Marketing strategy Multinational fast food restaurant chain Marketing strategy of Subway

Offering healthier alternative to traditional fast-food chains

Introduction

Subway is a multinational fast food chain started in 1965 with annual sales of $6.5 million and more than 30,000 units worldwide. It started by offering healthier, fresh, custom-made sandwich which offered a healthier alternative to that of the traditional fast food chains such as Kentucky fried chicken, McDonald’s, Pizza Hut etc. The concept of the product of Subway was to offer freshly prepared sandwich from fresh ingredients right in front of the customers has proven to be a winning marketing strategy in the United States and many European countries. The health-conscious customers were attracted to the healthier alternative provided by Subway and the customer’s responses are indicated by the growth of the fast food chain in the developed countries. Subway has also expanded into a lot of developing nations; however it has not been able to deliver a fast paced growth similar to that of the rivals such as KFC and McDonald’s. One of the negative factors of Subway is considered as the lower brand awareness among the consumers and their unique product offering mainly in developing nations (Boone and Kurtz, 2011).

Report overview

The objective of the present report is to identify and evaluate the present marketing strategy of Subway and to analyse the strengths and weaknesses of the existing marketing strategy. Further in the report based on the weaknesses and threats of the existing marketing strategy an alternative or an enhanced strategic approach will be developed particularly for the expansion process into the developing nations. Hence the report is divided into two sections where the first section is evaluating the present marketing strategy, the value creation process and the advantages and disadvantages of the healthier diet concept offered by Subway. The first part of the report evaluates the marketing strategy by using swot analysis, pest analysis, and five forces analysis and by evaluating the product positioning, promotions, pricing and several other marketing parameters. The second part of the report uses case studies and appropriate theories to develop an alternative strategy for increasing the market share, profitability, value creation and sustainability of Subway in the developing nations.

Background of organisation

Subway, similar to other multinational fast food restaurant chains have grown based on the franchising system where low levels of capital investment attracted many franchisees. Subway has seen enormous growth in the United States from the start in 1965, has won several awards, and rewarded the investors. According to industry analysts Subway plans to open more than 20,000 restaurants in Europe to cater to the health-conscious customer, develop its branding strategy, and promote the brand awareness among the health-conscious customers. Subway with its franchising system is competing with other fast food chains which are offering quick service and fast food, however with healthier meals in the menu and concentrating on nutrition and healthier diet. According to Pride and Ferrell, (2010), out of all the fast food chains which has worldwide presence, Subway is considered as the market leader offering healthier and nutritional fast food to the customers.

Part one

Analysis of present market strategy

Swot analysis of Subway

Strengths

Subway has expanded with numerous stores, healthier diet options in the menu, partnership with several associations and organisations promoting health consciousness, customising the menu options and offering low franchising cost (Boone and Kurtz, 2011). One of the unique propositions of Subway is to use only fresh ingredients in the food it prepares in front of the customers and offering customised food rather than prepared food based on fixed menu. Subway has used