Management decision making: the Nestle Nespresso case

Résumé du document

Nestle Nespresso is one of the fastest growing subsidiaries of the Nestlé group. The group includes many different brands producing coffee. Among them, there are two very profitable entities: Nespresso and Nescafé. Although they are not the same company, they are owned by the same group, and perform different activities. Nestlé Nescafé is a company that specializes in medium-range coffee. This brand owns many different ranges of products from soluble coffee to small portioned coffee sets. The products are sold in supermarkets, and this is one of its big differences with Nespresso. It is true that one of the particular features that we could identify about Nespresso is the fact that the company sells its products within a fully owned network of outlets. Nespresso is a company that specializes in high-end coffee and coffee machines for rich people. In fact, it was created with this concept in mind at the very inception. The company was created in Switzerland in 1982 to provide high quality coffee to homes, and commercial entities. Thus, this branch of Nestlé created a very powerful coffee machine that was very expensive from the very beginning, and provided two or three different capsules. It catered to what we call in marketing, a niche market. Nespresso looks for the best coffees from all around the world, and is very particular about quality: all the coffees that do not match with the company's exigencies are given to Nestle Nescafe.

Extraits

[...] This is mainly due to the fact that Nespresso does not give any information about their outlets in the advertisements. People do not make any link between the ad with George Clooney in the outlet, and the existence of such a place. Many existing consumers of Nespresso are very disappointed. In general, the marketing campaign, which is the same all around the world with the celebrity endorsement strategy involving George Clooney and the teasing approach, gives to Nespresso a very high end and respectable image. [...]

[...] However, there is no certainty about how the future would be in this case. Of course, there is also no certainty that the competition would not copy the system in great numbers. In this option Nespresso would count on its past performance, hoping that it has managed to create customer loyalty and brand recognition. However, to do nothing, is not a feasible solution, and a change management program would be suitable. As Charles Darwin, the great specialist of evolution said: is not the strongest species that survive, nor the most intelligent, but the most responsive to change”. [...]

[...] In fact, it was created with this concept in mind at the very inception. The company was created in Switzerland in 1982 to provide high quality coffee to homes, and commercial entities. Thus, this branch of Nestlé created a very powerful coffee machine that was very expensive from the very beginning, and provided two or three different capsules. It catered to what we call in marketing, a niche market. Nespresso looks for the best coffees from all around the world, and is very particular about quality: all the coffees that do not match with the company's exigencies are given to Nestle Nescafe. [...]

[...] Management decision making: The case of Nestle Nespresso Defining the problem Nestle Nespresso is one of the fastest growing subsidiaries of the Nestlé group. The group includes many different brands producing coffee. Among them, there are two very profitable entities: Nespresso and Nescafé. Although they are not the same company, they are owned by the same group, and perform different activities. Nestlé Nescafé is a company that specializes in medium-range coffee. This brand owns many different ranges of products from soluble coffee to small portioned coffee sets. [...]

[...] However, due to the success of the Nespresso system, it is sure that there will be competitors who will copy the system. In order to avoid this situation, there could be the option of manipulating the laws! Instead of trying to conduct a past patent, which is impossible, it would be suitable to conduct a new one that does not protect the same thing but has the same effect on the same features. For example, if Nespresso patented the use of aluminum capsules in the Nespresso machine systems earlier, a new patent that consists in protecting the aluminum capsule in any coffee system could be put in operation and save the situation of Nespresso. [...]