Nespresso case study

First of all, Nespresso is having trouble finding long-term clients for their espresso
equipment. They are up against other businesses like L’OR and ECC which their
capsules is compatible to Nespresso machines. Other businesses started to produce
capsules for Nespresso's machines, reducing their market share. To keep their market
share, they must decide whether to downgrade their reputation as a luxury brand or
find alternative distribution methods to their boutique stores.
Secondly, a SWOT analysis would help us better to analyse this case:
- Strengths is that Nespresso provides a high-quality brand of coffee for consumers to
drink daily, stylish machines and an exclusive, personalized service to its clients.
- Weaknesses: Nespresso offers capsules which is higher than their direct competitors.
Their distribution options where restricted to high-end sector. Additionally, their
European patents were about to expire, allowing rival companies to create single-serve
cups that could be used with Nespresso machines and cut into their ongoing revenue.
- Opportunities: Nespresso was positioned in a developing business in 2011, as the
market for capsule coffee has an increased percentage. Meaning that Nespresso has
an opportunity to increase its market share and revenues, they also have the chance to
add other distribution channels. Moreover, it’s good chance to spread awareness by
television advertisements.
- Threats: Nespresso is threatened by rival manufacturers of single-serve coffee makers
and capsules for home brewing.
Overall, the case points out that Nespresso’s distinctive competencies is positioned as
high-quality luxury brand, consumers can try out before making a purchase and they
also ran TV commercials in Europe with George Clooney as the main spokesperson
leading to increased trials and growth.
A disadvantage of Nespresso is the lack of distribution channels it owns compared to
its competitors. Their machines are only available through boutiques, official websites
and select retailers compared to their competitors who are available in local
supermarkets and much easier to obtain. Although it only produces espresso, a
machine that can produce frothed milk is much more expensive than any other
machine on the market.
As a recommendation to Nespresso would be to have their expresso machines become
available through more distribution channels, in order, to open their products to more
consumers and increase their market share. Also, Nespresso needs to keep
maintaining its value proposition by bringing in-home a personalized cup of coffee
while maintaining a long-term relationship with their customers. So, it delivers a
marketing strategy where it provides luxury as a lifestyle and emotional experiences
to their customers. Nespresso may open an open innovation group to increase market
awareness and increase the number of customers. A paradigm of participation,
connection and openness to more great idea. Relatively not all ideas are implemented,
but that's also a strength to communicate your message in a more open exchange with
consumers and other trader sector. In addition, this can also help reduce R&D costs.
Finally, Nespresso could keep maintaining or boosting in advertisement with a slogan
to keep on consumers mind, sponsor events to create an awareness among its
consumers and connecting multi-channels route. And as the case mention I would
agree to stay the course to have a strong brand.