Objective of this study is to evaluate product process to facilitate maximum product success in fast food industry as before and after implementing the system. By the end of this assignment, you will have more understanding and knowledge regarding Relationship Marketing issues, problems and complaints occurred within an organization and how to overcome it under this topic “An Evaluation of Product In Company” 1.2 METHODOLOGY
This study used the case analysis research method. Secondary data were obtained from media reports, homepages of the respective firm and other published sources. It also based on discussions held during lectures, library and with colleague. 1.3 DEFINITION
Relationship marketing is a strategy designed to foster customer loyalty, interaction and as well long-term engagement. Relationship marketing is designed to develop strong connections with customers by providing them with information directly suited to their needs and interests and by promoting open communication. This approach often results in increased word-of-mouth activity, repeat business and a willingness on the customer’s part to provide information to the organization. The business is done with a strategic orientation, where the relationship is improved with existing customers rather than finding new customers. It is meant to cater to the needs of individual customers. Its major part involves studying the need of the customer and how it changes in different circumstances. Relationship marketing applies techniques like marketing, sales, customer care and communication. The relationship is not only enhanced but its life period is increased by these strategies. And as the customer realizes the value of relationship, they are drawn closer. This marketing not only focuses on building relationship and attracting customers to their products and services but also how to retain them.
2.1 SITUATION ANALYSIS
A situation analysis is a valuation of the opportunities and potential problems facing by Subway through analysis a deeper understanding of this fast food industry. Competitors and possible optioned should be examined as well. Subway is the market leader in the sub and sandwich shops offering a healthier alternative to traditional fast foods. Subway’s annual sales exceeded $ 6.3 billion, while countless awards and accolades have been bestowed its chain over the past 47 years. Subway has more than 37,000 units worldwide whilst its rapid growth has attracted many investments and brought it many competitors such as KFC, McDonalds and Burger King. Recent initiatives attract customers beyond Subway traditionally health conscious consumers should increase the company’s share of the fast food market.
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 consumer’s 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 competitor’s trends and to place more focus on the children’s segment. SWOT analysis can be helpful to highlight subway’s 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 Malaysian culture.
2.2 COMPETITIVE ANALYSIS
“The purpose of analyzing competitors is to try and assess 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 and Pizza Hut are the world largest with 33,000 restaurants in over 100 countries. Four of the company’s highly recognizable brands such as McDonalds, KFC, Pizza Hut, Long John Silva’s and Taco Bell are global leaders of the Mexican, Chicken, Pizza, Quick service sea food categories. McDonald’s corporation is the world’s largest food survives relating chain with 31,000 fast food restaurants in 119 countries. McDonalds operates largely in Malaysia and is headquartered in Oak Brook, Illinois employing 447,000 people.
3. LITERATURE REVIEW
The purpose of this study is to understand the impact of Relationship Marketing strategy for Subway as a one of the fast growing fast food industry. I’m going to discuss and explain what are the Subway’s existing strengths, weakness, opportunity, threats, branding strategies and also their potential growth. Being part of a highly competitive and challenging market for fast food industry, Subway faces strategic challenges as to what relationship marketing to use in order to sustain a differential advantage while maintaining sales growth and above all profitability. .
With the system, the information that Subway have they can understand better about their customer more by knowing 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. “ 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 shops are well positioned to leverage their strength and address reasonable threats, weaknesses and opportunities.
3.1 SWOT ANALYSIS
The table below highlights these Strengths, Weaknesses, Opportunities and Threats.
STRENGTHS| WEAKNESSES| OPPORTUNITY| THREATS|
* Size and number of stores * Menu reflects demand for fresh, healthy and fast. * 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.| * Décor 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.| * Continue to grow global business. * Update décor to encourage more drive in business. * Improve customer service model. * 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 children’s menu packaging and co-branding opportunities.| * Franchisee unrest or litigation. * Food contamination. * Competition. * Interest costs. * Economic downturn. * Sabotage. * Law suits.|
Subway’s main 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, the menu reflects the demand for fresh, healthy and fast food. It also have better customizable menu offerings as well. Subway use nontraditional 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 strategy 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 décor 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 doesn’t 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 as a global business partners. They can update their décor to encourage more drive in business. Better opportunity to improve customer service model. They can continue to 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 children’s menu packaging and co-branding opportunities. THREATS
Main threats we can identify for Subway might be the food contaminations which are more popular. Franchisee unrest or litigation, emerging competition are the other threats which Subway face. Like every other companies Subway also facing the economic downturn threat these days. Sabotage and law suits are the other main threats for Subway. There are varieties of ways of classifying the forces at work in the macro environment. PEST analysis and Porter’ five forces analysis are two of them.
2.2 P.E.S.T ANALYSIS
Below table explain the P.E.S.T factors which are affecting to Subway. Political Factors| Economic Factors| Social Factors| Technological Factors| * Health and safety guidelines * Labeling and GM foods * Animal rights campaigns| * Low set up costs * Franchising facilities set ups * Support from major Suppliers * Growing market * Perceived value for money * Increasing disposable income| * Busy life styles * Healthy eating and obesity * Increased vegetarianism * Homogeneity * Social activities| * Investments in technological innovations * Computer ordering(Till system)|
Main political factors which are affecting to Subway marketing are health and safety guidelines of the government, Labeling 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.
3.3 FIVE FORCES ANALYSIS
According to Porter’s five forces analysis followings are the main forces and their effects for SUBWAY marketing environment.
THREAT OF ENTRANTS| THREAT OF SUBSTITUTES| POWER OF SUPPLIERS| POWER OF BUYERS| COMPETITIVE RIVALRY| 1) Setting up 2) Product differentiation| 1) Convenience shops 2) Mid-range restaurants 3) Precooked food 4) Other social activities 5) Health food shops| 1) Farming industry 2) Worldwide market of suppliers 3) Alliances| 1) Consumers 2) Little brand loyalty| 1) New entrants likely 2) Price wars 3) Overall demand 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.
4. MARKETING STRATEGY
Marketing strategies reflects the company’s 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. Subway represents marketing and product strategies that are 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 Doctor’s 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 system’s 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 designed to make an impression example of a fast food franchisee ready for success in the future fast food market. Subway continuing to move into other nontraditional venues such as colleges, airports, hospitals, and amusement centers. Part of their marketing strategy, Subway includes identifying which venues and retail chains would be most amenable to quick-service brands. 4.1 MARKETING OBJECTIVES
Subway’s main marketing objectives are maintaining positive, strong growth each quarter and achieve a steady increase in market penetration. Subway possesses good information about the market and knows a great deal about the common attributes of the most valued 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. 4.2 TARGET MARKETS
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). 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) Subway Segmentation
DEMOGRAPHICS| GEOGRAPHIC| PSYCHOGRAPHIC| BEHAVIORAL|
* Age * Lifecycle * Gender * Income * Occupation * Religion
* Education * Race * Nationality| * Location * Regional * Urban * Density * Climate| * Social class * Life style * Personality| * Occasions * Benefit sought * User stages * Usage rate * Loyalty status|
Subway is always improving their geographic segmentation from their early development ages. By studying Subway’s geographical expansion we can identify what kind of segmentation should be included their marketing strategies. 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 same with 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 kid’s meals. 4.3 MARKET DEVELOPMENT
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 petrol 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:
* Amusement parks
* Business centers
* Coliseums and stadiums
* Colleges and universities
* Convention centers
* Recreational facilities
4.4 PRODUCT DEVELOPMENT
Improvement of products in over the time is 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.
Subway effectively competes with burger chains and others that are in the fast-casual segment of the market. Including healthier meals into its menu and giving much attention to obesity and diabetes have supported consumers’ choice for Subway (Tarantino, 2005). 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 children’s segment. 4.5 MARKETING MIX
Marketing mix consist of four Ps. Product, Price, Place and Promotion. PRICE| PROMOTION| PRODUCT| PLACE|
* Level * Discrimination * Discount| * Advertising * Sales Promotion * Personal Selling| * Design * Packaging * Display * Brand| * Warehousing * Transportation * Service * Stockholding|
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 .Subway 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 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 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 ,convention centers ,hospitals, recreational facilities. People who in any kind of Subway sales point are on hand to ensure customer’s needs are matched with the right product and to explain the different options available. Subway will do market research on the location preferences and they will close if poor maintenance and predatory pricing practice franchisees regarding customer satisfaction. At Subway, you don’t 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 into four areas, they are 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 satellite 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.
5. DISCUSSION AND CONCLUSION
By understanding the whole concept how does the impact of strategic Relationship Marketing works in various elements within an organization is not simply enough to identify the strengths, weaknesses, opportunities, and threats of a company. In applying the SWOT analysis it is necessary to minimize or avoid both weaknesses and threats. Weaknesses should be looked at in order to convert them into strengths. Likewise, the threats should be converted into the opportunities. And strengths converted to opportunities should be matched to optimize the potential of a firm. This extremely beneficial to those who their objective is analyze their company. And also the marketing manager or the strategist planner should have rough outline or structure of the framework which have high potential marketing activities that can be used to take advantage of capabilities and convert weaknesses and threats. 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 an 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 differential 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 consumer’s 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 competitor’s trends and to place more focus on the children’s 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 new décor for franchisees they will 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 flavored soy products, but Subway can take advantage of that problem since Subway go for healthy and low calorie food product marketing.
McDonald, M. (2003) Marketing Plans, Kent: Butterworth-Heinemann publications.
CIM (2005) Marketing Environment, London: BPP professional education.
Lancaster, G and Reynolds, P (2003) Marketing made simple, Oxford: Made simple.