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Nestle Italy Study Analysis
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DescriptionNestle Italy Study Analysis
Nestle Case Study Analysis:
1. What is the structure of the Italian coffee market?
? About 750 national or regional coffee rosters, and coffee roster coffee-houses. They bought coffee directly from growers or through agents or importers.
? National Coffee Roasters normally bought beans from growers and sold their products to wholesalers on cash and carry basis; food channels such as supermarket, small stores or street vendors, coffee houses, restaurants, hotels, and coin operated machines
? Regional Coffee Roasters bought beans from importers or agents and sold their products to end-consumers through food channels
? Local Coffee Roasters bought beans from importers and sold to wholesalers.
? Coffee Roasters Coffee-Houses bought beans from importers and sell coffee to end consumers directly.
? Two segments:
? Family segments: They were end consumers, which had 80% of coffee dollar consumption and 31% of volume coffee consumption.
? CHR segment: They were coffee houses restaurants, and other institutional outlets, which had 20% of dollar coffee consumption and 70% of volume consumption.
? Normal: Family segment consumed doubled of coffee than CHR segment (69% vs. 31%)
? Decafe: Family segment consumed slightly higher than CHR segment (58% vs. 42%)
? Instant: Family consumed 7 times higher than CHR segment (88% vs. 12%).
? The market had low entry barrier.
? The top four national coffee roasters dominated about 42% of the coffee market. The next four dominated about 10% of the market.
2. Assess Nescafe’s current market position in Italy.
? It had less than 1% of market share in Italian ground coffee market. (0.836 tons vs. 137 tons of total market)
? Instant Coffee Market Share in Italy in 1988: Nestle had 77.7% of market share in terms of volume, and it had about 80.0% of market share in terms of dollar sales.
? Market Penetration: It had 100% penetration in all hypermarket, supermarkets, and convenience stores.
? Recently, the volume sales increased 25% due to Nestle had 14% price cut. However, the price cut was not a sustainable marketing strategy to gain market share. It often affected product image and led to a sales decline in the long run.
? Brand image was high in national level.
How has Nescafe’s positioning evolved?
? In a survey of Nescafe Image Tracking Study: 1978-1988
? Nescafe’ customers’ attitude towards the flavor and good taste of its instant coffee were stated from neutral in 1978 to slightly delight the taste in 1988. (2.6 vs. 3.6)
? Its image was less perceived as a sad product from 1978 to 1988. However, the change in Italy users was below than change in all users. (2.7 vs. 1.7)
? Most of its consumers agree that the product was convenient. ...
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