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EXECUTIVE SUMMARY

Gloria Jeans Coffee is an international coffee retailer and one of Australias leading coffee
specialists who has had a major role in the growth and development of Australias retail
coffee market. Gloria Jeans is known for its large range of more than 40 hot and cold coffee
drinks, including traditional espresso, ice blends, coffee beans, specially teas, pastries and
various coffee accessories.

Established in Australia in 1996, this Australian-owned and operated business follows a
franchise system under which it was opened over 900 stores (489 in Australia and growing)
across 37 countries internationally, considered as one of the worlds fastest growing
franchises and Australias largest and most recognised specialty coffee retailers
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, serving an
estimated five million coffees each month.

Gloria Jeans Coffees is devoted to building a unified family who consistently serve the
highest quality coffee and provide outstanding and personalized service in a vibrant store
atmosphere creating the ultimate coffee experience for every customer. Based on the
theory of Loyalty of Customers who will continuously consume the same product or service,
the regular customers will not change their consume habit even if there is a discount
promotion for the same products. This makes Gloria Jeans a brand that builds relationships
focused on integrity and trust from both parts.


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Gloria Jeans was ranked one of the top 30 fastest growing franchises in Australia by BRW. It was
also one of only seven franchises to be listed in BRW's annual Fast Franchises list for six consecutive
years.

The business uses a master franchise model market entry by selecting a master franchise
partner from a nation. For larger nations, as China, they break it down into regions with
several master franchise partners. Gloria Jeans sees this franchise as a partnership, where
the master franchise partner purchases the rights for their nation and develops stores
following the Gloria Jeans Coffees franchise model. Franchise partners need to have
sufficient capital to grow their business, showing a business plan and having sufficient
capital to fund growth. The company choose their own franchise partners under the values
integrity and trust. This means a lost of many opportunities as they only select the applicants
that they prefer.

In Australia, the coffee market continues to have an increasing number of new coffee
businesses looking to enter the market, as the barrier of entry to set up a coffee shop in
Australia is very low (Eselius et al. 1997) For that reason, Gloria Jeans must be conscious of
every kind of competition and conserve its status as one of Australias leading specialty
coffee retailer. Their current focus on taste and quality of their product range is according to
the industry and market demands, and their price is competitive with other specialty coffee
stores.

Recently, Gloria Jeans Coffee Australia has been accused by gay societies for supporting
Mercy Ministry, an anti-gay organisation who received 10 cents from every Gloria Jeans
cappuccino. This has had a negative impact on the sales as lesbian and gay community
members felt that they were indirectly funding the organization by purchasing Gloria Jeans
products.

DEMOGRAPHICS

Australia has one of the most conspicuous economies in the world in the past few years,
characterized by high growth, low inflation and low interest rate. The government sector is
efficient, with a flexible labour market and a very competitive business sector (Australia
today nd.) The market demands are constantly increasing, and the research also affirms that
coffee sales increase if the product is made more available to the consumer. (Strategic
Analysis nd.) This is an opportunity to Gloria Jeans as Australian consumers have higher
disposable income and they are determined to make more expenses.

Gloria Jeans primary focus on the demographics, psychographics and lifestyle of their
costumers. They are currently targeting small market segment, the young adults with ages
from 18 to 25 years old, compare to other competitor brands as Starbucks, whose target
market is between 15 and 64 years old. Besides, Gloria Jeans is oriented towards female
costumers as they are the source of half of the sales, while Starbucks targets both male and
female. Gloria Jeans supplies all coffee related needs, offering hot and cold coffee drinks
and non-caffeinated drinks for children and non-coffee drinkers, along with specialty teas,
pastries and coffee accessories.

The stores are clustered in high-traffic, high-visibility locations in each of its target markets
in order to realize operating and marketing efficiencies and enhance brand awareness.
Stores locations are carefully selected for convenience of the costumers, specifically
targeting places with dense pedestrian street traffic. Gloria Jeans is located in airports and
shopping centres, making it the most convenient for their costumers, assuring that they
have choices, and that choice is Gloria Jeans by offering numerous locations in a small area.
Design and construction services for the different franchises are provided for the different
locations, procuring key fixtures and equipment. This way, similar materials and furnishing
are used to keep the look of each store more consistent, but none of them end up looking
exactly alike as they have some differences depending of the geographic location and target
market.

Gloria Jeans has become one of the Australias largest and most recognized coffee retailer
serving and estimated seven million guests each month. In 2006 the number of Gloria Jeans
coffee stores grew by 22% in Australia and an outstanding rate of 82% internationally.

CULTURE

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) Gloria Jeans places itself as a third place in between
home and work, providing a space with a comfort atmosphere where costumers can enjoy
top gourmet coffee products.

The culture inside of the company is really important, as a franchise model business, Gloria
Jeans provides informative and intensive training that covers every aspect of operations
including purchasing, merchandising and product knowledge. Plus, they also render personal
field support in the new store to help with merchandise, operations and assistance in
employee training. This supportive environment from Gloria Jeans to each of their franchises
creates a whole business atmosphere of comfort and belonging where members of the
company are considered family, comparable to the old Japanese traditional business style.

Not only inside of the company, but Gloria Jeans culture also has a philanthropy side,
focused on social support. In Australia, Gloria Jeans Coffees is one of the biggest supporters
of Jeans for Genes, for which has raised more than $650,000, and a range of other charities
like Salvation Army. The company also encourages to franchise partners to support local
charities or causes. In 2009 they formed With Heart Foundation, which supports more
than 300 from the coffee producing regions of Brazil.

Another great face of Gloria Jeans culture is focalised in environmental preservation
thought a partnership the Rainforest Alliance, a non-profit organisation that protects
ecosystems and supports people and wildlife that depend on them.

MARKETS

The Australian hot drinks market continues to grow, recording strong off-trade value growth
of 4% in 2013. Hot drinks that resonate with consumers by offering a sense of
differentiation, whether is through innovative new product development, local or exotic
provenance, authentic heritage statements, distinguish packaging or even traditional means
of production. (Euromonitor International, 2014) Coffee keeps outstanding, as the caf and
coffee shops industry has grown successfully over the past five years, characterized by
Australias love for quality coffee. Its biggest growth comes from out-of-home consumption
with more and more consumers adopting the idea of caf culture. According to
Datamonitor, for seven cups of coffee consumed by an average Australian, one is consumed
out-of-home. (Datamonitor, 2010)

The trend of coffee consumption keeps changing, both in good and bad direction. On the
good side, people are having healthier lifestyles, which includes coffee as beneficial for the
heart. Coffee also tends to act as a social reinforcer and a affordable luxury (Martin,2005).
On the bad side, coffee and subsequently Gloria Jeans has to be conscious about the rise of
obesity among people, as it will affect them in terms of consumption and sales.
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COMPETITION

The coffee industry is in general highly competitive external and internally, and it continues
growing, increasing the number of companies who desire to enter the market. Gloria Jeans
should develop a competitive structure to have a better understanding of the overall
industry and identifying the different competitors in the coffee market.

Gloria Jeans has two major direct competitors: Starbucks Coffee and Hudsons Coffee, the
two largest coffee chains in Australia (Gee and Gee, 2006). Starbucks established in Australia
in 2000 with a strong brand image towards their coffee, but their success was not the
expected one. They came into Australia to bring the coffee and caf culture to the public,
and they found out that they already had it, with better quality coffee and more relaxing

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It is reported that 47% of women and 63% of men are overweight in Australia (Nutrition Australia,
2000)
cafes, especially in Melbourne. This failure was the product of not understanding the diverse
culture and style of the target market, in this case Australia. Starbucks has slowly recovered
by opening more retail stores in dense traffic and pedestrian locations.

On the other side, Hudsons Coffee is a fully Australian owned and operated brand. Started
in Melbourne in 1998, the company has opened over 30 retail points all over Australia under
a franchise model similar to Gloria Jeans. An indirect competitor that has become a major
one is McDonalds and the McCafe station in each restaurant. The product range is smaller
than Gloria Jeans
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, but the key location points of the stores may increase the switching risk
from costumers. Also, the convenience of having the variety food menu and the coffee in
the same place might get costumers to visit just one restaurant to cover their different
needs instead of different place.

Other indirect competitors are independent espresso bars, as Australians already had high
quality espresso before the coffee chains established in the market. (Coffee the Australian
way, 2006) Those espresso bars are very competitive as their placement is strategic (they
dont need a lot of space) and the consumers perceive them as more traditional, therefore
so the coffee, not like the big coffee chains that use automatic or semi-automatic espresso
machines.

EXTERNAL ENVIRONMENTAL ANALYSIS ON GLORIA JEANS IN THE COFFEE INDUSTRY

PEST ANALYSIS

Political And Legal Environment

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The McCafe consist of latter, mocha, capuccino, espresso, ice latte, vanilla stemar, ice mocha and
Premium hot chocolate (McDonalds coffee 2005)
In Australia the Fair Trade Certificate and the Rainforest Alliance are the main regulations in
the coffee industry.
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Gloria Jeans doesnt have the ability to control the political and legal
environment in the different countries, but they should formulate their strategy based on
the current legal situations. General environment may not be ignored, but evaluated and
analysed to have a better understanding and adapt to any changes to minimize risk in the
industry and the market.

Economic
Australian prosper economy is a current opportunity for business as Australians have more
disposable income to spend in available products to them. At the same time, this may attract
more competitors within the same category. Therefore, Gloria Jeans must be aware of the
competition and increase its brand differentiation between the new ranges of coffee shops
that the current flourish market attracts.

Social
As said before, Australia coffee drinking culture has become a part of the modern lifestyle,
increasing its consumption, especially among the younger generation, that conceives coffee
as a social product inside of the category of affordable luxuries.

Technology
Gloria Jeans must be aware of the technological developments in the coffee industry,
focused on all year round harvesting, the quality of the beans and de development in the
management coffee pest. Gloria Jeans buys and roasts its own coffees, controlling the
process from the bean to the cup (Gloria Jeans Coffees goes WiFi, 2003). Consequently, the
company has to ensure that the products are top quality and available when needed.
Following the example of Starbucks, Gloria Jeans also offers free WiFi to attract costumers
to the stores.


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Fair Trade Certificate is an alternative marketing system designed to give the disadvantaged
farmers guaranteed prices for their product. The Rainforest Alliance focuses on how farms are
maganed rather tan how products are traded (Sustainable Coffee n.d.)
PORTERS FIVE FORCES ANALYSIS

These are some of the major threats in the external environment for the business operations
of Gloria Jeans Coffees in Australia.

Threats of new entrants
The coffee industry in Australia has a high threat of new entrants, as there is a strong coffee
drinking culture that makes fair trade coffee a very popular trend. Also, there are very few
barriers to set up a coffee shop, which makes this industry more attractive.

Bargain power of buyers
Coffee buyers are very price sensitive, so they threat the industry by forcing down the price,
as coffee is often considered a commodity. Customers income has an important role in
selecting product, which reduces the switching cost in changing to other competitors or
making their own coffee. Gloria Jeans should increase brand awareness to increase the
customer loyalty based on quality and price.

Threats of substitute products
There are several substitute products in the coffee industry such as regular coffee, tea and
the caffeine beverages in the market such as cold coffee (Dare) or Coca-Cola.

Bargain power of suppliers
Coffee is the world second largest traded product after petroleum (Kembell et al. 2002)
The demand for coffee in Australia has increased by 60% over the past 10 years. This has
given the power to the buyer while the coffee suppliers are being exploited and forced to
continue the production in underdevelop countries.

Competitive rivalry
Gloria Jeans coffees is the largest specialty coffee retailer and the fastest growing franchise
organisation in Australia, but it faces a big competition in the local markets with the small
coffee shops and within mainstream market such as Coffee Club, Hudson Coffee, Starbucks
and McDonalds McCafe.

The coffee industry for Gloria Jeans Coffee is still an attractive market even though the
analysis of the five forces shows medium to high threats.

SWOT ANALYSIS
SWOT Matrix

STRENGHS
Strong brand recognition
o Attractive brand logo and well
designed retail stores
Strong brand positioning
o Partnerships with high coffee
consumption countries
o Continuous raise of standards
Ownership of over 900 stores
Continuous innovation
o Strategic use of technologies
o Large range of variety and
quality coffee and coffee-
related products
Strategic placement in highly
trafficking areas to attract more
costumers
WEAKNESSES
Low costumer incentives
Limited target market
Technological advancements
requiring new equipment for making
coffee
o Not up-to-date brewing
machine
Less variety than competitors
o Business profits are highly
dependent on the coffee
product
Strict franchise criteria
THREATS
High threats of new entrants
High levels of rivalry
Obesity
OPPORTUNITIES
Capitalization in high coffee consumption
countries
Product range easily widened
o People becoming more health
conscious reducing their intake of
coffee
Brand switching by costumers
Opening of more outlets due to increase
in coffee consumers
Whole bean sales in supermarkets
Co-branding with other manufactures
High spending power


MARKETING ANALYSIS

Established in 1979, Gloria Jeans coffee has become a coffee icon with over 900 stores in
more than 40 countries. It is a brand synonymous of coffee quality and leading franchise
system, offering to their costumers a range of over 150 products positioned on quality and
experience. Even thought the positioning of GJs range of products are focused on quality
and experience, they are not very different to its competitors. The brand image is one of the
success key elements, attracting costumers not only for their products by also for the
atmosphere of the store, where costumers socialize, study or relax while consuming coffee
products.

The extreme growth in Australians coffee drinking culture among the young citizens
(Hoffman, 2006) is an opportunity for marketers to focus on this market segment, creating
an appropriate advertising strategy to capture their attention via billboards, radio
campaigns, TV ads and social networking.
Gloria Jeans management team must understand the marketplace trend and their
competitive implications to plan an effective market strategy for the success of the
organisation. Gloria Jeans is increasing their franchise revenue and sales through an
expansion on both domestic an international markets. They are currently having active
Master Franchise Agreement covering 39 countries across the world, but the performances
of those international markets are relatively slow compare to the performance in Australia.
This is the product of an excessive wide segmentation strategy in the international market
instead of grouping countries by regions and form clusters of consumers who have similar
needs and buying behaviour, even though they are located in different areas.

Gloria Jeans marketing mix involves product determination, pricing considerations, channels
of distribution and promotions, all adjusted by the company to achieve the desired level of
sales in each target market.

The company relies in a long-term success based on a top quality of its customer interaction
with employees through an emphasis on a training program and different incentives to
achieve a superior level of customer service. Also, the innovation and creation of new range
of beverage attracts new customers, expanding the product range. With coffee as the main
product, they keep introducing new goods for costumers to spend more money and time in
the stores. Coffee related good as mugs and grinders; food as pastries and bakery goods;
and the recent adding of free Wi-Fi in some of the stores, creates diversity and adds new
features to the traditional range of coffee beverage and cafe services.

On the price side, Gloria Jeans avoids the price war and focuses on adding value on the
products providing professional services and top gourmet coffees. Although the prices are
slightly higher than the average, costumers are predisposed to pay more for a higher quality
product, as they are engaged and loyal with the brand.

By marketing their products and the development of a culture, the price is not a focus but
the value of the products. Gloria Jeans wide range of business activity allows taking
advantage of diverse channels of distribution, like grocery channel licensing agreements,
foreign retail outlets, franchising agreements and direct-to-consumer market channels. The
company also has a noteworthy success in a selection strategy of top placements for the
stores. They are located in visible locations in each of its target market in order to maximize
the marketing strategies and brand awareness in the different market segments. The stores
are designed in a sophisticated style that reinforces the brand image and guarantees a
comfortable environment and consumer-retaining atmosphere.

Gloria Jeans uses promotion with the aim of not only persuading customers to purchase but
also building long-term relationships. The fast development of technology and social media
creates a need for the companies to reinvent itself digitally, investing in new application
systems to build communications with costumers and franchise partners.

MARKETING AUDIT RESEARCH WORK PLAN

PURPOSE OF
THE AUDIT
To determine wether Gloria Jeans Coffee is reaching the desirable
penetration in the market segments by applying with effectiveness the
proper branding and product strategies. It will evaluate:
Marketing strategies implemented
Market segments in terms of product, place, promotion and
distribution.
Customer satisfaction reports of the different products offered and
customer service.
The audit will identify any areas where improvement is required and
recommend corrective action if necessary.
SCOPE OF
THE AUDIT
Preliminary research will consist of primary data as costumer reports and
product sales within the segments.
The audit will focus on analysing:
Marketing segmentation
Product range
Strategies towards each segment
Need of make it wider or narrower to improve its efficacy

DATA COLLECTION PLAN

OBJECTIVES OF
DATA COLLECTION
The analysis of quantitative and qualitative data will allow having a
better understanding of Gloria Jeans segments and strategies.
TYPES OF
REQUIRED DATA
Secondary data
Australian Bureau of Statistics
Social media and networks
Hot drinks reports in Australia (Datamonitor, Euromonitor)
Primary data
Consumer surveys
In-store observation
Staff and management interviews

DATA GATHERING PROCESS

TIMEFRAME AND BUDGET One week
Average rate of $200 per hour
Total budget of $10,000
DATA MANAGEMENT Computer, Data base (SPSS Statistics), Excel document and
spread sheets
DATA ANALYSIS METHOD Graphics and data comparison
DATA FINDINGS AND THE
AUDIT REPORT
Data will be presented in a visual format via graphics and
tables and a written report.

STAKEHOLDERS CEO and management (Jireh International Pty Ltd)
Shareholders
Current franchise owners and future buyers in Australia
and overseas
PARTICIPANT ROLES AND
RESPONSABILITIES
Research team and data analyser
Presentation and report editor
REPORTING FORMATS PDF format summary presentation and hard copy report to
management, CEO and franchise owners.


MARKETING AUDIT QUESTIONNAIRE



1. Is your brand image consistent with your product or service?



2. Are your marketing and communications materials consistent with the identity of
the brand?




3. How does Gloria Jeans target its market?
4. Narrowed target market remains the weakness of Gloria Jeans,
compared to its competitors, such as Starbucks, which have a
wider range of segment market. The market strategy of Gloria
Jeans is to expand its market share by enlarge the age range of
its target market.




5. Does Gloria Jeans know how satisfied the customers are with the products or
services?



6. How do Gloria Jeans current and potential customers rate the company and its
competitors in its reputation, product quality, service, sales force and price?



7. Does Gloria Jeans make a real difference in the marketplace?



8. Does Gloria Jeans promote its products effectively?



9. Is Gloria Jeans recognising and applying new market trends to the business?

CONCLUSION / RECOMMENDATIONS

Product differentiation and uniqueness
Consumers are different in several ways: their needs, wants, resources, locations, buyer
behaviour and practices. Market segmentation allows dividing large and heterogeneous
markets into small segments that can be reached more efficiently and effectively with
product and services that match their needs.

Like Starbucks, the quality and variety of the beans should be increased with a bigger range
of options to suit the consumers, like beans obtained from South America or Indonesia. This
would offer more choices and diverse beverage products for different types of consumers.
Also, health and obesity issues must be taken in count. Creamer, low fat milks and artificial
sweeteners are an alternative to the consumers who are concerned about those problems,
while providing a social- concerned public image.

On the other side, breakfast and lunch deals should be taking into consideration. Improving
the food range products would increase the number of consumers who look for a place to
dine in and not only the consumption of coffee, and also their expenses in Gloria Jeans
products, improving the loyalty towards the brand.

Increase customer awareness and incentives
Educating the consumers about coffee, bean and quality differences, ingredients could be
beneficial for improving the relationship with the brand and minimizing the risk of switching
customers. It will also allow increasing the price, as they will be willing to pay more for a
quality product. Gloria Jeans hardly ever does any advertising and promotion. Different
options as short TV ads or social networking will make the brand more recognizable and
memorable. Also, their locations next to university and high pedestrian traffic are an
opportunity to attract costumers by offering student discounts, free refills and loyalty cards
to encourage them to stay loyal to the brand, as they make them feel appreciated. The
employees should also encourage to new costumers to sign up for enjoy the benefits of
being part of Gloria Jeans membership.

Involving in social and environmental support is also a way to increase brand awareness, like
charity work related to coffee bean farmers and local causes. Sports are also a way to reach
the younger market, as McDonalds has done, supporting local youth football teams and
offering discounts or product samples after a match. The brand would not only be associated
with youth, also with energy and a sense of team and social belonging.

Franchise criteria as an expansion strategy
Gloria Jeans has a very strict policy in choosing franchisees for their business, which causes
a lot of potential franchisee withdrawn from their company. They should be less severe in
the requirements for the selection of the franchise partner, thus they must increase the
researching of the franchisee prior to the selection as their operations affect the brand
image. Starbucks, for example, does not allow franchising, giving to Starbucks the full control
of the management and operations of the retail store, both in domestic and international
business operations. This strategy allows maintaining the quality of the coffee in all different
locations and the whole distribution system, ensuring that the products are according to
Starbucks standards from the raw ingredients to the final product.

Raising standards
Both outlets and baristas standards should be increased. Baristas are the main
representation of the product supplier to the final costumer and their skills must be well
trained to serve the ultimate gourmet coffee Gloria Jeans bases its image on. Their services
would be improved by leadership and management skills to make them feel comfortable
and with more power knowledge over different business situations. On the other hand,
outlets are the principle creators of the environment, therefore using comfortable and
attractive furniture equipment as sofas and tables, reinforced by pleasant ambient music
and different facilities such as restrooms and Wi-Fi will improve customers perception and
make them spend more time and money in the facilities and products. Gloria Jeans
shouldnt forget that coffee is a social culture associated with interpersonal relations and
personal time among the youth segmentation, which suppose a big market opportunity, as
they are more sensitive to social image and networking than older segments.

Expansion on Southeast Asian region
Based on the International Coffee Organistion (ICO), Coffee has grown in more than 70
countries, with the 60% of the coffee produced by Brazil, Vietnam, Colombia and Indonesia.


The Southeast Asian market is a profitable market opportunity for Gloria Jeans in the coffee
industry. Regions such as Indonesia, Cambodia, Malaysia, Philippines, Singapore, Vietnam
and Thailand have already a franchise agreement, and the company should focus on them to
increase competitive advantages, as they are very important coffee suppliers. The positive
forecast in this market can boost Gloria Jeans performance by meeting the increasing of
future demand and supporting their suppliers and the quality of the bean. Not only the
product, but also the location of Indonesia is a strategic point as a resource to supply other
countries within the same region.