UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
1.0 Executive Summary
The main objective of this assignment is to develop a new product for Subway by
applying basic concepts of marketing and concentrate on other important elements such
as the marketing mix, marketing environment and marketing research methods.
The first part of the report begins with the history and background of the Subway
Company. This will included the co-founder of Subway and success story of the famous
sandwich shop. Next, the report is follow by the studies on current market situation of
Subway where we will discuss about the current demand and position of Subway in
market. As an addition, SWOT analysis also be done to further inspects Subway based on
different angle.
Upon completed the analysis part, new objective and mission for the newly
introduced product will be determined. Few elements that made up the mission are it
must be meaningful, specific, motivating and focus on establishing a greater experience
on customers rather than merely focus on profits.
On top of that, the marketing mix strategies which consist of the 4 Ps are the
main elements to discuss in this report. In short, this report has covered almost every
aspect of the fundamental and concept in marketing
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
2.0 Introduction and Background of Subway
Subway is a well-known multi-billion business which has 41,416 different outlets in
104 countries, and the number of expansion is still growing in future. (Subway.co.uk
2014) This highly recognizes Sandwiches Companys was first founded by Fred De LuCa
in 1965 and located at Connecticut, USA. (SUBWAY - Eat Fresh 2014) The first
sandwiches outlet was formed under partnership with Dr Peter Buck and known as Petes
Super Submarines in August 1965. The name has been shortened to SUBWAY and the
familiar bright yellow logo.
The evolution of Subway started when they began to welcome franchising which
gave them an opportunity to expand the business internationally and provide chances for
others to pursuit succeed in their own business venture. The earliest subway franchise
was opened in 1974 in Connecticut. (Referenceforbusiness.com 2014)
Today, this famous fast food restaurant is one of the world largest sandwich chain
and always the prime choice for customers who seek for quick, nutritious, fresh and
delicious order. (Subway.com 2014) This is aligned with their ambitious which is; Eat
Fresh, Live Green. Through this slogan, Subway is committed to make a positive impact
towards the society. (SUBWAY - Eat Fresh 2014)
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
3.0 Current market situation
The main objective of Subway is healthy eating. (SUBWAY - Eat Fresh. 2014) It offers
an alternative to traditional fast food such as burgers and fries. On top of that, Subway
also offered different kind of fresh sandwiches and customers always has an opportunity
to choose how their sandwiches to be served. (SUBWAY - Eat Fresh. 2014)
Variety of Subway ingredients offered based on customers choices
Subway offers the following products: (SUBWAY - Eat Fresh. 2014)
12 Monterey cheddar bread
69-Grain wheat Bread
3steak, Egg white & cheese
6cheese & egg breakfast sandwich
birthday berry cookie
Chocolate chip cookie.
pizzas
salads
sandwiches
smoothies
Now, Subway has 41,813 stores in 106 countries worldwide retail and the number of
the outlets will keep growing as the trend of eating healthy getting popularize over the
3
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
years. (Subway.co.uk. 2014) Subway is listed as the third best-selling fast food after Mc
Donalds and KFCs.
It is the market leader in the sub and sandwiches shops which offer healthier food
choices to customers. The annual sale of Subway exceeds $6.3 billion and has a larger
market share after Mc Donald. As evidence, we have included the result revealed by
analysis done on the fast food chain regarding to the ranking and position of the top 50
fast food restaurant below.
Ranking and Position of Fast Food Restaurant
As we can see, Subway is ranked on the second among the top fast food
retail shops. However, McDonald who is still ahead among the fast food restaurant
topped the list.
An analysis on the product life cycle (PLC) which divides the product into
4 different stages has been applied. Based on forecast done by an institution regarding to
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
the sales and growth of Subway in 2007-2008, Subway is expected to experience a
further growth even though the growth is slightly lower than that of 2002-2007. The
result displayed that Subway has greater market opportunity for further develop in
business as currently it still fall within the growth level.
This is supported with the current trend where people are seeking for
greater health and wellness through organic and healthy eating. Therefore, this has
provides a standing ground for Subway to established a distinctive position in customers
whenever come to the trend of low-fat diets.
.
The diagram above shows the increasing number of subway franchise worldwide.
One of the reasons that support the rapid growing of Subway chain are it offers a program
and information resources to equip entrepreneurs with the necessary skills and knowledge
needed. (Subway.co.uk, 2014)This will include the quality of the product, location
flexibility and operational support for staff. (SUBWAY - Eat Fresh. 2014)
4.0 SWOT Analysis on Subway
UC1F1308AF
Asia Pacific University (APU)
Strengths
Weaknesses
1. One of the largest food chain (more
than
BM012-3-1-MKG
30,000
locations
in
1. The employees do not work for
90
Subway for a very long time
countries) in the world which
resulting in high rate of employee
results in worldwide recognition
turnover.
2. The service delivery is inconsistent
and high brand loyalty.
2. It provides a variety of fresh,
throughout different stores; in some
healthy and tasty fast food, with
stores
specified number of calories and
service.This shows that Subway has
detailed nutrition facts for health-
poor control over their worldwide
conscious people.
3. Display all the food hygienically so
stores.
3. The decoration and set-up are not
that customers are able to choose
that attractive, and the restaurants
according to their own tastes and
lack
preferences.
4. They show
they
provide
comfort
which
quick
tends
to
promotional
discourage dine-in.
4. It lacks facilities such as home
strategy, such as offering coupons,
delivery and drive-through, which
compared
could really speed up the process of
to
good
other
fast
food
restaurants.
delivering food to customers, and
therefore can drive customers to
buy
from
another
fast
food
restaurant which provides these
facilities.
Opportunities
Threats
1. Subway has the possibility of
1. Competitors such as McDonalds,
growing even more global.
2. Since the world is more and more
KFC which exist since a long time.
2. The spending power of consumers
concerned
about
eating
clean,
is
affected
due
to
economic
Subway has a lot of cope for
recession, and thus acts as a threat
introducing more healthy products.
3. Subway has the possibility of
for Subway.
3. Lawsuits against Subway which
providing home delivery and drive-
were the results of poor managing
through.
ability and this have result in
6
UC1F1308AF
Asia Pacific University (APU)
4. Frequent innovations of the menu
BM012-3-1-MKG
Subway losing money.
4. One cashier system can be seen as
such as introduce a different flavor
low efficiency of the restaurant.
or new desserts to stay in trend with
the market and to attract customers.
5.0 Marketing Objectives
1) To provide student of APU with fusion food and totally difference recipe.
2) Achieve goal by introducing nutritious food through eating experience in which
provide the sufficient nutrient for their body.
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
3) Improve our services with greater values through providing quick, fresh and
delicious meal.
4) Boost overall company profits and looking forward to serve customer to delighted
and satisfactory level.
5) Be the world number one in Quick Service Restaurant (QSR), while maintaining a
great tasting freshness and health conscious sandwich restaurant.
6) Boost sales by 80% with introducing a new halal product which acceptable by all
the people around the world especially the Muslim customers.
6.0 Marketing Mix 4P
6.10 Product
The lasagne is one of the most favourite dishes in Malaysia; Subway is trying to
incorporate this flavours and textures with a twist of the combination of healthy nutrition
into their menu.
8
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
The newly developed product known as the Lasagne Toast which prepared by precook handmade lasagne with meat, mushrooms, broccolis, mozzarella cheese, bell
pepper, fresh tomato (for meat sauce), and onions which fused with mozzarella cheese inbetween two whole meal toasted bread.
The main idea of Lasagne Toast introduced by Subway is to acknowledge the
customer on the variety of the dishes especially the taste and textures. Most often, lasagne
is served with a bun or salads on a side of the plate. The main differences of the Lasagne
Toast introduced by Subway is in their various healthy and fresh ingredients which
promote low fats and calories diets in contrast with the original recipe which contain high
fats and oils.
In addition, the ingredients used and preparation method also take into the
consideration of halal issues which is a serious matter for Muslim religion. With the
growing population of Muslim throughout the world, Subway has to be feasible to change
and improve their product to cater customers from different background.
In short, Subways hope that the customers able to experience the two types of
food textures which is lasagne and bread in one bite of Lasagne Toast. And not least, the
Lasagne Toast can be easily carried and eat while you in hurry as the food will be wrap
with aluminium foil to keep it warm and convenient.
6.11 Lasagne Toast Ingredient & Gallery
UC1F1308AF
Asia Pacific University (APU)
a) Meat Sauce (Chicken/beef)
BM012-3-1-MKG
Ingredients for Lasagne Toast
- Tomato (base sauce)
- Olive Oil
- Mushrooms
- Minced
meat
(beef
and
b) Lasagne
c) Lasagne Toast
chicken)
Onions and garlic
Bell and yellow pepper
Cabbage
Thyme and rosemary
Lasagne sheets
Milk
Mozzarella and Parmigiano-
Reggiano Cheese
Meat Sauce
Lasagne
Bread
Mozzarella Cheese
6.12
Comparison
of Competitors Product
Restaurant
Dish
Size
Subway
Secret Recipe
Pizza Hut
Lasagne Toast
Lasagne
Seafood Lasagne
Medium size dish- Larger size dish and Large size dish and
which
easily very inconvenient to thus
consume and have
inconvenient
10
very
to
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
shorter time period carry around
to
consume
carry
around
and
and
because
of
the
- Cause nausea due to
excessiveness
its
huge portion size
causes nausea hence
which contributes to
slow
down
the
excessiveness hence
digestion.
slow
down
the
digest.
digestion.
Lasagne
Toast- Secret
introduced
Recipe Pizza Hut lasagne
by lasagne contains 2 does not have any
Subway contains 2 choices
Variety
choices
which
of
is
of
meat variety, they only
meat which is beef and serve
seafood
chicken chicken without any lasagne.
and beef included greens.
with broccoli.
Subway
use Secret Recipe use
Pizza
Hut
aluminium foil to plastic packaging to
plastic
packaging
wrap lasagne toast contain their lasagne
to
mainly to keep the because it is low
lasagne because it
food
is low cost and
warm
and cost
aluminium
and
foil resistance
impervious to light, releases
Packaging
moisture,
gases, when
water
but
it
chemical
exposed
to
contain
water
but
use
their
resistance
it
releases
chemical
when
bacteria, and odours heat (hot food) and
exposed
but its easy to tear create vapour in the
(hot
and
thus
create vapour in
except heavy duty reduce food quality
the container thus
aluminium foil.
and also cant keep
reduce food quality
the food warm.
and also cant keep
poke
holes container
to
heat
food)
and
the food warm.
11
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
6.2 Place
Place also known as channel or distribution which been use by the company to
distribute the product or the service to the end user at the right place.
The type of distribution can be divided into direct and indirect. Direct distribution
involves distributing directly from manufacturer to the end user whereas indirect
distribution involves distributing the product or the service to a wholesaler and then on to
the retailer where it involve several middleman. ()
Nowadays, Subway franchise has become the largest submarine sandwich chain
worldwide where their major selling location included franchisee shops, airports,
amusement park, business centers, colleges, convenience stores, shopping mall and
nearby supermarkets.
Subway has been applying both types of distribution channel, direct distribution is
12
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
always the primary choice where customers will visit the restaurants and make their order
based on their preferences. The advantage of direct sell is the direct contact with
customers where they will witness how well the food being handled and the freshness of
the ingredients. Therefore, Subway is going to apply the same distribution channels for
the newly introduced product which is the Lasagna Toast.
DIRECT SELL
CUSTOMERS
DIRECT DISTRIBUTION FLOW OF SUBWAY
6.3 Price
Price is defined as the amount of money customers pay to obtain a product (Kotler
Armstrong, 2010). Further defined as the sum of all values that customer exchanges for
all the advantage obtained for using and having the product or service (Kotler &
Armstrong, 2012: p.290).
Our pricing challenge is to find a price whereby subway receives a fair profit, a large
market share and the customers receive a value for money meal. Both internal and
external factors affect the companys pricing decisions. The factors that subway should
take into consideration before setting price are:
Customer value-there will be no demand above price ceiling.
Product cost- There is no profit below price floor.
Internal- marketing strategy, objectives and marketing mix and organizational
factors.
13
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
External- The nature of market and demand, competition, reseller needs and other
environmental considerations.
This challenge link to the major pricing strategies which are:
Pricing Strategy
Cost-based pricing
Definition & technique
Fair profit refers to the cost-based
pricing strategy. It refers to the cost
of production, distribution and sales,
adding up a percentage of fair
profit. Company and product costs
are important element that should be
considered
in
price
setting
as
Subway produces its own product
for sales. It should make sure that it
covers its manufacturing costs. It
also set the price floor i.e. the
minimum price to be paid by the
14
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
customer.
Customer value-based pricing
This is a price setting strategy
whereby price is set based on
customer perception rather than
sellers cost. The ceiling price is set
by the customers perception on the
products value. If a customer feels
the product is less worth that its
value, they will not buy.
However, Subway has to set a price
whereby it covers the sellers cost as
well as the customers perception.
Thus it should offer a value for
money food.
Competition-based pricing
This is a pricing strategy based on
competitors costs, prices, strategies and
market offering. Customers gives a
value to the product compared to the
same product of other companies.
Subway shall set a price whereby it
is more competitive than other
firms. In this case, Subway will not
find difficulty as it will have a high
market share. This is because the
product is quite unique.
15
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
In short, set a right pricing strategy is very important for the new product because
it will affect the sales volume of the lasagna toast in the Market. Lasagna toast will set a
cheaper price that similar to Subway competitors normal product so that the demand of
the product will be rise. This price of the product will be fix in a year for observe and
may range around RM 15- RM 20.
16
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
6.4 Promotion
6.41 Advertising
In order for Subway to communicate its message to the world, advertising is one of
the ways selected to achieve this target. By definition, advertising is any paid form of
non-personal presentation and promotion of ideas, goods, or services by an identified
sponsor. ( Kotler, P. 1997).
To promote the Lasagna Toast, the company will make use of billboards in famous
shopping malls and on some highways in order to display the new product and also the
time and day of the launching. More details, such as, coupons and free trials will be
mentioned on the billboards.
Furthermore, as Facebook is known and used by everyone, Subway will make use of
this media to promote the Lasagna Toast through its official page on Facebook, which
has more than 100,000 likes. By posting a picture of the new product, it will be known to
everyone.
6.42 Sales promotion
Sales promotion refers to the process of persuading a potential customer to buy a
product and usually last for a short period which aim is to boost sales. Sales promotion
can be in the form of free samples, coupons, competition, discount vouchers, free gifts,
loyalty cards and others.
To promote our new product Lasagna toast, we will be giving free samples for trial
on the purchase of any sandwich for first 100 clients. Also we will give coupons to our
clients on the purchase of our new product. The coupons will contain free drinks and
17
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
cookies. We can even give customers promotional price when the product launching.
6.3 Direct selling
Direct selling is a dynamic and vibrant expanding channel of distribution for the
marketing of products and services directly to consumers. Direct selling can best be
described as the marketing of products and services directly to consumers in a face to
face manner.. Direct sales typically occur through explanation or personal demonstration
by an independent direct salesperson.
We will advertise our product by attracting customers at the foyer where we will
display our new dish and make them taste our Lasagna Toast. There will be direct
contact between the sellers and customers.
6.4 Word-of-mouth
Through Subways strategy of promotion; giving out samples to first 100
customers in the initial stage can help build customer relationship simply because the
Lasagna Toast is so tasty. Indirectly, it formed a positive word-of-mouth which is a
great way for the new Lasagna Toast to be spread out to the world quickly. Customers
personal experienced on the newly introduced product will shaped a promotion tools and
hopefully able to attract more customers.
18
UC1F1308AF
Asia Pacific University (APU)
Advertisement for Lasagne Toast
19
BM012-3-1-MKG
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
7.0 Recommendation & Conclusion
7.1 Conclusion
By incorporating various marketing strategy on the newly introduced product,
Subway hope that it able to make greater growth and attract even more customers. With
the Lasagne Toast, Subway also tries to provide customers who are health concern with
additional variety and option by reducing the amount of salt, oil, and trans-fat. This also
adheres to the Gold Standard Food Safety and Quality Policy. (SUBWAY - Eat Fresh
2014)
The current market situation which shows a high correlation on healthy eating trend
has provide Subway an edge and potential to further expand its business. Therefore, the
newly introduced Lasagne Toast has a competitive advantage and provide customers a
new option which is delicious and healthy.
In Short, Subway has made a great success story in their own history and every step
taken has a positive impact on customers, franchisee, employees, vendors and
communities throughout the world. The journey and vision of Subway will always be
taken seriously and responsibly. (SUBWAY - Eat Fresh 2014)
20
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
7.2 Recommendation
Subway is an international well-known brand with the slogan eat fresh; it always
delivers greater value and benefits to the customers. Besides, all kinds of support and
assistance also extended to the franchisee, for example site selection, restaurant design
and food handling and quality control.
In order for Subway to further enhance their services and serve greater number of
customers, the giant sandwich shop should stress on the brands focus which distinguish
them from others. The goal is to create greater awareness and message to the customers
that Subway is more than just tasty food, it also provide food that rich in nutrients nad
healthy.
Also, this could be done through promotion activities like Today-Specials Menu,
free drinks and other performances that is very useful to communicate it brands image to
customers especially the kids and youth which is their main target market.
In conclusion, Subway is committed to provide customers with a wide range of great
tasting, healthier food choices and create a positive influence in the communities around
the world.
21
UC1F1308AF
Asia Pacific University (APU)
BM012-3-1-MKG
(2254 words)
References
1.
Referenceforbusiness.com. 2014. Subway - Company Profile, Information, Business
Description, History, Background Information on Subway. [online] Available at:
http://www.referenceforbusiness.com/history2/11/Subway.html [Accessed: 19 Mar
2014].
2.
SUBWAY - Eat Fresh. 2014. SUBWAY - Eat Fresh. [online] Available at:
http://www.subway.co.uk/media/history.aspx [Accessed: 19 Mar 2014].
3.
SUBWAY - Eat Fresh. 2014. SUBWAY - Eat Fresh. [online] Available at:
http://www.subway.co.uk/aboutus/our-commitment.aspx [Accessed: 19 Mar 2014].
4.
SUBWAY - Eat Fresh. 2014. SUBWAY - Eat Fresh. [online] Available at:
http://www.subway.co.uk/aboutus/our-people-communities.aspx [Accessed: 19 Mar
2014].
5.
Subway.co.uk.
2014.
SUBWAY
Eat
Fresh.
[online]
Available
at:
http://www.subway.co.uk/business/franchise/facts_and_history.aspx [Accessed: 19
Mar 2014].
6.
Subway.com.
2014.
Subway
History.
[online]
Available
at:
http://www.subway.com/subwayroot/about_us/history.aspx [Accessed: 19 Mar 2014].
22
UC1F1308AF
7.
Asia Pacific University (APU)
BM012-3-1-MKG
Subway.com. 2014. Official SUBWAY Restaurants' Nutrition Information;. [online]
Available at: http://www.subway.com/nutrition/nutritionlist.aspx [Accessed: 19 Mar
2014].
8.
Liutu, R. (2010) Subway Market Research. Saimaa University of Applied Sciences,
Lappeenranta.
9.
Subway SWOT analysis 2013 | Strategic Management Insight. 2014. Subway SWOT
analysis
2013
Strategic
Management
Insight.
[ONLINE]
Available
at:http://www.strategicmanagementinsight.com/swot-analyses/subway-swotanalysis.html.
10. SUBWAY - Eat Fresh, (2014). SUBWAY - Eat Fresh. [online] Available at:
http://www.subway.co.uk/menu/default.aspx [Accessed 11 May. 2014].
11. SUBWAY - Eat Fresh, (2014). SUBWAY - Eat Fresh. [online] Available at:
http://www.subway.co.uk/aboutus/default.aspx [Accessed 18 May. 2014].
12. Subway.co.uk,
(2014). SUBWAY
Eat
Fresh.
[online]
Available
at:
http://www.subway.co.uk/business/franchise/why_choose_subway.aspx [Accessed 11
May. 2014].
13. Subway.co.uk,
(2014). SUBWAY
[online]
Available
at:
http://www.subway.co.uk/business/franchise/support_network.aspx
[Accessed
11
May. 2014]
23
Eat
Fresh.
UC1F1308AF
Asia Pacific University (APU)
24
BM012-3-1-MKG
