Case study on Gloria Jeans

Is it worth the experience?

Group members:

Ayesha Anjum
Saad Chandna
Saba Saleem Bharuchi
Urooj Hashmi
Yawar Masood

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 ABSTRACT

Integrated marketing communications (IMC) is a process for managing customer

relationships that drive brand value primarily through communication efforts. IMC
includes the coordination and integration of all marketing communication tools, avenues,
and sources within a company into a seamless program in order to maximize the impact on
end users at a minimal cost.

IMC is very crucial for strategic marketing planning of any company like in our case, Gloria
Jeans Coffee. Gloria Jeans marketing team had been facing some inconsistency in
positioning the brand Gloria Jeans in the market due to numerous factors. The main
reason being the existent Coffee culture in Pakistan was much more different and
backward than western countries where Gloria Jeans operated. Along with that the market
was not much developed and only a few competitors were operating in the market. Gloria
Jeans due to its advanced factors had an overall edge but somehow lacked in promoting
and attracting the target market. They somehow were still not able to specify their target
market. The marketing activities had been haphazard and they lacked consistency. The
channels being used for marketing were not being utilized efficiently and loopholes existed
in the overall process.

The case therefore can be used at a graduate level as critical thinking skills will be
employed, which will be based on the concepts of Marketing.

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He began to clear away the counter after endless wait at the order desk. The whole
afternoon had gone by, yet there seemed no sign of the coffee lovers who had come once.

No more coffee lovers in Karachi?

How surprising!!

The manager walked out of the control room to check on the situation and was
disappointed with the number of customers Gloria Jeans newly opened outlet had
attracted. The idea earlier had seemed quite profitable, however now the assumptions
were in doubt. The manager in utter disappointment called in a meeting with his team after
the days work, in a hope against hope to reach a solution for the low sales and consumers
not coming back for more. The new coffee brand in town did not have the brand loyalty
from its consumers. The new coffee lovers shop in the city of lights, Karachi, was not
working out according to the expectations, how was that possible?

CAF CULTURE IN PAKISTAN

Cafes are merely treated as a place to eat food or hang out with friends and family. The Caf
culture in Pakistan has been significantly growing over the past 5 years. The major cities of
Pakistan; Karachi, Lahore and Islamabad have seen a rapid growth in cafes catering to
youth and the young working generation. These places do require a considerate capital
investment and some testing of the potential market for the viability is done before
someone can actually enter the market. Caf culture is relatively new in Pakistan while in
Karachi, Espresso made a forefront to this culture. Other dominating cafes include Butlers,
Xanders and Ciao. In Lahore it started with Coffee, Tea and Company and as the culture
progressed, a franchise of Gloria Jeans opened which gave a jump start to opening of cafes
in every corner of posh localities. Mocca Coffee in one of the leading cafes in Islamabad, it
has a library too and is particularly catered to serve the diplomats living in the capital city
of Pakistan. Gloria Jeans is also found there.

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 GLORIA JEANS

Gloria Jeans is an Australian owned global coffee brand with coffee houses in around 39
countries spread out across the world. It was founded by Gloria Jean Kvetko in 1979 in
Chicago, USA, where it began as a small coffee and gift shop. Nabi Saleh and Peter Irvine
identified the potential in the coffee chain and opened up a few branches in Australia. It
soon took off and within 6 years, Gloria Jeans had opened up around 185 branches all over
Australia.

Gloria Jeans only recently opened up in Pakistan. It started its operations from Lahore and
after winning the hearts of people in Lahore and Islamabad it opened on the 10th February
2012 in the countrys largest metropolis, Karachi. The outlet of Gloria Jeans in Karachi is at
Sindhi Muslim.

WHEN COMPETITION GETS INTENSE!

Speaking of competition in Pakistan, Gloria Jeans main competitors are Dunkin Donuts,
McDonalds, Cafe Coffee Day and Espresso. Other competitors, especially in the Karachi
area, include the myriad of coffee houses spread all across Zamzama. Since Starbucks is
absent from the Pakistani market (not counting the frozen cappuccinos available in the
bigger marts all across town), a very sizeable competitor is missing and hence there is no
clear-cut market leader, though Espresso has the highest market share and is the preferred
choice for coffee lovers. An interesting thing to note is that the areas where the previously
established coffee houses are located are the areas where most of the coffee lovers reside.

Chains such as Hardees and McDonalds are known to serve less of a taste in terms of
Coffee as compared to the actual coffee houses. For these fast food chains, coffee is just a
variation and provides diversification for their products, offering something different.
However, McDonalds and Hardees serve a much larger section of the country as opposed
to the other coffee houses and that contributes to their market share, which is hence not
necessarily a good indication of quality. These chains also do not offer as wide a variety of

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coffee accessories, which pushes customers looking for a full experience to the actual
coffee houses.

Another important factor for any retail management is location, talking of competition in
those terms it is worth noting that Gloria Jeans itself employed shrewd positioning
techniques by opening its outlet in Sindhi Muslim Society. Nearby well-known franchises
include KFC, Nandos, Roasters, McDonalds and the more local Hyderi juice and cold spot,
which is a favorite local hangout for the masses. There are no coffee houses in this locality,
since most of them are located in the Zamzama area. While some of the more avid coffee
consumers (residing in the Defence areas) complained of its positioning, the brand
manager, Mr. Abraiz promptly pointed out that this Gloria Jeans outlet is actually serving a
niche in the market. SEC A and B customers also reside in areas such as North Nazimabad,
PECHS, Kashmir road and they find it cumbersome to travel all the way to Zamzama for a
good cup of coffee.

CAN POLITICAL STABILITY BE THE OVERRIDING PRIORITY IN

PAKISTAN?

The issues Gloria Jean Pakistan faces largely emanate from the political instability present
in the country. Pakistan has been ranked at 105 out of the 183 economies in the Ease of
Doing Business 2012 index1. This shows a fall of 9 places from a previous rank of 96. The
political environment is certainly less conducive to business operations now than ever
before.

This same concern was raised by Mr. Abraiz, Brand Manager Gloria Jean. He pointed out to
the outdoor advertising problems caused due to political party disputes during the launch
of the international chains branch in Karachi. He was quoted to have said:

Our billboards were occupied by PPP banners for several weeks, although the media firms
allowed us extra days later on we had still lost the crucial time at which we had to convey the
opening of our cafe.

1
International Finance Corporation, the World Bank Group rankings for 2012 on Ease of doing business.
http://www.doingbusiness.org/data/exploreeconomies/pakistan/

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Faced with a limited advertising and promotion budget, the Brand managers had a few
locations to advertise on, and these when subjected to the omnipresent political
uncertainties had not been very effective. He also expressed concerns over the billboard at
Zamzama. Being located at an expensive location with heavy customer traffic, the location
lost its visibility because of road blockage due to a Ministers house nearby, for several
months. This further aggravated the situation for Gloria Jean.

Mr. Abraiz also pointed out to the Anti-Americanism present in our society. He used it
synonymously with Anti-Goras (against the white). He said that although Gloria Jean is an
Australian Brand, it is subject to the same hatred as McDonalds or any other American
chain amid drone attacks or aggressive interventionist policies. Just as McDonalds is stoned
at if opened during such events, Gloria Jean also has to cope with the threat of facing similar
damages. Hence, the cafe usually keeps shut during political crisis to avoid any
uncontrollable costs from being incurred. This accounts for a lot many days though.

Keeping the cafe closed means losing out on sales, said the Brand Manager.

Not to deny the fear that surrounds the city even after strikes and target killings have
occurred, he admitted that sales are lower on average on days after the strikes as well.

The manager also spelled out the fact that the uncertainties present in Karachi are far
greater than those in Lahore, meaning Karachi outlets are not able to perform like Lahore
outlets because the city is the hub for all political parties. There is no doubt in concluding
that Gloria Jean will continue to face this challenge and the most they can do is to halt their
operations to minimize their loses, which they are already doing.

WE DONT LIKE COFFEE BUT WE LIKE THE IDEA OF COFFEE

The idea of merging the two terms, COFFEE and PAKISTANIs always got some sort of
skepticism in the past. Pakistan has always had a tea culture. The caffeine that runs through
our veins has been passed down through generations via a karak cup of tea. There was no
Pak Coffee House culture. But the notion is changing. A lot of coffee shops are opening right,
left, centre and at almost every nook and corner of the country. We have quite rapidly

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turned into a coffee-lover nation and with that Pakistanis particularly Karachiites have led
a lot of international chain to open their doors in Karachi for the first time but it is worth
noting that the impact is not as strong as it should have been.

Whether you blame the lack of entertainment opportunities for the youth of Karachi, the
high food consumption habit of the people or the high level fashion slaves that we have
turned into, these coffees houses have become a major place for hang-out with friends.
Although we see a switch from the Karak chai to a much fashionable cup of coffee but the
question remains: have the Pakistanis really understood the meaning of coffee or coffee
shops?

The attitude of the Pakistanis towards this new trend of coffee has been very nicely
explained by the brand manager of the Gloria Jeans:

We dislike like coffee BUT we like the idea of coffee!

Coffee is more like fashion to the youth of Pakistan. The problem that the owners of
international outlets like Gloria Jeans face is that the Pakistanis dont like the bitter taste
of the coffee but they sip it down just because it makes us feel good about them. For
instance if theyre are sitting with a couple of friends theyll always go for a cup of coffee
and gulp down bitter black coffee and watered down cappuccinos not because it tastes
good, but because it feels good. It is also perceived that when we will sit down with a
cuppa, it will make us feel cultured. And of course it will make others think high-ly of us.
Basically coffee has synonymously been associated with the concept of modernism that
we all are running after.

Also the general norm thats seen as difficult for these international chains like Gloria to
address is that no matter how modern the people appear, theyll always go by the
traditional taste buds. In short actions and intentions part ways. The norm is to prefer a
coffee thats sweet in taste and has a thick form to it. Take for instance, Gloria Jenas
cappuccino of RS.235 that is extremely light with the international beans having a bitter
taste vs. the Nestle3in1 sachet for RS.25 thats not just sweet but also has a thick form to it.
Which one will a consumer go for? Since we dont really understand what real coffee is

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we would go for a RS.25 Nestle sachet thats not only cheap but also sweet and this poses a
problem for Gloria Jeans who find it difficult to adapt to varying preferences of the
consumers.

HUMAN RESOURCE PROBLEMS AT WORK

The major issue of the human resource at Gloria lies in the employee downturn. After the
time consuming employment process and ever expensive training procedures, the
employees leave Gloria in search for better opportunities. Given the training and skills, the
employees find a better place with the competitors of Gloria Jeans. If outlets like Espresso
provide a better working place, better wages then the employees question their presence at
a low paid cafe. Such is an issue which is hard to overcome. The cost of training and the
procedure alluded are thus hard to forgo. The idea of coffee culture is present abroad and
so the employees find appreciation in their work there. The owners of coffee cafs cannot
eliminate the process of training and development and so neither can the costs be avoided,
the end result is employees leaving the place altogether making the costs appear only as an
expense on the profit and loss accounts of the caf against which there is no gain!

Another issue for a food outlet like Gloria jeans is its calls for medical tests for proper
screening if there stands any chance of contagious diseases, any illness that may affect the
individuals working at the work place. Being an outlet where order is placed and instant
work is required, energetic employees are preferred. There is also a very stringent policy
for the use of drugs and alcohol. But can all this be avoided in a developing country like
Pakistan where crime rate is at its peak. The biggest drawback is the monetary amounts
spent of these employees who in their greed begin to switch to other places or keep having
health issues which hinders the entire operation of the coffee house.

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 WHEN HUMIDIDITY IN KARACHI PREVENTS THE PERFECT
ESPRESSO SHOT

The climatic conditions and hygiene problems are will never end in Pakistan. However this
climatic problem translates into an internal technical issue. Mr. Abraiz, the brand manager
stated that the hygiene was their upmost priority at Gloria Jeans. There was a lot of cost
involved in keeping a check on the safety concern of the food and abiding by the laws and
regulations. Other than this since Karachi is a coastal city hence the weather is mostly
humid. They had to install de-humidifiers all over the outlet to keep the environment inside
dry and enable their machines to give that perfect espresso shot. However he said that the
coffee machines (figure.1) were manually calibrated according to the temperature set
inside the outlet. Whenever someone entered through the door, the balance was upset and
hence the machine had to be re-calibrated according to their set standards.

QUALITY NEVER GOES OUT OF SYTLE- BUT WHAT IF

CONSUMERS BECOME PRICE CONSCIOUS?

All the raw materials being used at Gloria Jeans for their coffee and food items are
imported from Australia itself, where the parent company is based. These raw materials
are outsourced from around the world and then dispatched from Australia to Gloria Jeans
outlets around the world. The basic necessities are provided by the host country while the
vital raw materials in their specialty products are imported. Imported goods are then sent
to Lahore where they are stored and sent to outlets in Islamabad and Karachi as per their
demands. The supply can be weekly or bi-weekly.

The import cost is high and forms a significant proportion of the final cost of the goods sold
at Gloria Jeans. Other than that all materials used in the production process is of high grade
and quality is thoroughly checked which translates into comparatively higher prices passed
down to the consumers than that in other cafes.

Mr. Abraiz believes that the experience is worth the cost but unfortunately that is not
what the consumers in Pakistan believe. This is also evident from the feedback form that

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the consumers have to fill in before they leave Gloria Jeans and the most frequent
comment they received in this regard was high. Consumers felt that Gloria Jeans was
expensive while Mr. Abraiz said that it being an international chain has to follow
international pricing policies.

In addition to the price consciousness of the consumers, Gloria faces another problem with
regard to the portion size of their food. Gloria Jeans all over the word has a standard
quantity in all its serving. Hence in Pakistan the people have the tendency to ask for more
quantity in least price, they have mostly graded this category as average. They feel and
have commented that the quantity should be increased in their serving. While Mr. Abraiz
had something to say in opposition, he said that all the quantities were standard and if you
look at the other coffee competitors in Karachi like Butlers or Espresso, they are providing
the same quantity in the same price. Gloria Jeans being an international chain and
providing the same quantity and of better quality is a much better deal than local coffee
shops.

GLORIA JEANSS CURRENT PROMOTION STRATEGY

The promotion of Gloria in Karachi has never been a full beat promotion due to the
limited advertising and promotion budget. Also with it is the political instability that
restrains the large scale promotion of such an international chain. During the launch the
only major form of marketing was via a billboard at an expensive location with heavy
customer traffic in Zamzama.

Specifically speaking of current promotional strategy, Food Dot Com being seth owned has
not upgraded on its promotional strategy. The news of a new branch of Gloria Jean opening
at the Dolmen City Mall has only taken up two billboards around the city; one of them is the
same old Zamzama signal spot. Furthermore, the tagline of the new branch Think Sindhi
Muslim is too far? - contradicts the Brand Managers view that Sindhi Muslim location has
no problem for their business.

Apart from the ATL activity, Mr. Abraiz, a strong advocate of the early adopter concept,
promoted Glorias Coffee in colleges. He organized a campaign at Nixor College where he
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informed about the upcoming branch, yet he didnt acknowledge that youth could
contribute to the cafes revenues.

IS GLORIA ON A ROUTE TO SUCCESS, OR ON A FLIGHT BACK TO

AUSTRALIA?

The brand manager was content with the customer traffic at Gloria Jeans. He seemed
confident that his brand will not succumb to any threat that presents itself because they
are all prepared. Havent we all seen this complacency before? Costas anyone!

As per the consumer reactions our group accumulated while preparing this case, we found
a great distaste for Gloria Jeans service quality and its coffee milk. Consumers were
reporting how the milk tastes different and how they accidentally received pins in their
burger patty. These complains when presented to Mr. Abraiz were denied. He did agree
that one or two pins were found but thats merely human error which cannot be
eliminated. He also blamed the people for their lack of taste buds for the international
coffee beans and milk. But what he failed to acknowledge was the fact that it is this very
word of mouth that can result in Gloria Jeans failure.

Mr. Abraiz, not admitting to care about the youths reaction about Gloria coffee, seemed
happy with the above average sales targets his branch was achieving. But he failed to
realize that Gloria Karachi is only in its infancy, where a trial of the coffee house by the
citizens is earning him the sales figures.

We conclude by saying that a very confident, condoning, and complacent management may
not realize the challenges/threats their business may face. Whats more is that such a
management is overlooking a segment with the largest growth, i.e. the youth population of
114 million, a segment that can quadruple the revenues if properly targeted. Thus, we need
to wait and see whether the coffee houses management can take the caf on a route to
success, or on a flight back to Australia.

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 DISCUSSION QUESTIONS

During the interview with the brand manager of Gloria Jeans we focused on the following
questions:

1. How well integrated was GJs marketing planning process?

2. Can the strong dhoodh-pati concept that goes down our veins be replaced with a
coffee culture in Pakistan like it stands in international countries?

3. Coffee retail volume sales increased by only 4% in 2010 relative to a greater

percentage increase in 2009. This relatively disappointing performance can be
attributed to declining consumer purchasing power, increasing taxes, and the rising
cost of raw materials such as coffee beans. What is the brand managers take on this?

4. Will the high prices that are passed down to the consumers due to imported coffee
beans lead this international chain to end up in a state similar to Costa Coffees?

5. It has been reported that Nestl dominates coffee in Pakistan, recording a retail
volume share of 49% in 2010 due to its widespread presence, strong distribution
network, and extremely efficient marketing policies. What makes Gloria Jeans a
better option?

6. Generally speaking, we believe Gloria hasnt taken a success lead in the initial
months of its launch. How will you rate the following about GJs as per the
perception of an ordinary consumer:

Ambiance
Persons at Counter
Time taken at counter
The Quality of Food/ Beverages
Portion Size
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 Price
Friendliness
Promptness of Server
Overall Cleanliness
Your overall Dining Experience.

7. Does Gloria Jeans face the issue of employee downturn?

8. How did Gloria jeans launch its first outlet in Karachi?

9. Other than the two billboards, what other promotional activities has
Gloria jeans used so far?

10. Have the consumers always liked the taste Gloria jeans offer its consumers?

11. The feedback card that the consumers are required to fill before they
leave Gloria jeans given them adequate idea of what consumers demand?

12. One of the survey respondents was reported to have said: ' Gloria is
not worth the cost. What do you have to say about this?

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 CONTACT DETAILS

Name: Abraiz

Contact number: 0345-2277652

Designation: Brand Manager

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 ILLUSTRATIONS

FIGURE 1

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