Subway Marketing Management Case Analysis

Marketing Management Case Analysis

Subway® Sandwich Shops

Abstract

Subway® Sandwich Shops was founded in 1965, and has been franchised into the hearts and stomachs of families all around the world. This highly successful sandwich shop was the dream of high-school graduate Fred DeLuca. With the financial help of long-time friend Dr. Peter Buck, Fred opened the first Subway ™ Sandwich Shop in Bridgeport Connecticut in 1965. By 1974, the pair had opened over 16 shops around Connecticut. In the year 2004, the SUBWAY® chain entered its 39th year of operation. It is the world’s largest submarine sandwich chain with more than 21,000 restaurants in 75 countries. As a matter of fact, the SUBWAY® chain operates more units in the US and Canada than McDonald’s® does (www.subway.com). Subway® currently operates 23,983 restaurants in 84 countries, and because of its’ marketable success, the company was selected to be the subject of a marketing analysis.

The fast food landscape continues to evolve, and one of the most dynamic segments within the Quick Serve Restaurants market continues to be sandwiches, subs and wraps. Driven by consumer interest in healthier food choices and a growing demand for premium ingredients, sandwich chains are expanding locations as well as variety. In real terms, the sandwich, subs and wraps market has grown 70% since 1999, or from $9.9 billion to an estimated $16.8 billion in 1999-2004. Primarily Subway®, Quiznos, and Panera Bread have fueled growth and momentum. Regional chains have also seen significant revenue growth, contributing further momentum to the marketplace. Growth is driven through a combination of aggressive franchise strategy coupled with tactical marketing campaigns and innovative menu concepts that appeal from both a demographic, as well as a health standpoint (Mintel Int’l Group, 2005).

In response to its newfound competition, Subway® has responding with the following efforts. One effort to build sales units included adding a breakfast menu at 500 locations. In addition, Subway® has introduced specific value priced items to compete with McDonald’s and other value positioned franchises. Finally, subway has expanded into non-traditional markets such as:

• airports

• amusement parks

• business centers

• coliseums and stadiums

• colleges and universities

• convenience stores

• convention centers

• hospitals

• military bases

• recreational facilities

• elementary and secondary schools

• supermarkets

• travel centers/truck stops

(www.subway.com, 2005)

As expected, Subway’s customers tend to visit their location during lunchtime; however, a few customer demographics are unique to the sub chain, specifically, “demographics skew much younger and single” than the competition. In addition, Subway® is skewed towards western regions of the country and upper middle class customers (Wood, Robin 2002).

The target for the SUBWAY® chain's media buying is adults aged 18-49, in order to maximize our buying power with a skew toward programming that delivers better to the younger 18-34 audience. 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. It is doing this by continuing to build the brand on the "freshness" platform. The SUBWAY® chain is expanding its universe of potential customers as a place for "TASTY" and "HEALTHY" food. This positioning, communicated via an effective advertising campaign, will serve to make the SUBWAY® chain part of customers’ everyday consideration set (www.subway.com, 2005).

SWOT Analysis

Strengths

• Satisfies the need for convenient, value-oriented products that taste good

• Health appeal - providing healthier alternative