Subway Franchise’s Positioning Strategy

Executive summary

Subway franchise is the biggest sandwich chain in the world. The chain specializes in sandwiches and it has 33005 restaurants which are opened in 91 countries in the world. In Australia, Subways is the leading restaurant in terms of number of branches, which are totaling to 1000. But is market share is limited by its small space which lacks enough playing ground, less CSR and general advertisement strategies that are not Australia-specific. This report will explain the Australian macro trends and how Subway restaurant can reposition itself. It will also explain the repositioning strategy of subway and an advertisement campaign to help put the products in the market, focusing mainly on the Australian market.

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Introduction

Fred and Peter started the restaurant in 1965. The two partners had an aim of opening 32 more restaurants within a span of 10 years. They also aimed at providing products which were of high quality and providing excellent services to the customers (Subway 2010). They worked towards keeping the cost of operation as low as possible and looking for better locations. To date, the restaurant has over 34,000 locations. The chain specializes in sandwiches and it has 33005 restaurants which are opened in 91 countries in the world. Australia is the leading in number of outlets outside United States, with 663 branches (Ferrel & Hartline, 2008). The mission of the Subway chain is to offer value to the customers through provision of healthy food. It also aims at providing tools that will enable the entrepreneurs to have a competitive advantage all over the world as well as Australia where competition seems to be taking shape (Subway 2010).

The Australian macro trends

The competitive business environment is affected by macro trends like economic environment, social environment, political environment, demographic environment, lifestyle and technological environment (Oldroyd 2007). The macro environment is concerned with the general trends that exist in the society and economy. It is of great importance when a business is considering the development of broad strategies or business and product strategies. The analysis of the macro environment is also referred to as PEST analysis.

Organization
(Source: Kotler 1989, p.132).

Political environment

Political environment covers a range of issues like political character of the government itself, party politics and also the legal and the regulatory systems. The political character of Australia government is favorable to the businesses. Political environment in Australia assures confidence and certainty to the business people because the regulatory and political environment is open and stable (Pride & Ferrell 2007). Corruption rate is also lower compared to countries like United States and United Kingdom. The country has a transparent frame work which makes the country a safe place for those business people who want to invest.

Social environment

Social conditions include the social and culture aspects, human interactions and circumstances that encompass human beings. The society in Australia is changing constantly and therefore the marketer in the Subway restaurant should understand the trends in the community in order to satisfy their needs effectively. Understanding the social trends will help subway to develop strategies that will help it to satisfy the changing needs of the customers (Ferrel & Hartline 2008).

Economic environment

Economic environment is that part of macro environment which consist of factors which influence the personal disposable income of consumers as well as their purchasing power. In recent years, Australia has the best economy in the world. The economy has high growth rate, the inflation rate is low and also the interest rate is low which makes the country favorable for investors (Kotler 1989). The economic environment is favorable for Subway restaurant.

Technological environment

Technology helps a business to identify more opportunities for its products and services. Australia has been known for its achievement in development of new technologies. This helps the restaurant to use the most current technology thus getting new markets and gaining a competitive edge (Aaker 1991).

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Demographic environment

Demographic environment consist of issues like age, gender, occupation, nationality, region and family life. Australia‘s number of births and immigration is increasing and the rate of death decreasing. This has resulted to the population increasing thus making a great market for the businesses (Fifield 2007).

The repositioning of Subway

Brand repositioning can be associated with a change in the perception associated with a brand (Walker 2008). Repositioning is important to a brand because it takes the basic tangible aspects of the product and actually builds the intangibles in the form of an image in peoples mind. However, subway’s advertisement is generally designed and still carries American ideals even in Australia, making it less visible. MacDonald’s and Hungry jacks on the other hand have successfully designed their ads according to the specific market segment. MacDonald’s and Hungry jacks offer more variety of food products, have their locations strategically placed within major locations in cities of Melbourne and Sydney. MacDonald’s has wider space for children playground, a level Subway is yet to achieve.

Development of a new product

Development of new product line is seen as an essential approach to increasing brand visibility. It therefore means that for any retailer to penetrate the target market, it’s necessary that it increases its product offerings so as to achieve product goals.

The restaurant should introduce a health burger in order to target those people who are health conscious. With the rise in obesity cases in Australia (the country is ranked 3rd in obesity index of the world), most people are very sensitive on what they eat (Garber 2005). Therefore, in order for the subway chain to target these people should introduce health meal like vegetarian burger or grilled burger which will attract more customers.

Developing the existing product

In its repositioning strategy, the need to develop more products to accommodate various market needs is important in this line of business (Walker, 2008). Basically, an increased variety such as children’s meal would encourage more families to visit the restaurants. Additionally, as stated earlier, many of the Australian population have developed health-conscious belief on what they consume, hence the desire to see their children too enjoy a healthy eating habit as they grow (Schnaars 1998). Furthermore, Subway’s competitor MacDonald has been under threat for its full-of-fat foot products, a test that Subway has passed. The children eating healthily will encourage more families to crave for Subway restaurants, thus increasing the retailer’s brand recognition for long term business success (Duecy 2005).

Developing subways branches

The development of subway restaurant branches however has been jeopardized by its casher that slows down orders by customers. This is in contrast to MacDonald’s faster approach taking a mere 3 minutes to complete an order. Additionally, Subway has limited play grounds, thus inability to accommodate complete families. In order to overcome these problems, the company should focus on establishing branches in places with enough space to allow for the development of play grounds. The new branches would benefit children and those who want to have fun. These repositioning strategies will make the restaurant to gain a competitive advantage over and above other restaurants (Pride & Ferrell 2008).

Developing Subway’s advertising campaign

Advertising is a very critical means in which to emphasize Promotion campaign. Advertising is important in that it creates awareness on the change of product image, which is the main concept of repositioning. In order for the subway restaurant to target the kids properly it should use cartoon advertising (Young & Burgess 2010). The placement of cartoon advertisements in cartoon program will help the children to pay attention to the services and products that the Subway restaurant will be advertisement (Kotler & Armstrong 2010).

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Subway Company should also use internet marketing to advertise its services and products online. Internet marketing is powerful because of the limitless geographic range that it can penetrate. Almost every person is conversant with internet and as such when the company uses it as an advertisement media many people will be targeted. The restaurant can post the types of the meals it offers and other services for the people to see. Internet marketing will save time for the company because one does not need to travel but instead it involves posting an advert online and very many people will access it (Kutz & Snow 2009).

Sales promotion is also a promotional technique that the restaurant should use to reposition itself. This consists of activities or materials that will be used by induce the customers. The restaurant can use free samples or coupons to attract more customers to use their services and buy the products. This method will help the company to attract more customers, boost sales to the current customers and neutralize competitive promotional efforts (Lancaster & Reynolds 2005).

Subway restaurant should use public relation promotion strategy to create awareness of its products and services. Public relation will focus on enhancing the reputation of the total organization by making people aware of the restaurants products and services, brand or activities, as well as ethical stand in the societal welfare (Wakefield & Siahpush 2002). It will also help in creating the restaurants images such as that of innovativeness. The company can sponsor social and sport events in order to create a good image and reputation. This will help create customer loyalty and also attract more customers to use the restaurants products and services (Pride & Ferrell 2008).

Table: The table below shows the weakness of Subway in terms of advertisement strategies, as compared to MacDonald’s and Hungry jacks (Trott 2008).

Subway MacDonald’s Hungry jacks
Focuses on best choice, best price for health conscious consumers Focuses on quality in terms of cleanliness and high standards of service Relies on quality
Low-fat subs Vegetable Subs Concerned more with excellence in service
Inexpensive price Moderately priced Low price
Has one advertising plan for all countries, focusing mainly on American ideals Designs advertising plans for each market segment, in this case for Australian market Uses printed vouchers for advertising
Have limited public relations Have invested heavily on public relations through corporate social responsibilities Follows MacDonald’s footsteps in building their public relations image

Conclusion

Started over 5 decades ago, Subway owners’ mission was to offer customers with healthy food through an excellent service. Its rapid expansion in Australia has seen the restaurant chain emerge as the leading retailer in food and beverage category over the last five years, as far as number of branches is concerned. This rapid growth is as a result of stable political environment, which favors honesty, transparency and hence low corruption cases. Additionally, good economic environment and high technological advancement, and increased population growth in Australia has increased disposable income and presented faster means of production and communication and marketing. However, the changing social environment and lack of proper marketing campaign strategies that support brand repositioning are seen to limit the speedy success in terms of market penetration, thus low market share (only 2% of the total market share).

In line with the changing demographic status of the Australian people, Subways has the opportunity to reposition itself in order to penetrate this highly competitive market, with an aim of building an appealing image to the customers. It is therefore important for the company to establish image building initiatives through advertisements and corporate social responsibilities. The establishment of new restaurants should be done in places with enough spaces to allow for constructions of playing grounds. Additionally, the company should strive to increase its product range to match that of its competitors.

Reference list

Aaker, D 1991, Managing brand equity: capitalizing on the value of a brand name, Free Press, Chicago.

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Duecy, E 2005, ‘Global, growth urban sites speed Subway along track toward overtaking MacDonald’s’, National Restaurant News, New York, Vol.39, Iss. 6, p.4.

Ferrel, O & Hartline, M 2008, Marketing Strategy, Cengage Learning, New York.

Fifield, F 2007, Marketing strategy: the difference between marketing and markets, Butterworth-Heinemann, Chicago.

Garber, A 2005, ‘National Restaurant News’, New York, Vol.39, Iss.8, p.4.

Kotler, P 1989, Marketing in Australia, Prentice Hall, Chicago.

Kotler, P & Armstrong, G 2010, Principles of marketing, Pearson, Chicago.

Kutz, D & Snow, K 2009, Contemporary Marketing, Cengage Learning, New York.

Lancaster, G & Reynolds, P 2005, Management of marketing, Butterworth Heinemann, Chicago.

Oldroyd, M 2007, Marketing Environment, Butterworth-Heinemann, Chicago.

Pride, W & Ferrell, O 2007, Foundations of Marketing, Cengage Learning, New York.

Pride, W & Ferrell, O 2008, Marketing, Cengage Learning, New York.

Schnaars, S 1998, Marketing strategy: customers and competition, Free Press, Chicago.

Subway 2010, ‘Eat Fresh’, Web.

Trott, P 2008, Innovation Management and New Product Development, Prentice Hall, New York.

Wakefield, M & Siahpush, M 2002, ‘The Effect of a smoke-free law on restaurant business in South Australia’, Aust N Z J Public Health, vol. 26, no.4, pp. 375- 82.

Walker, J 2008, Marketing strategy: a decision-focused approach, McGraw Hill, Chicago.

Young, L., & Burgess, B 2010, Marketing Technology as a Service: Proven Techniques that Create Value, John Wiley and Sons, New York.

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