Rj Reynolds Marketing Audit

Subway Restaurants

Marketing Situational Analysis Case Study

Subway Restaurants Marketing Situational Analysis Case Study

Table of Contents

1. Executive Summary 3

2. Situational Analysis p

2.1 Market Summary p

Target Markets p

Market Analysis p

2.1.1 Market Demographics p

2.1.2 Market Needs p

2.1.3 Market Trends p

Market Forecast p

2.1.4 Market Growth p

Target Market Growth p

2.2 SWOT Analysis p

2.2.1 Strengths p

2.2.2 Weaknesses p

2.2.3 Opportunities p

2.2.4 Threats p

2.3 Competition p

2.4 Services p

2.5 Keys to Success p

2.6 Critical Issues p

Subway Restaurants Marketing Situational Analysis Case Study

1. Executive Summary

Subway Restaurants, the leading submarine sandwich franchise in the United States and the world with 20,532 restaurants worldwide located in 72 countries. Restaurant locations continue to increase year over year from an annual rate of 4 percent in 1999 to 14 percent in 2003. Brand recognition grows as our market geographically expands. Our new Tuscany Dйcor reinforces our fresh, healthy and great tasting menu items. Recent additions such as the Atkins friendly sandwich wraps should establish a stronger association between just good tasting fast food to now healthy tasting fast food as concerns continue to grow about the increasing obesity problems in developing countries.

Our diverse menu continues to provide a healthy alternative to burger chains which continues to support our growth. Target markets continue to include individuals with incomes over $55,000, students and young professionals in high population centers, and individuals concerned with their health including the overweight.

With over 59 percent of our market, our closest competitor continues to remain Quizno's. Concern over their ability to erode our customer base from older franchise "no frills" restaurants is a concern. A newer addition to the submarine sandwich market is Burger King with their various grilled chicken submarine sandwiches on baguettes. With over 11,000 restaurants, this could develop into a major threat.

Recommendations include focusing marketing survey studies on the ability of Quizno's and Burger King to erode our customer base. Further evaluation is needed concerning the results of our trial direct marketing of coupons through text messaging. The response rate for the 800 text message sent out for free Subway sandwiches was only 8 percent.

Subway Restaurants Marketing Situational Analysis Case Study

2. Situational Analysis

Subway was founded in 1965 in Bridgeport Connect by Fred Deluca and Dr. Peter Buck. Today Subway is the world's largest submarine sandwich chain with over 20,500 store locations in over 72 countries. This growth pattern in the last 38 years has made Subway the second largest fast food chain behind McDonald's. Entrepreneur magazine rates Subway the number 1 franchise for 12 of the last 16 years. The franchise continues to be well received both nationally and internationally with growth in franchise restaurants up 14 percent between 2002 and 2003. We continue to be the national leader in the franchise business. The market continues to need a healthy fast food alternative to the national burger chains. Families need a more upscale dining experience as home cooking continues to decline and health concerns increase. Subway is perfectly positioned with its new Tuscany dйcor restaurants that are bright, cheerful, and emphasis the fresh healthy menu alternative.

2.1 Market Summary

One in four adults now eats a fast food meal per day. Internal marketing surveys have detailed information on Subway's loyal customers. In addition, parents now have a healthier option for kids' meals that include the fruit roll up and juice rather than a cookie and soda. This information will continue to be leveraged in marketing campaigns and promotions. Needs and wants will continue to be monitored and new product development will be guided by these survey results.

2.1.1 Market Demographics

The profile demographics of the Subway customer base include geographic, demographics, and behavior factors:

Geographic: Each franchise is located within an area containing a high density population of professionals or students located within walking distance of the population and with a high visibility location preferably in a location receiving high lunch and dinner time traffic. Corner locations are preferred. Stripe malls and indoor mall locations that place us in high traffic shopping areas are also preferable.

Demographics:

* Male and female.

* Students, younger professionals, and parents with children.

* Household with annual income of $55,000 and up.

* Are concerned about their health.

* "Overweight" both adults and children.

Behaviors:

* Eat out frequently.

* Concerned about health.

* Want quality and healthy fast food with fresh ingredients.

* Want a convenient, fast but pleasant dining experience.

* Want a competitively priced meal compared to other fast food dining.

* Want an alternative to burger chains.

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