Introduction
Any business, whether in the services or goods industry, has the customer as the most important stakeholder. Organisations work hard and devise strategies to satisfy the customer. Customers on the other side are motivated by factors within their psychological core, the consumer environment, and by marketer controlled activity.
Success in a business is attained when management can understand effectively the expectation of their customers and align their services and duties to satisfy those needs. As the saying goes “a happy customer tells another while unsatisfied customer tells two others”. The phrase implies that it is much easy to lose customers than it is to gain them.
Companies that are responsive to customers’ needs and whose practices are flexible to adjust their processes with the change in customers’ preferences perform better than those who do not care or are rigid to change. The hospitality industry is currently under pressure due to high competition and changes in consumer preferences. To remain competitive in this market, a company need to ensure it satisfy its customers (Cook 2008).
Sandwiches are fast foods present in most fast food joints but the choice of one is dependent on the customer. Subway is an American Sandwich specialist company with its head office in United States of America. It has been in the business for over 40years. This paper looks into how customers make decisions on the kind of product they are going to buy; the paper will focus on the case of sandwiches from Subway.
Brief History of Subway
Subway is a leading world sandwich provider with 33318 restaurants distributed in 92 countries all over the globe. Other than itself operating from a central point, it is in the business of franchising. The restaurant was established in 1965 by a duo by the name Fred DeLuca and Dr. Peter Buck (Subway Publication 2010). The first restaurant was established in Bridgeport, Connecticut, United States of America. It is known for its fresh quality fast food. The main fast food that the company is known with is sandwiches.
Mission Statement
The mission statement of the company which doubles as its goals statement states that “Our goal is to be ranked the number one Quick Service Restaurant (QSR) worldwide while maintaining the great-tasting freshness of our products that is our trademark”.
This is the statement that the company has worked with all along and has led to a strong brand name that facilitates its entry in the franchising business (Dennis 2004). Since its incorporation, it has been involved in numerous social responsibilities and all along whether it’s a franchisee or not it’s guided by the passion to delight customers by serving fresh, delicious, made-to-order sandwiches as was the case by its incorporators.
Market Segment of Subways
The company cannot be said to have a specific class or group of people that it targets in its productions but basically it aims at the whole family production. There are packages that are said to fit more to the young generation, that is, the youth and there are those that are meant for children.
In places that it is reputable it aims at establishing the most dominant population composition so as it can produce goods in that line (Neal and Quester 2006). Products are divided into different sizes to cater for the economic welfare of the people so that the well to do and the less fortunate in the society can fit.
Subways Current Market Position
Subway is currently the world largest sandwich company. It has its branches in 92 countries both as franchised names and original company. It places its branches in strategic points where it can get a good access to its customers. To attain this position the company has embarked on policies that ensure that it remain competitive in the world markets.
Some of the ways that the company has embarked on is ensuring that it has satisfied its customers in all means (Kaplan 2008). This is in offering quality and fresh food all the time. Its location is another factor that has given the company an upper hand. It ensures that it produces fresh food. All franchised companies are supposed to abide to regulations set by the central company.
The overall attitude of a brand can be evaluated by the following mathematical formulae;
Where
A = overall brand attitude/perception
N = number of important features of a brand
B = strength of attitude that the brand has strength i
E = important features of benefit
The higher the value of the A, the stronger the brand name that a certain brand has.
Sample use of the formulae
The case of shampoo: I like a shampoo called smelling nice. I like it because;
- It smells nice
- It lasts for a long period and
- It is affordable
In a scale of 1-5, I give the level of satisfaction as 4.
Smelling nice two brands include, orange scent and flower scent;
In a range of -3 and +3, I give orange scent 1 and flower scent 3,
Totals for orange scent brand is 1 + 4 = 5, this is the attitude level I have for the product
Total for flower scent brand is 3+4= 7. This means that my attitude towards flower scent is higher/better than that towards orange scent brand.
Internal Factors That Control Customer Choice of Products
Consumer Perception and Pricing Strategy
The way a company portrays its product to the customer determines whether a certain good/service will be appreciated or not. By presentation it means that the product that a company produces should be responsive to consumer needs. Subway looks at this in four angles; the price that subways sell its product is influenced by different factors and the most determinant is the behaviour of the customers.
The restaurants marketers are aware of the consumer trends and use them to price their goods accordingly. For example, in Airports where people of a higher class are expected to be found, the company sells relatively expensive. This method of price determination is called price differentiation. The social class that the product is targeted will influence the price of the products.
The price parameter can be approached from the actual product price or the possibility that the product can be divided into smaller parts, not necessarily cheap but the need for this is to enhance affordability. From a broader point of view the market can be divided into three sections; the high class, the middle class, and the lower class. The high class are not interested in how expensive the product is but the point of interest is the utility that the product is going to give.
When they are buying things they are looking for something extra that can make them feel special and different. To target this group, the product should try to show how it is different from others, the price can be set high since the possibility is that the group will think that the higher the price the higher the utility. When they are the target group, the price should be harmonized with the competitor’s prices.
Consumers have different perception as far as price of a commodity is concerned. There are customers who believe that if a product is sold expensively then it probably is of a higher quality. This belief is mostly noted with the high class people. This is the notion that Subway uses to sell relatively expensive on places where the well to do in the society are likely to be found.
In this era of industrialization and computers, the living standard of people is on an upward rise. They have varying expectations from fast foods joints and understanding this will go a long way in satisfying them. People are adopting modern methods of lifestyle to a point that they are creating recreational time. In these recreations the foods that are relied upon are snack and junk food like those produced by subway.
This has led to an increase in sales; however, there are campaigns that are against fast food joints focusing on the health risk offered by their products. The trend has created the perception that when someone is going out, the food to carry should be fast foods. Subway have realised this and have take – away services to capture this market. Understanding the trend is important to evolve by it.
Customer availability and advertising
Subways sandwiches penetration in the market is affected by the promotional strategies that the company adopts. Promotions are aimed at persuading customers and potential ones to use a certain company’s products. Where the customer is more likely to be found should be the place that the goods are provided. If the target customers are people who value recognition, most of them are the high class, they are more likely to be found in the shopping malls pooch area. The products/advertising materials should be displayed on those places.
The possibility that these kinds of clients will be in the back street shops is unlikely and thus the products should not be availed there. Subways have locations in international airports and posy areas to target the high class in the society. The common market is also a place that they are unlikely to go. If the products are targeting the lower class, they should be distributed in the super markets that are expected to be less expensive that the shopping malls. There are also some places that are regarded to be the high class estates.
When developing promotional campaigns customers are persuaded by the character in the adverts. For example the youth can be well captured by modellers or musicians while the old people are more likely to be captured by politically successful people. Subway has noted this need and has developed advertising campaigns aimed at benefiting from the perception. The adverts for a certain targets group are made in places where they live.
For example, Subways have its outlets in shopping malls and in major towns to ensure that people have a large access to it. This is in the domestic and international countries that it has invested in. Subways use different ways of promoting its products. The way to adopt in a particular period of time and place is determined by the target customer that it aims to get. There are different factors which motivate customers differently; knowing the correct tool for a certain market is the key to successful promotion.
To engage in a promotion, the first thing to understand is the availability of the target customers. Where are they likely to be found? Are they free in the mornings, is it in the afternoon? After realizing their availability and the fact that they can give you time to sell your products then know the age of the market, the promotion for the youth should be designed to target the youth.
The behaviour of the youth is that they don’t want something that feels so common, let the promotion give a different good feel on the customer. If the promotion is for the introduction of a new product, then a lot should be invested in assuring the client of better quality to that offered by the competitor.
The existence of opinion leaders should be evaluated. The customers are likely to follow the opinion leaders in making their decisions. The existence of groups in the society and their matching lifestyles can also be of great use. The way the consumers react is that they will follow the others. Investment should be made in this area.
If the promotion is for an already existing product in the market, the approach should be from the angle that we are thanking our customers. If the customer feels appreciated and recognized he will develop loyalty and influence others to follow his way. There are times that the company uses road shows selling its products along the street to target and create more awareness. These have an effect on making customers aware of the availability of the products.
Consumer Theories
Consumer Preference Theory
Under the theory, for a customer to buy a certain product, the product must be outstanding among the options that the market offers. To be outstanding, there must be continuous products innovation and an innovation which ensures that products can be differentiated. When a customer is able to differentiate a certain company’s products then the company is able to self market itself and lead to increased customer satisfaction. Creativity and product innovation comes handy in creating product differentiation.
Subway is known for its international recognised sandwiches. To ensure that it remain competitive and create a more customer satisfactory goods, the company keeps inventing and improving the quality of sandwiches they serve. When a company is developing a product, there should be the need that the product is supposed to fulfil.
Fast food joints are places where consumers should get a quick service; this implies that they should have an effective queue flow to ensure that they have ready products adequate for the consumers at a particular point in time and still the products have not stayed in the restaurant for many hours. The trend that the customers follow at one given point is a change to the product that gives them a higher utility. When the product is developed, the team should always invest in offering something extra to the consumer.
On the other hand, if the customers are not much interested in the ingredients or they even are not aware of the ingredients, the focus should be the outcome that the product will give. The packaging of the product is also influenced by the consumer behaviour. What does the target customers expect, what are they likely to be moved by? What is the age of the target customer? If the target customer are children – by extension the parents, the products should have attractive bright colours that are more likely to attract the children.
If the target market is the youth then the fashion should be of emphasis. The packaging should be one that gives a sense of superiority to the product. The youth will always want to have a better product than the peers. Effort should be made to ensure that the product is portrayed to give the impression of superiority. When subway is packing its products, it has rebranded bags that portray superiority. This is another form of advertising.
The language on the product packaging should be targeted at the desired group age. If the prices have reduced and are lower than the market prices it is important to include them on the package. In all the marketing of the products whether they are target to the high class, middle class, low class, the old, and the youth the marketer should assure the customers of the availability of the products at all times. Understanding the target market segment cannot be overlooked (Anon not dated).
Neoclassical Economic Theory
The theory assumes that customers are rational and make choices on the products they buy from an informed point of view. This is to illustrate that if customers have to continue using Subways products, then the company should invest in increasing the value and standards of their products.
Other than taking a speciality in one area, the company can tap more customers when it adopts a strategy that promotes the development of its main products as it diversifies. By doing this, the customers will get a one stop restaurant where they can get their goods more efficiently. The last experience that a customer had on any Subway branch will affect the choice he is going to make next time.
According to neoclassical theory, one of the strategies that companies should embrace is diversification. Instead of concentrating in one line of business; sandwiches, Subways should have other fast foods like coffee. In striking for the right opportunities, the company will have to analyze its main market rival.
The strategies being employed by the competitor should be critically assessed and evaluated for necessary counter action. In addition, the general plan of the competitor in a bid to control the market is a vital toolkit that the company can use to estimate the competitive edge of the market (Cook 2008). Management should always be active in learning the current trends in the market and ask itself questions like, why is the competitor able to lower the price of this commodity?
Do they have access to cheaper raw materials or is it that quality of the product has been compromised and can be offered at a lower price than normal market value? Finally on opportunities, the marketing department will have to investigate the company’s managerial structure both current and in the past and give a detailed findings as well as possible conclusions on the same (Hanssens, Rust & Srivastava 2009).
Halo Models and Summary Construct Model
Verlegh & Ittersum (2001) explain that there are two ways/models that perception towards a country’s products can be looked at; halo models and summary construct model. In halo model people make a general perception of a certain country out of the little they are exposed to.
They necessarily need not to have a hand on experience of products from the country but the speculation and little information that they have developed their attitude. For example customer perception is likely to be affected by what they heard their peers say. If they heard a positive note about the company then they are likely to use the company’s product when they are in a position. To tap this perception, Subways should aim at developing a strong brand name (Paley 1999).
When consumers use summary construct model, they are guided by a certain experience that they have had and lasts in their memory for a long period of time. A prior hand-on experience is seen as the known point of view and from it a generalization is derived. This calls for service and products improvements to ensure that (Han 1990).
Conclusion and Recommendation
Customers are the main force behind the success of a company. There is need for a company to understand its target market and the kind of motivation that can be used on the customers for better results. In the fast food industry, the case is no different where customers increasingly are demanding for more satisfaction. This is attained if companies are willing to produce consumer focused goods.
Despite subways enjoying as the leading sandwich provider, there are other companies that have come up with the aim of entering the same business. To ensure that it maintains its stand then it has to utilize its available opportunities well. Opportunities for the company are dependent on both the internal and external assessment criteria of the company’s profile of operation. The company can still optimize on the various opportunities available to bring about sustainable growth through effective competition.
Customer’s perception is shaped by the environment they are living in as well as the internal processes of a company. In the case of Subways, it should ensure that it improves its internal process in terms of product differentiation and offering fresh foods. Consumers are affected by the general perception that people who have had an experience with a company hold. This calls for efficient and satisfactory services from subways always.
Reference List
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Subway Publication 2010. Official SUBWAY Restaurants Web Site. Web.
Verlegh, P W J & Ittersum, K.V. 2001. The Origin of the Spices: The Impact of Geographic Product Origin on Consumer Decision Making. In Frewer, L, E Risvik, & H Schifferstein, editors, Food, People and Society. Berlin, Springer.