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Executive Summary

The 5-year business improvement for Quiznos

Sales will increase by 71% while slowing during the 4th and 5th years, equaling $97,203,488.

Market share will increase from 7.9% up to 19.5% while stealing loyal Panera and Subway customers.

Gross profit will increase 84.5% to $54,280,894, tapering off with sales during the 4th and 5th years.

Quiznos has an opportunity to re brand themselves as affordable, healthy, gourmet food that appeals to Millennials and Generation Xer's. With a digital overhaul and advanced ordering options, online advertising and MyQuiznos app will revolutionize the sandwich experience

By using local marketing to understand what Quiznos customers do before and after they visit a shop, digital advertising strategies exclusively through internet sites, mobile devices, and social media will be used to monitor effectiveness

Panera Bread- Has about 9% market share and is a leader in the quick-casual restaurant business, operating about 2,000 bakery-cafes located throughout the US and Ontario, Canada (Tepper, 2012).

Their significant competitive products include quality ingredients and a beautiful atmosphere and design of restaurants, serving a moderately priced meal.

Panera has innovative design both in and outside of their establishments, allowing them to position themselves in higher income areas

Jimmy John’s- Holds a market share to be 6.8% and quickly rising, they have increased locations by about 100 each year since 2008 and will likely announce this year that it has reached 1,700 units.

A brief look into a cost-breakdown of resources

The key competitors for Quiznos are Subway, Jimmy John’s, and Panera bread respectfully.

Their significant competitive products include gourmet sandwiches made with freaky fast service and a comical effective advertising campaign emphasizing their freaky fast delivery.

References

Bixler, B. (2014, March 10). Franchise chatter guide: How Subway’s five dollar foot long helped the entire san

dwich sector. Retrieved from http://www.franchisechatter.com/2014/03/10/franchise-chatter-guide-how-subway-franchises-five-dollar-footlong-helped-the-entire-sandwich-sector/

Fry, R. (2016, April 25). Millennials overtake Baby Boomers as America’s largest generation. Retrieved from htt

p://www.pewresearch.org/fact-tank/2016/04/25/millennials-overtake-baby-boomers/

IBIS World. (2013, October). IBIS World Industry Report. Retrieved from file:///C:/Users/hartm/Downloads/

sandwich(1).pdf

Kelso, A. (2014, December 9). Quiznos turns to millennials in turnaround bid. Retrieved from http://

www.qsrweb.com/articles/quiznos-turns-to-millennials-for-turnaround-bid/

Taylor, K. (2015, February 16). Quiznos is pulling the plug on TV ads. Retrieved from https://

www.entrepreneur.com/article/242907

Tepper, R. (2012, October 23). Favorite sandwich chains: Panera Bread beats out Subway, Arby’s and others.

Retrieved from http://www.huffingtonpost.com/2012/10/23/favorite-sandwich-chains_n_2006233.html

Subway- Capturing 62 percent of market share and leading the industry, their significant competitive products include fresh ingredients, customization, and affordability.

Their average sales per restaurant are among the highest in the industry and focus mainly on speed.

Subway has had many successful marketing campaigns such as Jarod Fogell, Michael Strahan, and the number one campaign, 5$ foot longs. After the recession, Subway’s sales increased because they were more affordable than many other sandwich shops.

There seems to be an opportunity for Quiznos to compete with these tough competitors because rough financial times are known to remove many of the barriers for change, allowing a re branding effort to be more widely accepted by franchisees and franchisors.

Neither Subway, Jimmy John’s, or Panera bread have a fully integrated digital platform that comprises an app, proprietary internet TV channel, prepaid and interactive consumer accounts, or a massive social media campaign underway.

Using technology as a differentiating tool will attract more of their target demographic including Millennials and Generation Z

Macro trends affecting the market

In the future, the sandwich and sub franchise industry will continually introduce new, healthier food alternatives while expanding their menus with additional products and new features.

• A rise in disposable income resulted in consumers dining out more frequently.

• The industry has emphasized choices perceived to be much healthier than fried foods served up by other fast food restaurants.

• The industry offers products at price points that consumers see as affordable and having value.

Situation Analysis.... The Market

Major CompetitionJimmy John’s, Subway, Firehouse Subs, Jersey Mike’s, Potbelly, Panera, Blimpie, Schlotzsky’s, and McAlister’s

Quiznos current company market share and sales have both dropped more than 50% from 2008 to 2013 because they closed 2,500 out of 4,000 locations, placing them in a follower market position behind giant Subway, and now number three Jimmy John’s because of their meteoric rise.

Customers would like a better menu, ambience, quicker service, and newer products.

On top of that, the variation and diversity of menus are expected to contribute to revenue growth of 2.7 percent per year on average to $22.3 billion in 2018.

As consumer spending increases due to economic recovery, higher-priced gourmet options will continue to gain market share, companies like Jimmy John’s, Firehouse Subs, and Jersey Mike’s who each have their own identity and similar target segment.

The sub/sandwich franchise industry is in the growth phase of its life cycle, but although revenue, employment, and establishment numbers are all expected to grow at a slower rate over the next five years, the industry is still robust for investors (Bixler, 2014).

IBISWorld expected industry revenue to grow at an average annual rate of 3.5 percent to $19.6 billion by 2013. It attributes the overall sunny forecast for the sandwich sector to three things...

We want to avoid a price war with Panera and other high end sandwich shops who offers similar across the board prices and achieve inelastic demand through differentiation and specialization, so the initial offering price of sandwiches will go up from the $5 range to $6.25.

The idea is to push the MyQuiznos app so that loyal customers can receive discounts lowering the price back around $5 a sandwich, thus motivating adoption of the new digital platform by non-users.

The pricing strategy will be consumer value-based, meaning pricing decisions will be based on the consumers perceived value of a Quiznos product. We will make money where the spread between our costs and the perceived customer value is greatest, letting us focus on customer needs, product benefits, creating value, and increasing willingness to pay while avoiding the commodities trap.

SWOT Analysis

Economy pricing can be hard to discern so by utilizing small concentrated digital promotional offers, we can almost instantaneously have quantitative data to analyze, while appointing a pricing champion who understands how important price is to the profit equation, we can set the standard for the organization.

• 1500 locations across United States

• 600 international locations

• Good brand recognition via past Super Bowl and TV advertisements

• Freshly sliced meats and toasted bread

• High barriers of market entry

• Healthy alternative to fast food

• Struggling financially and fighting legal issues

• Not enough differentiation

• Operational issues from restructuring

• Franchising profitability

• Current advertising campaign

• Possible high loan rates

• High fixed cost investment per store

Price execution will be realized through are ability to train employees to communicate differentiation, benefits, and value proposition, as well as what the pricing strategy is and what the benefits are to the customer so they can explain what the value is!

Quiznos uses direct distribution with both front and back of the house, whether it’s ingredients or marketing, our exchanges go from the manufacturer directly to the consumer.

The distribution strategy for the digital marketing campaign is to utilize the most popular online distribution channels such as YouTube, TubeMogul, Napster, YouNow, Spotify, Facebook, Twitter, Instagram, and any other digital site that has high Millennial exposure.

In case adoption of the new digital platform is slow going, there will be additional promotional offers that give across the menu price discounts during certain days, making advertising a supplemental effort during the relaunch. Some of Quiznos lowest profit margin items can also be given out free to entice purchases of sandwiches, therefore creating a buzz around the community.

Weaknesses

Strengths

Opportunities

Threats

• Highly competitive category

• Increasing cost of labor, operations, and ingredients

• Less cash flow

• External business risks

• Healthier substitutes to sandwiches

• Depleted franchisee franchisor relationships

• Consumer preference for Subway

• Implementation of Quiznos app

• Overhaul IT portion of business

• Improve presence in emerging Asian and European markets

• Differentiation strategy

• New markets and acquisitions

• Rising health food concern

• Employing social networking sites provide more cost-effective advertising

Metric number one is to maintain a .8% click through rate which is the industry average.

Requirements for the success of this digital campaign include total cooperation from upper management to help provide a unified rallying cry throughout the franchise.

Metric number two is to have a cost per click remaining under $1.65 which starts quarter 2 once the campaign is in full swing.

Franchisee and franchisor must be on the same page regarding digital discounts, reimbursing for corporate promotional offers, prices from authorized suppliers, and providing adequate marketing support.

Focusing on the simplicity and convenience of our MyQuiznos app, our staff can supplement the online campaign leading to faster adoption.

Metric number three means holding a conversion rate of at least 3.5% which is just below last year’s average. This is important because it directly translates marketing attempts into dollars!

All management and employees of Quiznos must be trained to recognize the advantages our digital campaign has to offer, so the customer understands the value of what they are getting.

Metric number four is cost per conversion which is how much it costs Quiznos to acquire each real customer, at least one that makes a purchase. This cost must remain under $46.50 in quarter 1, under $45 in quarter 2, and under $43.50 during the last quarter.

Additional year goals include understanding Quiznos overall site traffic and their sources, so we can identify what keywords were used which then enables us to focus our description.

By continually promoting franchising opportunities in new areas fitting the target market, while continually improving Quiznos digital presence, revenues are expected to increase, allowing additional funds to be used for finding new channels of distribution or strengthening the existing relationships.

From a global perspective, Quiznos has much less competition in other countries which can allow them to scale down prices to increase patronage, Europe and South America are locations worth considering.

Implementation Controls

First year goals for Quiznos are to maintain a low cost per click and cost per conversion, while achieving a high conversion rate per advertisement.

Because these digital advertisements will be in real time, instantaneous results will show where adjustments should be made while decreasing the invalid click rate.

We want to avoid partnering with low-quality sites while carefully monitoring third-party tracking methods to protect proprietary information.

During the first year we will identify the obstacles that keep prospects from converting, then by changing the flow we can remove those roadblocks to find out exactly which path to conversion works best for our target audience.

The communication strategies for generating awareness, trial, and adoption for this digital campaign will be through our distribution channels which are best suited for our target market.

Positioning Statement

Quiznos provides gourmet toasted sandwiches that are faster and more generous than any other sandwich company around. We achieve this through healthy, quality ingredients, a commitment to green and sustainable resources, and our new digital platform that allows us to pass on the savings to our customers!

This method was chosen because higher infrastructure costs during the beginning are offset by the more efficiency and lower maintenance afterward.

Once customers have embraced our My Quiznos app, the distribution channels in the front of house become even shorter as do many of the activities previously done by employees. This automation of locating, ordering, and payment creates less hassle for both consumer and employee minimizing costs.

We will launch digital advertising campaigns concentrating on areas within 15 miles of all Quiznos locations, so by narrowing the bandwidth we can determine what areas are successful and what areas need different communication techniques.

Thirdly, Quiznos must flood social media with advertisements because once again, the advantage that online marketing has over traditional media is easy tracking.

Social media and online video makes it possible to see how many people see an ad, then base sales upon it. By launching smaller, monitorable digital plans, Quiznos can see what specifically brings customers through the doors and what doesn’t, all while saving thousands of dollars on TV adverts

Because of the flexibility and the fact that you can set up a $10,000 test in five minutes and test it instantly, brands will use or bring to bear more creative aspects than they would if they… had to go buy one 30-second TV spot (Taylor, 2015, para. 13).

Service Strategy

The new Quiznos Digital Campaign includes implementing a MyQuiznos app which features On-the-Go Ordering, Quiznos special deals, mobile payment, even customer tracking that can text members’ promotional offers when they are within one mile of a store. Customers can even save their favorites and reorder them in a tap.

Another weapon of Quiznos campaign will be the exclusive use of digital advertising through music and video sites like Napster, Spotify, and Pandora, or YouTube, TubeMogul, and YouNow respectively. Quiznos needs to gamble a large portion of their marketing dollars on digital video during at a critical time for the company, by ditching the TV advertising which still dominates advertising spending.

By keeping strong content through optimization and regular testing, communication can be prioritized to achieve optimal email frequency with preferred customers as well.

Value Proposition

Our digital platform is designed to streamline ordering, locating, promotional efforts, special offers, and customer service in a way revolutionizes the business to consumer relationship. Never has healthy food tasted so good and become so easy to order, whether you are on the run or just looking for a place to use free WIFI, Quiznos has a business casual relationship that everyone can enjoy.

Market Strategy

The push for more flavors and choices by millennials means their palates are more sophisticated than other generations and Quiznos must respond to that.

By using local marketing to understand what Quiznos customers do before and after they visit a shop, digital advertising strategies through internet sites, mobile devices, and social media can concentrate on emotionally engaging activities in which their target segment can relate.

Segmentation Choices for this Market

People who prefer toasted subs

Health food fanatics

Digital convenience advocates

Quality obsessed foodies

Contingency plans if plan if metrics are not meeting goals?

Mission Statement

To be the leading provider of gourmet, healthy, and affordable sandwiches, while setting the industry standard for digital consumer relations.

But there should still be a few more...

To collaborate with state and local colleges to have store’s on or near campuses. By associating themselves with collegiate organizations who foster our target segment and using events for promotional purposes, it exposes Quiznos to a demographic that may not have written them off just yet.

Through a convenient, relaxed, and friendly experience either online or in person, our relationships become our greatest asset.

These categories outline the potential market for Quiznos, but I think we can combine some of them to narrow the list! The relevant choices would include Millennials and Generation Z as our target segments because they each comprise all 7 segmentations of choice.

The Millennial segment comprises 22.7% of the Market and within that segment is a sub-group that is of great importance to marketers: “Confident Connecteds.” Confident Connecteds are the most likely of the four groups to engage with brands in positive ways.

Millennials have surpassed Baby Boomers as the nation’s largest living generation, whom we define as those ages 18-34 in 2015, now number 75.4 million, surpassing the 74.9 million Baby Boomers (ages 51-69) (Fry, 2016).

By shifting most of Quiznos marketing messaging specifically toward the coveted millennial demographic, a group trending toward higher quality ingredients, chef-designed recipes, and digital media, they can capture more millennial market share (Kelso, 2014).

Sponsoring school sporting events, getting involved with online charity drives, and changing the culture of the franchise are some additional ways in which they can attract positive attention.

Use as a meeting place

Business casual

Want a break from fast food

Marketing objectives

To obtain more Millennial and Gen Z market share who are consumers that might eat a sandwich every day.

These changes will be difficult with all the outstanding debt Quiznos currently holds, but unless they build a positioning model based on a healthier menu, increase value, and more technological convenience, lowering operating costs and streamlining the franchise start-up model will not be enough.

These are the same consumers who are watching a lot of online videos, so platforms like TubeMogul, YouTube, and various music sites provide the capability to chart what types of websites and videos are most liked to attract their desired market.

One year financial objective

Sales revenue is expected to increase 17% from $56,844,122 up to $68,514,296 during the first year.

Digital marketing resources are expected to increase by 12%, totaling 20% of total operating expenses.

Gross profit will increase 28.2% from $29,420,539 up to $41,025,179 during the first year.

The new marketing expense associated with the digital campaign will cost just under $1.8 million dollars the first year. The short-term projection method was used because Quiznos may want to adjust marketing costs based upon marketing success within each channel. Almost one-third of the $1.8 million will be spent during the first quarter to build the infrastructure necessary to become operational, while each successive quarter provides less financial support.

Quiznos Marketing Strategy by Joshua Hartmann

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