Business organizations, regardless of the industry that they operate in, can attain success and become market leader by using marketing as the key technique. In this regard, it may not be wrong to say, that authorities of a company need to pay a lot of attention on developing and devising appropriate marketing strategies, or else it can bring adverse results for the firm. Activities related to marketing and promotions become all the more important when it comes to corporations that are operating in the international market. Multinational or global companies have to evaluate their surroundings or the market that they intend to work in, because it would equip them with a lot of vital information and enable to effectively carry out the various tasks. This way, the process and task of formulating marketing plans and long term existence can be facilitated.
This report has been formulated with an objective to analyze Indonesia as a region where the company – Subway Restaurants can look forward to make an entry. It is world’s one of the largest fast food chains and operates in more than 107 countries with over 42,000 locations. At present, the company does not have any outlets in Indonesia because of a variety of reasons and factors. In this research study, the environment of the country has been evaluated, so that some marketing strategies can be suggested to the management of the company.
For companies that are looking forward to enter into new markets, it is critical that they conduct a thorough and intense research of the market, and then base their decisions on the information obtained. Such an evaluation would help the management of Subway to not only understand market, but also try to negate negative forces that may exist in it (Talamini and et.al, 2013). This way, maximum benefit can be taken of positive factors present at the marketplace. Through such an analysis of the market, authorities of a corporation can be armed with a variety of useful information and also make their tasks or duties much more effective. Additionally, it can also be said that evaluation at this scale and magnitude can prove to be very useful to Subway in long run. There are a lot of tools and techniques through which assessment of market can be done at macro level. There are two popular and highly effective techniques to conduct such an analysis – PESTLE and Porter Five Forces (Bosdriez and et. al, 2012). They provide the management of the corporation with useful, overall information about the market that they are intending to operate in. Following is a PESTLE analysis of the company when it is planning to make an entry into Indonesia.
It is one of those tools which can be very useful to business organizations as it would provide them with a lot of information regarding the market that they want to enter and also about the condition of the region from various points of views (Cadle, Paul and Turner, 2010). Herein, it can be said that the information from such an analysis can prove to be of great use for the company. PESTLE analysis basically comprises of six basic elements which provide holistic information to the firm about the market.
This is the first and one of the most vital components of the process. Analysis of this factor would reveal information and facts related to political environment of the region or country on a whole (deMello, 2011). This means that opening a new restaurant in the realm may become a lot simpler and easy task. Indonesia is a republic country where elections are held every five years for president and vice president. In this regard, it may not be wrong to say that after the stipulated time, there is a situation of change in the country. Last time, the elections were held in 2009 in the month of July; while the next ones will be held in 2014 in the same month (Rosser, 2013). Therefore, if the management of Subway decides that they would make entry in the Indonesian economy during the same time, they need to devise strategies to overcome the issues that might arise with changing government in the nation.
One of the very fast developing nations in the world is Indonesia, which means that for Subway, there is a lot of potential available to grow in the market. In the last few years, the nation has grown at a healthy pace, as it can be seen through the fact that GDP has increased by a good margin. In 2006, the country’s GDP was nearly 6.1% improving from 2005’s 5.5%, clearly indicating that it is on the path of growth and recovery from the recent economic crisis (Dick, 2002). The per capita income has also improved as now the locals can spend a great deal of their money on leisure activities. FDI also has augmented from $58.96 billion in 2007 to $67.3 billion in 2008. Through all these factors, it can be observed that for this international brand of fast food restaurant chains, entering into Indonesia may prove to be a very good option, as the outcomes that they may receive may justify the investment to be made (The Indonesia Competitiveness Report, 2011).
This is another very important factor that needs to be considered when conducting a PESTLE analysis. It discusses about the information related to current liking and preferences of the locals along with trends related to changes in demography of the region. At present, since per capita income of the residents has increased, they can now easily afford products and services offered by the international brands. Due to this very reason, there has been a substantial change in the lifestyle of dwellers of the country. Population is another factor which in the last couple of years has not only changed but increased as well. It is increasing at a rate of 1.13% every year (Wahyuni and Ng, 2012). Majority of people fall in the age band of 0-40 years, meaning that they have a tendency to follow the latest trends and eating out most of the times. Therefore, for Subway, it is one of the best realms which it can enter and thus increase its customer base. Other than that, the environment of the country can be understood by evaluating their literacy and education standards as well. More than 90% of the population is literate indicating that education and learning is given a lot of importance. Because of this very reason, it can be said that there is a lot of potential for the firm to grow in this nation.
Decision by the management of Subway to make an entry into the Indonesian market to some extent is dependent upon technological advancements. It is one of those countries which are developing at a rapid rate, as the government pays a lot of attention to use latest available technology. It can be supported through the fact that presently there are 139 airports, railways covering ground worth more than 8000 kilometers along with well maintained waterways as well. Further, it can be concluded that the country possesses a well developed transportation system (INDONESIA ECONOMIC QUARTERLY, 2013). Due to this, the process of carrying raw materials and other goods required by Subway would become very easy.
Today, the natural environment is decreasing at a very fast rate, as it can be seen through the fact that pollution is increasing at a rapid rate, so are the green house gases. Many authors and experts have cited that due to the fast paced industrialization, such issues are becoming more and more prominent. Indonesia is a country which is known all around the world for its natural beauty. When it comes to geographical layout and structure, Indonesia is one of the most complex regions; mainly because of the reason that it is both hot and humid at the same time (Walker, 2006). Other than this, it also boasts of a plethora of natural resources, meaning that Subway, if decides to enter the region, would not have to import many of the raw materials, as they would be available locally. Other than this, there are many rules and regulations as well in the country which have to be followed by companies. Some of them are related to protection of the natural environment and such resources. Non-compliance of such policies would mean that the company would have to face some serious repercussions.
For a country or a region, it is imperative to ensure that policies which they have formulated in relation to performance of the companies are followed stringently (Lindsey, 2008). They have made several policies in the same context. Many of them are related to starting up a new business venture in the country. It entails that they have to follow and incorporate the zoning laws. Management would have to find out the correct zone or patch of land where they can operate in an effective manner and try to earn good profits. Additionally, they also have to follow the Labor Law as prescribed in Article 28D (2). Company Law is another commandment which would have to be strictly followed by the fast food operator (International Business Publications, 2013).
Developing objectives related to marketing activities of a company is a very critical task, mainly because of the reason that it involves a lot of aspects to be considered by the management and then assessing them in the most appropriate manner (Avlonitis and Indounas, 2004). In this regard, for the management of Subway, it would be crucial that they develop appropriate marketing goals and also some effective entry strategies.
For Subway, while in the process of entering in the Indonesian market, it would be imperative that they develop some very specific marketing objectives as they will be the key on which different tasks and activities related to promotion would be carried out. For every organization, devising some marketing objectives is very crucial because they guide the top management as well as various other departments as to what all targets they have to attain (Karakaya, 2002). Following are some such objectives which Subway can try to achieve so as to successfully establish in the Indonesian market. One of the primary marketing targets is that the organization would have to create a unique image for itself in the market, also that it would be the ultimate one. This objective is very important for the company because of reason that it will aid in the process of not only becoming an established firm in the market, but also in ensuring that a solid clientele base can be developed. But to meet such an objective, there are many aspects which would have to be kept in mind by the management of Subway (Lee and Carter, 2012). Firstly, very unique marketing and advertising campaigns would have to be created, developed and implemented. This involves that the management as well as the marketing department should carry out an extensive research of the market and try to assess the needs, wants and desires of the locals. This would also help them in designing such a marketing campaign which is very attractive and trendy in nature. Also, there are chances of such campaigns becoming viral, meaning they are viewed by numerous members of target audience many times. Furthermore, such an analysis would also enable them to use the likes of internet, social media and email marketing much effectively. There are many objectives which would have to be attained by Subway, so as to establish themselves in the Indonesian fast food industry (McDermott, 2001). It includes the likes of instituting themselves in the market, increasing brand awareness among people, augmenting sales, and developing as well as maintaining customer loyalty and clientele base.
Although, all these objectives are extremely important for the company, but the first step which it would have to take states that efforts should be made so as to establish themselves in the market. It basically entails development of brand image among target customers. For that, management as well as marketing department would have to carry out extensive marketing campaigns. In this regard, it may not be wrong to say that aspects of product development like Research and Development would be crucial (Pearce, 2003). The authorities would have to understand the needs and desires of the target customers and then bring modifications into their products and offerings. In various surveys into Indonesian fast food industry, it has been found that locals like to have rice and non vegetarian items, with the dishes they eat, especially seafood. Therefore, one of the primary steps which would have to be taken by the fast food giant in terms of product development is that various eating options should be discovered along with necessary modifications in the existing product line. This means that extensive market survey and research would have to be conducted by the fast food giant (Warren, 2011).
Even though the economic condition of the country in last some years has changed considerably, but still if the company is to attain its goal to develop a good customer base, then prices would have to be kept as low as possible. In this regard, they would have to also find ways through which cost of production can also be lowered (Kotabe and Helsen, 2014). To attain the same target, local resources would have to be employed in the daily operations of the firm. This would help in dramatically reducing the manufacturing cost incurred. Herein, employing local managers can also be very supportive to Subway, as it would also reduce the costs and prices of the firm. Hiring such people can also be very beneficial from view point that they can help in assessing and understanding the needs of locals and fulfilling them effectively (Madichie, 2010).
For the restaurant chain, it would be imperative that they, in addition to development of marketing objectives, devise and select a plan through which making entry into the Indonesian market can become a simple task (Curry, 2010). Therefore, the management at Subway would have to evaluate all the entry strategies and select the most appropriate one. For companies, regardless of the industry that they operate in, when in the process of making entry in a market, a lot of attention has to be paid by management. Importance of market entry strategies can be understood through fact that they help the company in establishing itself in market and reaching out to the clients. If authorities and top level management at Subway are not able to determine the most appropriate market entry strategies then they would have to face a lot many problems which may affect its future negatively (Holtbrügge and Baron, 2013). There are many such strategies which can be considered by the management of the fast food firm such as Licensing, Franchising, Alliances, Joint Ventures, Outsourcing, Mergers and Acquisitions, etc. But considering the nature of operations at Subway, it can be suggested that the management should consider options of Franchising and Joint Ventures. They would prove to be of great use to the firm and also help it to considerably increasing the market share.
Franchising is one of the best options available to the company while planning to enter the Indonesian fast food and restaurant industry. In this method, the management would have to look for people who are willing and have the capacity to take franchisee of the brand and open its stores in the region. The main reason why it can be of great use of the firm is that not a huge investment would have to be made by the company and the brand can be marketed through a local name as well (Rosenbloom and Dimitrova, 2011). Joint Venture (JV) is another option which can be considered by the management. This option would require the company to form an agreement with other business firm(s) operating locally and develop a partnership between them so that outlets of the fast food giant can be established. For using this technique, the brand would have to invest considerable sum of money in the market, so as to formulate partnership with the other party. The investment would be made with an objective to launch the brand name and also to give it a local feeling, so that a large number of customers can be attracted (Lee and Carter, 2012). By partnering with such companies at the ground level, Subway would be able to much effectively reach out to the customers, understand their demands and fulfill them.
Marketing mix is a very important part of the marketing process which the company has to pay a lot of attention to (Yoo, Donthu and Lee, 2000). This is so because it has a great impact on the overall operations of promotions of the firm. In this regard, the management as well as marketing department at Subway would have to be very cautious when developing a marketing mix for the Indonesian market. Results can be very bad for Subway, if the management does not pay apt attention to the process. There are seven elements which are involved into the process of marketing mix: Place, Price, Promotion, Product, People, Process and Physical Evidence (). These components have to be developed in a very careful and attentive manner, as any mistake or mismatch can turn to be catastrophic for the company. Following is a suggested marketing mix for the fast food brand:
This element of the marketing mix discusses about the distribution strategies and channels. It also sheds light on as to how can the most appropriate channel be determined and maintained (Lamb, Hair and McDaniel, 2011). This element also talks about where the product would be sold in the region. For Subway, it can be suggested that their outlets be opened in Jakarta, the capital of Indonesia, because the people there have a good earning capacity and can afford to spend on leisure activities.
It is one of the most vital cog in the wheel of marketing mix as if it is not considered properly, then it can ruin the whole marketing process and be very damaging to the company as well (Belohlavek, 2008). Considering that Subway is planning to start its outlets in Indonesia, where purchasing power of people is not very high but moderate, and that other fast food companies also operate, penetration pricing would be the best option. This would mean that the company sets prices of products in a manner that they may seem to be low to the market, but essentially will increase the customer base.
It deals with the aspect as to how the product is to be marketed in the selected region (Gordon, 2012). Indonesia is a country which is technologically not very advanced, but has opened its gates so as to adapt and use the latest developments in technology. Therefore, it can be suggested to the company that they develop their marketing campaigns in a manner where a lot of importance is given to using traditional forms of advertising like using print and electronic media which includes newspapers, magazines, televisions and radios. Internet and digital marketing would not be given a lot of weightage.
This, in many views, is the most important element of marketing mix (Bowman and Gatingon, 2010). Authorities would have to understand the needs and preferences of the customers and thus modify their product range as well. For instance, the dwellers of Indonesia mostly like to have rice with their food. So, the company will have to make such changes and developments to their food items.
For effectiveness of the marketing campaign and to increase sales, people or the human resources play a vital role (Rosenbloom and Dimitrova, 2011). So, the marketing department and management of the company would have to hire such people at the workplace that they deal with customers in a proper an enthusiastic manner. They can also hire local managers who have knowledge about the market and can contribute to the decision making process to make it effective.
It discusses about the process which is undertaken so as to manufacture or produce the goods (Huang and Sarigöllü, 2012). Management at Subway can opt for such a process where emphasis is given on including local tastes to the food items that they prepare.
This part is related to the physical layout of the store (Wise and Sirohi, 2005). It has a very significant impact on marketing and promotional campaigns of the company. Subway would have to make sure that their stores or outlets are designed in such a manner that they attract customers and also provide them with comfortable sitting arrangements, so as to further augment their experience.
For the management of the company, it is imperative that they implement the plans which they have developed, for it is the only way through which targets and objectives prepared can be achieved. In this regard, it may not be wrong to say that devising marketing plans is a lot simpler than to practically implement them. This is so because of reason that there are numerous elements and processes involved into it. Also, there are some stages that the management would have to pass through so as to be able to implement the plan. The first one is related to hiring such people at the workplace who can improve marketing related operations by a considerable margin. Selecting and recruiting locals in the company at various posts may prove to be a very good option for the company. Hiring such people at the workplace can be very beneficial to the organization, as they have abundant knowledge about the local environment and understanding the needs and wants of the people can contribute by a great margin to getting a strong foothold of the market. In addition to it, management of Subway can also hire local people in the manufacturing and sales team. This way, the products can be given a local taste and they can be processed according to local culture, taste and norms. While having people who are dwellers of the nation would also help in making sure that customers are dealt with great ease and comfort. The company through such a method would be able to provide much effective services to the customers and try to make sure that their various needs and wants are satisfied.
Apart from these steps, the company also would have to find people who can be given the franchisee of opening an outlet. This entails that advertisements would have to be made at expansive levels, so that such people can be contacted with and made to buy the product of the company. Furthermore, a thorough understanding of the local laws would have to be acquired, so as to make sure that the fast food giant does not violate any regulation. Knowledge of policies would be of great aid to the task of ensuring long term future in the market.
It is a well known fact that marketing is one of the most important functions which have to be carried out by the management of an organization, mainly because of reason that it is the most effective way through which masses can be reached to and also a stir can be created in market. Also, if management of the firm is not able to perform this activity properly and effectively, then outcomes can be very damaging. For the present assignment, Subway – the fast food and restaurant was taken as an example with a view to suggest the company, a new market that it can look forward to enter into. Currently, the corporation does not operate in Indonesia. Through this study, it can be suggested to the company that they should hire local people in the sales and production team so that dealing with customers can be made efficient and also a local touch can be added to the food items that they sell. Apart from this, recruiting a local manager can also prove to be very helpful.