Assignment Relationship Marketing

ASSIGNMENT RELATIONSHIP MARKETING JANUARY 2016

BACHELOR OF BUSINESS ADMINISTRATION WITH HONOURS SEMESTER JANUARY 2016 BBMR4103 RELATIONSHIP MARKETING

MATRICULATION NO :

791016145081001

IDENTITY CARD NO.

:

TELEPHONE NO. :

019-6641264

E-MAIL

[email protected]

:

LEARNING CENTRE

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791016-14-5081

:

SHAH ALAM

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ASSIGNMENT RELATIONSHIP MARKETING JANUARY 2016

TABLE OF CONTENTS

PAGE

Introduction of eBay.com

3-8

The key elements of a business model

9-14

Reference of the key elements of a Business model

15

Analysis of the eBay.com based on the Key elements of a business model 1. Value Proposition

16-19

2. Revenue Model

20-23

3. Competitive Environment

23-27

4. Competitive Advantage

28-29

Recommendation 1. Strategy 1

29-30

2. Strategy 2

31-32

3. Strategy 3

33-34

Summary

35

References

36

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INTRODUCTION OF SUBWAY i)

Company Background

Subway chain is a fast food chain that comes at third position globally which comes after McDonald’s and KFC. This company came out to be established in 1965 and the originator of the Subway food restaurant was Fred De Luca, and he was so thoughtful to start is restaurant business when he was only 18 years old. First and foremost store was established in Bridgeport, Connecticut. The founder of Subway almost immediately cultured the fundamentals of management in a business, in addition, the significance of allocation as a well-made, high eminence item for consumption, on condition of the outstanding customer service and keeping operating costs low simultaneously by discovering immense position. Such kind of inventiveness sustained in serving the groundwork for prosperous SUBWAY restaurants internationally. There are in excess of 36,467 Subway restaurants nearly 100 countries globally and also it can be said as the world’s greatest intensifying authorization succession. This area monopoly sequence has occupied more than 173,432 inhabitants (Subway 2011). Subway offers many different kinds of fresh marine sandwiches also known as subs to their customers. Everything I decided by the consumers s which kind of a product they want to have in the services The companies motive is to provide the fresh products, slogan of company, Eat Fresh which says, Subway chain uses only a moment ago baked bread and fresh constituents. Since a very long time the Subway tried to make every efforts in the markets to set up again. The Subway chain has also a lot of rivals in every countries market. As soon as the Subway chain was withdrawing their restaurants from the Danish market, Sunset Boulevard immediately raised 3 of their branches (Subway Denmark).This description will provide the sequence about the Subway succession, its consumers and Subway as a authorization representation. The competition between Subway and its three biggest competitors McDonald‟s, Burger King and Sunset Boulevard, are also integrated. Vision: “Be the #1 Quick Service Restaurant (QSR) franchise in the world, while delivering fresh, delicious sandwiches and an exceptional experience” (Source: Retailindustry.about.com, 1965)

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Mission: Delight every customer so they want to tell their friends – with great value through fresh, delicious, made-to-order sandwiches, and an exceptional experience. (Source: Retailindustry.about.com, 1965) Logo:

Starting in January 2002, Subway started using a modified version of the logo. By early 2003, all branches had the new look. In this logo, the oval behind the word mark was removed. The slogan used with this logo was "Eat Fresh.". As of 2016, this logo is still used as a secondary logo.

The slogan “eat fresh” under the logo Goals: To be ranked the number one restaurant by consumers and number one in restaurant count in every market that they serve

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ii)

The Meaning of Customer Loyalty

Burger King wants to create and retain a loyal customer who engages in continued profitable business with them. Customer Loyalty is the measure of success of the supplier in retaining a long term relationship with the customer. Thus customer loyalty is when a supplier receives the ultimate reward of his efforts in interacting with its customer. Customer loyalty tends the customer to voluntarily choose a particular product against another for his need. The loyalty may be product specific or it may be company specific. When a loyal customer has repetitive requirement of the same product, such customers may be described as being ‘brand loyal’. On the other hand he may also require different products of the same manufacturer. That is to say he makes significant purchases direct from the same supplier and that counts as the company specific loyalty. Loyalty also means that customer is sticking to the supplier on certain grounds though he may be having other options also. It may be possible that the supplier may not have the best product or the customer may be having some problems with the supplier in respect of his supply of the product but the customer likes to ignore other options and prefers to continue with the same supplier as the customer thinks the supplier provides him more value and benefit than others. Such loyal customers tend to spend more money buy more, buy longer and tell more people about the product or supplier. This type of long-term customer loyalty can only be created by making the customers feel that they are number one priority with the supplier.

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iii)

The Principles of Customer Loyalty

Customer loyalty creates money. In the game of customer loyalty, when one business gains a loyal customer it is at no expense to the other company. Remember, the only time we can make profit is when the customers return to buy again for second, third, fourth time. If a customer is always buying from different businesses, there is no loyalty. No one is benefiting from repeat buying by making a profit from the customer. The customer is forever a new customer as he changes from one business to another. The customer doesn’t even win, because he is not getting enough satisfaction out of any transaction or relationship to come back to buy from that business again. However, when a company learns to give a customer what he wants the customer becomes loyal. He buys on a repeat basis and creates profit where no profit existed before. This profit is not at the expense of the competition; it comes from the savings and other benefit derived from selling to a loyal customer-everyone wins. The competition is no longer losing money on the unfaithful customer. The business’s that has the customer’s loyalty is now making a profit, which did not exist before. The customer is pleased enough with the transaction, relationship, products, or services to become a loyal customer. The five principles that create customer loyalty are: 

People do business with people The acronym K U H L (pronounced “cool”) tells the customers how important they are by Knowing, Understanding, Helping and Leading them.



Differentiation Differentiators are the unique features or differences in your product/solution/service that make it stand out and special. You may not be able to differentiate your product, but you can differentiate your services and how you deal with the customer

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

Value and assurance The customers always decide what is of value to them. Value is determined by the customers’ specific tastes, preferences, wants and needs. Value should not be confused with price. Price is only one component of value. People base their purchasing decisions on their specific situation and desires. How a customer perceives the value of your product or service can be described as your value proposition. Value proposition encompasses the true usefulness or specific benefits the product or service provides.



Effective communication Communication is the largest single factor determining what kinds of relationships you make with others and what happens to you in the world you live in. Communication is effective when it is two-way. Speaking, listening and learning are the basis for effective communication. The message you give to your customers and how you deliver that message is central in the process of creating customer loyalty. You communicate by what you say, how you say it, and how you look.



Focus Focus is the object of your current attention. Focus affects customer loyalty in three ways:  How you think about yourself and your business. When you make the five principles that create customer loyalty a part of your deepest thoughts, you are instructing your subconscious mind to use its infinite powers to serve your purpose.  How you think about your customers. Developing your ability to focus on relationships instead of just making a sale is critical in creating customer loyalty.  How your customers think about you.

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iv)

The Subway’s Product

Subway offers customers a wide selection of sandwiches also called “subs”. Sandwiches are always freshly baked, and customers can choose if they want their sandwiches toasted or nontoasted. There are two different sizes of sandwiches, a six inch. (15cm) and a foot long (30cm). Subway also serves soft drinks along with the sandwiches. Cookies, chips, coffee and chocolate can be ordered as accompaniments. In Denmark, there are four types of bread to choose from, the Italian white bread, the honey oat bread, the parmesan/oregano bread and the 9-grain wheat. The 9-grain bread is the only bread, which contains animal product if honey is considered an animal-derived ingredient. Wheat free bread cannot be found in Danish Subways. All of the breads are milk free except the parmesan/oregano bread, which contains cheese. (Subway menu 2009) Subway has a huge sandwich selection. There are more than two million different sandwich combinations. Healthy and light subs can be enjoyed in Subway restaurants as well. This fast food chain offers sandwiches, which contain only six grams of fat or less. These sandwiches became more famous after “a Subway guy” Jared S. Fogle lost weight of 240 pounds (109 kilos) due to the Subway diet (check chapter 3.1 – history of the Subway chain). On the Danish menu, customers can find 15 different sandwiches. In the following, a variety of the menu will be presented. (Subway menu 2009) Customers decide what they want their sandwiches to include. The filling can be ordered double or some things can be left out. The Subway chain also has a wide range of dressings that can be chosen from. The customer can choose between take-away and enjoying the meal at the restaurant. Any sub can also be turned into a salad. Salads were added to the menu in 1980.In Denmark, Subway does not have any special menu for children. 18 Birthdays and other occasions can be celebrated in Subway restaurants. On the menu, customers can find a catering part, which contains sub platters, giant subs and cookie platters. The giant sub can be made to any length depending on the amount of people. Sub platters consist of 15 4 inch, Portions and cookie platters contain 36 (minimum) delicious cookies. (Subway menu 2009)

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v)

The Subway’s Customer Profile

Subway’s customer profile based on the following: 1. Segmentation Subway segmented its market based on the following methods; a. Geographic The geographic segmentation is based on the segmentation of market through countries, locations, towns & cities. Subway segmented their market based on the test of different geographic location. They are considered COP (Country optional program), SOP (Store optional Program) and MOP (market optional program). For example, they offer mostly halal menu in Middle East countries, mostly vegetable without beef in India, likewise, more sauce for American. b. Demographic & socio-cultural The demographic segmentation is something related to the age group, gender, life cycle and income. And according to subway it majority of customer are concentrated on the age group in between 18 to 39 years mostly the people are either studying or working. We can observe the change in the products which are consumed by different age groups. So it is a strategy that involves the promotion of the item which meets the requirements of different age groups. c. Psychological or psychographic Subway core customer between the age of 16 to 39 are found to be more health conscious. Therefore, by providing healthy and fresh food, subway segmented the customer based on the trends or psychological. Besides by offering the reasonable priced food with fast services, subway wants to suits the pockets of the many college going adults as the concept is something related to the value for money.

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d. Behavioral or attitudinal By providing catering services to its customer, Subway is segmenting the market based on the behavioral of its customers. Subway knew that with hectic and busy lifestyle, catering of fresh, healthy and fast food is required in everyday life Subway also make special promotion during occasions like Christmas and new year by offering gift card, etc. on the purchase of its food. This shows that they segments he customer based on the occasion under behavioral of its customer.

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THE BENEFIT OF DEALING WITH LOYAL CUSTOMER Customer loyalty can be seen as the main key element of customer relationship management and illustrates the loyalty which is built between the customer, organization, persons, products or brands. Customer loyalty is the key determinant of an organization’s success. Loyal customers are those that come back to purchase from the same business again. Not only can they help increase the profits, they also often generate positive word of mouth, which can be an effective marketing tool. The main benefit of dealing with loyal customer can include:  increased sales  increased profits  increased word of mouth and referral business  reduced costs in attracting new customers  building good relationships with your customers.

At the point when an organization reliably conveys predominant esteem and wins customers affection, market share and income increases, and the expense of procuring and serving customers reduces. Through customer loyalty, Subway will get the benefit as belows: 1. Acquiring a new customer will costs more than maintaining an existing one Making contact with a customer and attaining the first deals frequently fetches so much that the net profit for the transaction is insignificant or even negative. At the same time as the relationship keeps expanding, prompting more business, the customer gets beneficial to the vender. The longer the relationship, lower the amortized cost of acquisition. When setting up a new bank account, expenses incurred during credit searches and promotional expenses to sell the service to a new customer can add up to five times the cost of efforts that might have enabled the firm to retain a customer.

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2. Loyal customers have a tendency to be less arrangement inclined Loyal customers have a tendency to be less deal prone than non-loyal customers of an organization. The customers who are in successful long-term relationships with banks, the demand for services from banks from loyal customers were less price sensitive when compared with the demand with non-loyal customers. 3. Loyal customers are likely to give free word-of-mouth advertising

Customer loyalty is consistent with a positive demeanor towards the service provider endorsing positive word-of-mouth. The customers who builds relationships with their sales associates tends to spread an extensive positive word-of-mouth. 4. Loyal customers have a greater tendency of purchasing products with a little effort of marketing The longer a customer stays with an organization; there is a high probability that they will place their business share with that organization, even to an extent of single sourcing.

5. Customer loyalty and employee loyalty are positively correlated When the customer retention rate is increasing then the employee retention rate will also increase since the employees will feel that they are satisfied with their job. Long-term customers are easier to serve since they know the structure well and how to use it as well as to work with loyal employees. The increasing rate in customer retention will leads to the improvement of customer retention since long-term customer serving employees will highly experience in creating value for their customers.

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1. ANALYSIS ON THE LOYALTY LEVEL OF TARGET CUSTOMER Subway is to provide fresh, customized sandwiches based on consumer’s needs and requirements. The specific and unique product offering of healthier diet and nutritious products is an important aspect in the brand equity of Subway. For several years Subway has advertising themselves based on eating healthier food and by aligning themselves with several organizations and associations promoting health consciousness Subway has also aligned themselves with several social events and programs promoting health consciousness in the developed countries. Subway is an example of developing a focus on a specific segment of customers based on demand factors, a developing trend and innovative products. The specific segment of customers is those health-conscious customers and the developing trend is the trend of healthier eating along with fast food concept. The innovative products are the customization off the menu and the ability of Subway to provide several varieties of food products. When analyzing the success factors it can be seen that healthier menu options, consistency of the food quality, convenience provided to the customers (fast food) and the lower capital costs required for franchisees are the important aspects of the marketing strategy of Subway. The unique brand equity of lower levels of fat content in the foot products offered by Subway through the advertising of the weight loss of one of its customers has developed high levels of consumer attraction to the food products offered by Subway. Subway the developing food products for different segments of the customers based on demography, geography, and behavior and psychographic. The segmentations are based on age where there are meals for kids, office goers and elderly. The food products are also customized based on income levels and health consciousness. The customization of the food products can be seen based on the geographic and lifestyle conditions also. An example is the halal sandwiches offered in many of the geographies where the customers insist for only halal food. Subway has taken a differentiation concept whereby the food products are differentiated from that of the conventional fast food restaurant chains. The pricing of the products are at the higher end of the scale and intended to promote unique value to the customers who are health-conscious and looking for quality service. The brand of Subway is positioned as the healthier option for fast food customers and it can be seen that it is positioned between that of a quick service restaurant and a full-service restaurant.

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Subway has positioned its products based on the health and nutritional aspects which can be said to be positioned at a different level to that of the competitors. Subway is able to offer enhanced value proposition to the customers by providing healthier and nutritional food along with quality and similar to the food products offered by other fast food chain such as Burger King, Kentucky fried chicken etc. Customers of these fast food restaurants are getting attracted to Subway because of the unique value proposition. Hence it may be said that the healthier food option along with the service is the unique value proposition for the customers. Moreover the franchisees are trained to provide excellent customer service. When analyzing from the aspect of targeting of the customers it can be seen that Subway is targeting the between age 18-50 years segment of the population who are health-conscious and the increasing trend of eating healthy food is being utilized by Subway in its marketing and promotional campaigns. It should also focus on the target groups such as teenagers and students as these target groups spend lot of time on social networking sites or other sites. So subway can add banners on such networking sites which are regularly visited by the target groups so concerned. The website of the Subway includes lot of information about the nutritional aspect of the food products offered by the Subway.

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RECOMMENDATIONS TO SUBWAY OF THE CUSTOMER LOYALTY LEVEL In today’s world one of the major problems is unbalanced growth in customer loyalty program. This paper exemplifies the environment and the ways loyalty managers can meet this exacting challenge. This can only achieved by making business plan and optimized business process design to compute those strategies which is maintained by highly technology persons. Overall coverage at each level is required for business processes which are fully cover up by business strategies. Technology fully covers the needs of the business processes which are fully covers the technology requirements. A. People do business with other people To strive for success, Subway should be inertia to react regarding to its substandard service quality. To increase customers’ satisfaction with Subway’s service, recommend that Subway to standardize the personnel training program, in which etiquette and English training will be delivered to staff of Subway. The etiquette training is expected to enhance staff service quality at a standardizing extent nationally so that Subway can ensure the service quality of its franchisees. Besides, English training is considered as a value added item, with which staff of Subway can provide more customized service to target customers who are English speaking.

B. Differentiation The fast food chains such as Subway offering differentiated products can be developed based on a differentiated focus approach with a target group of higher class of the society, upscale lifestyle and status of customers. Unlike in the developed countries, the stores of Subway in developing nations have to be in the upscale areas rather than distributed in different geographies. The franchisees can be provided to high-quality individuals and groups who have prior experience in providing and developing such retail outlets. The stores have to be located in upscale shopping malls and business areas. The specific target segment of the population would be families and individuals in the upper social classes. Based on the social and cultural

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parameters of the developing nations, innovative products have to be developed. Burgers and sandwiches are not the common food consumed by the customers in the developing nations. Particular stress and focus should be provided on geographic locations where vegetarianism and halal food concepts are prevailing. The burgers and sandwiches can be offered as differentiated products for the customers who would like to have some kind of differentiation. Along with burgers and sandwiches, Subway can also develop innovative products based on the social and cultural aspects of the developing nations. Subway should also set up delivery service, which KFC and McDonald’s have already done it. C. Value and assurance Since the present pricing of Subway is affordable for the target customer, and could manage with a high profit margin for franchisers and the head company, it wouldn’t alter the price greatly. However, prices would be lower for downsized sandwiches to provide a large price range and capture more customers.

D. Effective Communication If Subway want to see higher amount of revenue from existing customer and reduced customer falloff, focus on persuading consumers to become brand loyal. Implement the ‘Turnstyle initiative program (WIFI)‘ Subway have recommended an updated communications strategy that will utilize the trends, Subway identified to further tailor and amplify the program. Understanding the customer segments has allowed Subway to evaluate the existing program and make changes that will resonate with the targeted customers. Turnstyle’s platform has proved to be incredibly useful for attracting and retaining the customers, particularly millennials. Subway has also gained very deep insights about the customers. The existing customers who sign-in to the Turnstyle powered Wi-Fi return 1.8x more frequently than the rest of customer base. As the program progressed, Subway observed an increase in visit frequency amongst opted-in customers suggesting that Subway were able to form a tighter bond with their customer. It is a fully organic solution that addresses several of the communications objectives at SUBWAY; understanding more about what makes the customers unique, offering public facing Wi-Fi, increasing customer loyalty and retaining customers.

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E. Focus Subway must establishments use analytical software programs to track customer buying activity. Doing so enables Subway to make personalized recommendations, send targeted e-mail and mail promotions, and assess what products, services and price point’s customers prefer. Card-based loyalty programs also are used by some fast food chains to lure customers with promises of bulk discounts or rewards for repeat purchases.

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