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Subway (restaurants) is an American fast-food franchise owned by Doctor’s Associates, Inc and operating globally in 96 outlets. Subway was founded by Peter Buck and Fred DeLuca, with its first restaurant being set up in Bridgeport, Connecticut, U.S in 1965 (Subway website). The franchise has since grown and operates in 96 countries and runs 34,166 restaurants globally (Subway website). The franchise which mostly concentrates on the sale of submarine sandwiches, personal pizzas and salads is considered the second largest restaurant franchise in the world after Yum! Brands which currently have 37,000 outlets; and the largest single-brand restaurant franchise in the world (Hoovers, 2011; Most interesting facts, 2011). Subway is currently owned by Doctor’s Associates, Inc. and manages the outlets through regional offices in Amsterdam, Brisbane in Australia, Beirut in Lebanon, Singapore and India among other places. It is one of the fastest growing franchises (Entepreneur, 2011).
In a market that is growing increasingly competitive, it is highly imperative for an organization to develop proactive actions to be used in enhancing its competitive advantage (Butler, 2006). Among the most effective ways to enhance competitive advantage is through the use of effective marketing strategies which in effect denote the need for a marketing plan (Aswathappa, 2006). This report constitutes of a marketing plan for Subway Restaurant, an American franchise that managed to become one of the fastest growing franchises in the globe. The completion of the report will culminate in a marketing plan that examines the situational analysis of the environment, the SWOT analysis, the marketing strategy and objectives, promotional strategies, implementation schedule and timeline.
The Subway (restaurant) franchise exists in a highly competitive environment and it is certain that there are various factors; both internal and external which affect its competitiveness. The factors are discussed as follows:
The company’s employees are guided by a well respected culture of customer service and the provision of quality products (SUBWAY Operations Manual, 2008). These are factors that have promoted the growth of the restaurant franchise over the years.
The company’s main strength in the context of increasing competition is the fact that it offers healthy meals. Its submarine are said to have not more than 6 grams of fat. Through its advertising campaign in which the ‘Subway guy’ , Jared lost 245 pounds by strictly following a Subway diet, the franchise sought to have an upper hand in the healthy food category (Daniels & Monroe, 2010).
In order to capture the growing trend of internet use around the world, Subway has introduced online ordering whereby customers can order their food on their website and have it delivered without having to visit the restaurant.
Subway is highly committed towards the community and this is accomplished through environmental conservation - through the going green initiative; enhancing diversity; teamwork; and creating entrepreneurial spirit through providing opportunities for people to run Subway outlets (Subway website).
Subway if currently performing well financially; and remains one of the largest fast food outlets. One of the greatest strengths for Subway is that it enjoys global presence and is highly preferred across the customer fraternity.
The fast food business is highly competitive and the Subway restaurant has to compete for market with the likes of McDonalds, Quiznos, Greggs, Pizza Hut, Yum! Brands, Taco Bell, KFC, Long John Silver's, Jack in the box and Wendy’s (QSR, 2009). This denotes the need for Subway to be innovative and to conduct rigorous marketing in order to retain the market.
Legal factors that have affected the company so far include patent right issues and taxation issues. An example occurred in the year 2010 when Subway, UK lost to the high court in an appeal to pay a standard Value Added Tax (VAT) on its toasted Subs. This was a significant loss for Subway which on the contrary does not pay taxes for cold Subs. Further, other premises do not pay VAT in similar food (Howlander, 2011). The franchise also lost to Casey’s convenience stores in January 2011 when the franchise lawyer demanded Casey to cease from using “footlong” in advertising their 12 inch sandwiches and in turn Casey’s filed a case against Subway (Welte, 2011). Subway has a campaign dubbed ‘footlongs’ which also represents their $5 Foot-long marine sandwiches.
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The franchise is likely to be affected by economic fluctuations that threaten the purchasing power of buyers. An example is the recent global economic crisis that affected the profitability of most companies.
Political factors also threaten the franchise, given that it operates internationally. Changes in regulations and changes of governments for example could impact on the business requirements in difference countries.
Market leader: Subway is the world’s largest single-brand franchise and operates in 96 countries
Brand recognition throughout the world mostly due to its presence in the most traditional places including schools, hospitals and popular stores such as Wal-Mart thus lowering its advertising costs
Healthy food options including healthy subs sandwich enhance popularity. Subway has partnered with American Heart Association (Subway website).
High level profits due to large market coverage
Global presence insinuates that more customers can be reached and that it can take advantage of openings in these countries.
Lack of uniform performance among franchises: Subway has been criticized for lack of uniformity in performance among franchises such that a different kind of image is created every time a person visits a different Subway (Free Swot, 2011).
Varying service commitment: Customers are likely to obtain better service in some restaurants and unpleasant service in others thus raising the question of common goals.
Bread nutritional content: Subway has come under scrutiny due to the use of more corn syrup which is high in fructose as opposed to the use of whole grains (Nelson, 2010).
Restricted suppliers: Restaurants have to purchase products from selected Subway suppliers thus limiting their selection capacity and bargaining power.
Universal control: Universal control insinuates that the activities of the group are controlled from a central position; thus limiting autonomy in branches.
Poor diversification: Subway offers a limited range of products as opposed to other fast-food restaurants thus limiting their potential.
Competition from other fast food outlets such as McDonalds, Quiznos, Greggs, Pizza Hut, Yum! Brands, Taco Bell, KFC, Long John Silver's, Jack in the box and Wendy’s.
Legal issues that may come up during its operations
Food contamination remains a threat in case customers experience such a misfortune
Rising costs of supplies could affect the overall profitability of the franchise
Economic changes such as fluctuations in disposable income, foreign exchange and taxes could affect the company.
An opportunity for global expansion still exists for the company
Diversity: The current menu provision is limited and the franchise could benefit from diversifying into other food products
Partnerships with toy manufacturers, movie producers and beverage companies that could further promote the brand name
Merger and acquisition opportunities that would increase the market possibilities and diversity of customers (McFarlane, 2008).
The main focus of the company is to develop enhance market development in order to endure that it stays ahead of competition through attracting new customers and retaining existing ones (McFarlane, 2008). Marketing objectives are as follows:
- The company seeks to add 2000 stores in different areas around the globe, more so in the developing economies of India and Asia where 150 of the new stores will be located. India and Asia are developing economies which are expected to grow significantly in the near future (Sharma, 2005).
- To improve sales by 20 percent in the next 6 months and 30 percent in the next 12 months
- To increase customer awareness by 30 percent in the next one year
- To improve the efficacy of the online ordering system by 50 percent in the next 12 months and hence reduce traffic at its outlets. As noted by Kaplan & Haenlein (2010), online business is bound to be highly effective in improving sales.
It is imperative for Subway to consider its market before exploring the possibility of reaching out to customers. Accordingly, a survey of the market is imperative before embarking on the strategy in order to ascertain the potential market and the most effective strategies to enhance competitiveness (Aswathappa, 2006). The main strategies for use will include pricing and promotional strategies.
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Subway aims at improving its sales by 30 percent by the end of the year and this will be achieved through pricing strategies. One of the main ways of achieving this will be to offer a standard price for most of its sandwiches such that it retains a form of single-price identity where customers pay one price for most sandwiches. This is expected to improve the level of sales. The franchise will also react by reducing costs such that it will sell at 2% less than competitors thus attracting more customers. Reducing and standardizing the prices will cost the company approximately 2.3% of its profit per unit. This could add up to $15,000 per year. This will however be counteracted by the increased volume of sale.
There is going to be increased use of the internet as a promotional tool for the Subway. This emanates from the fact that the number of internet users has increased vehemently and online advertisements are likely to receive a significant level of attention (Butler, 2006). Subway will enhance this through the use of social networks such as Facebook, Twitter and LinkedIn among others. Social networks have been found to be of great impact in business development (Kaplan & Haenlein, 2010; Walter, 2010) Promotional strategies will involve giving out vouchers to lucky winners on free lunch draws both for online customers and customers visiting the hotel. This will increase the market share significantly. Implementation of the promotional strategies will cost the franchise will cost $20,000.
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The marketing plan identified above will serve as a guide during the implementation of the marketing strategies aimed at promoting the profitability of the company. It is notable that Subway has its own strengths and weaknesses and that a significant level of factors impact the franchise both at the internal and external level. In order to ensure that marketing plan works out well, the firm must ensure that the company’s strengths are used to overcome the weaknesses and threats. Through the pricing and promotional strategies, the franchise should be in a position to improve its market position.