Nespresso is the result of an innovation process that started inside the Nestle Company: a new idea of coffee that combines the quality of an espresso coffee and the convenience of the use of capsules. The process of launching this product inside a big company like Nestle was not an easy one. Innovations often bring some kind of fear in people's mind, i.e., there are barriers that must be broken during the process. Hiring someone from the outside and changing the structure, in order to make the company more agile and fast were the weapons to fight against them and to make the project move on.
Renovation is important for every long term strategy, especially in a field that is technology driven. Nestle was already a leader in instant coffee in the market, but those characteristics of innovation and renovation made the company discover another market to target, even though for many specialists, the market was already saturated.
[...] Turnover in 1998 Turnover (SF Million) Nespresso 130 Illycaffe 171 Malongo 59 Lavazza 919 Regarding the household segment, Nespresso is the leader, which has 90% shares of the market, while Malongo and Illy share the rest. However we can see that the Illy's turnover is even more than Nespresso's. Therefore, in the segment of away-from-home, Illy performs better than Nespresso. Therefore, Nespresso needs to pay a lot of attention to its competitors Analysis and goal formulation Being profitable, Nespresso has already reached a satisfactory performance, but now, to achieve its goal of SFr 1 billion sales, the company needs to find new ways towards the market. [...]
[...] This could ultimately lead the Nespresso system to be leapfrogged by an even more innovative system developed by one of Nespresso competitors in the coffee market. So, the Nestle division has to promote and sell this system as being a part of lifestyle. This will prevent Nespresso from only being a fag in the market, and will create a competitive advantage over possible competitors. To achieve this goal, Nespresso has to target the same customers, instead of targeting new consumers. [...]
[...] However, the price will have to stay high enough to maintain the image and the credibility of the system Middle-term Creating the Nespresso Experience We suggest that within 3 years the company should maintain its market shares in the in-Home market at the same level and reach a 30% market shares in the away-from-home market. This would enable the company to raise its turnover to SFr 450 million bit more than double) Distribution The idea of establishing exclusive boutiques to make the Nespresso system visible has to be carried out. [...]
[...] By achieving this, Nespresso will not only sell more coffee capsules, but also be in a position to sell more added-value products, which can be sold at a higher margin, and therefore which will be a key feature in the improvement of Nespresso's turnover Recommendation Basic Principles Any action executed has to take into account the final goal of an inspirational brand, and therefore has to tend towards a luxury image. Over time, personal service linked to Nespresso Club membership has to be further developed Short-term Make Nespresso more visible Within nine months, we plan to raise the awareness rate from to which is a most significant part of the market. [...]
[...] This range of accessories will have a high margin rate, which will help the company to boost its profit. It will also help to meet the customers' expectation. This diversification can also involve all material required to prepare the best cappuccino or the best caffe macchiato using the Nespresso system. Concerning the coffee itself, we will also introduce some diversity in the range. Some new capsules will be developed, either: Seasonal blends at no extra cost, but that will create additional sales. [...]
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