Nespresso case study is highly relevant in the current competitive business climate. This highlights Nestle’s creative and ambitious market strategy, which took Nespresso to the common man as a premium quality espresso coffee that anyone could ever prepare by pressing a button. The high quality coffee was packed in aluminum capsule that was used in the specialized machine, developed by Nestle, to prepare the quality brew. The critical factor for its success was the commitment to providing high quality coffee. The key factors for the ultimate success of the Nespresso can be contributed to the managerial leadership initiatives of Nestle and their intrinsic belief in the product.
After the dismal initial performance of the brew, Lang was invited to lead the Nespresso team. Lang was highly motivated and creative in its approach and favored aggressive marketing techniques. He believed that the core business strategy of any business heavily relies on new products and innovative market strategy that facilitates in creating niche market for their products and services. He used various marketing metrics to explore and exploit new markets. The marketing initiatives for Nespresso can be broadly described as follows.
The compulsions of the rapidly transforming societal paradigms and technological advancements are important factors that require more comprehensive and innovative approach to market strategy. Strategic marketing plans are crucial part of promoting products and services of an organization and establish market credibility. An effective market strategy promotes the use of SWOT (strengths, weakness, opportunities and threats) analysis on a periodic basis. The awareness of strengths and weaknesses in the company’s resources would help to act timely and efficiently so that opportunities and threats can be effectively met to provide a competitive edge to their rivals.
Consumer psychology and consumer information research are an important part of the market strategy which allows you to know the changing customer tastes in rapidly changing times. Analysis and identification of the changing trends of the customer requirements are important ingredients to gain leverage against their rivals. The market strategy should be fully focused on people’s needs and needs, and continuous efforts should be made to update its products in line with changing public demands. Understanding of consumer psychology, therefore, plays a vital role in the development of marketing strategy and planning.
Segmentation of the market to tap the potential of the customers is an essential part of market strategy. It helps to identify the target customers for the existing and new products and meet the challenges of their changing requirement. Market segmentation of the market to differentiate elements is vital in the highly competitive business environment. The segmentation helps to create a niche in the market. The mixed segmentation is hugely popular in the contemporary times and gives a big leverage to the companies to plan its market strategy in a more flexible manner and successfully introduce their products in a new market.
A good marketer always tries to exploit the personal preferences of the persons to influence his behavior as a consumer of goods and services that he wishes to sell. Marketers excel in influencing the self concept and personality traits and behavior by developing market strategies of the products, keeping in mind the prevailing lifestyles of the people. Hence, different market strategy is adopted for different group of people. Effective customer relationship management helps to improve and improvise the customer base and thereby significantly impact the business outcome, even during recession and difficult time.
The compulsions of the emerging new dynamics in the global businesses have necessitated for people-centric policies and plans that would meet the challenges of the changing social patterns and its changing demands. ‘A business can only outperform its competitors if it can make a difference that it can sustain. It must have higher value to consumers or generate equal value at lower cost, or do both. (Porter, 1996). While product is of vital importance and it’s pricing makes it a salable item, maintaining a good database of customers is intrinsic part of market strategy which helps one to know the changing preferences of the customers in the rapidly changing times. Critical analysis of CRM’s potential benefits would not only promote a broader understanding of shifting consumer tastes, but also encourage competitive leverage against their rivals. The rapidly transforming societal paradigms and technological advancements are important factors that require more comprehensive and innovative approach to market strategy. CRM is important part of strategic marketing plans that are crucial to rebuild the trust amongst its customers.
Brand creation is a major marketing technique that has massive support within and outside the business community and management strategy. In the rapidly advancing technology and changing socio-economic paradigms, the brands have made a niche in the existing and emerging markets. Products need to maintain an edge over their rivals by incorporating the whole system within which the product is marketed. ‘Brand building is needed because products are the same’ (Kotler, 2005). The brand name ensures that the product maintains a high standard of excellence at a price that a customer is willing to pay for. The brand thus provides the consumer with a quality product that meets its needs, making it one of the main reasons why brands continue to enjoy success among their consumers while at the same time attracting fresh customers.
Shultz say that it is the end-users who now control the markets rather than the marketers (Shultz, 2001). The leadership of Nespresso made concerted efforts to develop innovative market strategies and used market metrics to target new markets and helped attract household consumers. The success of Nespresso must be contributed to effective leadership initiatives that encouraged its workforce towards innovative practice without any fear of repercussion on failure.
Nespresso success is a landmark story of innovation against various odds. It is important to understand that social change, economic trends and the technological factors are the driving force behind research and development processes of the companies for new products to gain significant leverage in market positioning. Indeed, in the fast advancing technology and rapidly evolving societal norms, the preferences of the people is also changing with the same speed. The rapid globalization has created a pluralistic society which has diverse needs and requirement. Hence, the companies through regular surveys, feedback processes and R&D activities are able to identify the opportunities for new products. They incorporate the changing requirements of the people through the development of new products and services that meet the changing demands of the masses. They must continuously evolve both in terms of their business strategy and facilitating differentiation in their products and product line. These innovative processes help them to maintain competitive edge.
NCS must adopt more aggressive market mix strategy and use various media to promote and advertise its products using market segmentation. Fast changing environment of advancing technology and rapid globalization has made business more competitive and spreading awareness about the various products and services amongst the massed becomes vital for the organizations. Dissemination of information and creating demands for different products and services through effective advertising therefore, has become crucial for companies to maintain a competitive edge over their rivals. The advertisements of Nespresso carry huge implications for the company and regular feedback of those campaigns would ensure that the impact of those advertisements do not diminish with changing times and they are able to make appropriate changes in the content to suit the changing demands of the public.
- Kotler, Philip. (2005). Toward Stronger Marketing. unpublished presentation to the ARF, “Future of Advertising” Conference, Chicago, 10.24.05.
- Porter, Michael E. (1996). What is Strategy. Harvard Business Review. Nov/Dec96. Vol.74 Issue 6, p61.
- Shultz, Don E. (2001). Bid Farewell Strategy based on old 4Ps. Marketing news; Feb 12, 2001; 35,4; ABI/INFORM Global. p 7.