Lavazza: The Challenges of Foreign Market Entry in a Brand-Intensive Industry

Why is Lavazza’s expanding limited in USA compared to its growth in many parts of the world?

Lavazza being an Italy brand has been successful in the country and other regions as it has been able to master the coffee customer needs and their demands. Nevertheless, since venturing in USA in the form of strategic partnership in 1990s, in a period of more than 30 years, it has not been in a position of successfully to struggle in the market. This is with the organisation leveraging on approximately 1.4% of their market dominance. From the case study, there are different reasons what their growth in USA has been limited compared to the other global regions.

For instance, their market expansion represent a growth approach which focus on introducing the existing products to new markets. The organisation has focused on pursuing a total of 4 growth approaches which they use to depend on their approach on the correct products. These approaches are linked to market penetration, product development, market development and diversifications. At the start, the venture of Lavazza in the USA market was in the form of partnering with the local USA restaurants and bars. This was however not a successful approach in the market dominance in the sector. It is in this regard that the organisation opted for shifting from the business to business (B2B) approaches and partnering with various partnerships with restaurants and cafes and opposed to focus on household coffee markets through a direct sharing of consumers through local grocery chains including the Public Super Markets Inc.

Also, the limited dominance in the USA market is similarly informed by the existence of product-market fitness. In particular, the drip coffee had been identified as the most popular non-alcoholic beverage and ground coffee and single-cup coffee being the largest market segments in USA. Nevertheless, as noted by Lavazza CEO Ennio Ranaboldo, they were substantially loving espresso. With this drink being for minority in USA, their ability of dominating the USA market has substantially been limited.

The pandemic made the matter worse since for all their subsidiaries, Lavazza had challenges in accepting consumers in purchasing of the coffee machines. The organisation was hard to offer affordable household market operations. This is also coupled with the organisation lack of capability to adopt an appropriate marketing strategy which is a reflection of adoption of inclusive product portfolio of the organisation.

Why cannot Lavazza deal with the competition in the US market?

As evidenced in the case study, Lavazza is impacted by stiff competition from the different organisations in the market. Also, this competition is identified as being double fold. For the first fold, organisations including Starbucks and Dunking are also involved in selling ground coffee products and services including the handcrafted coffee, specialty coffee and cade experience. Additionally the organisations including Folgers, Keurig Dr Pepper Inc. and Stok and Stok are similarly significant competitors. These are involved in selling of ground coffee bar segments. Further, these organisations operates through similar value propositions despite of using varying business models. Hence, all these compounded makes it hard for Lavazza. This competition is stiff and the organisation is not in a position of actively competing with them. The fact that their competitors are already acclimatised to the USA culture, they are in a position of selling more products. This is while being effective in aligning their operations with the country culture. The impact of this has also been an attribute of leading to a less brand recognition by the USA consumers.

How could Lavazza change its limited brand recognition among US consumers?

For Lavazza, in order to successfully improve on their brand recognition, there would be a need of adopting a unique, committed to market-leading client services and produce thought-

Please click the icon below to receive this assessment in full