SUBWAY-MARKETING PLAN

PROJECT REPORT ONSUBWAY- MARKETING PLAN

SUBMITTED BYPRADNYA SHETTYM.Com Part II- Semester IV2014-15

PROJECT GUIDEProf. PASHMEEN KAUR SAINI

SUBMITTED TOUNIVERSITY OF MUMBAI

BUNTS SANGHA MUMBAIANNA LEELA COLLEGE OF COMMERCE & ECONOMICSSHOBHA JAYARAM SHETTY COLLEGE FOR B.M.SShashi Manmohan Shetty Higher Education Complex,Buntara Bhavana Marg, Kurla (East), Mumbai 400 070

CertificateBUNTS SANGHA MUMBAIANNA LEELA COLLEGE OF COMMERCE &ECONOMICSSHOBHA JAYARAM SHETTY COLLEGE FOR B.M.SShashi Manmohan Shetty Higher Education Complex,

This is to certify thatMiss. PRADNYA SHETTY of M.Com Part II Semester IV, has undertaken & completed the project work titled SUBWAY- MARKETING PLAN during the academic year 2014-15 under the guidance of Prof. Pashmeen Kaur Saini submitted to this college in fulfilment of the curriculum of Master of Commerce, University of Mumbai.

This is a bonafide project work & the information presented is true & original to the best of our knowledge and belief.

PROJECT COURSE EXTERNAL PRINCIPAL GUIDE CO-ORDINATOREXAMINER DECLARATIONI, Mrs.PRADNYA SHETTY of Anna Leela College Of Commerce & Economics, Shobha Jayaram Shetty College For B.M.S, M.Com Part II Semester IV, hereby declare that I have completed the project on SUBWAY- MARKETING PLAN in academic year 2014-15.The information submitted is true and original to the best of my knowledge.

Signature of the Student

[PRADNYA SHETTY]

ACKNOWLEDGMENT

I hereby acknowledge all those who directly or indirectly helped me to draft the project report. It would not have been possible for me to complete the task without their help and guidance

First of all I would like to thank the principal, Dr. K.S. Cheema and the coordinator Prof. Prashant Shinde, who gave me the opportunity to do this project work. They also conveyed the important instructions from the university from time to time.

Last but not the least; I am thankful to the University of Mumbai for offering the project in the syllabus. I must mention my hearty gratitude towards my family, other faculties and friends who supported me to go ahead with the project.

Table of Contents

1. Introduction to the study .......................................................................................................6-13

1.1 Introduction of Product Planning........................................................61.2 What is Product Planning....................................................................71.3 Meaning of Product Planning..............................................................71.4 Definition of Product Planning............................................................81.5 Phases of Product Planning..............................................................8-91.6 Product Planning in International Marketing................................10-13

2. Introduction to Subway and Company Profile ...............................................................14-18

2.1 Executive Summary..........................................................................152.2 Introduction of Subway....................................................................162.3 History of Subway.......................................................................16-172.4 Mission Statement...........................................................................172.5 Goals and Objectives........................................................................172.6 Product........................................................................................17-182.7 Competitive Advantages...................................................................18

3. Situation Analysis and Marketing Mix ...........................................................................19-27

3.1 Competitive Analysis.......................................................................203.2 SWOT Analysis............................................................................20-223.3 P.E.S.T Analysis...........................................................................23-243.4 Five Forces Analysis....................................................................24-263.5 Mission............................................................................................263.6 Core Values and Philosophy......................................................26-273.7 Marketing Objectives......................................................................27

4. Situation Analysis and Marketing Mix ..........................................................................28-36

4.1 Targeting.................................................................................... 29-304.2 Positioning........................................................................................304.3 Strategies.......................................................................................31-334.4 4Ps.................................................................................................34-354.5 Recent and Future Changes in marketing Environment at Subway...36

5. Bibliography...............................................................................................................................37

CHAPTER 1

INTRODUCTION TO THE STUDY

INTRODUCTION TO PRODUCT PLANNINGWHAT IS PRODUCT PLANNINGMEANING OF PRODUCT PLANNINGDEFINITION OF PRODUCT PALNNINGPHASES OF PRODUCT PLANNINGPRODUCT PLANNING IN INTERNATIONAL MARKETING1.6

1.1 INTRODUCTION TO PRODUCT PLANNING

Product planning is the ongoing process of identifying and articulating market requirements that define a products feature set. Product planning serves as the basis for decisions about price, distribution and promotion. 1.2 WHAT IS PRODUCT PLANNING

In order to maximise his sales revenue and profits, a business firm must continuously adjust and adapt its products and services to the changing requirements of customers. From time to time, it may have to design and develop new products. Product planning is the process of searching ideas for new products, screening them into tangible products and introducing the new product in the market. It also involves the formation of product policies and strategies. Product planning includes improvements in existing products as well as deletion of unprofitable or marginal products. It also encompasses product design and engineering which is also called product planning development. Product planning comprises all activities starting with the conception of product idea and ending up with full scale introduction of the product in the market.It is a complex process requiring effective coordination between different departments of the firm. It is intimately related with technical operations of the organisation, particularly with engineering, research and development departments. Any product has two board objectives- immediate objectives and ultimate objectives. Immediate objectives include satisfaction of immediate needs of consumers, increasing sales, utilising idle plant capacity, etc. Permanent or ultimate objectives consist of reduction in production costs, creation of brand loyalty, monopolising the market, etc.

1.3 MEANING OF PRODUCT PLANNING

The process of coming up with a business idea for a manufactured good, preparing the good for production and then introducing it to the market. Product planning involves managing the products manufacture and development by selecting marketing and distribution approaches, making modifications, setting and changing prices and offering promotions.

1.4 DEFINITION OF PRODUCT PLANNING

Product planning is the process of creating a product idea and following through on it until the product is introduced to the market. Additionally, a small company must have an exit strategy for its product in case the product does not sell. Product Planning entails managing the product throughout its life using various marketing strategies, including product extensions or improvements, increased distribution, price changes and promotions.

Thus Product Planning is required for the following reasons:(i) To replace obsolete products(ii) To maintain and increase the growth rate/ sales revenue of the firm,(iii) To utilise spare capacity(iv) To employ surplus funds or borrowing capacity, and(v) To diversify risks and face competition.

1.5 PHASES OF PRODUCT PLANNING

The Phases of Product Planning are as follows:-

1) Developing the Product Concept:-

The First phase of Product Planning is developing the product concept. Marketing managers usually create ideas for new products by identifying certain problems that consumers face or various customers need. For example, a small computer retailer may see the need to create a computer repair division for the product it sells. After the product idea is conceived, managers will start planning the dimensions and features of the product. Some small companies will even develop a product mock-up or model.

2) Studying the market:-

The next step in the product planning process is studying the competition. Secondary research usually provides details on key competitors and their market share, which is the percent of total sales that they hold in the marketplace. The business can then determine places in which it has an advantage over the competition to identify areas of opportunity.

3) Market research:-

A small company should consider doing both qualitative and quantitative marketing research for its new product. Focus groups are an example of qualitative information. Focus groups allow companies to ask their consumers about their likes and dislike of a product in small groups. A focus group allows the company to tweak the product concept before testing it through phone surveys- a more quantitative marketing research function. Phone surveys enable a company to test its product concept on a larger scale, the results of which are more predictable across the general population. Qualitative research is a method of inquiry employed in many different academic disciplines, traditionally in the social sciences, but also in market research and further contexts. Qualitative researchers aim to gather an in-depth understanding of human behaviour and the reasons that govern such behaviour. The qualitative method investigates the why and how of decision making, not just what, when, when. Hence, smaller but focused samples are more often used than large samples. Quantitative research refers to the systematic empirical investigation of social phenomena via statistical, mathematical or computational techniques. The objective of quantitative research is to develop and employ mathematical models, theories and/or hypotheses pertaining to phenomena.

4) Product introduction:-

If the survey results prove favourable, the company may decide to sell the new product on a small scale or regional basis. During this time, the company will distribute the products in one or more cities. The company will run advertisements and sales promotions for the product, tracking sales results to determine the products potential success. If sales figure are favourable, the company will then expand distribution even further. Eventually, the company may be able to sell the product on a national basis.

5) Product Life Cycle:-

Product planning must also include managing the product through various stages of its product life cycle. These stages include the introduction, growth, maturity and decline stages. Sales are usually strong during the growth phase, while competition is low. However, continued success of the product will pique the interest of competitors, which will develop products of their own. The introduction of these competitive products may force a small company to lower its price. This low pricing strategy may help prevent the small company from losing market share. The company may also decide to better differentiate its product to keep its prices steady. For example, a small cell phone company may develop new, useful features on its cell phones that competitors do not have.

1.6 PRODUCT PLANNING IN INTERNATIONAL MARKETING Product Planning involves a number of Product related decisions such as product design, product-mix, branding, pricing, etc. Therefore, the international marketer has to adopt various product planning strategies such as:

1. Product Design Strategies:

International Marketers have the following options in respect of product design strategies: (a) Product Innovation Strategy: A totally new product is developed for foreign markets. For instanc, low cost product may be developed for developing countries, and a premium product may be produced for developed countries. The main advantages are:

Enhancement of corporate image. Increase in customer satisfaction.

(b) Product Adaption Strategy: The domestic product may be modified to suit the requirements of overseas buyers. Even the Brand name may be changed in different markets. For instance, Nestle provide over 100 varieties of Nescafe to satisfy the tastes of different customers in different countries. The Main advantages are:

Helps to gain competitive advantage in overseas markets. Increases export sales in overseas markets.

(c) Product Standardization Strategy: Same standard product sold worldwide. For instance, Coca Cola, Pepsi, Rayban, Rolls Royce, Rolex Watches, Etc., adopt this strategy. The strategy adopted is One Product, One Message,- Worldwide. The main advantages are:

International marketers may get the economies of large scale production and distribution. MNCs from developed countries can take the advantage of Made in Image.

2. Pricing Strategies:

As far as pricing strategies are concerned, an international marketer may adopt any of the following strategies:

(a) Skimming Pricing: Where high price is charged when the product is launched in the market as in the case of innovative products.

(b) Penetration Pricing: Where low price is charged when product is launched to gain market share.

(c) Differential Pricing: Where different prices are charged in different markets depending upon market and competitive conditions.

(d) Standard Pricing: Where the same price is charged in all the global markets, which is quite rare.

3. Distribution Strategies:

The Manufacturer may also adopt distribution strategies as follows:

(a) Direct Exporting: Where the manufacturer directly exports the goods to overseas buyers. The main advantages of direct exporting are:

Reputation in the world markets Optimum use of resources Spreading of risks Export obligation under EPCG scheme can be fulfilled

(b) Indirect Exporting: Where the manufacturer exports through intermediaries such as star export houses or merchant exporters. The main advantages for the indirect exporter (manufacture) are:

Less Risk- only production risks. Less investment only production related investment Less overheads- only production overheads Specialisation in production activities and marketing is looked after by intermediaries.

4. Promotion Strategies:

The international marketer also needs to adopt suitable promotion strategies:

(a) Standard Promotion Strategy: Where the same promotion-mix is used in all the global markets and with the same promotional theme.

(b) Differential Promotion Strategy: Where different promotion-mix is used depending upon market and competitive situation and with different promotion theme.

5. After-Sale-Service Strategy:

After sale-service is vital in the case of durables, office equipment and machinery. The international marketer needs to adopt proper after-sale-service strategy. International marketers may have a tie-up with after-sale-service agencies in overseas markets. They may also depute their own service staff in important markets, especially in the case of industrial machinery and office equipment. Appropriate training is required for the service staff to upgrade their skills and attitude.

6. Product Positioning Strategy:

The international marketer should develop effective product positioning strategy. He may position the brand to create a distinct image by adopting any of the following strategies:

Positioning by features. Positioning by price. Positioning by use. Positioning by benefits, etc

7. Product Mix/ Line Strategy:

The international marketer should decide whether to concentrate on one product or deal with a product mix/product line. Product mix involves a set of product, which a marketer may offer to the international market. For instance, a firm may offer food products, toiletries, detergents and so on. Product line is a group of related products. For instance, a food items product line may include milk powders, health drinks, fruit juices, confectionaries, etc. Some firms may concentrate on a single product may be to concentrate all their efforts on that product or may be due to lack of resources. Other firms may go a product mix, especially; FMCG (fast moving consumer goods) companies prefer product-mix in order to make optimum use of resources, and to generate higher returns.

8. Branding Decisions:

Branding decision forms an important aspect of product planning. Firms must consider the essentials of Branding while giving brand names, and marks to their product. For instance, a brand name should be easy to pronounce, and should be short as possible, and relevant to the product. Language is vital, as different countries may have different meanings of the same word.

CHAPTER 2

INTRODUCTION TO SUBWAY AND COMPANY PROFILE

EXECUTIVE SUMMARYINTRODUCTION OF SUBWAYHISTORY OF SUBWAYMISSION STATEMENTGOALS AND OBJECTIVESPRODUCTCOMPETITIVE ADVANTAGES

2.1 EXECUTIVE SUMMARY

SUBWAY was started 43 years ago in the summer of 1965 an enterprising 17 years old young man, Fred Deluca . Subway is the market leader in the sub and sandwich shops offering a healthier alternative to traditional fast foods. Subways annual sales exceeded $ 6.3 billion, while countless awards and accolades have been bestowed its chain over the past 43 years. Subway has more than 28,000 units worldwide whilst its rapid growth has attracted many investments and brought it many competitors such as KFC and Burger king. Recent initiatives attract customers beyond Subway traditionally health conscious consumers should increase the companys share of the fast food market. Subway's marketing program addresses health, fresh, custom-made sandwiches expectations of consumers through a number of approaches The Subway concept of serving fresh made sandwiches on fresh baked bread, made right in front of customers, the way they like it has proven to be a winning marketing strategy in Europe. Their customers have really responded to the high level of service that Subway restaurants are famous for. They have also become popular with health conscious customers in Europe who are searching for higher quality fast food options. Subways low initial investment and ability to fit into unusual spaces are other reasons for their success. Without the need for heavy equipments for cooking a Subway restaurant is the perfect business for the small spaces and tight real estate of U.K. Their regional office makes the franchise start process simple and easy. Europe is currently wide open for development. As their brand awareness grows in Europe, more and more people are becoming aware of Subway as a great tasting lunch option and also as a great way to start their own business within their community. Estimates that its goal of opening another 1600 locations in the U.K and having a total of 30,000 restaurants worldwide, including 4,000 locations in Europe by 2010 are right on track.

2.2 INTRODUCTION OF SUBWAY According to SUBWAYs future market expansion strategies they have planned to open 1600 locations in the U.K by 2010. In this marketing plan I am going to discuss and explain what are the SUBWAY existing strengths, weaknesses, opportunities, threats, their marketing strategies, marketing mix , branding strategies and their recent and future changes which are effect their marketing success as a company. And also , as a marketer ,I discuss what are the changes they can do to minimize deviations from their original marketing objectives .In this plan I use my marketing knowledge to evaluate SUBWAY marketing strategies and , will be discussing their potential growth from my point of view as a marketer. For this I use some marketing theories and concepts for explain my ideas. First I use small marketing environment audit using SWOT analysis, P.E.S.T analysis and five forces analysis to discuss SUBWAY marketing environment. Then I will discuss subway marketing strategies using Ansoff metrics and Porter s generic strategies while considering their marketing mix and finally will go for recent and future changes.

2.3 HISTORY OF SUBWAY In 1965, the founded of Subway restaurants was 17 year-old high school graduate Fred Deluca, along with family friend Dr. Peter Buck. At that time, Fred Deluca was turned his thoughts toward achieving a higher education. Dr. Buck is a nuclear physicist, business partner of Fred DeLuca and long time DeLuca family friend, for some financial advice. Petes Super Submarines was the first subway restaurant opened in Bridgeport, Connecticut, USA in 1965. Moreover, the first franchised SUBWAY opened in Wallingford, Connecticut. Subway restaurant was 45 years and more than 35,000 restaurants later, Fred DeLuca remains the President of SUBWAY. Subway franchise is the worlds largest submarine sandwich franchise and the second-largestrestaurant franchise in the world. In addition, the headquarters of subway is located in Milford,Connecticut, with additional regional, country offices, employing about 1000 people in total.(Subway, 2010) Nowadays, subway brand become the largest submarine sandwich chain in theworld with 37,963 restaurantsin 99 countries.Fred DeLuca had a clear vision forthe future of subway brand which are provide nutritious meals, and serve fresh, delicious and made-to-order sandwiches (Subway, 2010).

2.4 MISSION STATEMENT

The mission of Subway is toprovide the toolsand knowledgeto allow entrepreneursto compete successfully in the Fast Food industry worldwide, by consistently offering value to consumers through providing great tasting food that is good for them and made the way they want it (Subway, 2012).

2.5 GOALS AND OBJECTIVES

According to Chris Joseph (2009), goal is a general statement of achievement and it can involve areas such as profitability, growth and customer service. In opposite, Objective is a specification or step would be taken to reach the goal of company. The goal of Subway is to be ranked the number one Quick Service Restaurant (QSR) worldwide while maintaining the great tasting freshness of our product that is out trademark (Subway 2012)

2.5 PRODUCT OF SUBWAY

Subway's core product is thesubmarine sandwich(or "sub"). In addition to these, the chain also sellswraps,salad, and baked goods (includingcookies,doughnuts, andmuffins). While some menu items vary between countries and markets, Subway's worldwide signature sub varieties include: B.L.T Chicken Teriyaki Italian B.M.T. Meatball Marinara Roasted Chicken Steak & Cheese Subway Club Subway Melt Tuna Veggie Delite Subway's best-selling sandwich,the B.M.T., containspepperoni,salami, andham. The name originally stood forBrooklyn Manhattan Transit, but now stands for "Bigger, Meatier, and Tastier".Subway also sellsbreakfast sandwiches,English muffins, andflatbreads. In 2006, "personal pizzas" debuted in some US markets. These aremade to order(like their subs) and heated for 85 seconds. Breakfast and pizza items are only available in some stores. In November 2009, Subway signed a deal to exclusively serveSeattle's Best Coffeecoffee as part of their breakfast menu in the US.A 2009Zagatsurvey named Subway the best provider of "Healthy Options" (in the "Mega Chain" category). Subway was also first in "Top Service" and "Most Popular" rankings. It placed second in "Top Overall", behindWendy's.

2.5 COMPETITIVE ADVANTGES The competitive advantage of Subway is operations manual in fast food market. Operation manual is the unique of Subway. Whether is breads, sauces, meals or vegetables, customer also can choose it by themselves. After customer choose all the food material, and then stuff of Subway will made the sandwich in front of the customer. Operating manual also can show to customers that the way fresh foods are simply put out where they can be seen so that employees do not have the fuss of frying things which is expensive and messy (Fran, 2011). Moreover, Subway provides the healthiest of sandwich compare with other fast food industry because it does not have any deep fry product Subway prides themselves on their sandwiches -- custom-made on freshly baked breads, Subway sandwich shops provide fresh, great-tasting 'made to order' subs, salads and wraps, with extraordinary customer service and value. Millions of customers think of Subway shops sandwich options (including '8 under 6' grams of fat) along with spokesman Jared Fogle -- as their preferred fast food choice for intelligent eating habits.

CHAPTER 3

SITUATION ANALYSIS AND MARKETING STRATEGY

COMPETITIVE ANALYSISSWOT ANALYSIS P.E.S.T ANALYSIS FIVE FORCES ANALYSISMISSIONCORE VALUES AND PHILOSOPHYMARKETING OBJECTIVES

A situation analysis is an honest valuation of the opportunities and potential problems facing a prospective or existing company, through analysis a deeper understanding of an industry , competitor and possible optioned can be examined. Subway is the market leader in the sub and sandwich shops offering a healthier alternative to traditional fast foods. Subways annual sales exceeded $ 6.3 billion, while countless awards and accolades have been bestowed its chain over the past 43 years . Subway has more than 28,000 units worldwide whilst its rapid growth has attracted many investments and brought it many competitors such as KFC and Burger king . Recent initiatives attract customers beyond Subway traditionally health conscious consumers should increase the companys share of the fast food market. Being part of a highly competitive and dynamic market, Subway faces a strategic marketing challenge as to what specific marketing mix to use in order to sustain a diffencial advantage while maintaining sales growth and above all profitability.Subway effectively competes with burger chains and others that are in the fast casual segment of the market. Including healthier meals into his menu and giving much attention to obesity and diabetes have supported consumers choice for subway. However, subway has not been satisfied thus far, instead, more intensified efforts have been made to improve business during the dinner hour. Additional menu options have also been added to answer competitors trends and to place more focus on the childrens segment.SWOT analysis can be helpful to highlight subways 1) Internal strength and weaknesses along with 2) the external opportunities and threats. In the past few years, sandwich market has gained incredible popularity in the U.K culture.

3.1 COMPETITIVE ANALYSIS

The purpose of analyzing competitors is to try and asses what they will do. This will enable the organization to respond accordingly. Competitive advantage is about relative competitive position competitors are sometimes used as benchmarks. (CIM, 2005) Subway is not without competitive pressures, chief competitors include KFC, McDonalds, Pizza hut, Greggs and Eat.KFC and Pizza hut are the world largest with 33,000 restaurants in over 100 countries. Four of the companys highly recognizable brands KFC, Pizza Hut, Long John Silvas and Taco Bell, are global leaders of the Mexican, Chicken, Pizza, Quick service sea food categories. McDonalds corporation is the worlds largest food survives relating chain with 31,000 fast food restaurants in 119 countries. The company also operates restaurants under the brand names the Boston Market and Chipotle Mexican Grill. McDonalds operates largely in the U.K and is headquartered in Oak Brook, Illinois employing 447,000 people.

3.2 SWOT ANALYSIS

However, since marketing is such a complex function , it seems illogical not to carry out a pretty through situation analysis at least once a year at the beginning of the planning cycle , in the same way that an annual financial audit is carried out ( McDonald, 2002 ) One useful way of doing audit is in the form of a number of SWOT analyses. A SWOT is a summary of the audit under the headings, internal strengths and weakness as they relate to external opportunities and threats (McDonald, 2002) Subway sandwich shops are well positioned to leverage their strength and address reasonable threats, weaknesses and opportunities. The table below highlights these Strengths, Weaknesses, Opportunities and Threats.

STRENTHS

Size and number of stores and channels. Menu reflects demand for fresh, healthy and fast. Use of non traditional channels. Partnering with the American Health Association. Worldwide brand recognition. Customizable menu offerings. Low franchisee start up cost. Franchisee training is structured, brief and designed to assure rapid start up and success.

WEAKNESSES

Dcor is outdated. Some franchisees are unhappy. Service delivery is consistent from store to store. Employee turnover is high. No control over franchise situation in given market area.

OPPORTUNITIES Continue to grow global business. Update dcor to encourage more drive in business. Improve customer service model. Continue to expand channel opportunities to include event wagons. Improve franchisee relations. Experiment with drive-through business. Expand packaged dessert offerings. Continue to revise and refresh menu offerings. Develop more partnerships with more producers and toy manufactures to promote new movie releases through childrens menu packaging and co-branding opportunities.

THREATS Franchisee unrest or litigation. Food contamination (Spinach). Competition. Interest costs. Economic downturn. Sabotage. Law suits.

Strengths

SUBWAY main identifiable strength is their size and number of stores and channels. This gives better advantage for SUBWAY when it competes with other competitors. When we consider their product line, menu reflects demand for fresh, healthy and fast .And they have better customizable menu offerings as well. SUBWAY use non traditional channels to develop their markets. SUBWAY product is mainly targeting for healthy product, they facilitate positioning their products by partnering with the American health association. SUBWAY has better world wide brand recognition which will be discussed later part of this plan deeply. Low franchisee start up cost is another strength they have when penetrating the market. On the other hand their Franchisee training is structured, brief and designed to assure rapid start up and success. These are the main strength which SUBWAY can use their marketing developments.

Weaknesses

According to marketing point of view their main weaknesses are outdated dcor in their franchise outlets . It reduces their competitive advantages in market. Some of their franchisees are unhappy. And their service delivery is consistent from store to store. Other main weakness of SUBWAY is their employee turnover is comparatively very high. SUBWAY doesnt have control over franchisee situation in given market area. For better marketing growth SUBWAY should critically evaluate these weaknesses and make them manageable under some certain level.

Opportunities

SUBWAY has number of opportunities become stronger in the sandwiches market rather than competitors. SUBWAY is continuing to grow global business. They can update dcor to encourage more drive in business. Better opportunity to improve customer service model. They can continue to expand channel opportunities to include event wagons, improve franchisee relations and expand packaged dessert offerings. SUBWAY can experiment with drive through business like McDonald already doing. To minimize competition SUBWAY should continue revise and refresh menu offerings. Develop more partnerships with more producers and toy manufactures to promote new movie releases through childrens menu packaging and co-branding opportunities.

Threats Main threats we can identify for SUBWAY might be the food contaminations which are more popular recently (Ex . Spinach). Franchisee unrest or litigation, emerging competition are the other threats which SUBWAY face. Like every other companies SUBWAY face the economic downturn threat these days. Sabotage and law suits are the other main threats for SUWAY.

3.3 P.E.S.T ANALYSIS

Political Factors Health and safety guidelines Labeling and GM foods Animal rights campaigns

Economic Factors Low set up costs Franchising facilities set ups Support from major suppliers Growing market Perceived value for money Increasing disposable income

Social Factors Busy life styles Healthy eating and obesity Increased vegetarianism Homogeneity Social activities

Technological Factors Investments in technological innovations Computer ordering(Till system)

Political Factors Main political factors which are affecting to SUBWAY marketing are health and safety guidelines of the government, Labelling of genetically modified foods and animal rights campaigns specially organize by some environment friendly groups. Economic Factors Low set up cost is a good advantage for SUBWAY. Franchising facilities setup, Support from major suppliers, Growing market for healthy foods, Perceived value for money and increasing disposable income are the main economic factors SUBWAY face. Social Factors Busy life style of the new generation is very good advantage for any kind of fast food industry. Awareness of healthy eating and obesity, increasing vegetarianism, homogeneity and social activities regarding fast and healthy foods are the main social factors which effect to SUBWAY marketing environment.

Technological Factors Investments in technological innovations and computer orderings are the technological factors.

3.4 FIVE FORCES ANALYSIS

According to Porters five forces analysis followings are the main forces and their effects for SUBWAY marketing environment.

Threat of entrantsThreat of substitutePower of suppliers

Power of buyersCompetitive rivalry

1.Setting up

2.Product differentiation

1.Convenience shops

2.Midrange restaurants

3.Pre cooked food

4.Othersocial activities

5.Healthfood shops

1.Farming industry

2.Worldwide market of suppliers

3.Alliances

1.Consumers

2.Little brand loyalty

1.Newentrants likely

2.Price wars

3.Overalldemand is increasing

Threat of Entrants Major threats of entrants are setting up of the entrance and differentiation of products which is important for market penetration and market development. Threat of Substitutes There are lots of convenient shops, mid range restaurants and health food shops are there in the market. So customers can have much kind of alternatives to select their option. SUBWAY marketing strategy should cover these every kind of competition as well. Pre cooked foods which customers can easily consume are the other threat. Different kind of other social activities regarding fast food industry also could be a threat f for SUBWAY market. Power of Suppliers We can consider as power of suppliers for SUBWAY market as farming industry, worldwide market of suppliers and alliances. Power of Buyers Any kind of industry power of buyers is specially consumers. Some kind of little brand loyalty also can be considered as power of buyers. Competitive Rivalry Mainly we can consider as competitor rivalry for SUBWAY are new entrants likely , price wars and increasing of overall demand.

Marketing strategies reflects the companys best opinion as to how it can most profitably apply its skills and resources to the market place. It is invertible broad in scope.Marketing strategies are the means by which a company achieves its marketing objectives and are usually concerned with the four P s. (McDonald, 2003) Subway's marketing program addresses health, fresh, custom-made sandwiches expectations of consumers through a number of approaches. The most notable were the television commercials featuring Jared. These commercials emphasize the healthy aspects of a Subway sandwich by highlighting the 245 pounds Jared lost by eating a Subway sandwich diet. Subway also markets through a national sponsorship in events such as American Heart Association Heart Walks and local events such as triathlons, and children's sports teams. The Subway example represents marketing and product strategies that are classic examples of focusing on market demand, consumer trends, product leveraging, and innovation. The marketing strategies of creating clear brand recognition, brand and product association, and market demands, have strategically positioned Subway to advance market share into the near future. These marketing strategies are also repeatable fundamental marketing strategies transcending the fast food market. The Subway Franchisee Advertising Fund Trust or SFAFT governs advertising. SFAFT functions independently of Doctors Associates Inc., which is the franchisor of the SUBWAY business franchise concept, and its affiliates. SFAFT manages funds contributed by SUBWAY franchisees. It was established to create advertising and marketing programs that are designed to build restaurant sales and promote the systems image. SUBWAY has a customer care team, dedicated specialists who are in constant communication with consumers. Success factors for fast food franchisees will include products and marketing targeted to healthier menu selections, brand consistency, low start-up costs, franchisee support, and consumer convenience. Subway represents a poignant example of a fast food franchisee ready for success in the future fast food market. Their strategies transcend the fast food market and apply to many other markets and products Branded fast food continuing to move into other non traditional venues such as colleges, airports, military bases, hospitals, and amusement centres. Part of their marketing strategy, Subway includes identifying which venues and retail chains would be most amenable to quick-service brands.

3.5 MISSION

Mission is an organizations rationale for excising at all and/or its long term strategic direction and/or its values ; its basic function in terms of the products and services the organization produces for its clients (CIM , 2005 ) Subway Mission To provide the tools and knowledge to allow entrepreneurs to successfully complete in the QSR industry worldwide by consistently offering value to consumers through providing great fasting food that is good for them and made the way they like it (Subway , 2005 )

3.6 CORE VALUES AND PHILOSOPHY SUBWAY is always committed to customer satisfaction through offering high quality food with exceptional service and good value. They always maintain their quality of customer service every franchisee outlet. They take great pride in serving each other, customers and communities. They seek continuous improvement in that entire do. SUBWAY Value a sense of urgency and emphasize an innovative, entrepreneurial approach to business because especially they are in fast food industry. They expect fairness and mutual respect in all activities. They know their success depends upon the initiative they take individually and their ability to work as a team.

3.7 MARKETING OBJECTIVES

SUBWAY main marketing objectives are maintaining positive, strong growth each quarter and achieve a steady increase in market penetration. SUBWAY posses good information about the market and knows a great deal about the common attributes of the most prized customer. This information will be leveraged to better understand who is served, what their specific needs are, and how SUBWAY can better communicate with them through marketing. SUBWAY use marketing segmentation, targeting and positioning strategies to develop their market.

CHAPTER 4

TARGET MARKETS AND MARKETING MIX

TARGETINGPOSITIONINGSTRATEGIES4 PSRECENT AND FUTURE CHANGES IN MARKETING ENVIRONMENT AT SUBWAYMETHODOLOGY OF THE STUDY

The process of breaking down the total market for a product or services into distinct sub groups or segments , where each segment might represent a distinct target market to be reached with a distinctive marketing mix. A market segment consists of a group of customers or consumers who share the same or similar needs (McDonald, 2002)Segmentation Methods1. Demographics (Age, Life cycle , Gender , Income , Occupation, Religion , Education , Race ,Nationality ) 2. Geographic ( Location , Regional , Urban , Density , Climate ) 3. Psychographic (Social class , Life style , Personality )4. Behavioral (Occasions , Benefit sought , User stages , Usage rate , Loyalty status )SUBWAY SegmentationsAge group (18 39)Kids mealsIncome level (c 1)worldwide locationsHealthy Life styleUrban AreaHalal sandwiches Subway is always improving their geographic segmentation from their early development ages. By studying Subways geographical expansion we can identify what kind of segmentation they include their marketing strategies. Where did the SUBWAY chain open its first international location? It wasnt in Canada, Mexico or somewhere close to the United States. It wasnt in England, Australia or somewhere that English is the official language. It wasnt in Germany, France or somewhere else where many different types of sandwiches are popular. Its not where you might think. The SUBWAY chain tested international waters when it opened its first unit in the small exotic Middle Eastern island nation of Bahrain in December of 1984. In a relatively short time, the SUBWAY chain started to appear in such distant lands as Iceland, Poland, Nicaragua and China. The SUBWAY chain, the worlds largest submarine sandwich franchise, goes to tremendous lengths to bring great taste and fresh ingredients to consumers in the farthest reaches of the globe. With more than 2,400 locations outside the U.S. and Canada, the SUBWAY chain is a leader in fast-food international development. In upcoming months, the plans for SUBWAY restaurants in countries such as Belize, Luxembourg, Thailand Romania and Hungary are on the drawing board. Despite the diversity of cultures. We can see SUBWAY target some kind of cultural and religious segments while keeping their original values maintaining. Wherever SUBWAY restaurants are located, the core menu stays relatively the samewith the exception of some cultural and religious variations. World travelers can expect the same high quality ingredients regardless of what nation they are visiting. On the other hand SUBWAY always target different kind of age segments, through their existing product lines and product developments, specially improving kids meals

4.1 TARGETING

Marketers do targeting for segmented markets. After the market has been segmented into its segments according to their segmenting strategies he will select a segment or series of segments and Target it /them. Resources and effort will be targeted at the first is the single segment with a single product. Secondly the marketer could ignore the differences in the segments, and choose to aim a single product at all segments. Finally marketer will target a variety of different segments with a series of differentiated products. The advantage of target marketing is marketing effort can be focused on the market segment(s) that offer the greatest potential for the company to achieve its objectives (Lancaster & Reynolds, 2003) Year 2003 SUBWAY improves the nutritional content of its Kids Pak meal by switching the carbonated soft drink to a juice box and changing from a high calorie cookie to fruit roll up fruit snack that is high in vitamin C. Many of the Kids Pak toys are now designed to inspire physical activity. The web site includes a resource for parents striving to manage their childrens diet and exercise levels. Parents and children can also ask Jared Fogle about how he lost his weight or how they can incorporate fun exercises into their everyday lives. SUBWAY restaurants begin to distribute 'Jareds Steps to Healthier Kids' information cards in efforts to educate customers about preventing childhood obesity The increase in sales of the sandwiches has been a result of decreases in consumer interest in hamburgers and fries and increases in demand for healthier options. Sales of sandwiches are growing 15 percent annually, outpacing the 3 percent sales growth rate for burgers and steaks. SUBWAY target virgin international markets using their strong brand name.

4.2 POSITIONING 4.1 TARGETING 4.1 TARGETING 4.1 TARGETING

Positioning is all about Perception . The term Positioning reefers to the consumers perception of a product or service in relation to its competitors. Positioning relates to the task of ensuring that a companys market offerings occupy a predetermined place in selected target markets, relative to competition in that market (Lancaster & Reynolds, 2003) SUBWAY positioning their products 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. SUBWAY use lots of strategies to position their kids meals. In year 2004 Jared Fogle and WNBA superstar Lisa Leslie kick off the Jared and Friends School Tour in NYC, stressing the importance of healthy eating and exercise. The in-school curriculum, 'One Body! One Life! Eat Fresh! Get Fit!' is developed by the SUBWAY brand and Weekly Reader. The curriculum is intended to help teachers of fourth, fifth and sixth grade students and in still proper eating and fitness valuesDevelop more partnerships with movie producers and toy manufacturers to promote new movie releases through children's menu packaging and co-branding opportunities

4.2 STRATEGIESEEEGIES We can use strategic tools to explain marketing strategies of the company.

4.3.1 THE ANSOFF MATRIX Some of the more common marketing strategies are illustrated by the Ansoff matrix. Existing Products New

Market penetration

Product development

Market development

Diversification

Market Penetration Market penetration is when a firm increases its share of a market in which it already operates. SUBWAY always focuses their marketing strategies to penetrate the markets which they are already operating. They have one operating department, it is Franchise sales, this group is dedicated to finding those individuals who possess the entrepreneurial spirit required to open a SUBWAY franchise of their own. They find new franchisees to penetrate the market. Other way they use existing franchisees to penetrate the market. For this purpose also they have separate department, Profit Building & Local Marketing This department helps franchisees in local markets with initiatives designed to increase sales at their restaurants.

Market Development This strategy involves finding new markets for the products a firm already makes. SUBWAY has developed a team specifying for market development. New Business Development This team works closely with potential franchisees who wish to open a SUBWAY restaurant in non-traditional locations--such as in a supermarket, movie theatre or gas station Subway restaurant sites are adaptable to any type of location. The simplicity of the Subway Restaurant operation and the ability to fit into spaces that competitors cannot enables them to open restaurants in many unusual and non-traditional sites, 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 Diversification Diversification involves the firm going into new markets which are totally different from those targeted by the existing activities of the firm. SUBWAY is going for real estate markets, mobile phone markets and some financial markets to reduce their business risk through diversification. They have a team called Subway Real Estate Corp the men and women of this division assist franchisees with real estate leasing and negotiations.

Product Development Improvement of products over time to maintain their competitive position. Product development is one of the main marketing strategies of SUBWAY, specially introducing improved healthier menus. SUBWAY has a Research & Development team this department is responsible for developing and test marketing the food that we serve and the equipment that is used.IN 2005 SUBWAY; their low-fat sub choices are expanded to 8 Subs less than 6 Grams of Fat. In 2007 The SUBWAY restaurant chain launches its Fresh Fit and Fresh Fit for Kids meals, which feature healthier-for-you side options such as apple slices, plump raisins, low-fat milk, bottled water and Dannon yogurt. The meals are developed to fit into the American Heart Associations approach to a healthy lifestyle. All trans fats are removed from SUBWAYs core menu items. Menu choices now include higher fiber Wheat and Honey Oat Breads, personal size Pizzas, Black Forest ham, and The Feast Double Stacked sub.

4.3.2 PORTERS GENERIC STRATEGIES Competitive Advantage Low cot Higher cost

Overall cost leadership

Differentiation

Cost focus

Differentiation focus

Competitive scope Narrow

Broad

PRICE

LevelDiscriminationDiscount

PROMOTION

AdvertisingSales promotionPersonal selling

PRODUCT

DesignPackagingDisplayBrandPLACE

WarehousingTransportationServiceStockholding

4.4 MARKETING MIX

Product The marketing mix combines many factors, but customers view marketing effort in more tangible terms of the product (or service). (Lancaster & Reynolds, 2003)SUBWAY menu offered a wide variety including salads, pasta, dinners, soups and desserts. They offer wider menu and better quality fresh products .In 1996 The chain's flagship sandwich, the classic BMT, is first introduced.IN 1997 The 7 under 6 menu, featuring seven submarine sandwiches with 6 grams of fat or less, is first introduced! In 2001 Another fresh veggies, the cucumber is added to the SUBWAY menu, which already boasts lettuce, tomato, red onion and green peppers. 2004 The SUBWAY chain introduces a line of new crab-controlled wraps. The wrap itself, has only 5 grams Net Crabs. In 2005 Delicious, fresh toasted subs are added to the SUBWAY menu,Quality of foodSubway prides them on always having the freshest ingredients available for sub, and they hide nothing from the customer. All their products are made on the spot while the customer chooses what toppings he/she wants on the sub. Unlike most fast food franchises, nothing is deep-fried or frozen. Price Price is a potent element of the marketing mix because of its direct impact on customers, the company and the economy. SUBWAY use upscale pricing little higher than normal subs in the market. They offer differential pricing strategy with value pricing. But create value products by service in terms of quality.

Place This is concerned with activities needed to move the product or service from the seller to the buyer. (Lancaster & Reynolds, 2003) SUBWAY target is open another 1600 locations in U.K by 2010.SUBWAY use their major selling locations as franchisee shops and their another new market development places in nontraditional places like 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 and travel centers/truck stops. People who in any kind of SUBWAY sales point are on hand to ensure customers needs are matched with the right product and to explain the different options available. And SUBWAY do market research on the location preferences and they close poor and predatory franchisees regarding customer satisfaction. They upscale to stripped down shops to quasi deli restaurants. At Subway, you dont wait for your order. You order it at the counter and watch it being made by the highly efficient team of staff. When the product is ready, you pay and take it with you. No bills, no queues, no hassles. Promotion Promotion covers four areas. Advertising, Personal selling, Public relations and Sales promotions. 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. The majority of the advertising is done via national TV during prime time, sports and late programming on major broadcast networks and cable networks. Additional advertising is done via local markets on TV, radio and in print. SUBWAY restaurants also promote advertising messages and specials in-store with point-of-purchase material such as posters, menu translates, etc.

Recent and Future Changes in Marketing Environment at SUBWAY

Although, SUBWAY has achieved better marketing position and brand image in the fast food industry, they face much kind of challenges in marketing environment. Specially most of the recent challenges are been created by economic down turn in the world. Economic downturn is being affected all of the markets in the world as well as fast food market. So each every marketer are finding ways, how to survive in this environment and what strategies have to use to develop their own market activities. SUBWAY also badly affected from this crisis environment. On the other hand there is a emerging competition for subway product line. Especially for their health conscious products. Because, all the other fast food competitors are introducing and improving their health conscious product line , which SUBWAY use to maintain leadership. Being part of a highly competitive and dynamic market, Subway faces a strategic marketing challenge as to what specific marketing mix to use in order to sustain a diffencial advantage while maintaining sales growth and above all profitability. Subway effectively competes with burger chains and others that are in the fast casual segment of the market. Including healthier meals into his menu and giving much attention to obesity and diabetes have supported consumers choice for subway. However, subway has not been satisfied thus far, instead, more intensified efforts have been made to improve business during the dinner hour. Additional menu options have also been added to answer competitors trends and to place more focus on the childrens segment. Like all kind of companies SUBWAY also facing the rapidly advancing of technologies. SUBWAY also introduces and gets use of new technological innovations to expand and penetrate their markets. When they designing dcor for franchisees they widely use new technological designing tools.Food contaminations are increasing in recent years and SUBWAY marketing badly effect from it. In future it will be more due to lots of pollutants in environment. On the other hand genetically modified food rejections also will be a big challenge for all kind of food produces specially for fast food producers. And environment friendly groups always make problems for meat and in future it will accelerate, so SUBWAY should have think about alternatives for meats like flavoured soy products, but SUBWAY can take advantage of that problem since SUBWAY go for healthy and low calorie food product marketing.

CHAPTER 5 BIBLIOGRAPHY

http://www.product planning.com http://www.subway.com http://www.google.com http://en.wikipedia.org/wiki/preference

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