Product strategy in harsh economic times: Subway

This paper aims to describe a pricing process that can aid companies in modifying their product strategy.

The case describes an approach that uses grass roots data from franchisees to change pricing strategy effectively.

The paper illustrates the wisdom of franchisees with customer contact and an intimate knowledge of customer wants. The application may not be applicable to all industries. The restaurant industry is affected by numerous economic conditions that can bankrupt operators. Fast food operations usually lose less business than traditional restaurants, since consumers who want to eat out but need to economize “trade down.” Within the fast food sector, Subway capitalized on consumers' need to economize and reduced the price of its sandwiches. It was the right move for the times and Subway enjoy considerable success. Their results can be valuable to other companies.

As in all case studies, the specific conditions found in one organization may not be found more generally in others. Readers are cautioned that the conclusions drawn in this case may have limited applicability.

The case depicts the process that one firm used to boost sales and compete effectively by matching customer wants to the characteristics of the product offering.

The case describes how a pricing strategy, focusing on the needs of a target audience, can boost sales amid an economic downturn.