introandunivar_sudip
TRANSCRIPT
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BACKGROUND
y Subway is an American restaurant franchise primarily sells submarine sandwiches (subs), salads,
and personal pizzas.
y It is owned and operated by Doctor's Associates, Inc. (DAI). It was founded by Fred De Luca and
Peter Buck in 1966, when they opened the second Subway restaurant.
y Subway is one of the fastest growing franchises in the world with approximately 34,187
restaurants in 95 countries/territories as of March, 2011.
y It is the largest single-brand restaurant chain globally and is the second largest restaurant
operator globally after Yum! Brands (35,000 locations)
y Objective is to become #1 Quick service restaurant
y The SUBWAY® franchise was named the #1 franchise in category among franchises with
worldwide operations in the 2010 Franchise 500
y Adopted franchise model for internationalOperations and they try to have Unique store
locations
LITERATURE REVIEW
We studied some current literature and news reports available on the growing fast food market in India.
There is a huge potential in the fast food market that is just starting to boom in India. According to a
report published by market research firm RNCOS in April 2010, titled Indian Food and Drinks Market:
Emerging Opportunities the Indian food and beverages market is expanding rapidly and is projected to
grow at a compound annual growth rate (CAGR) of about 7.5 per cent during 2009-13 and would touch
US$ 330 billion by 2013. The Indian fast food market is growing at an annual rate of 25-30 percent,
according to a report published by market research firm RNCOS in September 2010, titled Indian Fast
Food Market Analysis. Foreign fast food chains are aggressively increasing their presence in the country.
There is a great belief in the India growth story with the Increase in income level and presence of rising
middle class. This combined with the Increasing health consciousness among consumers of fast food
presents unique opportunities for a fast food chain like SUBWAY in India. Thus, this area presents a
huge marketing opportunity for companies and so is an exciting subject for study as well more so in the
localized environment of Bhubaneswar.
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THE CATEGORY
Fast Food is the term given to food which can be prepared and served pretty quickly. While meals
prepared with low preparation time can be considered fast food, typically it represents food sold in a
restaurant or store with low quality preparation and served to the customer in a packaged form or
takeout. Outlets may be stands or kiosks which may provide no shelter or seating. Franchise operations
which are part of restaurant chains have standardized foodstuffs shipped to each restaurant from
central locations. According to an industry body and E&Y study on the Indian food industry called
'Flavours of Incredible India Opportunities in the Food Industry', published in October 2009,
investment opportunities in the Indian food industry are set to shoot up by a huge 42.5 per cent to US$
181 billion in 2015 and to US$ 318 billion by 2020.
Fast food is one of the worlds largest growing food types. Indias fast food industry is growing by 40% a
year and is expected to generate a billion dollars in sales by 2005.The multinational segment of Indian
fast food industry is up to Rs. 6 billion, a figure expected to zoom to Rs.70 billion by 2005. By 2005, the
value of Indian dairy products is expected to be Rs.1, 00,000 million. In last 6 years, foreign investmentin this sector stood at Rs. 3600 million which is about one-fourth of total investment made in this sector.
Because of the availability of raw material for fast food, Global chains are flooding into the country.
MARKET SIZE & MAJOR PLAYERS
Dominated by McDonalds, it has as many as 88 outlets. Dominos pizza is present in around 100
locations. Pizza hut is also catching up and it has planned to establish 125 outlets at the end of 2005.
Subways have established around 200 outlets. Nirulas is established at Delhi and Noida only. However, it
claims to cater 50,000 guests every day. The major players in fast food are:
MCDONALDS
KFC
PIZZA HUT
DOMINOS PIZZA.
COFFEE DAY
BARISTA
The main reason behind the success of the multinational chains is their expertise in product
development, sourcing practices, quality standards, service levels and standardized operating
procedures in their restaurants, a strength that they have developed over years of experience around
the world. The home grown chains have in the past few years of competition with the MNCs, learnt a
few things but there is still a lot of scope for improvement.
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MARKETING OBJECTIVE
To determine the viability of Subway store in Bhubaneswar and find its potential target
consumers.
Bhubaneswar was meant to house the state's machinery and hence was designed to be a largelyresidential city with outlying industrial areas. With the economic liberalisation policy adopted by the
Government of India in the 90s, Bhubaneswar received large investments in the fields of
telecommunications, IT and higher education, particularly engineering. The city is home to around 60
engineering colleges (as of 2009) and the number is growing every year. The city is also home to many
tutorials and coaching institutes who prepare students for various entrance exams. Recent times have
seen large scale retail chains such as Reliance, Vishal MegaMart, Big Bazaar, Pantaloon, Pal Heights,
Indulge, New Leaf, Habib's, has opened outlets in Bhubaneswar. DLF Limited is developing an Infopark
spread over an area of 54 acres (220,000 m2) in the city. Forum Mart shopping malls is constructing
another Shopping mall named Forum Lifestyle mall a 550,000 sq ft (51,000 m2) lifestyle mall in
Bhubaneswar with 1,200 car parks. Such large scale urbanization being in the pipeline Bhubaneswarshould and would be a pretty big market for all the fast food players. Through our Market Research
project we are trying to get a clearer picture on whether SUBWAY can be viable in this potentially
booming market in Bhubaneswar.
RESEARCH OBJECTIVE
To determine the factors which are important for consumers of fast food
To identify potential customers for SUBWAY
The research objective is to find out what are the factors which influences the preferences of consumers
of fast food. The study focuses on those factors which would influence the potential consumers and to
see whether SUBWAY can satiate those needs. We are evaluating the strengths and weaknesses of the
SUBWAY brand as per the consumer opinion. We want to also have a look at the possible customer
segment for SUBWAY. Overall we are trying to infer our marketing objectives through the analysis of our
research objectives.
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CONCEPTUAL FRAMEWORK
The conceptual framework underlying the study of the shift in the consumers mindset is influenced by a
lot of factors as shown in the diagram above. It illustrates the macro effects of the increase in income
level and the impending rise of the middle class. It also documents how there os an increasing trend of
health consciousness among the consumers of fast food, which complements pretty well with SUBWAYs
offering of high quality service with product innovation. We are looking at how all these opportunities
could be converted into high sales if SUBWAY enters the Bhubaneswar market
Increase in income level and
presence of rising middle class
Increasing health
consciousness among
consumers of f ast food
Subway's focus:
Service and
product
innovation
Identif y other
parameters for success in
Bhubaneswar
market
Convert the
opportunities into
high sales volume
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KEY INFORMATION AREAS
Demographics
Here we are focusing on the customer and the type of customer who would like to visit
SUBWAY outlets. We would like to know the income levels the age groups which would be
interested and what each demographic segment are looking for when it come to fast food
and how SUBWAY is viewed by them.
Pricing
We are looking at the price sensitivity of the potential customers and how much they might
be willing to forego in terms of their expenses on fast food. We are trying to see whether
SUBWAYs price points would fit in with customers price requirements.
Looking at the Health perceptions on buying decisions
As SUBWAY has positioned itself as fast food outlet with a health perspective it is necessary
to know how much this is valued by the potential target segment.
Service features
Any fast food joint would be judged on its service features as it is an integral part of such
fast food chains. Here we try to get a picture of the customer expectations as well as their
perception of SUBWAY on these service features.
Product Offering
The product offering is equally important and we try to get a feel for the consumer
perceptions of the different product features and their opinion regarding SUBWAY I meeting
their expectations.
Brand Image
Based on the perception of a brand, each customer will have certain expectations from the
brand. We need to study what these expectations are and what are the factors, which help
in meeting those expectations.
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TARGET GROUP
Since we were studying the fast food category there are three groups that we targeted in our study:
Consumers of fast food.
Non-Consumers who have health considerations with respect to food.
We basically studied the following categories of people for our analysis:
Working professionals
Youths in the age group of 25-40 with high disposable income
Students and other youth about to join service or start up on their own
First year students of XIMB were also considered for the study
METHODOLOGY
The attempt of this study was to cover the viability of SUBWAY in Bhubaneswar, the coverage included
quantifying or finding the strong and the weak attributes that leads to sales in this category hence the
methodologies used are:
Focus Group Discussions (1)
Survey methodology (Sample Size = 60)
While the group observation and discussion helped us to identify the qualitative aspect of the study at
length the survey methodology helped us to reach to a various inferences related to percentage of
people preferring fast food and what are they looking at from a fast food provider, the primary drivers
for the fast food segment, the strengths and weaknesses of the brands, stochastic share of brands etc.
which is discussed in detail in the report at a later part.
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PROCESS
Since we are targeting customers in Bhubaneswar our survey had to be confined to the regional level.
The focus of our survey shall be:
Respondents from Bhubaneswar Prime target study
Home town in Bhubaneswar but currently living in other places
Online questionnaire: We used this as our method for collecting data so as to reach customers from all
possible segments and various cities.
SAMPLING
For the qualitative analysis, i.e. focus groups discussion, subjects were selected based on their
fast food consumption habits from the first year student community of X IMB.
For the quantitative analysis, an online questionnaire was floated on the internet as we sought
to seek respondents from a wide variety of backgrounds. Social networking sites were used to
get feedback from the target segment
Sample Size
Around 68 people were included in the study with the following rough breakup.
Around 8 for the focus group discussions (Qualitative Analysis)
Around 60 people for the Sample survey (Quantitative Analysis)
Aspiring groups comprising of students, young working people and executives were considered.
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VARIABLES
The variables that were considered for analysis with regards to our analysis are:
Age: Age of respondents
Gender: Gender of respondents
Employment: Employment related information
Income: Income level of the respondents
Weekly spending on f ast food: Current level of spending on fast food
Price for taste: Requirement in terms of price as against taste
Trust in ingredients: How customers perceive the authenticity of ingredients
Hygiene f actors: Cleanliness and other hygiene factors
Location: Store location
Hospitality: Service parameter in terms of reactions of service staff
Taste: Taste of the food
Customization: Impact of customization on consumer preferences
Menu diversity: Importance of diversity in menu offerings
Share of mind: Share of mind of SUBWAY
We had come up with these variables after much brainstorming among the group. We felt that these
variables would cover all of the aspects required to help us get an accurate conclusion from our analysis.
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Q UANTITATIVE ANALYSIS
Quantitative data analysis has been done in the following way. An Excel Analysis of the demographic
profile was done first to understand the respondents background and to check the general attributes of
the respondents. Then the Factor Analysis was done, the result of which has been explained below.
Then Jaccard Analysis was done to find out the primary drivers for the luxury watches category. It was
followed by stochastic share analysis and SWOT analysis. We also performed a stochastic analysis with
regard to brand preference of the customers. This is how an extensive quantitative analysis for our
research was done.
DEMOGRAPHIC DETAILS
SAMPLE SIZE: 60
GENDER
The respondents composed of 12% female respondents and 88% males in total sample of 60
respondents
Male
88%
Female
12%
Gender
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Age-wise breakup of respondents
Most of the respondents were in the 25-35 age category with 60% of the respondents being
in that range. Majority of the other 50% chunk were from the 19-24 age range.
Monthly Income data
10-180%
19-24
48%25-35
50%
36-50
0%
>502%
Age group
<6000
60%
6000-15000
7%
15000-2500010%
>25000
23%
Monthly Income
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Most of the respondents were students hence income levels were low. Around 60% of the
sample has less than 6000 Rs monthly income. Around 23% of the population has income
greater than 23%.
Liking for f ast food
90% respondents liked fast food.
Spending on f ast food
63% of the respondents spend around 101-500 Rs on fast food weekly. This is good in
SUBWAYs perspective as their price range is compatible to the weekly spending.
Yes90%
No
10%
Do you like f ast food?
< 100
25%
101-500
63%
501-1000
5%
>1000
7%Weekly spending on f ast food
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Share of Mind
Pretty evenly spaced out in terms of share of mind. Even though SUBWAY has the lowest
among all the other fast food brands with 17% share of mind.
Attribute preference
Subway17%
Dominos
22%
PizzaHut
20%
KFC
17%
McDonald
24%
0
10
20
30
40
50
60
Not preferrred
Preferred
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We see the preference for various attributes. To note, with regards to Customization which
is considered a strong point for SUBWAY the consumer preferences are neutral. Taste is
most preferred, Hygiene, Price and Hospitality also having high ranking.
Fast food category preference
Pizzas are highly preferred. The category which SUBWAY Is in i.e Sandwiches is towards thelower end in terms of preferences with around 23 people preferring Sandwiches. Pizzas are
preferred by 40 respondents.
0
510
15
20
25
30
35
40
45
Preferred
Not preferrred