team omega: tim hortons

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SM 346 Final Project Analysis of and Recommendations for Tim Hortons

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University of Michigan Sport Management: Marketing Capstone

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Page 1: Team Omega: Tim Hortons

SM 346 Final Project�Analysis of and

Recommendations for Tim Hortons�

Page 2: Team Omega: Tim Hortons

Introduction to Tim Hortons

•  Founded in 1964 as a “coffee and donuts” shop •  Dedicated to satisfying the changing tastes of

consumers through product innovation

•  #1 seller remains their “legendary” coffee •  95% franchise owned in Canada, similar

strategy in U.S. •  Merged with Wendy’s International, Inc. in 1995

in order to place greater focus on United States

expansion

Page 3: Team Omega: Tim Hortons

Identification of the Problem

While Tim Hortons does a great job of attracting the segment of consumers that are “on the run,” they disregard several other segments of coffee drinkers who need a comfortable space to spend time and “call their own” when buying and consuming coffee.

After our analysis, we have proposed a plan that will leave Tim Hortons better positioned to gain customers seeking a

comfortable place to call their own, while maintaining their established customer base of ‘on-the-run’ consumers.

Page 4: Team Omega: Tim Hortons

Current Situational Analysis

Page 5: Team Omega: Tim Hortons

Strengths •  Largest quick service restaurant chain in Canada

•  3,200 locations in Canada •  600 in the United States

•  Iconic in Canadian culture •  40% of all fast-food revenues •  80% of the baked goods market •  66% of the coffee market

•  Demonstrates corporate social responsibility through various programs

Page 6: Team Omega: Tim Hortons

Weaknesses

•  No brand recognition in the United States

•  Small presence in the U.S. with just 606 units •  Locations are not as profitable as Canadian counterparts

•  Competition in the U.S. is fierce •  All-American brands like Starbucks and Dunkin Donuts have

many more locations per capita

Page 7: Team Omega: Tim Hortons

Opportunities

•  International expansion •  In 2011, Tim Hortons

expanded internationally to the Gulf Cooperation Council •  5 restaurants opened

in the United Arab Emirates

•  Canadian expansion

•  Product line expansion

Page 8: Team Omega: Tim Hortons

Threats

•  Competitors are continuously moving into Tim Hortons’ territory

•  Global economic recession can result in increased costs for labor, production, and resources

•  Threat of market saturation

Page 9: Team Omega: Tim Hortons

Segmentation, Targeting, & Positioning

Page 10: Team Omega: Tim Hortons

Overall Strategy & Objectives

“Our guiding mission is to deliver superior quality products and services for our guests and communities through leadership, innovation and partnerships. Our vision is to be the quality leader in everything we do.”

•  Based  on  the  mission  statement  below,  Tim  Hortons’  strategy  focuses  on  two  main  objec;ves  •  Deliver  quality  products  and  services  •  Be  the  industry  leader  in  all  that  they  do  

•  They  deliver  on  this  mission  through  their  CSR  ini;a;ves  and  dedica;on  to  quality  product  sourcing  

Page 11: Team Omega: Tim Hortons

Segmentation Methods

GEOGRAPHIC    

Heavily  Canadian.  In  the  states,  localized  in  near-­‐

north  ci;es  such  as  Detroit  and  Buffalo;  scaIered  elsewhere.

DEMOGRAPHIC    

Gender  and  age  ranges  generally  similar;  decrease  in  consump;on  by  seniors.  Wealthy  more  likely  to  

frequent  Starbucks  than  TH  or  DD.    

PSYCHOGRAPHIC    

Fast-­‐paced  lifestyle,  “on-­‐the-­‐run”  consump;on  style.  May  appreciate  CSR  and  environmental  

ac;ons.  

GEODEMOGRAPHIC    

Suburban  and  “small-­‐urban”  subsectors.  Lack  

of  penetra;on  in  affluent  and  

sophis;cated  areas.

BENEFIT    

Those  who  seek  convenience  and  

economy  receive  both  from  Tim  Hortons.

BEHAVIORAL    

Loyal  and  frequent  consumer  base  of  “on-­‐the-­‐go”  coffee  drinkers.  Tim  Hortons  fans  are  avid  –  LOVE  Tim  

Hortons.  

Page 12: Team Omega: Tim Hortons

Evaluating Segment Attractiveness Current Strategy"

Identifiable? Convenience and economic-driven consumers looking for a quality product in a QSR setting Substantial? Large proven customer base in Canada; working to build similar base in U.S. Reachable? Current marketing strategy includes all traditional forms of media (TV, Radio, Print, Outdoor) as well as social platforms (Facebook, Twitter, YouTube) Responsive? Current customer base accepts Tim Hortons’ value proposition, reacts positively to offerings with high levels of customer loyalty Profitable? In Canada, yes: 66% of Canadian coffee market; 80% baked goods, 40% QSR. Need to build in U.S.

Proposed Strategy"

Identifiable? Maintain convenience-driven base while extending reach to those looking for a comfortable place. Substantial? Coffee market in the U.S. is huge: 64% of surveyed Americans consumed coffee in past 30 days. Reachable? Similar marketing strategy with an emphasis on digital and social as well as event-based marketing.

Responsive? Based on our survey data, consumers are receptive to our proposed ideas. Profitable? Similar options profitable; these consumers are some of most engaged.

Page 13: Team Omega: Tim Hortons

Selecting Target Market

Our proposed strategy shift will maintain the mass-marketing approach that Tim Hortons currently employs

•  TV •  Radio •  Print •  Outdoor (billboards, etc.) •  Social: Facebook, Twitter, YouTube

However, we will focus heavily on digital and event-based marketing, which will become clear later in our presentation.

Page 14: Team Omega: Tim Hortons

Developing a Positioning Strategy

Low Quality

High Quality

On-the-run Leisure

•  7-11

•  Dunkin Donuts

•  Tim Hortons

•  Espresso Royale

•  Bert’s

•  Lab

•  Biggby

•  Starbucks

•  Rendezvous

Target Market: Convenience & price-minded consumers

Benefits Offered: Low price, quick service, good quality

Price: Inexpensive (comparable to competitors)

Page 15: Team Omega: Tim Hortons

Marketing Mix

Product    Value  Crea)on  

Price    Value  Capture  

Place    Value  Delivery  

Promo@on  Value  

Communica)on  

Page 16: Team Omega: Tim Hortons

Product

•  Wide variety of goods •  Coffee, specialty beverages like espresso and iced coffee,

baked goods, and breakfast and lunch options

•  “On-the-go” options

•  Don’t offer many things you have to sit down to eat

Page 17: Team Omega: Tim Hortons

   

Price •  Coffee is priced around $1.20

•  Less expensive than other coffee shops

•  More focused on offering convenient items with less variety

•  Tim Hortons is about value and convenience

Place •  Tim Hortons is primarily consumed in Canada

•  Majority of outlets are located in Ontario

•  Their restaurant are the main way they get their products to the consumer and generate profits •  Some items can be bought online

Page 18: Team Omega: Tim Hortons

Promotion •  TimmyMe

•  Allows user to find the 10 closest store locations, get directions to the nearest location, check the balances of a gift card, and get nutritional information on all their products

•  Facebook and Twitter •  Roll Up the Rim to Win

•  Customer rolls up the rim on their coffee with chance of winning anything from free coffee or doughnuts to a brand new car

•  Held annually since 1986

Page 19: Team Omega: Tim Hortons

Ω  

Recommendations

Quick Caffeinators  

PLug-INs  

Comfort Creatures  

A la central perk  

Hip-sperts  

HANGOUT

What business are coffee shops really in?"The simple answer might be “selling coffee”

But every brand has an emotion behind it, else it’s just a product. "

For many coffee shops, that emotion tends to be" “Apart from their home and office,

people tend to seek out a place they can call their own”

Page 20: Team Omega: Tim Hortons

Our recommendat ions reflect the knowledge that there are several consumer segments who want their coffee shop to be a place to plug in and do work, relax with a good book, or meet up with friends.

Our research reinforced this by reflecting the perceptions of Tim Hortons and Dunkin Donuts as less inviting, with few having ever sat down in either establishment.

Our primary recommendation is to create “Hortons Hangout” in all locations, incorporating

event-marketing as part of the launch. HANGOUT

Page 21: Team Omega: Tim Hortons

These sit-down consumers are often the most engaged with the brand, frequenting their choice of coffee shop several times a week for extended periods of time, and often purchasing multiple drinks and snack items during their stay.

Page 22: Team Omega: Tim Hortons

Coinciding with the launch of “Hortons Hangouts” we will create pop-up hangout events in cities,

on campuses, at bus shelters, etc.

Two great examples from Absolut and Caribou Coffee

Page 23: Team Omega: Tim Hortons

Adding Value to TimmyMe Competitors’ apps incorporate payment systems and customer loyalty programs, where perks are received after a given number of purchases, on birthdays, etc.

The new and improved TimmyMe will incorporate these functions with the added benefit of WiFi enhancements and the best new function…

Page 24: Team Omega: Tim Hortons

Is This Seat Open?

Have you ever planned to go to Starbucks or even the UgLi to study, only to be denied an outlet or a seat altogether?

Each Hortons Hangout will be equipped with the technology for access on TimmyMe

Before accessing the WiFi – which Tim Hortons has already

implemented in all locations – users will be obligated to disclose whether they are seated in the Hangout and using an outlet

TimmyMe will know the logistics of each location and be able to

inform users whether there are seats or outlets open

Page 25: Team Omega: Tim Hortons

Each of these marketing innovations

will drive value to Tim Hortons�allowing them to access the consumer

base of coffee drinkers who need a comfortable place, while maintaining

their established “on-the-go” customers

HANGOUT

Page 26: Team Omega: Tim Hortons

That concludes our presentation

That concludes our presentation

Would you be more likely to frequent Tim Hortons if these options were available?

Are there any questions?