Tim Hortons is a large company that focuses on top quality, always fresh products, value and great service. It has become the largest quick service restaurant chain in Canada specializing in always fresh coffee, baked goods and home style lunches (Tim Hortons: About Us). Originally Tim Hortons offered only coffee and donuts to its customers but has greatly expanded today to offer a full lunch menu as well along with many more baked goods. The biggest attraction to Tim Hortons is still their always fresh coffee, it is also offered in a take-home tin so customers can enjoy the great taste of Tim Hortons’ coffee at home.
Our team has explored the company’s information resources to learn about what Tim Horton’s needs to do in order to successfully expand into the United States. This was achieved through a number of group meetings, emails and discussions about the different ways of expanding successfully into the foreign market. A review of the company’s history and timeline lead us to a greater understanding of how the company really works, and how committed they are to improving their image in the consumers eye.
Tim hortons Essay Example
We also conducted a SWOT analysis to determine the strengths and weaknesses of Tim Hortons and their major competitors: Dunkin’ Donuts and Starbucks. To deal with the challenges brought about by these competing firms Tim Horton’s will have to make the necessary changes that will ultimately make them a strong competitor in the United States. These changes include adding new items to the menu that will appeal to the American customer; they can also have an endorsement deal with American sports players to gain a bigger target market. Another thing Tim Hortons can do to gain more.
American customers is to continue their joint venture with the American company Wendy’s into the United States because it has proven to be successful in Canada. Lastly Tim Hortons can use a product and promotion strategy to determine which products they currently have or which ones they have that need to be modified or invented to create a menu that will appeal to the American consumer. Our team concludes the report with a brief analysis of the problems and the recommended solutions to further improve the company’s place in the American industry. Introduction
Company Goals Tim Hortons guiding mission is to deliver superior quality products and services for our customers and communities through leadership, innovation and partnerships. Their vision is to be the quality leader in everything they do (Tim Hortons: About Us). Tim Hortons plans to make a bigger push into the American market in 2008. For 2008 Tim Hortons expects operating income to grow 10%, which repeats the 2007 target (Reuters). Tim Hortons wants to create more awareness for their company in the United States and compete more aggressively with their competitors.
Team Goals As a team, we are concerned with gathering general company information including future goals for Tim Hortons, and current operating strategies so we can understand how the company operates and how they serve their customers. In the beginning we planned to survey people to find out their thoughts on different aspects of Tim Hortons but we realized that this would not let us return the results we wanted because we were not able to survey the American consumers. Therefore we had to rely on 4 secondary resources to guide our report.
Using the information we have collected from the company and our proposed conclusion, we can determine a recommendation for the company that describes how Tim Hortons can improve or maintain their effectiveness into the United States. Methodology & Analysis of Steps Our team’s research methodology was almost primarily based on the company Web Site. Finding old articles and using the company website provided us with a lot useful information. Our steps in finalizing an informational report included a number of team meetings, emails, and organizational divisions of work. 2.
COMPANY ANALYSIS Our group has chosen Tim Hortons as our company to produce a marketing plan to expand operations into the United States. Tim Hortons is a coffee and donut chain that was founded in 1964 in Hamilton, Ontario (Tim Hortons: About Us). The founder Tim Horton was a Hockey player for the Toronto Maple Leafs. To prepare for his retirement from hockey he decided to open a coffee and donut business to support him. Only offering two basic types of donuts and coffee it has expanded its menu to include a vast assortment of beverages, donuts, sandwiches, bagels, soups and much more.
Tim Horton’s even has their own brand name coffee that is available for consumers to take home. Tim Horton’s has surpassed MacDonald’s as Canada’s largest food service operator with nearly twice as many Canadian outlets as McDonald’s (Harris). “Today there are more than 2,750 stores across Canada, and over 350 locations in the United States with over 95% of the stores in Canada owned by franchisees” (Tim Hortons: 5 About Us). Tim Hortons’ mission statement is “Our guiding mission is to deliver superior quality products and services for our customers and communities through leadership, innovation and partnerships.
Our vision is to be the quality leader in everything we do” (Tim Hortons: FAQ). Four P-Analysis Product – From only offering two products back in 1964 to offering over 100 items on their menu and in stores today Tim Hortons products have become well received by Canadians and Americans by offering a vast assortment of products (Tim Hortons: In Our Store). Their products have come a long way not only offering a big menu but Tim Hortons’ even sells their products in Canadian and American retail stores. Tim Hortons continues to look at new possibilities for their menu as Canadian and Americans tastes change.
Tim Hortons also offers some healthy choices on their menu such as sandwiches and subs to appeal to the health wise consumer. Pricing – Tim Hortons keeps their prices inline with the current competition and takes into account the geographical area they are in. They try to remain competitive by providing good quality at a fair price. Place – From opening their first location back in 1964 Tim Hortons has rapidly expanded to having more than 2,750 stores across Canada, and over 350 locations in the United States. (Tim Hortons: About Us).
Today there is even a location in Kandahar, Afghanistan to provide the troops with the coffee they know and love. Tim Hortons also 6 has several stores in Ireland’s Tesco supermarkets (Breen). Tim Hortons not only has their regular locations with drive through but also has many satellite locations in shopping malls, highway outlets, universities and hospitals (Tim Hortons: About Us). Most of the locations are concentrated in Ontario and British Columbia see Appendix A for a map of all Tim Hortons stores across North America. Promotion – Tim Hortons mainly promotes themselves through the media.
Tim Hortons advertises on television, radio, magazines and outdoor methods including; billboards and transit shelters. Tim Hortons may also utilize newspaper advertising. (Tim Hortons: FAQ). Tim Hortons also promotes their products and chain through a large marketing campaign called “Roll up the Rim to Win” this is where customers can win various prizes by looking under the rim of coffee cups. Tim Hortons often runs this campaign from early February to May every year in the height of the NHL’s playoff season so that their ads can reach the most people possible.
Tim Hortons also promotes themselves through local communities by funding timbits hockey and sponsoring various other teams. 3. SITUATION ANALYSIS SWOT Analysis Strengths Tim Hortons’ has many strengths; in Canada one is their brand name in Canada. Tim Horton’s is synonymous with Dunkin’ Donuts in the United States in popularity and customer loyalty. For someone walking down the street it is not uncommon in Canada that a stranger may pull to the side of the road in their vehicle asking where the nearest Tim Hortons is.
However the name Tim Hortons have very little impact as a brand to 7 consumers. So Tim Hortons will depend on product quality as a strength in the US. Their biggest strength in the United States is their actual product and services their offer. Tim Hortons formulates their own coffee and is able to sell it to their customers. Having a good quality product will satisfy more customers, which will also sway customers to come back for more. Another strength that Tim Hortons has is its corporate responsibility through their charity organization “Tim Hortons’ Foundation”.
This foundation is able to contribute money, volunteers, camps, and such to children who are unable to experience the many pleasures of life as compared to an average child. The Tim Hortons Foundation also seeks to help disabled children and children under foster care. Weaknesses The biggest weakness for Tim Hortons expanding to the United States is that they have not created awareness of the American market. There are currently 350 stores south of the border and that number has such declined or slowed down expansion. Another problem is that Americans prefer black coffee, and most customers are satisfied with Dunkin’ Donuts coffee.
This has caused problems for Tim Hortons as it has been unsuccessful with marketing to get customers to switch over. Dunkin’ Donuts offers a wide variety of donuts and coffee that Americans are very pleased with. Tim Hortons offers more types of coffee and a wider variety of food choices and yet Tim Hortons is unable to reach American customers enough to bring them to try a coffee or donut. Opportunities Tim Hortons has filled Canada with its stores and really can not expand much except into newer communities as cities and towns grow. With Tim Hortons entering the 8
US market, it has a strong competition against the ever popular Dunkin’ Donuts. If Tim Hortons can come up with a better marketing strategy that will focus on what the customers like from Dunkin’ Donuts that Tim Hortons also offers only better, then maybe Tim Hortons will have a fighting chance at expanding across the United States and maybe overtaking Dunkin’ Donuts. Threats Current threats for Tim Hortons include competition. For instance Dunkin’ Donuts and sandwich shops like Subway or Mr. Sub. Dunkin Donuts’ is a threat because of their strong brand image that they have in the United States.
Many customers are aware of what products and services they offer. The issue with sandwich shops being a threat is only against Tim Hortons’ sandwiches that they offer. The problem is that Tim Hortons’ sandwiches are $5-$6 for a portion half the size of a subway sub that costs $6$9. So the threat here is that customers may see that Tim Hortons’ sandwiches are expensive and it is cheaper for them to go to one of these big chain sandwich retailers. The hope is that Tim Hortons will realize this and lower the price to keep these customers, as well as to not be overtaken in its fight to offer more.
If Tim Hortons was to be overtaken then they would not be able to offer these sandwiches and therefore would be one less type of item to offer to its value customers. Internal Environment Analysis As stated in the SWOT analysis, Tim Hortons’ strengths in America are its products mainly coffee, and its foundation. Tim Hortons’ weaknesses are its stagnated ability to expand in the United States market. The close competitors only offer or specialize in some of the areas that Tim Horton’s does. For instance, Starbucks, a 9
premium coffee retailer compete against Tim Horton’s specialty coffees like the iced cappuccino but the competition with Starbucks ends there. With Tim Hortons having a major issue with overcoming the competition against Dunkin’ Donuts, it will take the right marketing strategy to overcome this feat. Tim Hortons needs to focus on what really attracts customers to Dunkin’ Donuts and what they want.
Then they need to focus their marketing strategy on those needs with comparison to Dunkin’ Donuts. If Tim Hortons can attract customers from Dunkin’ Donuts as well as other customers, there will be much more room for expansion in the United States market. External Environment Analysis Tim Hortons has its opportunity knocking at the door inside the United States and as stated above, a new marketing strategy is needed to target customer wants and differences in wants compared to Canadian customers. Maybe even a few menu changes or change the focus of products in advertising to products that appeal to Americans. When expanding into the states Tim Hortons has developed competitors that they will have to compete against. These competitors will have advantages over Tim Hortons.
Some advantages are experience with the target market and awareness of their brand. Other external factors that Tim Hortons has to recognize are that the American market will be different than the Canadian market. A few differences that will affect the company would be political and regulatory issues, America has different business rules and regulations companies have to oblige to. Marketing law also differ between the countries. Economic issues also need to be taken into consideration; the currency is different between the two companies. 10 4.
CUSTOMERS ANALYSIS Tim Hortons has many customers throughout Canada and the United States that come to the local neighborhood coffee shop. Tim Hortons is a cultural fix for Canadians as it is intergraded into Canadian society (Fischer). Tim Hortons’ customers range from people of all races, genders and ages as they all come together under their roof to enjoy Tim Hortons goods. Tim Hortons target market is the working class and more towards the blue collar workers. Their main focus is on the morning rush as Canadians often need their morning fix of coffee.
Their focus in recent years has also shifted to the lunch hour as they are offering more lunch menu choices. Their target market also includes business or social functions as they offer catering to local businesses and customers. Overall Tim Hortons’ market is vast as their market is unlimited throughout Canada and the United States. Tim Hortons already has a 70% market share of the Canadian coffee and doughnut industry (Crane 397). Tim Hortons’ possible market share can even grow as they invade their competitor’s territory as they continue to open more locations in the United States. 5. COMPETITIVE ANALYSIS AND CLIMATE
Entering into a developed market can be tough for any company, but when it comes to Tim Hortons in the United States, there are many obstacles to overcome. There are three large coffee shops in the United States. They are Krispy Kreme, Starbucks and Dunkin Donuts. Starbucks is thought of as a more upscale coffee shop, with the large selection of specialty coffees. Krispy Kreme is on the opposite end of the scale of coffee shops because they are having difficulties competing against the others in the market. They decided to expand into the Canadian market with the opening of 18 stores (CBC).
After only four years, Krispy Kreme closed 12 of their 18 stores due to the hard times, while filing for bankruptcy protection and trying to salvage their last six stores (CBC). Tim Horton’s main competitor south of the border is Dunkin’ Donuts. Dunkin’ Donuts is a successful franchise in the United States, just as much as Tim Hortons is here in Canada. Dunkin Donuts is seen as their main competitor in the United States, because they are both targeted to the “blue-collar” class (Boyle). Both companies main focus is also coffee and donuts (Boyle).
Tim Hortons offers a large variety of soups and sandwiches, whereas Dunkin Donuts have only recently introduced three types of sandwiches (Boyle). Dunkin Donuts’ weak spot in their business model is that 2/3 of their sales are acquired before lunchtime (Boyle). Tim Hortons has taken advantage of that weakness so far, generating 16% of their sales from their soup and sandwich menu in their American stores (Boyle). Their lunch menu is a major benefit to them because the more options that are offered to customers, the greater chance that the company will attract more people into the stores and make more money.
Another difference between the two companies is that Tim Hortons has a dine-in atmosphere; they encourage the customers to stay and eat (Boyle). Tim Hortons can use this as an advantage to those customers who are looking for places to stay and eat rather than the “grab-and-go” atmosphere that Dunkin Donuts offers (Boyle). To some people, the ones that are always in a rush to get to their destination this is acceptable, but for others the feeling of the store generally is what will bring them back, aside from the products that are being served.
Dunkin Donuts is very aware of how successful Tim Hortons is in Canada, because Dunkin Donuts have tried to expand to Canada and have struggled because Tim Hortons is such a strong competitor (Boyle). 12 Since New England is considered Dunkin Donuts “territory” Tim Hortons has introduced some stores in that area to increase competition (Whitman). Although Dunkin Donuts has around 2,100 stores in that region Tim Hortons only has 42 stores, customers in that area have 2 Dunkin’ Donuts that are closer to their houses than one Tim Horton’s (Whitman).
Krispy Kreme has already attempted to enter this market but failed and it looks as if Tim Hortons is on the same path, as they have recorded an annual $4. 8 million loss in that area. In Tim Hortons’ other areas including Ohio, New York, Maine and other states bordering Canada they have all been very successful (Whitman). For Tim Hortons their biggest obstacle against their competitor Dunkin Donut is brand recognition (Whitman). Tim Hortons also has indirect competitors to keep in mind. Some consumers rather have coffee at home in the morning, rather than going out and buying one.
Their indirect competitors would include Maxwell House, Folgers etc. These brands can be found in grocery stores. In Canada, the usual location for a Tim Hortons store is a stand alone building with a drive thru. In order to expand further into the American market and gain brand recognition, they are trying something new by putting 15 kiosks in Shell gas stations (Whitman). Available at these locations are the standard pots of coffee, as well as cappuccinos, lattes with fresh doughnuts and baked goods (Whitman).
According to the chief executive of the company that owns the gas stations; coffee sales have doubled within the last year when Tim Hortons’ products have been available (Whitman). This is definitely a start for the long uphill battle that Tim Hortons faces when trying to compete with the American chains. Simple ideas, like selling coffee at local gas stations, are a 13 great way to get noticed and introduce people to your brand without spending a lot of money constructing stand alone buildings. 6. ANALYSIS OF THE PROBLEM FACED BY THE ORGANIZATION Tim Hortons has been very successful in regards to its marketing strategy in North America.
Using advertisements on TV, radios, billboards, and bus shelters, Tim Hortons has opened more than 2,750 stores across Canada, and over 350 locations in the United States (Tim Hortons: About Us). However, the company is experiencing some problems expanding further south; they do not have customers that are aware of their brand. Tim Hortons is an international firm because it markets its products in the United States the same way it does in Canada; the company is applying the product extension strategy, where they sell practically the same product in the United States as they do in Canada.
However, this only works best when the consumer target market for the product is alike across countries and cultures. This is not the case with Tim Hortons, and as a result, the company might not be able to attract enough customers to its current stores in the United States to enable them to open more stores. For instance, American citizens prefer to have their coffee black instead of the famous “double, double” preferred by Canadians. Tim Hortons is competing with various national, regional, and local companies in Canada and the United States, major ones being Dunkin Donuts and Starbucks.
The company believes that since the marketing strategies they use in Canada attract millions of customers, they are positive that the same marketing strategies will produce the same results in the United States. They are, however, forgetting that Americans prefer their own coffee and donut franchises. Dunkin’ Donuts, the most popular coffee and donut 14 shop in the United States, is the major competitor of Tim Hortons, and the company has to gain the trust of the American public in order to become as popular and successful as Dunkin’ Donuts. Dunkin’ Donuts is an established business in the United States with franchises in every single state.
As Tim Hortons is starting up they only have 350 stores, so it is harder for them to create awareness when it is hard to find a store in the United States. There may be some government regulations preventing Tim Hortons from using the same advertising techniques in some states as it does in Canada, forcing the company to change its marketing strategies to achieve customer preference. Expanding globally might cause problems for Tim Hortons because they may have to change the products that they sell because consumer’s preferences are different.
This is a problem for them because the products they offer now are what make them so popular and they do not want to change that too much. 7. MARKETING STRATEGY ANALYSIS The business world is becoming increasingly innovative and consequently, organizations are becoming more and more multifaceted. The pricing strategy is a vital aspect to the success of any organization and for that reason it requires a great deal of attention. Any organization’s goals is to earn profit; upon glancing at the profit equation, it becomes evident that price plays a big role in the performance of an organization.
Currently, Tim Hortons is the prominent retailer of coffee and donuts in Canada and hold’s over 70% of the Canadian market share (Crane 397). Due to it’s dominance in Canada it is less sensitive to a price change by its competitors despite the ongoing success and growth north of the border. The increased level of competition which has 15 more so the characteristics of a pure competition market, Tim Hortons price strategy must change strategically in response to a major competitors price change.
Tim Hortons aim should be on setting a price which would enable competition, primarily with Dunkin’ Donuts. Price is a representative of value and therefore they should strive to appropriately set prices which will appeal to the American consumer while maintaining a positive image of quality. The biggest obstacles when entering a new market is to make your brand known and a good way to get people to become familiar with Tim Hortons is by offering discounts as an efficient way of easing people into the Tim Horton’s familiarity.
Perhaps the biggest marketing problem Tim Hortons faces in their United States debut is to dispel the customer loyalty which is already present in other big brand coffee and donut stores. A big part of its success in Canada can be attributed to the culture influence it has built and how Canadians have become accustomed to the Tim Hortons experience. When entering a new market, especially one as developed as the American restaurant/fast-food industry, researching the present consumer needs and wants is imperative to helping a company gain some of the customers by tending to unsatisfied yearnings.
It is important to note that outside of Buffalo and New York, where Tim Horton played hockey, the name Horton is relatively unknown. In addition with the lack of hockey enthusiasts in the United States, the brand value just does not have the sentimental value as it does for the Canadian people. Tim Hortons set to differentiate itself and its image from the present dominating competitors by focusing it’s advertising on the freshness of its products.
Also, they noticed that Dunkin’ Donuts was merely a grab-and-go restaurant meanwhile Tim Hortons provides a more meaningful experience 16 whereby people can go sit down and spend time thus creating a home away from home type feel (Tim Hortons: Contact Us). In Canada, Tim Hortons distribution strategy consisted of allocating its stores in particular locations which were deprived of similar services. Meanwhile, in the United States, there is already a strong existing presence of big brand name coffee and donut stores as well as competitors to the wide variety of products sold by Tim Hortons.
In an attempt to enter the United States market with a bang, Tim Hortons opened multiple stores including stores in New England, in which Dunkin’ Donuts is known to have a very strong dominance (Tim Hortons: Media1). Alongside the expansion of regular stand alone stores, for convenient access to consumers, they can also be located in shopping malls, highway outlets, universities and hospitals which increase the convenient locations as well as increases in visibility which ultimately leads to more awareness.
The offering of 24-hour drive-thru is a welcome addition for consumers on a time schedule and it fits the current business model of Dunkin Donuts. Further more, strategic combo unit locations with Wendy’s, which are already popular in the United States, can further the convenience and further the awareness for the American consumer (Tim Hortons: Contact US). Tim Hortons aims at potential target markets by providing locations near consumers; such as universities or shopping malls for added convenience.
Nowadays it seems like everyone is in a rush to get somewhere and for that reason Tim Hortons have implemented a 24-hour drive-thru to accommodate that specific target market as well as made an effort to provide healthier food in an attempt to be on par with the health awareness trend whereby people are distancing themselves from unhealthy junk food and 17 moving more towards more healthy food choices. Market segmentation is important because it allows for better analysis of consumer needs by grouping similar needs and wants under the same segmentation groups to identify the best course of action to accommodate each segmentation group.
Tim Hortons is expanding its target market by constantly adding new foods to their menu ranging from the likes of soups to chili as to draw more customers other than just from their coffee and donuts meanwhile their competitors, for example Dunkin Donuts, is essentially only competing for the coffee and donuts market. Tim Hortons servicing of different market segmentations means more business throughout the day meanwhile the customary coffee and donut shops peak during the morning hours and have few customers afterwards.
Tim Hortons is known for having brilliant promotions which have become so prominent in Canada that they have made an impact on the culture. They were able to reach the Canadian people in a sentimental way and therefore created a friendship with their consumers. The “roll up the rim to win” promotion became an instant success in Canada as it was very well communicated with the help of television advertisements, billboards and radio. The simple phrase “roll up the rim to win” became a part of the Canadian national identity and it was ultimately brilliant advertising because that is all people were talking about.
Now Tim Hortons is releasing the same “roll up the rim to win” promotion in the United States in an attempt to create the same brand awareness and build relationships with the American consumers (Tim Hortons: Roll Up the Rim). Tim Hortons provides online information regarding their foods and beverages menu as well as other nutritional facts and a nutritional calculator. They also have a store locator which allows the user to locate the nearest Tim Hortons to them and also gives the 18 phone number for added convenience.
In addition to company information and promotional deals, announcement and advertisements, their website also provides the user with upcoming news as well as talks about the community of consumers. Their website uses the versatility and efficiency of the internet to gather important data regarding their consumers while also conveying important data to the consumer in a pleasant and straightforward manner. The website is useful for marketing purposes as well as it provides customer service in a fast and convenient manner (Tim Hortons: Contact Us). 8.
ALTERNATIVE MARKETING STRATEGIES Introduction of a new product to the product mix: The introduction of a new product is often a good way to penetrate a new market. To create a niche product that appeals to a new group of target customers will enhance Tim Hortons image and open a new field of customers to exploit. The product in question will be Smoothies. This new consumer good will appeal to the health minded customer and will add a cold beverage option to compliment the predominantly hot beverage menu. Specifically Tim Horton’s will use a fresh fruit genre of smoothies.
This will ensure the highest quality of smoothies. The fruit should be used in its prime condition and yogurt will also be a menu option to widen variety. Some fruit such as bananas and citrus fruits can also be added among the typical berry fruits as they have virtually no seasonality. Pricing will be particularly beneficial to this product as smoothies are often fairly pricy and considered a classy product with regards to beverages. This will establish a more prestigious image in the customers mind and will open Tim Hortons to a new market of consumers.
Benefits of this concept will more likely be in a group atmosphere 19 where customers travel in a group to grab a “Tim’s”. Not every customer however will be interested in coffee, and a fruit smoothie will be a healthy and enjoyable alternative product choice. Distribution will not be of much concern to this new product. Since Tim Hortons already carries most of the fruit and yogurt in their Yogurt and Berries snacks, the only fruit that will need to be purchased are those with good seasonality.
Such fruits will be bananas and citrus fruits and will be included for variety and taste, as well as long product lifetime. Promotion will not be out of the ordinary for the Tim Hortons new product. A typical mix of television, radio, and billboard ads will promote the product the same way Tim Hortons would promote any of their new products. In terms of additional equipment that will need to be purchased, only a blender will be essential to this product. In general the introduction of the fruit smoothie seems like a logical and profitable next step to the Tim Hortons product mix.
With most of the supplies already available and in use at Tim Hortons the product will be easy to introduce as well as create a classy cold alternative to the typical coffee shop. It is a niche market that is within grasp and should be considered when entering the USA. Endorsements Endorsements are a nice addition to your marketing mix when trying to infiltrate new markets (Frankowiak). The credibility of a “third” party is often beneficial and can promote your product in the right situations. This has been a successful social trend used by companies such as Nike and Gatorade.
Since Tim Hortons was established by the great hockey player, Tim Horton it is only right to choose a hockey player to endorse the 20 product. Also since Tim Hortons is trying to penetrate the American market, particularly the New York and northern states, an American hockey player should be chosen from one of the near by teams. Although hockey is not such a big sport in the United States, they could make endorsements seasonal. For instance they could have a hockey player for the NHL season and a football player for when the NFL season starts.
This will allow them to continue to represent Tim Hortons as Canadian by implying a hockey player, but also promote the American sports. Product Life Cycle A marketing strategy that Tim Hortons can use is the product life cycle. They can use this on their main product the coffee and donut. The product life cycle will allow the company to analyze the stages that a product goes through in the marketing place (Crane 317). There are four stages; introduction, growth, maturity and decline (