Analysis of Subway's Marketing Mix and Strategic Recommendations

This report provides a comprehensive analysis of Subway's marketing mix strategy, focusing on the 7Ps: product, price, place, promotion, people, process, and physical evidence. The report highlights Subway's current strategies, including its premium pricing and emphasis on healthy food options. It delves into specific strategies like penetration pricing, particularly for developing countries, and discusses internal and external influences affecting Subway's marketing decisions, such as competition and supplier relationships. The report emphasizes the importance of employee training (people strategy) to enhance customer knowledge and loyalty, and the significance of physical evidence strategies, like restaurant layout and online ordering, to attract customers. Recommendations include implementing penetration pricing, investing in employee training, and enhancing the physical environment to increase market share and sustain future growth. The report concludes by emphasizing the need for Subway to adapt its strategies to maintain a competitive advantage in the fast-food industry.

Running head: MARKETING FUNDAMENTAL
Marketing Fundamental
0 | P a g e

MARKETING FUNDAMENTAL
Executive Summary
Subway is an American corporation which operates in restaurants industry and offers healthy
food to its customers. The company can use marketing mix strategy to increase its market
share and customers base. Marketing mix is defined as a set of various marketing tools which
are used by corporations to achieve its marketing objectives. Marketing Mix strategy includes
7Ps which assist corporations in influencing their customers’ buying behaviour. The 7Ps
include place, price, product, promotion, physical evidence, people and process strategies.
Subway should implement ‘Penetration pricing strategy’ which can assist in increasing its
business in developing countries. There are various internal and external influences which
effect Subway’s strategy such as cost, competitions, predetermined objectives, and suppliers.
People strategy focus on providing training to employees which increases their “customer
knowledge” that result in increasing customer loyalty. The physical evidence strategy
requires the corporation to influence its physical environment to attract customer bases such
as providing self-service, online booking, home delivery, simple restaurant layout, and large
sitting space. Subway can implement this strategy to target its potential customer base which
results in increasing company’s market share worldwide and sustain its future growth.
1 | P a g e

MARKETING FUNDAMENTAL
Table of Contents
1.0 Introduction..........................................................................................................................3
2.0 Previous Assignment Summary...........................................................................................4
3.0 Marketing Mix Strategy.......................................................................................................5
3.1 Subway’s Pricing Strategy...............................................................................................6
3.2 People Strategy.................................................................................................................7
3.3 Physical Evidence Strategy..............................................................................................7
4.0 Recommendations................................................................................................................7
References..................................................................................................................................9
Appendix..................................................................................................................................11
2 | P a g e

MARKETING FUNDAMENTAL
1.0 Introduction
This report will focus on analysing the marking mix strategy of “Subway” which is an
American fast food chain restaurant. The company is one of the world’s biggest restaurant
chains, and it offers its services in more than 100 countries (Subway, 2018). This report will
discuss the marketing mix strategy of Subway which will include product, price, promotional,
people, process, physical evidence and place strategies. Further, the report will provide
recommendations for Subway that can assist in improving its marketing mix strategy in order
to provide them a competitive advantage over other firms.
3 | P a g e

MARKETING FUNDAMENTAL
2.0 Previous Assignment Summary
Subway is the world’ largest fast-food restaurant chain and it offers its services in more than
44 thousand locations of 100 counties. The primary strengths of the company include healthy
products, fresh ingredients, large investment and availability in multiple locations, whereas,
its weakness include expensive products, low sales, and workers’ pay issues (Harwell, 2015).
The opportunities of the enterprise include interest in healthy food is increasing, cheaper
expansion, and growing interest in vegetarian food, however, various threats include more
competition change in customers’ taste and pressure for providing health food (Ming, 2017).
The corporation’s segmentation includes young people below 40 years and old people above
40 years who prefer to buy healthy food. The target market includes young people who need
to know that healthier food taste good and older customers who prefer healthy food and
lifestyle. The position of Subway in fast food market provides that they offer healthier food at
relatively cheaper rates.
4 | P a g e

MARKETING FUNDAMENTAL
3.0 Marketing Mix Strategy
Marketing mix is defined as a set of factors, actions or policies that are used by corporations
to promote its products to its targeted customers in the market (Anitsal, Girard and Anitsal,
2012). It is used by companies to influence customers’ purchasing decision in order to
increase their sales. While taking crucial marketing decisions, managers evaluate 7Ps of the
marketing which influence company’s strategy and increase its effectiveness (Yasanallah and
Bidram, 2012). Following are the 7P’s of marketing which influences company’s marketing
decisions.
7P’s Summary
Product Product defines an item which is produced by
a company to satisfy the requirements of its
customers. It can be an object or service.
Corporations have to ensure that their
products are based on customers’
requirements.
Price It defines a product’s price which is paid by
the customer to enjoy such product.
Organisations can significantly influence
their marketing strategy by changing the
price of products.
Place Distribution is a key part of the marketing
mix. The companies ensure that their
products are easily accessible to potential
customers.
Promotion Promotion is crucial for an organisation since
it can increase brand recognition and sales.
Organisations use different methods to
advertise their products such as television,
radio, online, print media and others (Khan,
2014).
People Organisations have to research on the
potential market to ensure that enough
customers are available in target markets who
are interested in company’s products and
services.
Physical Evidence Physical evidence of delivery of service and
products perceived in the market is necessary
which influence company’s marketing mix
strategy.
Process The system and procedure of an enterprise
include its method of executing service;
therefore, corporations have to ensure that
5 | P a g e

MARKETING FUNDAMENTAL
they have a well-tailored procedure which
focuses on reducing operating costs.
This report will discuss Pricing, People and Physical Evidence strategy for Subway to
increase their market share by targeting potential customers.
3.1 Subway’s Pricing Strategy
Subway is a premium price fast food restaurant because as compared to its competitors,
McDonald’s and KFC, its products are high priced (Bhasin, 2018). However, the corporation
offers low calories healthy food to its customers which justify its high priced strategy. The
company also maintain its restaurants clean and germs free to attract a large number of
customers. Thought, the prices of Subway’s products are high; the company provides more
quantity than compared to its competitors which justify its prices.
Strategy
Subway should use ‘Penetration Pricing Strategy’ to increase its market share in restaurants
industry and target new potential customers. The strategy will focus on reducing company’s
products prices in developing countries such as India, China, Indonesia, Thailand and other to
target new potential customers. Many other competitors such as McDonald’s and KFC have
implemented similar strategy while entering in new markets (Bhattacharjee and Chatterjee,
2015). Subway should advertise its products as “low-cost healthy food” which attracts its
target customer’s bases which include young and old people. Especially, students will prefer
to buy healthy food at low cost since awareness about fitness is continuously increasing.
Influences
Subway had to deal with various internal and external influences which affect the company’s
pricing strategy. Various influences which affect the pricing strategy of Subway include
demand, competition, objectives, costs, suppliers, and others. Following are two internal and
external influences which affect Subway’s pricing mix strategy and for details, see appendix
below.
Internal Influences External Influences
Cost Competition
6 | P a g e

MARKETING FUNDAMENTAL
Predetermined Objectives Suppliers
3.2 People Strategy
Subway has more than 490,000 employees working across its restaurant chains; generally,
around 8 to 12 employees are needed in one Subway restaurant. The company provides 33
hours on-job training and 62 hours of classroom training to its employees (Entrepreneur,
2018). In order to target potential customers, company has to implement new guidelines for
employees. The workers are requiring being friendlier in order to attract old people. The
employees are requiring having ‘customer education’ in order to attract consumer in the
restaurant; the company can provide that by giving appropriate training to the workers. The
enterprise should also introduce reward and incentive policies which motivate employees to
perform better.
3.3 Physical Evidence Strategy
Physical Evidence is referred as the elements of the physical environment of the restaurant
which is experienced by customers and visitors. The physical evidence influence customers’
perspective about the company and the way it functions (Ryu, Lee and Gon Kim, 2012).
Subways should maintain clean and hygienic interiors to attract potential customers. The
company should offer a self-service system with easy to understand the system, and the
employees must wear similar attract cloths. The design of the restaurant should be simple to
ensure that old people did not face any problems and it must provide large sitting space. The
company should also offer online ordering and home delivery facility to attract students and
other local customers.
4.0 Recommendations
 Subway should implement above-mentioned strategy because it assists in increasing
company’s market share in the restaurant industry and assists them to target their
potential customers.
 The pricing strategy enables Subway to increase in markets of developing countries.
In developing countries, generally customers did not prefer to buy highly expensive
food products. Therefore, penetrating strategy allow Subway to attract such customers
and increase their market share.
7 | P a g e

MARKETING FUNDAMENTAL
 Highly trained employees increase brand image of the company and customers’
loyalty. Employees assist in maintaining a positive relationship with customers which
assist company in targeting their potential customers.
 Physical evidence such as large setting space, easy restaurant layout, and well-dressed
employees increase company’s brand image which assists in increasing its sales.
Therefore, Subways should implement the above-mentioned strategy since it assist in
increasing company’s market share and customer base.
8 | P a g e

MARKETING FUNDAMENTAL
References
Anitsal, I., Girard, T. and Anitsal, M.M. (2012) An Application of Services Marketing Mix
Framework: How do Retailers Communicate Information on Their Sales Receipts?,
„. Business Studies Journal, 4(2), pp.77-90.
Bhasin, H. (2018) Marketing mix of Subway. [Online] Marketing91. Available at:
https://www.marketing91.com/marketing-mix-of-subway/ [Accessed 21st January 2018].
Bhattacharjee, N. and Chatterjee, S. (2015) Fast food rivals expand, hitting Yum sales in
India. [Online] Reuters. Available at: https://in.reuters.com/article/yum-results-kfc-pizzahut-
india/fast-food-rivals-expand-hitting-yum-sales-in-india-idINKCN0S11P420151008
[Accessed 21st January 2018].
Entrepreneur. (2018) Subway. [Online] Entrepreneur. Available at:
https://www.entrepreneur.com/franchises/subway/282839 [Accessed 21st January 2018].
Harwell, D. (2015) The rise and fall of Subway, the world’s biggest food chain. [Online] The
Washington Post. Available at: https://www.washingtonpost.com/business/economy/the-rise-
and-fall-of-subway-the-worlds-biggest-food-chain/2015/05/29/0ca0a84a-fa7a-11e4-a13c-
193b1241d51a_story.html?utm_term=.49b943490604 [Accessed 21st January 2018].
Khan, M.T. (2014) The concept of'marketing mix'and its elements (a conceptual review
paper). International journal of information, business and management, 6(2), p.95.
Ming, C. (2017) Trends for 2017 show wellness and foods link to grow. [Online] CNBC.
Available at: https://www.cnbc.com/2016/12/30/trends-for-2017-show-wellness-and-foods-
link-to-grow.html [Accessed 21st January 2018].
Ryu, K., Lee, H.R. and Gon Kim, W. (2012) The influence of the quality of the physical
environment, food, and service on restaurant image, customer perceived value, customer
satisfaction, and behavioral intentions. International Journal of Contemporary Hospitality
Management, 24(2), pp.200-223.
Subway. (2018) About Us. [Online] Subway. Available at: http://subway.is/en/umsubway/
[Accessed 21st January 2018].
9 | P a g e

MARKETING FUNDAMENTAL
Yasanallah, P. and Bidram, V. (2012) Studying the Status of Marketing Mix (7Ps) in
Consumer Cooperatives at Ilam Province from Members' Perspectives. American Journal of
Industrial and Business Management, 2(4), p.194.
10 | P a g e

MARKETING FUNDAMENTAL
Appendix
Internal Influences
Cost In order to provide low-quality health food,
Subway has to ensure that it purchase
ingredients at relatively lower prices and the
manufacturing process is also required to be
cost-efficient.
Predetermined Objectives The corporation has to change its
predetermined objectives in order to
implement penetration pricing strategy
effectively. The firm has to focus on
increasing market share rather than
maximising profits.
External Influences
Competition Subway is facing fierce competition from
companies such as McDonald's, Burger King,
and KFC. All these firms focus on offering
low priced products to their customers which
increases their market share.
Suppliers In order to reduce price of healthy food,
Subway has to deal with its suppliers to
ensure that they provide fresh ingredients at
low prices.
11 | P a g e