang, 2013). As a global mature fast food brand, Subway
has a highly efficient and well-recognized business system. Franchisees can benefit
from mature processes and structures, as well as strong local and international
support. Young entrepreneurs who join a mature brand like Subway will benefit from
a strong brand influence, allowing them to quickly and efficiently establish their own
companies. Subway's criteria for selecting franchisees are not capital, experience,
and skills, but the franchisee's character and whether it can operate in accordance
with the brand's management system.
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Flexible venues are a major advantage of Subway's rapid development. Hospitals,
gyms, cinemas, train stations, and many other locations that many brands consider
too small or unavailable for operation are not stressful for Subway. Subway only
needs a small place with water, electricity, and potential passenger flow.
3.4 Promote
In 1999, Subway’s nutritionist successfully helped an obese college student in the
United States lose 245 pounds (Spethmann, 2006), which caused a sensation.
Subway seized the opportunity to use the concept of health as its selling point and
launched the slogan "Not all fast food will be obese", which won praise (Spethmann,
2006). After that, Subway and its franchisees continued to launch health promotion
activities, such as "walking for all." In 2005, Subway launched a public service
advertisement with the theme of "healthy and fresh" in response to the hot issue of
childhood obesity. The advertisement tells the story of three boys who chose to be
healthy and changed their lives. The advertising campaign also includes various
activities, such as distributing promotional toys in children’s packages, sponsoring
the American Heart Association’s skipping sports, etc.
When franchisees experience problems, such as sales decline for several
consecutive months, Subway will make a complete assistance plan for the store,
mainly doing some targeted marketing activities, such as buy one get one free. In the
process, Subway will also provide part of the funds for marketing promotion to help
franchisees. After one or two months of assistance, if sales performance does not
improve, Subway will help franchisees relocate and move, and the cost of moving is
very small.
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putting product functional requirements first. When Subway decides to bring a
product or service to the market, they must know who they are targeting, what
benefits they will get, and what advantages they have compared to competitors
(USC Marshall).
Subway uses product marketing strategies to produce popular food products by
dividing different target market tastes and different geographical tastes.
Subway’s menu includes a variety of sandwiches and wraps that you can choose
from the ingredients (for example, you can choose chicken, bacon, beef or tuna as
ingredients), as well as various salads, breakfast, breads, dissert, and so on. For
some countries and regions, Subway has also launched flat breads, Breakfast
sandwiches, English muffins, Sichuan flavored chili chicken sandwich or flatizza.
They not only provide Fresh Fit menus for people who want to reduce fat calories at
lunch and dinner, but also offers a range of vegetarian products for some
vegetarians in India (Subway 2020).
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4.3 Promotion strategies:
Promotion strategy means that companies pay attention to changes in sales
behaviors to stimulate consumers, and use short-term behaviors (such as profit
distribution, buy one get one free, marketing atmosphere, etc.) to promote
consumption growth, attract consumers from other brands or lead to early
consumption. Promote sales growth.
An increase in brand awareness means an increase in sales, because consumers
often need to understand the characteristics of the product and the brand’s
reputation before deciding to buy a product. At this time, a high brand awareness will
attract consumers more.
Subway uses a variety of methods to increase brand awareness. One of the more
effective methods is to use the connection between celebrities and food rather than
just use some TV or online advertising. Subway selected some well-known athletes
to promote their products, such as Olympic swimmer Michael Phelps, football star
Pele, American football player Robert Griffin III and NBA player Blake Griffin. These
people’s publicity is undoubtedly a key factor in the success of promotional activities,
because in the eyes of consumers, these athletes mean health, and the reason why
athletes are healthy is because they eat Subway low-calorie food, which means that
if you want to have a healthy body like an athlete, then Subway will be a good choice
(MBA Skool Team,2020).
During COVID-9, Subway set up a team to provide free food to community residents
and front-line staff of medical institutions in various countries who need help. For
example: In the UK and Ireland, Subway donated more than 250,000 salads, crepes,
biscuits and pastries to the staff of the National Health Service and emergency room.
In Canada, the Subway team promised to provide food to frontline volunteers across
the country. Throughout New Zealand, the Subway team has successively donated
more than 17 tons of fresh produce to various food charities (Subway 2020).
In a way, these donations are also to promote the brand, and to help those who seek
help in times of difficulty, which will make Subway's brand image more positive and
attract more customers.
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4.4 Placement strategies:
Placement strategy means that companies do not directly face consumers, but focus
on the cultivation of distributors and the establishment of sales networks. The
contact between companies and consumers is carried out through distributors.
Subway, the world's largest hotel chain, was established in 1965. In terms of
Placement strategy, Subway has one of the fastest franchise rights. So far, this
restaurant chain has become the world's largest restaurant operator, and There are
42,118 chain stores in 112 international and regional areas (M Rahman,2017).
Subway has headquartered in Milford, USA, and distributes its international
operations to five regional centers: European offices in Amsterdam, New Zealand
and Australia offices in Brisbane, and Asian offices in Singapore, Lebanon and
Beirut, the Latin American office is in Miami (Hitesh Bhasin, 2020).
Subway often chooses some off-beat premium places to locate outlets, such as
airports, shopping malls, amusement parks, business centers, hospitals, military
bases and so on. Subway believes that customers who have been active in these
off-beat premium places for a long time will pay more attention to health and low-
calorie food, so they will not mind paying higher prices.
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5. External Analysis
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Chart 1 Open restaurants 1965-2009 (Subway)
Roy Morgan’s latest research shows that more than 17 million Australians (84.5%)
over the age of 14 can get from leading fast food restaurants (such as McDonald’s,
KFC or Metro) or local fish and chips Shop, pizzeria, convenience store to buy food.
So, subway analyzed the eating habits of the entire Australian people and launched
many sandwiches that meet the tastes of the locals. In Australia, subway still
adheres to its core values and principles. Daily fresh ingredients and affordable
customized healthy sandwiches are provided. Distinguished guests always provide
excellent service and provide the highest quality dishes at prices everyone can
afford.
Chart 2 Top 10 fast-service restaurants for eating or taking out in an average of six
months in Australia
Target Market
The SUBWAY brand has become the world's largest sandwich chain, with more than
44,000 locations worldwide (Subway 2007). It has become the first choice for people
seeking fast, nutritious meals that the whole family can enjoy.
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Subway has been improving geographical division since its early development.
However, with the growth of regional franchise, subway should consider subdividing
the total market of products or services into different subgroups, each of which may
represent a unique target market and achieve its goals through a unique marketing
mix (Bhasin, H. 2020).
Segmentation method
1.Demographics (age, gender, income, occupation, religion, education, ethnicity)
2.Geography (location, area, city, density, climate)
3.Psychology (social class, lifestyle, personality)
4.Behavior (occasion, benefit, user stage, usage rate, loyalty status)
When SUBWAY targets certain cultural and religious groups, while maintaining their
original value. No matter where the Subway restaurant is located, the core menu
remains relatively unchanged (Subway 2007). Doing so can guarantee that apart
from certain cultural and religious differences. No matter which country they visit,
world travellers can expect to use the same quality ingredients. On the other hand,
Subway has always targeted people of different ages through its existing product
lines and product development, especially improving children's diet (Bhasin, H.
2020).
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Chart 3
Market Positioning
Although the three are all urban families in the choice of target groups. However,
according to Kolmakova, L. (2017), there are differences in the three major groups
that make up the family (that is, children, young parents, young men and women):
McDonald’s continues to insist on a child-centered family, followed by parents and
young men and women; while KFC is based on young men and women. Center,
then children and young parents. Subway is mainly based on family members who
care about health. The three seem to be the same, but they have completely
different operating focuses, which affects the subtle differences in the restaurant
decoration and planning, products and location selection.
Product Positioning
KFC, McDonald's and Subway have big differences in product positioning.
McDonald's focuses on burgers. And KFC focuses on chicken products (Mujahid
Uddin, S. 2020). Subway is based on sandwiches.
Location Layout
McDonald’s is the world’s largest food survivor chain, with 31,000 fast food
restaurants in 119 countries/regions (Kolmakova, L. 2017). McDonald's will carefully
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consider the location of its restaurant. The construction of a McDonald’s restaurant
will cost millions of dollars. In order to make the operation profitable, it must be
placed in an area that can maximize customer exposure (Racoma, B. 2019). In
addition, McDonald's has its own suppliers to distribute its products. This means that
the company only uses a single channel (Kolmakova, L. 2017).
In the past, McDonald's and KFC usually positioned themselves as providers of
delicious burgers and fried chicken, but actually did not pay much attention to the
nutrition or health of the food (Lesser, L., Cohen, D, et al.2013). They mainly focus
on the consumer experience, not nutrition and dietary requirements. Now Subway's
competitors have begun to provide healthier alternatives, but Subway's brand
heritage means that it has successfully retained a healthier overall image (Subway
2007).
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Investment in technological innovation and computer ordering are the main technical
factors of Subway (Bhasin, H. 2020).
6. SWOT analysis
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6.1 Strengths:
Number of stores
Compared with competitors, Subway has the most outlets among all fast food
chains. (In McDonald's, Burger King, KFC, Taco Bell). This is undoubtedly the
advantage of Subway, which can cover more potential consumers. (Bhasin, 2020)
High brand loyalty
Subway focuses on health, so it has a high brand recall rate and attracts the
attention of specific customer groups. Among the most valuable restaurants in the
world, Subway ranks third after McDonald's and Starbucks. (Restaurants 25, 2020)
Health benefits
Compared with the food provided by other fast food chains, the healthy food they
provide is more popular and healthier. Other fast foods rely heavily on fried foods,
which is exactly the opposite of Subway's goal. Due to the increasing global attention
to food health issues, customers have begun to switch to healthier choices, which
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indirectly promotes the rapid rise of Subway. This may be the most advantageous
factor of Subway,
Franchising
Staff training for franchisees is structured to ensure that new employees get on
board quickly, and all employees are trained by institutions hired by Subway. This
ensures that the new restaurant can be set up and run easily and smoothly
anywhere.
Differentiation
Unlike other fast food chains that specialize in burgers or pizzas, Subway offers
healthy sandwiches to the public in the opposite direction. Customers can flexibly
choose their favorite ingredients to make their own sandwiches. No other fast food
brand can reach the level of popularity achieved by Subway. This makes Subway
unique and makes it the most popular brand among various food chains.
6.2 Weaknesses:
Brand value
Although compared with the world's largest competitors McDonald's and KFC,
Subway's brand value is not inferior at all. It has consistently topped the list in the
fast food industry.
Satisfaction
As employee training is undertaken by outsourcing organizations, it cannot ensure
that the service satisfaction level of all Subways worldwide reaches the same high
level.
Old-fashion
Subway's meals or restaurant style remains unchanged, and its style has not been
updated according to the changes of the times. This has resulted in low satisfaction
among new generation customers.
Online status
In the Internet era, Subway did not seize the opportunity to promote online, which
undoubtedly affected the company's brand. This is what Subway lacks.
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Employee treatment
Subway's work content is low-paying and low-skilled jobs. This will lead to low
performance and high employee turnover, thereby increasing the cost of their
training.
6.3 Opportunity:
Customer's health awareness
In today's world, people are becoming more and more aware of health. This is also in
line with Subway's product philosophy, so Subway can really take advantage of this
and become a model for the industry.
Delivery service
Most successful restaurants provide door-to-door delivery services and have
developed their own apps. Subway needs to cater to this trend.
Diversification
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Subway only stays on one product (Subs), so it needs to diversify and develop
different meals to attract potential consumers and maintain its competitive
advantage. It can also develop new products for an established customer base to
consolidate existing consumers.
Most Subway offers different types of meat for customers to choose from, but there
are not many menus for vegetarians.
Drive-through
KFC and McDonald's all have this consumption method. For the convenience of the
public, Subway also needs to apply this method in its restaurants.
6.4 Threat:
Competitors
Subway may be threatened by McDonald's, KFC and other fast foods, and they also
have loyal followers. If they also start to provide healthy, DIY low-fat foods, this may
seriously affect Subway's customer base.
Saturated market
Many of the new restaurants today have the same model as Subway, and most of
them are local catering. They can better cater to the tastes of locals, which will
undoubtedly harm the customer base.
Reputation
CNN once exposed that Subway's food sold in North America contained the
chemical "azodicarbonamide", although Subway responded immediately and
announced that it would stop using it. But this will damage the trust of the brand.
Changes of trends
If people start to care more about the taste of food than whether it is healthy or not,
they may choose other restaurants to eat.
7. Market segmentation
Much of the success of Subway is the proper implementation of marketing strategies
such as market segmentation. The general definition of market segmentation is the
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process of separating a market into portions each characterized by the various traits
of potential consumers. Each segment or portion possesses consumers who share
similar characteristics. Marketing segmentation could ease the burden of marketers
to customize marketing campaigns.
By using market segmentation, it could minimize the possibility of a marketing
campaign is unsuccessful. Through the division of the market into segments of
potential consumers who share similar traits, the chances of a campaign being
successful are high (Liutu, 2010). Also, by segmenting the market, the company was
able to identify its target audience and prioritize the campaign on them. The
company would then allocate most of their marketing resources and attention on the
identified target audience.
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Subway is looking for ways to improve its geographic segmentation to incorporate
the cultures adopted across the world.
8. Additional steps
After identifying the various segments and the characteristics prioritized by Subway,
the target audience is the next logical step. To start with, Subway targets young
adults of ages between 16 and 39, despite their healthy sandwiches being viable for
people of all age groups and backgrounds (Liutu, 2010). The main reason for
targeting young adults being they form the majority of the population across the
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world. They identified the target market as young adults who know their minds. Their
main aim is to provide nutritious food rather than the junk foods, like pizzas and fries,
offered by other fast-food restaurants.
Through target market research, Subway can offer varied food chains based on the
healthy foods demanded by the target consumers. The restaurant is also able to take
care of the needs of other consumers’ preferences by offering regular foods but with
low-fat options (Liutu, 2010). To attract a wider target audience, Subway offers
reasonable prices to its items when compared to the high value of these items and
competitor pricing. Subway is providing a healthier and reasonably-priced food
option for young adults.
Subway also aims at providing freedom and choice to its consumers. Pleasing young
adults is a difficult task, but Subway has given the young adults a lot of choices on
what they want in their orders. The choice is also apparent in the ‘point to order’
method they adopt in which the customers point their order to minimize confusions
during selection (Liutu, 2010). The method is not in use by other fast-food
competitors such as KFC and Mc Donald’s.
9. Conclusion
All in all, Subway entered the fast-food market in Australia by its opportunities and
advantages rather than threats and disadvantages. However, in the past four years,
with changes in consumer eating habits and a challenging retail environment, the
number of Subway stores in Australia has decreased by nearly 1/10. However, a
Subway spokesperson said that including 1,353 Subways in Australia, which are
temporarily closed due to renovations, Subway expects to experience performance
growth in the next few years, but only new commercially viable stores will be
considered. "This is to launch the "next-generation flagship Subway restaurant" in
Australia. In recent years, customer demand for healthy fast food has increased day
by day, and Subway still has a large number of potential customers and room for
development. On the other hand, the widespread use of social media is advertising
Publicity, and promotion provide tremendous opportunities. Therefore , the relatively
healthy concept and characteristics of Subway's products fully meet the needs of
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target consumers and the pursuit of young people in the new era. However, they
need to pay attention to their weaknesses and external threats, and use their
advantages to seize business opportunities in order to occupy a specific market.
10. Reference
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Lalita, D 2013, ‘Subway Customer Loyalty And Evaluating Marketing Strategies’,
Journal of Business Management & Social Research, vol.1, no.1, pp.63-77.
Lesser, L., Kayekjian, K., Velasquez, P., Tseng, C., Brook, R., & Cohen, D. (2013).
Adolescent Purchasing Behavior at McDonald's and Subway. Journal Of
Adolescent Health, 53(4), 441-445.
https://doi.org/10.1016/j.jadohealth.2013.02.014
MBA Skool Team,2020, Subway Marketing Mix (4Ps) Strategy Retrieved from
https://www.mbaskool.com/marketing-mix/services/16886-subway.html
Noreen, O 2010, ‘How Subway Built a $4B Brand, Five Bucks at a Time’,
Brandweek, vol.5, no.2, pp.45-49.
Racoma, B. (2019, January 04). How McDonald's Adapts Around the World.
Retrieved from Day Translations: https://www.daytranslations.com/blog/how-
mcdonalds-adaptsaround-the-world/
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Spethmann, B 2006, ‘Subway Freshens Kids Marketing’, Promo, vol.2, no.2, pp.15-
25.
https://www.subway.com/en-us/SubCulture/coronavirus-and-your-safety
Subway (restaurant). (2020, September 14). Retrieved September 30, 2020, from
https://en.wikipedia.org/wiki/Subway_(restaurant)
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