Marketing Strategies / Strategic Marketing Case Study

Subway in the US: Challenges of Extending Product Mix

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Abstract:
In 2008, Subway, the US-based world's largest sandwich chain decided to enter the US pizza market, which had been growing rapidly and reached a value of $33.9 billion in 2007. Pizza sales accounted for nearly 9% of the total sales in the US fast food industry. Seeing the growth opportunity in the pizza market, Subway began test marketing its pizzas across its 13,000 restaurant chains in the US. Subway had been trying to incorporate pizza into its menu for about 10 years in the US. But it faced many challenges - like logistics issues and lack of consumer awareness about the new offering - which hindered its growth in the US pizza market. Though a late entrant, it was well positioned in the US fast food industry. Whether Subway would succeed in extending its product mix and transforming its brand remained to be seen.

Pedagogical Objectives:

• To understand the dynamics of the fast food / pizza industry in the US.
• To analyse the challenges in extending product mix.
• To understand the product line management.
• To understand the challenges as a late entrant in the industry.

Keywords :  Subway, US fast food industry, Pizza market in the US, Product mix, Product cannibalisation, Brand image, Brand dilution, Product positioning, Brand positioning, Product line management, Business strategy, Marketing strategy, Late entrant, Product differentiation