Thursday, April 08, 2010

Tim Hortons Stateside Positioning



Last month, Tim Hortons announced they were planning on a push to open 900 stores in the US, in the states on New York, Ohio, and Michigan. Their positioning will be more upscale, with a re-branding strategy changing the name to Tim Horton's Cafe and Bake Shop. This is a shift from it's more working-class positioning in Canada. Their COO for US and global markets, David Clanachan, told analysts::
"In Canada Tim Hortons can get away with just slapping a ‘Tim Hortons' on its signs...But in the U.S. it's very important to let people know who we are. Establishing being a cafe and bake shop is very important to us."
Interestingly, the Big Recession doesn't necessarily mean upscaling is dead, as this recent market research report summary offers::
"As opposed as the economic downturn is to the upscaling thrust (i.e., shifts toward specialty coffee drinks, specialty coffee varietals, single pod coffee, and fair trade and triple certification coffee), the former doesn't negate the latter but rather interacts with it. Instead of settling for cheap ground coffee, consumers and their growing 'coffee connoisseurship' have been willing to make difficult tradeoffs to stay within their means while indulging in premium beverages that provide many with a source of comfort during stressful times."
Michigan, Ohio, and New York need a lot of comfort, with unemployment rates in the double digits. Michigan's is expected to be 15% throughout 2010.

Tim Hortons said it learned from its mistakes in the past in the US. While strong in Canada, they were expecting their brand strength would carry over to the US, which didn't materialize. Now, they are going to focus on building brand awareness through the coffee and the bakery. While volumes are low, half what they are in Canada, they see opportunities in the American market. They are also planning on expanding their menu.

I think their strategy makes sense. Given their volumes and their overall scale in North America, I think it makes sense to develop an upscale positioning in the US that's distinct from Starbucks and Dunkin, building a strong regional presence in certain markets with less competition.

On another note, I've heard that the Tim Hortons in the Skydo...Rogers Centre charges its regular prices last year. Well, in June, I'm looking forward to dunking my Timbits in my $9 beer, when the SF Giants come to town.

Twitterversion:: @tim_hortons is planning US expansion and a more upscale positioning in selected markets in MI, NY, & OH. @Prof_K

Song:: Group of Seven-'Ghost of Tim Horton'



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