The Tim Hortons Fast Food Chain’s Analysis

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Introduction

Due to its availability and comparatively low price, fast food has become ubiquitous globally, affecting people’s eating habits and reflecting the changing lifestyle of most people, particularly its increasing pace. Although on a global level, the top position of the fast food producing giant has been taken by McDonald’s for quite long, in local markets, companies of smaller scope may enjoy tremendous popularity. In Canada, the fast-food chain known as Tim Hortons has taken the spot of the most popular and successful one. Since the organization’s key rivals have been flourishing in the Canadian fast-food market, their progress spearheaded by an innovation-driven approach, Tim Hortons will need to develop premium-level products to create a level playing field.

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Competitor’s Product Growth

All of Tim Hortons’ major rivals have been showing consistent and impressive growth in the Canadian fast-food context. Specifically, Starbucks has been deploying innovative approaches toward connecting with its customers by developing mobile apps for maintaining customer-company dialogue (“Starbucks announces next phase of store transformation in Canada,” 2021). In turn, McDonald’s has also been quite successful in Canada, with its recent foray into the Canadian fast-food market and the clever use of the one-time-only offer of the long-awaited Spicy Chicken McNuggets (“McDonald’s Canada brings the heat north of the border with the introduction of Spicy Chicken McNuggets® Français,” 2021). Finally, Second Cup has been pursuing an expansion-based strategy in Canada lately, having stretched to nearly 100 new locations (Toneguzzi, 2021).

Benefits of the Competitor’s Products

Admittedly, all of the three companies have undeniable advantages that have led them to become the key players in the Canadian fast-food market. For McDonald’s, the brand name and the unique value proposition, namely, offering its inimitable meals, is the primary benefit. In turn, Starbucks prides itself on the refinement of the product and on outstanding customer service (Tintara & Respati, 2020). In turn, Second Cup combines innovation and sustainability in its business strategy to create a unique competitive advantage (Brown, 2021).

Positioning of the Competitor’s Products

Each of the competitors positions its products as affordable and quality-oriented. However, there are certain nuances as to how the three companies represent themselves in the target market. Specifically, Starbucks represents itself as an expensive yet high-quality fast-food chain (Goh et al., 2020). McDonald’s approaches the issue slightly differently, emphasizing its family-oriented nature, which allows the company to attract a specific segment of the population (“Our people,” n.d.). Unlike the two, Second Cup seeks to position itself as an expanding organization with the focus on shared expertise as the main tool for quality improvement (“The Second Cup Ltd. announces new structure and strategy,” 2019).

Advertising and Promotion Budget for the Competitor’s Product

All of the three companies in question have been striving to advance the Canadian fast-food market, having spent an impressive amount of resources on their promotion and advertising. Specifically, McDonald’s spends more than $200 billion on advertising every year (Williams, 2020). Similarly, Starbucks does not hesitate to invest a large portion of its revenue into the promotion of its product, having spent around $258.8 million on advertising worldwide (“Why do companies like McDonalds still have a marketing team, there’s a McDonalds on every street,” 2021). In its turn, Second Cup shows significantly lesser advertisement spending rates, which indicates that the company lacks the much-needed global presence (Brown, 2021).

Message and Media Strategies for the Competitor’s Product

While each of the three companies utilized a unique strategy for promoting its product to the target audience, there is a pattern in the message and media strategies utilized by Starbucks, McDonald’s, and Second Cup. Namely, all of the three organizations point to the outstanding quality of the product and the unique atmosphere that it creates. Additionally, all three organizations use social media actively to attract new customers and communicate to their target audiences effectively (Goh et al., 2020). Therefore, the use of social media and, particularly, social networks as the platform for advertising should be considered a necessity for Tim Hortons as well.

Assessment of the Competitor’s Strengths and Weaknesses

Strengths

A long-lasting presence in the global market and the focus on quality are the main advantages of Starbucks. In turn, McDonald’s has been successful in promoting its family-friendly image, which has helped it to attract not only each customer individually but also entire families. Finally, Second Cup owes its success to its advantage of providing a luxurious product.

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Weaknesses

However, there are several dents in the companies’ strategies. For instance, Second Cup has a rather poorly thought-out financial strategy, which has placed it at risk recently. However, due to the change in its brand image and strategy, Second Cup has managed to overcome the specified weakness (McNeil, 2019). In turn, McDonald’s still has the reputation of a rather unhealthy food option among Canadians, as well as the global market, in general (Ansari et al., 2019). As for Starbucks, the company’s rigid pricing strategy can be seen as its key weakness that prevents it from attracting a broad range of clients (Brown, 2021).

Buyers of the Product

McDonald’s buyers are represented by an exceptionally broad demographic, ranging from middle-class families to office workers. Compared to McDonald’s clientele, Starbucks’ buyers include middle- to upper-class citizens due to the higher product quality and, therefore, higher prices. Similarly, Second Cup targets lower-middle-class and middle-class Canadians as its potential audience.

Demographic Factors

Attempting to embrace as large a range of customers as possible, McDonald’s appeals to customers of all ages, as well as both male and female buyers. Starbucks, on the other hand, with coffee being its key product, appears to cater to an audience of 20-50. Likewise, Second Cup seeks to attract people of the specified age.

Geographic Factors

All three of the companies seek to sell their products worldwide, also embracing the entirety of Canada. With McDonald’s, Starbucks, and Second Cup outlets located in every Canadian city, the organizations have managed to reach out to a wide range of people across Canada.

Psychographic Factors

Another important characteristic that defines customers’ attitudes to the companies’ products, the psychographic specifics of their buying behaviors deserve a mentioning. While McDonald’s emphasizes the role of family values in its promotion, thus, creating the environment for parents and children, Starbucks introduces a more sophisticated and intellectual atmosphere, attracting students and office workers. As for Second Cup, the company seeks to cater both to millennials and baby boomers, which makes the psychographic approach of the company rather blurred.

Behavioral Factors

Among the behavioral factors that inform buyers’ decision to purchase each company’s products, one must mention the combination of quantity, quality, and price as the key deciding points for the buyers of Starbucks’, McDonald’s, and Second Cup’s products (Brown, 2021). Although the fear of obesity might avert some of the potential customers from McDonald’s, the general attitude toward the negative effects of McDonald’s fast food seems to be mostly indifferent (Ansari et al., 2019). The same can be said about Starbucks’ and Second Cups’ coffee services, which may cause health issues in the long term.

Buying Behavior and Problem Solving

When selecting each of the three company’s products, customers seem to be driven by the limited problem-solving approach. Specifically, most customers of each company are typically aware of their needs and the goals that they pursue when purchasing McDonald’s, Starbucks’, or Second Cup’s food and drinks. Specifically, buyers look for affordable and tasty food and drinks that they can have during a lunch break at work or at school. Moreover, having typically already tried the product before, they seek the same experience and, thus, do not need to apply extended problem-solving to do extended research when selecting the product.

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Product and Brand Involvement

Given the fact that limited problem-solving can be observed in customers buying Starbucks’ coffee. McDonald’s fast food or Second Cup’s products, their brand involvement can be characterized as low. Although the specified criterion does not apply to new customers, it is typically observed in most of the companies’ clients. Introducing new products would help increase brand involvement to an extent, which Tim Hortons’ should consider in order to build a competitive advantage.

Conclusion

Once Tim Hortons introduces a strategy geared toward conquering the top-tier market segment, targeting premium-level customers, it will be able to level the playing field in the global context and compete with corporate giants such as McDonald’s and Burger King. Therefore, the organization will need to alter its current approach toward STP, marketing, and branding, as well as its production process. Specifically, by introducing premium products and services, Tim Hortons will be able to integrate into the global fast-food market organically, operating on the same level as its key rivals.

References

Ansari, A. A., Ameer, M. W., & Tabbassum, L. (2019). Strategies of green marketing as tool of competitive advantage. Pakistan Journal of Humanities and Social Sciences, 7(2), 257-265.

Brown, N. (2021). Aegis sells Canadian coffee giant Second Cup to Foodtastic for US$11 million. Daily Coffee News. Web.

Goh, S. Y., Kee, D. M. H., Ooi, Q. E., Boo, J. J., Chen, P. Y., Alosaimi, A., & Ghansal, M. (2020). Organizational culture at Starbucks. Journal of the Community Development in Asia (JCDA), 3(2), 28-34.

McDonald’s Canada brings the heat north of the border with the introduction of Spicy Chicken McNuggets® Français. (2021). Web.

McNeil, S. (2019). New name, new strategy as Second Cup looks beyond its coffee roots with Aegis re-brand. Bloomberg. Web.

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Our people. (n.d.). Web.

Starbucks announces next phase of store transformation in Canada. (2021). Web.

The Second Cup Ltd. announces new structure and strategy. (2019). Web.

Tintara, I. D. G. W., & Respati, N. N. (2020). The effect of product differentiation, service differentiation, and image differentiation on competitive advantage. American Journal of Humanities and Social Sciences Research, 4, 316-321.

Toneguzzi, M. (2021). Second Cup Expansion to see nearly 100 new locations open over 36 months after Foodtastic acquisition. Web.

Why do companies like McDonalds still have a marketing team, there’s a McDonalds on every street. (2021). Web.

Williams, R. (2020). McDonald’s boosts marketing budget $200M to drive recovery. Marketing Drive. Web.

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