International Marketing Report: Tim Hortons

BUSI 1005
Fanshawe College
Professor Woodward

November 24, 2014

Andrew Deelstra
Dylan Galbraith
Farzaneh Jahangiri
Firas Hmidan Simsam
Julis Kukawka
Kyle Gallagher

TABLE OF CONTENTS

REASON FOR CHOSING MEXICO..3

LANGUAGE.3-4
MARKET ENTRY STRATEGY4
TARGET MARKET4-5
MARKETING PLAN.5-6
COMPETITION.6-7
SWOT ANALYSIS7-9
BUSINESS PLAN.9-10
COSTS.10
LABOUR LAWS..10-11
CONCLUSION......12
REFERENCES..12-13

REASON FOR CHOSING MEXICO

For our new Tim Hortons, we decided to open a restaurant in Mexico.
The reason we chose Mexico was because Mexico is a large tourist
destination. By opening a Tims in Mexico, we can bring some familiarity to
the tourists. So many people have an actual need for Tim Hortons coffee
every morning, and this can be the solution that they need.
LANGUAGE
In Mexico, the most common language spoken is Spanish. Just over
80% of the people living there speak this language. We will want our
employees to be able to communicate in Spanish with the customers but we
would also want them able to speak English for the tourists. Since this
business is Canadian based, it would be efficient and effective for the
employees to be able to communicate in English, so they are able to
communicate effectively with upper management and also visitors from
other countries coming to the Tim Hortons. English is a language common
around many countries around the world, which is why it would be beneficial
for the employees to be bilingual with Spanish and English. We will base our
environment around the Mexican culture, and traditions. All signs and
billboards that are written will be in Spanish with English subtitles. The
Mexican culture is big on family, and having large family gatherings. We will
offer an environment that is very welcoming for large families such as

extended tables and separate areas just designated for large families. Our
specials and deals will also be based with the trends going around in Mexico
such as festivals, ect. Mexicans are very keen towards their festive music.
We will have that playing giving the Tim Hortons the authentic Mexican
experience.
MARKET ENTRY STRATEGY
Our entry strategy is to team up with a leading resort in Cozumel,
Mexico. Cozumel is one of Mexicos leading tourist destinations, so it will
have a large customer base at all times. By doing so, we can bring our
product more directly to our initial main target market, the tourists. When a
tourist wakes up in the morning and is wanting some coffee, they dont want
to go get some stale coffee from some buffet. They also dont want to go
outside of the resort, just for their morning coffee, especially when they
dont know where to go and probably dont have their own vehicle to do so.
Instead they can come to our shop and order a fresh coffee, made just the
way they like.
TARGET MARKET
Our Customers:

Initially, our target will be the tourists on the resorts

24 Million tourists travelled to Mexico last year

Of that 24 million, 15%(1.6million) were Canadian

65% of Canadians drink coffee

Of that 65%, 81% drink it everyday

The rest of the Mexican population is our secondary target

Our service targets people of all ages

Majority of the population in Mexico speak Spanish

13% of all Mexicans speak English as a second language

The average consumption of coffee per person in Mexico is 0.7kg

annually

Although significantly lower than Canadas consumption per

capita(6.5kg), Mexico has a population almost 4 times larger than
Canada and still consumes 130,000 metric tons of coffee annually
which is 62% of what Canada consumes

MARKETING PLAN
Placement:
Presidente Inter-Continental Cozumel Resort & Spa is the top for its
resorts; has nightlife, shopping and activities for tourists. It also has
beautiful beaches since 2009 and 2010. Despite that some may avoid it
because of its party reputation and spring break type revelry, families will
also be able to find other options and have a great time! Also very close to
the airport and the main city.

Price:
To start, $1 Canadian dollar is about 12.12 pesos. Coffee prices
average from 5 peso (from the local coffee shop) up to 40 peso (from
Starbucks coffee). Selling coffee at the same price rate as Canada, a cup of
coffee would be around 17 peso to 21 peso.
Product:
All the products that Tim Hortons in Canada contains are going to be
the same products sold in Cozumel, Mexico except we are going to add
locally grown coffee, just so locals can relate rather than neglect. (Bias
individuals) And add more refreshing, cool drinks.
Promotion:
Since we are opening a branch in a resort, promoting Tim Hortons
would go through the resorts site. So when tourists and travelers check out
the resort online, they would be able to see the location of Tim Hortons
within the resort.
COMPETITION
The number one competition for us would be Starbucks Coffee,
because they already have branches located in Cozumel, Mexico. Then along
comes local coffee shops. Without a doubt, Tim Hortons coffee has its
unique quality, so having to compete against local coffee shops should not
be a major competition. As for competing against Starbucks, both Starbucks

and Tim Hortons are equal in quality. Our advantage though, is our prices,
because Tim Hortons products are cheaper than Starbucks. This puts Tim
Hortons on a good level in competing against Starbucks and other coffee
shops.
SWOT ANALYSIS
The focus of this SWOT Analysis for Tim Hortons is its strengths,
weaknesses, opportunities and threats first on a Canadian/American scale
but also an enhanced focus on the strengths, weaknesses, opportunities and
threats in Mexico.
Strengths:
-

It has approximately 5,300 restaurants in North America (4,500 in

Canada)

With over 100,000 employees it is Canadas largest fast food employer

Has a great brand image in Canada

Holds the majority of Canadas coffee market

Holds the majority of Canadas baked goods market

Named Best Managed Brand twice by Canadian Business Magazine

With the recent purchased of the business by Burger King, the

company is the third largest fast food operation in the world

Great brand image can extend to Canadian tourists in Mexico

NAFTA includes Mexico

Weaknesses:
-

Does not many healthy alternatives or cater to health conscious

consumer

Losing price power in the coffee and baked goods market

Does not have experience in hot climates

Does not have experience working with resorts

Does not have items on current menu that would have much appeal to
Mexican market

Very little experience in general when it comes to foreign markets

Opportunities:
-

With the new owner being Burger King it can offer more meals

With more Canadians working abroad there is more opportunities to

grow globally

Booming economy in Western Canada (Oil sands) which has a cold

climate that give more opportunities for expansion in Western Canada

Many Canadians travel to Mexico for vacation and might want to see
familiar and safe products while in Mexico

Working with resorts allows for safe market penetration

If initial market penetration in Mexican resorts goes well the company

can open shops in Mexican cities

Option to offer more cold drinks in Mexico that if successful could

become wanted or popular in Canada

Threats:
-

McDonalds is trying to appeal more to coffee drinkers with McCafe

More consumers are become health conscious

Increased competition in general

Increased cost of raw materials (especially coffee)

Local coffee shops in Mexico

Warmer climate in Mexico might not appeal to Tims coffee and baked
goods

BUSINESS PLAN
Opening a Tim Hortons in Mexico is venturing into new ground that
Tim Horton's has not seen before. For this reason we plan to enter the
market very cautiously. The projected short term plan is to partner with one
major hotel resort in Mexico and open a shop within the resort, targeting
Canadian and American tourist that miss the taste at home and those who
cannot live without their morning cup of coffee. The Tim Horton's in Mexico
will mirror shops in Canada and the US to give the consumer a feel of home.
Along with the traditional set-up there will be a Mexican theme to the shops,
for example, using common Mexican sayings and offering Mexican influenced
items on the menu.

After the first year in Mexico our intermediate plan is to look at the
performance and profitability of the shop in the resort. If it is an absolute
bomb and does not meet the required goals we have set we will have to
ditch the Mexico experiment. But, if the shop does well and there appears to
be good support from Canadian and American tourist and also local support
we plan over a course of three to five years to expand to at least one port
city (Cozumel) to appeal to those coming off cruises and to locals and also
expand to more hotel resorts.
Our long term goal is to open shops in Mexican cities and appeal to
local Mexicans and not to only tourist.
COSTS
Implementation of NAFTA allows us to export all necessities to Mexico
without tariffs, quotas, or any other restrictions
Corporate Tax Rate

Sales Tax Rate

Mexico

30%

16%

Canada

40%

5% GST 0-10% PST

United States

26.5%

0-11.725%

LABOUR LAWS
Just like Canada, Mexico has their own separate labour laws regarding
employment in the economy. However, Mexico is not as developed as

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Canada, which makes the employment and conditions poor. Depending on

the region we chose to establish the Tim Hortons in Mexico, it will
untimately determine the minimum wage in that area. Mexico has a different
minimum wage amount for each specific geographical area. The general
minimum wage amount is 86.00 pesos/day which is roughly $7.00 Canadian.
In Cozumel, the minimum wage is 45.81 pesos which is roughly around
$3.70 Canadian. Workers are able to work a maximum of 6 days a week,
with the 7th day off. They are able to work a maximum of 8 hours a day,
with no more then 9 hours a week for overtime. The labour laws are similiar
to Canadas regarding the work week, however instead of being paid hourly,
Mexican employees are paid by the day. Finding employment in Mexico is
very rare, and it is often difficult to find openings for work. This gives us the
impression finding employees to work for Tim Hortons here in Cozumel,
Mexico will be no problem. We will offer the minimum amount of around
45.81 to 86.00 pesos/day, and will be flexible with the employees, on what
days they are available to work. With the availabilities of all the employees,
we will put together the working schedule to cover the hours of operation for
the Tim Hortons.

CONCLUSION

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In conclusion, we believe that opening a Tim Hortons in Mexico would

be a very profitable decision. By initially opening up in a resort, we can
establish a demand for our product. Once that demand is there, we can open
up more stores spreading throughout Cozumel, and then the rest of Mexico,
bringing our product to more people.
REFERENCES
4Ps Competition
http://diary.thepurplepassport.com/global/restaurants-global-cities/the-bucks-stop-here-starbucksprice-index-edition-3
http://www.travelandleisure.com/travel-guide/cancun/hotels/fiesta-americana-grand-coral-beach
http://www.costalegre.ca/money2.htm
https://www.google.ca/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF8#q=canadian%20dollar%20to%20mexican%20peso%20chart
http://intercontinentalcozumel.com/

SWOT Business Plan

http://www.mbaskool.com/brandguide/food-and-beverages/10316-tim-hortons.html
http://www.timhortons.com/ca/en/corporate/investing.php
http://en.wikipedia.org/wiki/Tim_Hortons#Future_expansion_plans
http://2200group.wikispaces.com/3+SWOT+Analysis
http://www.timhortons.com/ca/en/index.php

Target Market Cost Consideration

http://en.wikipedia.org/wiki/Demographics_of_Mexico
http://www.export.gov/mexico/static/CCGFINAL2014_Latest_eg_mx_076936.pdf
http://embamex.sre.gob.mx/canada_eng/index.php/press-releases/566-march-2014/5407-in-2013-forthe-ninth-consecutive-year-a-record-number-of-canadian-tourists-visited-mexico
http://chartsbin.com/view/581

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http://www.timhortons.com/ca/en/corporate/canadians-heart-coffee-guess-how-much.php
http://www.coffeeassoc.com/coffeeincanada.htm
http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-ratestable.aspx

Labour Laws Lanugages

http://academics.utep.edu/LinkClick.aspx?link=mexico_labor_law.pdf&tabid=67019&mid=153056
http://www.mexicolaw.com/LawInfo11.htm
http://www.livescience.com/38647-mexican-culture.html

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