E101: Distribution Mark Zimmerman MaRS email: mzimmerman@marsdd.com twitter: @markzim

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The Four “P”s

Product Price Place Promotion 3

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The Four “P”s Product Price Distribution Promotion

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3 Parts: Delivery, Sales, Service

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2 Flavours: Direct, Indirect

6 It’s OK and often optimal to mix & match.

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How to Choose?

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Market type; Existing, Re-segmented, New

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Market Stage

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Complexity

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Price

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Customer Preference

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13 “Default” Choices

New Existing Re-segmented

Market Type

Early Mature Midstage

Market Stage

Simple Complex

Product Complexity

Cheap Expensive Price

Direct Indirect

Channel Type

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Other Factors

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Size of market Diversity/complexity of market

“Proximity” of market Completeness of offering Cost of channel Speed to market

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Not just a tactic...

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...for some a Strategy Amazon

Dell Zappos

Apple

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Background

1970 - Invented 1976 - Patented 1986 - Launched Sold as a complete solution, machines & coffee for a per cup price to restaurants and offices.

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Background

1970 - Invented 1976 - Patented 1986 - Launched Sold as a complete solution, machines & coffee for a per cup price to restaurants and offices.

1988 - Acknowledged dud, Nestle considers shutdown.

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Background

1989 - Jean Paul Gaillard named Commercial Director.

“Pivots”

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Separate machine & coffee. Sell to consumers.

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Machines

Made and serviced by 3rd parties. Sold through independent retail stores. Manufacturers handle delivery and stocking. Nespresso handles sales training.

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Coffee

Sold online and over the phone direct to members of the Nespresso Club. Delivered direct to consumers in 24 hours or less.

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Later

As market matured Nespresso added their own brand machines made by an OEM. Added it’s own retail boutiques to further control the sales message. Created Nespresso Pro channel to serve the office market.

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Results

12 million

machines

20 billion capsules

50 countries

30% CAGR

over 10 years

~$3 billion in annual revenue

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Thanks! Mark Zimmerman, mzimmerman@marsdd.com @markzim

Questions? Comments? Suggestions? 27