Tim Hortons

PROFILE CANADIAN MARKETING EXCELLENCE It began as a one-store shop in Hamilton in 1964 founded by legendary hockey player Tim Horton. By 1967, there were three Tim Hortons stores open for business under the root successful franchisee, Ron Joyce (who currently serves as chairperson emeritus of the TDL Group). Since then, Tim Hortons has grown to 2527 stores (2343 in Canada, 184 in the fall in States) and over US$800 million in revenue. With a 13-year cumulative average growth in gross revenue of 7. 1 pct in Canada and 17. 5 percent in the United States, Tim Hortons is one very successful coffee and doughnut shop.How this local operation rancid into an international franchise corporation and a major Canadian cultural icon, with a rapidly expanding U. S. presence, has everything to do with a very well-planned and carefully executed selling strategy. Tim Hortons core strategy is the reason for its success. On its most basic level, the Tim Hortons merchandise team has created a br and that represents an idealized image of the Canadian national eccentric friendly, neighbourly, unpre gotious, gently playful, frugal, trustworthy, and clean. The company measures everything it does against this list of brand values. In everything we do, weve always foc employ on the concept of being that friendly, unpretentious, good neighbour youd want vivacious down the block from you, says Cathy Whelan Molloy, TDLs vice-president of brand advertising and merchandising. It also uses extensive customer and franchisee surveys, and other consumer research, to make sure its products, service, and communications fit the ideals. Furthermore, the organization has shown fast commitment to this vision and strategy for over 30 years. Tim Hortons has executed this core strategy through many years of innovative marketing campaigns.It was one of the first Canadian organizations to tap into the benefits of sports marketing. Its first stores were painted blue and white to capitalize on the fame of Tim Horton himselfa Toronto Maple Leafs legend. It has developed a major presence in local communities with the creation of the nonprofit Tim Hortons Childrens Foundation. The foundation sponsors an estimated 33 000 children in Timbit hockey leagues annually and operates five camps at which underprivileged Canadian and American children enjoy ten summer days and five winter days of activities. Developing MarketingStrategies and Plans 2 CHAPTER 2All of the companys campaigns are designed to communicate a positive and plausible truth about the Canadians who go to Tim Hortons. Effectively, Tim Hortons dares to hold a mirror up to Canadians and challenges them to like what they see, says Philippe Garneau, a partner at Torontos Garneau Wurstlin Philp Brand Engineering. For example, in 2002, the company ran a television ad campaign called True Stories. These were a series of vignettes based on hundreds of suggestions the company receives from its customers every year.The campaig n featured Canadian sailors and students afield trying to get their fix of Tim Hortons coffee. In 1976, Tim Hortons changed the face of doughnut consumption forever with the introduction of Timbits. It has been able to use this product in the companys marketing strategy to continue to build the playful, friendly nature of the brand. Of course, no discussion of Tim Hortons would be execute without one of the most successful annual promotional tools in Canadian history the Roll Up the Rim to Win customer reward program that offers prizes ranging from coffee and doughnuts to luxury cars.In one of the best examples of how Tim Hortons used this program to build the brand, the company aired a TV spot featuring a Canadian citizen crossing over the U. S. border. When asked to prove his nationality to the immigration officer, the character plain rolls his Rs while speaking the phrase roll up the rim to win. These investments have paid off. Of those surveyed in the Canadian Business poll of Canadas best and chastise brands, Tim Hortons was the clear winner, with 42 percent of those who responded to the poll (conducted by the Strategic Counsel and Spencer Francey Peters).What is more impressive is that 95 percent of the companys 2500-plus outlets are own by franchisees, which may have independent ideas about what Tim Hortons is about. However, creating programs to ensure that the organization builds the brand and develops the business together has been crucial to the overall strategy. New franchisees must complete a seven-week training program before taking ownership of stores. Furthermore, the company has strict quality control standards. It routinely surveys and inspects stores, including checking everything from how fast and friendly the staff is to whether the junk in he parking lot has been cleared. But it is not through hierarchical, heavy-handed intervention that it creates strong brand commitment from the franchisees, it is through a well-developed knowle dgeable strategy that works to ensure the success of each franchisee. For example, the Roll Up the Rim to Win promotion was created specifically to boost coffee gross sales in the warmer spring months. While franchisees end up giving away thousands of free coffees and doughnuts (in 2004, winners redeemed over 20 million food prizes), the promotion drives sales growth.Consistently keeping customers coming back every day (sometimes two or three times a day) is Tim Hortons challenge. In this intensely competitive market, it does not undertake much more than a stale doughnut or a cup of cold coffee to lose a customer. Yet consumers keep liner up. (Tim Hortons had a 68 percent share of the most often coffee purchases in the first quarter of 2004, while Starbucks and Second Cup had 7 percent and 3 percent respectively. ) Part of this success is believed to stem from Tim Hortons decision in the 1980s to drop the Doughnuts from its name and carve out a niche as a breaktime restaurant.Now the company appeals to consumers who want to stop in for soup and sandwiches as well as those simply looking for a coffee. Interestingly, one of the brands that Canadians seem to come upon with most closely is actually owned by Americans. In 1995, Ron Joyce sold the company for US$450 million to Ohio-based Wendys International Inc. In 2003, Tim Hortons sales equal nearly 20 percent of the fast-food giants retail sales, and the Tim Hortons operations in both 36 PART ONE Understanding Marketing ManagementCanada and the United States posted the best same-store sales growth in the entire organization.Sources John Gray, King of the Cruller Our Survey Crowns Tim Hortons the Best-Managed Brand in the Country, Canadian Business magazine publisher Online, www. canadianbusiness. com, June 6, 2004 (viewed July 12, 2004) Before Tims Was Tims, abridged and excerpted from Tales from Under the Rim The Marketing of Tim Hortons by Ron Buist, Marketing cartridge holder Online, www. marketmag. ca , September 22, 2003, (viewed July 12, 2004) Terry Poulton, Long Live the Double Double, Strategy Magazine Online, www. strategymag. com, July 29, 2002, p. 9 (viewed July 12, 2004) Wendys International Inc. Investor Presentation, June 2004, www. wendys-invest. com (viewed July 12, 2004) Tim Hortons Web site, www. timhortons. com (viewed July 12, 2004). A key ingredient of the marketing management process is insightful, creative marketing strategies and plans that can guide marketing activities. Developing the right marketing strategy over time requires a blend of discipline and flexibility. Firms must stick to a strategy but must also find new ways to constantly improve it.