This article states that Tim Hortons might need to higher the price of coffee due to the price hike of beans. This would definitely have a negative impact on the company and eventually lead to a decrease in profits. I found this article interesting because Tim Hortons is a local company that has a strong customer loyalty among Canada and I personally use it very often. I like Tim Hortons better than Starbucks and other coffee shops because they offer products that are comparatively affordable and inexpensive for its quality. I believe many people feel the same way as me. Tim Hortons currently uses cost leadership strategy (low cost producer in an industry) to gain its profitability and attractiveness, however, this might change if the price of coffee gets higher. I believe that this price hike would be a real pain for them as it would make their products less attractive to customers, hence less customers buy their products. In order for them to keep customers and profitability, I believe that changing their strategy from cost leadership to differentiation would be the best as it is now hard to keep the products low cost. If they have products that are different from other competitors which customers are willing to pay more for, this price hike would not be such a big deal. I think Iced Capp is a great example as no other companies have the similar products and customers like it not because of its price but its uniqueness. They should offer more products like Iced Capp in order to differentiate from others and keep customers despite the price hike. From this article, I found that in some inevitable situations, companies would have to reconsider their business strategy and shift it if necessary.

Article URL: http://www.cbc.ca/news/business/tim-hortons-exec-hints-coffee-price-hike-may-be-needed-1.2824752