BUS 419: SPSS Report Colby Cheung, Ryan Hakes, Hannah Hughes, Jeff Lien 3 December 2012

Subway SPSS Company Background Subway made its start in 1965 when Frank DeLuca opened a submarine sandwich shop in Bridgeport, Connecticut to help pay for his education. Frank and his partner, Dr. Peter Buck, made the goal of opening 32 shops within 10 years. Ten years later, with only 16 stores opened, the owners made the decision to franchise the Subway brand. Today, Subway has over 37,000 locations and is the worlds largest submarine sandwich chain. Over the years Subway has consistently scored high customer service scores which has placed Subway as #1 in categories like Top Service, Healthy Options and Most Popular in Zagats annual Fast Food Survey. Subway is also committed to a number of social and environmentally responsible business practices. They pride themselves on their food safety and quality. For example, Subway makes its 6-inch sub with 2 servings of fresh vegetables and no added Trans Fat. Subway has been a powerhouse in the fast food industry, but can still improve in a number of areas. In order to compete and thrive Subway must evaluate its business and improve its customer relationships, increase brand loyalty, and build commitment. Questions The Big Question: How can Subway build and maintain profitable competitive advantage using customer relationships? Customer relationships are becoming a focus of marketers because they are a key component of creating a profitable competitive advantage. Companies are willing to invest significant sums of money in order to better understand why customers do or dont visit their business. In order to build and maintain competitive advantage, Subway must look into the factors that encourage customers to purchase their product. Investigating trust and satisfaction predictors of committed customer relationships helps Subway to analyze which factors to maintain, which to improve, and which to ignore. This can be done through an in-depth analysis of performance factors in order to identify Subways strengths and weaknesses and ultimately, to create a profitable competitive advantage. Supporting Questions Question 1: How can Subway improve the strength and nature of its customer relationships? Subway needs to maintain a strong focus on customer relationships. It has been proven that loyal customer relationships with a company are extremely profitable. Customers will continually purchase a product or service from a company only after developing trust and therefore loyalty with the brand. These relationships exist in two different forms: personal and functional. Functional relationships consider factors that customers look at within a brand. For example, a customer will habitually return to a brand when they are satisfied with factors like high quality, good prices, and fast service. These satisfaction predictors if well executed, serve the needs of customers and build functional relationships. Functional relationships are intended to meet the standards and expectations of the customer. To that end, Subway is striving to improve customer satisfaction through better customer service and consistent quality products and ultimately to

Subway SPSS create strong customer relationships and repeat customers. Subways has stronger functional relationships with its customers than Wendys, but does not have as strong of a functional relationship as Panera Bread. Its function relationship score is roughly equivalent to that of Chick-Fil-A. Beyond meeting the expectations and needs of customers, it is essential for Subway to maintain strong personal relationships in order to obtain a profitable competitive advantage. Personal relationships are characterized and measured by the level of customer trust and loyalty with a company. A customers personal relationship with Subway will make them more likely to pay more for a product, overcome barriers like inconvenience, and try new products. This is accomplished through the important factor of trust. When a customer feels that a brand acts in his or her best interest and is motivated to make them happy, they are more likely to repeat their business. Subway has a stronger personal relationship with its customers than Wendys but scores far lower than Chick-Fil-A and Panera Bread. Question 2: Increasing loyal behavior: How can Subway fix its weaknesses and take advantage of our strengths in order to directly impact loyal behavior? In order to increase loyal behavior, Subway must identify those attributes of loyal behavior that are important to its customers. The most effective way to capitalize on the attributes of loyal behavior is to determine which are strengths and which are weaknesses for Subway. To do so, we created a Loyal Behavior Prescriptive Quad Map. This map shows how different attributes rank in terms of importance to customers and measures how well Subway performs in them. Subway should spend the time investing in and promoting their strengths, which are the attributes: delicious food, consistent food, and I like items. Subways weaknesses serve as opportunities for growth. These include surroundings, special treat, and manager resolves problems. After analysis, it would serve Subway well to focus on fixing those attributes in which they are not performing well in, but that rank high in customer importance. These actions will make Subway more competitive and increase loyal behavior of its customers. When comparing Subways strengths and weaknesses to those of its competitors, it is possible to determine the companys competitive position. The results of Subways top three strengths are all lower than those of Panera Bread or Chick-Fil-A, but are also all higher than those of Wendys. The results of Subways top 3 weaknesses are all lower than those of Panera Bread, Chick-Fil-A, or Wendys. So Subway is not only weak in these areas internally, but also as it compares to the competition and for those attributes that are its internal strengths, it is only externally stronger than Wendys. Its strengths are not competitive strengths, as they are lower than two of the competitors. Question 3: Are there demographic differences that Subway can use to its advantage in building strong relationships? Demographic differences are important to look at when attempting to build strong customer relationships. Since Subway is a restaurant, demographic differences in gender arent as apparent as in retail stores. The chances of males and females typically visiting Subway is approximately

Subway SPSS the same. Therefore, Subway does not need to direct its marketing efforts to target specific genders. There is however, a generational difference in the groups of customers that are more likely to eat at Subway. Our research shows that younger (18-35) to middle aged (36-51) groups are more likely to visit Subway. Taking this key information into account, Subway can target their strong customer base by appealing their advertising and outreach initiatives to that target market. This information will also help to identify key reasons or attributes of Subways products that attract the younger and middle aged generations. By looking at demographic differences, Subway can focus on building strong relationships by tending to the needs of their specific, targeted customers. Analysis, Discoveries and Recommendations Question 1: How can Subway improve the strength and nature of customer relationships? A. How do we define relationships?
Personal (Trust) Functional (Satisfaction)

Relationships are the connections a brand makes with its customers and must be maintained in order to keep a business thriving. These relationships can be personal and/or functionally based. Subway can improve the strength of its relationships by improving customers trust and satisfaction with their product. Functional relationships are viewed as partnerships between the customer and the business. The customer seeks practical and operative aspects of the business. For example, Subway customers who have high functional relationships go to Subway because they like the items, the food is consistent, and is always delicious. Personal relationships are focused on emotional bonds with a brand and are seen as an interpersonal romance. Customers who feel a great personal relationship, feel that they can trust the brand and that the business has the customers best interests in mind. Subway excels at through assuring customers when the manager resolves problems, giving friendly service, and promising refunds for unhappy customers.

Subway SPSS B. How do relationships work?

Relationship Model

Analysis: Customer relationships work when both personal and functional aspects are fulfilled. It is important to analyze trust and satisfaction variables so a company can better understand which aspects to take action on and improve their customer commitment. In order to find the effects of personal and functional relationships, we built a relationship model. We constructed the model by running a regression analysis to find out how much of commitment can be explained by our survey with r. We then ran a correlation between trust, satisfaction, and commitment to determine how much of commitment could be explained by trust and satisfaction. Finally, we ran another correlation to find the top three predictors of both trust and satisfaction. Findings: We found that only 38% of customer relationships can be explained by commitment. Trust is a bigger predictor of commitment than satisfaction and areas such as manager resolves problems, friendly service, and will give refunds are all important factors to maintaining personal relationships with customers. Recommendations: Promote and invest in the top three predictors of both trust and satisfaction. These are Subways strengths and if Subway takes advantage of them, then Subway will increase profitability. C. How does Subway do versus competitors in the strength and nature of relationships?

Subway SPSS

Analysis: We developed a Brand Relationship map to find how Subway ranks on commitment against its competitors. We created the map by first running a mean comparison including commitment, trust, and satisfaction to receive a total mean score for commitment. The total mean commitment score was then divided into 100, which gave us our Multiplier. Next, we took each brands mean commitment score and multiplied it by the Multiplier found in the previous step to calculate the final Commitment Index Score (CIS) for Subway and all of its competitors. Any CIS above 100 is considered to be better than the average, and vice-versa. These CISs are then plotted onto a map based on the mean coordinates of trust and satisfaction for each brand. Findings: Compared to competitors, Subway is on the weaker end of the scale. Subway ranked the lowest, with a Commitment Index Score of 87. Based on the graph though, Subway has both a higher functional and higher personal relationship than Wendys. Subways other competitors, Panera and Chick-Fil-A, both have larger Commitment Index Scores of 109 and 111, respectively. Recommendations: According to our findings, it would be appropriate to say that Subway should sufficiently improve personal relationships with customers. Since personal, or trust, factor explains 57% of commitment, it takes a greater role in how Subways performance will rank. It is important for brands to maintain personal relationships with their customers as they will be more willing to go out of their way to buy a product and will more readily forgive problems which occur with the brand. Subway runs the risk of relying too heavily on the functional customer relationship, and should aim to focus more on personal relationships so as to build solidly committed customer relationships. D. How might Subway improve its relationship position? How can Subway specifically improve personal (trust) or functional (satisfaction) connections? Analysis: Since creating a Relationship model and map, we have determined Subways strengths and weaknesses and how they affect Subways relationship position. We ran a mean comparison of Subways trust and satisfaction predictors against the competitive average to see how Subways strengths compare to the competition. Findings: The top three predictors for trust which affect personal relationships are manager resolves problems, friendly service, and will give refunds. The top three predictors of satisfaction which affect functional relationships are consistent food, I like items, and delicious. Subway scored below the competitive average in all top predictors of trust and satisfaction except in the factor I like items. Recommendations: Within the trust predictors, Subway has the most room for improvement with giving refunds. Subway was far below the competitive average in this area and should aim fix this aspect immediately. Subway scored high above the competitive average in the I like items category, which means that they should invest and promote the items that customers enjoy the most.

Subway SPSS Question 1 Summary: Having strong functional and personal relationships with its customers is extremely important for Subway to maintain a profitable competitive advantage. Given our data from the relationship model, personal relationships are only slightly higher than functional relationships in predicting customer commitment to Subway. Each variable of trust and satisfaction have a degree of influence in determining personal and functional relationships. To maximize the profit gained and to strengthen Subways customer relationships, we have suggested a number of recommendations. Trust and satisfaction are key predictors for commitment. Since trust accounts for only a slightly greater amount of commitment than satisfaction, it is imperative to consider the top three variables for each. In order to develop a stronger level of trust with the customer, Subway should focus on mangers resolving problems, providing friendly service, and giving refunds. To obtain higher satisfaction from their customers, Subway needs to provide consistent food, items their customers like, and delicious food. Subway will have more satisfied and trusting customers by meeting or exceeding customer expectations on these various variables. Based on the brand relationship map, our recommendation is that Subway focus heavily on improving personal relationships with their customers, especially because trust accounts for 57% of commitment. By developing stronger personal relationships, Subway will have more committed customers that will be willing to make sacrifices and overlook inconveniences in order to obtain its products. Regarding trust predictors, the largest difference between Subway's performance and that of the competitive mean is in giving refunds. Our recommendation is to improve this area and have a stronger tendency and willingness to give refunds to customers. Regarding satisfaction predictors, Subway rated much higher than the competitive average in "I like items." Our recommendation is that Subway continues to advertise and promote the food products that their customers like the most.

Subway SPSS Question 2: Increasing loyal behavior: How can Subway fix its weaknesses and take advantage of its strengths in order to directly impact loyal behavior? A. What are Subways strengths and weaknesses?

Analysis: We conducted research on Subways strengths and weaknesses by creating a map that displays the companys performance-related attributes across four sections. This type of map is called a Loyal Behavior Prescriptive Quad Map. When examining this, we can see the attributes graphed based on their importance to the company and how well the company performs in each. Where an attribute is located on the map can explicitly lay out the essential actions that should be taken by Subway. For instance, those attributes located in near the upper left of the map would be considered the companys biggest weaknesses, which should be improved upon sooner than later. The map helps to determine where a company should be placing its focus and resources. On the other hand, attributes found in the top right of the map are the current strengths that just need to be maintained in order to keep current customers. Findings: In the area of loyal behavior, Subway performs well in several attributes. Three attributes in particular stand out as Subways greatest strengths with consideration for their level of importance to consumers. Those are delicious, consistent food, and I like items. Some potential weaknesses shown on the bottom left portion of the graph are the attributes Special Treat, Surroundings, and Manager Resolves Problems. These are of lower importance to Subway, but what classifies them as a weakness is the fact that the performance level is very low compared to the other areas. Contrastingly, a large majority of the attributes are found in the bottom right section of the map, indicating that even though they may not be of the highest importance, Subway is still maintaining a high performance level with them. Recommendations: After analyzing the map and our findings, we have determined several recommendations for Subway. First of all, the weaknesses surroundings and special treat need to have better performance levels because of their relative importance to consumers. Special Treat has the worst levels of performance compared to all other attributes, so its

Subway SPSS concern should be a priority. To fix this, we suggest that Subway should specifically create a better dessert menu. Varying the selection and keeping items fresh are essential to creating happy customers. Concerning surroundings, we recommend that Subway focus on creating a better environment in their restaurant locations. Aspects such as color, amount of parking for customers, availability of tables and chairs, and even the type of music playing can all affect the customers perception of a brand. Determine which of these are inhibiting Subways score on Surroundings will require further research. On another note, the attributes in the bottom right should not be overlooked even though Subway is performing well with them. It is key to maintain this performance by using the same techniques that are working now so that they dont slip into the weakness category. Even if a customer says that an attribute is not particularly important to them, they may very well be subconsciously expecting it. B. How do we perform vs. competitors on our strengths and weaknesses?
Subway Strengths vs. Competition

Analysis: In order to remain competitive in the sandwich restaurant market, Subway must constantly work to maintain its strengths and improve upon its weaknesses. To better understand how Subway performs against competitors, we ran a mean comparison of Subways top three strengths (delicious, consistent food, I like items) and weaknesses (surroundings, special treat, manager resolves problems) against its competition. Findings: Subways top strengths are I Like Items, followed by Consistent Food and Delicious. Subways strengths were not significantly higher than any of its competitors except for Wendys. Subways biggest weakness is Special Treat, which is also the lowest among the competition. In addition to these weaknesses, Subways only attribute with a better score in any of the categories and across all competitors is Manager Resolves Problems. This is an indication of little effort by Subway towards these attributes and should be acted on in a timely manner. Recommendations: It will be crucial for Subway to put emphasis on improving its worst attributes and maintaining its best so as to not fall behind the competition. Since surroundings is a weakness and not as important to customers, Subway should focus efforts on improving the issue of special treat. For example, they could choose to offer promotions to customers. Examples of some specific promotions are half price on a sandwich on a customers birthday or a

Subway SPSS free cookie with a minimum purchase of $20. There are many ways to take this, but the outcome should be to strengthen customer relationships so that they will choose Subway more often over the competition. As far as strengths go, Subway needs to keep on its current path. They are performing well for a reason, so to change their strategy may cause harm and push Subway below their competitors. Question 2 Summary: Competition provides significant and important data to Subwaya way to judge where it stands and how it should improve in order to remain competitive. If Subway is going to get on top of the competition, it needs to be able to excel in all attributes that are important to target consumers. Strong attributes like Delicious, Consistent Food, and I Like Items need to be maintained while weaknesses like Surroundings, Special Treat, and Manager Resolves Problems, should be tackled with a fresh viewpoint. A new plan that includes promotions, improved restaurant environment (both physically and socially), and a variety of menu items should be strongly considered and implemented to address weaknesses. An important aspect of staying ahead of the competition is that those attribute that are strengths need to remain a focus. All other attributes in which Subway performs well on, but that arent as important as their greatest strengths still need to be maintained. Those that drop may significantly impact Subway in terms of both image and performance. Subway not only needs to improve their ranking against the competition but also needs to increase the loyal behavior of their customers. When customers see that a brand is beneficial to them, they will be more likely to pay the extra money for their products or go a distance to buy from that specific brand. This all relates back to the topic of customer relationships and how important they are for the brand to keep strong. Strong customer relationships lead to even more loyal customers, which generates a cyclical image: the brand finds the weaknesses, fixes them, which then makes the customers happy, and they increase their customer lifetime value and profitability for the company. 3. Are there demographic differences that Subway can use to its advantage in building strong relationships? A. Are males and females different?
Males and Females on why visit

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Subway SPSS

Analysis: We ran a mean comparison to see why males and females visit Subway. Typically gender plays little to no role in purchasing behaviors for fast food restaurants. Gender tends to be a demographic difference that is more important to retail outlets. Because of this, Subway doesnt need to differentiate their advertising and promotional efforts to different genders. However, it may be beneficial to learn if specific genders are more inclined to visit for any specific reasons in order to target them. Findings: In the case of Subway, males and females show similar reasons for visitingas we would expect. However, females rate slightly higher on all why visit attributes except for Kids and Breakfast. These two categories also scored lowest compared to all other why visit attributes. Recommendations: Because males and females score similarly on the why visit attributes, Subway could mainly focus on improving the breakfast and kids reasons that people visit Subway, since these scored lowest. There is little difference between the genders, but Subway might best be able to target the male audience with advertising that acknowledges kidfriendliness and breakfast offerings. This could be significant when determining what type of advertising to place where (ie, gender-specific networks or publications). In general, Subway should work to better promote its breakfast items and kid-friendliness. B. Does age matter? On commitment?
Age and Commitment across Competitive Set

Analysis: To determine whether or not age has an influence on the level of commitment to Subway, we conducted mean comparisons across Subway and its competitors. The independent variables were the age groups 18-35, 36-51, and 52-78. The dependent variable was the level of brand commitment. Findings: People aged 18-35 were found to have the strongest commitment to Subway as

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Subway SPSS compared to any other age group. Subway is the only restaurant in its competitive set that has the lowest commitment by people aged 51-78. Panera, Chick-fil-A, and Wendys all had strongest commitment from the age group 51-78. Recommendations: Based on the data, we recommend that Subway create a stronger focus on marketing to people between the ages of 18-35. Subway should work on its personal and functional predictors for why the 18-35 year old age group visits. C. Differences on ratings, reasons, relationships.
Why visit by age group

Analysis: A mean comparison was run in order to determine which age groups go to Subway based on the why visit attributes. We did this to better understand the reasoning behind each age groups decision to go to Subway. Findings: All ages visit Subway the most because of specific items. The 52-78 age group visits Subway because of convenient locations. The 36-51 age group visits Subway more than any other group when they are in a hurry. Recommendations: Because the 18-35 age group is the most committed, it is important for Subway to improve its why visit attributes specifically for them. The only why visit attribute that the 18-35 age group scored significantly different on as compared to the other two age groups was the atmosphere. We recommend that Subway improve its restaurants atmospheres to better serve this age group. Subway should maintain its convenient locations by continuing to issue franchises. Question 3 Summary: It is important for Subway to look at demographic differences when trying to improve customer relationships. Some demographics are more significant than others, and certainly the most committed demographics should be a focus. Gender isnt as important of a demographic as age is for Subway because Subway is a fast food restaurant where the reasons for males and females

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Subway SPSS visiting are typically very similar. For age, younger and middle aged groups were found to be more likely to visit Subway than older generations. Subway can use this demographic information to target their strong customer base and appeal in their advertising efforts to a specific target market. In order to do this, we recommend that they focus their advertisements and promotions on the 18-35 age group. The reason this age group visits Subway the most is because of specific items. We recommend that Subway invest and promote these items more specifically to this age group. The next top reason for why people visit Subway aged 18-51 is because they are in a hurry. It is crucial for Subway to maintain their quick and quality service for customers. Final Recommendations: Subway has spent years creating a valuable brand that has many unique and valuable attributes. However, like all businesses, it must constantly reevaluate its consumer base and competitive performance. Recognizing the demographics that represent Subways customer and their performance in various factors, we recommend the following actions in order to attain a profitable, competitive advantage. From the mean comparison, we have learned that Subways customer base is mostly people ages 18-35, which is different every one of the competitors. We recommend that Subway focus on this high level of young customers in targeted advertising. o Specifically, marketing should narrow in the reasons why the 18-35 year old age group is most likely to visit Subway: kids, specific item, and deals. We recommend that Subway continue to provide a fulfilling functional relationship to its consumers, but that it increase its personal relationship, where it significantly lags behind both Panera and Chick-Fil-A. o Specifically, Subway should focus on the attributes of surroundings and particularly, special treat. o These can be addressed through changing the restaurant environment in Subway franchises to better meet the desires of the consumer and providing menu items, such as desserts, that customers would look forward to purchasing and consuming. We recommend a strong, continued focus on the menu items reflecting what the consumer likes. The attribute of I like items is marginally less than one competitor, Panera Bread. With a strong effort, this factor could prove to be a competitive advantage in the near future. o Alternatively, Subways second and third place strengths (consistent food and delicious, respectively) are significantly lower than Panera and Chick-Fil-A. These attributes require significant additional attention in order to be realized as competitive advantages, or even to become competitive (although Subway does beat out Wendys in both) o Consistent food and delicious require additional staff training and perhaps alterations to the menu.

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