When two companies sell similar items at a similar price with a similar level of quality, how does one all of a sudden seem SO much better? The difference is a winning marketing plan.
Let’s take our dear friend coffee and run with that example. In the bargain coffee segment we have two big Winnipeg competitors: Tim Hortons and Robin’s Donuts. They both serve coffee, donuts and light meals. They’re both cheap, fast and both companies are in their 30s. Yet, due to strategic planning, they have very different reputations in the city.
One of these two companies has become a Canadian cultural icon… the other is Robin’s Donuts. So what did Tim’s do that was so special?
1. They dedicated themselves to consistent, focused marketing
For a large entity (and often small ones) to do this, they need consensus on the brand which starts with the company’s mission, vision and values. After all, no one person can approve every aspect of everything. Tim Hortons has a clear, consistent brand message and they hammer it home often. Their main thought process focuses on what customers care about and what will make them want to visit the store more often. Robin’s appears to be focused on minimizing costs, which philosophically takes away from the spirit of caring about the brand.
2. They continuously evolve to attract new customers
Tim Hortons clearly keeps their customers in mind with every product, location and renovation. They have consistently invested in their brand image and the look and feel of their stores… and it seems to have worked. Walk into any Tim Hortons and you will see families, teenagers and retirees in line. Robin’s quite obviously did not invest in staying current. Their signage appears to date back to the 1970s and their logo and decorations appear to be from that same time period as well. Although this may elicit feelings of nostalgia from older audiences, they do not appear to draw in a significant younger demographic.
3. They are market leaders in innovation
Tim Hortons takes over the city each year when they unleash their ever-popular “Roll up the Rim to Win” promotion. You can’t take two steps Downtown without seeing one of their signature red and yellow cups. Robin’s has followed suit with their “Sip to Win” promotion which is essentially the same thing.
Being an innovator creates value. Being an imitator does the opposite.
Take for example their two websites (click images below):
The two websites look VERY similar. Without knowing who launched which site first, who do you think is the innovator and who is the imitator? Truthfully, I have no idea. What I do know is that based on Tim’s track record of innovation I’ve been programmed to assume that they led the way and Robin’s followed.
They have positioned themselves as leaders and that is a great way to create value.
4. They worked hard to become a true Canadian brand
Coffee and donuts aren't historically Canadian items (they’re no syrup and poutine), but Tim Hortons has made them Canadian. From Timbits hockey to the Tim Hortons Brier curling tournament to local community sponsorships, Tim's has become a true Canadian icon. They've also helped build this image through advertising as well, especially through a large number of TV spots. From families gathering in the morning hours at an arena to friends road tripping to the lake, Tim’s has associated itself with good ol’ fashioned Canadiana. When two products are essentially the same, we gravitate to the one that makes us feel an emotional bond - this has become Tim’s advantage.
As you explore the differences between these two long-time competitors, it becomes clear that Winnipeg’s budget coffee wars are more of a truce than a battle. Tim Hortons has grown exponentially over the past decade and Robin’s simply can’t keep up. Luckily for them though, people will always be sleepy and a great high-traffic location can keep many Robin’s going for years to come. This, however, is not a formula for growth but a formula for slow degradation.
Comment one: A Great Footnote to the Article
When I moved to Winnipeg in 1999, I noticed how under-represented Tim Hortons was here.
There were 11 Tim Hortons in Winnipeg and 44 Robin's Donuts.
Robin's had huge advantage at that time as they had nailed down a lot of the prime real estate locations. But - as you pointed out - their stores became tired and old.
One key fact FYI: in 2000 Tim's Franchisee agreements were for 10 years. Corporate owns the store and property. The franchise fee pays for the depreciating assets (chairs, equipment, etc.) Every 10 years they pay the fee again and the stores are remodelled so a Tim's interior will be updated every 10 years.
One problem from a franchisee perspective was you cannot really build equity. If the franchise cost $200,000 (real number in 2000) - it depreciated by 10% each year. If you wanted out after 5 years, you could only sell the franchise back to the franchisor - and the price would be 50% of $200K.
The range that a franchisee could pull out of a store - ranged from $60K a year for a store doing $1 million in sales to $400K or more for a store doing $4 Million or more - however the sell back value was the same for both stores.
That was the agreement details 12 years ago - some early franchisees had different and much more lucrative sell back agreements.
Comment 2: We Agree to Agree
Good article on Tim's vs Robin's. I've often thought about this subject (sad, I know)... Robin's really [messed] up. They used to be THE place for coffee and donuts in this city! Then it seemed around 2000 Tim's blew them out of the water overnight. I still say the donuts are better than Tim's (which have gotten noticeably smaller and [worse] in recent years), and the coffee is as good (ie. drinkable, but hardly Starbucks or Second Cup quality), but the restaurants are dumps with a very high scumbag ratio. Who wants to even set foot in there?
Comment 3: A West Coast Perspective
Interesting article on coffee. By the way, I haven't seen a single Tim's in Vancouver since I've been here… weird!