International Marketing: Nespresso's Market Entry Strategy and Brand Suitability

This document discusses Nespresso's market entry strategy and brand suitability in international marketing. It explores the concepts of market entry strategy, company orientation, culture, ethnic approaches, and brand suitability. The document also includes a comparison between standardisation and globalisation, as well as a marketing business plan for Nespresso.

International
marketing

Table of Contents
INTRODUCTION...........................................................................................................................3
Question 1........................................................................................................................................3
Market entry strategy & company orientation:......................................................................3
Culture:...................................................................................................................................3
Ethnic approaches: .................................................................................................................4
Brand suitability: .............................................................................................................................4
Question 2:.......................................................................................................................................6
Difference between standardisation & globalisation:.............................................................6
Question 3........................................................................................................................................8
Marketing busies plan.............................................................................................................8
CONCLUSION..............................................................................................................................14
REFERNCES.................................................................................................................................15

INTRODUCTION
Nespresso is a business unit that is based on Switzerland. It is a brand that is dealing in
small capsules of grounded coffee and different machines to brew coffee based on these
capsules. It represents a basic combination of Espresso and nestle. Present report is based on the
concept of international marketing that is adopted by organisations for the purpose of getting
insights of different aspects that are forming part of a business organisation (Alrayees, 2017).
There is use of various approaches for the purpose of making a in depth analysis of marketing
aspects. There is use of insights that have been gained from such analysis for the purpose of
developing a effective marketing plan that can be used by a brand for the purposes of
achievement of some specific laid down objectives.
Question 1
Market entry strategy & company orientation:
Market entry strategy in case of Indonesia will be same as that of already established
markets such as there will be formation of long term association with existing brands in which
they will be focussing on providing a experiencing the taste of premium portioned coffee. The
main concept that is based on opening of boutiques that is a complete innovation for the new
target segment of market (Bereznoy, 2019). They will be having a target of working with 3299
farmers in small villages of Indonesia and providing them support by enhancing the productivity
and quality of their harvests.
Culture:
Indonesia that is the present target segment country of Nespresso there is use of high
context communication as there will be communication that is based on high emphasis on the
physical contact, non verbal messages, physical settings, interpersonal relations and high cultural
values. For the purpose of brand promotion and marketing techniques there will be use of cross
cultural communication techniques in which there will be use of social media strategy that is part
of the digital sources as a medium for adjusting to the higher context cultures of different
countries and is uses both in context of business promotions and marketing tools (Brem, , Maier
and Wimschneider, 2016). It will be having a focus on internalised, non verbal messages and
cultural values.

Ethnic approaches:
There will be use of ethical approaches for marketing in the target country of Nespresso. Such as
there is a use of normal genera market for the purpose of expansion of their product segments.
Such as Multiculturally marketing is a basic practise that is targeting one or more audiences who
belong to a particular ethnicity that is justified of the majority of the culture that is part of whole
country (Clauss, 2017). It takes advantage of cultural aspect like traditions, religions, language
and any other concept for the purpose of making a communication to the target market and then
persuading them to purchase the products.
In the present case study of Nespresso there will be use of different cultural values like social
media, mass media and product category for understand the consumer product ownership and the
motive behind brand preferences. Coffee si a beverage that is preferred by all segment of
markets and all different target customer groups so there is no specific age group that has been
selected by Nespresso instead there is a general markets target that is basically based on having a
strong cup of coffee by their core product that is coffee capsules.
Nesopresso is making use of three tier strategy that is based on specially for the business class
segment of Indonesia, there will be use of Need so that customers needs can be identified. Want
that is related to specific requirement of a product as people who are office going do not have
enough time to make coffee so having coffee capsules is a very convenient option for them. Kast
is demand that is creation of a set of ability and desire to keep people more staoafied by the taste
& process that will be offered to them.
Brand suitability:
The brand suitability technique of Nesprsso is related tp using several branding strength
that is helping them in having successful expansion to other different parts of the world in
present scenario it is the Indonesia where this brand is willing to establish themselves. Such as
there is successful link with customers that has been maintained by use of social media
marketing as a strategy (de Almeida, and Zylbersztajn, 2017). Another strategy has been use of
media marketing that is focused on television and print advertising that has been adopted since
the year 2009. the brand strength lies in the long term associations with various farming
communities that are present in some remote locations. Such as in year 2003 they have formed a
a partnership with Rainforest alliance so that they can establish a sustainable utility program for
the purpose of bean production and paying the farmers, they have sourced 51 percent of their

beans with the help of this program and has a commitment to achieve a target of 80 percent by
the year 2013. this was successfully achieved by them. All these key strengths helps them in
establishing their presence in several new countries.

Question 2:
Difference between standardisation & globalisation:
Globalisation is a process that is having relation with integration and interaction among
Companies, people and government across various countries. It is a process that is driven by
investment, international trade and information technology. This is a process that is having effect
on culture, environment system and political systems. It is used for the defining the feature of
globalisation for transformation of economic factors like investors, costumers, and use of
economic opportunities that leads to faster growth and analysis of economic trends across world
so that there can be transmission of assets and collaboration of similar brands.
On the other hand, standardisation is related with strategic value of standards. It is a
source of competitive advantage that can be adopted for industrial development, it is used
surviving in the situations of global economic competition and having a direct impact on the
competitiveness of standards (Elgebali, 2019).
In the present case of Nespresso this brand is willing to expand themselves to different
parts of world and approach a new segment of market. This is helping them in being a part of
globalisation as their strategy for the objective of earning higher revenue.
Place: Indonesia is a country having a high prospect of future sales for this there is a
future if higher growth as there is high retail sales that has been observed in this segment in
recent years. In the year 2019 there has been growth of many new coffee brands and for the
capsule coffee brand Nespresso there is a high prospective of future growth. They are working
towards opening their boutique plaza in Indonesia since year 2019 and this is a completely
different market from all their existing markets.
Product: The core product is regarded as a strategy and benefit in which the product is all
about their basic value that is offered to customers.
Actual products is referred to as the tangible object that is relating to the physical design
and quality of the product (Iryono,, 2018). In the present case of Nespresso the core product is
overall benefit that is derived by their target segment of customers such as there is the actual
coffee that is experienced by their customers when they are availing the use of product. coffee

capsules will be used as their actual product and core product strategy for the new target segment
of market.
Augmented product is regarded as measures that have been considered to help the
consumers in using the product. The added value in Nespressso new customer segment will be
the way capsules are providing the benefit of strong coffee to their target segment of customers.
Promotion:The promotional strategy that will be adopted by Nespresso consist of using
digital media sources for purpose of expanding to key target segment of markets. Such as there
will be use if various food bloggers in Instagram who will be sending some free samples of
products and they will be asked to review the coffer so that their followers can get influenced
and this is the most effective way of having indirect promotion of brands with the most cost
effective method (Janjevic, and Winkenbach, 2020). There will be complete use of culture by
those food bloggers and other influencers that will be playing a major part in helping the new
target customers in developing a trust for this new coffee brand.
Pricing: In the initial stages there will be use of price penetration as the most effective
strategy for the purpose of attracting people based on high quality of product. Nespresso has
already established a effective brand image in their Present markets this is going to help in
making the new target market getting aware of the product.

Conclusion
It can be summarised and conclude from the above discussed information that there will
be use of a price penetration strategy for the purpose of entering in new market of Indonesia.
Further there will be adoption of their existing brand image as a tool for increasing the amount of
brand awareness for this new market, the business model is also existing that there three coffee
components consist of coffee machines, coffee capsule and the exclusive customer services by
use of various boutiques and long term associations with the Farmers. They belief in serving the
customers and for this they value the handwork of farmers for which they are willing to mutually
share the benefits in terms of higher profitability & productivity with their all stakeholders. The
recommendation based on above made analysis is that Nespsresso is successfully serving in the
existing markets and they have have to achieve higher growth because of the present business
model. So, this is the tool that can be very helpful them in approaching all other new market
areas. This technique will also be very helpful in having higher economies of scale and is going
to help them in having the possibility of higher cost effectiveness in their new market that is
Indonesia.
Question 3
Marketing busies plan
Introduction: It is a plan that is built up based on the analysis made from the above discussed
information. Further there has been use of several models that is going to affect the way there
will be future formulation of strategies by Nespresso using the information collected from
frameworks like porters five forces analysis, marketing mix techniques and PEST analysis.
Mission: The mission statement of Nespresso is a need to get the recognition of ultimate coffee
experience across all different parts of world ( Gifts & accessories, 2019).
Vision: To be a part of continuous innovation and have a aim of creating moments of pleasure
for all their associated club members.
Objectives:
There are several marketing objectives that are based on achievement of higher sales segment by
Nespresso and these are mentioned below:
 Achievement of a higher market share in the new target market that is Indonesia.
 Enhancement of overall revenue growth by 10% in by the financial year ending 2021.

Proposed strategy: The perspective future strategy that is the main criteria of new products
launch in their Newmarket share Indonesia is based on using of price penetration as the most
effective strategy for capturing larger market share (Kostelijk and Alsem, 2020). On the other
hand there is use of innovation & creativity strategy where there is establishment of their coffee
boutiques in different areas.
Porters five forces analysis:
It is a tool that is used for understand the different aspect of the model is that there can be
a detail assessment of the overall competitive position of a organisations so that there can be
further formulation of strategies. The porters five forces analysis of Nespresso is mentioned
below:
Competitive rivalry: It is a factor that is related to the number of competitors that are
already functioning in the target market and many impact the future position of a new brand that
is entering & willing to establish themselves (Porte and Kramer, 2019). Such as it can be said
that Sumatra Gayo coffee, Java taman dadar coffee will be providing a very high competition to
Nespresso.
Threat of new entrants: This is a threat that is having relation with the profitability of
new coffee brands that can enter the coffee industry and pose a high threat on functioning of
Nespresso. It can be said that it becomes very difficult for a complete new brand to enter a
industry as it involves high legal cost, marketing cost, lending cost and distribution cost. So,
there is need of large amount of financial resources that might lead to increase in barrier and a it
may not be feasible for a new brand to enter the coffee industry (Rivas, 2017).
Bargaining power of buyers: The entertainment industry and high presence of media
has lead to increase in the amount of bargaining power of buyers (Sathana, Velnampy, and
Rajumesh,2018). Customer posses low or zero cost of switching and this is leading to high risk,
business are not able to charge high prices and this is the main reason why Nespresso is willing
to make their Launches by use of price penetration as their strategy.
Bargaining power of suppliers: There is need of long term association with suppliers so
that organisation can have more benefits in terms of prices and economies of scale. In case of
Nespresso the product is itself a innovation that will be done in the markets of Indonesia for
their target segment of customers (Schlegelmilch, 2016). The overall established large base of
customers in countries where they are already functioning creates a situation of low bargaining

power of suppliers. As espresso is preferring highly competitive prices to their target segment of
customers this is leading to difficulty for their suppliers in making a switch to nay other similar
brand as it is going to affect their profitability.
Threat of substitution: There is a requirement that every new brand has to make a in
depth analysis oaf all the already existing brands in order to make a analysis of how these re
going to affect the future sales and what will be the major threat of substitution that can impact
their competitive positioning. It can be said that in case of Indonesia there are already established
coffee brands like Sumatra Gayo coffee, Java taman dadar cofee, Sulawesi kalossi coffee that is
going to affect their competitive positioning in the long run.
Marketing environment audit:
There is need to understand the market by use of techniques like marketing mix and PESTLE
analysis.
There is a need to develop a detail understand of various environmental factors that are part of
the external business environment and can posse a high impact on the way Nespresso will be
planning their future expansion strategies.
Political factors: It consist of the government intervention in the functioning of a
organisation. In present case Nespresso has their target market Indonesia that is a constitutional
republic and they are founding member of UN.
Economic factors: These factors are those that are having association with the economic
scenario of a country such as the rate of taxation has to be considered that is 25 percent. In
Indonesia there is growing income of the consumers that is consumers are willing to enhance
their level of spending and this has affected the food industry in such a way that consumers are
willing to spend on luxury beverages and coffee is one of the most preferred hot beverages.
There is also more focus on using higher quality products based on high quality coffee grounds.
Social factors: Social factors are those that are related with the social challenges that is
related with the changing preferences of people in the society. It can be said that The Indonesian
society is a collectivist that tends to have importance on whole group and not on one individual.
They believe in having a extended family and community that is a very important part of every
business and individuals (Verhoevenand Johnson, 2017). There is growing importance of more
personal relationships and this helps in having a different communication style that is having
more focus on individuals

Technological factors: One of the major technological transformations that has affected
the drink industry across different parts of world includes the modifications that has been made
for the purpose of self improvement of taste yield and shelf life,. There is also use of techniques
of genetic engineering for the coffee industry where there will be helping in growth of coffee and
production of higher profits. Coffee machines is also a great advancement that has been made
especially by coffee brands like Nespreso where the coffee machines is a part of their three tier
core product category.
Legal factor: There are some legal factors that have to be taken into consideration by
Nespresso it consist of food standards where there is a need to understand the different food
regulations, there are wide range if ways that have to be Considered it consist of the storage
policies, transportation acquirement that have to be considered by a coffee brand for the purpose
of developing a detail overview of caffeine standards. In case of presents scenario of Nespresso
there is a need to give proper consideration to all the laws that are part of coffee industry in
Indonesia.
Environmental aspects: It can be said that Nespresso can take into consideration several
environmental factors that are using the available raw materials in a more judicious manner.
There has to be elimination of waste and creation of smarter ways so that there can be proper
recycling of all available resources. Sustainable farming is another very popular approach that
has been adopted by Nespresso in which they are willing to take the benefits of sustainable
framing here there are many different types of environmental issues that is use of fertilisers and
pesticides all these are given special consideration so that there can be proper utilisation of all
available resources (Nespresso, 2020). In Indonesia also this technique of collaborative framing
is adopted by Nespresso and its helping them in making a holistic contribution towards the
external business environment.
Changes to the Marketing Mix
There are many Changes that will be made in the prevailing marketing mix strategies of
Nespsresso that will be adopted for the purpose of enhancing their market share that is one of the
most important objectives of the present marketing plan as discussed below:
Product:
Nespresso will be making use of their coffee extraction system with pressurized water
and capsule as the main core products for purpose of achievement of market share. They will be

offering a large variety of 60 capsules to their target segment of marker based on three different
categories such as “originals” and “Vertuos” it will help in increasing the offerings for their
customers. They will be using a Complete set of products like coffee machines, accession and
traest as a tool to attract more customers.
Place:
The motive is to make the product available at such locations that it is very easy
accessible to all the customers. There will be establishment of some Nespresso boutiques in the
prime location so that more customers can be attracted by the way there is creativity that will be
used in building up of such boutiques that will be entirely different and will be a theme based
location. Further there will be sue of a customised process of delivery so that it can be formed
according to individual preferences of these customers. If there will be no or low demand after a
time period of 4 months then there will be collaboration with local brands so that people are able
to develop a trusty for this new brand.
Promotion:
Promotion of Nespresso in their new location will be based on using of their luxury brand
image that is they will be using the high quality as a tool of satisfying their customers who will
be using their product for the first tome. Further after this there will be use of price penetration
as a strategy to attract people as because of high prices people might hesitate and are not willing
to purchase the product. So there has to be some free samples based on their marketing campaign
that has to be held on some public places that will help in attracting large number of people by
making them taste their freshly made coffee by using the capsules and machines.
Price:
The high quality is a key that can help them in charging higher prices also from their new
target base of customers but in the present situation for a one year there will be no price
skimming. That is the prices of all 60 variants of capsules will be kept lower but there will be no
compromise that will be made on high quality of products. Nespresso is a brand that has received
benefit of being patented since last 20 years and it will continue for more future period of time.
They can easily work for a lower profit margins for a time period of one year in Indonesia till the
time customers are accepting this new brand. After there has been a significant amount of sale
further there can be increasing of prices that can help in achievement of higher market share by

the high satisfaction of their customers that has been achieved because of the taste and creativity
that no other coffee brand is offering to their customers.
Monitoring and controlling:
There is requirement to monitor the whole business plan based on end objectives that has
been achieved by the business. The time period of two years has been set up to understand the
preferences that has been made throughout this time period. There will be understanding of
different deviations that have occurred between the set targets and the actual performance level.

CONCLUSION
From the above discussed report it can be said that there are different perspectives that
have to be understood by a particular brand for the purpose of achievement of higher sales and
profitability. Such as there is a need to make a detailed analysis of macro and micro
environment that is related to that new market. It helps in getting more insights for the purpose of
development of a specific target segment of customers. For the purpose of building a Brand
image in new market are the most important part is played by use of promotion and marketing
strategies that has to be effective enough in order to make people aware of the new products and
its key attributes.

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Online
Gifts & accessories, 2019, [online] Available through <https://www.nespresso.com/uk/en/gifts-
accessories>
Nespresso, 2020 [online] Available through <https://www.nestle-nespresso.com/about-us/global-
presence>