introandunivar_sudip

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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.



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.



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.



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



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.



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.



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.



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.



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



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



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



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



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

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