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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