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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 Jean’s Coffee History
In 1979, Gloria Jean Kvetko founded Gloria Jean’s 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 Jean's Coffees in Australia. Together, they opened their first Gloria Jean’s Coffee in Miranda, Sydney, and then in Eastgarden, Sydney, two week later.
Gloria Jean’s 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 Jean’s 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 Jean’s Coffee has established stores in every state of Australia.
Jireh International Pty Ltd in 2005 purchased the rights to the Gloria Jean's 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 Jean’s Coffee Australia is being accused by gay societies by supporting Mercy Ministry, an organization that supports anti-gay where 10 cents from every Gloria Jean's 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 anti-gay, pro-life charity, 2007) Struggling with your essay? We can help!
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 Jean’s 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 Jean’s mainly focuses on female customers, where half of the sales came from that particular gender.
Customers Are More Demanding
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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 Hudson’s Coffee and Starbucks Coffee took up a huge portion of the share in the market.
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...