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INTRODUCTION

o Nespresso is the brand name of Nestlé Nespresso S.A., an operating unit of the Nestlé Group based in Lausanne , Switzerland. Nespresso machines brew espresso from coffee capsules, a type of pre-apportioned single-use container of ground coffee and flavorings.

o Launched 30 years ago, Nespresso is a subsidiary of Nestlé and one of the worldwide leaders of coffee market. The brand became very famous thanks to the coffee maker based on capsules. More than a simple coffee, Nespresso managed to create litterally a “Nespresso experience” by its innovative concept.

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NESPRESSO COFFEE MACHINE

Nespresso offers a number of different machines for sale. The machines carry the brand names of well known kitchen equipment manufacturers such as Krups, Magimix, Miele,Siemens, and DeLonghi.

They are manufactured by the Swiss company Eugster / Frismag,

one of the world's largest coffee machine producers. Eugster/Frismag (based in Amriswil, Switzerland) is little known

to the public because the company is strictly an original equipment manufacturer (OEM). In 2000, Nespresso began distributing machines bearing the "Nespresso" brand.

In August 2011 Australian brand Kogan announced they were developing the "Ez-press", a coffee machine compatible with Nespresso pods.

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NESPRESSO COFFEE PODS Nespresso capsules are sold exclusively

by Nespresso and are more expensive than portions of ground coffee purchased "loose".

The cost per serving is up to three times higher than that of alternative brewing methods.

The capsule material and perforated top are both made of aluminum. For health reasons, the interior of most of the capsule is lined with food-grade lacquer.

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CHANNEL STRUCTURE

Manufacturer(Nespresso)

Nespresso Call Centre

(Telephone Orders)

Nespresso Company

Owned Stores (Boutiques)

Nespresso Websites

Consumers(Nespresso Coffee Club Members)

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COMPANY OWNED STORE

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ROLE OF DIRECT DISTRIBUTIONS

Nespresso has gained it’s Brand Equity due to it’s Exclusivity.

Has complete control over it’s distributions channels thereby ensuring it’s availability as a premium products.

Helps Nespresso in charging higher prices than local competitors due to it’s unique offering in distributions channels which is by selling coffee pod only through it’s self-owned shops.

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POSSIBLE FUTURE CHANNEL STRATEGIES

Transfer of Nespresso Coffee Pod License to other parties like mall owners , hotels, Theater owners etc.

Vending Machine can also be installed at various places where footfalls is high like local super mart which will increases it’s reach and availability .

Can also add up Franchise models in their strategies for distributions.

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BENEFITS

Will meet huge increase in coffee demand globally and thereby serving it’s potential customers.

Helping in expansion of the business by exploring possible untapped business opportunities.

Under franchise models Nespresso will get wide customer base as well as regular revenues from it’s franchises.

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MISSING OPPORTUNITIES

By using direct channel Nespresso is giving up lot of lucrative opportunities like:

Meeting Growing Demand of customers Preventing themselves from exploring

news channels which might be profitable. Social media Marketing like Facebooks ,

Twitter. Adoptions strategies of Low cost

competitor like Sara Lee which provide low cost coffee pods .

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POSSIBLE RETURNS OF INDIRECT CHANNELS

Transfer of variable cost to third parties.

Reaching wider set of customer in developed as

well as in developing countries.

Greater understanding of changing customer’s

taste & preference regarding coffee.

Implementation of appropriate marketing mix .

Enhanced brand knowledge & Imagery.

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CHAMPION VS. CHALLENGERS

In early 2010, major Swiss and French supermarket had providing with much cheaper new coffee pods as compared to Nespresso’s which is 20% higher in price.

Sara Lee has been started providing the coffee pods for Nespresso coffee machines

These pods have available in more than 2000 French supermarket at 10% low price than that Nespresso pods

With gradual loss of the market share in coffee market, Nespresso is fighting an infringement case against many competitors regarding Nespresso Patents.

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MAJOR DISPUTE

Nestec loses Nespresso capsule patent dispute

A German court has rejected an application by Swiss food giant Nestle to ban the sale of unlicensed coffee capsules for its Nespresso coffee machines in Germany.

Nestlé Sues Sara Lee in Coffee War  accusing the latter of contravening its patents. In December 2010, Sara Lee announced that they would start selling their capsules in the US under the Douwe Egberts name and since mid 2011, Sara Lee has expanded sales of its capsules into other countries, such as Spain where they are sold under the "Marcilla" brand.

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