Internationalization of a brand - the case of Nespresso

Résumé du document

First, to introduce this company one should notice that it is one of the most successful global brand that has been recently launched. Despite being physically present in only 35 countries, Nespresso is worldwide famous. Thanks to its consistent premium positioning and a long-term innovative strategy, the brand manages to reach a wide base of customers.

Created in 1986, the company is wholly owned by the Nestlé group but remains an independent entity dedicated to the homebrew premium coffee market. Combining a specific distribution strategy with a strong and consistent positioning, Nespresso succeed in turning a daily product into a luxury good and therefore changing consumer habits. Thanks to its numerous competitive advantages that we will analyzed further on its study, the brand establish itself as the reference for premium homebrew coffee on this highly competitive market.

Most of all the Nespresso case study integrated many concepts we learned during our classes in International Marketing. Our work will begin with a focus on the brand itself and the market targeted.

Then the analysis of the triggers for the internationalization will be developed, following by a deep focus on the strategy. The last part will finally establish the crucial role of branding and the communication mix of Nespresso.

Being iconic and successful, Nespresso is, at our eyes, a great example of a born global brand that implemented a powerful and consistent international marketing mix.

The history began in 1970 when the Nestlé Group filed the patent for its unique pressurized coffee extraction process. Ten years later was created the Nespresso SA Company which is until now wholly owned by the Nestlé Group. The Nespresso System was launched at first in Switzerland and Italy with coffee machines manufactured in partnership with Turnmix while the capsules production was in Nestlé's factory.

From 1987 to 2004, the brand began its expansion firstly to Japan, followed by main European countries and the U.S.A. Nespresso is also launched in the Middle East, Malaysia, Singapore, Taiwan and Hong Kong.

In 1986, the Nespresso Professional line of products is developed. It aimes at provinding convenient coffee machines and premium-portioned coffee to SMEs and to premium hotels as well as many airline companies. Launched only in Switzerland, Italy and Japan this line was a complete disaster. Only 875 machines were sold the first year. Why such a failure?

The line was first sold as a system : one product, one price. The distribution system was too ambitious. The purchase of a Nespresso system would engage the company into a new retail system.

The change of supplier was considered as too costly. Moreover the daily consumption is very high in offices, the coffee expenses would have explosed. The question for the budget responsible remained : how to justify such a high price, especially when the daily consumption is very important ? Secondly, of all the countries targeted have very various representations and consumptions habits toward coffee.

Extraits

[...] In a three years period of time Nespresso gained great exposure and acquaintance. The communication focus nowadays on the product which is presented as a star. fededede The message changes The now legendary “Nespresso What Else simply expresses the simplicity yet the refinement and quality of the brand and its product. Present in every campaign and piece of communication this slogan strengthen the values and positionning of Nespresso. Moreover it put the emphasis on the brand by linking automatically the name of the brand to everything. [...]

[...] The association of a brand or product with a country affect the evaluation of the customers thanks to a “halo effect”. The values and images of the country are transposed to the ones of the brand which could benefit from it if the associations are positive. It could boost the reputation of an unknown brand. In the case of Nespresso, as it is owned by Neslté which is a giant company based in Switzerland and spreading its products and brands worldwide, the associations could have negative impact (especially as the brand is positioning as a premium one and Nestlé owned many mass market brands). [...]

[...] The internationalisation strategy of Nespresso takes this factors into account. As a result, Nespresso has two different international strategies: one for the capsules and one for the machines. Nespresso's international value chain 26 Nestlé and Nespresso held all the patents for the Nespresso machines. However, they licence the production to manufacturers (Krups, Magimix, etc.) who distribute and sell them internationally through selected household appliance retailers. For example, in the United Kingdom Nespresso licence its production to Krups, Magimix, Alessi, Jura, Miele, Siemens and works with Harrods. [...]

[...] Such strategy required a wide basis of customers with similar behaviours, attitudes and expectations toward the brand. The major advantages are the reduction of costs (as the campaign is basically the same in every markets), the reinforcement of brand values and image and the assurance to conquer a global present. Global communication allows though brand to match with global exposure. Nowadays customers are very active on Internet and they are looking for advices, information on products and brands. Being present online is not often. [...]

[...] Moreover the daily consumption is very high in offices, the coffee expenses would have explosed. The question for the budget responsible remained : how to justify such a high price, especially when the daily consumption is very important ? Secondly, of all the countries targeted have very various representations and consumptions habits toward coffee Source : www.nespresso.com/ 6 For instance, Italy is the home country of espresso coffee. How to position the brand there and generate sales with SMEs ? After this failure, a new CEO has been nominated. [...]