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Nespresso - Essay Example

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Nespresso Introduction Nespresso is a Nestle subsidiary, which was launched three decades ago. Since then it has enjoyed success as a leader in the coffee market. Nespresso became famous due to use of capsules in coffee making. This move enabled it to become more than coffee as managed to create a literal Nespresso experience through its innovative concepts…
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Download file to see previous pages The company has numerous opportunities, which range from expansion of its markets to progression of its sales as more people continue to buy its capsules. Discussion Internal Environment of Nespresso Nespresso has continued to record profits since 2001. This success is because coffee is among the most traded commodities on the world markets. Particularly, markets such as the French market are worth Billions of Euros and the country has been producing tones of the commodity. At Nespresso, the capsules segment has continued to increase as Seifert, Leleux, & Tucci (2008, p. 64) indicate that the year 2005 saw an increase by 57% and 56% in volume and value respectively. Moreover, since 2005, Nespresso’s market has grown by a wide margin annually. This progress can be partly attributed to the fact the machines used at Nespresso are capable of producing real espresso. According to Kourdi (2009, p. 79), the numerous chain outlets under Nespresso are currently competing with Italian brands such as Segrafredo and Illy or players such as Columbus coffee and Starbucks coffee. The adoption of club Nespresso has catered for the provision of personalized advice on a 24/7 schedule with customers being informed about how to maintain the machines and use the products. Furthermore, Nespresso has adopted a sales channel, which has been widely used to order capsules, accessories and machines and guarantees delivery of Nespresso products within a few working days. Nespresso has a hotline that addresses technical issues and operates daily. Technicians at Nespresso provide assistance regarding return of machines, repairs, after-sales issues and replacement. Nespresso provides special services to companies that chose to install machines in their offices. This service is also provided to restaurants, hotels, airlines and luxury goods stores that serve customers with Nespresso. Nespresso has continued to enjoy success due to personalized services like follow-ups, which it offers to its customers. This service depends on the amount of coffee bought by the customer. Nespresso also sends reminder emails to the customer in case it thinks that the customer is about to run out of supply. Moreover, people who buy Nespresso machines automatically become members of the Nespresso club (Eigenhuis & Dijk, 2007, p. 28). Nespresso’s internal environment has also been characterized by weaknesses. Some of the weaknesses include decline in coffee consumption amongst the young population. Cronin (2010, p. 89) indicates that over the last decade coffee prices have experienced a slump. Moreover, the producers receive minimal proceeds from the sale of coffee given that intermediaries take unjustified cuts. Some of these intermediaries are infamous for their unscrupulous business practices. Furthermore, the capsule system adopted by Nespresso is unfriendly to the environment. External Environment Nespresso has numerous opportunities as coffee is among the trendiest drink in the world. According to Seifert, Leleux, & Tucci (2008, p. 60), millions of cups are drunk every day. Given the superior quality being produced by Nespresso and its marketing strategy, the company will be able to expand and gain a huge market to further its operations. It has become a modern trend for social occasions and informal meetings to be avenues for drinking coffee. This is a good opportunity for Nespresso, as it will benefit immensely ...Download file to see next pagesRead More
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