The Nespresso Competitive Advantage

Abstract

Nespresso belongs to Nestlé Group and its history began in 1986. This new brand in the coffee industry was directed specially to the gourmet coffee market. The encapsulation system was not only the result of many years of development and innovation, but also its plunge into a market strongly protected by patents. From the beginning, the idea was to have a quality coffee in the office, due to the price being higher than the traditional systems used at home, and thus, it did not make sense to target at other customer segments, because Nespresso thought it would not be profitable. It focused on that segment thinking that the price would not be important in the office coffee market and that the speed in preparation and the efficient cleaning would be valued. However, they made a mistake, because the market share in office sales is very small. Turmix was requested to undertake the manufacturing process and Sobal was asked to carry out the distribution. In this way, Nespresso was the intermediary between the manufacturer and the retailer.

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