RIZAL TECHNOLOGICAL UNIVERSITY

Boni Avenue, Mandaluyong City

GRADUATE SCHOOL

Advanced Marketing Management

YELLOW SUBMARINE
Case Analysis

First Semester, SY 2018 - 2019

Saturday 10:30 AM – 1:30 PM

Presented by:
Judy Jane Adlawan
Kristine Diones
Remina Espino
Jomar Ulanday
Joana Marie Relente
MBA Students

Submitted to:
Dr. Roberto A. Gabiola
Professorial Lecturer

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Viewpoint Taken

Mr. Eric Lao, the owner of Yellow Submarine and the father of Paulo M Lao a
major stockholder of the business.

Time Context

Middle of March 2000

Case Brief

Yellow Submarine, a gourmet fast-food restaurant situated at Amber Drive

Ortigas, Pasig City were many large and small Corporations were located. It is
also a home to class A residential condominium and subdivision.

I. Statement of the problem

Major Problem:
How Yellow Submarine can keep their business going in short run and in long
run?
Secondary Problem:

 Yellow submarine’s primary target market are UA&P students which could be
seasonal. Amber exit gate if UA&P was closed and the said school opened a
canteen with several food concessionaires.
 Entry of fast-food companies or similar product line and nearby competitors
might threaten their market share.
 “Mad cow” scare in other countries could negatively affect consumption of
Yellow Submarine sandwiches.

II. Objectives

Short Term Run

 To recover the lost in sales brought by the decline in customer traffic.

 To develop an alternative plan.
 To maximize profit for its owners with maintaining social responsibility.
 Good customer service.
 Marketing, understanding your customers buying trend.
 Maintaining profitability in making sure that revenue stays ahead of the costs
of the business.
 Having a network, the word of mouth is always going to be done as the best
form of marketing.

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 Long Term Run

 By doing Market Research, we can formulate marketing strategies to drive

more customer.
 Maintain Financing that results to a good cash flow if capital is needed to
expand the business.
 Growth in terms of historical data and future projections.
 Competitive Analysis, it is a comprehensive analysis of the competition on an
ongoing business objective.
 Be a risk taker. Never afraid to step out of your comfort zone.
 To provide customers with products of health benefits, variety, and exceptional
quality at affordable prices, supported by outstanding service and convenient
ambiance.

I. Areas of Consideration

A. EXTERNAL ENVIRONMENT

 Demography
- 17 – 24 years old.
- 1,900 students
- AB (100-150 Per day)
- College-Up
- Urban

 Industry Profile
- Nearest competition would be the establishment at Pearl 8 101 such as
Starbucks Coffee California, Australian Deli Shop, Sugarhouse, Bottomless
Grill.

 Economic Situation
- Increase in the inflation would squeeze in profit margin by increasing the
cost of goods, meat, and vegetable, bread which is very volatile inputs and
could cause sharp increase in the sandwich size.
- Effect of “mad cow” scare in other countries that could negatively affect
consumption of the sandwich.

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  Socio-Cultural Background
- 17-24 years old
- 1,900 students
- AB (P 100- 150 per day)
- Collage-up
- Urban
- Eats in a group
- Likes to hang-out
- Follows the “crowd effect”
- Looks at the store appearance comfort, ambiance and quality
- Student image-conscious outgoing, trend-setter and health conscious

The outcome of the above analysis should identify the following:

Threats
 Increases in the volume of home and office deliveries.
 The closed Amber exit gate.
 The presence of large competitors, indirect, and direct competitors, and new
entrants.
 The increase in inflation would squeeze profit margin and demand of students
would likely be seasonal and fluctuating.
 The increase in inflation would squeeze profit margin by increasing the cost of
raw materials.
 Demand of students would likely be seasonal and fluctuating.
 “Mad cow” scare in other countries.

Opportunities

 Yellow Submarine is located at the Ortigas Center, a business district where

many large and small corporations are situated. It is also home to class A
residential condominiums and subdivisions.
 Closest market UA&P has student population of 1,900 and still growing
 Students comes from middle-income to high-income families with average
disposal allowance of P100-P150/day.
 There is a growing trend for slimmer bodies and healthier diets.

B. INTERNAL ENVIRONMENT (Corporate Appraisal)

Detailed analysis of current situation in the company affecting (pros/cons)

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 1. Marketing Operations
2. Production Operations
3. Organization and People
4. Financial Operations (analysis should touch on financial ratios only supported by
a general statement of financial condition)

The outcome of your corporate appraisal (internal) should identify:

Company’s Strengths

 Yellow Submarine has built a product position that emphasizes Yellow Sub’s
overall freshness in bread, vegetables and meats.
 Affordable price compares to other competitors.
 Yellow submarine delivered customized services and competed on their ability to
address individual customer needs.
 One of the first hoagie/submarine restaurant in the country, offering variety of 13
types of subs, responding to customer’s specific demands for an affordable, health
alternative fast food product and a cozy customer-oriented restaurant to go with.

Company’s Weaknesses

 Small eateries as competitors

 It is easily affected by sudden changes in the environment and other geographic-
related factors.
 The restaurant is small, and its brand name is less recognized compare to other
renowned and large fast-food companies also located within the vicinity.
 Direct Promotion. The promotional tactics and campaign may not be as broad and
intensive enough as what other companies of the same business do.

Areas of Consideration: 5 Forces

Competitive Rivalry

 There are various food establishments in the Ortigas area. The nearest
competition would be the establishments at Pearl 8101 such as Starbucks, Coffee
California, Australian Deli Shops, Sugar House, Bottomless Grill and more.
 For delivery, restaurants along Meralco Avenue provide alternative food choice like
Deli Sandwiches, hamburgers, pizza and Thai food.
 There are also sit-in restaurants like KSP Bar and Grill captures a lot of customers
during lunch time.
 Nearby eateries are also experienced the same decline in customer traffic.

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 Bargaining Power of Suppliers

 An increase in inflation would squeeze profit margins by increasing cost of raw

materials.
 Unfavorable weather conditions can hamper food supplies in Manila resulting to
sudden price increases.
 Yellow Submarine depends on established and well-known suppliers. Fresh
breads are supplied by French Baker which location is nearby. Blue Bacon, an
upscale restaurant and meat shop in Quezon City area supply fresh meat for
Yellow Submarine anytime ensuring freshness of the meals.

Bargaining Power of Customers

 Purchasing decision of customers are influenced by attitudes, beliefs and emotions

derived from the service or product.
 is a growing trend for slimmer bodies and healthier diet
 UA&P students prefer having a full meal below P100.00 with the same delight and
filling experience.
 Curiosity or “crowd effect” can also impact purchasing.
 Consumers prioritize filling the need – need could be affordability and availability
of value meals, enhanced appearance, health benefits, food quality and variety
store décor and ambiance

Threats of New Entrants

 New entrants of fast-food companies or other similar product lines

 Entry of more efficient and effective means of preparing and serving food.
 New entrants, the school concessionaire.

Threat of Substitute Products

 UA&P students may opt to eat to nearby restaurants and in food concessionaires
in their canteen due to short breaks.

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 II. Alternative Courses of Action

Short term run (6 months – 1 year)

ACA #1. Give discounts to customers

Advantage:

 To encourage new customer

 Increase sales
 Boost reputation
 Meet sales goals
 Save money

Disadvantage:

 This might result in loss in profit.

 The perception of your business’s quality suffers.

ACA #2. Rent space inside UA&P as concessionaire

Advantage:

 Yellow Submarine will retain their primary customers

 Increase sales by offering to other students and employees having their meals
inside the university
 Increased company exposure inside and outside UA&P
 Enable the company to maintain and/or increase sales while looking for
expansion.

Disadvantage:

 Additional investment renting in school as concessionaire.

 Additional cost of transferring products inside UA&P
 The condition of the change of place and ambiance.
 Different order preparation

Long term run (5th year)

ACA #1. Rebranding the business (“Chrys-o-Lite”) means a precious stone of

heavenly Jerusalem

Advantages:

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  Improve brand name and image
 Attract new customers
 Achieve new goals
 Turn your loyal customers into brand ambassadors
 Initiate changes and communicate new identity
 Become more relevant, competitive and more profitable in your target market.

Disadvantage

 Lose few traditional customers

 Additional cost for marketing and registration
 May bring confusion to other customers

ACA #2. Find new store location near UA&P entrance/gate.

Advantages:
 Yellow Submarine will have a better access to their primary customers, the UA&P
students.
 Can give the company opportunity to reach a new market.
 Enable the company to expand and grow

Disadvantages:
 The company might lose some of their customers.
 The cost of running a business near the entrance/gate of university is more
expensive.
 The company will incur significant cost such as renting and renovating the new
store and moving equipment and supplies.
 Relocating can disrupt the business operation for a while.

ACA#3. Introduce regularly new Product Variety

Advantages:

 Effective way of enhancing customer’s responsiveness by providing them with a

wide array of products or services in the market: variety of sandwich dressings,
healthier bread, less fat menu, fresh veggies.
 To regularly introduce new items to the menu.
 To diversify. If sales of the original product decline, increasing sales of new
products might replace it.
 It will increase revenue and increase profitability.

Disadvantages:

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  The cost of developing and selling so many products are high.

 Some products may fail if the company has not done sufficient market research
that might result in destroying other product image.

 Maintaining the process cost of different products and procuring number of raw
materials and maintaining them

Recommended Solution
The group decided to choose ACA#2 in short term run, renting a space inside UA&P
as concessionaire. It can rapidly accelerate customer growth. But it’s carefully measured
through results. Start small, make sure the economics work and then scale. Exploring the
chance of sustaining the business. While maintaining/increasing sales the company can
focus on expanding the company in producing new variety or finding better store location
for the business.

Objectives on the recommended solution

1. Short Term Run (1st to 5th year)

To provide an enjoyable, nutritious and attractively presented selection of food at
reasonable prices. To use school concessionaire as a medium of sales and
business continuity.

2. Long Term Run (5 years and beyond)

Sustain the company’s growth in sales through continues establishing of product
quality, benefits and affordability.

Functional Strategy:
Marketing: Increase of market share by 40%

III. Plans/Programs for Implementation

Outline of each Program

Program Title: Store advancement in UA&P

Objective: To sustain the business, attract new customers

and maintain the competitive advantage.

Expected Output: Volume of sales and business continuity

Details of the Program

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 Activities Target Date Responsibility

Plan and Develop Captive Mid of April 2000 Marketing Manager

Market
-

Estimated Budget

Human Force Enough personnel committed to continue the daily operation of

business.

Operating and various Space rent and improvement of space inside UA&P
expenses
Estimated Cost to be P 45,000.00
considered

Activity Timetable Responsible Resource Measurement

Needed

Research on End of Marketing Team Intended Actual number of assumed

your Market March 2000 audience or target market
pre-determined
customers

Rent space April 2000 Management Manager Additional sales

inside UA&P

Continues April-Dec Marketing Team Introduce Increase monthly sales by

Promotion/Create 2000 additional food 15%.
a 30-day menu variety and
Research and
Development

Projected Financial Statements

Jan-00 Feb-00 Mar-00 Apr-00 May- Jun-00 Jul-00 Aug-00 Sept- Oct-00 Nov-00 Dec-00
00 00
Revenues 120023 126024 132325 138941 145888 153182 160841 168883 177327 186193 195503 205278
Cost of Sales 34757 36494 38319 40235 42247 44359 46577 48906 51351 53919 56615 59446
Gross Margin 85266 89530 94006 98706 103641 108823 114264 119977 125976 132274 138888 145832

Expenses
Salaries and 16500 16500 16500 16500 16500 16500 16500 16500 16500 16500 16500 16500
Wages
Rent 23100 23100 23100 23100 23100 23100 23100 23100 23100 23100 23100 23100
Monthly dues 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200

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Utilities 3700 3700 3700 3700 3700 3700 3700 3700 3700 3700 3700 3700
Miscellaneous Expenses 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Marketing & Admin 0 0 0 45000 0 0 0 0 0 0 0 0
Expense
Operating Expenses 47500 47500 47500 92500 47500 47500 47500 47500 47500 47500 47500 47500

Income before Income 37766 42030 46506 6206 56141 61323 66764 72477 78476 84774 91388 98332
Taxes
Income Statement – Best Case Scenario

98332
91388
84774
78476
72477
66764
61323
56141
46506
42030
37766

6206

JAN-00 FEB-00 MAR-00 APR-00 MAY-00 JUN-00 JUL-00 AUG-00 SEPT-00 OCT-00 NOV-00 DEC-00

Income Statement – Worst Case Scenario

Jan-00 Feb-00 Mar- Apr-00 May- Jun-00 Jul-00 Aug- Sept- Oct-00 Nov- Dec-00
00 00 00 00 00
Revenues 37035 38146 39290 41255 43318 45484 47758 50146 52653 55286 58050 60953
Cost of Sales 10725 11046 11378 11947 12544 13171 13830 14522 15248 16010 16811 17652
Gross Margin 26310 27100 27912 29308 30774 32313 33928 35624 37405 39276 41239 43301

Expenses
Salaries and 16500 16500 16500 16500 16500 16500 16500 16500 16500 16500 16500 16500
Wages
Rent 23100 23100 23100 23100 23100 23100 23100 23100 23100 23100 23100 23100
Monthly 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200
dues
Utilities 3700 3700 3700 3700 3700 3700 3700 3700 3700 3700 3700 3700
Miscellaneous Expenses 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Marketing & Admin 0 0 0 45000 0 0 0 0 0 0 0 0
Expense
Operating Expenses 47500 47500 47500 92500 47500 47500 47500 47500 47500 47500 47500 47500

Income before Income -21190 -20400 -19588 -63192 -16726 -15187 -13572 -11876 -10095 -8224 -6261 -4199
Taxes

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 JAN-00 FEB-00 MAR-00 APR-00 MAY-00 JUN-00 -11876 SEPT-00
JUL-00 AUG-00
-13572 -10095 OCT-00
-8224 NOV-00
-6261 DEC-00
-4199
-16726 -15187
-21190 -20400 -19588

-63192

Conclusion:

To solve the impact of current issue of Yellow Submarine caused by closing of

Amber exit gate where their primary target market can easily reach them, it is a
conclusion of the team based on the projections and statements made, the
company should aggressively enter the school as concessionaire while looking for
rebranding and expansion in the long run. The company can maintain and/or
increase their sales targeting students and employees inside the university. With
continuous growth, the company can look on expanding in the long run changing
their location and creating a strong brand image.

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