Join TSR now to have your say on this topicSign up now

Subway are a profit seeking company with benevolence? Watch

    • Thread Starter
    Offline

    2
    ReputationRep:
    (Original post by Hustler-1337)
    Lol, what's with the aggressive attitude? :eyebrow:

    If people don't use a loyalty card such as the SubCard then there is no loss to Subway.

    A loyalty card does have value to a business if customers use them. They're not giving things away for free and making a loss. The profit they make from selling, say, 18 subway sandwiches probably far exceeds the cost of one subway sandwich they are giving away to you for free. Like others have said, the margins they make is more than enough to cover the cost of giving away a free sandwich.

    For example: say they make a profit of £2 per sandwich sold. If they sold 18 sandwiches, they would have made £36 in profit.

    Of that £36 they made, they give you a free sandwich that costs the company only £1 to make. They've still got £35 of profit left, a happy customer, and repeat business as the customer will probably keep on coming to get that free sandwich. The real winners are the company, they're getting repeat business and rewarding the regular customers with a free sandwich that costs them peanuts.

    Obviously, this would not make economic sense if they gave away a sandwich for free for every 2 sandwiches the customer buys, as it'll significantly reduce the amount of profit they make from sales as the free sandwich will cancel out how little they've made from selling 2 sandwiches. Only then will it make poor business sense due to the risks of giving away a free sandwich so frequently.


    Even if people didn't use them, the only potential loss to the company is the customers going to someone else as they don't have enough of a reason to come to Subway. That'll mean Subway will need to work on something else to make the customers come back to their stores (like improving taste, customer service, price or anything else that customers may find attractive about buying from Subway).

    You don't need a business course to understand the basic idea of a loyalty system and when it will make money, just common sense and some basic arithmetics.
    Refer to the post that I just wrote.

    I never said that Subway make a loss in real terms, I said that they will be making less money than they could have. As are places like boots who have to essentially nullify a 100th of their revenues from people who use an advantage card, even though the extra patronage they've gained from the scheme is countered by places like Superdrug doing the same thing and luring customers to them who might have gone to Boots instead.

    If you genuinely think that its a loyalty scheme that makes people come back to Subway then I feel like ive probably wasted time just writing the simple rebuttal that I just did.
    Offline

    16
    ReputationRep:
    (Original post by theonefrombrum)
    Believe me I know what I'm talking about and not just through my own analysis but because I worked in Subway for a while and you wouldn't even believe how many repeat customers didnt have a SubCard because they either couldn't be arsed or didn't even know much about it. That shows clearly that these people come to Subway and spend money because, and only because.... they like Subway.
    Well now we know what caused the banking crisis.......

    we dont need all those people with degrees and business acumen - what we really need is you - a guy whose skills are so phenominal he can put cucumber on a footlong with JUST ONE HAND. And knows the ins and outs of disadvantages to a loyalty card. :rolleyes:

    Make this guy into subways CEO - he will be our new messiah and saviour
    Offline

    2
    ReputationRep:
    (Original post by Patriot Rich)
    Loyalty cards are a pretty sound move. They lock you into buying from one company.
    To give you an example; my local supermarket is a Sainsburys, hence I have a Nectar card. If I go to another town with a choice I'll naturally seek out a Sainsbury's even if Tesco's or Asda offers the same products for cheaper.
    Not if you have a club card, nectar card, boots advantage card, super drug beauty card
    Offline

    16
    ReputationRep:
    As an expert in business you'll also understand the huge significance of a loyalty card for obtaining customer details and tracking buying patterns. Which lets you develop far better marketing strategies and understand your customer base a lot more. Which makes you a lot more money. This is probably as important as repeat business, if not moreso.

    Of course, we know that loyalty cards have a significant impact in driving custom (irrespective of your anecdotal assertion that they don't do so in Subway) and best of all for the company, the vast majority of points go unredeemed/forgotten about, so it's pretty much free in most cases. There's also the branding idea. Put your brand into someone's wallet and they'll think of you more often. Put your app on their phone and it'll have the same effect. Companies don't spend time and money on loyalty schemes unless they have evidence that it'll make a difference in driving custom. Obviously this bit has already been covered, but it would be an incomplete reply without it. There'll be other reasons but marketing really isn't my forte.
    • Thread Starter
    Offline

    2
    ReputationRep:
    (Original post by silverbolt)
    Well now we know what caused the banking crisis.......

    we dont need all those people with degrees and business acumen - what we really need is you - a guy whose skills are so phenominal he can put cucumber on a footlong with JUST ONE HAND. And knows the ins and outs of disadvantages to a loyalty card. :rolleyes:

    Make this guy into subways CEO - he will be our new messiah and saviour
    Refute what I said and then you're socially free to mock me, until then its you commuting the error in decision and making yourself out to look like a condescending clown who lacks the ability to counter any of my arguments.


    Hahahaha, you're a clown!
    Offline

    20
    ReputationRep:
    (Original post by Clip)
    I think you're wrong. I hear that Samsung, KFC and Kraft Foods are in a three-way bunfight to have theonefrombrum consulting for them after hearing his guest lecture to MBA students at Harvard.
    Yikes. He should avoid Samsung, those guys are *bums*. Best to stick to what he knows best - food.
    Offline

    19
    ReputationRep:
    (Original post by someonesomewherexx)
    Not if you have a club card, nectar card, boots advantage card, super drug beauty card
    It's a case of working out the value ie: say shampoo costs 90p in Asda, and £1 in sainsburys, where you also get 1 nectar point (so 0.5p effectively) for spending at sainsburys, and say they're in close proximity of each other.

    It makes financial sense to go to Asda, BUT because of the nectar card scheme, people think "Ooh nectar points" and go to sainsbury's
    Offline

    16
    ReputationRep:
    (Original post by theonefrombrum)
    Refute what I said and then you're socially free to mock me, until then its you commuting the error in decision and making yourself out to look like a condescending clown who lacks the ability to counter any of my arguments.


    Hahahaha, you're a clown!
    I dont need to refute you - everyone else has already done it.

    As for the clown comment - well i am funny so yeah sure ill live with that.
    Offline

    1
    ReputationRep:
    (Original post by theonefrombrum)
    Subway offer SubCards, a card which gives you free sub for every 17 that you buy. Clearly the cost to Subway of doing this will outweigh any gains made by offering this reward so why do they do it?

    Are the really a franchise who actually want to selflessly reward their customers and thank them for their purchases without expectation of getting something in return or do they just have terrible business sense?

    Seriously, what a silly rant. Don't you have something better to do????

    I have never seen a loyalty program which is fabulous because if there ever was one the business would collapse. There is no such thing as a free lunch.

    I know that Costa Coffee got robbed with its loyalty scheme as employees sold the stampers on ebay.
    • Thread Starter
    Offline

    2
    ReputationRep:
    (Original post by russellsteapot)
    As an expert in business you'll also understand the huge significance of a loyalty card for obtaining customer details and tracking buying patterns. Which lets you develop far better marketing strategies and understand your customer base a lot more. Which makes you a lot more money. This is probably as important as repeat business, if not moreso.

    Of course, we know that loyalty cards have a significant impact in driving custom (irrespective of your anecdotal assertion that they don't do so in Subway) and best of all for the company, the vast majority of points go unredeemed/forgotten about, so it's pretty much free in most cases. There's also the branding idea. Put your brand into someone's wallet and they'll think of you more often. Put your app on their phone and it'll have the same effect. Companies don't spend time and money on loyalty schemes unless they have evidence that it'll make a difference in driving custom. Obviously this bit has already been covered, but it would be an incomplete reply without it. There'll be other reasons but marketing really isn't my forte.
    I understand that a loyalty card would better enable a business to track an individual's buying patterns but I'm struggling to see at this moment how this would greatly benefit them? Prior to the advent of SubCards for example, Subway knew what and what wasnnt being sold but just not by which individuals and so I can't why there's a lot of value in having information on a customer' buying habits. Will Subway market their brand or a particular sub to that Individual person? No. Will they cut the prices of the subs that a person likes, just for that person, so the person may end up making Subway more profit because they buy a lot more of the cheap foods of their choice? No. So tell me genius, where is this value for Subway? Oh and don't be generic, cite actual examples if you don't mind.

    We know that loyalty cards have a significant impact in driving custom? Do we? Really? How do 'we' know this? If anything we completely do not know this and the evidence for it is based on what, the continued existence of said schemes? The fact tha people actually use their cards (because why wouldn't you, you're getting something for free in exchange for you doing WHAT UD DO ANYWAY)?

    The branding aspect of your arguement is futile as the companies that actually launch loyalty schemes are pretty much in the conscience of most consumers anyway and a marketing effort to spread the word of a SubCard on 50 billboards will do as much in terms of marketing reach as will spreading the word of a 2 for 1 deal at Subway on 50 billboards. Remember its not little stores that launch these loyalty schemes, its huge ones with profits equal in stature to the brand awareness that they have engendered through many other reasons.

    I don't give a damn if some companies spend a lot of time looking into loyalty cards, that fact alone doesn't prove anything. If the whole concept of Loyalty schemes was financially postive for companies utilising it, why haven't many other big companies launched them? Why doesn't McDonalds or KFC have a loyalty scheme? Are they unaware of the very possibility of launching one or is it fair to assume that they've considered them and ostensibly concluded that there was little value in launching such a scheme? Why hasn't the sales growth of any of the companies who have launched loyalty schemes been higher relative to what it was prior to the loyalty scheme, ceteris Parabus?

    Answer all of these questions, consider what I've said and then come back at me. Also you may want to look at the general consensus to this thread and you may even begin to understand why a public company launching such a scheme might do so. If the overwhelming reaction to the validity of the loyalty schemes is in favour of them, for whatever reason, its not unreasonable to assume that the motives behind launching a loyalty scheme may have a bit more to do with increasing shareholder confidence and the underlying belief in the value of a company. Just something to consider.

    I've used this site for a few years now and largely its been a great thing. It's good to engage in positive debate and my neg rep count is largely thanks to threads like this, where insight and considered judgement are left at the door and traits that students shouldn't exemplify like unchallenging beliefs and an unwillingness to accept any arguments that challenge the status quo of something. Sad thing really.
    Offline

    12
    ReputationRep:
    (Original post by theonefrombrum)
    Any gains that Sainsburys makes from you shopping there because you have a nectar card are negated by them not getting what they could have made if Tesco didn't also have a Loyalty scheme. Make sense?
    I don't (genuinely) think you understand what supermarkets use loyalty cards for.... They aren't used as a focus for offering deals, that is a byproduct and an ioncentive for customers, it is not the incentive for Tesco/Sainsburys

    The output of people using the cards is purchasing meta data (a purchase history per customer) it allows you to look at tending purchasing data to leverage buying power throughout the year, e.g. customers don't want blueberries in October as the sales drop 85%.

    It also allows them to focus marketing on a single person, for example if you are a Tesco clubcard holder and you use their online services, the third party marketing is directly linked to your clubclard purchase history and has been for about 5 years now (http://econsultancy.com/uk/nma-archi...ross-tesco-com)

    "Every time a Clubcard is used, a copy of the store shopped in, products purchased and price paid are stored against the Clubcard account. Applicants are asked to provide personal details such as name, address and children. Tesco have stated that this is to help them pick vouchers that are relevant to the holder and also monitor trends to help product availability"

    So it's not, really, about offering cheaper products to customers, it's about targetting specific products or deals at specific customers to ensure they enter the store (with the intent of purchasing that deal) and then purchase a wider array of goods and to ensure brand loyaly, e.g. "Tesco offers the best deals for me" - well of course they do, they know exactly what types of products you purchase and when.


    EDIT: check out a firm called Dunhumby (http://en.wikipedia.org/wiki/Dunnhumby) they were behind the Tesco clubcard scheme and are now majority owned by Tesco, they did a trial in 94 with Tesco and the first response from the board came from Tesco's then-Chairman Lord MacLaurin, who said "What scares me about this is that you know more about my customers after three months than I know after 30 years."

    Also read up on Big Data/Meta Data
    • Thread Starter
    Offline

    2
    ReputationRep:
    (Original post by SeriouslySmart)
    Seriously, what a silly rant. Don't you have something better to do????

    I have never seen a loyalty program which is fabulous because if there ever was one the business would collapse. There is no such thing as a free lunch.

    I know that Costa Coffee got robbed with its loyalty scheme as employees sold the stampers on ebay.
    Don't you have anything better to do to reply to what you feel is a silly rant? Yeahhhhhh. It's something to discuss, its a debate to be had and I'm not going to go too much into this but I have business aspirations which have elements of the loyalty concept in them and its always good to understand the general sentiment towards something.

    Oh and I'm able to type out a post that took me two minutes and still do plenty of other things in the day (like passing my driving test, woooo )... I have to ask, can you do the same thing?
    Offline

    12
    ReputationRep:
    Questioning the business practise of a company that's making more money that it knows to do with. Really?
    • Thread Starter
    Offline

    2
    ReputationRep:
    (Original post by silverbolt)
    I dont need to refute you - everyone else has already done it.

    As for the clown comment - well i am funny so yeah sure ill live with that.
    Actually no one has but to be honest, I have the sense that your efforts to do so would be more laughable, but funny in ways that a self proclaimed comedianlike yourself didnt intend on.

    Please go away now, your desire to jump in on the bandwagon and mock me makes me sick.
    • Thread Starter
    Offline

    2
    ReputationRep:
    (Original post by 419)
    Questioning the business practise of a company that's making more money that it knows to do with. Really?
    Not the whole practice no, just this one aspect of its operations. Read a few of my previous posts, show me where I'm wrong and then pass a comment, until then its not really right to do so I would say.

    If you do manage to find errors in my arguments than I apologise in advance for not replying until much later on today, I'm going to be very busy and will incidentally be buying a niceeee Subway. (But because its nice and only because of that...)
    Offline

    15
    ReputationRep:
    A six inch sub costs less than a £1 to make most of the time. Giving someone one as a reward for buying a certain amount of subway sandwiches is hardly going to break the bank.
    Offline

    2
    ReputationRep:
    (Original post by theonefrombrum)
    Subway offer SubCards, a card which gives you free sub for every 17 that you buy. Clearly the cost to Subway of doing this will outweigh any gains made by offering this reward so why do they do it?

    Are the really a franchise who actually want to selflessly reward their customers and thank them for their purchases without expectation of getting something in return or do they just have terrible business sense?
    What they are doing is stimulating demand for their product. This may slightly reduce their profit margins, but it will increase their turnover and therefore their gross profit.

    Nothing benevolent about it really.
    Offline

    2
    ReputationRep:
    Its annoying how Americans only have to pat $5 for a footlong whereas we have to pay £5.
    Offline

    16
    ReputationRep:
    Here in France it's 7 subs! And they still have sweetcorn
    Offline

    16
    ReputationRep:
    Never mind the fact that the subs are overpriced, or the fact that the loyalty scheme hardly rewards loyal customers.

    I have been food-poisoned by Subway once, (previously been a v. regular customer beforehand), and have never returned since. I can assure anyone that the cause behind this (and possibly most other subway food poisoning cases) is simply due to the fact that the sandwich makers who also happen to handle the tills & the DIRTY change NEVER, EVER wash their hands in between the two jobs.

    Simply disgusting, and unacceptable.
 
 
 
Reply
Submit reply
TSR Support Team

We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

Updated: April 14, 2013
Poll
If you won £30,000, which of these would you spend it on?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Quick reply
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.