Starbucks vs Tim Hortons
A Comparison of Starbucks and Tim Hortons Starbucks and Tim Horton’s are two companies that specialize in the food and coffee service industries. Information about each company, a comparison of how each markets their brand and their differing distribution methods will be provided. Starbucks is a “premier roaster, marketer and retailer of specialty coffee” (Marketline 2012).
This company is globally recognized because of their vast amount of stores, consisting of more than 17,000 retail stores in over 55 countries.
Most retail stores are in highly populated areas, like “downtown and suburban centers, office buildings, university campuses and in select rural and off-highway locations” (Marketline 2012). Starbucks sells other products in addition to coffee, like teas and fresh food items. It also “licenses its trademarks through … grocery stores and national food service accounts” (Marketline 2012). Some of the brands, besides Starbucks, are Tazo Tea, Seattle’s Best Coffee and Starbucks VIA Ready Brew.
Products for sale in Starbucks stores include Italian-style espresso beverages, cold and iced shaken drinks, and both breakfast and lunch items such as pastries, salads and sandwiches. Starbucks also sells warm food items, coffee equipment provides free wireless internet within its stores. Tim Hortons is like Starbucks in the sense that they provide similar products like “premium coffee, flavored cappuccinos, specialty teas, home-style soups, fresh sandwiches, wraps, hot breakfast sandwiches and fresh baked goods” (Marketline 2012). Tim Hortons has 3,750 restaurants in Canada and the United States.
Most of these (3,148) are in Canada. “It also offers home-brew coffee through various lines of distribution in Canada and the US, including certain grocery stores” (Marketline 2012). The way in which both Starbucks and Tim Hortons distributes their products is through the various licensing channels. For example, Starbucks directly advertises and sells its products in grocery and warehouse club stores in Canada, the U. K. and countries in Europe. This channel is also known as the CPG Channel, which represents the four business segments: the U. S. , international, global consumer products group and other (Marketline 2012).
Many licensees also have license agreements with Starbucks where Starbucks sells its ingredients to make these products that are sold in retail stores. Regarding Starbucks, some of these licensing agreements are with North American Coffee Partnership (joint venture with Pepsi-Cola Company), Arla, Suntory, and Dong Suh Foods. With these license agreements, Starbucks is able to have these other companies “manufacture and market ready-to-drink beverages” like the Frappuccino and Doubleshot espresso drinks as well as manufacture, market and distribute Starbucks chilled cup coffee beverages in Europe, Japan and South Korea.
Super-premium Tazo Tea and ice cream products in the U. S. with Unilever is another example of how the manufacturing and distribution works with Starbucks. Most of these products discussed are sold to foodservice companies that serve the following industries: businesses, education, healthcare, office coffee distributors, hotels, restaurants, and airlines, among many more. National accounts also receive Starbucks (Seattle’s Best Coffee brand), such as SYSCO Corporation, US Foodservice and others (Marketline 2012).
Like Starbucks, Tim Hortons uses warehouses for distribution efforts as well. They also market their goods in restaurants and also have self-serve kiosks that consist of pastries and both hot and cold beverages. What differs from Starbucks is the distribution of paper and dry goods in the “Canada-based restaurants” as well as the frozen baked goods that are delivered to Ontario-based restaurants. Coffee-roasting plants in areas like Rochester, New York and Hamilton, Ontario are also used as third party distributors, which differs from Starbucks’ methods (Marketline 2012).
Tim Hortons doesn’t have as many joint ventures as Starbucks, but still also shares that distribution method, as Tim Hortons operates the Maidstone Bakeries facilitiy, which is a 50-50 joint venture with a subsidiary of IAWS and a subsidiary of Starbucks (Marketline 2012). In comparing both Starbucks and Tim Hortons regarding distribution, Starbucks definitely has more of a wide range of distributors and concentrates mainly on coffee and fresh food distribution. Tim Hortons concentrates on their beverages as well as bread, dry foods and pastries distribution as well.
So in this sense, they differ a bit in what they distribute and how, as Starbucks uses a lot of licenses and partnerships while Tim Hortons relies on third party distributors and warehouses. Marketing is another key aspect that both Starbucks and Tim Hortons do differently for their company. Starbucks has intensely used technology applications such as for the iphone, in which a customer can use their mobile phone to make their purchases and it is also connected to the Loyalty Card that Starbucks has (Baker 2012). Starbucks also uses Facebook and online shopping to market their products.
For example, in regards to social media, that area is part of the Marketing team in the UK and Ireland. They include customer care and public relations people, as well. Ian Cranna, Vice President for Marketing, stated that Starbucks believes “that customers want genuine and authentic interaction with the brands they choose to engage in online” (Lifting the lid on social… 2012). Starbucks hosted a “Frappuccino Happy Hour” and Cranna also admitted “most of the best ideas come from their customers” and Facebook is a great way to stay connected. Lifting the lid on social… 2012). Also, regarding the online shopping aspects, the Verismo, recently released in September, is Starbucks’ first home coffee machine and can be bought on Starbucksstore. co. uk. This is “the first time the chain has ventured into e-commerce” (Baker 2012). According to Androich and Laird, a managing director, Kris Engskov, stated, “”Up until today making a Starbucks Latte at home was just not possible. Now customers who have been asking for more convenient ways to enjoy Starbucks need look no further” (2012).
Starbucks is aiming to also provide self-serve “Go machines. ” Its aim is to provide “the quality of Starbucks” anywhere (Baker 2012). Tim Horton also uses technology like social media to attract customers and advertise, just as Starbucks does. Tim Hortons did a Facebook campaign with the “Rolling up the Rim” promotion, which also included television, radio and both outdoor and in-store promotions. Those who liked the Facebook page could download a free ringtone of the “Roll Up” ringtone as well as create profile pictures with the theme.
Free coffee for a year and gift cards were available to win. This attracted thousands of “likes” on Facebook and really promoted the Tim Hortons name (Androich and Laird 2012). However, what differs from Starbucks is that Tiim Hortons is especially associated with Canada life, and the few regions it inhabits in the northern United States area, while Starbucks is more of an internationally recognized brand because of its wide spread stores. According to Chris Koentges, a writer in Vancouver, Tim Hortons attracts Canadians.
In his article, “Why we are Tim Hortons and Tim Hortons is us! ” was a headline on Canada. com (Koentges 2012). Overall, Tim Hortons and Starbucks differ in their marketing by who they market to – as Tim Hortons is mainly in Canada and Starbucks, although predominantly in the United States, is also all over the world. However, they do market their brands in similar fashions on Facebook or other social media channels and providing chances to “win” certain prized items. References Androich, A. & Laird, K. (2012).
Facebook done right. Marketing Magazine, 117(3), 44-47. Retrieved from EBSO Host on November 11, 2012. Baker, R. (2012). Starbucks launches new caffeine fruit drink. Marketing week (Online Edition), 11. Retrieved from American Psychological Association on November 11, 2012. Koentges, C. (2011). The Pandora’s Box of the new Tim Hortons’. Marketing Magazine, 116 (18), 21. Retrieved from the American Psychological Association on November 11, 2012. Lifting the lid on the social brands. (cover story). (2012).
Marketing(00253650), 3-5. Retrieved from the American Psychological Association on November 11, 2012. Starbucks Corporation. (n. d). Retrieved from: <http://web. ebscohost. com/bsi/pdfviewer/pdfviewer? sid=0b16a9d4-19ac-47a0-8263- 6385a5496666%40sessionmgr10&vid=8&hid=8> on November 11, 2012. Tim Hortons Inc. (n. d). Retrieved from <http://web. ebscohost. com/bsi/pdfviewer/pdfviewer? sid=0b16a9d4-19ac-47a0-8263- 6385a5496666%40sessionmgr10&vid=7&hid=8> on November 11, 2012.