Standardization or Adaptation of Nespresso Club

Standardization or Adaptation of Nespresso ClubNespresso is the worldwide pioneer and market bequeather in premium-portioned coffee. It launched the first system of extracting coffee from capsules to the domestic household market. They currently operate more than 200 boutiques in key cities around the world. The Nespresso Club concept has been prospering in Western europium. The concept is simple when a machine is bought, the customer joins Nespresso Club on earnings to purchase capsules. This case study investigates on the amplification of Nespresso Club in china and east Europe and that may presume Nespressos entry of these markets. point 1 Discuss the key environmental factors that may affect Nespressos entry of these markets, and comment their transaction implications.Coffee pecks and perceptions be changing fast. Both Western and Eastern European countries give way seen an explosion of trendy coffee shops everywhere the past decade. Coffee has become a fashionable lifestyle drink and consumers across Europe are demanding products that allow them to replicate the coffee shop see to it at home. (Mintel 2010)On the other hand, the key environmental factors that may affect Nespressos entry in the market of Eastern Europe and China are sort into five factorsSocial-CulturalThe Chinese suck up the habit of drinking tea. About coffee, they know only freeze-dried coffee. China is the worlds first country to have planted, prepared and drank tea. A culture related to tea made its appearance in a long history. Tea is indispensable in the life of Chinese. It is not only seen as a beverage, but it has also become a cultural art that expresses the philosophy, the aesthetic vision and the lifestyle of Chinese.According to the secretary of the European Coffee Association, Eastern Europe could be the biggest potential developing market of coffee. Moreover, the consumption could develop radically in Poland, Romania and the Czech Republic (Mooradian Swan 200 6). He also added that for coffee consumption grows in Eastern Europe, it would be necessary to stop for consumers to consider it as a high life product, but as an everyday consumer product.Tea is sincerely present in Russian society and it is inseparable from the Samovar Ceremony. Today, tea drinking around the samovar is to perform a warm and friendly gesture. (Healthy Tea Magazine 2008) It is a moment of sharing within the community in which everyone benefits from home and the presence of each. However, coffee market is expanding in recent years in this country.Legal in that location are several barriers in China to establish itself in this country. There is a lot of paperwork to enter in the country. Nespresso sells the machines under license. Their concept, the machine and capsules are protected by 70 patents (School Project 2010). Nevertheless, the China market is risky because by and by few months the product is counterfeit. No legislation is truly effective in China for the counterfeiting.Under the legislation in force in Russia, over 60% of the products to be sold in the country require compulsory certification or license. That is to say, they must be approved by relevant Russian authorities to verify compliance national standards (Malchik 2010).EconomicChina is the second largest economy after the United States. The country had a particularly strong economic growth since the 1980s. However, the population remains relatively poor. There are large disparities between regions and individuals. (BBC word of honor 2009)Eastern Europe consists of a poor population, but its emerging economies have improved their buying power in recent years. Nevertheless, machines and capsules are expensive in spite of everything.PoliticalChina has introduced a new tax for foreign companies (Proexport 2008). It would be for maintenance and construction of cities and educational support from foreign companies and foreign persons with business interests in the country.To control imports, the Chinese authorities have introduced restrictive measures applied to many products the requirement to obtain an import license, the application of quotas and the application of tariff measures. (Thompson 2009)In Russia, there is a lot of bribery for companies. Approximately 80% of companies operating in Russia are forced to pay bribes. Further, the average amounts have increased in recent years. In 2000, a company had to pay on average 6500 to have no trouble. Now, they must give 85 000. It is the equivalent of the price of a small apartment in Moscow.couterLire phontiquementTechnologicalConsumers must join online the Nespresso Club to purchase capsules from Nespresso Boutiques but only 45% of the population in China have Internet.Over 80% of households have Internet access in countries of Northern Europe. Eastern Europe is trying to gradually catch up delay Internet access, but it is very long to implement.The main business implications of these key environmenta l factors are that the coffee market is no place in Eastern Europe and China because the tea market is dominant in these markets. Moreover, legal problems are particularly numerous. Trade barriers create a difficulty for Nespressos entry and Nespresso strategy washbasin be in danger as few people have computers or Internet. Thus, the different cultures of these countries with their tastes, their traditions, their customs and their policies may affect Nespresso.Question 2 cut into opportunities and challenges for Nespresso in these markets in managing customer relationship and sales through the Internet. What are the advantages and disadvantages of such an approach?On Nespressos website, the Nespresso club can give access to a full range of services tailor-made for customers. This concept has been successful in Western Europe.Opportunities for Nespresso are to have consumers on Internet to control the different information.The advantages for Nespresso in these markets in managing c ustomer relationships and sales through the Internet are the ability to know the expectations of customers and to read the consumer reviews on products. Nespresso Club allows a direct customer get hold of thanks to emails or discussion boards. On Internet, this is the best way to promote products and introduce the company. It creates a close relationship with consumers and forms a special connection. It hopes to turn them into tick off advocates. In addition, it updates the database marketing and it can adapt sales strategies. Furthermore, if it does not sell in supermarkets but only in Nespresso Boutiques and Nespresso Club, the branding is positive and reflects a luxury product. By having the main service exchange online, Nespresso retain control of supply channels. Thus, it can assure high quality standards that build a brand identity. (New Media 2009)Challenges for Nespresso are to convince consumers to drink coffee in these markets, to buy a Nespresso machine and to join Nesp resso Club to purchase capsules.The disadvantages with such an approach are that the consumers dis standardized purchasing online, especially Chinese people. Moreover, in China, only 45% has Internet and boutiques are in big cities. There is a large part of the country, which is not cover by Nespresso boutiques because major cities are in Eastern China on the coast (Alvarez Wilding 2008). Such an approach is risky for several reasons. Consumers do not needs motivation to join in the club online, especially to purchase coffee capsules. Further, some consumers prefer to have someone to talk in face-to-face and not on the Internet through emails or discussion boards. In Eastern Europe and China, a portion of population has low incomes. They do not want to waste time so they buy products they find at the supermarket. In addition, they have not all used to order online because this is not in their manners.Question 3 Given that the Eastern Europe and China are emerging markets, would y ou consider that Nespresso could successfully apply the Nespresso Club concept developed for the Western markets, or should the marketing strategy be adapted to reflect the markets specifics? Support your view on this with examples.Nespresso has not adapted its concept in these markets. However, some companies have chosen the adaptation strategyCarrefour is a French international chain hypermarket. In 2009, Carrefour is the third in the world biggest to make profit tin Wal-Mart and Tesco. The adaptation of Carrefour consumption patterns for Chinese people is evident in the stores the fish are alive in aquariums, customers choose their own pieces of meat and strong products are extremely varied more than in Western Europe.Likewise, McDonalds in China has adapted its menu to meet the Chinese taste. There are a lot of fried chicken instead of meat in the hamburger because more Chinese people like it. Unlike Western Europe people, they like meat more than fried chicken in their hambu rger. Further, it is very important to most Chinese consumers to have coupon deals so McDonalds offers several coupon deals to struggle the KFC fast food. Nevertheless, McDonalds has standardized the concept in Europe and USA with identical hamburgers and restaurants.Nespresso is not the only one to have standardized its own concept. Several companies have preferred standardizationLike IKEA, it offers home products that meet the needs of people worldwide. For people with needs, tastes and budgets which are very varied. IKEA has the same structure and offers the same furniture catalogs in the world. IKEA stores around the world have the same range of products. It sells a similar lifestyle worldwide. The catalog contains from 2000 to 3000 products and it is the same furniture everywhere in the world. The concept is a success in Russia. It worked very well.Then, Starbucks Coffee has established in China with the same concept as in USA and Europe. Coffee shop has a friendly atmosphere thanks to its decoration, comfort (chairs, sofas), the music played and the ability to take his time in the shop (Wi-Fi connections). This place has attracted the Chinese despite their taste for the tea.Nespresso chose to apply the same concept in Eastern Europe and China. It is a good strategy because it achieves economies of scale in research and development. Thanks to standardization, Nespresso has a reconciled brand image across markets. Further, a standardization strategy is much less complex to implement and it is quickly operational (Chernev 2007). Standardization can lead to failure despite the economies of scale that it generates because people do not want to change or abandon their culture.