How Did Nespresso Successfully Penetrate the Global Market?
https://www.theguardian.com/food/2020/jul/14/nespresso-coffee-capsule-pods-branding-clooney-nestle-recycling-environment
Nestle’s full-year results show consistent mid single-digit growth for Nespresso
Nespresso, an operating unit of the Nestle group, is one of the largest and the most successful brands that sell coffee capsules and coffee machines in the world. Although Nespresso operates in a highly competitive market with an increasing number of direct and indirect competitors (convenience in living has influenced various fast food chains and groceries to also offer coffee), Nespresso has still managed to position itself in a growing market as a premium lifestyle brand. But how did Nespresso do this?
According to online sources, Nespresso is continuously growing. Even as much as 30% over a single year. They have 810 boutiques in 84 countries, effectively penetrating the global market. Nespresso’s success can be explained by the diffusion of innovations theory, which explains how new ideas and technologies spread in networks.
In order to gain a small foothold in the global market, Nespresso slowly introduced its products in the global market by opening pop-up stores. By doing this Nespresso has been able to examine their product placed in a new environment before opening a boutique (which is more permanent than a pop-up). They examined customer satisfaction levels along with their sales and worked closely with the customers to deliver a satisfying experience. With their impeccable customer service, Nespresso was able to slowly penetrate the clusters in foreign markets.
For a new product to enter a new network, it should reach the threshold value (when the threshold value is reached, the customer will choose to purchase the machine and capsules). Since Nespresso has successfully positioned itself in a growing market as a premium lifestyle brand, it is easier to target coffee drinkers seeking for convenient and high-quality coffee experiences. There is such a huge market for home coffee drinkers and since Nespresso has a wide variety of flavors and a more aesthetically appealing, compact machine compared to its competitors, the threshold value for the targeted consumers in a new network will be relatively low.
Moreover, sustainability plays a huge part in today’s economy and how the company is presented to the public. In other words, with the increasing public’s attention to sustainability awareness, customers are more likely to support brands that are more sustainable. In order to penetrate more deeply into the network, Nespresso is constantly seeking more sustainable options to deliver its products (minimal packaging made from degradable materials). With the increasing support for sustainable brands, more people are likely to purchase from Nespresso, ultimately making Nespresso easier to penetrate the global market (with a lower threshold value) and gaining a solid pool of consumers.