International Marketing Student 1 and Student 2

Tim HortonsCafé and Bake Shop

Tim Hortons Company Overview: Current Investors Presentation Tim Hortons Company Overview

Began in 1964 Based in Hamilton, Ontario Began as a coffee shop designed to cater to the advancing tastes of

the consuming audience Integration of pastries and eventually lunch items After strong popularity of coffee, the company began to sell

the brand in grocery stores Strategic Enablers:

People Culture Communities Sustainability

Company goals “Leverage menu innovation to grow morning, lunch and snacking

dayparts” “Grow hot and cold beverage category and market share” “In the U.S., continue to test and implement menu opportunities

that further differentiate us as a Cafe and Bake shop destination” “Leverage our marketing strength to drive same-store sales growth” All above information is from the Tim Hortons website

Tim Hortons Company Overview: Investors Presentation Strengths:

Specializes in coffee drinks and pastries Recent expansion into lunch foods

Strong emphasis on freshness

Weaknesses: Seasonality of product offerings Lower stock prices in winter months

Opportunities International expansion

Threats Strong competitors in industry

Necessity of competitive advantage

Tim Hortons Company Overview: Investors Presentation Tim Hortons Company Overview Core Competencies: Coffee and assorted coffee drinks Pastries, doughnuts, muffins Emphasis on freshness and top quality

Marketing Capabilities Strong marketing presence in the consumer

market Established brand name; strong brand

recognition Emphasis on seasonal items I.E. Christmas doughnuts and coffee drinks

Tim Hortons

Company Overview: Product and Market Review Company and Product Review

Strong reputation due to extensive menu and consistent quality Most popular items: Variety coffee drinks

Company Sales Total Revenue for Q3 2012: $800M

The above chart was retrieved from Tim Hortons Stock Information, 2012

Tim Hortons

Company Overview: Product and Market Review Behavior Trends Tim Hortons is appealing to a more up-scale audience by:

Strong improvements of the store appearance Adding more up-scale items to the menu The above information is taken from Celentano, 2012.

These actions help Tim Hortons to attract a more financially stable consumer base.

Pricing “Tim Hortons offers a wide menu of "Always Fresh" food and beverages

for our guests. Pricing at Tim Hortons restaurants across Canada and the US can vary slightly…” (Tim Hortons website)

Tim Hortons

Expansion Plans Tim Hortons is thriving in every market in which it is present. 600 U.S. stores; 3,000 Canadian stores (Tim Hortons website)

International expansion Afghanistan Dubai, Abu Dhabi, Fujairah Nanavut Plans to expand into the Persian Gulf

"Our top strategic priority is continuing to grow our Canadian and U.S. businesses which are the primary drivers of shareholder value. We also believe there is an opportunity over the long-term to explore international opportunities and seed the Tim Hortons brand in various markets outside of North America” (CEO Don Schroeder, 2011).

South Korea

Tim Hortons

Expansion Plans (Cont.) Tim Hortons should expand into the following markets in order

to enhance global brand recognition and overall corporate profits: South Korea Economy

South Korea over the past four decades has demonstrated incredible growth and global integration to become a high-tech industrialized economy.

Large revenue producers: o electronics, telecommunications, automobile production, chemicals,

shipbuilding, steel Agricultural specialties:

rice, root crops, barley, vegetables, fruit; cattle, pigs, chickens, milk, eggs; fish

Imports – partners: China 24.4%, US 10.1%, Japan 7.1% (2011 est.) Above information is from the Central Intelligence Agency, The World Factbook, 2012

Russia

Tim Hortons

Expansion Plans (Cont.) Russia “If your product or service is a success at home, expanding to Russia

offers great potential” (StartupOverseas).

Russian Economy “Privatized industry” Large revenue producers: Oil, natural gas, crude oil reserves “High oil prices buoyed Russian growth in 2011 and helped Russia

reduce the budget deficit inherited from the lean years of 2008-09.” Above information is from the Central Intelligence Agency, The World Factbook, 2012

Agricultural specialties: Grain, sugar beets, sunflower seed, vegetables, fruits, beef, milk

Imports – partners: China, Germany, Ukraine, Italy

Above information is from the Central Intelligence Agency, The World Factbook, 2012

Bolivia

Tim Hortons

Expansion Plans (Cont.) Bolivia Economy The global recession slowed growth, but Bolivia recorded the highest

growth rate in South America during 2009. Large revenue producers: natural gas, soybeans and soy products,

crude petroleum, zinc ore, tin Above information is from the Central Intelligence Agency, The World Factbook, 2012

Agricultural specialties: soybeans, coffee, coca, cotton, corn, sugarcane, rice, potatoes; Brazil

nuts; timber Imports – partners: Brazil 41.8%, US 12.2%, South Korea 6.4%, Peru 5.7%, Argentina

5.2%, Japan 4.7% (2011) Above information is from the Central Intelligence Agency, The World Factbook, 2012

Economy South Korea

Population: 49M

Unemployment: 3.4%

Inflation Rate: 4%

GDP (Purchasing Power Parity): $1.57 T (2011)

GDP (Composition by sector):

Agriculture: 2.6%

Industry: 39.2%

Services: 58.2%

Russia Population: 143M

Unemployment: 6.6%

Inflation Rate: 8.4%

GDP (Purchasing Power Parity): $2.383 T (2011)

GDP (Composition by sector):

Agriculture: 4.5%

Industry: 36.9%

Services: 58.6%

Bolivia Population: 10M

Unemployment: 7.6%

Inflation Rate: 10%

GDP (Purchasing Power Parity): $51.56B (2011)

GDP (Composition by sector):

Agriculture: 10%

Industry: 40%

Services: 50%

All above information is from the CIA.

Trade Agreements South Korea

U.S. – South Korea - Free Trade Agreement

Canada-Korea – Free Trade Agreement

Australia – Republic of Korea - Free Trade Agreement

World Trade Organization

ASEAN+3

Russia

The Coalition for U.S. –Russia Trade

Serbia – Russia Free Trade Agreement

Russia – Armenia Free Trade Agreement

World Trade Organization

Bolivia

Mexico – Bolivia Free Trade Agreement

MERCOSUR

Andean Community

World Trade Organization

Consumerism Trends: Coffee South Korea

“…Korean coffee drinkers consume on average 350-400 cups of coffee each year” (The Marmot’s Hole).

“Instant coffee-mix products took up 64.2 percent of coffee consumption last year, with coffee shops accounting for just 7.8 percent” (The Marmot’s Hole).

Russia

Russians are the second highest consumers of coffee at 72%.

Russians are more likely to consume instant coffee at home than to go to a coffee shop.

7th largest market in the world for coffee consumption.

All above information is from Foodbev.com

Bolivia

“Coffee is the most popular hot drink in Bolivia”

Low price between regular coffee and decaffeinated and organic products.

“Instant coffee is the most affordable to low-income consumers…”

All above information is from EuroMonitor.

Supply Chain EfficiencyCountry Proximity to World’s Largest Coffee-Producers South Korea

Vietnam (#2)

Indonesia (#4)

India (#5)

Russia

Vietnam (#2)

Indonesia (#4)

India (#5)

Bolivia

Brazil (#1)

Colombia (#3)

Honduras (#7)

Peru (#8)

Guatemala (#9)

Mexico (#10)

“The World’s Top 10 Coffee-Producing Countries in 2010-2011”

Expanding Tim Hortons Internationally

International Expansion Goals: Supply the international markets of South Korea, Russia, and

Bolivia with a North American-style café and bake shop Overall consistent menu to the North American shops with slight cultural

adaptations

Create competitive advantage to existing international coffee shops through capitalizing on the popularity of sports television Provide an emphasis on sports entertainment by having multiple

televisions providing access to popular sporting events Create an atmosphere where groups can come to observe sporting

activities while enjoying North American café and bake shop items

International Expansion Demographic information: The emphasis on sports will create a competitive advantage that

will differentiate this brand from competitors. Target audience: sports fans between the ages of 18-40 Popular sports worldwide: Soccer Baseball Hockey Basketball

Taking Tim Hortons to Each Global Market

Target Markets and Marketing Objectives• Marketing Objectives

• Marketing objective #1: Tim Hortons aspires to be a class leader in high quality, fresh foods, and specialty drinks

• Marketing objective #2: Emphasize social entertainment by providing a comfortable atmosphere for communal groups.

International Expansion Channels of Distribution

Incorporate a wholly-owned strategy, in which Tim Horton's will be in control of the original international brand offerings.

Five stores will be opened in each selected nation; response will be measured and the future number of shops will be added accordingly. Cost of opening store in South Korea: $450,000; Russia: $400,000; Bolivia: $350,000

These numbers were adapted by looking at the cost of opening a Starbucks store (Business School,

University of Washington).

Ingredients for specialty products will be purchased and delivered from local distribution chains. This will ensure product freshness, and increase supply chain efficiencies, which will result in lowering importing costs.

Because this strategy incorporates local distribution chains, products will be shipped directly to stores, eliminating the cost of owning and operating multiple distribution centers.

International Expansion Distribution: from origin to destination

For each specific international market, a third-party logistics coordinator will be hired to take responsibility for collecting ingredients used in Tim Hortons products These products will be delivered to the Tim Hortons stores so that both the ingredients and

final products will be kept at peak freshness

Hiring a third-party logistics coordinator will successfully transfer the risk factor of transportation to an outside source.

Therefore, Tim Hortons will not be responsible for purchasing and upkeep of vehicles, payment of workers, and storage of supplies.

Taking Tim Hortons to Each Global Market

Cultural Emphasis in Each Country South Korea

Internet connectivity Strong technological

emphasis

Tim Hortons will have wireless internet as well as computers available for customer usage.

Main sports emphasized: Soccer

Baseball

Russia

National pride is very important (Kwintessential.co.uk)

Tim Hortons will incorporate national pride into building aesthetics through decorations as well as menu by having favorite national dishes

Tim Hortons will have wireless internet

Main sports emphasized: Ice hockey Soccer Basketball Tennis (Above information from Saakov)

Bolivia

Strong social emphasis Incorporation of

comfortable and relaxed group setting

Extra comfortable seating will be available for groups to congregate.

Tim Hortons will have wireless internet

Main sports emphasized: Soccer

Taking Tim Hortons to Each Global Market

Store Layout Additional televisions will be added to the displayed setup:

Taking Tim Hortons to Each Global Market

Problems/Opportunities South Korea

Problem Competition

Tension with North Korea

Opportunities Number of coffee shops

increased 54% from last year.

Coffee sales increased 60% from last year

Above information is from Marmot’s Hole

Russia

Problem Competition

“Russian economic growth continues to be dependent on oil and gas exports” (Nichol).

International tension(Nichol)

Opportunities Climate

NHL lockout

Emphasis on health (ATS)

Bolivia

Problem Competition

Government

Opportunities Emerging Market

Location

Taking Tim Hortons to Each Global Market

Sales Objectives South Korea

400 orders per day

Average sale: $5 Total sales per day:

$2,000 Open for business 365

days per year

Total sales per store per year: $730,000

5 stores: $3,650,000

Russia

500 orders per day

Average sale: $6 Total sales per day:

$3,000 Open for business 365

days per year

Total sales per store per year: $1,095,000

5 stores: $5,475,000

Bolivia

350 orders per day

Average sale: $3 Total sales per day:

$1,050 Open for business 365

days per year

Total sales per store per year: $383,250

5 stores: $1,916,250

Taking Tim Hortons to Each Global Market

Sales Objectives: 5 Year Estimate South Korea

Growth: 10% per year

Year 1: $3,650,000

Year 2: $4,015,000

Year 3: $4,416,500

Year 4: $4,858,150

Year 5: $5,343,965

Total: $22,283,615

Russia

Growth: 10% year 2

Growth: 5% years 3-5

Year 1: $5,475,000

Year 2: $6,022,500

Year 3: $6,323,625

Year 4: $6,639,806

Year 5: $6,971,796

Total: $31,432,727

Bolivia

Growth: 10% year 2

Growth: 5% years 3-5

Year 1: $1,916,250

Year 2: $2,107,875

Year 3: $2,213,268

Year 4: $2,323,932

Year 5: $2,440,128

Total: $11,001,453

Grand Total: $64,717,795

Potential Advertisement Example

Taking Tim Hortons to Each Global Market

Plan Strategies and Communications Goals Plan Strategies

Provide a unique experience that incorporates North American specialty foods and drinks to an international audience

Leverage consumer interest in sporting events to captivate attention Diversify Tim Hortons to attract an enlarged consumer base

Communications goals Overcome cultural barriers by effectively displaying Tim Hortons products as unique

and quality North American café and bake shop items Increase awareness of the brand through effective marketing communications that

will: Captivate audience attention

Display product attributes

Communicate available entertainment and social conveniences

Taking Tim Hortons to Each Global Market

Tactical Marketing Mix Tools South Korea

Product American specialty

drinks and baked goods

Place 5 different shops in

Seoul

Price Average sale: $5

Promotion Mobile device

advertising

Tablet advertising

TV commercials

Social media

Russia

Product American specialty

drinks and baked goods

Place 5 different shops in

Moscow and St. Petersburg

Price Average sale: $6

Promotion Mobile device

advertising

TV commercials

Social media

Transit advertising

Bolivia

Product American specialty

drinks and baked goods

Place 5 different shops in La

Paz and Santa Cruz

Price Average sale: $3

Promotion Bill board

advertisements

Mobile device advertising

Marketing Budget• Estimated Marketing Expenditures

• $50,000 for creation of Iphone/Ipad app (Bluecloudsolutions.com)

• $50,000 to hire international marketing firm to be responsible for international social media/marketing

• Corporate Tim Hortons will finance the upgrade of current website to be more user-friendly to those in various international markets.

Taking Tim Hortons to Each Global Market

Tactical Marketing Mix Tools South Korea

Product American specialty drinks

and baked goods Branding

Keep corporate brand in English; adapt menu language

Packaging Traditional North

American packaging Pricing

Coffee: $3 3226.14 Won

Doughnut $1 1075.48 Won

Specialty: $4.50 4839.21 Won

Sandwich: $5 5377.4 Won

Russia

Product American specialty

drinks and baked goods Branding

Keep corporate brand in English; adapt menu language

Packaging Traditional North

American packaging Pricing

Coffee: $3.50 107.45 Ruble

Doughnut $2 61.4 Ruble

Specialty: $5 153.51 Ruble

Sandwich: $6 183.76 Ruble

Bolivia

Product American specialty drinks

and baked goods Branding

Keep corporate brand in English; adapt menu language

Packaging Traditional North

American packaging Pricing

Coffee: $1 7 Bolivianos

Doughnut $0.50 4 Bolivianos

Specialty: $2 14 Bolivianos

Sandwich: $3 21 Bolivianos

Taking Tim Hortons to Each Global Market

Tactical Marketing Mix Tools (cont.) South Korea

Personal Selling/Service Hiring capable local

managers and staff

Promotion/Events Holiday advertising

Liberation day, Christmas

Advertising Message “North American sports

café”

Merchandising Continuous sales of

specialty coffee blends

Publicity Managed by corporate in

concert with local management

Russia Personal

Selling/Service Hiring capable local

managers and staff Promotion/Events

Holiday advertising New Year,

Christmas, Russia Day, Unity Day, National Flag Day

Advertising Message “North American sports

café”

Merchandising Continuous sales of

specialty coffee blends

Publicity Managed by corporate in

concert with local management

Bolivia Personal

Selling/Service Hiring capable local

managers and staff

Promotion/Events Holiday advertising

New Year, Good Friday, Labor Day, Christmas

Advertising Message “North American sports

café”

Merchandising Continuous sales of

specialty coffee blends

Publicity Managed by corporate in

concert with local management

Why You Should Invest with

Tim Hortons International Revenues Total predicted revenue of $64,717,795 over 5 years

Strategic corporate direction Expansion into the specific markets of South Korea, Russia, and

Bolivia will reinforce the company as an international leader in the coffee shop industry

Value Provide unparalleled value and innovation for the future

Thank you

Sources ATS, http://www.ats-sea.agr.gc.ca/eur/pdf/5696-eng.pdf

Bluecloudsolutions.com, http://www.bluecloudsolutions.com/blog/cost-develop-app/

Business School, University of Washington, Starbucks Corporation: Competing in a Global Market, http://faculty.bschool.washington.edu/skotha/website/cases%20pdf/starbucks_Intl%20copy.pdf

Celentano, Domenick, “Food Trends 2012 – Fast Food Industry Moving Upscale,” 2012, http://foodbeverage.about.com/od/Grocerant/a/Food-Trends-2012-Fast-Food-Industry-Going-Upscale.htm

Central Intelligence Agency, The World Factbook, December 4, 2012, https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html

Doom, Justin, Bloomberg, “World’s Top 10 Coffee-Producing Countries in 2010-2011,” Aug. 19, 2011, http://www.bloomberg.com/news/2011-08-19/world-s-top-10-coffee-producing-countries-in-2010-2011-table-.html

EuroMonitor, Coffee in Bolivia, www.euromonitor.com/coffee-in-bolivia/report

Export.gov: Helping U.S. Companies Export, Trade Regulations, Customs and Standards, August 5, 2012, http://export.gov/southkorea/doingbusinessinskorea/traderegulationsstandards/index.asp

Foodbev.com, http://www.foodbev.com/news/report-reveals-how-global-coffee-drinkin#.UMY5LoM818E

Food of Bolivia, Language Crossing: Learning & Adventure Overseas, http://www.languagecrossing.com/Destinations/Bolivia/Food_of_Bolivia/

IndexMundi, Bolivia GDP, http://www.indexmundi.com/bolivia/gdp_(purchasing_power_parity).html

IndexMundi, South Korea GDP, http://www.indexmundi.com/south_korea/gdp_(purchasing_power_parity).html

Korean Traditional Food, http://www.freewebs.com/koreatb2/korean%20traditional%20food/koreanfood1[1].htm

Kwintessential.co.uk, http://www.kwintessential.co.uk/resources/global-etiquette/russia-country-profile.html

Kubilius, Kerry, Russian Traditional Foods, http://goeasteurope.about.com/od/russia/a/Russianfood.htm

“The Marmot’s Hole,” http://www.rjkoehler.com/2012/01/26/south-korea-and-coffee/

Nichol, Jim, Russian Political, Economic, and Security Issues and U.S. Interests, https://www.fas.org/sgp/crs/row/RL33407.pdf

Saakov, Rafael; October 17, 2010, http://www.uwtledger.com/2.13122/top-five-popular-sports-in-russia-1.1701994

StartupOverseas, Preparing to Expand, http://www.startupoverseas.co.uk/expanding-a-business-in-russia/preparing-to-expand.html

“Tim Hortons opens in Dubai,” The Canadian Press, September 20, 2011, http://www.cbc.ca/news/world/story/2011/09/20/tim-hortons-dubai.html

Tim Hortons Investor Conference http://www.timhortons.com/ca/pdf/2010_Investor_Conference_FINAL.pdf

Tim Hortons Stock Information, 2012, http://www.timhortons.com/us/en/about/stock.html?c=195616&p=irol-stockquote