The Homa Files

Excerpted from Ad Age, “Quiznos Throws Subway Curve With ‘Sexy’ $4 Foot-Long” By Emily Bryson York, March 23, 2009

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Seeking to return to its identity as an edgy upstart, Quiznos is undercutting rival Subway’s $5 foot-long with a $4 version called the Toasty Torpedo, pitched as a product with “12 inches of flavor” by a smoky-voiced toaster that asks a chef to “Say it sexy” and “Put it in me.”

It’s the latest attention-grabbing bid by the nation’s second-largest sandwich chain, which has struggled in recent years because of problems with franchisee profitability and the perception that the food is expensive … “The reality is that we are a challenger brand,” CMO Rebecca Steinfort said … “Our main competition is Subway, which is an 800-pound gorilla. We may be 200 pounds, but they’re 800.”

Quiznos built a following with toasted, high-quality subs and envelope-pushing marketing … While the recession hit Quiznos hard, rival Subway has gone gangbusters with its $5-foot-long promotion, which helped to fuel double-digit increases in same-store sales. At Quiznos, marketing failed to drive traffic and closed stores …

Creative aside, the $4 price point might just be a magic bullet for Quiznos, undercutting its rival in a recessionary market where every dollar counts for consumers. “I think the right price point is very important in the sandwich business,” said Dennis Lombardi, exec VP-food service strategies … Subway’s foot-long “changed the paradigm. So the trick now is: How do you create a product that counters that? And a $4 sandwich sounds like a good start.”

Earlier this year, Quiznos revamped its menu to reduce prices and come closer to the critical $5 mark … This month, Quiznos offered a “Million Sub Giveaway” … While the promotion was an overwhelming success in terms of data collection, a few problems ensued. Quiznos had 1 million e-mails within three days, but some consumers didn’t get their coupons, and others couldn’t print them. A few flustered franchisees turned coupon holders away.

Mr. Lombardi said Quiznos will have to be careful of the promotions it uses to survive the recession, but “it’s much easier to go from premium product to bargain product than it is to go from bargain product to premium product” …

Ms. Steinfort said the chain’s recent marketing efforts have already begun to pay off. Quiznos’ consumer research shows that most customers come into Quiznos and notice the prices are lower, and 70% say they plan to come back. She described the results as being “significantly better,” or showing “hockey-stick-type improvement” over last year, when the chain’s prices were on the rise.

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Full Article:
http://adage.com/article?article_id=135435

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This entry was posted on April 7, 2009 at 7:03 am and is filed under Mktg - Pricing, Mktg - Promotion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.