Subway is owned by the “Doctor’s Associates Inc., an American restaurant franchise that mainly sells submarine sandwiches, salads and personal pizzas” (Wilk 2006, p. 132). Currently, Subway records more than US$9.05 billion in sales every year, an indication of its success internationally. It is widely recognized as a health conscious restaurant and as a result, it is one of the fastest growing franchises in the world. Despite Subway being a poignant example of a fast food franchise that is successful globally, penetrating into new markets is still a big challenge, just like any other new entrant into the market. Establishing or repositioning a Subway store in a new market, like Saudi Arabia still requires a lot of advertising and brand name building. Otherwise without a strategic advertising plan, the store would most likely end up failing in spite of its success in other countries or regions.
In the modern business world where economic growth has leveled and competitors multiplied, every organization needs to adopt aggressive marketing strategies for it to be successful. The marketing strategy details the courses of action that the organization focuses its strengths and opportunities so as to increase its revenues and domination in a targeted market forte. In coming up with the appropriate marketing strategy for the Saudi Arabia market, Subway should conduct a PEST analysis; this indicates the political, economic, and social aspects surrounding the company in new market (Hooley, Piercy & Nicoulaud 2008, p. 23).
Economic marketing and marketing environment
With the global economic turmoil, though it’s recovering, the retail sectors have been forced to adjust to the tastes and needs of their customers (though, it is usual as per Ang, Leong & Kotler (2000, p. 67) that customers’ needs and preferences change in times of financial crisis). Usually most customers go for the most affordable products and avoid being extravagant. Therefore in relation to this, Subway store would be effective in a new market if it is able to provide the consumers with their products at rates that are affordable enough for that specific market. By doing an all inclusive research, it is easy to determine the rate at which the local competitors are selling their products and establishing the practicable rates at which to introduce Subway merchandise would be effortless.
The franchise can begin by selling at slightly lower rates than the competitors so as to attract potential customers. Luckily, with the current financial crisis, pocket-minded customers are more likely to visit stores that offer cheaper products rather than expensive ones. To further advertise the store, Subway can embark on its marketing strategy used in the United States, by giving an offer of “five dollar foot-long” submarine sandwiches for a limited time only promotion. In the US, Subway sold the “foot-long” (which is a 30cm submarine sandwich), at $5 exclusive of premium and double meats submarines. This promotion, having being the most successful ever in the company’s history is very likely to be a huge success in Saudi Arabia.
Subway restaurants were offering a “customer rewards programs called the “sub-clubers” for many years but were forced to discontinue the program due counterfeiting, internal theft of stamps by employees and sale of stamps on online sites such as eBay” (Smith 2006, p. 215). This program worked in such a way that customers were given special stamps every time they bought a sandwich, with one stamp for a 6 inch sandwich and two stamps for a foot-long sandwich. The stamps were then redeemable for a free standard sandwich. Subway would re-introduce the package under a new program name such as “sub fans” and ensure there is adequate monitoring and accounting for the stamps. This re-introduction and more so in a new location would not necessarily mean a repeat of the fraudulent activities. On the other hand, subway would also initiate the stored-value cash card that is already functioning in several subway restaurants. This card popularly known as “Subway Card” allows customers to earn points which accumulate per every dollar spent and eventually a customer can get free food and sandwiches with the points earned. Both of these customer reward programs are likely to work extremely well in a new environment and as an introduction of the food chain into the new market.
To create a more stable customer base in the Saudi Arabia market, it is necessary for Subway to have a long lasting effect on the consumers because it certainly guarantees the establishment of a stable clientele within the market. While setting up a new store, the social effect that it will have on the civilians is very significant. Ensuring that the effects are positive is even more crucial in attracting customers. Rather than establishing a “take-away service” store, the Subway store would be more effective if opened in a spacious building or vicinity that has enough room for customers to sit down and enjoy a meal, alone or with friends. This would comprise of high-quality and updated décor within the restaurant as well as good, soothing music. By doing this, it will indirectly give people confidence to gather socially and sends out a welcoming message as well, thus catching the attention of many people.
Another way of creating a positive social effect is by employing the locals to work in the store and for the store rather than hiring expatriates. The Subway staff working for the store should also be recruited from the local community. Credentials and work experience are only slightly important since franchisee training is structured, to the point and designed to guarantee swift start ups. As a result of creating job opportunities for the local community, the store is perceptibly expected to gain popularity and garner a lot of customers along the way. Furthermore, raw materials used to make the sandwiches, salads, pizzas and other foodstuffs should be bought from the local marketplace or from local distributors.
However, Subway has been met by its share of religious, legal and political drawbacks in every country it has established outlets. But the franchise has overcome this through consents and negotiations with the host countries. Tax laws and other rules and regulations as set by the host country or region that affect the restaurant, directly or indirectly, should be followed to the letter and where compromise is required, consulting is obligatory. This is necessary in preventing friction and misunderstandings. It also helps in avoiding unnecessary lawsuits or other punitive actions such as banning from a certain region due to non-compliance (Schnaars 1998, p. 101).
Subway has become a worldwide brand recognition that is especially renowned for its low-calorie diet that mostly contains vegetables. In a world where people are driven to eat too much high-calorie foodstuff, Subway instead sends out a healthy message of “7 subs with under 6 grams of fat” as a major part in its advertising. The Vegetarian Resource Group reported that “We are pleased to report that one chain, Subway, with over 13,000 locations worldwide, has earned the right to use the “Five a Day for Better Health” logo of the Produce for Better Health Foundation. Subway menu items, many of which are low in fat and 100% of which contain vegetables, meet the rather strict standards of that organization. We encourage other chains to follow the lead…..” (as cited in Bartas 2000, p. 87). Subway encourages healthy living for everyone and sells food products that are healthy and appropriate for every person, whether sick or ill, young or old. The menu at Subway, which is constantly revised and updated, reflects fresh, healthy and fast food snacks. In addition, it has partnered with American Heart Association to promote good health through good eating habits.
Subway, being a health conscious restaurant targets all age groups and provides food stuff that is healthy for people of all ages. However, it being a fast food restaurant most people do not recognize it unless they hear it from someone or happen to visit the store themselves. This can prove to be difficult especially when trying to get into a new market as many people automatically assume that a fast food store only deals with high-fat foods. Nonetheless, this can be easily rectified by a few marketing strategies. Quiznos, which is the main Subway competitor, have contracted Michael Clarke Duncan, a film actor, to provide the voiceover for all their commercials. Subway can use this idea and make a contract with a local celebrity to market and promote the Subway delicacies on television and radio. A local celebrity is more likely to attract attention and influence young people and children to the store. This will then have a ripple effect and will pull more potential clients to Subway. In addition, subway could go on and sponsor local foundations or even individuals. Sponsorship creates awareness up to the grassroots level. This is something that subway has done before with the NASCAR Sprint Cup series and the 2009 Little League World Series and would only be an extension to garner more support.
Entering into the Saudi Arabia market means meeting competitors and rivals, therefore a lot of effort is needed to at least counter an already established competitor, if not outdo him. This means coming up with tactics that will outshine the products that the competitor is providing. However, this does not mean engaging in tactics that ruin relations between a company and its rival or that would hurt the competitor gravely as this might end up being the downfall of the company. Meeting and creating good relations between the competitors is essential as they help the incoming retailer to learn more about the market and its preferences.
Ang, S. H., Leong S. M. & Kotler P. 2000. The Asian apocalypse: crisis marketing for consumers and businesses. Annapolis, MD: Long Range Planning.
Bartas, J. M. 1997. Vegetarian Menu Items at Restaurant and Quick Service Chain. Vegetarian Resource Group, p. 26-27.
Hooley, G., Piercy, N. & Nicoulaud B. 2008, Marketing Strategy and Competitive Positioning, 4th Edition. London: Pearson Prentice Hall.
Schnaars, S. 1998. Marketing strategy: customers and competition. Northampton, MA: Free Press.
Smith, A. 2006. Encyclopedia of junk food and fast food. Westport, CT: Greenwood Publishing Group.
Wilk, R. 2006. Fast food/slow food: the cultural economy of the global food system. Lanham, MD: Rowman Altamira.