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					                             SUBWAY STORES:

                       ADOPTING A FRESH ATTITUDE




    50 Word Précis:

    This paper outlines how audience insight coupled with smart media

    thinking allowed a relative newcomer to a high volume low

    involvement category     achieve   9% same store sales growth in a

    single year across the UK and Ireland.




Category:            2: Communication Excellence Awards
                     G: Media Excellence

Author:              Debbie Kiely

Word Count:          1,953




1
200 Word Summary:
Subway, the American franchised sandwich chain has been opening

stores across the UK and Ireland since 1996. By the end of 2005 there

were over 500 Subway Stores in operation in these markets and it was

felt there was an opportunity to become a serious contender in the out

of home eating category. During 2005, the Subway franchisee

community got together and decided it was time to hit the hearts and

minds of young people across the country to take their businesses to

the next level.



During 2005 two regional test campaigns were carried out in Granada

and Yorkshire, followed by Scotland which indicated that consumers

were very responsive to Subway’s brand positioning.           These test

campaigns resulted in significant sales uplifts which inspired the

franchisees across the UK and Ireland to roll the campaign out across

all markets in 2006.



The brief was to grow store traffic by 9% in a single year. We delivered.




2
The Brief:
Add one third to Subway’s business, both sales and profits, every year

for three years, starting with a 9% target for 2006.

                        2006                         2007                 2008

                      Brand                     Innovation             Environment
£Y                       &                          &                       &        Sales
                      Value                        Menu                    OPS         V




                                                                                     Profit


£X


    Figure 1: 2Subway Business Objectives 2006-2008. Source: Subway.




The challenge was in delivering the business objectives whilst

competing with other advertisers in the Quick Service Restaurant (QSR)

category who had in some instances above the line budgets seven times

larger than that at our disposal.




3
                                                                                            4% 1%
                                                                                                 3%
                                                                               23%




                                                                         14%


                                                                                                        55%




                                                                  Subway       Greggs   Wild Bean     McD's   BK   KFC




    Figure 2: 2005 Quick Service Restaurant Expenditure - £76,558,852
                                                                        Figure 3: 2005 Quick Service Restaurant Share of Voice
                                                                                                           Source: AdDynamix



Campaign Objective:

Deliver an increase of 9% in same stores sales year on year by

increasing customer traffic. The “same stores” measure would be the

key deliverable given the natural sales increase that would occur

through new store openings across the UK and Ireland territories.



Market Context:

At the end of 2005, brand tracking showed that just 22% of all adults

aged 15-50 were spontaneously aware of Subway. Product trial was

even lower with only 13% ever having visited.

Source: BMRB Omnibus Benchmark Tracking Survey, Jan 2006




The sandwich market was worth £3.6 billion and the QSR category was

worth a further £2.8 billion.

Source: Mintel 2005




4
We were entering a crowded market, with a relatively small budget, low

brand awareness and a consumer attitude that could be described as

confused as to what constituted a healthy diet. However, we believed

we had the ability to take on the traditional QSR retailers and win.



What we knew:

From extensive pre-launch research we identified a core target market

that we christened Demanding Young People Who Know Their Own

Minds. This equated to 19% of the total population or 9 million

individuals who fit the following description:

            18-39s, working or studying who DO NOT frequent Subway

             currently and who agree with five of the following

             statements;

          I am not easily swayed by others’ views

          People have to take me as they find me

          I like to pursue a life of challenge, novelty and change

          I like to try out new food products

          It is important to learn new things throughout life

          I enjoy life and don’t worry about the future too much

          It is important to be well-informed about things




5
For our audience, Subway offers a fresh alternative to the trash culture

they reject, not just in food but in all aspects of their lives. They don’t

and won’t compromise their values or their individuality.



We shared similar values:




We knew what our audience were in to. We understood their lifestyles

and eating habits.       We also knew that freshness, choice and

convenience sit at the top of their agenda; they filter out anything that is

tired or stale and only grant time to that which is fresh in every sense of

the word.

We knew we needed to communicate with a sizeable, discerning group

who are in control of their lives. It was attitude first and demographics

second.




6
  Ben:
                    RADIO                        MOBILE


                    iPOD                        OUTDOOR


                   AMBIENT                        E-MAIL


                   METRO                            TV

                                 INTERNET


 Representative of our target, he is of the “work hard, play harder,

 splurge/purge, live in the moment, it’s all about me” mentality. He is a multi

 tasking multi platform consumer, living a diverse life, comfortable with,

 indeed a demander of, new technology, who expects and actively seeks out

 the best that life has to offer. He is the ultimate Consumer in Control. As

 such, if we are not relevant to him and his lifestyle, we will be filtered out

 and ignored.


Strategic Platform:

To create and drive a connection with our target audience we needed to

have and communicate with a fresh attitude. An attitude that would be

expressed in the tone we used, our media environments, our PR and in-

store materials.

The idea was to position our brand in media environments that are fresh

– vibrant, innovative, individual and energetic. We recognised that fresh

can mean different things to different people; for some it is about

individualism and innovation, for others it is about dynamism or energy.

Given our budget, we had to develop some smart media thinking. We

couldn’t compete head to head with the burger chains so we had to
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outsmart them.   We knew our target market were not passive media

consumers waiting to be informed about the latest brand or product,

rather they are interactive information seekers. Our challenge was to be

in the right place at the right time with the right message; position

ourselves at the point of consideration and tip opportunity into

purchase.



In a high volume, low involvement category with three dominant

advertisers (McDonalds, Burger King and KFC) it was going to be

difficult for Subway to erode market share.      With the health issues

surrounding fast food, obesity and a consumer movement seeking

healthier alternatives to the hedonism of the 80’s and early 90’s we

found ourselves in the enviable position of our brand having real

resonance with consumer attitudes. As a genuine alternative to greasy

fast food we could deliver on consumer demands on many fronts. Our

product was made fresh in front of the consumer, tailored to the way

they wanted it – the element of choice available at Subway offers a real

alternative to the competitive set.    Subway allows consumers to

customize the menu to suit their requirements.




8
                                                Brand Clustering by Need

              Conv enie nce & v alue                                                              Conv enie nce & hun ger



                             (& o ther s uper markets )




                                                                       EAT
                                benjys                            Independents
                                                                                                                         (Cos ta,
                                                                                                                         Nero etc


               Conv enie nce & quali ty
                                                          Freshn ess & quali ty (c ustom made )        Chill o ut & q uality




                Subway - clearly well-positioned to meet a fairly wide variety of needs

    Figure 4: Source: JUICE Qualitative Research, June 2005



Media Execution:

We had a clear understanding of who our audience was and what our

business goals were.

We had a new product offering available to stimulate trial amongst non-

users; the £1.99 Sub of the Day. This, we believed, would serve as our

passport to trial by giving customers a simple mechanism to order in

store.

We understood from our pre-launch research that first time customers

found the menu to be complicated and intimidating but established

users understood the proposition and the variety available.




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      It can feel                                                     I was tempted. I
      bewildering…                                                    looked in the
      intimidating almost                                             window but
                                                                      decided no, it’s too
                                                                      confusing
                            At Subway, you’re in
                            charge of what you
                            eat. You can make it
                            as healthy or
                            unhealthy as you like



            Figure 5: Consumer Quotes [Source: Subway UK Qualitative Research conducted by Juice, 2005]




We also knew that promoting a £1.99 offer consistently across the year

would not be sufficient to drive profitable business; therefore a

brand/retail strategy was required.



Competitive Market Context:

By the end of 2005, the QSR category was spending in excess of

£76million with McDonalds, Burger King and KFC accounting for 92% of

all expenditure. During 2005, they had moved into the sandwich sector

with the creation of their own “healthy” alternatives to their core

offering.




10
Figure 6: QSR Visuals




These product launches had received heavy weight media support on

multiple formats including television and outdoor. We knew we couldn’t

shout louder than the established brands in the category but we could

not afford to be a stealth brand either. We needed to be seen and we

needed         to       create   cut   through.   Television   was   the   natural

communications channel to deliver our primary goal of becoming

visible, fast, whilst radio would be used as a media multiplier to create

compound contacts with our core audience. We knew the programmes

and channels that resonated with them. It was less about the mass and

more about the mindset. The placement of radio airtime during mid

morning would also serve as a call to action during the hours when

people are considering what to have for lunch – the natural daypart for a

sandwich to fit with consumers need state.




11
                              Quick Service Incidence (% of orders including )

        14.5                   14.3
                                                        13.8
                                                                                                12.9               13.1
                                                                             12.2
                               11.8
                                                                                                                   11.4
                                                        11.1

                                                                                                9.9
         9.1                                                                  9.2


         7.2                                                                  7.3
                                6.8
                                6.5                      6.3                                    6.4
         5.8                    5.9                                           5.9               5.8                 6.0
                                                         5.7                                                        5.4
                                                         5.0                  5.3               5.3                 5.0
         4.3                    4.2                      4.2                  4.3
                                                                                                3.8                 3.9



     YE SEP '01           YE SEP '02               YE SEP '03              YE SEP '04       YE SEP '05          YE SEP '06
           Beef Burger                                    Sandwiches                            Pizza
           Chicken Nuggets/Strips                         Chicken Burger                        Fried Chicken
                    Proprietary and conf idential - f or client use only         Source: NPD/CREST
Figure 7: Sales Incidence in QSR Outlets – Source: The NPD Group

We knew that sandwiches were the second biggest menu option for

QSR customers and we intended to divert share from the traditional

players into Subway stores. We also knew what our competitors were

up to – how they invested their budgets and where.
25                      QSR Distribution of Impacts – Day of Week 2004/05

20

15

10

 5

 0
           Sun                 Mon                   Tue                   Wed          Thu              Fri              Sat

                Subway                 KFC              BK             Pizza Hut         McDonalds             Natural Delivery
Source: DDS/B ARB

Figure 8: 16-34 QSR Impacts

12
We decided to buck this trend and adopt a non traditional retail strategy

by investing the bulk of our TV budget into Sunday to Thursday airtime.

The rationale behind this was two fold:

      1. Avoid the weekend clutter inherent in the category

      2. Drive weekday lunchtime footfall

We identified the freshest channels and programmes that would

position us in the environments that reflected our target audience’s

mindset. We had to achieve sufficient coverage to deliver cost effective

communication whilst also creating a connection with our target

audience. Our strategy was deliberately programme and channel lead.

We maintained a presence on ITV1 to reach the broad demographic and

up-weighted our airtime on C4, Five and multi-channel TV.           Only

programmes that had an affinity with our “Demanding Young People”

were targeted; movie premieres, first run American series’, fresh

comedy and premium sporting events.




13
To optimise investment across the year, we chose three key windows to

promote our message.




The initial burst was designed to kick-start the year by promoting the

value platform through the £1.99 Sub of the Day. January was the ideal

month to roll out our launch – airtime is relatively cheap, viewing is high

and our competitors were traditionally less active at that time of year.

We could not afford to dominate the airwaves on a continuous basis so

we had to be smart with our budget and identify clear windows of

opportunity. Later bursts were also planned to capitalise on periods on

relative quiet within the category. The rationale behind the laydown was

simple: He who shouts loudest gets heard. We knew we could gain

optimum share of voice during these windows and maximise our

investment.




14
     Figure 9: Competitive QSR TVRs 2005/2006


We had to ensure that when we were on, we were seen. Campaign

weight would be critical to ensure visibility and build consumer

connection. Targets were set to reach a minimum of 80% of the 16-34

population at least once and 60% three or more times.



We also knew we had to “double job”:

          Build a brand for a relatively unknown retailer

          Increase store traffic to deliver the key business objective



 To achieve this, we recommended combining brand and retail

 messages within each campaign flight after the initial SOTD value

 focused burst. Subsequent commercials were 30 seconds in length

 with 10 seconds of product footage embedded within them.                 To

 optimise budget further, the 10 second commercial was also used as a

 stand alone cut-down to deliver frequency of viewing.




15
         Figure 10: QSR TVRs 2005/2006 including Sub way




The execution of the TV strategy dramatically changed the way

Subway’s airtime was bought; by amending the channel mix we

achieved significantly more coverage for the same amount of TVRs

previous campaigns had delivered.




     Figure 11: Coverage curve: Source MediaCom




16
Radio’s role within the marketing mix was to drive store traffic on a

weekday basis, stimulating a response during consideration periods.

The blend of programmes and stations available was mapped against

our target audience and as with TV, only those that resonated with our

Demanding Young People earned their place in executing the strategy.



The campaign was an immediate success. Same store sales during the

initial period rose by a phenomenal 17.6% with a corresponding

increase in traffic of 16% .



                                                                                  16% increase in store
                                                                                  traffic and
                                                                                  corresponding 17%
                                                                                  sales growth indicates
                                                                                  the pulling power of the
                                                                                  price point in driving
                                                                                  traffic but without
                                                                                  eroding the value of the
                                                                                  average transaction.



 Figure 12: National AUV (Sales) and Traffic (Footfall) increases over the January 2006 campaign [Source: Subway]




More importantly, this uplift in sales and traffic was not a short term

response.         Traffic and sales continued to grow across the full 2006

calendar year, consistently out performing 2005.




17
 Figure 13: Traffic by Month, 2006 vs 2005. Subway UK. [Source: Subway]




 Figure 14: Sales by Month, 2006 vs 2005. Subway UK. [Source: Subway]




Subway achieved sales growth of +9.8% and footfall growth of +9.1%

without eroding cheque value. Each campaign was tracked to ascertain

its impact not only on sales and footfall but also on brand awareness,

advertising awareness and future purchase intention. Throughout 2006,

all metrics showed positive growth.



18
The science behind the strategy:

Regular analysis of the key metrics of sales and traffic in same stores

Vs the previous year confirmed we were on track to deliver our first

year’s objectives.       We also needed to ensure we were providing a

positive return on investment and not negatively impacting on the

bottom line. We undertook econometric modelling in two of the bigger

macro regions – Carlton and the North which together account for some

40% of total Subway Sales.




          Figure 15: Campaign Sales Uplift, source: MediaCom




          Figure 16: Return on Investment Index, source: MediaCom
The above figures illustrate the positive return on investment achieved

for all TV campaigns conducted in 2006. The data for Jan/Feb 07 also

19
indicates we are on the right track to continue to deliver profitable

growth.




How do we know it was the advertising and marketing

that worked?

Nothing else changed significantly:

        Store Environment: US template for store builds is still used.

        Counter Staff: No significant changes were recorded in Mystery

         Shopper scores.

        Price: Sub of the Day at £1.99 was a re-branding/re-positioning of

         the existing Daily Special.

        Menu Options: No new menu items were introduced during 2006.

        More Stores: All KPIs are benchmarked against the same stores

         from the previous year.

        Short term effect: Econometric modelling indicates the positive

         return on investment has carried through to 2007 activity.

        Change in Competitive market: Although Subway achieved a 7%

         share of voice by the end of 2006, our biggest competitors still

         accounted for 89% of all QSR expenditure.




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Summary of Success:




 Figure 17: Summary of KPI Performance 2006




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