Case Study Yellow Submarine (1)

May 10, 2011

[STRATEGIC MARKETING MANAGEMENT: CASE STUDY]

Yellow Submarine

Gourmet Fast-food Restaurant

Submitted by:

BSBA Summer Class 2011

QUEIPO, Mark Daryl

RAMIREZ, Jien Ceriz

PELAEZ, Caroline

LOYOLA, Aries

BERTULDO, Daniel

FERNANDEZ, Lawrence

Time Context:

Middle of March 2000

Point of View:

Paulo M. Lao

Central Problem:

Sudden decrease in sales due to declined customer traffic during the last 3 days.

May 10, 2011


Statement of Objectives

Must Objectives:

Increase sales and customer traffic.

Want Objectives:

Sustain the company’s market share.

Areas of Considerations

Internal Environment

Strengths:

Good Location

Yellow Submarine is located at the Ortigas Center

a business district where many large and small corporations are situated

home to class A residential condominiums and subdivisions

closest market is UA&P (University of Asia and the Pacific) which has a student population of 1,900 and still growing

May 10, 2011


Close Proximity to UA&P

Approximately 150 meters from the backdoor entrance

Provides students with a venue to “kill-the-time” from long and short breaks

Accessible place to meet friends and have a quick meeting for school projects

Provides a respite from the humid and hot weather

Students would opt to have lunch nearby rather than pay for parking fees at the mall and other restaurants

UA&P is a premier university that is why it has one of the highest tuition fees in country

Students come from middle income to high income families with an average disposable allowance of around P100-P150/day.

Weaknesses:

Seasonal demand with Students as a primary target market (UA&P)

Demand will fluctuate due to school season such as

Opening classes

Semestral-breaks

Term paper seasons

Midterms and Final Exams

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Other school events

Opportunities:

Outperform competitors in the quick-service segment

Outperform indirect competitors in the area because of tight margins natural to small volume.

Match all business activities with real and distinct customer needs, constantly identify customer needs and align or adjust all Yellow Sub’s activities to ensure customer satisfaction.

Threats:

Nearest Popular Competition

Establishments at Pearl 8101

Starbucks

Coffee California

Australian Deli Shop

Sugarhouse

Bottomless Grill

Restaurants providing alternative food choices for Delivery

Slice of Meat (Deli Sandwiches)

Brother’s Burger (Hamburgers)

Little Caesar’s (Pizza)

May 10, 2011


Thai-in-a-Box (Thai Food)

Sit-in Restaurants that capture a lot of customers during Lunch Time

KSP Bar and Grill

Entry of fast-food companies and similar product lines

Threatens the hold of captured market segment

Decrease their market share

Alternative Courses of Action

ACA#1: Completely overhaul the marketing plan of Yellow Submarine and formulate major initiatives for growth and long term survival of the business including:

o Introduction of new product lines

o Market Penetration

o Market Development Strategies

Advantages:

Disadvantages:

ACA#2:

May 10, 2011


Advantages

Disadvantages

Recommendation

Adopt: ACA# 1

Detailed Action Plan

Activities Person Responsible

Time Frame Budget

MARKET STUDY

Purchasing Decisions of Customers

Influenced by attitudes, beliefs and emotions derived from the service product.

Students highly consider other student’s perception of them

Where they eat for lunch

Where they hang-out during lunch and breaks

What they have for lunch

May 10, 2011


Where they ate and where they will eat will give them enhanced appearance

They would want to eat where the cool people eat and where they could be associated with the crowd eating there.

This segment also wants to appear with more money impressive lifestyle and a trendsetter.

UA&P students as trendy young adults are curious of any openings and exciting happenings.

Reasons for purchasing:

Curiosity or “Crowd Effect”

Filling a “Need”

Affordability

Enhanced appearance

Genuine preferences for sandwiches, salads, pasta and soup

Health Consciousness

Healthier Food Alternative

There is a growing trend for slimmer bodies and healthier diets.

Students are being offered a healthy alternative to lunch and snack meals, without sacrificing the need for

Good Music

Nice Ambiance

May 10, 2011


Great Food

Students will prefer having a full meal below P100 with the same delight and filling experience.

Students belong to a larger group of friends

Group sizes may range from 3 to 12 members

Groups could easily occupy a table for 4 easily

Once a group has developed a liking to the place they would consider it as a regular hang-out to meet and eat with friends, after carefully considering:

Price

Special Offers

Food Quality

Ambiance/ Store Décor

Convenience

Customer Service

Students could go there as much as 3 times a week or at least once every two weeks

As surveyed, Wednesday is the day where there are long breaks. This day is reserved for UA&P’s organization meetings and activities.

Secondary Target Market for Sit-in Service: Professionals

May 10, 2011


Product: Sit-in Service or Take-outs

Target Market

1. Professionals

Those working overtime

Those who are looking for a quick snack

Those who are looking for a convenient location

Those looking for a place to hang-out while waiting for traffic to pass

Those looking for an accessible stop to buy food for dinner or take-out for family

2. Organizations

Those looking for a place to meet with clients

Regular meeting

3. Residents

Those looking for an accessible place to eat

4. Faculty Members at UA&P

Secondary Target Market for Sit-in Service: Professionals

Product: Delivery Service

Target Market

May 10, 2011


Secretaries:

Those responsible for ordering food during meetings, events, functions, or large groups

Busy Executives/ Professionals

Those looking for quick lunch, snack and overtime food needs

Professionals

Those ordering for events, meetings, large groups, division/ departmental functions

Nearby Residents

Advantages of Market Segmentations Strategies include the following:

Greater profitability in satisfying diverse demands of the market place

Increase sales by addressing the needs of target customers and correspondingly allocate resources

Help firms develop strategies for brands or product categories

Assist marketers in developing strategies for brands or product categories

Useful in providing guidelines for product positioning in tri-media ads and selecting media to reach target segments

Focus on consumer needs to maintain competitive advantage

Market Segment Possibilities

Upper Class Market

May 10, 2011


Class A & B: UA&P Students

Convenience Markets

Ortigas Professionals

Secretaries

Yuppies

Professionals

Residents

Nearby condominiums, townhouses

Status seeking individuals

Ambiance, Store décor

Fun-seeking individuals

Music personnel

Budget conscious individuals

Value meals

Discounts

Health conscious individuals

Hoagies sandwich lovers

Salad lovers

May 10, 2011


Pasta lovers

Hang-out Seekers

Coffee lovers

Comfortable seats

Weight-watchers market

Bottomless drinks market

Coffee and Iced tea

Quick-service preference

Sit-in

Take-out

Delivery Services

Customer Oriented

Qualified Staff

Trendy Individuals

Those who wants to try something new

Quality-seeking consumers

Yellow Submarine’s Product Positioning

May 10, 2011


Yellow Submarine builds a product position that emphasizes Yellow Subs overall freshness in bread, vegetables and meat.

Its secondary position emphasizes on its affordability vis-à-vis its competitors.

This strategy enables Yellow submarine to establish a niche in the quick-service segment and out-perform indirect competitors in the area because of tight margins natural to small volume.

It couldn’t complete prices of the highly capitalized competitors .

Yellow submarine depends on established and well known suppliers to back-up its claim.

French Baker, one of the leading bakery companies supplies Yellow Submarine’s bread.

Its location is nearby and can deliver fresh made bread with a lead time of one day only

The meat is supplied by Blue Bacon, an upscale restaurant and meat shop in the Quezon City area.

Orders can be picked up time, ensuring the freshness of the meals.

In order to out-perform up anytime, ensuring the freshness of the meals.

In order to outperform competitors in the quick-service segment and other indirect customers at 8137 plaza, Yellow Submarine continuously has to work on the following competitive edge:

May 10, 2011


1. Operational Efficiency: This term describes a firm who attempts to utilize all process to provide their customers with dependable products at a competitive price.

Yellow Submarine concentrated on the following factors:

A. Matching all business activities with real and distinct customer needs, constantly identify customer needs and align or adjust all Yellow Sub’s activities to ensure customer satisfaction.

B. Reducing or eliminating entirely the activities which currently expend time and resources which do not correspond to customer needs.

Investment in Operational Efficiency Equipment or Automated-Systems for inventory or billing was pursued likewise standardization of procedures and food preparation.

C. Developing job descriptions providing for cross-functional responsibilities which require everyone to be responsible for customer service.

Each team member therefore works with each other to identify ways to simplify processes and lower costs.

D. Develop a screening process for suppliers and other vendors that ensure cost efficiency and timely transfer of products or services.

Yellow Submarine responded rapidly to changes in market demand by adjusting products/ services to meet such demand, providing customers with product or services at a competitive price.

2. Customer service: Yellow Submarine developed competitive strategies involving a commitment to match product/ services to meet individual customer needs.

Yellow Sub rarely competes in price.

May 10, 2011


For Yellow Sub to sustain competitive advantage it strongly considered the following factors:

A. Flexibility in the delivery of products and services to customers in the area of sit-in, take-out and delivery service.

B. Proper training of personnel through relationship selling programs, building long term win-win relationships with customers.

C. Infrastructure, providing a customer service information system capable of collecting and analyzing customer data to educate both management and employees in making customer s service decisions.

Yellow Submarine made sure that product or services are tailored to the individual needs of customers, providing customized services and providing relevant information and service to each group of customers

3. Product Leadership: Yellow Submarine is one of the first Hoagies/ Submarine Restaurant in the country, offering a variety of thirteen types of sub, responding to customer’s specific demands for an affordable, health alternative fast food product and a cozy customer-oriented restaurant to go with it.

Yellow Submarine ensures a top-of-the-mind awareness as a hoagie sandwich leader, providing customers with enhanced benefits through product improvements that correspond with customer’s product needs, being proactive to avoid being reactive to the marketplace.

Yellow Submarine ensures a high-quality service effectively implementing the following initiatives:

Reliability

-strictly observing operating hours

-making available menu items at all times upon customer’s request

May 10, 2011


-on time delivery of sales orders

-consistent food taste

Responsiveness

-transactions with customers always done with a smile

-personnel are willing and happy to serve customers

Competence

-timely and perfectly preparing food orders just as the customers want them to be

-asking customers certain ingredients to be placed in the sandwich

Access

-having a telephone, fax machine, web-site and e-mail addresses in order to be reachable by the customers/ suppliers at all times

Credibility

-being open and honest to inquiries of customers regarding its ingredients, food, products and sources of raw materials

Security

-freshness o f food all the time, serving the freshest bread, vegetables and ingredients in its food

-customer information for Yellow Sub’s exclusive use only

Understanding

-understanding customer needs, wants and changing preferences

May 10, 2011


-flexibility in implementing changes on food items, developing new food items, ambiance and music etc

Tangibles

-conducting regular preventive maintenance on its equipment for reliability during operating hours so as not to be inconvenient to its customers

Long-Term Promotion Program

Trial-to-Loyalty Program

Trial Stage:

Utilizing the primary reinforce of a free sample of the product

A sample of Yellow Subs delicious sandwiches were given during the grand opening day to the invited target market.

Included in the package is a loyalty stamp card which entitles the holder to a free 6 inch sub sandwich upon completion of the 6 stamp boxes (subject to a specified period) and a 10% discount on drinks during their next purchase upon completing the customer survey questionnaire.

In doing this, trial is encouraged with no commitment from the consumer.

Repeat purchase is encouraged; however, there is a large inducement so the consumer does not have to fully commit to purchase but is essentially subsidized by Yellow Submarine.

Brand Conscious Stage:

Utilizing the second reinforce by issuing the stamp loyalty card, thereby promoting the continuity of purchase through a future reward system.

May 10, 2011


The consumer is being asked to purchase 6 more “six inch” sandwiches (to fill 6 stamp boxes) during the next two weeks (or the specified period stated) at full price prior to receiving a reinforce in the form of a free sub sandwich.

During this sequence, the consumer has actually purchased the product at full price for its inherent value with the promise of a future reward.

Program Plans

#1 Program Theme

“Have one on us” is a trial-to loyalty promotion program for the first 100 customer from 11am to 2pm.

Sales Objective:

Develop sandwich sales of 100,000 over a two-month period.

Have an average of 650 sandwich orders a month or 1,300 over the two-month period.

Promotion Objective:

Sampling the product during the grand opening to invited target markets; providing stamp loyalty cards to potential customers whenever a free sandwich sample is given.

Returned Customer Survey Questionnaire is given a 10% discount on drinks during the same day.

Description:

Loyalty Stamp Card has 6 to 8 empty slots for stamp marks. Upon completion of the six boxes, the holder can avail of a free sub sandwich with a minimum order of a soft drink or bottomless iced tea. This was to launch together with the restaurant’s grand opening.

May 10, 2011


The Loyalty Stamp Card has a specified affectivity date of no later than two weeks from day of acquisition. The expiry date is adjusted daily. There is a control number to whom it was issued and when it was issued, for the monitoring and control purposes.

The duration of the promo lasted for the two months (October and November) but was extended because it was proven to be unsuccessful.

Support: Streamers, flyers, email text newspaper, inserts, direct marketing.

Rationale:

This promotion built trials and exposure for the Yellow Submarine sandwiches.

Serving and cold sandwich show customer the variety of food products offered

Ability to communicate direct to target market (health conscious, sandwich lovers, UA&P students, professionals, etc)

Another purpose of the grand opening was to collect pictures of various customers and displayed them on the restaurant’s wall for a month or so.

By doing this, customers were endorsing the Yellow Submarine and directly spoke to future first-time customers.

October was chosen as the grand opening because this was the time when UA&P students came back from their semestral break.

The six stamp loyalty card encouraged immediate purchase after trial.

The 10% discount on drinks was strong inducement and along with the free sandwich, lowered the risk of trying an unknown product.

#2 Direct Mail Promotions to Secretaries

May 10, 2011


Mailing of brochures, letters, and other materials that describe a product and ask the consumer to order it.

Program Theme:

Sales Objective: Sales of P120, 000 over a two month period.

Promotion Stategies:

Collect a customer database of secretaries, executive assistants, administrative assistants and other employees responsible for ordering food for

Large executive meetings

Functions

Events

Lunch and snack appointments

Group breakfast, lunch or dinner

Regular lunch take-out and overtime snacks.

The manager issues a personal complementary meal every time a maximum delivery order of P500 is made.

Description of Direct Mail

Promotional Activity for Delivery Services

The complementary meal must be availed in the period specified together with a large drink or bottomless iced tea.

May 10, 2011


This complementary meal must comes with a 6” sub sandwich and potato chips on the side.

This may vary accordingly and salad meal may be chosen upon the discretion of the manager in case the previous complementary free meal has already been given.

Each complimentary meal note shall be recorded on a logbook and will have a corresponding control number for verification and monitoring purposes.

In case a second large order is placed by the same person within a specified period and the complementary meal has not yet expired, the manager may extend for another 3 days the complementary meal.

This notification will be made in a personal note duly signed by the manager.

The manager may reinforce its customer relationship by personally calling the customer and informing her of a complimentary meal or an extension and an invitation to visit the restaurant.

As variation of addition to the promo, the delivery can include a customer survey form which will include a “Return to Yellow Sub” promo.

This will merit the customer a complementary soup or meal given by the manager personally.

It will also have a specified period of validity to hasten the repeat purchase or return visit.

In availing the complimentary meal, only one person, whose name appears on the manager’s note can rightfully avail of the free meal. It cannot be transferable. This rule is for the purpose of meeting personally the customer and establishing loyalty.

Should a repeat large order be absent for a month or beyond, the manager can send a

May 10, 2011


reinforcing letter as a sign of remembering and giving value to the customer.

Support: In-store signage, posters and display, direct mail and flyers

Rationale:

The promotion builds trial and exposure for Yellow Submarine as an alternative to other fast food joints.

This promotion helped Yellow Sub establish a market niche in delivery services for office functions, events, group meetings, group breakfast, lunch, snack and dinner take out needs.

October and November were chosen as the time to launch the promotion because it gave time to build a customer database.

By this time, Yellow Sub would have already started its first month of operation and have built the initial awareness of its products and restaurant.

Case Study Yellow Submarine (1)

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