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The Internal And External Environments Of Subway Marketing Essay

1755 words (7 pages) Essay in Marketing

5/12/16 Marketing Reference this

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The report presents a brief introduction of the Subway sandwich chain and focuses mainly on its marketing strategies and objectives. For that it presents an analysis of its internal and external environments along with a detailed SWOT analysis for the company. This includes an insight into the target market of the company along with the promotion and pricing strategies followed by the company so far in order to create value for its customers. The report ends with a concise statement of marketing objectives for Subway that it needs to follow in order to achieve its goals.

Subway, the world’s number 1 sub-marine sandwich franchise of 2011, was started by Fred DeLuca in 1965 to make money for being able to pay his medical college’s tuition fee. Fred borrowed $1000 from Dr. Peter Buck, a family friend who later on became his partner, to open his first sub-marine sandwich shop in Bridgeport, Connecticut. The shop taught him the art of conducting business along with the significance of producing high-quality sandwich, great service, low operating costs and location efficiencies.

Fred and Peter expanded their business in 1974 through allowing franchisees to open Subway franchises and thus making Subway the most popular sub-marine sandwich brand. Subway initially offered Submarine sandwiches but gradually expanded its product offerings as it grew. The menus of Subway franchises vary from location to location as it adapts to the cultural differences and preferences of its target consumers.

The report presents a situational analysis of both the internal and external environments of Subway to highlight the company’s target market, its objectives, competitive advantages, overall market analysis and its marketing strategies. It also presents a competitor analysis followed by a SWOT analysis of the company that indicates the strengths, weaknesses, opportunities and threats presented by the internal and external environments of Subway. Marketing objectives will follow the SWOT analysis, laying the foundation for helping the company meet its objectives.

Situation Analysis

Internal Environment

Subway’s main objective is to provide its customers with fresh and high quality sandwiches at all times. It also aims at establishing itself as a fresh and healthy sandwich maker in the fast food industry.

Product

Subway mainly deals in submarine sandwiches that are promoted as healthy and fresh sub-sandwiches. This was what Fred DeLuca started initially when he opened his first sandwich shop in Bridgeport. The company, however, expanded its product offerings with the passage of time and thus increased its menu from only sandwiches and salads to breakfast, sandwiches, salads, catering services, coffee, cookies and Kids’ meals.

Promotion, Pricing and Placement

Subway has always targeted the upper and upper-middle class segments of the market therefore their sandwiches do not come cheap. One of the franchisees, however, set out to increase his franchise’s sales and popularity by offering $5 Foot-long sandwiches which was later adopted by the company as a promotional campaign due to its popularity and also because it brought instant increases in the franchise’s sales-volume.

Since Subway has promoted itself as a healthy fast-food chain, it ran ads and campaigns with Jared Fogle, a teenager who lost 245lbs after following a year long Subway sandwich diet, as their spokesperson in order to inspire all those who wanted to lose their weight and also to increase the market share of the company.

Subway has benefited a lot from its product placement strategies in which it has used two of NBC’s famous shows namely Chuck (Mel, 2009) and The Biggest Loser (Castillo, 2010) for marketing wherein characters have been seen craving for and loving the experience of eating a Subway sandwich, and eating it to lose weight.

The marketing campaigns of subway have always succeeded in promoting the brand as a healthy sandwich producing company. The most important feature of a brand, the logo, helps a company or enterprise communicate to its consumers what the brand is all about. The logo of subway helps the company convey its objective of letting the consumers know about its healthy sandwiches. The green color in the logo of subway represents nature, health and environment friendliness. This conveys openly to the consumers that subway sandwiches are more healthy and fresh than its competitors. The white color used in the logo represents purity and it conveys that subway sandwiches are free of impurities and are thus healthier.

The health campaign of subway is also promoted by the Doctor’s Associates Inc. and Subway’s sponsorship of the American Heart Association’s Start! Heart walk (Subway 2011). This indicates Subway’s mission of providing its consumers with fresh and healthy food.

Target Market

The main target market of Subway consists of young adults ranging between the age of 16 and 39 and belonging to the middle and upper class segments of the market (Subway 2011); single, married without children and married with small children who are more health conscious and prefer healthier food over fattening fast food items.

Value-addition

Subway has always tried to maximize the value and benefits derived from buying a Subway sandwich. It has offered fresh, made-to-order sandwiches that are prepared in front of the customer with the customer giving orders about what he/she wants in the sandwich and what has to be excluded according to their tastes and preferences. This has given extra value to the business as customers get a sense of personalization in their sandwiches and thus promotes repeated purchase. It offers its customers a choice of freshly baked bread that they can choose from for their sandwich and also offers freshly toasted bread. Subway has its own bread manufacturing units and thus is able to offer a variety of freshly baked breads.

External Environment

The increased awareness about health and safety issues has helped Subway gain greater fame among customers as they are now more aware of nutritional and health benefits of Subway sandwiches. The increase in the desire to ‘live healthy, eat healthy’ has also lead to an increase in the sales of Subway as more customers are shifting from fried and fattening burgers to Subway’s healthy and freshly made sandwiches. It is therefore, understood that any person who is concerned about his/her health would prefer Subway over any other fast food restaurant.

Competitors

The main competitors of Subway are McDonalds, KFC, Taco Bell, Wendy’s, Hardees, Pizza Hut and Long John Silver’s.

These companies normally position themselves as providers of tasty burgers and pizzas not actually paying much heed to the nutritional or health aspects of their food. They focus mainly on the experience rather than nutrition and diet requirements of their consumers.

Technology

Since Subway is a global franchise, it maintains a constant contact with its franchisees thorough its intranet and has a system of electronic transmission of its sales updates from franchises to headquarters. Subway also owns state-of-the-art cooking ranges/ovens which are used in production of its breads and various other ingredients.

SWOT Analysis

Strengths

Subway sandwiches are custom-made to match the taste preferences of its customers and develops in them a sense of liking and attachment with the brand.

Subway chains are wide-spread and have also been termed as the number 1 Franchise of 2011 (Subway 2011). Subway has opened its mini-stores and franchises in parks, hospitals, tube stations, schools and popular retail stores.

Success stories of individuals like Jared Fogle have helped the company gain fame in the market and have increased its sales phenomenally.

An increase in the customer awareness regarding health and safety has lead to an increase in the popularity of Subway sandwiches and has thus resulted in a greater market share of Subway as more and more customers are shifting from friend and fattening burgers to Subway’s fresh and healthy submarine sandwiches.

Weaknesses

One of the major weaknesses of Subway is the freedom that it has given to its franchisees in determining their promotion campaigns. This is considered a weakness because this results in variation and inconsistency among the franchises of Subway and thus leading to confusion amongst customers.

Since franchisees have a certain level of freedom of choice, it has lead to inconsistency in quality and taste as they vary from franchise to franchise and thus lead to customer dissatisfaction.

Opportunities

Subway still has a lot to consider for its customer satisfaction and thus should pay more attention to customers in order to attract them. This can be done by revamping its stores and decorating them, not with subway maps of the US, but with subway and railway line maps of the countries in which it is operating so as to give the customers a greater sense of affiliation.

Subway still has a major chunk of customers that have been left un-tapped. A large number of Muslims reside in the United States but they are unable to eat Subway’s sandwiches since they are not Halal. Subway can open up Halal chains in order to attract Muslim consumers.

Threats

The main threat faced by Subway is from its main competitors as they have increased their efforts to retain their customers and have also started campaigns to attract more customers, thus, threatening Subway’s market share.

Subway is also threatened by the recession that hit the world as it has reduced the purchasing power of its customers.

Marketing Objectives

The main marketing objective of Subway should be to attract a larger number of customers and this can be done only by increasing promotion efforts. More combo meals should be offered and discount pricing should be done in order to attract customers during non-peak hours. It should seek to increase the demand for its products by doing so. Demand can also be increased by emphasizing more on health issues and by supporting causes like anti-obesity campaigns. Advertisement campaigns should be as consistent as possible, varying only to meet the cultural differences of different countries in order to maintain an as consistent image as possible worldwide. Subway should rely more on subliminal messaging and should also start advertising thorough movies i.e. by signing contracts with movie producers to advertise Subway sandwiches in movies and major TV shows.

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