Subway Sandwich, Business Marketing
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Subway targets consumers ranging from 18 – 45 Years old, where business workers are their main consumers. Subway has been targeting mostly foreigners when it was started in 2003. Where they targeted for 80% foreigners and 20% local consumers. This is because when it was first start, only foreigners know about the brand Subway. Subway aims to turn this around where they would like to target 80% local consumers and 20% foreigners by the year 2010. Moreover, they also target to open 140 stores throughout Thailand to increase its exposure and convenience for their local consumers.
Currently, it cost approximately $72,000 USD (2,592,000 Baht) – $192,000 USD (6,912,000 Baht) to start up a Subway Franchise, where Subway franchise is also separated into 3 types; Lower Cost, Moderate Cost, and Higher Cost. Lower Cost is considered to have fewer leaseholds, fewer seats, and fewer equipments, where for Moderate & Higher cost franchise are the ones that requires extensive interiors, extensive seating’s, and extensive equipments. (www.world.subway.com).
In Thailand, Subway sandwich shop is separated to two different types of stores; Store based (Moderate – Higher Cost) & Counter Based (Lower Cost). Firstly Store based, which is located in busy areas such as Sukhumvit or other chosen area. The store based subway stores have their own spaces and buildings, mostly located next to the road. These stores are mostly operated 24 Hours, where some shops are merged with other coffee stores such as Coffee World. Secondly, Counter based, which are mostly located in department stores and trade shows venue such as Muang Thong Thani. The Subway stores will have their own well decorated booth located in a certain part of the department store, where their services are identical to Store based but with a smaller space. These stores are operated according to the venues operating time; an example is Siam Paragon, which opens at 10:30 AM – 10:00 PM.
There are a large number of competitions in this industry, where Subway is considered as a Fast food restaurant. In the fast food industry of Thailand, direct competitors such as McDonald, KFC, MOS Burger, Au Bon Pain, Pizza Hut and other small sandwich stores, can pull customers away from Subway. Indirect competitors such as normal restaurants can easily be substituted, where consumers can choose to eat other things rather than Subway Sandwich.
Currently the market of the fast food industry of Thailand is very competitive, where large amount of chain stores are opening in every potential areas and new department stores and venues. This allows Subway (Who started its business in 2003) to hold only a small amount of market share in this industry.
SWOT ANALYSIS: THAILAND
Healthier Alternative Fast Food – Fresh
Strong brand name & image
Nationwide Chain Room for growth
Convenient – Remains at its core value of Fresh and Taste good – Freshly made
Low accuracy on orders – Consumers may not get what they want.
No direct communication and link between different stores & Head quarters.
Slow growth in Thai Market – Should expose more through more distribution.
Low Start up Cost – More Franchises purchased.
Health conscious consumers are on the rise – More consumers are eating Healthy.
Room for Expansion throughout Thailand – Small amount of Stores in the Thai market.
Increasing amount of Fast Food stores.
High competition & substitution product.
In Thailand, Subway partners with few suppliers for their inventories and products. First, as a sandwich store, ingredients for the sandwich are the most important inventory that Subway must have. Havi Food Service is the major ingredients provider for Subway in Thailand (Interview, 2008). Basic ingredients such as, Vegetables and Meat products (Ham / Bacon / Beef) are supplied by Havi Food Service. Other key products such as “Turkey from the U.S, beef from Australia, Cheese from New Zealand, and some Bread from Malaysia.” (www.amchamthailand.com).
Secondly, the bread itself, where Subway Thailand cooperated with Farmhouse to provide froze breads to Subway. These frozen bread are used for making and baking the bread that subway serves. For example, their Parmesan Oregano are made with the plain frozen dough baked with Subway secret recipe dressings. This helps subway to produce their bread faster, where their breads are all freshly made everyday, in order to serve the best to their customers. Moreover, Farmhouse also provides cookies to them, which are served as a side order along with their sandwiches.
Another business partner that Subway partner with is Coffee world. Subway uses Coffee world as a location to set their stores (Only in some areas of Bangkok & Pattaya). Coffee world has a large amount of location already, where Subway uses this opportunity to set their store in Coffee world (Not All coffee world), where they can sell their Sandwiches along with a large variety of coffee and beverages.
RELATIONSHIP MANAGEMENT STRATEGY:
Subway strategy for relationship management includes; firstly, partnering with Subway stores in New Zealand and Australia, where in there are currently 1,200 stores in New Zealand and Australia. Partnering with Subway from other areas makes it easier for Subway Thailand to manage their products, where the Subway in New Zealand and Australia knows exactly what Subway Thailand wants. Where they are serving somewhat identical products to their customers.
Havi Food Service is Subway’s major supplier, where they supply Subways major ingredients to them twice a week (Interview, 2008). They act as a buying center for Subway franchises. This helps Subway to keep their inventories up to date. Although this keeps their inventory updated, their inventories are not managed. This means that the ingredients, which are not used, will be stocked up in Subway inventories. Havi also does not link their system with Subways inventory system.
This disallow them to track their inventories, and unable to supply to Subway right away. When inventories are used up, Subway will need to borrow inventories and ingredients from other stores (If needed). From our interview, we also found out that Havi supplies same amount of inventories to every Subway store, meaning that they do not track on how much inventories are needed for each Subway store located in Thailand. This increases the cost on inventories, where there should be a better inventories system on how much sales has been made and how much are needed for each week.
From these entire situation analyses and observing from going to Subway sandwich stores, we found out that Subway has two main problems.
Unable to keep accuracy on orders made by consumers.
Lack of Inventories management – Between Suppliers Havi Food Service.
Firstly, unable to keep accuracy on orders made by consumers. This is a major problem for Subway where it is hard for consumers get what they actually want. Every time a consumer order, they will need to either yell and talk loudly, where they will need to point on the food counter to choose what they want to put in. Consumers takes more time ordering where sometimes, when there are a lot of consumers, the waiting time might be very long. This disallows Subway to provide their sandwiches to their consumers at the most efficient level.
As mentioned before, Subway inventories are sent and managed by Havi Food Service. They have a poor system in managing inventories, where Havi does not track their inventories needed in each Subway stores in Thailand. This increases cost for Subway itself where they may face exceeding inventories in some Subway stores. Inventories should be managed, where they should track on inventories information about ingredients delivered to every store and also other relevant information’s that are needed to manage better.
PHASE 2: BUSINESS MARKETING PLAN
We “OYA Technology” is a technological firm that would like to provide a computer based “Touch Screen Kiosk Ordering System” to provide a better service and a more systematic system for Subway end consumers. This machine does not only provide a better ordering system but also a better inventory management for Subway Sandwich stores in Thailand.
Our product will include a number of things that will be needed to operate such ordering system. These components includes:
CPU – Moderate to High Performance depending on types of system needed by customers.
Monitors – Monitors will be touch screen where we will use highly performance and highly sensitive touch screen system to recognize consumer’s touch.
Power Pack – To help keep power and supplier power incase of any lights out incidents.
Server System – this server links all Kiosk system to provide to customers where information’s and system can be updated easily.
Card Recognition – A card scanner that customers use their member cards while ordering.
Kiosk Ordering System will be a wall-mounted system that will be placed in each store. This system will be linked to a server, which will be again linked to main server in our system for further development and updates. Consumers will be able to choose what they want to include in their Subway sandwiches directly from this Ordering system. Their orders will then be sent directly to the food counter, which will then make their sandwiches according to order. Nothing else will be required from consumers, where the last step that consumers will need to do is only pay at Subway Point of sales system, which will be linked to our system and calculate all price to be paid by consumers.
During the ordering process, the inventories will be checked by the computer system, where each time an order is placed, the inventories will be deducted and tracked directly in the Subway store system. Each time a customer swipe their card, a consumer-based database will keep track on what the consumer eat and ordered overtime. This provides a better consumer relationship for Subway and its member’s consumers. Moreover, we would like to help these stores to save cost on labor and also manage time more efficiently for their labors to serve their customers.
ADVANTAGES & LIMITATIONS:
• Able to increase inventory tracking & management
• Highly use consumer database
• Increase efficiency of work
• Fast update service – E.g. New Promotions
• Consumer need to take time for learning how to operate the system
• When the system breaks down, the hardware will need to be sent back to company, which will take time.
TYPES OF INDUSTRIAL PRODUCT LINE:
The main Key of OYA Tech is that we provide customization service of our ordering machines accordingly to our customers needs. This makes OYA tech falls into Custom Design Products in this framework. This allows us to grab directly on what they want, where it allows them to use this system usefully in their stores. An example is Subway who we think that they need an ordering system to provide a more efficient and more accurate service to their customers. OYA Ordering Kiosk System will allow them to not only provide a more accurate order for their customers, but also able to track inventories, and keep customer database (E.g. Favorite or most ordered menu).
TYPE OF DEVELOPMENT PROJECT: As a technological firm, we fall into the platform project development project. Although we are customized, but we use identical platform for consumers who have the same needs. Parts such as CPU and Screens can be the same, where OYA Tech Kiosk system will only change their design and interface system according to our customer’s customization.
FOUR STRATEGIC FACTORS:
HIGH USAGE OF CUSTOMER DATABASE – Keep track on loyal customers orders, create a more satisfied environment and interface for stores consumer.
ACCURACY IN MAKING ORDERS – Allows consumers to buy and make orders more accurately.
TRACK INVENTORIES – Allows stores to track and link directly to their suppliers and inventory system.
_MARKETING SYNERGY:_ Our sales force will need to have knowledge on our OYA Ordering Kiosk system, where they will be able to provide and demonstrate our products to our customers like our engineers.
_TECHNOLOGICAL SYNERGY:_ We will have a 24 Hours customers service to provide maintenance to our customers. Also we will constantly track on customers changes in promotions where information can be updated within a few hours time to their OYA Ordering Kiosk System. This allows customers system to always be up to date with their fast changes in promoting.
_INTERNATIONAL ORIENTATION:_ We will be using Multi-Domestic strategy in order to keep our high complexity knowhow. Where as mentioned our OYA Ordering Kiosk System is customized accordingly to customers need, which disallow us to have a standard price for our product. In the same time, if we go global and market our product internationally, we will set up a company there in order to keep our high technological know how in our hands.
We would like to not target on Subway, but also other Fast Food Chain stores that needs customization or stores that provides products with customization. Our target market can include:
Au Bon Pain
Other Ice-Cream or Ice Related stores – E.g. Ice Monster, Red Mango
These shops mentioned above will need customization by their customers in their products. Here are some current situations of what each store is currently using:
Subway – Counter Ordering, consumer have to point and talk loudly to sandwich maker. Inaccurate ingredients can be easily added.
Au Bon Pain – Paper ordering where consumers will have to fill in the paper provided by Au Bon Pain. Sometimes Au Bon Pain have to ask consumers again in order to make sure on what they want.
Ice cream Stores – Order taken by Ice cream stores staff, many ingredients can be added, sometimes complicated for staff members.
Due to the product feature and complexity of product, we aim to introduce out kiosk machine to all subway stores within 3 years. However, since Thai subway is aiming to expand to 140 stores by the year 2010. We have come up with 2 plans for Subway:
For the Existing Stores, we have calculated market value of around 3,000,000 Baht (sell 1 machine per store). For Bangkok area, we aim to sell our machine to all subway stores within 2009-2010. For the Rest of 9 stores around Thailand, we plan to install machine within 2011. After meeting our objective of selling our OYA Ordering system to existing Subway stores, we would like to follow on providing more OYA Ordering system to Subway in order to increase their usage and purchase of our OYA Ordering system from 1 machine to 2 – 3 OYA Kiosk Machines per store.
In the case of that subway plan for their shop expansion, we have seen that this market is very attractive to us, where there are 29,000,000 Baht (Calculated by 140 Stores multiply with the price of 1 OYA Kiosk Machine) are waiting for us, Therefore we plan to create long term partnership with Subway Store where the machine will become one of the capital investment for
all franchisee with special price. For this, we can install our machine with the store decorations, which will also be a part of the extensive cost for store designs.
SUPPLY CHAIN MANAGEMENT:
UPSTREAM SUPPLIERS: This part of our supply chain includes our raw materials needed to produce our Kiosk system. These are components such as plastic sticker paper for our machine wrappings, and also PC chips that will be custom made for our needs. These suppliers can also be our outsource target where they can produce certain components more efficiently.
DIRECT SUPPLIERS: Our direct suppliers are those suppliers who provide us the basic needs for producing our OYA Ordering Kiosk System. These include sets of computers, Hardware & Software’s, and also networking parts. With these basic suppliers we buy these basic components from them where we will order accordingly to our ordered amount.
OYA TECH: For our self, we buy these components from both Upstream & Direct suppliers where we will use these components to be assembled in our factory. This hen will be sent out to our customers accordingly to their orders and specific needs.
SUBWAY & CUSTOMERS: These are our business-to-business customers who are interested in buying our ordering system to be used in their stores.
RELATIONSHIP MANAGEMENT WITH OUR SUPPLIERS & END CONSUMERS:
_Suppliers to OYA -_
We will purchase more than 60% of components needed from these suppliers. Components such as OEM software and Major computer components such as Screens and CPU system will be purchased by OYA to produce our Kiosk system.
_OYA to Customer -_
We will provide constant maintenance and system update for our customers, where as mentioned in our services we will provide a variety of benefits to keep our customers satisfied with both our products and services.
From our research, we found out the price for a standard Kiosk System provided in Thailand. The price range of these customized based Kiosk system ranges between 130,000 Baht – 400,000 Baht. This depends on the level of customization of their product and system.
• High level of innovation and R&D Support
• Staff training is important in product use.
_COST TO FIRM:_
• HARDWARE: Computer, CPU, UPS etc
•- SOFTWARE: Menu Ordering, Anti-Virus
• NETWORK: Center Server for Data Transfer (Major Cost)
• Onsite Service: Transportation Cost
PRICE SETTING DECISIONS:
We will be using 3 main types of Personal Selling promotion strategy, which includes:
_Direct Sales_ – Our sales team will contact and search for potential customers. Sales will be highly educated in our product offerings and will also provide after sales service for all our customers.
_Online Marketing_ – We will have an online marketing program, which will be websites that will provide information’s about our products with direct contact through emails and phone numbers, which will allow our consumers to ask further questions about our products.
_Demo Touring_ – We also provide a demo tour service where new customers can contact us to see our production sites and also try our products in our factory. This will allow customers to have a deeper look into our products and learn more about our company background.
_Trade Shows_ – We will be participating in large Machines, Technology, and Food exhibitions. This will allow us to increase our trial ability to our new customers, where exhibition such as Machine and Technology Expo, which will be held every year at Bitec or Sirikit convention center, can be one of our choices to show our product. Another exhibition can be “Commart”, where computer technologies are shown.
SERVICES PROVIDED BY OUR COMPANY:
_Demo & Presentation:_
• To have a demonstration in using the system before purchase.
• Trial period – 30 days
• Customer can choose either self-service order or traditional order service
• Support Team assist through self-service order for their customer.
_Implement & Training:_
• Survey & Analyze
• Confirm Requirement
• Set up & Configuration
• System Training
• Data Migration (if any)
• Operation Testing & Parallel Run
_Customization & Modification:_
•A back up marketing teamwork of large franchise store.
_System & technical consult:_
• A consult service provide before and after system set up
• Recommend suitable hardware and software set up
• Ensure new system and fit with existing system
• Recommend the communication network between branches
_Implementation & Training:_
• Maintenance & Service – Recommend through phone or Internet / Modem or
• On-site Service
We will be using two types of advertising campaigns to help us expose our product more in the market. These advertisements campaign includes:
_Magazines_ – We would like to show our print ads on technological magazines and major business magazines such as Positioning”. By doing this we will be able to attract more business customers to use our products especially those who open restaurants.
_Mailing_ – This is also another way to advertise our products to our potential customers, where our sales team will find out who are our potential customers or keep track of name cards received from trade shows, in order for us to send our brochures and new product offerings to our customers. This can be easily done through postal mailing, fax, and emails.
PROMOTION (ADVERTISING) STRATEGY:
We want to aware 80% of fast customize food restaurant within the first year, and the leader of alternative technology sector with 5% share of total fast food restaurant within three years.
First year objectives
100 % of subway restaurant to aware of our product
70% of target audience understand benefit
Second year objectives
75% of target audience feel brand superiority
Third year objectives
By using impersonal communication such as business magazines, Moreover, we also use the direct sale by promoting our product to fast food industry in order to let them inform the in-depth information and also convince customer to switch to our product.
_Developing the message_
_Informational appeal will focus on;_
Product features; Customer relation, consumer information, reduce out of stock, easier in ordering therefore increase sales.
Certificates; Show the certificates or guarantee from credible sources that is credible. Such as Department of Energy, and give 3 years free guarantee.
Benefit as long-term investment, increase in sales by 36%, tracking royal customer’s recent purchase record.
_Emotional appeal will focus on;_
User friendly; Lead to more customer satisfaction and faster in ordering.
Repeat purchase: It is fun and easy to use and we have the point collecting system therefore it can create more loyal customer.
SELECT THE MEDIA
We will use business magazines; the advertisement will be in one full page in full color on each magazine. We will always hire sales that will go door to door to each of our target market.
EVALUATION ADVERTISING EFFECTIVENESS
Pre-test and Protest
PRE-TEST: In order to set our objective campaign and the strategies, we have to know what the characteristic of the target customers are. Thus we decide to create campaign’s ideas and conduct a survey to check the respond.
POST-TEST: After we launched the campaign, we have to assure that our campaign will achieve the objectives. We will conduct a research on the number of customer phone call who interests in our product. Also, hire a research company to make the evaluation of our campaign.
Interview, Khun Wit: Subway Sales Manager (2008), Interviewed on Dec 1rst 2008.
WORLD WIDE WEB:
Subway.com (2008), Subway Sandwich Worldwide, Retrieved on Dec, 2008 from the world wide web http://www.subway.com
Subway Thailand (2008), Subway Thailand, Retrieved on Dec, 2008 from the world wide web http://www.thailandsubway.com
Kiosks (2008), Kiosk Information Technology, Retrieved on Dec, 2008 from the world wide web http://www.kiosk.is.in.th
The Entrepreneur Spirit (2008), Franchising the future Michael Allan, Retrieved on Dec, 2008 from the world wide web www.amchamthailand.com/asp/view_doc.asp?DocCID=2076 –
Smart Kiosks (2008), ” Smart Kiosk ” เทคโนโลยีล้ำสมัยสำหรับคนในยุคไอที, Retrieved on Dec, 2008 from the world wide web http://www.franchisefocus.co.th/index.aspx?ContentID=ContentID-080630113713693
Prompt computing (2008), 3M Microtouch, Retrieved on Dec, 2008 from the world wide web http://www.promptdirect.com/
Subway Stategy (2008), Subway Strategy Thai Taste & Price, Retrieved on Dec, 2008 from the world wide web http://www.marketeer.co.th/inside_detail.php?inside_id=4532
Subway Store Siam Paragon (2008), Observed on November 25th, 2008