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Nespresso

In: Business and Management

Submitted By taniamurcia30
Words 525
Pages 3
-------------------------------------------------
March 01, 2012

How a brand could go ahead: Nespresso Nespresso, Swiss brand, was a separate company created in 1986 as a 100% owned Nestlé affiliate aiming to further develop, produce and market the Nespresso system. The product consisted of high quality coffee packed in aluminum capsules for exclusive use in specially designed machines. There were eight available coffee varieties. With this product, Nespresso was developed as a totally innovate system. However, the company had to face some troubling signs of market.
Nespresso was on sales fields for both the machines and the capsules, but at the end of 1987 just half of the manufactured machines were sold, and without the machines further coffee capsules would not sell. Consequently to this, the machines had defects that were consuming much of the maintenance and service budgets that were covering in total by Nestlé.
We can see at this point, that one of the causes of the losses of the company was the slow sales in non-traditional espresso markets like japan.
Given this situation, we can identify two problems faced by the company: the first one was a problem of distance with the customer, and the second one, it seems as if the company had forgotten its primary purpose: the sale of coffee, not machines. For the first issue, Nespresso had to have thought about the customer (what he wanted) within its distribution strategy.
In addition, Nespresso needs to think on a way that the customer could buy the desired amount, at the time he wants and in the most comfortable place according to their habits and lifestyle. In other words, the company needs to be more accessible to coffee purchasing.
For the second issue, although the main product of the company is coffee, not machines, Nespresso needs to increase the penetration of the machines to attract new consumers and more consumer moments.
The advantage of Nespresso was that due to its failure, the competition was not interested in getting a replacement product, so we thought that the company did the right thing to bring someone from outside with new ideas to save Nespresso from an early death and not a person within the company.
Due to persistent problems with the reliability of Nespresso machines, the idea of using a direct marketing channel came up. And it worked. At that moment, Nespresso had a lot of ideas, but what they really did was to extract the idea, carry it forward in the organization and transform it onto the supermarket shelf. The company had a long term vision for growth, and still they have it. They generated growth with highly differentiated new products.
This case is a good example to believe that continuous innovation and renovation are the keys to meeting the company´s goal, to the success of the leading brand. A company may have an excellent product, with the best quality, but if the enterprise does not know how to approach the customer, if they do not use the proper channels of distribution, this one may enter into losses. At the same time, the company must anticipate the changing environment and customers’ expectations.

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