Analyzing Subway's Marketing Strategies for Competitive Advantage

This assignment requires an in-depth analysis of Subway’s marketing strategies with a focus on the classic 4Ps: Product, Price, Place, and Promotion. Students will examine how these elements are tailored to enhance Subway's market position against competitors. The product strategy involves assessing Subway’s menu offerings and customization options. Price analysis includes pricing models and promotional discounts. Place evaluation considers Subway’s global presence and distribution channels. Promotion entails examining traditional advertising techniques like OOH campaigns and digital strategies such as social media marketing. This comprehensive study aims to provide insights into how effectively Subway integrates these elements to maintain its competitive advantage in the fast-food industry.

Marketing and communication: Subway Assignment

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Task A
1. Introduction
1.2 Overview of Subway
Based on the idea of selling submarine sandwiches the company has come a long
way in establishing a worldwide brand. Peter Buck along with Fred DeLuca started the
business of selling fresh made submarine sandwiches which were prepared in a “made
to order” format. One of the most interesting facts about the company is that during the
establishment of the company Peter Buck was just 17 years old (Subway.com 2018).
The first store was opened in Bridgeport, Connecticut. From the very beginning of the
venture the company has been following the three core principles which have now
become a part of the organisation culture:
 Premium service to the customers
 High quality food at the most affordable price
 Ensure low operating cost and to continuously improve in order to develop the
business (Subway.com 2018)
Ever since with the help of these founding principles the company has come a long
way in establishing a chain of restaurants all over the world. There are more than 4000
locations. The future aspirations of the company are to continue with the core values
and principles that have established the venture (Subway.com 2018).

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The purpose of the assignment is to understand the dynamics of the market that
Subway operates in so that the company can take strategic decisions accordingly. The
assignment includes an analysis of the marketing strategies with the help of the concept
of marketing mix that Subway incorporated in the process of strategic decision. It also
includes the industry analysis of the company in order to understand the external
business factors which impact the business. The task also includes recommendation
that the company can use following the analysis of the industry and the market.

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2. Evolution of Marketing (LO1)
A. Market orientation is the business model which is followed by an organisation
where the focus is on the customers. The changing needs and requirements of the
consumers are given precedence and decisions are made accordingly. The most
important tool that is used in this orientation model is market research, this is the
process by which the company employees to research the market in order to
understand the perspective of the customers and determine what they require (Murray
et al. 2011).
The advantage of this process is that it creates a valuable relation with the customers
as they feel connected with the company in the long run it helps the company create
loyalty and trust (Kumar et al. 2011). On the other hand a disadvantage is that the
process of conducting a market survey is an expensive investment, sometimes the
company has resources to conduct the survey by themselves whereas there are times
that the company have to hire third parties to do the survey (Kumar et al. 2011).
Product orientation is the process by which the company takes decisions based
on the value of creating products with the lowest possible cost (Jayaram et al. 2012). In
order to satisfy the demand for the product the goal of the company is to continuously
push products of high quality at low price. The focus is on providing the people with high
quality products in order to attract the customers (Jayaram et al. 2012).
The advantage is that the company can build a reputation of providing
good quality products among the customers as well as other stakeholders (Jayaram et
al. 2012). The disadvantage of the business model is during creating strategic decisions

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to gain competitive advantage as there may be other players in the market who can
take way the advantage form the organisation by producing better quality lesser price
product (Ngo and O’Cass 2012).
B. Subway is an organisation that has been motivated in providing the customers with
Sub sandwiches from the beginning of the venture. This indicates that the company
runs on the product orientation business model. Subway has used this model to develop
the sub sandwiches in a way that it has established as a generic term (Ngo and O’Cass
2012).
The core values and principles that has been discussed above states that the
company is focused on proving the customers with fresh high quality sandwiches, this is
an example that states the product oriented approach of the company. Over the years
the organisation has been producing only sub sandwiches which are made to order in
front of the customer. The customers can choose the meat, veggies and the sauce of
their choice to create a custom made sandwich for themselves (Ngo and O’Cass 2012).
Another example that establishes the product oriented approach of subway is the fact
that the company is focused on improving the service and the product with involvement
of technology and easy serving techniques. The company keeps adding and deducting
the variants of the filling that is offered and also develops variants based on the country
of operation as well (Ngo and O’Cass 2012).

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3. Marketing Environments (LO 2 & 3)
Every business operates under two environments internal and external, where
the internal factors are under the control of the company, however the external factors
are not. Therefore the management of the company has to determine the dynamics of
the eternal environment in order to take effective strategic decisions (Brosche et al.
2013).
Political factors such as stability of the government are essential in order to
establish a business on the foreign grounds (Auzair 2011). As an American company
the organisation has to analyze the foreign relation of the country of expansion while
taking decisions. It is important to align the interest of the company along with the rules
and regulations of the country of operation in order to develop valuable relations with
the customers.
Environmental factor such as adhering to the CSR regulations of the country is
one of the major factors that impact the business and its decisions as the company has
to take decisions where they can fulfill the responsibilities as well as make profit in the
process. The complimentary products like napkins, cups, salad bowls, wrapping papers
that Subway uses are in the “green” materials category (Auzair 2011). These items that
the company uses are biodegradable grade and thus have less impact on the
environment. With such responsible actions taken by the company also establishes
goodwill among the customers as well as the other stakeholders (Auzair 2011).

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4. Marketing Strategies (LO3)
A. Segmentation is the process by which the company identifies the target market of the
products or services by dividing the population into four segments: demographic,
geographic, psychographic and behavioural (Wedel and Kamakura 2012). It is important
for the management of the company to segment the market in order to ensure effective
marketing decisions (Wedel and Kamakura 2012).
Psychographic segmentation is a part of market segmentation based on the
personality of the customers. This helps in indentifying the customers of the product or
service based on their principles and values, beliefs, lifestyle and their interest. These
are the abstract aspect of an individual which impacts the buying behavior of the
customer. For example: if a person is interested in living a healthy lifestyle then there
are chances that they will choose to eating a sub sandwich over an unhealthy street
food (Cleveland et al. 2011).
Behavourial segmentation is the process by which the population of the target market
is divided on the basis of their buying behaviour and patterns the factors that are
included in the process is the frequency of use, loyalty towards the brand, benefits
associated with the products or services. For example: if a person like the way subway
creates a customized sandwich and is a loyal customer, they will chose the brand over
any other fast food restaurant in the industry (Craft and Hassan 2015).

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B. Segmentation is the process by which the company analyses the market and
establishes the effective strategic management decisions. Segmentation helps the
company to define a growth potential market place. As resources are limited and the
time is also under constraint a company has to narrow down the target market and this
is the reason why the process has to be effective as well (Mihić and Kursan 2010). In
the current market scenario it is essential to segment the target market so that the
companies can device decisions which will allow them to gain an edge over the
competitions. Psychographic segmentation is the most valuable type of segmentation
for subway, as an organisation that operates in the fast food industry, this segmentation
will allow the company to have a better understanding of the customers and how they
can improve their product to maintain a better quality (Wedel and Kamakura 2012). As
the company is focused on the improving the product this segmentation will help to
target the right people with the help of marketing decisions such as promotion and
communication, price etc can be set accordingly in order to effectively build a valuable
relation with the customer (Mihić and Kursan 2010). Fast food is a product that is
heavily dependent on the factors that are discussed as a part of the psychographic
segmentation. For example: the interest of a person to explore various types of filling or
a person who is a foodie will be interested in the brand rather than a person who is not
interested in exploring food items (Craft and Hassan 2015).

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5. Marketing Mix (LO 1, 4, 5 & 6)
The concept of marketing mix helps the company device decisions regarding the
aspects of marketing. Traditionally there were 4Ps that were developed as marketing
aspects: product, price, place and promotion. The contemporary version of the theory
includes 7Ps. It is an important model that the management of the company can follow
in order to keep up with the trends in the market. The marketing mix defines the way the
company has placed the product in the market and therefore it is an important model as
it is the way the company can connect with the end customer (Huang and Sarigöllü
2014).
Product The product that the company offers the target market is a submarine
sandwich that can be customized with the vegetables and filling of the choice
that the customers want. Not only that the customers can also choose from
an array of sauce to spice up the sandwich. The business model of the
company is built on product orientation and therefore the company ensures
that there is high quality in the process of service. From the inception of the
venture the owner of the company has focused on keeping up with the quality
of the food. There are salads and wraps apart from sandwiches, which can
also be customized as per the requirements (Singh 2012).
Apart from the restaurant services the company has also recently developed
the catering service which targets, block parties, small events etc. the
company offers several options and combinations for serving the client.
Price The prices of the sandwiches are kept in an affordable range as the people
who are targeted by the company are from the lower to medium income

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group. The company strives to provide the customers with high quality
product with at the lowest price possible and focusing on the product has
enabled the company to do so. The price of a 6 inch subway sandwich price
in the US ranges from 3-6 $ (Subway.com 2018). This proves that the price
range that the company targets is on the affordable range. The strategy that
has been used is competitive pricing strategy as the prices of the products
are set according to the trend in the market and the price point at which the
competitors sell their products (Singh 2012).
Place The products are available in the restaurant which is set up by the company;
there are 4000 stores all over the world that sells the product to the
customers (Subway.com 2018). However technology has enabled the
company to reach out to the customers with the help of third party
organisations who can deliver the food to the people using the digital
platform. Not only that the company also has its own digital platform that
allow the customers to order online (Singh 2012).

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Task B
1. Promotion mix is the process by which the company communicates with the
customers directly or indirectly. There are various medium of communication that the
company can use depending upon the message and the target market as well as the
objective of communication. Organisations invent a lot of financial resource in promotion
of the products so that they reach out to the customers. The objective of communication
depends on the objective of the business. For example: if subway has decided to issue
a discount on a special occasion, they will have to communicate the message to the
customers and in order to do that they may use various medium. Television, radio,
newspaper, magazine, pamphlet etc are some of the traditional tools of promotion.
Digital media is the contemporary tool (Thackeray et al. 2012).
2. In the video the elements that are used are the contemporary tool of promotion:
digital media. Youtube is a social platform where any individual can upload audiovisual
content this can be shared from one person to other using other social media platforms.
The message that Subway wants to convey the customers is clear in a very creative
audiovisual sequence (YouTube.com 2018). The video has been viewed 56,880 times
as of 30th June 2018 (YouTube.com 2018). It has also been trending in other social
media handles of Subway. The advantage is that it can be easily circulated among the
target market and the disadvantage is that the medium banks upon internet
connectivity.

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3. The channels of communication that is used by Subway are:
Television advertising: this is one of the major medium used by the company to
engage with the customers and keep them informed regarding the company.
OOH: Subway also uses out of home advertising in billboards, subways hoardings etc
are used, this is an easy way to send the message across. Refer to the image in
Appendix 1 (Emcoutdoor.com 2018).
Social media: subway has social media presence in a number of platforms where the
company can directly communicate with the customers.
4. The key message that is in the video is “MAKE IT WHAT YOU WANT”. This
describes the versatility of the product and the fact that it can be customized according
to the preferences of the customer (YouTube.com 2018). The fast pace and the audio of
the campaign is perfect for the message that the company is trying to convey.
5. The target market in the video is young people who are energetic and have a passion
to explore new things in life. This is the psychographic segmentation of the target
market that is portrayed in the advertisement (Craft and Hassan 2015). These people
are trendy and fashionable and lead a fast paced life; the people are looking for
adventure and are also rebels in nature.

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6. The AIDA theory is used to analyze a communication campaign and determine the
effectiveness of the project (Barry and Howard 1990).
Attention The fast paced image and the rock beat music helps in getting the attention of the
viewer immediately.
Interest The words that are shown create interest with the collaboration with the imagery
used.
Desire The delicious ways in which the company portrays the food in the video creates
desire.
Action The actions will be completed when an individual will end up purchasing a sub
after viewing the advertisement.
7. Feedback is an essential part of communication especially in mass communication
where the company conveys a message to the target market but it takes a long time to
understand the impact or reach. The platform that has been chosen here is social media
the company can enable the comments in order to receive immediate reaction and
feedback (Thackeray et al. 2012).
It can be concluded form the above discussion that the promotion mix of the
company is well strategised and is also effective as the brand has not lost its popularity
among the intense competition of the fast food market on an international level.

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Subway.com., 2018. The Subway Story. [online] subway.com. Available at:
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Appendix 1:
Figure: Example of Subway OOH
Source: (Emcoutdoor.com 2018)