INTRODUCTION TO MARKETING (MKT410)

CASE STUDY – THE MARKETING ENVIRONMENT

NAME OF COMPANY:

SUBWAY

TYPE OF BUSINESS:

PARTNERSHIP

PREPARED BY:

NURSAFURA BASYIRA BINTI ZAMRI

PREPARED FOR:

DR WAN NORMILA

SUBMISSION DATE:

11 NOVEMBER 2020
1.0 EXECUTIVE SUMMARY
2.0 INTRODUCTION

SUBWAY brand had started more than 50 years ago when Fred DeLuca who is a 17 years
old high school graduate and Dr. Peter Buck team up to open their first submarine
sandwiches shop in Bridgeport, Connecticut in 1965. The idea of opening the submarine
sandwiches shop is coming from Dr. Peter Buck who is a nuclear physicist. He came out with
this idea as the initiative to help Fred DeLuca pay his tuition. The fact that DeLuca highly
hoped to earn enough money for his college tuition and eventually he become a doctor.
SUBWAY is originally called “ Pete’s Super Submarines” and later in 1968 the “SUBWAY”
name is used for the first time. On the first day of opening, they got to sell 312 sandwiches.
The difference between their sandwiches and the others is they served fresh and affordable
made to order sandwiches. They always provide the highest quality of menu items at a price
that everyone can afford and enjoy. They also keep to their principle which is ‘keep operating
cost low and ensure to have a great system in place and never stop improving’. SUBWAY
offers variety kind of fresh submarine sandwiches to their customers. Besides, every
customers had chance to decide how they want their sandwiches to be served. By 1974, as the
brand already had 16 submarine sandwich shops throughout Connecticut, Fred DeLuca and
Dr. Peter Buck realized that franchising is the best way to grow up their business. Today,
SUBWAY brand had become the world’s largest submarine sandwich chain with more than
44,000 branches all around the world with more than 150,000 employees.

The purpose of this case study is to analysis the impact of microenvironment forces towards
the selected company which is SUBWAY. The company’s microenvironment consists of
actors close to the company that combine to form its value delivery network and forces that
influence the company’s ability to transact business effectively with its target market. It
includes the company itself, suppliers, marketing intermediaries, customers, competitors and
publics.
3.0 ANALYSIS OF MICROENVIRONMENT

3.1 COMPANY
SUBWAY has become a huge chain in the fast-food industry. Therefore,
SUBWAY restaurant is following the Matrix management in the management
system, which against the traditional system. A key feature of the matrix structure
is dual reporting where employees report not only to a functional manager but also
to a project team leader or a product manager with regard to product issues. The
highest post in this organization is Chief Executive followed by Functional
Manager, Manager of Project Managers, Project Manager, and lastly, Staff. The
management of this organization has five main functions named Planning,
Organizing, Staffing, Directing, and Controlling.

3.2 SUPPLIERS
Since SUBWAY is one of the largest franchises in the world, it may hold
considerable bargaining power with its suppliers. It can set demands on suppliers
to comply with, and due to its many franchised restaurants, it can buy in large
volumes which makes a possible to get a higher discount . Furthermore, there are
plenty of suppliers within the food industry so it would not be a major problem for
SUBWAY to change suppliers if deemed necessary. This serves to decrease the
bargaining power of the suppliers even further. Overall, suppliers are no
immediate threat in any way since SUBWAY to a large extent can dictate
demands and threaten with switching to another supplier if they do not comply
with specific demands. The upside as a supplier, however, is that SUBWAY needs
to make sure that the potential suppliers can live up to its standards. This means
that a decision to switch to a different supplier would not be taken lightly.

3.3 MARKETING INTERMEDIARIES

Marketing intermediaries work to promote the product through marketing
channels, which builds customer relationships and ultimately increases brand
loyalty and awareness. There are basically four types of marketing channel which
are direct selling, selling through intermediaries, dual distribution, and reverse
 channel. Subway is using direct selling as its marketing channel to reach its final
consumers. As we know, Subway prides them on always having the freshest
ingredients available for sub and they hide nothing from customers. All their
products are made on the spot and the most interesting part is when all customers
can customize their own sub by choosing any toppings and flavour of their
favourite.

3.4 COMPETITORS
The first in the list of top competitors of Subway is McDonald’s followed by
Yum! Brands and Burger King. These three companies are also conceptual fast-
food chains like Subway. There are a few major differences that makes
McDonald’s remain as one of the top competitors of Subway. One of the
differences is based on the ownership structure where McDonalds’s is a public
company whereas Subway is a privately owned company. Besides, these both
companies are using franchising in their business models but to different extents.
Subway itself has franchised all its restaurant and it does not own any of its
restaurant. Meanwhile, McDonald’s owns 20 percent of its restaurant and the
remaining 80 percent owned and operated by independent franchises. As for Yum!
Brands, it has four brands to its name with each specializing in a given type of
menu which are Taco Bell, The Habit Burger Grill, KFC, and Pizza Hut brands. It
specializes in pizza, fried chicken, chargrilled burgers, sandwiches, and Mexican-
style foods. Meanwhile, in Malaysia, KFC and Pizza Hut has become a great
competitor to Subway.

3.5 PUBLIC
3.6 CUSTOMERS