Nespresso Presentation

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THE DIFFUSION OF NEW PRODUCTS
AND

TECHNOLOGIES

ANALYSIS OF THE NESPRESSO DIFFUSION
Diffusion of Innovations: Nespresso

Student No: 0955773 | Word Count: 3000 + 10%

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Contents
Introduction .............................................................................3 The Nespresso Journey............................................................4 StrategicLeadership.................................................................5 Main Driving Factors: PESTLE Analysis................................7 Political............................................................................8 Economic..........................................................................9 Social..............................................................................10Technological.................................................................12 Legal...............................................................................13 Environmental................................................................14 Nespresso – Consumer uncertainty in process.......................16 Key Marketing for Innovation Diffusion – Nespresso Club..18 Appeal to OpinionLeaders....................................................19 Conclusion..............................................................................20 References..............................................................................21 Appendix 1 – Key Survey Results.........................................24
Diffusion of Innovations: Nespresso

3 Introduction
The Nespresso story began with asimple but revolutionary idea;

‘The perfect cup of coffee, time after time and cup after cup’
To do so Nespresso pioneered the concept of premium portioned coffee, designed for maximum convenience. The process redefined the way coffee lovers around the world could enjoy their coffee. Key to the vision was a determination for quality, innovation and perfection. This essay will consider the diffusionof Nespresso over time, through different markets and countries, identifying the main driving factors in the process through a PESTLE analysis. With all innovations comes uncertainty, I will identify potential issues which Nespresso faced within the diffusion process, considering the consumer characteristics which made this innovation viable. The essay identifies the key marketing efforts whichNespresso utilised to speed up the diffusion process and develop worldwide consumer acceptance.

Diffusion of Innovations: Nespresso

4 The Nespresso Journey
In the Late 1970s Nestle dominated the instant coffee market with its Nescafe brand, this accounted for 30% of worldwide coffee consumption, although Nestle had no significant presence in the larger roast and ground segment. Seniormanagement realised the opportunities for growth in this rapidly developing 'gourmet' segment. The technology behind the Nespresso system originated in Geneva, gaining support from the food service division, which identified Nespresso as a suitable product to enter the restaurant market. By late 1987 only half the machines that had been manufactured were sold and subsequently in 1992 they decided toabandon the strategy in favour of targeting the office coffee sector, which seemed a good place to build awareness and create a loyal customer following. They partnered with a Swiss company already present within the office market with distribution experience; it was felt that compared with households, office managers would be less sensitive to the relatively high unit price of the machine.Diffusion of Innovations: Nespresso

5 Strategic Leadership
Shreiber and Chakravarthy (2007) demonstrated the crucial role of innovation at Nespresso, stating that the project would not have become a reality had the CEO of Nestlé, Dr Helmut Maucher listened to the pessimistic consumer surveys for the proposed innovation. Deschamps (2005) identified the importance of the selecting the right leader...