Tim Hortons Marketing Strategies - Case Study Example

Tim Horton’s Marketing Strategies Introduction Tim Hortons is an iconic Canadian quick service restaurant that is famed for its doughnuts and coffee. The company started in 1964 with the first coffee shop in Hamilton, Ontario. Tim Hortons has been top of the game in delivering top quality products and delivering exceptional services to its clients. Fernau (2013) argues that this has pushed the company to grow into Canada’s best quick service restaurant chains and has been best known for years as the provider of fresh coffee, baked goods, and home-style lunches. The company has been active in other countries as well and has the drive to expand even more. History and Status among Competitors After Tim Hortons opened its first shop in Ontario, Canada in 1964 as part of TDC groups which operated in Canada and the United States, the company has seen good and bad times. The company started as a partnership between Tim Hortons and Ron Joyce. When Tim died in 1974, Joyce took over as the owner. The company’s amazing journey is told by the tremendous growth it has experienced over the years, starting from a single corner coffee shop to thousands of successful restaurants spread across the world (Lussier, 2008). The company opened shops in major parts of Canada and had opened its first restaurant in New York, United States in 1985. Due to the excellent response from the US market, the company opened several others across the country. In March 2006, the company was declared a separate public company. The company has signed several agreements including one with the UAEs apparel groups to open more than 100 restaurants in the UAE. Today, the company has more than 4000 restaurants across the world (Fernau, 2013). Tim Hortons celebrated its 50th birthday in 2014 and rode in a wave of love that Canadians have shown it over the years. In a study that was carried out by Ipsos Reids carried out, the iconic coffee shop was ranked number six among Canada’s most influential brands. Leading the Canadian brands in the study, the company came after global giants such as Google, Microsoft, Facebook, Apple and Visa. In another study that targeted female consumers in Canada carried out by Marketelle, a division of Marketele, Tim Hortons claimed the top spot as the company most loved by women, followed by Walmart, Apple, and Starbucks. In some parts of Canada like Quebec the company came second with women preferring the town’s local brand Kean Coutu. According to the women who took part in the study, more than 40% of the Canadian women enjoy the emotional connection that the coffee shop provides and think no other brand does it like them. According to Ravensthorpe (2015), talking of emotional connection that brands can create, APCO recently ranked Tim Horton’s as number 61 on the most loved companies list. This is research that focuses on the emotional connection of brands with their clients. Tims ranked ahead of McDonald’s, which came at number 69, Yum! Chains at 78, Starbucks which came at number 96 (Thurston et al., 2013). It was the only brand from Canada on the list. In the quick service industry, the company was only beaten by Subway, which came at number 32. The growth and success of Tim Hortons is because it has earned the trust of its clients who are not just declaring their love for the brand. They are opening their wallets and letting them do most of the talking. The company boasts a QSR market share of 27% in Canada and a traffic of 42%, which ranks higher than a combination of the next 15 QSRs, which includes its major competitors like McDonald’s, Starbucks, and Subway. According to a research carried out by the company, it serves 75% of coffee in Canada. Tims currently competes with McDonald’s in breakfast day part, which the research shows it is winning by a long shot. What’s more, it is fast gaining ground in lunch market which was initially dominated by McDonald’s but currently the two market giants are neck to neck. Ronald (2007) articulates that the company’s strong marketing strategy is a major contributor to much of its success in the industry. This also drove Burger King to seek a merger with it. This merger has opened doors for more opportunities for expansion not only in Canada, but also globally. Their marketing strategy has been lauded as one of the best for a business that majorly targets the young and busy. According to Shantar et al (2012), the company has been shrewd in ensuring they do not build their own self importance. He says that the company allows it clients to tell their own stories adding that it is dangerous for a company to tell people that it is really important for them.. Tim Hortons marketing strategy is one that constantly communicates the importance of the product and the value it adds to the clients. It is the value proposition that drives people to flock the coffee shop. He adds that Tim Hortons has been a cultural phenomenon for a long time in Canada, giving the ordinary people an opportunity to sit around tables and talk about the events of the day. He says the coffee shop was important because one would not be thinking of coffee or doughnuts without having to think of Tim Hortons. The perception that it was a place where ordinary people could meet led to the growth of a political reality that it was the perfect place where politicians seeking office were able to meet ordinary Canadians. Most of the time, they could be seen laughing and playing nice to the ordinary citizens who would later called the Tim Horton’s voters. As a result, the significance of the restaurants back in the days. This undoubtedly led to its tremendous growth in Canada (Goodrich, 2015). SWOT Analysis Strengths Weaknesses Opportunities Threats The company has a strong competitive pricing policy. They have a range of products to offer their clients. Their menus are the best. Excellent customer service. Most of their clients think they are quick and friendly. Merger with Burger King. Strong image in Canada and the United States. Less employees to keep up with the growing number of restaurants worldwide. Employee training programs to assist in picking up the age-old culture of excellent services. Keeping up with strong brands in new locations. There is need to come up with ways of ensuring the brand stays on top of the competitors in the new markets. The company’s strong image in the Canadian and the US markets is a good platform to extend its operations to any other part of the world. Tim Hortons merger with the Burger Kings also gives it a perfect opportunity to tap into the latter’s knowledge of the worldwide market and establish more restaurants. The company’s good image worldwide could be a good marketing tool as it seeks to enter new markets. Competition with formidable and famous coffee houses like Starbucks, Second Cup, and Dunkin Donuts. As the company seeks to expand even more, the increase in the cost of labor and production may have adverse effects on the company’s revenues. Poor performance in some markets outside Canada could lead to more losses for the company. Position of Tim Hortons and other Companies in Canada Company Locations Market Share Tim Hortons 3,600 27% Starbucks 3, 200 18% Second Cup 970 7% Dunkin Donut 1, 400 12% Others 26% Position of Tim Hortons and other Companies Worldwide Company Locations Market Share Tim Hortons 4,500 13% Starbucks 7,200 21% Second Cup 2,400 5% Dunkin Donut 3,200 7% Others 54% Comparisons of Marketing Strategies of Tim Hortons and its Competitors Tim Hortons marketing department has been on the front line in ensuring the characteristics of the brand remain upheld. The department, just like those of the competitors, strive to keep up with the pace and the growing opportunities that continuously emerge in the industry. It is these efforts that have seen the company become Canada’s number one brand. The Canadian Business Magazine awarded them the best managed brand recently (Penford, 2008). Tim Hortons’ marketing strategy focuses on gaining a position of advantage over its competitors, or other, exploiting the possibilities that are continuously emerging in the industry. The future is always uncertain, and to prepare a marketing strategy means there has to be a set of options on the table. Tim Hortons bases its strategy on: Increasing sales on same stores through vigorous marketing. Investing and constructing the brand in new and existing markets. The desire for continuous growth. The company views itself as not yet had enough growth. Improving the strengths of the business and the franchise system. Implementation of the drive to conduct the activities that the company lays out. Improving the interior and the exterior designs of its shops by acquiring new equipment and furniture and new designs that respond to customers in various settings, whether urban or rural. Increase the number of menus and items on offer. Unlike the other players in this industry, Starbucks Coffee is the most unconventional when it comes to marketing strategies. And it does this not for the fun of it. Through this unique concept, the company uses individualized marketing strategies to create a strong brand (West, Ford & Ibrahim, 2015). The following are some of the company’s strategies: They emphasize on the quality of their products. Their coffee is expensive but is known for its rich, delicious taste and aroma. Creating a third place between home and work where people can go and have a different experience. Put customer satisfaction ahead of everything else from the entrance to their coffee. Creating a community around the Starbuck’s brand. Using partnerships to increase their sales. Innovative additions to their products and services. Word of mouth marketing and letting their good services advertise for them. Dunkin Donut on the other hand, uses a range of strategies to cut its own share of the competitive market. The company relies on its customers opinions to improve its services and the quality of its coffee (Penford, 2008). It seeks to present itself to its customers as not driven by status, simple, down to earth, and non-judgmental. Other key strategies it uses include: Getting feedback from customers. Strong brand identity. The company has recently redesigned its restaurant to have a more contemporary feel. The brand transformation also included innovation of the menu, which was actually an integral part of the whole process. The company also develops through strategic partnerships and seeks to extend to other parts of the world through this method. Quality of the products. Dunkins Donut also utilizes mobile innovations to market its brand worldwide. It uses platforms such as Facebook, Twitter, and LinkedIn to engage more directly with its clients from any part of the world. Second Cup is another major player in the coffee shop industry. It has been in the field since 1975 and has since grown, but not as much as its competitors like Starbucks which started 10 years later. It currently has more than 300 stores in Canada alone. Second Cup seeks to provide coffee drinkers and people who want to meet and talk with a perfect place without having to spend a lot of money. The company portrays its products in a unique way. It has made a considerable amount of investments to portray itself as the ideal Canadian coffee shop (Connolly, Greenwood & Wallis, 2003). Second Cup Ltd. also makes use of contractual vertical marketing system to handle its distribution channels. Instead of maintaining complete controls over its retail outlets, the company prefers to franchise them. This way, they seek to give each shop an opportunity to innovate on their own and give their clients what exactly they need. More than 90% of its outlets are franchised, making it Canada’s largest coffee shop franchisor. The company offers the franchisees an intensive training to ensure they maintain high quality and consistency. What’s more, it provides them with instructions on what to include in their menu items. Their prices are also different at any given time because they have no contracts with the coffee bean suppliers. Tim Hortons has already made remarkable strides since its entry into the Irish coffee shop industry. Ireland has big cities with huge. This is a market that already has some of the world’s largest coffee shops like the Starbucks, and Tim Hortons has been a worthy addition into the market. Due to the high traffic of people in and out of these cities, there is great need for Tim Hortons to up their marketing game and cut a bigger share of this market. According to In Thurston, In Morris & In Steiman (2013), it would be a great idea if the company could set up more coffee shops in the centres and in areas that are near train stations. The Irish have an outgoing culture and it would be a great idea for Tim Hortons to tap into this and find a way of including it in their marketing strategy. Their marketing should be focused on the right target audience who are the students and the young adults (Connolly, Greenwood & Wallis, 2003). This is a group that is always up and about hence they are too busy to sit at coffee shops. Therefore, Tim Hortons should set up portable stands at social events to get a higher possibility of reaching the youths. Kamin & Anker (2014) argues that social media would be the best place to market such events since nearly 9 out of 10 Irish people are active on these platforms. Tim Hortons stands a better chance of succeeding in the Irish market. All they need to do is to use the tools they have at hand with a little bit of innovations. The marketing strategy that the company currently uses everywhere else would be perfect for this market, but there will be need to improve in some area. Tim Horton’s should maintain its current marketing strategies like focusing more on its growth like it has not made any strides into the area. With the recent merger with the Burger King, one of the world’s largest companies, Tim Horton’s has a perfect opportunity to blossom in Ireland. It can use the Burger King’s renowned image and established customer base in the country to tap into more of this market. Since the company opened its first store in the country, the growth has been remarkable and will no doubt soar higher with more vigorous marketing and smart strategies. Conclusion The coffee shop industry has seen a lot of growth over the year with the major players seeking to create more than coffee shops. They want people to have a third place from work and home where they can relax and have a different experience altogether. The major players in this industry have been using innovative marketing strategies to ensure they stay ahead of the game. Industry giants like Tim Horton’s, Starbucks, Dunkin Donuts, and Second Cup are leading the pack with revolutionary menu items that are meant to keep their clients happy at all times. Tim Horton’s contributions to the industry have been crucial not only for its growth, but also in ensuring the market remains in constant competition and quality products over the years. It has kept giants such as McDonald’s and Starbucks by rivalling their products and ensuring their clients have the best experience. References: Top of Form Connolly, M., Greenwood, M., & Wallis, G. (2003). The rough guide to Ireland. London: Rough Guides. Top of Form West, D. C., Ford, J. B., & Ibrahim, E. (2015). Strategic marketing: Creating competitive advantage. Top of Form Lussier, R. N. (2008). Management fundamentals: Concepts, applications, skill development. Mason, OH: South- Western/Cengage Learning. Top of Form Penfold, S. (2008). The donut: A Canadian history. Toronto: University of Toronto Press. Ronald A.N (2007). Handbook of Marketing Research Methodologies for Hospitality and Tourism. Psychology Press. Top of Form Shankar, et al.,(2012). Handbook of Marketing Strategy. Cheltenham: Edward Elgar Pub. Bottom of Form Top of Form In Thurston, R. W., In Morris, J., & In Steiman, S. (2013). Coffee: A comprehensive guide to the bean, the beverage, and the industry. Top of Form Kamin, T., & Anker, T. B. (2014). Cultural capital and strategic social marketing orientations. Journal of social marketing, 4, 2, 94-110. Goodrich, A. (2015) Drinking just one cup of coffee daily can slash liver cancer risk by 14%. Retrieved on 23rd November, 2015 from Read More