The Success Of Subway Marketing Essay

Introduction

Subway chain is the third largest fast food chain in the world after McDonald’s and KFC. The first Subway was founded in 1965. The founder of the Subway chain, Fred De Luca, started running his restaurant business when he was only 17 years old. The first Subway restaurant was opened nine years after its foundation in Connecticut where the headquarter is now situated. (Subway Malaysia) Now there are more than 30,000 Subway restaurants in 88 countries worldwide and it is the world’s fastest growing franchise chain. New Subway restaurants are opening all the time. The franchise chain has employed more than 150,000 people. (Subway 2009)

Subway offers customers many different kinds of fresh submarine sandwiches also called “subs”. Customers always decide how they want their sandwiches to be served. Subway’s advertising is based on freshness. Slogan “Eat Fresh” tells that Subway chain uses only freshly baked bread and fresh ingredients. Subway has a lot of competitors for example McDonald’s, Burger King and KFC.

http://www.nationmultimedia.com/2011/03/15/business/images/30150940-01.jpghttp://www.subwaysj.com/images/subway_333733353334_89_logo.jpg

Subway Logo and Slogan. Fred DeLuca, founder of Subway

Mega Environment

Subway in Malaysia operates in a macro environment of forces and trends that shape opportunities and pose threats. These macro environmental forces will be described by analyzing the macro environment by using McKinsey’s PEST analysis. Referring to the delimitations, the technological factors will not be considered. (Marketing teacher, PEST Analysis 2009)

Economic Environment

All businesses are affected by national and global economic factors. The climate of the economy dictates how consumers, suppliers and other organisational stakeholders such as suppliers and creditors behave within society.

As the economy is in a recession due to the financial crisis right now, it has the impact on the potential customers that they generally have less money to spend. Due to that fact, people might tend to keep the money in their pockets and cut down on expenses in their everyday life. One consequence may be that they reduce or cut down on restaurant visits. That can be seen as an advantage that they reduce visits to more expensive restaurants and instead visit less expensive fast food chains. In that an opportunity would arise for fast food chains like Subway. People do not want to renounce totally to go out for lunch or dinner and therefore they might choose more affordable places. Besides that, compared to other nationalities, Malays earn quite a lot. As a result they are not so affected by the crisis and do not have to cut down so much in their everyday life.

Population changes also have a direct impact on organisations. Changes in the structure of a population will affect the supply and demand of goods and services within an economy. The unemployment rate in Malaysia with its 2,3% (December 2008) is very low. Malaysia has one of the highest gross domestic product (GDP) per person in the world. Therefore, people have more money to spend. As a result, there are more potential customers for visiting fast food chains.

Socio-cultural Element

The second aspect of PEST focuses its attention on social forces affecting attitudes, interests and opinions. These forces shape who we are as people, the way we behave and ultimately what we purchase. Within Malaysia, people’s attitudes have been changing towards their diet and health in the past few years. They have become very conscious about their health. As a result, Malaysia is seeing an increase in the number of people joining fitness clubs and a massive growth for the demand of organic/healthy food. Besides this trend towards healthy food, there is also a trend towards quick food as people work a lot and do not have so much time for cooking.

Organisations must be able to offer products and services that aim to complement and benefit people’s lifestyle and behaviour. If organisations do not respond to changes in society, they will lose market share and demand for their product or service.

Malaysia holds a number one position in the world when it comes to their happiness index. Therefore, one can interpret that many Malays give importance to spending a holiday in sunny destinations, hanging out with friends in cafes or restaurants and having a relaxed lifestyle. (The Medical News 2009)

Task Environment

Subway functions within a certain market environment, that is, the second sub-environment which lies just outside the business. The variables in the market environment will influence the enterprise to some extent. It is the task of management to evaluate these variables and their influence on the business, to recommend strategies to utilise the opportunities in the market environment and to counteract threats from, among others, competitors so as to ensure the long-term survival of the business. (blurtit.com)

The Competitors

Three main competitors were chosen to be analyzed more closely since they are considered to be the biggest threat. These three are McDonald’s, Burger King and KFC. Like Subway, they all are conceptual fast food chains. In addition, all three have a considerable market position in Malaysia. Obviously, there are many more competing within the fast food industry. Some other big players in the Malay market are Statoil, Shell and YX, which have the highest number of outlets and a fair share of the fast food market. However, these three are not considered to be as big of a threat since their business concepts are quite different from other fast food chains. Surely, they also serve the fast food market, but to some extent other customer segments. For instance, a family of four would often be seen at for example Burger King, but it would be a somewhat rare sight to see the same family eating together at the local gas station. Bearing this in mind, it can be argued that McDonald’s, Burger King and KFC are the most direct competitors since they resemble Subway the most. For this reason, they will be looked at in greater detail.

Competitors like McDonald’s and Burger King have many similarities in their menus for example french fries, burgers, salads and drinks. Taking a closer look at KFC, it can be noticed that they offer healthier products to the customers, for example smoothies instead of milkshakes or sandwiches instead of hamburgers.

Furthermore McDonald’s and Burger King offer some special burgers/menu for children same as KFC. For the children there are additional toys in all the three competitors.

The Customers

Consumers are able to act in five different roles during a buying process. Sometimes, different people act in these roles and sometimes only one person covers all.

The five roles are:

Initiator: Communicates a purpose

Influencer: Makes suggestions and communicates opinions

Decision maker: Says what will be bought when and where

Purchaser: Executes the buying

User: Uses the product or the service

(Hollensen 2003, 144)

The total market is often too big that not all consumers could be reached. For this reason a segmentation of the market, which means to make a selection of the relevant target group, is necessary. The first step is market segmentation, the classification of the market into a well-defined target group. The second part will be definition of the target group, which includes the specification, and choice of the most attractive market segment.

Sometimes there is a Burger King available; the customer is not in the mood to eat this kind of fast food. Continuing from the processed set the customer has to make his first (consideration set) and second (KFC) preference, while McDonald’s has been rejected. According to Subway’s statement on their website :

“The goal of the chain’s current advertising campaign is to increase the brand presence in the consumers‟ “consideration set”–that is, which fast-food restaurants consumers consider when deciding where to eat.” This graphic shows an example of how customers‟ information research during the buying process of fast food and how it can take place and affects their buying behavior.

The next step is the cognitive process valuation, about the product and offers. The consumer anticipated advantage convenience of one product. The review of the advantages will be based on personal experience, the brand image and the weighing of the product characteristics. (Hollensen 2003, 118-123.)

The fast food industry and the offered products do not obtain high.This has two reasons. To buy fast food, the customer must not be aware of any technical knowhow and does not have any risk of diseases which might occur when eating too much fast food when choosing the wrong product (meal). The price level is compared to other products, low. These factors make the decision making process (with information research) not relevant compared to high technical or high price products.

Conclusion