Third Largest Fast Food Chain Marketing Essay

1751 words (7 pages) Essay

1st Jan 1970 Marketing Reference this

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Subway chain is the third largest fast food chain in the world after McDonalds 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 headquarters are now situated. (Subway Malaysia)

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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.

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

Every business is affected by countrywide and worldwide economic factors. The climate of the economy dictates how clients, sellers and other organisational stakeholders such as suppliers and creditors act in society.

Subway is governed by capitalist economy as its economy is governed by market forces and the means of production are owned by individuals.

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. Subsequently, people might cut down on expenses in their everyday life. One consequence may be that they reduce visits to restaurant. It can be considered advantageous that they reduce visits to more expensive restaurants and instead visit cheaper fast food chains. In that an opportunity would arise for fast food chains like Subway. People do not want to relinquish totally going out for lunch or dinner; 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.

http://www.triplepundit.com/2011/09/subway-introduces-eco-restaurants/

http://www.qsrmagazine.com/executive-insights/subway-effect

Socio-Cultural Element

The second aspect of PEST focuses its attention on social forces affecting attitudes, interests and beliefs. These forces determine who we are as people, the way we conduct ourselves and finally what we buy. 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. Thus, in Malaysia, the amount of people joining fitness clubs is rising and there is a huge increase in the demand of organic/healthy food. There is also a trend towards quick food as people work a lot and do not have so much time for cooking.

Hence, organisations must be able to offer products and services that seek to balance and profit people’s way of life and conduct. Organisations will lose market shares and the demand for their products or services will decrease if they do not react to changes in society.

Since people are more health conscious, they prefer to eat healthy fast foods. Subway is the only fast food restaurant that provides healthy complete meals while giving nutrition advice on their website.

Subway Restaurants is the first fast food restaurants in the Industry to meet and obtain the American Heart Association’s. “Being the first restaurant to meet the stringent nutritional standards required for the American Heart Association’s, Heart-Check Certification program is another health milestone for Subway Restaurants” said Tony Pace, Sr. Vice President, Global Chief Marketing Officer of the Subway Brand.

For instance, the menu in the subway restaurant changes according to its location, state and country. In Muslim Countries like Malaysia, Iraq and Pakistan, the menus exclude ingredients which are not halaal such as pork. In India, the menus will not have beef. Yet, the core sandwich items are kept. These examples show how the socio-cultural element has contributed to the success of subway.

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 control the enterprise to some degree. It is the task of management to evaluate these variables and their influence on the business, to propose strategies to exploit the opportunity in the market environment and to work against threats from competitors to guarantee the lasting survival of the business. (blurtit.com)

The Competitors

Three main competitors were chosen to be analysed more closely since they are considered to be the biggest threat. These three are McDonald’s, Burger King and KFC and like Subway, they are all fast food chains. Moreover, all three have a significant market position in Malaysia. Obviously, there is many more competing within the fast food business. For instance, a family of four would often be seen at for example Subway, but it would be rare 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 Hence, 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 Subway, it can be noticed that they offer healthier products to the customers, for example whole wheat bread instead of plain bread or sandwiches instead of hamburgers.

Subway also offers special meals during some events for example a Ramadan meal during the Ramadan month where the meal was available early. It was also cheaper and healthier compared to the meals that McDonald’s, KFC and Burger King offered.

Fierce competition has improved the ability of Subway to innovate by inventing new meals which are healthy, fresh and not expensive. Consequently, the loyalties of its customers have improved.

Subway demonstrated their commitment to customer service by publishing the nutritional value of all its products in their outlets as well as giving free nutritional advice on which food one should take. This swayed customer loyalty towards Subway, even if the products and services it offers are comparable to those offered by competing businesses.

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)

Understanding what customers want is fundamentally in order for a restaurant to implement their marketing strategies.

Sometimes burger king may be easily available; the customer will prefer to buy a Subway since it provides fast and healthy meal choices.

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 shows an instance of how consumers’ information research during the buying procedure of fast food and how it can take place and influence their buying behaviour.

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When a person is satisfied with a company, they will share their experience with other. As a result the power has now shifted to the customer. There is a strong link between customer satisfaction and retention. It is far less costly to keep existing customers than to win new ones.

Subway built lasting relationships with customers by focusing their whole organization on understanding what the customers want and on providing them superior quality, reliability and service. As a result, customers are contributing to Subway’s success.

Conclusion

We have analysed how mega environmental factors and task environmental factors have contributed to the success of subway. Owing to the economical crisis, Subway’s sales have increased significantly as people want to buy healthy food at a cheaper price. Socio-cultural element can result for important shifts in demand of a product. As we have seen previously, people increased health awareness makes them buy Fast food from subway more than from any other competitors such as Mc Donald’s as subway offer fresh and healthy food with less fat. Competitors are an important factor in the success of any company. For subway restaurants, it has enabled them to innovate and provide better service so as to satisfy customers and obtain their loyalty. They also have special meals which their competitors do not offer and consequently they are more successful. The customers and clients are one of the most important factors to the success of any company. They are in fact the key to the success of subway as subway is adapting and adjusting its meals according to customer’s wants and preferences which make them come back for more.

Subway chain is the third largest fast food chain in the world after McDonalds 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 headquarters are 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.

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

Every business is affected by countrywide and worldwide economic factors. The climate of the economy dictates how clients, sellers and other organisational stakeholders such as suppliers and creditors act in society.

Subway is governed by capitalist economy as its economy is governed by market forces and the means of production are owned by individuals.

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. Subsequently, people might cut down on expenses in their everyday life. One consequence may be that they reduce visits to restaurant. It can be considered advantageous that they reduce visits to more expensive restaurants and instead visit cheaper fast food chains. In that an opportunity would arise for fast food chains like Subway. People do not want to relinquish totally going out for lunch or dinner; 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.

http://www.triplepundit.com/2011/09/subway-introduces-eco-restaurants/

http://www.qsrmagazine.com/executive-insights/subway-effect

Socio-Cultural Element

The second aspect of PEST focuses its attention on social forces affecting attitudes, interests and beliefs. These forces determine who we are as people, the way we conduct ourselves and finally what we buy. 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. Thus, in Malaysia, the amount of people joining fitness clubs is rising and there is a huge increase in the demand of organic/healthy food. There is also a trend towards quick food as people work a lot and do not have so much time for cooking.

Hence, organisations must be able to offer products and services that seek to balance and profit people’s way of life and conduct. Organisations will lose market shares and the demand for their products or services will decrease if they do not react to changes in society.

Since people are more health conscious, they prefer to eat healthy fast foods. Subway is the only fast food restaurant that provides healthy complete meals while giving nutrition advice on their website.

Subway Restaurants is the first fast food restaurants in the Industry to meet and obtain the American Heart Association’s. “Being the first restaurant to meet the stringent nutritional standards required for the American Heart Association’s, Heart-Check Certification program is another health milestone for Subway Restaurants” said Tony Pace, Sr. Vice President, Global Chief Marketing Officer of the Subway Brand.

For instance, the menu in the subway restaurant changes according to its location, state and country. In Muslim Countries like Malaysia, Iraq and Pakistan, the menus exclude ingredients which are not halaal such as pork. In India, the menus will not have beef. Yet, the core sandwich items are kept. These examples show how the socio-cultural element has contributed to the success of subway.

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 control the enterprise to some degree. It is the task of management to evaluate these variables and their influence on the business, to propose strategies to exploit the opportunity in the market environment and to work against threats from competitors to guarantee the lasting survival of the business. (blurtit.com)

The Competitors

Three main competitors were chosen to be analysed more closely since they are considered to be the biggest threat. These three are McDonald’s, Burger King and KFC and like Subway, they are all fast food chains. Moreover, all three have a significant market position in Malaysia. Obviously, there is many more competing within the fast food business. For instance, a family of four would often be seen at for example Subway, but it would be rare 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 Hence, 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 Subway, it can be noticed that they offer healthier products to the customers, for example whole wheat bread instead of plain bread or sandwiches instead of hamburgers.

Subway also offers special meals during some events for example a Ramadan meal during the Ramadan month where the meal was available early. It was also cheaper and healthier compared to the meals that McDonald’s, KFC and Burger King offered.

Fierce competition has improved the ability of Subway to innovate by inventing new meals which are healthy, fresh and not expensive. Consequently, the loyalties of its customers have improved.

Subway demonstrated their commitment to customer service by publishing the nutritional value of all its products in their outlets as well as giving free nutritional advice on which food one should take. This swayed customer loyalty towards Subway, even if the products and services it offers are comparable to those offered by competing businesses.

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)

Understanding what customers want is fundamentally in order for a restaurant to implement their marketing strategies.

Sometimes burger king may be easily available; the customer will prefer to buy a Subway since it provides fast and healthy meal choices.

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 shows an instance of how consumers’ information research during the buying procedure of fast food and how it can take place and influence their buying behaviour.

When a person is satisfied with a company, they will share their experience with other. As a result the power has now shifted to the customer. There is a strong link between customer satisfaction and retention. It is far less costly to keep existing customers than to win new ones.

Subway built lasting relationships with customers by focusing their whole organization on understanding what the customers want and on providing them superior quality, reliability and service. As a result, customers are contributing to Subway’s success.

Conclusion

We have analysed how mega environmental factors and task environmental factors have contributed to the success of subway. Owing to the economical crisis, Subway’s sales have increased significantly as people want to buy healthy food at a cheaper price. Socio-cultural element can result for important shifts in demand of a product. As we have seen previously, people increased health awareness makes them buy Fast food from subway more than from any other competitors such as Mc Donald’s as subway offer fresh and healthy food with less fat. Competitors are an important factor in the success of any company. For subway restaurants, it has enabled them to innovate and provide better service so as to satisfy customers and obtain their loyalty. They also have special meals which their competitors do not offer and consequently they are more successful. The customers and clients are one of the most important factors to the success of any company. They are in fact the key to the success of subway as subway is adapting and adjusting its meals according to customer’s wants and preferences which make them come back for more.

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