Alex C.

Wilson

Percy J. Vaughn College of Business

MKT 510: Marketing Management

Mario Zaino

Assignment Due Date: August 16, 2023

 Executive Summary

Nestle founded in 1866 specializes in a variety of portfolios including, chocolate, instant coffee,

instant beverages, soups and bouillon cubes, preservatives, and pharmaceuticals. Operating at its

highest in 1988, with a revenue of 20 billion, instant coffee is failing in Italy. Although Nestle’s

success before World War II (WWII) was a profitable one for its ease of use worldwide, its

official brand Nescafe, with three key blends, fails to contribute over 1% in all the market in

Italy. Nescafe is not commonly accepted in Italian culture as “real coffee”, the product has failed

several marketing campaigns, and has only successfully targeted on key group, older consumers.

Nestle seeks to promote a new marketing strategy that will either further its target audience or

seek out numerous targeted groups.

 Questions

1) What is the structure of the Italian Coffee Market?

The structure of the Italian coffee market consists of about 750 total firms, who have

developed their own roasted blends. Of those, many purchase directly from growers or

small producers to add a unique taste to their portfolio. Coffee is sold in a town or region

in Italy in coffee houses, restaurants, or end consumer retailers. Firms have devoted

investments for advertisement, promotional offers, and a marketing strategy using

demographics based on age, workforce or professional status, international consumer

brand usage, CHR, and the traditional Italian coffee image and likeness. A few examples

of those key players outside of Nescafe are, Lavazza S.p.A., Segafredo-Zanetti, S.p.A.,

Crippa and Berger, Procter & Gamble Italia, Illy Caffe, Consorzio Sao Caffe, and Café do

Brasil.

2) Assess Nescafe’s current market position in Italy. How has Nescafe’s positioning

evolved?

Although Nescafe is affordable, the company only holds a 1% share in the entire Italian

coffee market even after being on the market for 30 years. Consumers do not consider

Nescafe to be “real coffee” because of its quick and “easy to make” process. “Instant

coffee” does not equate to “quality coffee.” The image is “inappropriate for those who

want instant gratification.” Young consumers consider Nescafe to be old fashioned and its

highest consumers are older, more specially between the ages of 45-54.
 Nescafe’s approached changed after a less aggressive marketing strategy classifying the

brand as the best quality coffee based off its indirect growth in France. Nescafe also

experimented with sampling the product at retail and appealing marketing displays during

point of sale.

3) How do Italian consumers buy coffee?

Italian consumers purchase coffee in coffee houses, restaurants, and other institutions

otherwise known as CHR segments. In Italian culture, coffee is best made in a coffee

house, so brands made sure their brand reputation and presence operated best in CHRs.

4) What strategic options could grow the Nescafe brand in Italy?

Nescafe proposed four strategic options. The first was to focus on the consumer who

purchases the brand the most, the older demographic. The second strategy shifted

Nescafe to be a milk modifier instead of an “instant coffee.” The third targeted younger

professionals entirely. The final proposed plan of action involved investing into the CHR

market more heavily.

5) Nescafe is positioned as a new international beverage targeting young people. What are

the marketing program implications?

The marketing implications to marketing as an international beverage is the thread of

“transnational consumers” who aren’t concerned about traditional products but those who

consume international brands, including food. Traditional “Italian” brands are less

appealing to a consumer who purchases worldwide brands.

6) What are the economics of the proposed program?

By 1988 Nescafe had a budget of 312 million to invest in a marketing campaign. The cost

of a failed marketing strategy is high, and Nescafe seemed to just barely compete in the

market or not see positive results. Consumption of international brands from different

countries adversely effects purchase trends for Nescafe. A perception that coffee is “less

healthy” also poses a threat to the coffee market in which sales in coffee decrease so an

increase in advertising and marketing wouldn’t necessarily make a difference.

 References

“Nestle Italy.” Nestle Italy - Case - Faculty & Research - Harvard Business School,
www.hbs.edu/faculty/Pages/item.aspx?num=19562. Accessed 16 Aug. 2023.