Fast Food Multinational: Subway - Case Study Example

Fast Food Multinational: Subway Executive Summary Subway is a fast food multinational that was established in the year 1956.This multinational has annual sales that stand at $ 6.5 million. Worldwide, this fast food multinational has about 30, 000 units (Lamb, Hair and McDaniel, 111). In its initial days of operation, the company was offering fresh custom-made sandwiches, which were deemed to be much healthier compared to the widely available fast food. It was therefore an alternative to the traditional fast food providers like KFC and McDonalds. This concept of offering freshly prepared sandwiches has been very influential in the success that Subways have had over the years. Those customers who are concerned about the health aspects of the fast foods have been attracted to the Subways stores in the developed countries. This multinational, initially operated in the developed countries has been able to expand to the developing countries where it has cut a niche for itself as a substitute for the traditional fast foods that were offered by the likes of Pizza Hut and Kentucky (Siegel and Lotenberg, 89).The positive response that it has received has allowed it to cut a niche for itself in the wider fast food market. One negative factor which has reduced the profitability of the business is the low brand awareness among the consumers in third world countries. Report overview The object of this report is to establish and evaluate the best marketing strategy of Subway. In line with this, there is an analysis of the strengths and weakness in the existing marketing strategy. It is also imperative determine the opportunities and threats in order to improve on its operations. In light of this, this report is divided into two with the first section focusing on the current operation strategy and the value of creation using the SWOT analysis. Background of Organization Subway, just like other multinational fast food restaurant chains grows as a result low level financing. It has recorded tremendous growth in the United States from the start in 1965. It has won several accolades. The future plan is to open over 10, 000 restaurants in Europe to serve different cadres of customers. The goal to attracting and retaining customers is by offering healthier food as a cutting edge. Analysis of Present Operation Strategy SWOT Analysis of Subway Strengths The food chain has grown with a lot of stores with healthy diet in the offer. Subway has also worked with a number of organizations in the health sector. It has been offering low priced food prepared from fresh ingredients. Customers are also served with food according to their tastes and preferences. Weaknesses The rebranding of Kentucky fried chicken, McDonald’s and several other fast food chains has been a challenge to Subway chain. It notably uses an old branding system which has limited its ability to compete effectively with other players in the industry. Opportunities Just like other players in the industry, Subway has the ability to grow at a global scale through the franchising. Subway also capitalizes on the healthier food produced for the consumers. In focusing on all these, subway hopes to spread it stores in the United States of America. Threats It is imperative to note that Subway focuses much on nutrition and consciousness and therefore if there happens to be any sort of negative publicity, a great ripple effect can be felt in the management of the food store. Additionally, competition is rife in the food chain business with our rivals having greater brand equity. PESTLE Analysis Political Factors Health regulation policies that focus on areas where Subway has an advantage greatly affect the operations of the food chain. The use of genetically modified organisms which are of low quality affect the operations of Subway (Reid and Bojanic, 89). The penetration into third world countries with different socio-cultural views requires the rearrangement of menus to suite the customer needs Economic Factors Subway enjoys the low cost franchising as compared to other operators in the industry. Conversely, the cost of the required ingredients and supplies favors Subway. Social factors The changing lifestyles impact greatly on the growth of fast food chain in the country. Many people tend to contrite on healthy food. There is variance on the perception of fast food in the developing and developed countries. In light of this, Subway does customize its products to meet the customer needs. This will come in handy in promoting the expansion of Subway food stores. Technological factors There is no single entity that can development and grow as expected without investing on information technology. Therefore, Subway will adopt quality monitoring of the franchising. The social network such as Facebook and Twitter among others can be used to improve on the marketing strategy. Legal In all the markets where it is operating, Subways has to abide with the easing regulations on health issues. These licensing needs and regulations may have legal implications if not complied with. Environment In each of the markets, the prevailing environmental issue dictates the kind of food that is preferred by the market and the products that the company can sell. Five Forces Analysis Threat of New Entrants The food chain has developed a concept of health and nutritional food serving that is unique. The threat of new operators into the fast food market is inevitable and it is worth noting that there is a serious differentiation in the business. Threat of Substitutes The other concern is the mushrooming of healthy and nutritional food outlets and full-service restaurant. Small scale restaurants may act as a substitute in the mainstream food chain business. Power of Suppliers The sources of supplies are limited to area of Subway concentration. This therefore, poses a bib threat to the operations of subway. This therefore means that the suppliers have a greater say than Subway. Power of Buyers Normally there is fading brand loyalty as a result of entry into the business by other players. This means that consumers are focusing on new brand makers and suppliers. This affects the growth and development of Subway. Competitive Rivalry in the Industry Competition is always rife in the fast food segment. There tends to be greater price competitions in a bid to attract and retain customers. This is usually prompted by new entrants into the market. There is greater consumer demand for the healthy and nutritious food products. The Four Generic Building Blocks of Competitive Advantage On the basis of the SWOT, PESTEL and the five force analysis that has been done above, Subways comes out as a company which has adopted a management strategy that puts it as provider of fresh sandwiches that are based on the needs of the consumers in the markets where the company is operating in (Lamb, Hair and McDaniel, 67). This is intended to give the company a competitive advantage over the other industry players that rival it either directly or indirectly. This unique strategy is very vital in building the Subways brand and it is this strong brand that has grown over the years of operations which has enabled the company to stay relevant in the industry and be able to cut a niche in the already crowded fast food market. The company has been able to align itself with events that promote healthy eating in both developed and developing nations in order to build its brand. Efficiency is one aspect of the building block for competitive advantage which the company has relied on and used to stay ahead of other industry players. The company has been able to analyze the specific needs of its target customers and from this analysis; it is able to come up with services and products which are effective and efficient. Subways align its operations to the specific needs of the customers and thus provide only the services that it deems necessary for the satisfaction of the needs of the clients (Harrell, 33).This ways it is able to avoid procedures and processes which do not add value to its operations. It is these services and processes that do not add value that normally reduce the efficiency and the effectiveness of a company. As such, Subways has been able to avoid such as situation by critically defining, developing and reviewing the most important services and focusing on them. Quality has always been ensured at Subways. This fast food multinational has over the years tried to position itself as a very unique brand whose products are based on healthy as well as nutritional aspect of fast foods. This has ensured that it puts itself at a different level to rivals such as KFC and Pizza Hut. It is through ensuring that it offers quality, healthier and nutritionally rich fast food that Subway continues to attract more customers (Lamb, Hair and McDaniel, 67). The customers continue to be attracted to fast food due to the fact that it offers additional value preposition in its products. In order to ensure quality, Subway has developed and implemented quality management tools that are meant to make sure that the products are in line with its goals and objectives. Total quality management tools and tactics are implemented at various levels of operation in the company. This is done to ensure that its serves and procedures are always of the quality that is required. In cases where quality issues are detected, there are clear laid down strategies and tactics which are used by the company to correct the situations. All the Subway staff is also enlightened about the quality aspect of business operations. This is done to ensure that the employees are aware that quality is central in the operation and success of the company. Through this, it has able to remain relevant throughout the several years it has been operational. In the franchises which are not directly operated by the company, the owners and the management are normally trained on providing quality and excellent services and products. This is done to ensure that all the Subway stores provide standardized quality services in every region or location that they operate in. Innovation is part and parcel of the operations of Subways. In all the Subways franchises, the workers and managers of the stores strive to remain very innovative to develop items and products that put them in a different point to the other rivals. The innovative products that are developed by Subway are also in line with the objective of the company to provide healthier and more nutritious fast food. Subways constantly carry out market survey in order to determine the needs of its target market (Harrell, 93). It is from this research and surveys that clients’ needs are determined and new customized menus developed to help meet the specific needs of the client market. Subways recognizes customer as the central part of their business. When the customers are satisfied, the chances of the business remaining profitable and relevant are high. To ensure this, Subways is very responsive to the clients. This is terms of the needs and the complaints of the customers. The prices that are offered in most of the Subways stores are as a direct identification of the needs of the clients. The clients air their views on the services and products which they would like in the menu. From this, the company promptly responds to the suggestions. The subways menus are not standardized as in the cases with other fast food restaurants like McDonalds. The company has resorted to adapting the menu where necessary in order to respond to the specific needs of its customers. By this, it has been able to compete with its rivals and also increased customer satisfaction with the products. Differentiation Strategy Subways has clearly used differentiation in order to be able to effectively and profitable operate in the fast food market. The company has effectively positioned itself and its services from the other players in the fast food industry by focusing on the offering of fast foods that are not only nutritious but also healthy (Lamb, Hair and McDaniel, 67). From the analysis of the Porters generic strategy, it is evident that Subways has used the differentiation concept to be able to differentiate itself. The prices that are offered by Subways has been done on the higher side of the scale. This is intentionally done to add value to the clients who are health conscious about the fast foods. The brand of Subways has been positioned to be between the quick service restaurant and the full service restaurant. It is through this that Subways has tapped into the market that had initially been under tapped since most of the fast foods chains are high end placed. Segmentation Subways has relied on a very unique segmentation through developing of food products that are meant to cater for different market segment of customers based on the demography, geography and the behavior of the customers. The segmentation that is practiced by this fast food giant is based on age where there are foods for the kids, office workers and the elderly members of the society (Siegel and Lotenberg, 35). They have also customized the foods to cater for different levels of income families. Customization is based on geographic conditions and the lifestyle conditions. An example is the halal sandwich that is provided in different geographic regions where the clients insist on the halal foods alone. The younger segment of the population has been targeted. This is especially through the marketing promotions and the campaigns. The website is also tailor made to provide the promotional information. Expansion Currently, Subways has been operating majorly in the developed countries. However, there is the need for the company to expand into the developing country market. The lifestyle concept has not caught up with the customers in the developing countries and this gives the company a chance to exploit a new market (Siegel and Lotenberg, 69).Many multinationals like McDonalds and KFC have positioned themselves as upscale service restaurants that offer conventional products. However, burgers and sandwiches are not common in the developing countries and Subways can exploit this avenue to expand. In this expansion, the company is poised to face the challenges of pricing, competition from the other players and lack of brand awareness as most of the customers in the developing countries do not consume the sandwiches Recommended Solutions In order to solve these problems the company needs to focus on the prices, promotions and products. The pricing should be on the upper scale level and should be done on the basis of value preposition. Promotions should be done through the televisions and billboards. Moreover a brand ambassador can be used to create awareness (Siegel and Lotenberg, 29).On the products the company needs to come up with innovative products that are based on the social and cultural needs of the society. The company needs to offer the sandwiches as a differentiated product. The issue of nutrition and health should be a very vital aspect of the products. Apart from the sandwiches, Subways may develop innovative products which are based in the unique value propositions of the developing countries. Works Cited Boone, Louis and Kurtz, David. Contemporary Business. New York: John Wiley & Sons Publications, 2011.Print. Harrell, Stevan. Marketing: Connecting with Customers. Chicago: Chicago Education Press, 2008. Print. Lamb, Charles, Hair, Joe and McDaniel, Carl. Essentials of Marketing. London: Cengage Learning, 2008.Print. Reid,Robert and Bojanic, David. Hospitality Marketing Management. New York: John Wiley and SonsPublications, 2009.Print. Siegel, Michael and Lotenberg, Lynne. Marketing Public Health: Strategies to Promote Social Change. New York: Jones & Bartlett Learning, 2007.Print. Read More