PART I: CURRENT MARKTING SITUATION

COMPANY ANALYSIS
Core Competencies of Gigis Cupcakes
o Taste: the delicious cupcakes are freshly baked every morning and they satisfy every sugar craving. o Look: The signature frosting style in which each cupcake is topped with icing as tall as the cake is a trademark for the Gigis Cupcake brand. Each cupcake is a work of art and the quality of its appearance brands the cupcake as Gigis. Also, the Tiffanys inspired packaging of a pale green box is another brand for the cupcakes. 2 o Variety: Gigis offers a wide variety of flavors with over 60 different types of cupcakes. The constantly changing menu allows the customer to have a different experience every time he or she steps through the door of Gigis Cupcakes. 1 o Events: Gigis provides cupcakes in mass quantities for any event. 1 o The Happy Birthday Party Pack offers a dozen cupcakes for birthdays. o Quick Pick-up Daily Dozen is perfect for any customer in a hurry. o Gigis most popular cupcake, Wedding Cake, is a favorite among brides for an alternative to the traditional wedding cake. 7 o Location: The original Gigis Cupcakes store is located at 1816 Broadway, near the heart of downtown Nashville, Tennessee. However, Gigis continues to expand and will have over 35 locations across the United States by the end of this year. 1 o Gigi: Gigi is an incredibly personable woman and an experienced company owner, having owned her own company since she was fifteen years old. 2 Gigis climb to success is not only inspirational, but also adds a homey neighborhood feel to each cupcake shop. o Alan: A franchising specialist who is dedicated to the success of Gigis, Alan has been vital in the successful expansion of the Gigis Cupcake brand. 2 Gigis Cupcakes Value Proposition o Gigis Cupcakes lives up to their word of spreading love one cupcake at a time.2 Each cupcake is simple enough to satisfy any sugar craving, yet elegant enough for a wedding reception. Every store is a boutique that neatly showcases the cupcakes, and the ambience of the bright store and the aroma of freshly baked cupcakes create a friendly hangout to talk with friends and eat cupcakes. Marketing and Financial Goals o Five years down the road Gigis Cupcakes plan to have at least 100 stores nation wide. 2 o Currently Gigis single store sales are approximately $11,000 per week, and the goal is to increase this number by 15% in one year. 2 o Gigis sells merchandise in the form of coffee, t-shirts and mugs as well as cupcakes. They plan to increase merchandise sales by 100% in one year.2 o Sometime in the future, Gigi would consider selling her store to the right person.2 1

PART I: CURRENT MARKTING SITUATION

MARKET OVERVIEW
Customer Analysis:
o Gigis Cupcakes serve a wide variety of customers, targeting those who enjoy moist homemade cupcakes with rich frosting and a very intimate, elegant, and unique bakery experience. o Gigis usually sets up shop around two areas that bring in the most business:2 - Hospitals - Colleges o Cupcakes are sold in singles, 4s, 6s and dozens, so customers can easily purchase the right amount of cupcakes for whatever event or occasion they are holding.1 o Customer needs: - Delicious cupcakes with rich frosting and incredibly moist cake. - A trendy and elegant brand experience with Gigis Cupcakes. - A friendly, positive experience interacting with employees in the store. - Customers want their costly $3 purchase to be a good value, which means a satisfying cupcake. - A wide variety of cupcakes for any occasion (birthdays, Valentines Day, Halloween, Christmas or weddings) - A wide variety of flavors and combinations - Gigis has new menus with each season and their website showcases each and every cupcake. 1 - A convenient and accessible location - Visibility from the road - A good amount of parking near the store - Customers want convenient store hours - Right now each franchise is able to set their own hours 2 - Most franchises open around 9 or 10 and close at about 8 - Driest Tinder - College students and people who are make hospital visits are the largest consumers of Gigis Cupcakes. 2

Market Demographics, Growth and Trends:

o Right now, there are 22 Gigis Cupcakes franchises, but there will be 35 by December 2010. The number of franchises is rapidly increasing and the cupcake trend is booming with business. 1 o On September 20, 2010 Gigis just sold a LivingSocial coupon for $27,000 worth of cupcakes. 9 o Gigis appeals to a wide variety of customers because cupcakes are considered very trendy and in. Since 2004, the search volume index for cupcakes on Google (in the U.S.) has increased by 300%. 3 (See Appendix). o The search volume index has steadily increased since 2008, and in late 2009 and 2010 the search volume index has been rising more rapidly than ever. 3 o There are 2,604 followers of Gigis (gigiscorp) on Twitter. 4

SWOT ANALYSIS

PART I: CURRENT MARKTING SITUATION

Internal
Strengths
Gigis has a well-established reputation for quality, especially in the south. They have become well established for the birthday and wedding scene. 2 They offer a very wide selection of flavors The company has been growing very rapidly since its start in 2008. They have been considered the best product by a number of sources. 5 They strive to maintain a small business atmosphere They have done a lot of work with branding, especially with Cupcakes unlike ice cream arent seasonal. Their product fills a very specific need and does it very well.

External
Opportunities
Many believe the economic downturn has lead to an increase in demand for cupcakes. 10 Franchising provides unlimited avenues for growth in a huge number of markets. And also allows Gigis to expand without spending too much of their own money. They have not done much work with their merchandise. This is an area that could potentially see a lot of growth. Because of a growing concern to healthiness, smaller treats such as cupcakes could be seen as a better alternative to entire cakes. Their Chattanooga branch has used their Facebook page very effectively. Being a young company, without deeply entrenched marketing strategies, it will be easy to adopt a new comprehensive strategy using social media.6

Positive

Weaknesses
They are a franchise. While this provides great growth opportunities, they lose some control over their stores. Gigis doesnt have much control over the success of each branch. Essentially an outside party is being trusted with their product and name. 2 The product is expensive. There is some disconnect with the customer about the rotating menu.

Threats
They have a huge variety of competition, ranging from dessert specialty shops, restaurant desserts, supermarket bakeries, bakeries, and home baking. There has also been a huge increase in the boutique cupcake shops. 3 The general trend toward healthiness could hurt a store selling only sweets. There is no telling as of now whether or not the specialty cupcake store is a fad. 3

Negative

PART I: CURRENT MARKTING SITUATION

COMPETITIVE ANALYSIS
Due to the nature of their business, Gigis competition is very wide spread. In the cupcake industry, Gigi identified her main competition as Sprinkles.2 Sprinkles Cupcakes, based in Beverly Hills, California, is the pioneer of the boutique cupcake industry. They are incredibly well established and they are located in many major markets. 8 This being said, Gigis has a great deal of other competition that lies outside of the cupcake industry. From bakeries to supermarkets, there are many other avenues to find cupcakes for a much lower price. Also, being a desert vendor, they are competing with both restaurants and other specialty desert shops. However, according to Adam Borden, a Food focused venture capitalist, Cupcake stores are taking the place of ice cream stores. Cupcakes arent seasonal like ice cream, and they appeal to people who want the authentic experience. They have an allure based on nostalgia. 5 The needs of Gigis and competitors customers are to buy a delicious, high quality product. They want the product do be delivered in a pleasing manor, and they want it to be easily accessible.6 Noted competitors other than Sprinkles are: (map shown in Appendix)

Shop Name12
Dulce Desserts (A) Las Paletas Gourmet Popsicles (B)

Distance from Gigis11

1.1 miles 2.8 miles

Products
They have cupcakes, cookies, custom cakes, and pies. Easy parking They offer gourmet popsicles at a comparably high price. Parking is difficult. They offer ice cream in downtown Nashville. Parking can be difficult They offer high quality baked goods of all sorts. This is another high-end baker that offers a wide assortment bakery items. Parking can be a challenge. Offers quality deli-style food along with a reasonable assortment of desserts at comparable prices. A quality dessert that treat shop with reasonable. This is another quality bakery/deli. Offers delicious and healthy frozen yogurt with a wide assortment of flavors and toppings.

Mikes Ice-Cream Fountain (C) Backers Bakery (D) Sweet Sixteenth Bakery (E)

2.4 miles 9.2 miles 6.1 miles

Bread and Company (F)

1 mile

Maggie Moos (H)

1.6 miles

Puffy Muffin (J) Sweet Ceces

10 miles 1 miles

PART I: CURRENT MARKTING SITUATION

MACRO AND MICRO ENVIRONMENT

Macro Environmental Factors
Demographics: o In Williamson County the population is 51.6% female and 48.4% male 13 o Median household income in 2009 was $86,648 compared to $93,116 in 2008. o Tennessee and other southern states such as Louisiana and South Carolina are ranked in the bottom 10 poorest states.15 Economic Climate: o Despite the current economic recession, the demand for cupcakes is continuously increasing. 3 o Personal income rose 0.5% in August, while spending from individuals has increased 0.4%.9 o The average price of weddings has dropped nearly $6,000 dollars as brides scale back. Many brides are opting for a Gigis Cupcake wedding cake that costs $2.50 per cupcake (for orders over 100), while a typical wedding cake can cost anywhere between $1.50-$12 per slice. 7 Sociocultural Factors: o According to Gigi, Valentines Day sales garner almost twice the amount in profit than any regular day of the year. It is their most popular day to buy cupcakes. 2 o With the cupcake craze sweeping America, cupcakes are promoted all throughout society. o Cupcake Wars is a series pilot on the Food Network where bakers vie to create the most interesting concoctions. 10 o Cupcakestakethecake.com is a cupcake blog visited by 9,000 people a day.14 o Gourmet cupcakes are featured on popular television shows such as Entourage and Sex and the City. 10 Legal and Regulatory Factors: o Gigis Cupcakes cannot open shops in Chicago, California and the northeast in New York because of restrictions and high cost for franchising. Once Gigis has grown and become more profitable, such ventures will be possible.2

Micro Environmental Factors

Competitors: o Gigis biggest competitor is Sprinkles Cupcakes. Although predominantly located on the west coast, Sprinkles is currently expanding their market to the east coast and even oversees in Tokyo, London, and Paris. 8 o Unlike Gigis, Sprinkles sells prepackaged cupcake mix to their customers. 8 Customers: o Most of Gigis profit comes from brides, hospital patients and college students.1 o Word of mouth marketing strategies have contributed to Gigis growing number of customers. 6 Media: o Connecting with social influences such as Facebook and Twitter has generated a strong following of about 3,000 likes on Gigis Facebook page. 4 5

PART I: CURRENT MARKTING SITUATION

1 2 3 4 5 6 7 8 9

http://www.gigiscupcakesusa.com Gigi, Creator and owner of Gigis Cupcakes http://www.google.com/trends?q=cupcakes http://twitter.com/gigiscorp http://www.nytimes.com/2009/11/26/business/smallbusiness/26cupcake.html http://www.facebook.com http://theknot.com http://www.sprinkles.com/ money.cnn.com http://www.nytimes.com www.google.maps.com www.yelp.com http://www.city-data.com/county/Williamson_County-TN.html

10 11 12 13 14

http://www.inc.com/best-industries-2010/bakery-industry-grows-as-little-luxuriesflourish.html
15

http://money.cnn.com/2010/09/16/news/economy/Americas_wealthiest_states/index.htm