SlideShare uma empresa Scribd logo
1 de 25
Baixar para ler offline
1




THE
DIFFUSION OF
NEW                 ANALYSIS OF THE NESPRESSO
PRODUCTS
AND                         DIFFUSION
TECHNOLOGIES




                                                              Diffusion of Innovations: Nespresso




               Student No: 0955773 | Word Count: 3000 + 10%
2


Contents

Introduction .............................................................................3
The Nespresso Journey............................................................4
Strategic Leadership.................................................................5
Main Driving Factors: PESTLE Analysis................................7
       Political............................................................................8
       Economic..........................................................................9
       Social..............................................................................10
       Technological.................................................................12
       Legal...............................................................................13
       Environmental................................................................14
Nespresso – Consumer uncertainty in process.......................16



                                                                                                Diffusion of Innovations: Nespresso
Key Marketing for Innovation Diffusion – Nespresso Club..18
Appeal to Opinion Leaders....................................................19
Conclusion..............................................................................20
References..............................................................................21
Appendix 1 – Key Survey Results.........................................24
3

Introduction
The Nespresso story began with a simple but revolutionary idea;

            ‘The perfect cup of coffee, time after time and cup after cup’
To do so Nespresso pioneered the concept of premium portioned coffee, designed for

maximum convenience. The process redefined the way coffee lovers around the world could

enjoy their coffee. Key to the vision was a determination for quality, innovation and

perfection. This essay will consider the diffusion of Nespresso over time, through different

markets and countries, identifying the main driving factors in the process through a PESTLE

analysis.

With all innovations comes uncertainty, I will identify potential issues which Nespresso faced

within the diffusion process, considering the consumer characteristics which made this

innovation viable. The essay identifies the key marketing efforts which Nespresso utilised to

speed up the diffusion process and develop worldwide consumer acceptance.




                                                                                                 Diffusion of Innovations: Nespresso
4

The Nespresso Journey

In the Late 1970s Nestle dominated the instant coffee market with its Nescafe brand, this

accounted for 30% of worldwide coffee consumption, although Nestle had no significant

presence in the larger roast and ground segment. Senior management realised the

opportunities for growth in this rapidly developing 'gourmet' segment.

The technology behind the Nespresso system originated in Geneva, gaining support from the

food service division, which identified Nespresso as a suitable product to enter the

restaurant market. By late 1987 only half the machines that had been manufactured were

sold and subsequently in 1992 they decided to abandon the strategy in favour of targeting

the office coffee sector, which seemed a good place to build awareness and create a loyal

customer following. They partnered with a Swiss company already present within the office

market with distribution experience; it was felt that compared with households, office

managers would be less sensitive to the relatively high unit price of the machine.




                                                                                            Diffusion of Innovations: Nespresso
5

Strategic Leadership

Shreiber and Chakravarthy (2007) demonstrated the crucial role of innovation at Nespresso,

stating that the project would not have become a reality had the CEO of Nestlé, Dr Helmut

Maucher listened to the pessimistic consumer surveys for the proposed innovation.

Deschamps (2005) identified the importance of the selecting the right leader to implement

innovation strategies. The key aspects of leadership are to promote and sustain innovation;

it seems the Nespresso success could be linked to the selection of an innovative leader. The

Swiss born and US educated Yannik Lang was brought into the Nespresso team, with a

reputation for flair and creativity. He concluded that the prospects in the office sector were

limited, but identified potential in the household market.


They tested this high risk strategy in the single market of Switzerland, deciding that one

market would be easier to keep in control of and be easier to shut down if not successful.

The test proved successful, so a staggered international introduction was followed,

launched in Italy, the world's largest espresso drinking nation and a market renowned for its




                                                                                                 Diffusion of Innovations: Nespresso
passion and expertise of espressos. Nespresso obviously were confident in this product,

followed by entry in Japan, one of the world's fastest growing coffee markets.


Due to the shift to the household market, they decided to re-evaluate their old distribution

strategy, the idea of channelling capsule sales through supermarkets was explored, but

selling the coffee capsules in US food outlets failed. The premium consumer segment was

small, they still had an average awareness rate of less than 5% within international markets,

while penetration was less than 1% of households. This left retailers with a considerable

stock of stale coffee capsules, taking up to three months for the Nespresso capsules to
6

arrive on store shelves, cutting in half the time remaining until the expiry date. With such a

short shelf life quality could not be assured, this strategy of supermarket distribution was

subsequently rejected as it was felt this would transfer the profitability of the business away

from Nespresso. Nespresso seized upon the idea of offering a direct channel to stay in close

contact with the consumer, creating exclusivity at the same time, effectively turning a

technical constraint into an elegant marketing solution. In addition to handling calls it

offered consumers around the clock order taking through the usual channels, with the

advantage of prompt delivery in just two business days. While offering personalised advice,

trained coffee specialists were on hand to advise consumers about the different coffees and

provide technical assistance. By 1999, Nespresso were receiving 70,000 orders worldwide

each day.




                                                                                                  Diffusion of Innovations: Nespresso
7




   Main Driving Factors




                          Diffusion of Innovations: Nespresso




PESTLE Analysis
8

Political

To further develop, produce and market the Nespresso system, a separate company was

created. The new business involved selling coffee, something Nestle were already the

market leader. The company’s top management decided early on that the similarities

between the two businesses were more illusory than real. Nestle were selling instant coffee

to the mass market but Nespresso specifically targeted wealthy and young urban

professionals, positioning itself as an upmarket brand. Nespresso adopted a business model

more akin to a luxury goods manufacturer, not only were the two business models different,

they potentially conflicted as Nespresso could be cannibalizing the sales of Nescafe, while

the values and attitudes of the Nespresso organization were the exact opposite of those in

the traditional Nestle organization.


It was decided that a new unit would be able to move faster in seizing the market

opportunities identified within the newly-created individual portion category. A study of

FMCG companies by Ghoshal and Bartlett (1988) considered the effects of subsidiaries for




                                                                                                Diffusion of Innovations: Nespresso
creation, adoption, and diffusion of innovations. It found that the subsidiaries of Unilever,

ITT and Philips enjoyed considerable strategic and operational autonomy; such a structure

was found to be a better environment for innovation, creation and diffusion. It found that

high levels of centralization could be likely to impede an organization's ability to create

innovations. A separate company provided a more flexible and dynamic entity, with

freedom to experiment. Nespresso could position themselves differently than Nestle, this

separation allowed them to develop separate commercial, distribution and workforce

policies, it seems that this structure was an important success factor.
9

Economic

Cafes inspired the coffee revolution, stimulating the development of coffee drinking,

creating consumers willing to pay vast sums for the 'coffee shop experience’ Through
                                                                 experience’.

creating interest in the coffee process and provenance, Nespresso have been able to add

value through the 'Grand Cru' offering
                      nd      offerings.


When a customer purchases the machine, ranging from £119 to £1500 they are tied to
 hen                                                        £1500,

using Nespresso capsules and the closed system allows Nespresso full control to set its

prices. Prices of capsules are fixed at between £0.27 and £0.31 per capsule, much higher

than any other coffee option in the home, over 3 times higher than for filtered Nespresso,
                                                          her

interestingly the brand communication very rarely even makes any reference to price, which

makes me think of quite an apt staying.




                                                                                             Diffusion of Innovations: Nespresso




                  'If you have to ask the price, you can’t afford it’
10

Social
Aaker (1997) identified 5 dimensions of brand personality; most relevant for Nespresso is

‘Sophistication’, this helps reinforce its premium positioning, while developing exclusivity,

differentiating it from the other coffee brands, adding feelings of style and elegance.

Nespresso have segmented their target group further by simultaneously launching machines

to appeal to users within this segment, such as machines designed in a slim format to easily

fit into the smaller spaces, or those with an urban vibe or daring style. A recent model

shown below demonstrates the adaptability of Nespresso, creating a machine for couples,

representing flexibility for this group, at the same time retaining its trademark elegance.




                                                                                                Diffusion of Innovations: Nespresso
11

Primary research of young professionals (Appendix1) identified interesting characteristics

about affluent city dwelling professionals. They were asked ‘How important to you is fashion

and style? Based on 107 responses, 49% responded important, while 28% responded very

important. The next question ‘How many people live in your household?’ 24% responded

‘live alone’. For a greater understanding about levels of disposable income I asked, ‘How

much do you usually spend on a pair of jeans?’ 25% responded over £80, suggesting an

affluent young and single segment really does exist.


Nespresso utilised the power of celebrity endorsement, picking someone with an image

consistent to the Nespresso brand. George Clooney is a fantastic choice for brand

ambassador, stating they have many things in common, an intense love of style & good

living, both impress their respective fans and stand for incomparable quality. George

Clooney represents a personification of what the Nespresso brand stands for. This method

of linking similarities between the brand ambassador and the brand are detailed in

McCracken (1989), finding the use of celebrity was found to be most effective when




                                                                                               Diffusion of Innovations: Nespresso
meanings are able to pass from celebrity to product and from product to consumer. The

article acknowledged that the celebrity can draw powerful characteristics from the roles

they assume while in character, seen to contribute to their personality.


Nespresso have targeted the premium market, finding product champions to represent the

high quality of the product. They have gained more media exposure while amazingly not

diluting any of the products exclusivity. Understanding the social aspects allowed Nespresso

to strengthen their brand image. Greater exposure helped with the diffusion process, subtly

informing the target market, encouraging them to try Nespresso.
12

Technological

Nespresso machines were successfully developed thanks to the creation of an innovative

culture and environment that allowed and encouraged team members to take intelligent

risks, giving everyone the chance to be an innovator. Kumar & Steenkamp (2007) identified

that successful innovation requires changes in three key processes: new product

development, new product launch, and intellectual property protection. Nespresso have

effectively dealt with these three issues, firstly Nespresso have created technological

pairings with exceptional manufacturers, this can be seen through winning several design

awards from 1996 to the present day.

The Nespresso key strategy is based on its core competency of coffee, they developed

policies to intensify cooperation in the R&D sector with universities, research institutions

and companies. Nespresso created a design award for students of product design, the

support of young talents is an investment in the future, nurturing talented innovative

inventors and creating an interest in coffee machine innovation. The pace of innovation is




                                                                                               Diffusion of Innovations: Nespresso
fast within this high value industry, Mitchell (2007) found cooperation with others brings

new insights and can open new domains and develop the necessary experience. It’s

therefore imperative that Nespresso continue to attract and work with industry leaders and

continue their machine evolution, coffee quality and capsule development.
13

Legal

Nespresso commercialise the machines under license, while remaining in strict control of

the capsule content, only available in Nespresso stores or boutiques. The pod technology

means that no drinks other than what Nespresso intend can come out of a Nespresso co-

branded machine, such control over the licence can ensure a buzz is created through its

exclusivity.


The concept of Nespresso, the machine, capsules and service is protected by 70 patents

which acts as a suitable barrier for potential competitors and imitators. Suppliers must

conform to the restricted set of standardised designs and this level of control and exclusivity

ensures an exceptionally high quality, while Nespresso can gain leverage from respected

machine manufacturer brands such as Krups and the ultra premium machine brand Miele,

pictured below.




                                                                                                  Diffusion of Innovations: Nespresso
14

Environmental

It seems Nespresso are content meeting the minimum ethical and environmental

expectations of consumers, knowing that taste and luxury are more important to this

segment. There is large waste-per-cup with this product, while aluminium recycling

programs have been limited to only a few markets. Starting in 2009, New York boutiques

started taking back used capsules, it is suggested this initiative should be rolled out globally.

To counteract criticism Nespresso have participated in various sustainability principles such

as collecting rainwater and local community heat exchange, while an automatic standby

function was introduced to help reduce energy consumption. Nespresso make little

ecological claims on their products, avoiding a hypocritical approach. While much of the

coffee industry is being sold through fair trade markets, Nespresso instead invest in

sustainable quality development, which is hoped to result in higher quality beans. Coffee

farmers who are part of program are rewarded with not only higher prices but through

creation of long term partnerships.




                                                                                                    Diffusion of Innovations: Nespresso
It seems Nespresso have taken a clever approach, avoiding the high priced fair-trade market

means that they can be more profitable, while investing in an exclusive program which

differentiates their product from the fair trade offerings which already saturate the market.

I have travelled to the coffee farms and met some farms that supply Nestle beans, shown in

the picture below is a similar coffee organisation called UTZ certified, which promotes

traceability for coffee, such sustainable projects are mutually beneficial, with the potential

to become more viable than the artificial price setting Organic and Fair-trade movements.
15




Diffusion of Innovations: Nespresso
16

Nespresso – Consumer uncertainty in the process

The premium pricing of this product could potentially restrict the successful diffusion rate of

the innovation, to protect against this Nespresso made sure to emphasise at every

opportunity its high quality, moving it away from a commoditised coffee drink, promoting

the ultimate coffee experience. Nespresso have added value by establishing the line of

'Grand Cru' coffees in a similar way that 'Grand Cru' distinguishes a top quality wine. The

association with 'Gourmet' suggests that special care and attention has been devoted,

adding value and differentiating it from all other coffee. The premium positioning that

Nespresso have taken makes it difficult to compare with other home consumption coffees,

the only thing coming close to Nespresso is a cafe espresso, and in this comparison

Nespresso is much cheaper at 30p per shot compared with around £2.00.

There is potential uncertainty among consumers that the range is quite small, club

members’ feedback was used to develop new and exciting coffees, each year they add

limited edition 'local discoveries'. The 'special club' and 'limited edition' coffee appeals to




                                                                                                  Diffusion of Innovations: Nespresso
consumers who enjoy exclusivity and limited edition products to feel special. Nespresso

have tried to counteract the limitation on coffee choice by allowing consumers to express

themselves with a stylish range of machines, specially designed for city goers and retro

lovers, the latest CitiZ machine was developed based on club members’ feedback, it is

hoped that this involvement would help product acceptance.


Nespresso toyed with the idea of making the Nespresso machine capable of handling other

hot drinks; however this approach was scorned, which subtlety suggests superiority. ‘Why

would you want to drink something other than coffee?’ Although advertising does

demonstrate the ability of Nespresso to make cappuccino and latte, the focus of this
17

machine is towards espresso, to enjoy coffee it at its best; no compromise, no gimmicks.

The barrier to successful diffusion of Nespresso is potential resistance from coffee

traditionalists who are anti-technology and loyal to the old methods. Nespresso opened

boutique bars in glamorous locations to position Nespresso as a suitable rival, proving the

experience is exactly the same, if not better!


Research found 60 per cent of the sensory experience of drinking espresso comes from the

retail environment so they launched a chain of upmarket coffee outlets partially to enhance

the appeal of their home-prepared product, Soars (2009). The way that Nespresso promote

sampling has been successful to achieve acceptance from the traditionalists.

The café culture ties in well with the Nespresso image, a benefit of the coffee house

experience is the coffee education, a development of what you learn in Starbucks,

Nespresso is the next step of coffee appreciation, they want to recreate the Italian espresso

bar experience. Adverts appeal to those who are likely to have an urban apartment,

assuming they care about the design and are house-proud, they want to encourage the cafe




                                                                                                Diffusion of Innovations: Nespresso
culture without even leaving your own home, it’s sociable and flexible!
18

Key Marketing for Innovation Diffusion - The Nespresso Club

Prior to the Nespresso club, the company relied mainly on word of mouth, which was

possible due to the existence of an extremely loyal customer base, resulting in step by step

growth. Liebermann (1999) found membership clubs (MCs) to have a concrete potential of

enhancing members’ patronage, the empirical results show that MCs enhance three areas:

image, sales and marketing.     In the annual satisfaction survey, 95% of the 1 million

respondents were 'Totally Satisfied’, suggesting brand loyalty created a special and unique

relationship. The Nespresso club database allowed segmentation according the consumption

patterns and length of membership, the database was set up to handle orders for capsules

and customer details, including ordering patterns. This database subsequently provides a

wealth of information about usage, attitudes and behaviour, providing valuable data, which

has proven instrumental the successful relationships Nespresso have developed.

Nespresso have total control of all sales coming through this channel, with the ability to

closely track new members. It’s felt that long term consumption habits are formed by usage




                                                                                               Diffusion of Innovations: Nespresso
patterns established early in the relationship, allowing them to work out the potential

lifetime value, thereby placing an appropriate level of care. Heavy capsule users (more than

100 per month) were followed up by Nespresso club staff if these users failed to place an

order by an anticipated date they would get in touch to make sure their machine was

functioning, take orders or answer questions. This enabled identification if machines needed

servicing, arranging for free home pick-up and return, while a replacement would be loaned,

all contributing to the development of customer intimacy.
19

Appeal to Opinion Leaders
Word of mouth proved to be a successful but slow process, other means were considered to

speed up the awareness and diffusion process of the Nespresso concept. Over the last 8

years the number of Nespresso club members worldwide jumped from 600,000 to more

than 6 million, with an additional 2.2 new members added in 2008 alone. 50% of all

Nespresso club members first experienced the brand through existing members.

Valente and Davis (1999) researched the role of opinion leaders, finding they accelerate the

diffusion process and opinion leaders usually were identified as heavy users. Nespresso

developed a model to target the innovative consumers and develop strong relationships

with them. Through WOM, sponsorship and PR, the customer base has steadily expanded

among the elite of espresso lovers, Nespresso reported that Heston Blumenthal, chef of the

renowned English Michelin-3-star restaurant "The Fat Duck", succumbed to the exceptional

quality of Nespresso coffees, suggesting mainstream gourmet acceptance.

The strategy to further internationalise and position Nespresso as a premium product was

strengthened through the patronage of British Airways and Cathay Pacific among many




                                                                                               Diffusion of Innovations: Nespresso
other airlines who now serve Nespresso Coffee on-board first class, as each day more than

10,000 Nespressos are served in onboard this is diffusing the Nespresso concept further.
20

Conclusion

Most people previously consumed espresso away from home, in restaurants, hotels, bars

and cafes, vending machines, offices and public areas. Home consumption was limited due

the perceived high price of espresso.       In cafes, espresso was inexpensive and widely

available, but only 1 in 5 Italians consumed espresso at home.


Consumers have moved away from traditional coffees and developed a taste of inventive,

upscale, premium priced speciality coffee, the trends suggested that traditional coffee

popularity is declining, the gourmet coffee world was revolutionised by Starbucks, leading to

espresso being perceived as a trendy, socially elite drink. The typical espresso drinker can be

defined as a city dweller with discerning tastes in food some may say a ‘bon vivant’.

Nespresso identified well educated and affluent, 35-45 year old, who enjoyed drinking café

quality espresso at home, finding this segment would constitute a profitable segment for

the Nespresso system.


Nestle identified over time that the household market was suitable for building long term




                                                                                                  Diffusion of Innovations: Nespresso
business, they recognised that demanding consumers would need to receive high levels of

attention to retain their loyalty. Investments were made in the training of sales clerks in

retail stores to encourage the first connection, promote tastings and reflect the key

attributes of the product to emphasise the points which matched the consumer’s lifestyle.


The opportunity was there for a home gourmet coffee experience and Nespresso

successfully innovated a fantastic product to fulfil this need.
21

References

Aaker, J. (1997). Dimensions of brand personality. Journal of Marketing Research. 34 (3), pg
347 – 356.

Abrahamson, E., Rosenkopf , L. (1997). Network Effects on the Extent of Innovation
Diffusion: A Computer Simulation.Organization Science. 8 (3), pp. 289-309.

Agrawal, J., Kamakure, W. (1998). The Economic Worth of Celebrity Endorsers: An Event
Study Analysis. Journal of Marketing Research. 59 (July), pg 56-62

Al Bawaba. (2010). Nespresso Launches CitiZ, in the Kingdom.Available:
http://www.albawaba.com/en/countries/Saudi%20Arabia/259233. Last accessed 21 March
2010.

Alvarez, G., Wilding, R. (2008). Governance dynamics in a multi-stakeholder network: The
case of Nespresso AAA Sustainable Quality Program . British academy of Management
Conference. September

Bone, P. (1995). Word-of-Mouth effect on short-term and long term product
judgements. Journal of Business Research . 32 (99), Pg 213-223.

Chakravarthy, B., Lorange, P. (2008). Driving renewal: the entrepreneur-manager. Journal of
Business Strategy. 2 (2), pp: 14-21

Chakravarthy, B., Shreiber, N. (2007). Leading Paradoxically. EBF. 30 (Autumn), pg 28 - 33.

Chernev. A (2007). Strategic Marketing Analysis. 2nd ed. Chicago: Brightstar Media.




                                                                                                   Diffusion of Innovations: Nespresso
Datamonitor (2005). Company Spotlight: Nestle, October [online]. London: Datamonitor.
Available from http://datamonitor.com/ [Accessed: 08/02/2010]

Dekiple, M., Parker, P., Sarvary, M. (2000). Global diffusion of technological innovations: A
coupled-hazard approach. Journal of Marketing Research. 37 (1), pg 47-59.

Deschamps, JP. (2005). Different leadership skills for different innovation strategies. Strategy
& Leadership. 3 (5), pg. 31 – 38.

Dodson, J., Muller, E. (1978). Models of New Product Diffusion through advertising and
word of mouth.Management Science. 10 (2), pg 1568-78.

Ghoshal, S., Bartlett, C. (1988). Creation, Adoption, and Diffusion of Innovations by
Subsidiaries of Multinational Corporations. Journal of International Business. 19 (3), pp.
365-388.

Godes, D., Mayzlin, D. (2004). Using Online Conversations to Study Word-of-Mouth
Communication . Marketing
Sciehttp://www.neilstoolbox.com/images/button_blue_getresult.gifnce. 23 (4), pp. 545–560.
22

Goldman, A., Ramaswami, S., Krider, R. (2002). Barriers to the advancement of modern food
retail formats: theory and measurement . Journal of Retailing. 78, 281-295.

Greenalgh, T., Robert, G., Macfarlane, F., Bate, P., Kyriakidou, O. (2004). Diffusion of
Innovations in Service Organizations: Systematic Review and Recommendations.The
Milbank Quarterly. 82 (4), PG 581-629.

Kim N,. Srivastava R. (1998). Managing Intraorganizational Diffusion of Technological
Innovations. Industrial Marketing Management . 27, p229–246

Kumar, N., Jan-Benedict., Steenkamp. (2007). Brand versus Brand. Springer. 7 (18)

Lambin, J-J. (2004). Strategic Marketing Revisited after September 11. Emerging Issues in
Management. pg 1 -23.

Liebermann, Y. (1999). Membership Clubs as a Tool for Enhancing Buyers’
Patronage. Journal of Business Research. 45 (99), pg 291-297.

Lindinger, C.,Labbe, D., Pollien, P,. Rytz, A. (2008). When Machine Tastes Coffee:
Instrumental Approach To Predict the Sensory Profile of Espresso Coffee . American
Chemical Society

Mahajan, V., Muller, E. (1979). Innovation Diffusion and New Product Growth Models in
Marketing. Journal of Marketing Research. 43 (4), pg55 - 68.

Markides, C (1999), All the Right Moves: A Guide to Crafting Breakthrough Strategy.
Harvard

Markides, C., Charitou, C. (2004). Competing with dual business models: A contingency
approach. Academy of Management Executive. 18 (3), pg 22 - 36.




                                                                                            Diffusion of Innovations: Nespresso
McCracken, G. (1989). Who Is The Celebrity Endorser?.Journal of Consumer Research. 16
(3), pg 310-321.

Miller, J. (2003). Innovation and Renovation: The Nespresso Story. Available:
http://wwwdim.uqac.ca/~attrembl/8INF848/Cases_HBRP/IMD046-PDF-ENG.pdf. Last
accessed 06 February 2010.

Mintel (2008) Coffee UK January [online]. London: Mintel. Available from
http://academic.mintel.com/ [Accessed: 08/02/2010]

Mintel (2009). Small Kitchen Appliances UK December [online]. London: Mintel. Available
from http://academic.mintel.com/ [Accessed: 08/02/2010]

Mitchell, A. (2007). Interview with Peter Brabeck-Letmathe. International Commerce
Review. 7, pg10-14.

Moeini, A., Goldmintz, S., Alamgir, S. (2006). Lead User Innovation. Schulich School of
Business Research. 99 (99), Pg 1-20.
23

Moeller, M. (2005). Strategic Innovation. Available:
http://www.doujak.eu/fileadmin/Redaktion/Downloads/Strategic_Innovation_Chapter_1.pdf.
Last accessed 13 March 2010.

Mooradian, T., Swan, S. (2006). Personality-and-culture: The case of national extraversion
and word-of-mouth .Journal of Business Research . 59 (99), pg 778–7

Pae, J., Kim, N., Han, J,.Yip, L. (2002). Managing intraorganizational diffusion of
innovations Impact of buying center dynamics and environments . Industrial Marketing
Management . 3, 719-726.

Panayotis, Z. (2006). ‘Transnational Business Growth’.Available: http://www.zamaros.net.
Last accessed 21 Match 2010.

Richler, J. (2009). How to make perfect coffee at home.Available:
http://www2.macleans.ca/2009/10/15/how-to-make-perfect-coffee-at-home/. Last accessed
01 March 2010.

Richter, J. (2009). The Avenches Milestone in the Nespresso Success Story. Available:
http://www.nestle.com/Resource.axd?Id=CF489C89-60D4-4A6E-8590-091D6D5E0672.
Last accessed 06 February 2010.

Shah, S. (2000). Sources and Patterns of Innovation in a Consumer Products
Field. Massachusetts Institute of Technology: Sloan Working Paper . #4105

Soars, B. (2009). Driving sales through shoppers’sense of sound, sight,smell and
touch. International Journal of Retail & Distribution Management. 37 (3), pg 286-298

Teichert, T., von Wartburg, I., Braterman, R. (2006). Tacit meaning in disguise: Hidden
metaphors in new product development and market making . Business Horizons . 49, pp. 451-
461.



                                                                                             Diffusion of Innovations: Nespresso
Thompson, M. (2009). Integrity in Marketing: Chinese and European Perspectives. Journal
of International Business Ethics . 2 (2), pg62 - 69.

Valente, T., Davis, R. (1999). Accelerating thr Diffusion of Innovations Using Opinion
Leaders. Annals. 566, pg 55-67.

Wang, Q., Montaguti, E. (2002). The R&D-marketing interface and new product entry

strategy. Marketing Intelligence & Planning . 20 (2), pg 82-85.
24

Appendix 1 – Summary of Key Survey Results




                                             Diffusion of Innovations: Nespresso
25




Diffusion of Innovations: Nespresso

Mais conteúdo relacionado

Mais procurados

Nespresso case study
Nespresso case studyNespresso case study
Nespresso case studyMehul Sharma
 
NESPRESSO MARKETING ANALYSIS 2014
NESPRESSO MARKETING ANALYSIS 2014NESPRESSO MARKETING ANALYSIS 2014
NESPRESSO MARKETING ANALYSIS 2014Marine Escande
 
Nespresso case study - Internship under Prof. Sameer Mathur, IIM Lucknow
Nespresso case study - Internship under Prof. Sameer Mathur, IIM LucknowNespresso case study - Internship under Prof. Sameer Mathur, IIM Lucknow
Nespresso case study - Internship under Prof. Sameer Mathur, IIM LucknowSanthosh Kumar
 
Nespresso: Perfect Consistency - What Else?
Nespresso: Perfect Consistency - What Else?Nespresso: Perfect Consistency - What Else?
Nespresso: Perfect Consistency - What Else?XPotential
 
Nespresso - Crafting the Brand Positioning
Nespresso - Crafting the Brand PositioningNespresso - Crafting the Brand Positioning
Nespresso - Crafting the Brand PositioningKarthik Prasad
 
A new coffee for the USA from Nestlé Nespresso
A new coffee for the USA from Nestlé NespressoA new coffee for the USA from Nestlé Nespresso
A new coffee for the USA from Nestlé NespressoNestlé SA
 
Presentation nespresso
Presentation nespressoPresentation nespresso
Presentation nespressoLola Bismuth
 
Nespresso: About and its Market Analysis
Nespresso: About and its Market Analysis Nespresso: About and its Market Analysis
Nespresso: About and its Market Analysis Vasudha Harlalka
 
Integrated Marketing Communication of Nespresso and Tassimo
Integrated Marketing Communication of Nespresso and TassimoIntegrated Marketing Communication of Nespresso and Tassimo
Integrated Marketing Communication of Nespresso and TassimoMalik Aberkane
 
Case Analysis of Nespresso
Case Analysis of NespressoCase Analysis of Nespresso
Case Analysis of NespressoSonia Grover
 
NESPRESSO MARKETING ANALYSIS 2014 Complete analysis
NESPRESSO MARKETING ANALYSIS 2014 Complete analysisNESPRESSO MARKETING ANALYSIS 2014 Complete analysis
NESPRESSO MARKETING ANALYSIS 2014 Complete analysisMarine Escande
 

Mais procurados (20)

Nespresso
NespressoNespresso
Nespresso
 
Nespresso case study
Nespresso case studyNespresso case study
Nespresso case study
 
Marketing Plan for Nespresso
Marketing Plan for Nespresso Marketing Plan for Nespresso
Marketing Plan for Nespresso
 
Nespresso
NespressoNespresso
Nespresso
 
Nespresso Analysis
Nespresso AnalysisNespresso Analysis
Nespresso Analysis
 
NESPRESSO MARKETING ANALYSIS 2014
NESPRESSO MARKETING ANALYSIS 2014NESPRESSO MARKETING ANALYSIS 2014
NESPRESSO MARKETING ANALYSIS 2014
 
Nespresso case study - Internship under Prof. Sameer Mathur, IIM Lucknow
Nespresso case study - Internship under Prof. Sameer Mathur, IIM LucknowNespresso case study - Internship under Prof. Sameer Mathur, IIM Lucknow
Nespresso case study - Internship under Prof. Sameer Mathur, IIM Lucknow
 
Nespresso
NespressoNespresso
Nespresso
 
Nespresso: Perfect Consistency - What Else?
Nespresso: Perfect Consistency - What Else?Nespresso: Perfect Consistency - What Else?
Nespresso: Perfect Consistency - What Else?
 
Nespresso - Crafting the Brand Positioning
Nespresso - Crafting the Brand PositioningNespresso - Crafting the Brand Positioning
Nespresso - Crafting the Brand Positioning
 
A new coffee for the USA from Nestlé Nespresso
A new coffee for the USA from Nestlé NespressoA new coffee for the USA from Nestlé Nespresso
A new coffee for the USA from Nestlé Nespresso
 
Presentation nespresso
Presentation nespressoPresentation nespresso
Presentation nespresso
 
Nespresso: About and its Market Analysis
Nespresso: About and its Market Analysis Nespresso: About and its Market Analysis
Nespresso: About and its Market Analysis
 
Integrated Marketing Communication of Nespresso and Tassimo
Integrated Marketing Communication of Nespresso and TassimoIntegrated Marketing Communication of Nespresso and Tassimo
Integrated Marketing Communication of Nespresso and Tassimo
 
Nespresso UK
Nespresso UKNespresso UK
Nespresso UK
 
Case Analysis of Nespresso
Case Analysis of NespressoCase Analysis of Nespresso
Case Analysis of Nespresso
 
Nespresso-Case Study
Nespresso-Case StudyNespresso-Case Study
Nespresso-Case Study
 
Nespresso Business Strategy
Nespresso Business StrategyNespresso Business Strategy
Nespresso Business Strategy
 
NESPRESSO MARKETING ANALYSIS 2014 Complete analysis
NESPRESSO MARKETING ANALYSIS 2014 Complete analysisNESPRESSO MARKETING ANALYSIS 2014 Complete analysis
NESPRESSO MARKETING ANALYSIS 2014 Complete analysis
 
Nespresso
NespressoNespresso
Nespresso
 

Semelhante a Nespresso

Case Study Nespresso.pdf
Case Study Nespresso.pdfCase Study Nespresso.pdf
Case Study Nespresso.pdfdwijunianto8
 
Consumer Research-Nescafe Brand Personality comparison between International ...
Consumer Research-Nescafe Brand Personality comparison between International ...Consumer Research-Nescafe Brand Personality comparison between International ...
Consumer Research-Nescafe Brand Personality comparison between International ...Mustafizur Rahman
 
Nespresso brand positioning
Nespresso brand positioningNespresso brand positioning
Nespresso brand positioningAnjali Gupta
 
Nescafe 4 Ps of marketing mix and consumer research
Nescafe 4 Ps of marketing mix and consumer researchNescafe 4 Ps of marketing mix and consumer research
Nescafe 4 Ps of marketing mix and consumer researchDevansh Tiwari
 
Nespresso brand positioning
Nespresso brand positioningNespresso brand positioning
Nespresso brand positioningPOOJA M
 
Nespresso brand positioning
Nespresso brand positioningNespresso brand positioning
Nespresso brand positioningPOOJA M
 
Report social media relationship quality of nespresso lindt nestlé
Report social media relationship quality of nespresso lindt nestléReport social media relationship quality of nespresso lindt nestlé
Report social media relationship quality of nespresso lindt nestlédigitalgorillaz
 
Developing and Establishing Brand Positiioning
Developing and Establishing Brand Positiioning Developing and Establishing Brand Positiioning
Developing and Establishing Brand Positiioning Nikhil Seth
 
Nestle Nespresso Bus 400
Nestle Nespresso Bus 400Nestle Nespresso Bus 400
Nestle Nespresso Bus 400starsajeeb
 
Nestle study
Nestle studyNestle study
Nestle studytechnogar
 
Term report marketing
Term report marketingTerm report marketing
Term report marketingsadiq Islam
 
Term report marketing
Term report marketingTerm report marketing
Term report marketingsadiq Islam
 
report on consumer preference w.r.t to coffee
report on consumer preference w.r.t to coffeereport on consumer preference w.r.t to coffee
report on consumer preference w.r.t to coffeegauravishah90
 

Semelhante a Nespresso (20)

Case Study Nespresso.pdf
Case Study Nespresso.pdfCase Study Nespresso.pdf
Case Study Nespresso.pdf
 
Nespresso
NespressoNespresso
Nespresso
 
Consumer Research-Nescafe Brand Personality comparison between International ...
Consumer Research-Nescafe Brand Personality comparison between International ...Consumer Research-Nescafe Brand Personality comparison between International ...
Consumer Research-Nescafe Brand Personality comparison between International ...
 
Nespresso brand positioning
Nespresso brand positioningNespresso brand positioning
Nespresso brand positioning
 
Nescafe 4 Ps of marketing mix and consumer research
Nescafe 4 Ps of marketing mix and consumer researchNescafe 4 Ps of marketing mix and consumer research
Nescafe 4 Ps of marketing mix and consumer research
 
Nespresso brand positioning
Nespresso brand positioningNespresso brand positioning
Nespresso brand positioning
 
Nespresso brand positioning
Nespresso brand positioningNespresso brand positioning
Nespresso brand positioning
 
Report social media relationship quality of nespresso lindt nestlé
Report social media relationship quality of nespresso lindt nestléReport social media relationship quality of nespresso lindt nestlé
Report social media relationship quality of nespresso lindt nestlé
 
BM summative
BM summativeBM summative
BM summative
 
Nescafe
NescafeNescafe
Nescafe
 
Developing and Establishing Brand Positiioning
Developing and Establishing Brand Positiioning Developing and Establishing Brand Positiioning
Developing and Establishing Brand Positiioning
 
Nespresso.pptx
Nespresso.pptxNespresso.pptx
Nespresso.pptx
 
Nestle Nespresso Bus 400
Nestle Nespresso Bus 400Nestle Nespresso Bus 400
Nestle Nespresso Bus 400
 
Report
ReportReport
Report
 
Marketing Mix Nestle Company
Marketing Mix Nestle CompanyMarketing Mix Nestle Company
Marketing Mix Nestle Company
 
Nespresso
NespressoNespresso
Nespresso
 
Nestle study
Nestle studyNestle study
Nestle study
 
Term report marketing
Term report marketingTerm report marketing
Term report marketing
 
Term report marketing
Term report marketingTerm report marketing
Term report marketing
 
report on consumer preference w.r.t to coffee
report on consumer preference w.r.t to coffeereport on consumer preference w.r.t to coffee
report on consumer preference w.r.t to coffee
 

Último

Introducing the Analogic framework for business planning applications
Introducing the Analogic framework for business planning applicationsIntroducing the Analogic framework for business planning applications
Introducing the Analogic framework for business planning applicationsKnowledgeSeed
 
Pitch Deck Teardown: Xpanceo's $40M Seed deck
Pitch Deck Teardown: Xpanceo's $40M Seed deckPitch Deck Teardown: Xpanceo's $40M Seed deck
Pitch Deck Teardown: Xpanceo's $40M Seed deckHajeJanKamps
 
TriStar Gold Corporate Presentation - April 2024
TriStar Gold Corporate Presentation - April 2024TriStar Gold Corporate Presentation - April 2024
TriStar Gold Corporate Presentation - April 2024Adnet Communications
 
Onemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
Onemonitar Android Spy App Features: Explore Advanced Monitoring CapabilitiesOnemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
Onemonitar Android Spy App Features: Explore Advanced Monitoring CapabilitiesOne Monitar
 
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdfChris Skinner
 
Healthcare Feb. & Mar. Healthcare Newsletter
Healthcare Feb. & Mar. Healthcare NewsletterHealthcare Feb. & Mar. Healthcare Newsletter
Healthcare Feb. & Mar. Healthcare NewsletterJamesConcepcion7
 
Guide Complete Set of Residential Architectural Drawings PDF
Guide Complete Set of Residential Architectural Drawings PDFGuide Complete Set of Residential Architectural Drawings PDF
Guide Complete Set of Residential Architectural Drawings PDFChandresh Chudasama
 
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...Hector Del Castillo, CPM, CPMM
 
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdfGUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdfDanny Diep To
 
Traction part 2 - EOS Model JAX Bridges.
Traction part 2 - EOS Model JAX Bridges.Traction part 2 - EOS Model JAX Bridges.
Traction part 2 - EOS Model JAX Bridges.Anamaria Contreras
 
Cybersecurity Awareness Training Presentation v2024.03
Cybersecurity Awareness Training Presentation v2024.03Cybersecurity Awareness Training Presentation v2024.03
Cybersecurity Awareness Training Presentation v2024.03DallasHaselhorst
 
Intermediate Accounting, Volume 2, 13th Canadian Edition by Donald E. Kieso t...
Intermediate Accounting, Volume 2, 13th Canadian Edition by Donald E. Kieso t...Intermediate Accounting, Volume 2, 13th Canadian Edition by Donald E. Kieso t...
Intermediate Accounting, Volume 2, 13th Canadian Edition by Donald E. Kieso t...ssuserf63bd7
 
Effective Strategies for Maximizing Your Profit When Selling Gold Jewelry
Effective Strategies for Maximizing Your Profit When Selling Gold JewelryEffective Strategies for Maximizing Your Profit When Selling Gold Jewelry
Effective Strategies for Maximizing Your Profit When Selling Gold JewelryWhittensFineJewelry1
 
Jewish Resources in the Family Resource Centre
Jewish Resources in the Family Resource CentreJewish Resources in the Family Resource Centre
Jewish Resources in the Family Resource CentreNZSG
 
Fordham -How effective decision-making is within the IT department - Analysis...
Fordham -How effective decision-making is within the IT department - Analysis...Fordham -How effective decision-making is within the IT department - Analysis...
Fordham -How effective decision-making is within the IT department - Analysis...Peter Ward
 
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...SOFTTECHHUB
 
WSMM Media and Entertainment Feb_March_Final.pdf
WSMM Media and Entertainment Feb_March_Final.pdfWSMM Media and Entertainment Feb_March_Final.pdf
WSMM Media and Entertainment Feb_March_Final.pdfJamesConcepcion7
 
Entrepreneurship lessons in Philippines
Entrepreneurship lessons in  PhilippinesEntrepreneurship lessons in  Philippines
Entrepreneurship lessons in PhilippinesDavidSamuel525586
 
The-Ethical-issues-ghhhhhhhhjof-Byjus.pptx
The-Ethical-issues-ghhhhhhhhjof-Byjus.pptxThe-Ethical-issues-ghhhhhhhhjof-Byjus.pptx
The-Ethical-issues-ghhhhhhhhjof-Byjus.pptxmbikashkanyari
 

Último (20)

Introducing the Analogic framework for business planning applications
Introducing the Analogic framework for business planning applicationsIntroducing the Analogic framework for business planning applications
Introducing the Analogic framework for business planning applications
 
Pitch Deck Teardown: Xpanceo's $40M Seed deck
Pitch Deck Teardown: Xpanceo's $40M Seed deckPitch Deck Teardown: Xpanceo's $40M Seed deck
Pitch Deck Teardown: Xpanceo's $40M Seed deck
 
TriStar Gold Corporate Presentation - April 2024
TriStar Gold Corporate Presentation - April 2024TriStar Gold Corporate Presentation - April 2024
TriStar Gold Corporate Presentation - April 2024
 
Onemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
Onemonitar Android Spy App Features: Explore Advanced Monitoring CapabilitiesOnemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
Onemonitar Android Spy App Features: Explore Advanced Monitoring Capabilities
 
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
20220816-EthicsGrade_Scorecard-JP_Morgan_Chase-Q2-63_57.pdf
 
Healthcare Feb. & Mar. Healthcare Newsletter
Healthcare Feb. & Mar. Healthcare NewsletterHealthcare Feb. & Mar. Healthcare Newsletter
Healthcare Feb. & Mar. Healthcare Newsletter
 
Guide Complete Set of Residential Architectural Drawings PDF
Guide Complete Set of Residential Architectural Drawings PDFGuide Complete Set of Residential Architectural Drawings PDF
Guide Complete Set of Residential Architectural Drawings PDF
 
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
How Generative AI Is Transforming Your Business | Byond Growth Insights | Apr...
 
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdfGUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
GUIDELINES ON USEFUL FORMS IN FREIGHT FORWARDING (F) Danny Diep Toh MBA.pdf
 
Traction part 2 - EOS Model JAX Bridges.
Traction part 2 - EOS Model JAX Bridges.Traction part 2 - EOS Model JAX Bridges.
Traction part 2 - EOS Model JAX Bridges.
 
Cybersecurity Awareness Training Presentation v2024.03
Cybersecurity Awareness Training Presentation v2024.03Cybersecurity Awareness Training Presentation v2024.03
Cybersecurity Awareness Training Presentation v2024.03
 
Intermediate Accounting, Volume 2, 13th Canadian Edition by Donald E. Kieso t...
Intermediate Accounting, Volume 2, 13th Canadian Edition by Donald E. Kieso t...Intermediate Accounting, Volume 2, 13th Canadian Edition by Donald E. Kieso t...
Intermediate Accounting, Volume 2, 13th Canadian Edition by Donald E. Kieso t...
 
Effective Strategies for Maximizing Your Profit When Selling Gold Jewelry
Effective Strategies for Maximizing Your Profit When Selling Gold JewelryEffective Strategies for Maximizing Your Profit When Selling Gold Jewelry
Effective Strategies for Maximizing Your Profit When Selling Gold Jewelry
 
Jewish Resources in the Family Resource Centre
Jewish Resources in the Family Resource CentreJewish Resources in the Family Resource Centre
Jewish Resources in the Family Resource Centre
 
WAM Corporate Presentation April 12 2024.pdf
WAM Corporate Presentation April 12 2024.pdfWAM Corporate Presentation April 12 2024.pdf
WAM Corporate Presentation April 12 2024.pdf
 
Fordham -How effective decision-making is within the IT department - Analysis...
Fordham -How effective decision-making is within the IT department - Analysis...Fordham -How effective decision-making is within the IT department - Analysis...
Fordham -How effective decision-making is within the IT department - Analysis...
 
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
How To Simplify Your Scheduling with AI Calendarfly The Hassle-Free Online Bo...
 
WSMM Media and Entertainment Feb_March_Final.pdf
WSMM Media and Entertainment Feb_March_Final.pdfWSMM Media and Entertainment Feb_March_Final.pdf
WSMM Media and Entertainment Feb_March_Final.pdf
 
Entrepreneurship lessons in Philippines
Entrepreneurship lessons in  PhilippinesEntrepreneurship lessons in  Philippines
Entrepreneurship lessons in Philippines
 
The-Ethical-issues-ghhhhhhhhjof-Byjus.pptx
The-Ethical-issues-ghhhhhhhhjof-Byjus.pptxThe-Ethical-issues-ghhhhhhhhjof-Byjus.pptx
The-Ethical-issues-ghhhhhhhhjof-Byjus.pptx
 

Nespresso

  • 1. 1 THE DIFFUSION OF NEW ANALYSIS OF THE NESPRESSO PRODUCTS AND DIFFUSION TECHNOLOGIES Diffusion of Innovations: Nespresso Student No: 0955773 | Word Count: 3000 + 10%
  • 2. 2 Contents Introduction .............................................................................3 The Nespresso Journey............................................................4 Strategic Leadership.................................................................5 Main Driving Factors: PESTLE Analysis................................7 Political............................................................................8 Economic..........................................................................9 Social..............................................................................10 Technological.................................................................12 Legal...............................................................................13 Environmental................................................................14 Nespresso – Consumer uncertainty in process.......................16 Diffusion of Innovations: Nespresso Key Marketing for Innovation Diffusion – Nespresso Club..18 Appeal to Opinion Leaders....................................................19 Conclusion..............................................................................20 References..............................................................................21 Appendix 1 – Key Survey Results.........................................24
  • 3. 3 Introduction The Nespresso story began with a simple but revolutionary idea; ‘The perfect cup of coffee, time after time and cup after cup’ To do so Nespresso pioneered the concept of premium portioned coffee, designed for maximum convenience. The process redefined the way coffee lovers around the world could enjoy their coffee. Key to the vision was a determination for quality, innovation and perfection. This essay will consider the diffusion of Nespresso over time, through different markets and countries, identifying the main driving factors in the process through a PESTLE analysis. With all innovations comes uncertainty, I will identify potential issues which Nespresso faced within the diffusion process, considering the consumer characteristics which made this innovation viable. The essay identifies the key marketing efforts which Nespresso utilised to speed up the diffusion process and develop worldwide consumer acceptance. Diffusion of Innovations: Nespresso
  • 4. 4 The Nespresso Journey In the Late 1970s Nestle dominated the instant coffee market with its Nescafe brand, this accounted for 30% of worldwide coffee consumption, although Nestle had no significant presence in the larger roast and ground segment. Senior management realised the opportunities for growth in this rapidly developing 'gourmet' segment. The technology behind the Nespresso system originated in Geneva, gaining support from the food service division, which identified Nespresso as a suitable product to enter the restaurant market. By late 1987 only half the machines that had been manufactured were sold and subsequently in 1992 they decided to abandon the strategy in favour of targeting the office coffee sector, which seemed a good place to build awareness and create a loyal customer following. They partnered with a Swiss company already present within the office market with distribution experience; it was felt that compared with households, office managers would be less sensitive to the relatively high unit price of the machine. Diffusion of Innovations: Nespresso
  • 5. 5 Strategic Leadership Shreiber and Chakravarthy (2007) demonstrated the crucial role of innovation at Nespresso, stating that the project would not have become a reality had the CEO of Nestlé, Dr Helmut Maucher listened to the pessimistic consumer surveys for the proposed innovation. Deschamps (2005) identified the importance of the selecting the right leader to implement innovation strategies. The key aspects of leadership are to promote and sustain innovation; it seems the Nespresso success could be linked to the selection of an innovative leader. The Swiss born and US educated Yannik Lang was brought into the Nespresso team, with a reputation for flair and creativity. He concluded that the prospects in the office sector were limited, but identified potential in the household market. They tested this high risk strategy in the single market of Switzerland, deciding that one market would be easier to keep in control of and be easier to shut down if not successful. The test proved successful, so a staggered international introduction was followed, launched in Italy, the world's largest espresso drinking nation and a market renowned for its Diffusion of Innovations: Nespresso passion and expertise of espressos. Nespresso obviously were confident in this product, followed by entry in Japan, one of the world's fastest growing coffee markets. Due to the shift to the household market, they decided to re-evaluate their old distribution strategy, the idea of channelling capsule sales through supermarkets was explored, but selling the coffee capsules in US food outlets failed. The premium consumer segment was small, they still had an average awareness rate of less than 5% within international markets, while penetration was less than 1% of households. This left retailers with a considerable stock of stale coffee capsules, taking up to three months for the Nespresso capsules to
  • 6. 6 arrive on store shelves, cutting in half the time remaining until the expiry date. With such a short shelf life quality could not be assured, this strategy of supermarket distribution was subsequently rejected as it was felt this would transfer the profitability of the business away from Nespresso. Nespresso seized upon the idea of offering a direct channel to stay in close contact with the consumer, creating exclusivity at the same time, effectively turning a technical constraint into an elegant marketing solution. In addition to handling calls it offered consumers around the clock order taking through the usual channels, with the advantage of prompt delivery in just two business days. While offering personalised advice, trained coffee specialists were on hand to advise consumers about the different coffees and provide technical assistance. By 1999, Nespresso were receiving 70,000 orders worldwide each day. Diffusion of Innovations: Nespresso
  • 7. 7 Main Driving Factors Diffusion of Innovations: Nespresso PESTLE Analysis
  • 8. 8 Political To further develop, produce and market the Nespresso system, a separate company was created. The new business involved selling coffee, something Nestle were already the market leader. The company’s top management decided early on that the similarities between the two businesses were more illusory than real. Nestle were selling instant coffee to the mass market but Nespresso specifically targeted wealthy and young urban professionals, positioning itself as an upmarket brand. Nespresso adopted a business model more akin to a luxury goods manufacturer, not only were the two business models different, they potentially conflicted as Nespresso could be cannibalizing the sales of Nescafe, while the values and attitudes of the Nespresso organization were the exact opposite of those in the traditional Nestle organization. It was decided that a new unit would be able to move faster in seizing the market opportunities identified within the newly-created individual portion category. A study of FMCG companies by Ghoshal and Bartlett (1988) considered the effects of subsidiaries for Diffusion of Innovations: Nespresso creation, adoption, and diffusion of innovations. It found that the subsidiaries of Unilever, ITT and Philips enjoyed considerable strategic and operational autonomy; such a structure was found to be a better environment for innovation, creation and diffusion. It found that high levels of centralization could be likely to impede an organization's ability to create innovations. A separate company provided a more flexible and dynamic entity, with freedom to experiment. Nespresso could position themselves differently than Nestle, this separation allowed them to develop separate commercial, distribution and workforce policies, it seems that this structure was an important success factor.
  • 9. 9 Economic Cafes inspired the coffee revolution, stimulating the development of coffee drinking, creating consumers willing to pay vast sums for the 'coffee shop experience’ Through experience’. creating interest in the coffee process and provenance, Nespresso have been able to add value through the 'Grand Cru' offering nd offerings. When a customer purchases the machine, ranging from £119 to £1500 they are tied to hen £1500, using Nespresso capsules and the closed system allows Nespresso full control to set its prices. Prices of capsules are fixed at between £0.27 and £0.31 per capsule, much higher than any other coffee option in the home, over 3 times higher than for filtered Nespresso, her interestingly the brand communication very rarely even makes any reference to price, which makes me think of quite an apt staying. Diffusion of Innovations: Nespresso 'If you have to ask the price, you can’t afford it’
  • 10. 10 Social Aaker (1997) identified 5 dimensions of brand personality; most relevant for Nespresso is ‘Sophistication’, this helps reinforce its premium positioning, while developing exclusivity, differentiating it from the other coffee brands, adding feelings of style and elegance. Nespresso have segmented their target group further by simultaneously launching machines to appeal to users within this segment, such as machines designed in a slim format to easily fit into the smaller spaces, or those with an urban vibe or daring style. A recent model shown below demonstrates the adaptability of Nespresso, creating a machine for couples, representing flexibility for this group, at the same time retaining its trademark elegance. Diffusion of Innovations: Nespresso
  • 11. 11 Primary research of young professionals (Appendix1) identified interesting characteristics about affluent city dwelling professionals. They were asked ‘How important to you is fashion and style? Based on 107 responses, 49% responded important, while 28% responded very important. The next question ‘How many people live in your household?’ 24% responded ‘live alone’. For a greater understanding about levels of disposable income I asked, ‘How much do you usually spend on a pair of jeans?’ 25% responded over £80, suggesting an affluent young and single segment really does exist. Nespresso utilised the power of celebrity endorsement, picking someone with an image consistent to the Nespresso brand. George Clooney is a fantastic choice for brand ambassador, stating they have many things in common, an intense love of style & good living, both impress their respective fans and stand for incomparable quality. George Clooney represents a personification of what the Nespresso brand stands for. This method of linking similarities between the brand ambassador and the brand are detailed in McCracken (1989), finding the use of celebrity was found to be most effective when Diffusion of Innovations: Nespresso meanings are able to pass from celebrity to product and from product to consumer. The article acknowledged that the celebrity can draw powerful characteristics from the roles they assume while in character, seen to contribute to their personality. Nespresso have targeted the premium market, finding product champions to represent the high quality of the product. They have gained more media exposure while amazingly not diluting any of the products exclusivity. Understanding the social aspects allowed Nespresso to strengthen their brand image. Greater exposure helped with the diffusion process, subtly informing the target market, encouraging them to try Nespresso.
  • 12. 12 Technological Nespresso machines were successfully developed thanks to the creation of an innovative culture and environment that allowed and encouraged team members to take intelligent risks, giving everyone the chance to be an innovator. Kumar & Steenkamp (2007) identified that successful innovation requires changes in three key processes: new product development, new product launch, and intellectual property protection. Nespresso have effectively dealt with these three issues, firstly Nespresso have created technological pairings with exceptional manufacturers, this can be seen through winning several design awards from 1996 to the present day. The Nespresso key strategy is based on its core competency of coffee, they developed policies to intensify cooperation in the R&D sector with universities, research institutions and companies. Nespresso created a design award for students of product design, the support of young talents is an investment in the future, nurturing talented innovative inventors and creating an interest in coffee machine innovation. The pace of innovation is Diffusion of Innovations: Nespresso fast within this high value industry, Mitchell (2007) found cooperation with others brings new insights and can open new domains and develop the necessary experience. It’s therefore imperative that Nespresso continue to attract and work with industry leaders and continue their machine evolution, coffee quality and capsule development.
  • 13. 13 Legal Nespresso commercialise the machines under license, while remaining in strict control of the capsule content, only available in Nespresso stores or boutiques. The pod technology means that no drinks other than what Nespresso intend can come out of a Nespresso co- branded machine, such control over the licence can ensure a buzz is created through its exclusivity. The concept of Nespresso, the machine, capsules and service is protected by 70 patents which acts as a suitable barrier for potential competitors and imitators. Suppliers must conform to the restricted set of standardised designs and this level of control and exclusivity ensures an exceptionally high quality, while Nespresso can gain leverage from respected machine manufacturer brands such as Krups and the ultra premium machine brand Miele, pictured below. Diffusion of Innovations: Nespresso
  • 14. 14 Environmental It seems Nespresso are content meeting the minimum ethical and environmental expectations of consumers, knowing that taste and luxury are more important to this segment. There is large waste-per-cup with this product, while aluminium recycling programs have been limited to only a few markets. Starting in 2009, New York boutiques started taking back used capsules, it is suggested this initiative should be rolled out globally. To counteract criticism Nespresso have participated in various sustainability principles such as collecting rainwater and local community heat exchange, while an automatic standby function was introduced to help reduce energy consumption. Nespresso make little ecological claims on their products, avoiding a hypocritical approach. While much of the coffee industry is being sold through fair trade markets, Nespresso instead invest in sustainable quality development, which is hoped to result in higher quality beans. Coffee farmers who are part of program are rewarded with not only higher prices but through creation of long term partnerships. Diffusion of Innovations: Nespresso It seems Nespresso have taken a clever approach, avoiding the high priced fair-trade market means that they can be more profitable, while investing in an exclusive program which differentiates their product from the fair trade offerings which already saturate the market. I have travelled to the coffee farms and met some farms that supply Nestle beans, shown in the picture below is a similar coffee organisation called UTZ certified, which promotes traceability for coffee, such sustainable projects are mutually beneficial, with the potential to become more viable than the artificial price setting Organic and Fair-trade movements.
  • 16. 16 Nespresso – Consumer uncertainty in the process The premium pricing of this product could potentially restrict the successful diffusion rate of the innovation, to protect against this Nespresso made sure to emphasise at every opportunity its high quality, moving it away from a commoditised coffee drink, promoting the ultimate coffee experience. Nespresso have added value by establishing the line of 'Grand Cru' coffees in a similar way that 'Grand Cru' distinguishes a top quality wine. The association with 'Gourmet' suggests that special care and attention has been devoted, adding value and differentiating it from all other coffee. The premium positioning that Nespresso have taken makes it difficult to compare with other home consumption coffees, the only thing coming close to Nespresso is a cafe espresso, and in this comparison Nespresso is much cheaper at 30p per shot compared with around £2.00. There is potential uncertainty among consumers that the range is quite small, club members’ feedback was used to develop new and exciting coffees, each year they add limited edition 'local discoveries'. The 'special club' and 'limited edition' coffee appeals to Diffusion of Innovations: Nespresso consumers who enjoy exclusivity and limited edition products to feel special. Nespresso have tried to counteract the limitation on coffee choice by allowing consumers to express themselves with a stylish range of machines, specially designed for city goers and retro lovers, the latest CitiZ machine was developed based on club members’ feedback, it is hoped that this involvement would help product acceptance. Nespresso toyed with the idea of making the Nespresso machine capable of handling other hot drinks; however this approach was scorned, which subtlety suggests superiority. ‘Why would you want to drink something other than coffee?’ Although advertising does demonstrate the ability of Nespresso to make cappuccino and latte, the focus of this
  • 17. 17 machine is towards espresso, to enjoy coffee it at its best; no compromise, no gimmicks. The barrier to successful diffusion of Nespresso is potential resistance from coffee traditionalists who are anti-technology and loyal to the old methods. Nespresso opened boutique bars in glamorous locations to position Nespresso as a suitable rival, proving the experience is exactly the same, if not better! Research found 60 per cent of the sensory experience of drinking espresso comes from the retail environment so they launched a chain of upmarket coffee outlets partially to enhance the appeal of their home-prepared product, Soars (2009). The way that Nespresso promote sampling has been successful to achieve acceptance from the traditionalists. The café culture ties in well with the Nespresso image, a benefit of the coffee house experience is the coffee education, a development of what you learn in Starbucks, Nespresso is the next step of coffee appreciation, they want to recreate the Italian espresso bar experience. Adverts appeal to those who are likely to have an urban apartment, assuming they care about the design and are house-proud, they want to encourage the cafe Diffusion of Innovations: Nespresso culture without even leaving your own home, it’s sociable and flexible!
  • 18. 18 Key Marketing for Innovation Diffusion - The Nespresso Club Prior to the Nespresso club, the company relied mainly on word of mouth, which was possible due to the existence of an extremely loyal customer base, resulting in step by step growth. Liebermann (1999) found membership clubs (MCs) to have a concrete potential of enhancing members’ patronage, the empirical results show that MCs enhance three areas: image, sales and marketing. In the annual satisfaction survey, 95% of the 1 million respondents were 'Totally Satisfied’, suggesting brand loyalty created a special and unique relationship. The Nespresso club database allowed segmentation according the consumption patterns and length of membership, the database was set up to handle orders for capsules and customer details, including ordering patterns. This database subsequently provides a wealth of information about usage, attitudes and behaviour, providing valuable data, which has proven instrumental the successful relationships Nespresso have developed. Nespresso have total control of all sales coming through this channel, with the ability to closely track new members. It’s felt that long term consumption habits are formed by usage Diffusion of Innovations: Nespresso patterns established early in the relationship, allowing them to work out the potential lifetime value, thereby placing an appropriate level of care. Heavy capsule users (more than 100 per month) were followed up by Nespresso club staff if these users failed to place an order by an anticipated date they would get in touch to make sure their machine was functioning, take orders or answer questions. This enabled identification if machines needed servicing, arranging for free home pick-up and return, while a replacement would be loaned, all contributing to the development of customer intimacy.
  • 19. 19 Appeal to Opinion Leaders Word of mouth proved to be a successful but slow process, other means were considered to speed up the awareness and diffusion process of the Nespresso concept. Over the last 8 years the number of Nespresso club members worldwide jumped from 600,000 to more than 6 million, with an additional 2.2 new members added in 2008 alone. 50% of all Nespresso club members first experienced the brand through existing members. Valente and Davis (1999) researched the role of opinion leaders, finding they accelerate the diffusion process and opinion leaders usually were identified as heavy users. Nespresso developed a model to target the innovative consumers and develop strong relationships with them. Through WOM, sponsorship and PR, the customer base has steadily expanded among the elite of espresso lovers, Nespresso reported that Heston Blumenthal, chef of the renowned English Michelin-3-star restaurant "The Fat Duck", succumbed to the exceptional quality of Nespresso coffees, suggesting mainstream gourmet acceptance. The strategy to further internationalise and position Nespresso as a premium product was strengthened through the patronage of British Airways and Cathay Pacific among many Diffusion of Innovations: Nespresso other airlines who now serve Nespresso Coffee on-board first class, as each day more than 10,000 Nespressos are served in onboard this is diffusing the Nespresso concept further.
  • 20. 20 Conclusion Most people previously consumed espresso away from home, in restaurants, hotels, bars and cafes, vending machines, offices and public areas. Home consumption was limited due the perceived high price of espresso. In cafes, espresso was inexpensive and widely available, but only 1 in 5 Italians consumed espresso at home. Consumers have moved away from traditional coffees and developed a taste of inventive, upscale, premium priced speciality coffee, the trends suggested that traditional coffee popularity is declining, the gourmet coffee world was revolutionised by Starbucks, leading to espresso being perceived as a trendy, socially elite drink. The typical espresso drinker can be defined as a city dweller with discerning tastes in food some may say a ‘bon vivant’. Nespresso identified well educated and affluent, 35-45 year old, who enjoyed drinking café quality espresso at home, finding this segment would constitute a profitable segment for the Nespresso system. Nestle identified over time that the household market was suitable for building long term Diffusion of Innovations: Nespresso business, they recognised that demanding consumers would need to receive high levels of attention to retain their loyalty. Investments were made in the training of sales clerks in retail stores to encourage the first connection, promote tastings and reflect the key attributes of the product to emphasise the points which matched the consumer’s lifestyle. The opportunity was there for a home gourmet coffee experience and Nespresso successfully innovated a fantastic product to fulfil this need.
  • 21. 21 References Aaker, J. (1997). Dimensions of brand personality. Journal of Marketing Research. 34 (3), pg 347 – 356. Abrahamson, E., Rosenkopf , L. (1997). Network Effects on the Extent of Innovation Diffusion: A Computer Simulation.Organization Science. 8 (3), pp. 289-309. Agrawal, J., Kamakure, W. (1998). The Economic Worth of Celebrity Endorsers: An Event Study Analysis. Journal of Marketing Research. 59 (July), pg 56-62 Al Bawaba. (2010). Nespresso Launches CitiZ, in the Kingdom.Available: http://www.albawaba.com/en/countries/Saudi%20Arabia/259233. Last accessed 21 March 2010. Alvarez, G., Wilding, R. (2008). Governance dynamics in a multi-stakeholder network: The case of Nespresso AAA Sustainable Quality Program . British academy of Management Conference. September Bone, P. (1995). Word-of-Mouth effect on short-term and long term product judgements. Journal of Business Research . 32 (99), Pg 213-223. Chakravarthy, B., Lorange, P. (2008). Driving renewal: the entrepreneur-manager. Journal of Business Strategy. 2 (2), pp: 14-21 Chakravarthy, B., Shreiber, N. (2007). Leading Paradoxically. EBF. 30 (Autumn), pg 28 - 33. Chernev. A (2007). Strategic Marketing Analysis. 2nd ed. Chicago: Brightstar Media. Diffusion of Innovations: Nespresso Datamonitor (2005). Company Spotlight: Nestle, October [online]. London: Datamonitor. Available from http://datamonitor.com/ [Accessed: 08/02/2010] Dekiple, M., Parker, P., Sarvary, M. (2000). Global diffusion of technological innovations: A coupled-hazard approach. Journal of Marketing Research. 37 (1), pg 47-59. Deschamps, JP. (2005). Different leadership skills for different innovation strategies. Strategy & Leadership. 3 (5), pg. 31 – 38. Dodson, J., Muller, E. (1978). Models of New Product Diffusion through advertising and word of mouth.Management Science. 10 (2), pg 1568-78. Ghoshal, S., Bartlett, C. (1988). Creation, Adoption, and Diffusion of Innovations by Subsidiaries of Multinational Corporations. Journal of International Business. 19 (3), pp. 365-388. Godes, D., Mayzlin, D. (2004). Using Online Conversations to Study Word-of-Mouth Communication . Marketing Sciehttp://www.neilstoolbox.com/images/button_blue_getresult.gifnce. 23 (4), pp. 545–560.
  • 22. 22 Goldman, A., Ramaswami, S., Krider, R. (2002). Barriers to the advancement of modern food retail formats: theory and measurement . Journal of Retailing. 78, 281-295. Greenalgh, T., Robert, G., Macfarlane, F., Bate, P., Kyriakidou, O. (2004). Diffusion of Innovations in Service Organizations: Systematic Review and Recommendations.The Milbank Quarterly. 82 (4), PG 581-629. Kim N,. Srivastava R. (1998). Managing Intraorganizational Diffusion of Technological Innovations. Industrial Marketing Management . 27, p229–246 Kumar, N., Jan-Benedict., Steenkamp. (2007). Brand versus Brand. Springer. 7 (18) Lambin, J-J. (2004). Strategic Marketing Revisited after September 11. Emerging Issues in Management. pg 1 -23. Liebermann, Y. (1999). Membership Clubs as a Tool for Enhancing Buyers’ Patronage. Journal of Business Research. 45 (99), pg 291-297. Lindinger, C.,Labbe, D., Pollien, P,. Rytz, A. (2008). When Machine Tastes Coffee: Instrumental Approach To Predict the Sensory Profile of Espresso Coffee . American Chemical Society Mahajan, V., Muller, E. (1979). Innovation Diffusion and New Product Growth Models in Marketing. Journal of Marketing Research. 43 (4), pg55 - 68. Markides, C (1999), All the Right Moves: A Guide to Crafting Breakthrough Strategy. Harvard Markides, C., Charitou, C. (2004). Competing with dual business models: A contingency approach. Academy of Management Executive. 18 (3), pg 22 - 36. Diffusion of Innovations: Nespresso McCracken, G. (1989). Who Is The Celebrity Endorser?.Journal of Consumer Research. 16 (3), pg 310-321. Miller, J. (2003). Innovation and Renovation: The Nespresso Story. Available: http://wwwdim.uqac.ca/~attrembl/8INF848/Cases_HBRP/IMD046-PDF-ENG.pdf. Last accessed 06 February 2010. Mintel (2008) Coffee UK January [online]. London: Mintel. Available from http://academic.mintel.com/ [Accessed: 08/02/2010] Mintel (2009). Small Kitchen Appliances UK December [online]. London: Mintel. Available from http://academic.mintel.com/ [Accessed: 08/02/2010] Mitchell, A. (2007). Interview with Peter Brabeck-Letmathe. International Commerce Review. 7, pg10-14. Moeini, A., Goldmintz, S., Alamgir, S. (2006). Lead User Innovation. Schulich School of Business Research. 99 (99), Pg 1-20.
  • 23. 23 Moeller, M. (2005). Strategic Innovation. Available: http://www.doujak.eu/fileadmin/Redaktion/Downloads/Strategic_Innovation_Chapter_1.pdf. Last accessed 13 March 2010. Mooradian, T., Swan, S. (2006). Personality-and-culture: The case of national extraversion and word-of-mouth .Journal of Business Research . 59 (99), pg 778–7 Pae, J., Kim, N., Han, J,.Yip, L. (2002). Managing intraorganizational diffusion of innovations Impact of buying center dynamics and environments . Industrial Marketing Management . 3, 719-726. Panayotis, Z. (2006). ‘Transnational Business Growth’.Available: http://www.zamaros.net. Last accessed 21 Match 2010. Richler, J. (2009). How to make perfect coffee at home.Available: http://www2.macleans.ca/2009/10/15/how-to-make-perfect-coffee-at-home/. Last accessed 01 March 2010. Richter, J. (2009). The Avenches Milestone in the Nespresso Success Story. Available: http://www.nestle.com/Resource.axd?Id=CF489C89-60D4-4A6E-8590-091D6D5E0672. Last accessed 06 February 2010. Shah, S. (2000). Sources and Patterns of Innovation in a Consumer Products Field. Massachusetts Institute of Technology: Sloan Working Paper . #4105 Soars, B. (2009). Driving sales through shoppers’sense of sound, sight,smell and touch. International Journal of Retail & Distribution Management. 37 (3), pg 286-298 Teichert, T., von Wartburg, I., Braterman, R. (2006). Tacit meaning in disguise: Hidden metaphors in new product development and market making . Business Horizons . 49, pp. 451- 461. Diffusion of Innovations: Nespresso Thompson, M. (2009). Integrity in Marketing: Chinese and European Perspectives. Journal of International Business Ethics . 2 (2), pg62 - 69. Valente, T., Davis, R. (1999). Accelerating thr Diffusion of Innovations Using Opinion Leaders. Annals. 566, pg 55-67. Wang, Q., Montaguti, E. (2002). The R&D-marketing interface and new product entry strategy. Marketing Intelligence & Planning . 20 (2), pg 82-85.
  • 24. 24 Appendix 1 – Summary of Key Survey Results Diffusion of Innovations: Nespresso