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Nestle is considering whether to introduce a new multi-beverage coffee machine positioned for the mass market. The decision is complicated by the fact that Nestle already has a successful coffee machine (called Nespresso), that is positioned at the high-end of the market and has a best-selling instant coffee brand (ie, Nescafe) positioned for the mass market. The (A) case addresses the questions: (1) given the existing crowded coffee-machine market and Nestle’s own position at the top-end of this market (with its Nespresso machine), should the new machine (targeting the mass market) be introduced? and (2) if it is, what should be its positioning to allow it to differentiate itself not only relative to its existing competitors but also relative to two other Nestle brands – Nescafe and Nespresso? Should it be launched under the Nespresso or Nescafe brand name (or neither)? and how could Nestle avoid potential cannibalisation of its Nespresso and / or Nescafe sales?
- Understand how to commercialise a new product and scale up a market.
- Learn which strategies allow a company to drive a new product along its S-curve of growth and grow the mass market.
- Evaluate whether and how to segment the market to offer different brands to different customers.
- Understand the trade-offs between creating a separate unit for a new business and integrating it with the existing operations of the company.
- Examine how to assess if a new strategy is working (or not).
|Publication Date:||July 2008|
|LBS Case Code:||CS-08-001|
|Subjects:||Brand strategy, Market segmentation, New product launching|