Gloria Jean Coffee

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Subject Area - Marketing Gloria Jean Coffee

The following report analyses the coffee industry of Gloria Jeans Coffee in regard to its competitive position in the market. Gloria Jeans is a premium coffee maker that focuses on franchising their business to locals. Gloria Jeans Coffee History In 1979, Gloria Jean Kvetko founded Gloria Jeans Coffees with her first outlet opened in Chicago, USA, selling coffee and gifts. 1n 1996, Jireh International Pty Ltd, founded by Nabi Saleh and Peter Irvine, purchased the rights to franchise Gloria Jeans Coffees in Australia. Together, they opened their first Gloria Jeans Coffee in Miranda, Sydney, and then in Eastgarden, Sydney, two week later. Gloria Jeans Coffees is known for its signature range of hot and cold coffee drinks including traditional espresso and ice blends; coffee beans, specialty teas, pastries and coffee accessories. (Wikipedia - The Free Encyclopedia 2008) Gloria Jeans Coffee then moved to franchising in 1998, and opened 185 stores within 6 years where all are locally owned and operated by more than 100 franchisees. By 2003, Gloria Jeans Coffee has established stores in every state of Australia. Jireh International Pty Ltd in 2005 purchased the rights to the Gloria Jeans Coffees brand for all international countries except USA and Puerto Rico, to further expand the brand name. They won numerous awards such as Australian Franchisor of the Year (2005), Franchise Export Award of the Year (2006), Food Franchisor of the Year 2007 and the Western Sydney Exporter Award (2007). (Wikipedia - The Free Encyclopedia 2008) Recently, Gloria Jeans Coffee Australia is being accused by gay societies by supporting Mercy Ministry, an organization that supports anti-gay where 10 cents from every Gloria Jeans cappuccino was donated to the charity Mercy Ministries. This causes concern among gay societies where they feel threatened by the act. (Crikey - Borders passes the hat for antigay, pro-life charity, 2007) Taking all this into account the main strategic issues of this report are declining trend in the coffee industry. Issues Faced By Gloria Jeans Coffee Niche/Small Target Market Gloria Jeans Coffee is currently targeting small market segment, young adults segment, which comprises people age 18 to 25 years old, compared to Starbucks, 15 to 64 years old. Besides that, Gloria Jeans mainly focuses on female customers, where half of the sales came from that particular gender.
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Customers Are More Demanding Nowadays, customers are more knowledgeable towards coffee. Besides, there is no switching cost to other competitors. They know what different types of coffee taste like and what kind of beans came from where. Thus they only drink those that they prefer and they like. Customers are price sensitive, where a slight change in price might lead to change in preferred brand due to the low switching cost. This means that if customers do not get what they want from a brand, they will have no obligations to switch to the other brand, or they might as well buy coffee beans from supermarkets and brew themselves, which is one of the reason why sales is declining. Highly Competitive Industry There are a lot of brands that selling the same product, which is coffee. Most of it is already well established. Thus it is a highly competitive industry where all are fighting for a share in the industry. The reason for many companies being in the same industry is because of a profitable market and low entry barrier. Growth in specialist coffee shops such as Hudsons Coffee and Starbucks Coffee took up a huge portion of the share in the market. Obesity It is reported that 47% of women and 63% of men are overweight in Australia (Nutrition Australia, 2000). Obesity is a hot issue in Australia now where even World Health Organization is trying to pressure food and beverage manufacturers to produce healthier food. Because of that, people became more health conscious and looks for lesser consumption on dairy products and sugar. Social and Environmental Issues The recent stir of the partnership with a charity organization, Mercy Ministry has caused sales to decline to Gloria Jeans. This is because the lesbians and gays community members in Australia are calling for a boycott of the coffee chain. Mercy Ministry is a non profit organization that supports Anti-Gay and Pro-Life. The community members felt threatened as they are indirectly funding the organization by purchasing Gloria Jeans product. Selection of Franchisee/Partners Gloria Jeans is very particular in selecting franchisees or partners. The company stands by their values, which is Our partnerships are based on integrity and trust. They only choose those that they prefer and they feel good with. This causes many opportunities that go into the drain for others that unsuccessfully applied. Gloria Jeans always keep to their vision, which is To be the most respected and loved coffee company in Australia General Environment of the Coffee Industry It is important for an organization to investigate the market they plan to enter as well as the external environments to guarantee that they will be ready and prepared. It is a great tool for any size organization who would like to have
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php a simple to use tool for understanding the external forces influencing their market and performance(Chenard 2008) which is crucial to ensure you remain ahead of the game and constantly aware of what is required of you and where you need to focus most attention. Technological Developments Technological developments in the coffee industry are focusing on three important aspects which is all year round harvesting, excellent quality beans and development in the management in coffee pest.(Off service to the regional coffee industry 2006). Gloria Jeans buys and roasts its own coffees controlling the process from the bean to the cup.(Gloria Jeans Coffees goes WiFi, 2003) therefore it is important for them to know every aspect of the coffee industry to ensure that the products offered by them are top standard quality products and available at all times. Other technology advancement such as what Starbucks has done is the implementation of Internet cafes to attract customers. (Martin 2005) should be taken into account. Social and Cultural Attitude Trends The degree of social and cultural influences on the coffee industry will vary from country to country. Take Australia for an example Australias strong coffee drinking culture has heavily influenced growth in specialist coffee shops, especially among the younger generation. Coffee drinking has become an integral part of the modern lifestyle in Australia and specialist coffee shops have become more than just a place for coffee.(Hofmann 2006). Hot drinks in Australia continued to grow with total volume growth of over 3%. On-trade volume sales posted stronger growth than off-trade volume sales in 2007 due to the rising number of on-trade specialist coffee shops and other cafs/ bars in Australia. The 2007 result was driven mainly by coffee, where the trend toward fresh coffee continued.(Hot Drinks n.d) The trend of coffee consumptions continues to change in both direction good and bad. The good side is people tend to have healthier lifestyles to replace alcohol noted by Mclver (n d.) recent health studies have shown that the drink can also benefit the heart, fight cancer, diabetes and Parkinsons and it might also improve your sex life. Coffee tends to acts as a social catalyst and has moved into category of affordable luxuries. (Martin 2005). However on the other hand the problem that Gloria Jeans faces in the modern world is the rise of obesity among people around the world. It is important for Gloria Jeans to understand this, as it will directly affect them in terms of sales and consumption. The picture below shows the percentage of obesity in each country. Source taken from Miscellanea 2007 Economic Trends Economic factors are an important aspects that concern the nature and direction of the economy in which a firm operates. Since the relative affluence of various market segments will affect the consumption patterns, companies must take this into consideration when planning its strategy.(Kembell et al 2002). For example Australia has had one of the most outstanding economies of the world in recent years. As a high-growth, low-inflation, low interest rate economy, it
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php is more vibrant than ever before. There is an efficient government sector, a flexible labour market and a very competitive business sector. (Australia Today nd.). Gloria Jeans should take this as an opportunity as consumers in Australia have higher disposable income and are willing to spend more, research also suggest that coffee sales increase if the product is made more available to the consumer (Strategic Analysis n.d) Demographic In regards of knowing which country are the top consumers in coffee consumption, the table below shows the top 10 worlds coffee consumers by size. Instead of targeting country which prefers others than coffee, for instance China with tea, it is easier to target countries with high consumption of coffee. Source taken from (World Top 10 Coffee Consumer Countries n.d.) Political and Legal Environment The Political / Legal / Regulatory Environment can be simply described as the laws and regulations that business has to follow in order to make sure the business owners do not get arrested, or have the business fined for noncompliance of some regulation.(The Political / Legal / Regulatory Environment 2006) In Australia there are many rules and regulations that were created for the coffee industry, such as the Fair Trade Certificate and the Rainforest Alliance. Where the Fair Trade certification is an alternative marketing system designed to give the disadvantaged farmers guaranteed prices for their product while The Rainforest alliance focuses on how farms are managed rather than how products are traded. (Sustainable Coffee nd.). In order for Gloria Jeans to go global, Gloria Jeans management team should formulate their strategy based on the different legal situations in different countries where Gloria Jeans buys and sells their coffee such as the tax policies, tariffs and trade restriction. In conclusion, it is well understood that general environment may not be ignored(Flanagan and Norman 1993, 55). Since in most cases, company or individual do not have the ability to control and the shift in general environments may change anytime drastically or slowly, some to our advantage or some to our disadvantage. Therefore attention must be given to evaluate each of the environments to enable them to analyze and be aware of any changes to minimize risk. However because it is unclear how the general environment impacts Gloria Jeans further analysis have to be done to assist Gloria Jeans in understanding the industry and the market. External Environment Analysis on Gloria Jeans In The Coffee Industry Porters five forces analysis The purpose of conducting Porters five forces analysis is to analyze every single aspect of the industry from the intensity of rivalry to the attractiveness of an industry and to identify the most common threats faced by the firms in this industry. (Recklies 2007) Some of the major threats in the external environment for the business operations of Gloria Jeans are as follows:
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php Threats Of New Entrants The threat of new entrants for the coffee industry in Australia is considered high; the reason for this is because Australias strong coffee drinking culture has heavily influenced growth in specialist coffee shops, especially among the younger generation. (Hofman 2006) this shows an opportunity for people to venture into this business. Other things to be noticed is the barrier of entry to set up a coffee shop in Australia is low, noted by (Eselius et al. 1997), it takes little more than four small walls or even a kiosk to deliver high quality coffee to the thirsty masses. In accordance to this point of view Grant (1998) suggests that a company can erect barriers to entry by creating and exploiting economies of scale, by product differentiation, contrived deterrence or using government policy to deter entry.(Martin 2005) http://www.gotessays.com/essays/3544/index.php Bargaining Power of Buyers Rather then going consumers going all the way to Gloria Jeanss for a cup of drink especially coffee, they prefer to purchase different brands of coffee from the nearest stores or supermarket. Buyers of coffee show a variety of price sensitivities. At the low price end, coffee is often considered a commodity and, accordingly, demonstrates price sensitivity.(Eselius et al. 1997). Take for example Starbucks coffee case in 1994 freeze in Latin America raised the prices of Arabica beans worldwide, which in turn puts pressure on the prices of Starbucks coffee beverages. Consumers did not balk at the higher prices. The Starbucks brand stands for quality, and consumers have shown great willingness to pay for that quality.(Eselius et al. 1997). Other threats to Gloria Jeans are that the customers of Gloria Jeans have low or no switching cost in switching to other competitors for example to Coffee Club and the ability of its customers to brew their own coffee. Therefore it is important for Gloria Jeans to build its brand around quality and pricing to increase its customer base and customer loyalty. The Australian coffee market is very competitive but consumers are brand-loyal, and becoming more sophisticated.(Australian Coffee Stats 2006) Bargaining Power of Suppliers Coffee is the world second largest traded product after petroleum (Kembell et al. 2002). The supply of coffee is determined by weather, demand and sometimes quality of the beans. It is said that the demand for coffee in Australia has increased by 60% over the past 10 years, with the higher quality `Roast and Ground market now comprising 20% of total imports. Demand for `Roast and Ground coffee increased by 6.3% in 1996 compared to 1.4% for instant coffee.(Drinman and Peasley 1997) and this has caused the major players in the coffee industry have seen profits decline because of over-crowding of the market (Kembell et al. 2002) thus it will give the suppliers higher bargaining power. Other factors that affect the bargaining power of suppliers are the condition of the weather and the health of coffee trees for example during winter seasons. (Kembell et al. 2002) Threat of Substitute Products and Services The threat of substitute products can be considered average for Gloria Jeans in the coffee industry. Other beverage industries can satisfy the customers need for a drink, and other food industries can satisfy the customers need to eat.(Kembell et al. 2002). However, though it may be said there is no substitute for a good cup of coffee or coffee beans,
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php coffee bars are beginning to face significant substitution threat in the form of alternative distribution outlets.(Eselius et al. 1997). Intensity of Rivalry among Competitors The more concentrated an industry is, the fewer the competitors are, and the more likely that competitors will recognize their mutual interdependence and so restrain their rivalry.(Simeon 2006) Gloria Jeans Coffees is the largest specialty coffee retailer and the fastest growing franchise organisation in Australia.(Skinny Caramelatte the new low fat alternative 2004) However it faces very tough competition from Coffee Club, Hudson Coffee and not to mention Starbucks in this industry, the reason for this it is said that the coffee industry market growth is declining. Competitors are selling similar products, including specialty coffees as well as high quality foods. In this slowing market, competition is high.(Kembell et al. 2002). Other threats to be noted is that the major chains and many of the independent specialist coffee shop outlets that operate in Australia also engage in promoting premium varieties of coffee by educating their customers about the different coffees that are available. This strategy has led to increased sophistication among coffee drinkers and accounted for the disproportionate rise in the value sales of specialist coffee shops, compared to the number of transactions in 2004.(Hofmann 2006) In summary it can be said that for Gloria Jeans, the coffee industry is still considered an attractive market even though the five forces analysis shows medium to high threats. Shown in the graph below, the threat of new entrants, intensity of rivalry and bargaining power of suppliers and buyers is high. However the threat of substitute product is considered moderate to low as said above there are no direct substitute to a cup of coffee or coffee beans. Bargaining Power of Buyers - (HIGH) Threats Of New Entrants - (HIGH) Bargaining Power of Suppliers - (HIGH) Threat of Substitute Products and Services - (LOW TO MEDIUM) Intensity of Rivalry among Competitors - (HIGH) Competitive Structure of the Coffee Industry Competitive structure for any industry os very crucial to the business. With the structure it is to help with a better picture of the industry overall as well as identifying the competitors in the market. Competitors can come in both forms either direct or indirect. Based on the reseach that have been carried out, for Gloria Jeans there are three major competitors within the coffee industry and also several indirect competitors. The main objective of this structure is to identify the major competitors but it is advisable to know the indirect competitor as well so that the company could achieved an overview of all the possible rivarly. Direct Competitor
The direct competitor for Gloria Jeans Coffee would be Starbucks Coffee and Hudsons Coffee. These two coffee chains are the largest coffee chain in Australia (Gee and Gee 2006). As for Starbucks Coffee it could be one of the largest chain because of the strong branding image towards their coffee. Starbucks first started its business in Australia at the year 2000. At that time it was growing slowly because all stores are company owned and none are franchised as to compare with Gloria Jeans. But Starbucks Coffee is slowly picking up by opening more stores especiallly in the malls and its more a franchised business now. For Hudsons Coffee, it a purely 100% owned and a fully operatedcompnay by Australian. Hudsons Coffee started out firstly in Mellbourne 1998. It now has over 30 stores in Australia and has begun to franchise its operation to achieve more rapid growth (Coffee the Australian Way 2006). With regard on the idea that the competitors for Gloria Jeans coffee is using the franchised method on doing business as well as the strategic way Starbucks Coffee used to classify its product uniqueness that is different from the others. This is where Gloria Jeans how to look into and tap its market share back across the countries which Starbucks had taken over. Indirect Competitor Apart from the two main competitor, Gloria Jeans Coffee is also facing with its indirect competitors such as;Dunkin Donuts Krispy Kreme McDonalds Independent Espresso Bars As for the donut stores such as Dunkin Donuts and Krispy Kreme apart from the donut they do sell beverages such as juice, coffee and tea. When customers drop buy to have the donuts at the same time they are able to have coffee at the store as well and it is not much difference than the other big establish coffee chain. National doughnut-shop chains, such as Dunkin Donuts and Krispy Kreme, may prove to be a more serious competitive threat. Dunkin Donuts has been particularly aggressive of late, appealing to the blue-collar customer with a new line of espresso drinks (Gloria Jeans Gourmet Coffee 2004). Where else for McDonalds they are also now selling coffee using the arabica beans as well for its customers there is a free re-fill of coffee during breakfast hours. Besides in some other countires such as Tokyo, Australia, United States they are advertising and selling its McCafe which is coffee. McDonalds diversify the by previosuly selling just the arabica coffee to several McCafe. The McCafe consist of latte, mocha, cappucsino, espresso, ice latte, vanila steamer, ice mocha and premium hot chocolate (McDonalds Coffee 2005). This might attract customers to actually goind to McDonalss to have coffee and the price are relativle cheaper than Gloria Jeans. In March, Consumer Reports magazine reported a taste test of basic black coffee found McDonalds stronger blend beat brew from Starbucks, Burger King Holdings Inc. and Dunkin Donuts Inc (Burritt 2007). Besides McDonalds do serve biscotti, just like Starbucks and other coffee chain.
Independent Espresso Bars are also an indirect competitor as well. One reason for this is that unlike in the United States and Asia, Australians already had decent espresso before the chains came in (Coffee the Australian Way 2006). In addition some customers would like to visit these espresso bars because they just like how the coffee is made using the traditional way rather than using the coffee machines like the rest of the coffee chain. The other major gripe that Australians have with chains is their increasing use of fully automatic and semi-automatic espresso machines rather than making espresso and steaming milk the traditional way using manual espresso machines (Coffee the Australian Way 2006). In conclusion, it crucial to develop a competitive structure to overview the most aand smallest possible outcome of competitors that could harm the coffee business. From the research in the external as well as the internal analysis, coffee industry in general is of highly competitive nature. There are more and more other companies of a smaller independent coffee stores are coming up. Gloria Jeans Resources & Capabilities Resources Understanding the organizations resources and capabilities is both important in order to succeed in the competitive environment of today and the future. This requires Gloria Jeans management team to understand the marketplace trends and their competitive implications. By having all the information and knowledge, they can plan their strategy, and a good strategy will always determine the success of an organization. Therefore, internal analysis need to be done as per to underlines their unique resources and capabilities in order to develop a competitive advantage. While the external analysis did find out what the company might do, the internal analysis will examine what the company can do (Hanson et al. 2005). Outlining Gloria Jeans resources would consist of two (2) parts; tangible resources and intangible resources. According to Hanson et al., tangible resources means the attributes that can be seen and counted, while intangible resources can neither be seen nor counted, but valued. Thus, intangible resources are hard to imitate, because they are more difficult to understand (Hanson et al. 2005). Tangible Resources Financial Sector Gloria Jeans Coffees management team manages to expand their franchises internationally and have full control over their franchisee. Based on the Diedrich Coffee Reports, total revenue for the third quarter of fiscal year 2008 is $11,322,000 compared to total revenue of $8,975,000 in the same period of the prior year. There is 26.1% or $2,347,000 gain in the overall revenue. The table below shows the revenue with respect to the components of total revenue (InterestAlert.com 2008). Revenue
Loss (-) / Gain (+) Wholesale Revenue $2,773,000 + 40.2% Franchise Revenue - $198,000 - 23.1% Retail Sales - $228,000 - 18.6% Total Revenue $2,347,000 +26.1% Source: InterestAlert.com As per year-to-year date, it is reported that total revenue increased from $25,392,000 to $31,930,000 in the same period of the prior year. The table below shows the revenue with respect to the components of total revenue. Revenue Loss (-) / Gain (+) Wholesale Revenue $7,148,000 + 36.9%
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php Franchise Revenue - $524,000 - 20.0% Retail Sales - $86,000 - 2.5% Total Revenue $6,538,000 +25.7% Source: InterestAlert.com Based on the report above it is well understood that Gloria Jeans Coffees is trying to boost up their franchise revenue and retail sales. According to Wealth Creator Magazine, Gloria Jeans annual turnover was $85 million and the company employed 3,500 Australians after eight years operating the business (Wealth Creator Magazine 2006). Joint owner of Gloria Jeans Coffees International Pty Limited, Nabi Saleh said he and his partner Peter Irvine have aggressive expansion plans for both the domestic and International operation. Internationally we are focused on emerging markets with plans to open new operations in England, China, Hong Kong, South Africa and Japan in the first year. We have our eyes on other countries in the following years and of course will be working to grow our existing franchise operations. said Mr Saleh (Gloria Jeans Archives 2004). Get help with your essay from our expert essay writers... Organisational Resources Gloria Jeans Coffees has set up an acquisition with Citymax India, which is a part of the Dubai-based global retail giant Landmark Group, to launch a chain of coffee houses across India. The managing director of Citymax India, Ravi Saxena, believes that there will be a growth opportunity in coffee industry in India, as he expect number of coffee outlets will double in the next four years. (LiveMint 2007) As a result, Gloria Jeans Coffees is able to achieve higher economies of scale and global distribution network through mergers and acquisitions. It is stated that Gloria Jeans Coffees and Citymax India have done an extensive research in the countrys market over the past six months in order to tackle the issues such as product positioning, pricing, sourcing and returns. (Sadhwani, B n.d.) Physical Resources
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php Gloria Jeans Coffees is primarily owned by Diedrich Coffee, its US based parent company. Apparently, Jireh International Pty Ltd bought over the ownership and Jireh International Pty Ltd holds the right to franchise the rights Gloria Jeans Coffees in Australia. In addition, they have bought the rights to the brand name of Gloria Jeans Coffees for all international countries, except USA and Puerto Rico. Jireh International Pty Ltd is a wholly Australian owned company. Therefore, it is much easier for them to gather source of labour. Johnson et al. have mentioned that the labour force could even be a source of competitive advantage (Johnson et al, 2004). Intangible Resources Intangible assets such as intellectual property; inventions, patents, copyrights; original business concepts; creative product; brand name recognition; goodwill; innovative concepts, ideas, techniques is part of an economy based on creativity. These factors could increase the economic value (BNET 2003). Gloria Jeans intangible resources can be categorized into three (3) parts. Human Resource Instead of having their shareholders or partners develop the appropriate skills and knowledge about the coffee business, Gloria Jeans Coffees actually provides an ongoing support for all their franchisee. (Franchising.com n.d.) Innovation Resource Gloria Jeans Coffees is one of a dedicated company that strives and have done countless effort in order to make sure that the product they sell have a huge impact on peoples daily lives. They have continuously developed their beverages to look tempting to attract customers. Besides, they have spent a large sum of money for Research & Development in order to gain competitive edge to compete with the other main competitors as well as the local coffee stores. (Franchising.com n.d.) Reputation Resource Gloria Jeans Coffees has a strong brand image (Gloria Jeans Archives 2004). The brand is built around premium quality and excellent taste. Importance of branding is that the company name must be different and unique (Fuchs, C n.d.). Gloria Jeans Coffees needs to have a good brand image in order to outshine themselves from their competitors as this plays an important role in an emerging market industry. Capabilities Capabilities represent a firms competencies, knowledge, and skills that an organization can apply to achieve success in a competitive environment. The concept is thought to be derived from the core competencies approach to corporate strategy. It is viewed as one of the main pillars of strategic management and focuses on the ability to provide products that customers value or will value in future. This involves the need to adjust and change in order to fit the changing environment and the need to stretch to exploit organizational resources in ways that are innovative, or that other organizations will find it hard to match. (Hanson et al. 2005)
Core Competencies Core competencies are strategic business capabilities that provide a company with a marketplace advantage. Core competencies are the skills, abilities, knowledge, and characteristics that help distinguish superior performance and are the roots essential of a companys or and individuals expertise. (Hanson et al. 2005) Based on the resources mentioned above, it is well understood that Gloria Jeans Coffees is capable of many things, such as having an excellent brand image, a good brand positioning, and on-going supports for their shareholders, and continuous development and training. Strength and Weaknesses (Internal Analysis) Operations Diedrich Coffee, owner of Gloria Jeans Coffees strive to develop their operations in retail business environment by using several channels. One of their distribution strategies is having a very well known third party companies that basically shares their beliefs, values, and commitment to quality. Examples of Gloria Jeans Coffees distribution channel are grocery channel licensing agreements, foreign retail outlet, franchising agreements, and direct-to-consumer market channels. Gloria Jeans Coffees also expanded their coffee business by making their coffee and coffee-related products available via mail order and the World Wide Web. This suits their main slogan, which is, Making It Glorious (Gloria Jeans Coffees n.d.). Gloria Jeans Coffees has setup a licensing agreement with Albertsons to market and distribute Gloria Jeans freshly roasted coffees in the grocery channel in Southern California region of the United States. A variety of Diedrichs finest specialty coffees are expected to be available at selected Albertsons stores (Bison 2002). Customer Service Gloria Jeans Coffees always monitor and search for a suitable business partners who would share their passion and commitment of good coffee and best customer service to join the Gloria Jeans family. Besides looking for a appropriate business owner who have the ability, skill and met the financial standard to operate a franchise, Gloria Jeans Coffees expect that their business partners to have an excellence standard in customer service. Due to the companys family spirit, they tend to take customer service as an important role and expect their partners would share these values in the area. Since Gloria Jeans Coffee houses around the world are known for providing a very friendly environment and offers a personalized service. Therefore, Ian Martin, group chief executive of Gloria Jeans Coffee franchise said that, At Gloria Jeans we dont talk about customer service because we dont have customers, we have guests. This is more than semantics - we dont see ourselves as retailers, but as a coffee house, serving guests, and you treat guests differently from customers (Franchise Business 2007). This is one of Gloria Jeans Coffees strength as it is proven that they do take their consumers seriously. Production-Operations
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php Gloria Jeans Coffees stores are typically more like a gift shop concept than a specialty coffee outlet. Stores vary in size and located in a variety of settings, including overlooking parks and gardens, the beach, and main thoroughfares. Most of the location chosen for their outlets usually is a metropolitan area which most of people usually go. They believe in the concept of higher volume, higher chances of having customers. Nabi said, Its not what I want, or what Peter Irvine (the business partner) wants, its the person paying the dollars who is keeping us all going (Wealth Creator Magazine 2006). The product mix varies between each store based on the size and location of the store. Gloria Jeans Coffees has focused on improving efficiency and increasing its gross profit margins. When they firstly operated in Australia, they were losing market share because of their wrong approach. It was a take-away concept, which is totally un-Australian. But they soon realize this matter and completely re-format the whole design in order to cater the customer wants and needs (Wealth Creator Magazine 2006). Marketing Established over 30 years ago, Gloria Jeans Coffees has become a coffee icon with over 700 stores in more than 40 countries. As a specialty coffee retailer and one of the fastest growing franchise operations in the world, they offer consumers a range of over 150 products including hot and cold espresso drinks, fresh premium coffee beans, teas, cocoas and coffee related merchandise. Gloria Jeans Coffees positions their products on quality and experience, rather than just offering coffees. A comparison of specialty drinks with its competitors reveals very minor differences. Gloria Jeans Coffees image is one of the key elements to their success. The company has realized that people dont only come for the coffee; they come for the atmosphere. People socialize, read, study, dine, or just enjoy the music while drinking their coffee. By knowing this, Diedrich Coffee try to make their stores unique in some way or another that will create a vibrant store atmosphere. Retailer Gloria Jeans Coffees has launched its first brand campaign out of its newly appointed agency Reed Miltiades Kaye. The outdoor advertising that continues to use the Gloria Jeans three-year-old tagline Escape the Daily Grind features a series of executions showing consumers savoring their coffee. One shows a picture of woman with her coffee and the line Come in, hang out. Gloria Jeans Coffees marketing manager Ian McKenzie said it was decided to focus on outdoor advertising as a way to be more visible in our communities. McKenzie said the new campaign is aimed at further strengthening the Gloria Jeans positioning around the escaping the daily grind theme (Reed Miltiades Kaye 2005). The marketers have overseen the extreme growth in Australians coffee drinking culture especially among the youth citizens (Hoffman, O 2006). Therefore, Gloria Jeans Coffees has chosen an appropriate advertising strategy to capture their target market in order to be successful in this market. Gloria Jeans Coffees concentrated on a bigger market share as they have released huge billboard ads, TV and radio advertisement campaign, which targeted the younger 1825 audiences. Gloria Jeans Coffees US is well known for its sponsorship in American sports. It also appointed Allison Shreeve who is the worlds number one formula windsurfing, as its spokesperson for Gloria Jeans Coffees in the US (Nation Master 2007). Research and Development Gloria Jeans Coffees consider research and development (R&D) as one of the main factor to be successful in the market thus they constantly urge their employees to be innovative and creative. This is evident through the continuous
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php developments of new and exciting products, being the various drink flavors and coffee related products. By introducing more and more new products and by developing new distribution channels, it coincides with Gloria Jeans Coffees goal of becoming the most loved and respected coffee company in the world. From the companys website, it is known that Gloria Jeans Coffees has recently completed the installation of their state of the art roasting and manufacturing facilities. After receiving and viewing several submissions of roasting equipment, Gloria Jeans Coffees decided on the highly regarded and respected Brambati roasting equipment together with a fully integrated and automated green coffee handling system. This would be the most sophisticated equipment ever to be used in Australia. The entire system is fully automated and completely integrated (Gloria Jeans Facility n.d.). TOWS Matrix Strengths (S) Brand recognition Brand positioning Over 700 stores owned Excellent management Continuous innovation Weaknesses (W) Not up-to-date brewing machine Less varieties than competitors Strict franchisee criteria Bad choice of partnership (associates) No customer incentives Niche target market Opportunities (O) Target High Coffee Consumption Countries Substitutes High Spending Power Culture SO Strategies Build partnership with high consumption coffee country Raising standards WO Strategies Widen target market Update current brewing machines
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php Carefully choose partners Threats (T) Obesity High Threats of New Entrants High Rivalry ST Strategies Product differentiation Product uniqueness WT Strategies Wrong choice of partnership More advertising & promotions Develop & enhance products Recommendations Product Uniqueness Gloria Jeans should opt for better coffee beans or a variety of coffee beans from around the world. Beans could be obtained from areas such as South America and Indonesia. These are the places that Starbucks venture into to obtain variety of beans that suits the consumers. By doing so, consumers will definitely have a variety of brew that they could choose from, besides, the special beans could even provide a better taste of coffee for different types of consumers. Using low fat milk, creamer and artificial sweetener could benefit those whom are worried about obesity and have obesity problem. This specially caters to them as it is less fattening and less sweet, thus it could comply with World Health Organizations agenda of providing healthier food and beverages. Product Differentiation Gloria Jeans should provide food to customers instead of only cakes and pies. This is because walk in customers would find it convenient to dine in instead of just buying coffee from the outlet. Menu such as breakfast sets and set lunch should be provided besides serving light food such as sandwiches and cakes. Raising standards Increase outlet standards Most walk in customers look for a cozy and warm place to hangout when they enter the outlet. Gloria Jeans could provide a better environment for them by using comfortable sofas and furniture, warm ambience with music and also providing handicap facilities. This will improve consumers perception towards the outlet.
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php Modern equipment such as The Clover, which is a specialized brewing machine that allows a barista to quickly deliver one freshly brewed cup of coffee at a time, would be useful. It takes quite some time for a freshly brewed cup of coffee to be served to customers with traditional equipments, thus it might lose some customers whom could not wait. Many people patronize coffee outlet is because it is a neutral place for people to talk about business and do their homework and assignment. This means that internet connection is very useful for them, including students whom usually do their assignments and homework at the outlet. Providing Wi-Fi service to them might benefit Gloria Jeans, as more people will patronize the outlets for usage of Wi-Fi, which will indirectly linked to purchasing of coffee in the outlet. Increase baristas standards Providing further training such as entrepreneurship skills and management skills to baristas might improve their services. Baristas will feel more knowledgeable in handling situations that might occur. Giving baristas extra incentives such as entertainment allowance and company trips might boost up their morale, which might indirectly increase their productivity level and decrease the turnover rate. Widen the target market Gloria Jeans target market in considerably small, where there only target people aged 18 to 25 years old compared to other competitors. They could widen their target market to cater students as well as corporate business people. This can be done by widening the operation to hotels and resorts, healthcare, college and university campus environments and business and industry cafeterias. Besides that, they could provide kids menu, which could be favorable to those families that brings their children together to Gloria Jeans outlet. Increase Customer Awareness Gloria Jeans hardly did any advertising and promotions. They should advertise in local newspaper on their special promotions and their new products to gain customers awareness. Celebrity endorsement could also be useful in the sense that Gloria Jeans is their choice of coffee. This will gain attention of the fans of the celebrity and also people in public. Local celebrities such as Nicole Kidman is prove to be useful as a marketing strategy in the sense of celebrity endorsement. Social and environmental effort can be seen as a good way to increase customers awareness towards the brand name. Doing charity work such as funding the coffee bean farmers, building schools and clinics could be seen as a useful tool to gain worldwide attention towards what Gloria Jeans is doing for the world. They could also be part of Governments plan of reducing the consumption of electricity and water by doing so in the outlets itself. Customer incentives Gloria Jeans should reward their loyal customers with membership card or loyalty card to encourage them to stay loyal to the brand and also continue patronizing. These rewards will be beneficial to them and make them feel happy and
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php treasured. They could provide them with discounts coupons and free refills for them who have the membership card, and encourages those that have not sign up, to sign up for these benefits. Franchisee Criteria Gloria Jeans has a strict policy in choosing franchisees for their business. This causes a lot of potential franchisees withdrawn from franchising for Gloria Jeans. The company should be more lenient towards the requirement in selecting franchisee or partners. But then also they have to do adequate power research on the background of the franchisee before choosing them. This is because they reflect the brand image of the company when they are operating under Gloria Jeanss name. Choosing the Right Partner From the problem regarding funding Mercy Ministry against anti-gay society, Gloria Jeans should discontinue the funding of it in order not to interfere with serious issues that could jeopardize the business. Instead, they should fund beneficial organizations such as Red Crescent Society and World Wildlife Fund. This will also help promote Gloria Jeans name worldwide, as a form of consumer awareness. References Australia. 2005. http://www.exploringabroad.com/regions/australia.htm(accessed May 4, 2008) Australia today. n.d. http://www.visalogic.net/Australia_Australian-Economy_pie.aspx?t=2&t2=82(accessed May 4, 2008) Bison - Diedrich Coffee Expands Its Distribution to 300 Albertsons Grocery Stores in Southern California. 2002. http:// www.bison.com/press_diedrichcoffee_09252002 (accessed May 4, 2008) BNET - The competitive business environment of the 21st century. 2003. http://findarticles.com/p/articles/mi_ qa3908/is_200306/ai_n9272806 (accessed May 4, 2008) Burritt. C. 2007. McDonalds Challenges Starbucks With Cheaper Lattes. http://www.bloomberg.com/apps/news?pid= 20601109&sid=a08JuUP7J6RY&refer=home (accessed May 6, 2008) Crikey - Borders passes the hat for anti-gay, pro-life charity. 2007. http://www.crikey.com.au/Politics/20071114Borders-between-charity-and-Hillsong-church-thin-.html(accessed May 15, 2008) Drinman, J., and D. Peasly. 1997. Coffee. http://www.rirdc.gov.au/pub/handbook/coffee.html (accessed May 4, 2008) Franchise Business - Gloria Jeans Coffee franchise overview. 2007. http://www.franchisebusiness.com.au/articles/ Gloria-Jeans-Coffee-franchise-overview_z62926.htm (accessed May 3, 2008) Eselius, E., J.D. Taylor, O. Boekhorst, and P. Winters. 1997. Business Analysis and Security Valuation. http://www.johnson.cornell.edu/parkercenter/docs/studentresearch/1997_spring/sbux. pdf(accessed May 15, 2008) Flanagan, R., and G. Norman. 1993. Risk Management and Construction. Blackwell Publishing Franchising.com - Gloria Jeans Coffees Food Franchise Opportunity. n.d. http://www.franchising.com/gloriajeanscoffee (accessed May 1, 2008) Gee. D., and M. Gee. 2006. Coffee The Australian Way.
The UKs original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/essays/marketing/gloria-jean-coffee.php http://www.baristabasics.com.au/article.asp?AID=49 (accessed May 5, 2008) Gloria Jeans Coffees About Gloria Jeans Coffees. n.d. http://www.gloriajeanscoffees.com (accessed April 27, 2008) Gloria Jeans Facility - Gloria Jeans Roasting Facilities. n.d. http://www.gloriajeanscoffees.com/pages/content. asp?pid=11 (accessed April 27, 2008) Gloria Jeans Archives - 100% Australian now taking on more of the World. 2004. http://www.gloriajeanscoffees.com. au/pages/content.asp?pid=104 (accessed April 27, 2008) Gloria Jeans Gourmet Coffee. 2004. h t t p : / / w w w . c o f f e e f o r u m s . c o m / v i e w t o p i c . php?t=269&start=15&postdays=0&postorder=asc&highlight=&sid=19b5449836a78ff2ae703baa2fc4b01a (accessed May 6, 2008) Hanson, D, Dowling, PJ, Hitt, MA, Ireland, RD & Hoskisson, RE 2005, Strategic management: competitiveness and globalisation, Pacific Rim 2nd edn, Thomson, Southbank, Sydney. Hot Drinks in Australia. 2008. http://www.euromonitor.com/Hot_Drinks_in_Australia (accesed May 5, 2008) Hoffman, O. 2006. Specialist coffee shops in Australia see vigorous expansion. http://www.euromonitor.com/ Specialist_coffee_shops_in_Australia_see_vigorous_expansion (accessed May 5, 2008) InterestAlert.com - Diedrich Coffee Reports Third Quarter Results. 2008. http://interestalert.com/ story/04210000aaa00b40.prn/print/RETAIL01/retail.html&S=siteia (accessed May 3, 2008) Johnson, G, K Scholes & R Whittington (eds), 2004, Exploring corporate strategy: [text and cases], 7th edn, Financial Times Prentice Hall, Harlow. Kembell, B., M. Hawks, S. Kembell, L. Perry and L. Olsen. 2002. Catching the Starbucks Fever. http://www.academicmind.com/unpublishedpapers/business/marketing/2002-04-000aag-catching-the-starbucksfever.html.(accessed May 6, 2008) LiveMint - Tried Barista, Cafe Coffee Day; now sip at Gloria Jeans. 2007. http://www.livemint.com/2007/12/10173913/ Tried-Barista-Cafe-Coffee-Day.html (accessed May 2, 2008) Martin. I. 2005. Starbucks. (accesed May 5, 2008) McDonalds Coffee. 2005. http://cruftbox.com/blog/archives/001207.html (accessed May 6, 2008) Miscellanea. 2007. http://www.wellingtongrey.net/miscellanea/archive/2007-05-06--world-fatness.html(acessed May 15, 2008) Nation Master Gloria Jeans. 2007. http://www.nationmaster.com/encyclopedia/Gloria-Jeans (accessed May 5, 2008) Reed Miltiades Kaye - Gloria Jeans sells experience. 2005. http://www.bandt.com.au/news/77/0c035677.asp?print=true (accessed May 5, 2008) Sadhwani, B. n.d. http://www.indiaprwire.com/print/?type=pressrelease&id=200712106106 (accessed May 1, 2008) Simeon. R. 2006. Global Strategic Management. userwww.sfsu.edu/~rsimeon(accessed May 4, 2008) Skinny Caramelatte the new low fat alternative. 2004. http://www.gloriajeanscoffees.com.au/pages/content.asp?pid=96(accessed May 4, 2008) The Political / Legal / Regulatory Environment. 2008. http://www.witiger.com/internationalbusiness/politicalenvironment.htm(accessed May 4, 2008) Wealth Creator Magazine - Peter Irvine and Nabi Saleh: The Glory of the Bean. 2006. http://www.wealthcreator.com. au/peter-irvine-nabi-saleh-gloria-jeans.htm (accessed May 2, 2008)
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