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Prof. Francesca VicentiniA.Y: 2015/2016
Introduction of the Nespresso Club concept
1986 – 1994 PIONEERING YEARS: TRIAL AND ERROR
1995 – 1999 START-UP PHASE: LAYING THE FOUNDATION
1989 1991 1995 1998
First aviation Nespresso
machine
First e-commerce platform
Introduction of recycling in Switzerland
Creation of Nespresso
5 employees First machine & 4
Grand Crus
The Beginning
1999
Evolving
Sustainability
2000 2003 2004 2010 2012
Boutique
Recycling George ClooneyBoutique
AAA Sustainable Quality Program
Nespresso opens its 200th boutique in
Shanghai
Achieves their 75% recycling capsule capacity objective one year before
time.
George Clooney becomes the brand
ambassador of Nespresso.
First Nespresso Boutique opens in
Paris
01 02 03 04 05 06 07 08 09
Strategic Analysis Filter – Teece (2009)
Segmenting the market – WHO?
- Nespresso: differentiation strategy
- Companies + private households
01 02 03 04 05 06 07 08 09
Strategic Analysis Filter – Teece (2009)
Creating a value proposition for each segment – VALUE?- Broad variety of choices
- Convenience of being able to prepare it in less than a minute
- Unique Nespresso coffee experience
01 02 03 04 05 06 07 08 09
Strategic Analysis Filter – Teece (2009)
Designing and implementing a mechanism to capture value – HOW TO CAPTURE?- The razor-blade model
- Two types of capsules: for offices & private households
- Continuous capsules sale: lock-in effect
01 02 03 04 05 06 07 08 09
Strategic Analysis Filter – Teece (2009)
Figuring out and implementing isolating mechanisms – HOW TO PROTECT?
- Intellectual Property System
- Holding patents to protect their competitive advantage
01 02 03 04 05 06 07 08 09Profiting from Innovation Framework
Teece (2009)
2 Modes:
1. Integrated Business Model2. Outsourced Business Model
Nespresso has a hybrid model..
01 02 03 04 05 06 07 08 09Profiting from Innovation Framework
Teece (2009)
Coffee machines:
• Licensees for producing coffee machines
• Selling through direct and indirect channels
Coffee capsules:
• Production of the coffee beans: raw materials
01 02 03 04 05 06 07 08 09
01 02 03 04 05 06 07 08 09
Cost Structure
Creating sustainable
businesssuccess
Creating long-lasting
consumer relationships
Creating highest quality grand
cru coffee
• 1-2% off the entireworld production of coffee
• Close contact withfarmers
• AAA Sustainable Quality Program
• The Poistive cup
• The Nespresso club
• Brand ambassador
Strategy
01 02 03 04 05 06 07 08 09
Cost Structure
• Patents
• Brand image
• Sustainability
• Systems, processes and assets that is hardto replicate
• Level of Opacity
• Cannibalizingexisting sales and profits
Protective Measures
“A business model describes the rationale of how an organization
creates, delivers and captures value.”
A. Osterwalder & Y. Pigneur
01
02
05
04
03
06
07
08
09
The Business
Model Canvas
01 02 03 04 05 06 07 08 09
Customers Segment
B2C – BUSINESS TO CONSUMERB2B – BUSINESS TO BUSINESS• Companies and firms looking for
qualitative coffee• Hotels• Restaurants • First class airlines
• 18-65 years old
• Niche market• Medium-high
income
• Average of 7 coffee per week
• Looking for quality• Looking for a status
01 02 03 04 05 06 07 08 09
Value Proposition
CAPSULES EXPERIENCE
Create the perfect cup of coffee, with exquisite cream, a tempting aroma and full-bodied taste…
…at home in a convenient and consistent way
SMART MACHINES:
• Affordable• Clever in size• Technology• Design
• Best Quality• Variety of
choice
• Luxury image
• In-shop experience
• Lifestyle
01 02 03 04 05 06 07 08 09
Channels
OWN CHANNELS PARTNER CHANNELS
Retailers:
Only machines are sold even in electronic stores
Nespresso wants to bring the machines into your
house
Boutique:Popular chic department stores and major
citiesRight balance between coffee experience and
retail
Online:E-commerce
Reserved to Nespresso Club Members48 hours delivery when ordering <200
capsules
Telephone:Advise on the selection of Grand Crus and
machinesDelivery service suited to individual needs
Reserved to Nespresso Club Members
01 02 03 04 05 06 07 08 09
Customer Relationships
BOUTIQUES DIGITAL EXPERIENCE
NESPRESSO CLUB
• Advices from coffee experts
• In-shop experience
• Broad range of services• Feeling of belonging to an
exclusive network• Database for all of its
members
• Clear website• Products
assortment• Online orders• Support
CALL CENTER
• Enabling them to place orders 24/7
• Provide technical support
01 02 03 04 05 06 07 08 09
Revenues Stream
LOCK-IN STRATEGY
Strategy that instigates the repetitive sales of capsules
FIXED MENU PRICINGStrategy of predefined prices
based on static variables
Price range for machines:from 99 to 699 euros
Price range for capsules:from 0,37 to 0,45 euros
CAPSULES
92% of the company’s turnover is
represented by the
capsules
MACHINES
4% of the company’s turnover is represented by the machine and
the cross-selling of coffee accessories
01 02 03 04 05 06 07 08 09
Key Resources
FINANCIAL:
Nespresso belongs to NestlèGroup
Access resources and capital of an international company
PHISICAL:
3 production center in Switzerland
410 boutiques worldwide
INTELLECTUAL:
1700 patents gave to the company a competitive
advantage
HUMAN:
1,500 coffee specialist in their Customer Relationship Centers10,500 employees worldwide
01 02 03 04 05 06 07 08 09
Key Activities
PRODUCTION:
• 63000 farmers in 11 countries • Coffee processed and capsuled• Manufacturing activities 100% in
Switzerland• Quality checks
MARKETING & BRANDING:
• Marketing campaign • Brand ambassador & Celebrities• Web presence
B2C DISTRIBTION:
• Direct distribution strategy• Worldwide distribution• In-house delivering
R&D:
• Focus on creativity, design and innovation
• Improving sustainability • Quality and different tastes
01 02 03 04 05 06 07 08 09
01 02 03 04 05 06 07 08 09
Key Partnerships
MACHINE MANUFACTURERS
Krups, Delonghi, Siemens, Magimix, Gaggia
COFFEE BEANS SUPPLIERS
Farmers provide to Nespresso the coffee as raw
material
(IUCN) International Union for Conservation
of Nature
“Alucycle Program”: sustainability through
value chain
01 02 03 04 05 06 07 08 09
Cost Structure
US $100.00 US $300.00US $200.00
FIRST PACK THIRD PACKSECOND PACK
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
PRODUCTION COSTS
R&D COSTS B2C DISTRIBUTION
COSTS
MARKETING & BRANDING
COSTS• Farmers• Production
process• Quality controls• Production
centers• Coffee
specialists
R&D TEAM:
Network of expertsfocused ondesigning moreinnovative, high-performing andgreener machines
• Shipping products worldwide
• Provide the same service
• Provide machines to retailers
• Testimonials • TV advertising• Social media
presence• Boutiques in the
best locations• Newspaper
advertising
A successful Business Model
Bringing machines into your house
LOCK-IN
Repetitive sales of capsules
Competitors are now allowed to produce compatible
capsules
EASIER TO FIND
CHEAPER
01 02 03 04 05 06 07 08 09
Cost Structure
US $100.00 US $300.00US $200.00
FIRST PACK THIRD PACKSECOND PACK
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
FLAVORS SUSTAINABILITY
The company is increasing the
variety of tastes of their capsules’
lines
The company is improving their commitment in
environmental and social responsibility
“AluCycleProgram”
Nespresso is already responding to this
threat:
QUALITY
The company is trying to
increase the perception of coffee quality
A new generation of business model is needed
Nespresso should focus on what really make their customers loyal to them:
The Customer Relationship “Nespresso Elite
Club”
Luxury club really involving customers
01 02 03 04 05 06 07 08 09
Cost Structure
US $100.00 US $300.00US $200.00
FIRST PACK THIRD PACKSECOND PACK
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
Lorem - Ipsum
GOLD CLUB PLATINUM CLUB SILVER CLUB
2500 capsules
New machine for free
Stimulant to be a loyal customer
Implicit perception of discount
Silver member€ 50 per year
Exclusive service:Luxurious treatment in any Nespresso boutique
5000 capsules
Sophisticated coffee machine
Access to the Gold Club service
Invite two friends Taste coffee before time
to market
“NESPRESSO ELITE CLUB”
01 02 03 04 05 06 07 08 09
The effect on the business model
Cost structure
• Increase in CRM costs• Giving free machines
Revenues
• Customers staying loyal• New customers
Key partnerships
• Newspapers suppliers
• Mobile devices suppliers
Key activities
• In-shop entertainment
Thank you for your attention!!!
Thank you for yourattention!!!
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