Subway Restaurants free essay sample

Secondary data investigates past research undertaken in customer satisfaction surveys and the market position of Subway in relation to its major competitors. The purpose of the study is also revealed here with the objectives and the usefulness that the findings will serve. The analysis then details the methods used to carry out the research process. The use of selfadministered surveys and the exploratory research undertaken is documented including the use of focus groups and reverse engineering. The conceptual diagram is also contained here which formed the basis of the research instrument. Consideration of the research instrument is then documented. The scales used and pre-testing are both examined in this section. The Sampling analysis addresses the key influencing factors in the selection of the sample. The selection of the population size of 228, above the minimum of 200 required for the research to be valid, is detailed as are the limitations encountered to complete the project. A description of the data obtained is found in the Results and Analysis section. Research findings by the Better Health Channel (cited in Subway research contained in Appendix One) revealed that obesity is now a major societal issue with rates of obesity/overweight people rising from 52% of adult males in 1998 to 68% in 2000. The corresponding figures for females told a similar story with an increase from 36% to 53% for the same time frame. Inferences were made that fatty, unhealthy food was no longer acceptable and that competitors were beginning to move in on Subway’s territory. Traditionally, the fast food industry has been associated with the cause of this health-related issue (Boyle 2004). Major fast food companies have been called to Federal Government summits to improve the quality of junk food (Wright 2007). While most of these major companies have now taken steps to offer an alternative healthier menu, Subway has long been establishing itself as the market leader in this area. Marketing champions, â€Å"eat fresh† and â€Å"Under 6 Subs†, as well as the endorsement by newfound celebrity Jared Fogle, are examples of standing itself out from the rest. Hence it is no surprise to see Subway’s timely response to this global demand for healthy fast food has seen itself soar with success. The consumer’s perception of low-fat, healthy food is related to a perception of a higher quality product (Boyle 2004). Nevertheless, much cynicisms and criticism is raised against the â€Å"healthy fast food† proposition. For example, the alternative low-fat menus or healthy menus offered is simply a marketing exercise to improve the perception of the restaurant food, even though the items offered in the â€Å"healthy menu† are likely to be poor sellers, or even higher quality does not mean healthier and better nutrition. CBS 3 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway The above issues are still current and ongoing debates. Our satisfaction survey focuses on customer satisfaction on service quality. In particular, personal service and service setting (Gilbert et al 2004). A satisfaction survey does not cover the scope of whether the consumption of Subway has resulted in customer weight loss. Secondary Research Findings Customer satisfaction surveys have shown that 50 percent of customers who have a problem with a product or service are not likely to tell the company about it. Nine out of these ten ‘silent’ critics will probably take their future business to a competitor. When a customer does complain, half of them will not be thoroughly satisfied with the company’s efforts to solve the problem. Additionally, dissatisfied customers typically tell as many as 16 other people when they have had an unsatisfactory experience with a company (TARP, cited in Seidman 2001). Paramount to long term business success is service quality, which can be measured by customer satisfaction. Gilbert et al (2004) claim that when customers are highly satisfied, â€Å"they will keep returning and will keep the business growing†. But how do we measure customer satisfaction? Quality is what the customer says it is and when measuring service quality, you must deal with how customers think, feel and behave (Webster Hung 1994). Generally speaking, if performance exceeds expectation, a customer will experience positive confirmation and be satisfied. However, if expectations exceed performance, negative disconfirmation results and a consumer is dissatisfied. Furthermore, if dissatisfaction is attributable to the company, then this dissatisfaction is magnified (Seidman 2001). Parasuraman et al (cited in Saleh Ryan 1991) identified ten factors of expressive service: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, knowledge/understanding and tangibles. They later reduced this to five combining communication, credibility, security, competence and courtesy to become assurance and creating empathy by combining knowledge/understanding with accessibility (Saleh Ryan 1991). The gap between the consumers’ perception of the service quality received and the standard expected is the fifth gap identified by Parasuraman et al (cited in Johns 1993). Johns (1993) also identifies this as the true measure of service quality. CBS 4 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway The result, SERVQUAL, has proved to be a popular research tool and has been applied to a variety of sectors (Thwaites 1999). SERVQUAL is a 22-item questionnaire intended to measure the difference between customers expectations of a service and their perceptions of the service and was designed to measure service quality in a variety of service settings (Webster Hung 1994). Administered in a before and after setting, the SERVQUAL user would ask guests to complete the ‘expectations’ portion of the instrument before and the ‘perception’ element after their exposure to the service – the difference between the scores represents the gap in service quality provision (Webster Hung 1994). Although SERVQUAL is considered a useful research tool, Seidman’s research (2001) questioned the validity of the instrument when applied to the fast food industry. The paper by Gilbert et al (2004) identified a variety of methods and approaches that can be used as a tool to measure customer satisfaction: expectancy-disconfirmation approach, performance-only approach, technical and functional dichotomy approaches, service quality versus service satisfaction approach and attribute importance approach. These methods are said to be excessively complicated and impractical but are used by the American and European Satisfaction Indexes (ACSI and ECSI) in all of their measurements schemes (Gilbert et al 2004). Since our project involves customer satisfaction, we can also use or refer to some of these methods when designing our own research to a much smaller scale. The paper stated that the ‘performance-only approach’ was best used in measuring customer satisfaction in the fast food industry. This approach is considered to be a more satisfactory method because it measures â€Å"service eatures related to transitional-specific service satisfaction – both the technical and functional† (Gilbert et al 2004). It measures satisfaction with personal service (SatPers), and satisfaction within a service setting (SatSett), immediately after the service experience. It is more reliable and valid compared to the other approaches. CBS 5 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway Customer satisfaction survey data can be easily and economically obtained at the outlets immediately after the service experience. It also provides real time and practical measurements that aids manager to assess service quality. Research objectives, methodology, factorial findings and empirical inference have also been outlined in the article to help establish common measures of the SatPers SatSett. This can be deployed by different franchise stores, enabling the individual store managers to gauge service quality on a real-time basis. Nevertheless, there remains a need for periodic reassessment and continuous improvement so as to achieve customer retention as well as attracting new customers. For the data collection of Gilbert et al (2004) study, the Customer Satisfaction Survey fivepoint Likert rating scale was used. They also used a multiple option, polar adjective type tool to increase the power of measurement (Gilbert et al 2004). During data gathering, they used the sampling method in the selection of fast food establishments from within the areas they were conducting the survey. The research paper by Gilbert et al (2004) can guide our group on which methods to use or to avoid when measuring customer satisfaction. It also ays out the important variables that can measure a customers satisfaction, (e. g. provider courtesy, timely service, convenient operating hours) which we can also apply in our concept diagram. The article titled ‘Sandwich’ (Restaurants Institutions 2006) provides a detailed profile of market research conducted in the USA concerning customer satisfaction with various sandwich chains. Although the survey conducted appears to be fairly ba sic, the fact that it specifically deals with sandwich chain outlets renders it particularly pertinent to our own project. Specifically, the section that describes the numerous variables tested by the survey provides us with the opportunity to compare and possibly augment the various factors assessed by our own questionnaire. However, upon critical examination, the survey does not appear to offer any novel ideas with regards to variables, and tests only the obvious attributes of ‘food quality, cleanliness, value, service, menu variety, convenience, reputation and atmosphere’. It may be concluded that the research conducted was not particularly intensive or customised to sandwich chains particularly, and simply fulfilled the basic requirements of a satisfaction poll of fast food sandwich customers. CBS 6 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway The article also presents comments made by the President of the sandwich chain ‘Panera’ that achieved the highest overall score. The President’s remarks may be considered useful in that they provide an interpretation of the survey results from a management perspective. However, they also demonstrate the importance of testing all possible variables in order to be able to draw informed conclusions from the research. The President reveals that ‘Panera’ regularly anticipates consumer needs and seeks to provide extras such as in-house internet services to engender customer satisfaction, and attributes a large measure of the chain’s success to these innovations. These specific factors of technology and innovation appear to be untested by the project makes relying on the President’s comments problematic, and indicates that to make market research successful, care must be taken to include all relevant variables. The survey results offer no indication of whether the availability of the internet is important to customers, and its usefulness to Panera in evaluating the success of their innovations is undermined. However, the President also emphasises the importance of good service and friendly, intelligent staff to the success of a sandwich retailer, a statement confirmed by the survey in which Panera scored highest in the service category. It may be concluded from this article that the importance of testing all significant variables is paramount, in order to ensure that market research may be successfully applied by retailers. Results from extensive research conducted for Australian and New Zealand Subway Restaurants is contained in Appendix One. McDonald’s was by far identified as the market leader with a market share of 37%. Subway came in fourth with 8% behind KFC (17%) and Hungry Jacks (9%) however by 2005 had the highest number of stores registering an increase from just under 200 in 1998 to nearly 850 in 2005 – the most significant increase of all fast food restaurants. Although top-of-mind brand awareness remained low at eight percent, an increase of only one percent from the previous year, unaided awareness was still strong at 61%, only behind KFC with 67%. Unaided awareness was also higher for Subway in Australia than in New Zealand – 71% opposed to 62%. Television advertisement awareness increased from 48% to 51% in Australia to now be on a par with New Zealand. Only McDonald’s registered higher awareness in Australia with 66% – eight percent down on the previous year. Consumers liked the Subway advertisements mainly because they like their products and sandwiches however only thirteen percent found CBS 7 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway it relevant to them. Most 35-54 year-olds did not dislike Subway advertisements however nearly six in ten of the total sample did dislike their advertisements. An anomaly appears though in visitation in the past four weeks from those that have frequented Subway restaurants in the last three months where it is significantly higher with 18-24 year-olds (67%) than it is with 35-54 year-olds (55%). Maybe more interesting is that the 35-54 year-old figure is down nine percent on the previous year. The figures relating to those aware of the brand and visitation in the past three months was comparable. McDonald’s market position was further exemplified in that 57% of respondents that had visited a fast food restaurant in the past three months had been to McDonald’s. KFC ranked second with 43% and were the only corporation in the top five to experience growth from the previous year. Subway were next with just over one-third. Whilst both the 25-34 and 35-54 age groups decreased, the 18-24 year-olds experienced a seven percent growth – the most of any age range in the top three. McDonald’s dropped eleven percent in the same age bracket. The frequency of visits to Subway Restaurants remained stable over the twelve month period at 2. 65 times in the past month – an increase of 0. 3. McDonald’s again was the highest with 3. 64 visits in the last month with KFC ranked third behind Subway at 2. 55. The main reason for Australians not visiting a Subway Restaurant in the past four weeks was because it had not entered their minds (34%). 26% of respondents indicated that Subway was too expensive or the restaurant locations were not convenient to them. When asked about to think about their impressions of fast food restaurants, whether theyve eaten at them or not, the categories of customised, food made fresh, low fat, nutritious food and tastes good all declined for Subway and increased for McDonald’s. McDonald’s also came across as stronger on ease of locations and child friendly. The data obtained through Subway allowed the researcher’s to gain an insight into the type of research already undertaken and was a useful reference tool when ascertaining target markets especially in terms of age. It also identified areas that we did not need to examine given that this research had been undertaken comprehensively by a reputable market research company. CBS 8 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway Research Objectives OBJECTIVE 1: OBJECTIVE 2: To determine the expectations of a healthy product range. To compare the means of the importance of attributes when visiting fast food restaurants. OBJECTIVE 3: To determine whether a relationship exists between a customer’s household size and the importance placed on dine-in and drive-thru facilities of a fast food restaurant. OBJECTIVE 4: To determine whether exercising habits influence a person’s behaviour towards frequenting fast food restaurants. OBJECTIVE 5: To determine whether age affects who people visit fast food restaurant with. OBJECTIVE 6: OBJECTIVE 7: To determine whether age has an impact on expectations. To determine whether promotions and discounts has an impact on the visiting frequency to a fast food restaurant. OBJECTIVE 8: To ascertain if a relationship exists between household size and fast food visiting frequency. OBJECTIVE 9: To determine if customer spending is influenced by the type of companionship. OBJECTIVE 10: To determine categories of expectations when visiting fast food restaurants. OBJECTIVE 11: OBJECTIVE 12: To identify a target segment based on fast food preference. To compare the performance of McDonald’s against the expectations of customers. OBJECTIVE 13: To compare the performance of Subway against the expectations of customers. OBJECTIVE 14: To compare the performance of Subway against the performance of McDonald’s. CBS 9 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway Usefulness of Research Findings The market research that we propose to undertake is anticipated to be useful primarily to Subway Restaurants. Our objectives have been specifically customised to evaluate Subway’s performance in relation to customer expectations, and thus gauge customer satisfaction. Based on the results of our survey, Subway will be able to make informed decisions regarding the development of their restaurants, and be confident that they are catering successfully to customer needs. We also propose to test Subway’s performance with McDonald’s, in order to provide management with an indication of their relative market position. However, because the variables tested by our project are common to most fast food outlets, our research findings will also be applicable to other chains. The results of the questionnaire will reveal the relative importance of various factors such as friendly service and a ‘healthy choice menu’ to customers, and although the particular performance of retailers besides Subway and McDonald’s in these areas will not be tested, they may still decide to develop certain aspects of their outlets with reference to the project’s findings. CBS 10 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway RESEARCH METHODOLOGY A project brief was carried out prior to the commencement of this project. A number of elements were contained in this project brief including exploratory research, secondary research, case studies and focus groups. The project brief was designed to assess the researchers understanding of the material covered early in the course and to oversee the formulation of a conceptual diagram which would form the basis of the questionnaire. Exploratory research was conducted in order to diagnose and define the issues to be investigated by future research. The exploratory research was intended to be qualitative rather than quantitative in nature, and was necessary to provide insight into what particular themes our questionnaire should ultimately focus on in order to be effective and constructive in a marketing context. A variety of methods were utilized during the exploratory research process. Experience surveys were performed by asking Subway managers about their perceptions regarding the issues facing their franchises in particular and the industry generally. The results indicated that competitors were beginning to follow the lead and provide healthy eating options and influenced the eventual design of our questionnaire. Additionally, secondary data was sourced and analysed in order to provide an indication of the nature and content of existing research in the area, and the methodologies they employed. Examination of the data collated, which included thirteen articles from a variety of respected academic journals, provided guidance on which methods to use or to avoid when measuring customer satisfaction in certain situations. It also outlined the important variables that can measure a customer’s satisfaction, such as provider courtesy, timely service and convenient operating hours, which were useful in the construction of our conceptual diagram and ultimately our research instrument. A case study method was also employed during the process of qualitative research. Specifically, reverse engineering of a McDonalds outlet was conducted in order to provide insight into which factors may contribute to its success, and should be tested by further research. The factors revealed as possible variables that should be addressed by our research instrument included the impact of having ‘family-friendly’ menus and interiors, and the level of importance of a ‘healthy choice’ menu. CBS 11 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway A focus group was also conducted in order to augment the amount and relevance of qualitative information already obtained. The focus group was formulated and administered based on the stipulations of Burns Bush (2006). Analysis of the data acquired during the performance of the focus group provided the researchers with a number of additional variables that should be assessed for their relative significance by our questionnaire. Exploratory Research Findings Focus Group The selection of members for the focus group was conducted with reference to their demographic homogeneity and other shared characteristics such as a similarity in lifestyle. Being a fairly regular consumer of fast food was also necessary to qualify for inclusion in the group. Specifically, the focus group consisted of five men and three women, ranging in age from 24 to 30. All participants were employed in skilled professions, including Urban Planning and Public Relations, and all were currently undertaking further full or part time study at a post-graduate level. The group was evenly split between members who were unattached and those who were in relationships, but no members had children. Most described their financial situation as comfortable but not affluent. As previously stated, all participants were regular consumers of fast food, and had purchased Subway products within the last 6 months. The moderator prepared a list of discussion topics in order to provide direction to the focus group’s conversation. The list was composed with the objective of eliciting new ideas and variables from the members of the focus group, and was also designed to test the relevance of variables already referred to in the conceptual diagram. Particular care was taken when composing the questions to avoid influencing the participants’ responses, to ensure that the material gleaned from the group would be of a high standard. The issues that the moderator’s guide was designed to address included the participants’ expectations of a fast food experience, their perceptions of Subway as a brand, and what was important to them as consumers of fast food. The questions asked of the participants included: 1. Why would you choose a certain fast food outlet over another? 2. Think of a positive experience you have had with fast food. Describe what made it good. Repeat for a negative experience. 3. What do you think differentiates Subway from McDonalds or Hungry Jacks? CBS 12 Geraldine Goopio, Malcolm Lau, Vanessa Macknay and Damien Todorovic Research Report – Taking the Subway 4. Why would you choose to eat at Subway instead of McDonalds, and vice-versa? 5. What do you think a typical Subway customer would be like, as opposed to one from McDonalds? How old would they be, what would they wear, what time of day would they visit? The participants advised that a combination of good menu variety, food quality, friendly and efficient service persuaded them to choose one fast food outlet over another. They were unanimous that price and good value were particularly significant influences in their decision to choose a specific retailer. It was also agreed that advertising, and especially the promotion of value meals and similar deals, was an important factor in their choice.