Subway Systems Australia - SWOT Analysis - Case Study Example

Subway Systems Australia Name Professor Institution Course Date Subway Systems Australia Executive Summary Australia fast food industry has experienced stiff competition as established market players seek to outdo each other in terms of price, product development, market share and profits. With its slogan “eat fresh”, Subway Systems Australia has posed a strong competition to the market leaders including Competitive Foods, McDonalds’ and Domino's Pizza and even attracting more customers as market shift to healthy fast foods. Therefore, this report will draw SWOT table to critical analyze the strength and weakness of Subway Systems Australia which has helped and also hindered its competition in Australia fast food market. The report also described the market target by the company and the new product developed for target market. Finally, the report describes the customer value offered by the new product, and provides justification on how the new product ‘fits’ with the SWOT analysis. Introduction Subway Systems Australia is a fast food company operating Australia. Subway Systems Australia is branch of the parent company SUBWAY® chain which first established in 1965 in Connecticut, US (Lichtenberg 2012, p. 37). After a few years in operation the company had grown and started expanding to other cities and countries across the globe. Subway (2016) claimed that today, SUBWAY® chain has more than 44,000 outlets in more than 100 nations across the globe. However, in June of 1988, SUBWAY® chain first entered Australian fast food market and opened its doors in Perth. Subway (2016) postulated that currently, the company has more than 1400 stores in Australia which are owned and run on the basis of franchise. The company is famous for its submarine sandwich which is offered in all its outlets across the globe. Subway Systems Australia also offers foods like Italian B.M.T, Roasted Chicken, Tuna, Meatball Marinara, Subway Club, Subway Melt, hamburger, wraps, Chicken Teriyaki, salad, Steak, Turkey, Veggie Delite, Cheeses and salads among others (Subway 2016). Research has found out that Subway Systems Australia is the largest single-brand fast food company in Australia. SWOT Table Strengths Weaknesses Subway Systems Australia has a global presence which makes it a strong brand (Subway 2016). The company puts high regards to healthy foods. Subway Systems Australia has greatly diversified products hence offering more options (Lichtenberg 2012, p. 36). The company employees some of the highly qualified people in the market. Subway Systems Australia has numerous outlets in Australia hence making it difficult to control (Subway 2016) Having several outlets within one city cause cannibalism. The company has faced some aspect of negative brand publicity. Opportunity Threats Product development especially healthier fast foods. There are increasing opportunities from advanced technology. The growth of home delivery and take away foods modes of purchase has presented new opportunities. Stiff competition from established companies. Economic fluctuations (Pitta 2010, p.131). Increase in consumer health concerns (Currie et al. 2010, p. 33) Findings Explanation of SWOT analysis table Subway Systems Australia possesses several strengths which has made it one of the highly rated companies in Australia. The company is regarded as strong brand in Australia and beyond. The fact that Subway Systems Australia has a parent company in the US and even other outlets in many parts of the world creates global appeal. IBISWorld’s market research has also revealed that the company is ranked fourth in market which has several players such as Competitive foods, McDonald's Australia Holdings and Domino's Pizza among others (IBISWorld 2016). Subway Systems Australia is also known for healthy fast foods menu. IBISWorld (2016) pointed out that the strategy of venturing into health fast foods has attracted most of the customers as the market is inclined towards healthy choices. In fact, Subway Systems Australia is positioned as a healthy and fresh fast food company (Subway 2016). The positioning set it apart from its competitors. Subway has some of the most qualified employees which provided an excellent service to customer. Namkun and Jang (2007, p. 389) argued that the professional approach in serving best foods has attracted more customers to the business. However, Subway Systems Australia also has its weakness which has made it trail the best four companies in the market. The company has opened several outlets in Australian cities making it had to control their operations (IBISWorld 2016). The presence of several outlets created some form of cannibalization into each other resulting to other restaurants not making profits. Subway Systems Australia has suffered negative brand publicity. Donaldson (2014) posited that one of such situation emerged in 2014 when the company criticized of selling bread with chemical azodicarbonamide. Research has also established that Subway Systems Australia face several threats which could derail its quest to growth. Market research by Euromonitor (2016) claimed that the company faces fierce competition from McDonald’s, Competitive Foods, Domino's Pizza and Yum! and other upcoming firms (IBISWorld 2016). The fluctuation of global economy is a real threat to Subway because such situation reduces the value of currency and disposable income. Pitta (2010, p. 132) asserted fast food industry highly depends on disposable incomes and fluctuations in these factors affect firms’ profits. Another threat facing Subway is that of more people leaving fast food for healthy foods due to health concerns and disorders such as obesity. Nevertheless, the company has numerous opportunities which if they use well can help them improve their chances of growth. Opportunities are now present in healthier and fresh fast food segment (IBISWorld 2016). The company has since diversified to these segment and increase healthier fast foods which also include vegetables. Technology has also presented opportunity which Subway can exploit. IBISWorld (2016) opined that the company can use technology for research, product development and marketing. In addition, offering free internet like Wi-Fi within the outlets has been used to attract more customers in the current times. Recommendations Target market Subway Systems Australia targets young people who are majorly urban dwellers in age of 25-35 (Pitta 2010, p. 132). The people who belong to this age group are either in college or work, or both, and are believed to have a busy schedule hence prefer fast foods. Furthermore, IBISWorld (2016) pointed out that the target group is urban dwellers belonging to middle and upper class who have high disposable income to use for fast foods. Also, the group has a strong expression of taste, wants greater fads in life. Euromonitor (2016) claimed that Subway Systems Australia has done well to attract the target market with its products in the past. However, a research which claims that the young people are more prone to obesity, diabetes and cardiovascular disease has made this target group to shift to healthier fast foods (Currie et al. 2010, p. 33). These young people understand the value of living healthy. New Product Even though Subway Systems Australia maintains some of its products, the management has introduced a new product called Grilled chicken sandwich to target its customer (age 25-35) who are health conscious (Subway 2016). Grilled chicken sandwich is healthier food option with low fat content. Helpguide.org (2016) contended that Grilled chicken sandwich is breast of chicken with no bones marinated with seasonings and grilled to produce for juicy and tender backyard-grilled experience and taste. This product is served with Green Leaf tomato and lettuce. As opposed to frying chicken which normally result to high fat content, grilling chicken after removing the skin lowers the fat content giving it healthier taste and value (Helpguide.org 2016). The form of product development together with fairer prices placed on this placed attracts more customers. Customer value proposition Kotler and Keller (2013, p. 123) argued that customer value proposition is the statement why consumer needs to buy the firm’s product. Subway Systems Australia, new product, grilled chicken sandwich, offers high customer value proposition in terms of product in very many ways. Grilled chicken sandwich is healthier and provide nutritional value to customers (Helpguide.org, 2016). For instance, Grilled chicken sandwich is rich in protein, vitamin B-12 and iron as opposed to fried chicken which has high fat content and can cause diseases. In other words, Helpguide.org (2016) asserted that grilled chicken sandwich will make sure that consumer can prolong their lives. The customer will also benefit from fairer prices offered the company on the new product and even have some savings. The customer will also enjoy value as a result of differentiated product as opposed to usual fast food they are used to. Justification of the choice of new product using at least one strategy By developing new product called Grilled chicken sandwich, the companies is actual using S-O and W-O strategies to fit into SWOT analysis. Subway Systems Australia has developed new product to pursue health conscious customer which the new customer segment in the market. In this way, the company uses S-O strategies to pursue the new opportunities which are the best fit for the firm’s strength (Kotler & Keller, 2013, p. 156). In addition, by developing new product, Subway Systems Australia is also using W-O strategies. In the past, the company has suffered negative brand publicity as a result of using chemical and antibodies in making some of its products especially bread and chicken. Kotler and Keller (2013, p. 156) claimed that by using W-O strategies, the company is attempting to overcome its weakness by pursuing opportunity which health foods. Conclusion The research on Australian fast food market it is shows the Subway Systems Australia presently enjoys its operation and competition in the market. Its current status is attributed to its positioning as a company which offers healthier and fresh fast foods. In addition, the company has able to provide customer value proposition through healthy fast foods and fairer prices. The research also projects that Subway Systems Australia may intensify competition as the market shift to healthier fast foods. However, to grow and strongly challenge the top companies such as McDonald’s, Competitive Foods and Domino's Pizza, it has to shake off some of its weaknesses including its expansion and negative brand publicity. References Currie, J, Vigna, S.D, Moretti, E & Pathania, V 2010, The Effect of Fast Food Restaurants on Obesity and Weight Gain, American Economic Journal: Economic Policy vol.2, pp.32–63 Donaldson, S 2014, Subway Takes Chemical Out of Sandwich Bread after Protest, ABC News Euromonitor 2016, Fast Food in Australia, Viewed on 1st August 2016 from Helpguide.org 2016, Healthy Fast Food: Tips for Making Healthier Fast Food Choices, http://www.helpguide.org/articles/healthy-eating/healthy-fast-food.htm IBISWorld 2016, Fast Food Services in Australia: Market Research Report, Viewed on 1st August 2016 from http://www.ibisworld.com.au/industry/default.aspx?indid=2005 Kotler, P & Keller, K.L 2013, Marketing Management, Prentice Hall Lichtenberg, A.L 2012, A Historical Review of Five of the Top Fast Food Restaurant Chains to Determine the Secrets of Their Success, Claremont McKenna College, pp. 2-53 Namkung, Y & Jang, S 2007, Does food quality really matter in restaurant: its impact of customer satisfaction and behavioral intentions? Journal of Hospitality and Tourism Research, Vol.31, No.3, pp.387-410 Pitta, D.A 2010, Product strategy in harsh economic times: Subway", Journal of Product & Brand Management, Vol. 19, No. 2, pp.131 - 134 Subway 2016, Subway Official Website, Viewed on 1st August 2016 from https://www.subway.com.au/ Read More