Assignment Sample on Nesspresso
Introduction
Nespresso is a branch of Nestle that aims to gain competitive advantage from the market. A critical analysis of the reason for slow commercialization of products has also been evaluated through this study. A sustainable competitive advantage and certain recommendations to increase future business performance of Nespresso has been discussed in this study.
What insights into the innovation process from the case study can be gained?
Analysing case study of Nespresso, it can be stated that Nespresso brand is engaged in radical innovation. Radical innovation refers to a transformative business model that looks for complete demolishment and replacement of an existing industry to establish a new industry. The notion of Nespresso improved in 1970’s which was based on a lack of ideas of pressing top quality instant coffee in houses. Thereafter seventeen years, when Nestle took over whole businesses of Nespresso to finish its machine and even after collaborating with many home base appliances distribution companies, half of the machines were sold. After disruptive impact of Nespresso machines on the market, Nestle has implemented innovation starting by changing shift leadership and administrative management of Nespresso (Bisnajak, 2018) . New Nespresso machines are designed with a braid in an operating capsule pouch with a filtering system that maintains pressure of coffee blend and heat water in 86 degrees to 91 degrees.
Over decades Nespresso has developed the innovative process through improving their leadership and management. The company has suffered to get a fruitful idea for developing and launching a new machine in the market to sustain radical innovation. Over time, development team of Nespresso grew old and improved leadership had helped Nespresso to come up with better ideas. Radical innovation comes into place by renovating ideas such as the establishment of Nespresso Club in the end of 1996 helped to boost members of 2,20,000 in Europe only with providing twenty-four hours of ordering capsules as well as providing Nestle company with up-to-date information about customers. Effective market research policies, process of research allocation, business unit, product organisation structure, strategic planning sources helps Nespresso to bring radical innovation to gain competitive advantage (Keong and Dastane, 2019). Creating the Nespresso coffee machine with adopting modern technology helps to establish a new brand image with the market.
What is the reason for slow commercialisation of Nespresso?
Innovation in Nespresso took almost twenty years to bring success with the company even in the beginning stages of its improvement. Employees of Nespresso were sceptical rather than optimistic about the innovation process thinking that it would get success like Nestle’s mainstream products. Import of Nespresso machines faced challenges because of bigger size and taxes of those heavy machines were a constraint of this company which scared slow commercialisation (Desbrow et al. 2019). Failure of minimizing traditional coffee machines that are firstly used for Italy that was the biggest inspiration of creating Nespresso brands, was also first idea in Nestle’s instant coffee machine concept (Narazaki et al. 2019) Furthermore, failure of leadership is one of the biggest reasons of slow growth of Nespresso. Poor decision-making process by Nespresso administration such as failure of minimising size of machines, making a bulk production of machine without creating any promotion or recognition of brand to the customers. Administration of Nespresso avoids machine prices that have become a reason for not increasing sales of Nespresso machines (BAKHU, 2019). Apart from costly coffee machines, they made poor decisions about pricing coffee capsules that became unaffordable to their customers. Customers lost interest due to heavy prices of coffee machines and coffee capsules in the market. Inefficient market research by management for addressing customers’ needs and expectations caused failure of sales of coffee machines (Romo and Segura, 2020). They required skilful operators to settle down coffee and future maintenance of coffee machines. The administration management of Nespresso were only concentrated about selling coffee machines towards offices and it was leaded by Jean-Paul. After that, in leadership of Gaillard, focus was shifted from being an office to more of a luxurious brand. Gaillard was able to cut down the prices of products and licenced to third party companies and after that company started to make success.
Sustainable competitive advantage of Nespresso
In present days, Nespresso brand has an ability to gain a sustainable competitive advantage in market by comparing with other coffee machine manufactures. A sustainable competitive advantage signifies those assets or liabilities owned by a company are extremely difficult for an outsider company to copy, and the company leads control of the market by dominating over their competitors for a long period. Nespresso uses effective marketing strategies such as low prodding, promoting brand values, market powers, threats of new entrance to gain sustainable competitive advantage (Haseeb et al. 2019). Recently, Nespresso gained competitive advantage through their Grand Cru coffee ambit procured from sustainable resources. Nespresso has an ability to collect used coffee capsules from its customers to recycle it. It creates a positive image of Nespresso customers’ minds which helps them to gain competitive advantage. Nespresso brings Radical innovation into their injury that is the biggest reason to dominate over the marker.
Recommendation
Management of Nespresso can introduce new and upgraded versions of coffee machines with adopting modern technology. Nespresso Can use advanced technological equipment such as use of AI to detect face of persons at the time of preparing coffee to make coffee according to that person’s taste. In addition, Nespresso can create more sizes of aluminium coffee capsules especially for children of butter age groups of 10-12 years. Nespresso management can also implement technologies to reduce current size of coffee machines and cut down on additional cost of manufacturing for gaining a more sustainable competitive advantage.
Conclusion
From this above study, it can be concluded that the Nespresso Coffee brand was not able to understand market news at first due to inefficient management and leadership. It needs decades to bring radical innovation in industry which helps them remain competitive in the market. Furthermore, it took twenty years to get success and sustain a competitive advantage from this market. Suggestion is made to improve technology and cut cost from manufacturing to obtain objectives and sustain more profitability.
References
Bisnajak, A. (2018) The Bio-Nespresso Project: The design of a small-scale manufacturing unit for personalized medicine production.
Desbrow, B., Hall, S. and Irwin, C. (2019) Caffeine content of Nespresso® pod coffee. Nutrition and health, 25(1), pp.3-7.
Haseeb, M., Hussain, H.I., Kot, S., Androniceanu, A. and Jermsittiparsert, K. (2019) Role of social and technological challenges in achieving a sustainable competitive advantage and sustainable business performance. Sustainability, 11(14), p.3811.
Keong, L.S. and Dastane, O. (2019) Building a sustainable competitive advantage for Multi-Level Marketing (MLM) firms: An empirical investigation of contributing factors. The Journal of Distribution Science, 17(3), pp.5-19.
Narazaki, R.Y., Ruiz, M.S., Kniess, C.T. and Pedron, C.D. (2018) Towards sustainability through incremental innovation of a low cost product: the Nespresso case. Revista de Gestão e Secretariado, 9(2), pp.01-19.
Romo, Z.F.G. and Segura, C.P. (2020) La experiencia Nespresso, el Marketing Sensorial aplicado al sector del café. Miguel Hernández Communication Journal, 11, pp.75-96.
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