Nespresso Case Study

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PRICE & OPPORTUNITIES: Luxury Market Strategy: Strengths: 1. Focus on technology and innovation. 2. High quality coffee provider. 3. Nespresso Club. 4. Customer Service 5. Recognition from International institute of coffee. 6. Willingness to take the risk. - Management support 7. Well trained sales representatives for the coffee machines. ! Weakness: 1. Image of Nestle on Nespresso. 2. Average awareness rate was less than 5% in the international market 3. Penetrated less than 1% of the house hold. 4. Low return on investment in the marketing initiatives. 5. Nespresso system was more expensive than alternate coffee. Opportunities: 1. Just like they entered the airline industry, Nespresso can consider diverse luxury markets (e.g.: Luxury Yachts, etc) 2. Penetrate the International market to increase customer base as the market share is only 23%. Threats: 1. Reachability of the product. 2. Alternate substitute of Nespresso - competitive Italian and many other brands in the market. Recommendations: 1. Nespresso should spread across luxury segments such as Yachts, Cruise Liners, private charter airlines 2. To introduce Nespresso concept in North American markets by establishing hip, stylish coffee bars in top cities of North America. For e.g.., New York City, Miami, Los Angeles, etc

Justifications for point 1 in Opportunities: 1. To target international high net worth individuals. 2. To increase sales and customer base. Justifications for point 2 in Opportunities: 3. The growth in popularity of European lifestyle in cuisine and fashion in the United States. 4. Considering the growth and popularity of other coffee shops such as Starbucks, the same concept can be applied to the high end Nespresso.

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