RETAIL MIX: SUBWAY

Pricing Strategies

Presented by: Group 2

Assignment: "Retail Mix of your
franchisee store with an emphasis on
pricing. Also chart the retail mix
strategy of the store 5 years from
now"

RETAIL MARKET STRATEGY

Retail Strategy

Target Market

Market segment(s)
toward which the
retailer plans to focus
its resources and retail
mix

Retail format

The nature of the

retailers operations
its retail mix

Sustainable
Competitive Advantage

Advantage the retailer

has over its competition
that is not easily copied
by competitors and thus
can be maintained over
a long period of time

RETAIL MIX
The retail mix is a set of
decisions retailers make to
satisfy customer needs and
influence their purchase
decisions.
Elements in the retail mix
includes:
the types of merchandise
and services offered
merchandise pricing
advertising and
promotional programs
store design
merchandise display
assistance to customers
provided by salespeople
convenience of the stores
location

Pricing

Communi
cation
mix

Merchan
dise
Managem
ent

Location

Ret
ail
Mix
Store
design
and
Display

Customer
service

SUBWAY: AN INTRODUCTION

Subway (stylized as SUBWAY) is an American fast food restaurant

franchise that primarily sells submarine sandwiches (subs) and
salads, started in 1965 in the US.
Qwned and operated by Doctor's Associates
More than 43,000 stores in 110 countries
Competitors include McDonalds, KFC, Dunkin Donuts
Slogan: Eat Fresh
Entered India in 2002: First restaurant opened in Mumbai, followed
by Bangalore, Chennai, Hyderabad
492 stores in India as of 2014
4 only-vegetarian stores in India, introduced sub offerings that
match local taste

RETAIL MIX: SUBWAY

Internal: company policies

such as performance linked
pay, activities and internal
branding such as employee
of the month
External: Advertising (TV,
magazines, hoardings,
pamphlets, ads on cabs, emails) Sales promotion,
Social media engagement
Interactive: Customization
of subs, online ordering,
home delivery
Others:
4 onlyBy
-veg
stores
Forecasting:
taking
past
3 years data and comparing
it with past 3 weeks data.
Orders are given for 7 days
worth of materials needed
and an additional 3 days as
buffer
Sourcing & Vendor
Relations: Vegetable vendors
are whole-sellers, for other
materials different vendors
in different parts of India, all
purchasing is done centrally
Assortment:: Veg/ Non-veg

Value Pricing: price points start from Rs.

100 for subs
Bundling pricing: combo with beverage/
cookie

Pricing
Commu
nication
mix
Retail
Mix
Mercha
ndise
Manage
ment
Store
design
and
Display

Since the operation of a

subway restaurant needs
Location
less space (as compared
to say McDonalds), it
can be opened even in at
a petrol pump or a car
dealership.
Since Subway offers
higher customization in
terms of the final product
(as compared to KFC or
Custome
McD), it leverages this
r service
advantage to the young
clientele who like to have
a different flavour every
Presentation: Two
bays: one non-veg and
time.
the other veg with billing counter in the
center.. The layout allows a sequential flow
from ordering, making of the sub to billing
Atmospherics: Color: green and brownhealthy/hygienic food. Lighting: White light
which is uniform throughout the store.

SUBWAY PRICING
STRATEGIES

Value Pricing:
Subway tries to create value products by service in terms of quality,
ambience, variety, and convenience. By introducing the concept of sub of
the day the company tries to satisfy the needs of its present customers
by creating a sense of curiosity amongst in the sense they would want to
know what sandwich is the sub of the day.

Bundling Strategies:
Subway offers combo offers of a sandwich, potato chips/cookie and a
drink at only Rs. 45 extra for a medium size meal and Rs. 50 for a large
size meal.

Promotional Pricing:
To increase its current consumers base and also to attract new
customers, Subway goes for promotional pricing quite often. Subway has
come up with new campaign where with any 6 inch sub and a medium
beverage the company is offering another 6 inch sub for free. In
September 2011, Subway had introduced a buy one get one free offer on
Mondays.

SUBWAY FINANCIAL
STRATEGIES (INDIA)

Financial Objectives
Higher Number of bills
Higher Billing Amount

Targets
Monthly, weekly & daily targets are allotted
In terms of Sales and COGS (Max 35% of sales)

Pricing
Varies across cities, purely as a function of
logistics
Avg. monthly prices are paid to vendors for veg

Royalty
8% of revenues is paid as royalty fee
4.5% is allocated to marketing funds

RETAIL MIX STRATEGY

GOING FORWARD

FRANCHISING: Opening a new Subway restaurant needs

less expenditure as compared to its competitors. This
advantage can be leveraged in maintaining its competitive
advantage in pricing.

THANK YOU