Illy's success is attributed to its winning marketing mix of offering a high quality product, selling at the right price, distributing through suitable channels, and promoting using education. Key aspects include a unique coffee blend, cafes agreeing to serve only Illy, training programs, and strategic acquisitions to strengthen the brand globally. Lessons include focusing on quality, innovation, and market segmentation to produce tailored products for different cultures.

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Maria Stefanou (stefanou.maria90@gmail.com)
Hoang Pham Hai (hoang1188@gmail.com)
Lui Lan (vinifera.lui@gmail.com)
Buru Meressa Abraha (meressa25@yahoo.com)
Achamyeleh Dagnaw (achea.dag@gmail.com)
Illy Cafe and Illy Group Case

2. winning mix of Illy's marketing activities
the right product
• single, unique, perfect blend of coffee with consistant taste cup after
cup, year per year
• 100% Arabica beans, the compony employed a master blender
(liquorer)
• three main products: espresso and cappucino products, brewed coffee
(U.S.A), moka pot (morning italian habit)
plus 3-klg tin of coffee beans for commercial use (novel packaging
technique)
• E.S.E espresso pods and E.S.E compatible espresso machine, Metodo
Iperespresso (next generation espresso capsule technology)
• In 2005 exept from its niche product line Illy Cafe formed a new entity,
Gruppo Illy SpA, provides also premium food products: tea, chocolate,
candied fruit,wine
• ''Illy Issimo line'' (ready-to-drink product)

3. winning mix of Illy's marketing acrivities
sold at the right price
• Illy makes one brand, best in the world but is an accessible luxury for
millions
''It's like making a Ferrari, but not making any cheaper version of the
same car''
• price relatively higher than its competitors but this is compensated by
high quality products, innovation, focus-on-education orientation
offering high levels of expirience to the customers

4. winning mix of Illy's marketing acrivities
in the right place
• away-from-home market:
I. Illycaffe's market consisted of franchising: ''espressamente illy cafes''
(230 espressamente illy cafes in 34 countries on 5 continents),
restaurants and hotels
II. Illycaffe aligned itself with coffee shops such as Greco Cafe (San
Francisco),
Cafe Nineteen in Atlanta (Georgia)
III. 25% U.S. retail stores including stores such as Willians-Somona, Sur La
Table, Whole Foods⃰ (upscale locathion)
IV. 800 Safeway Stores selected by Illy (because their customers were
predisposed to quality)
• Italy and abroad: cafes agreed to serve illy exclusively (program Artisti
del Grupo)

5. winning mix of Illy's marketing acrivities
using the most suitable promotion
• 1999 Universita del Caffe: training and educational activities, courses
for the consumers, tasting events, coffe-themed dinners
• North America: ''experiential marketing'' a complete coffee experience
(Soho New York art gallery: art and shop combined with coffe
seminars)
• e-store at illyUSA.com (illy offered a coffe machine for a subscribtion of
coffe)
• Safeway stores's illy team members (helped retailers develop an
effective program in terms of product and solutions for teaching
consumers how to make better coffee at home)
• partnership with Williams-Somona offering sessions on coffee at shops
with training facilities

6. winning mix of Illy's marketing acrivities
using the right people and processes
• people: thrigh generation of managers with common goals
 ethical dimention of the company (the brand had to be designed and
created on the basis of a promise given to the consumer)
 focused on investment in research and innovation
 endless pursuit of quality
• process: for illy the delivery of its services its integral part for its success
 what illy offers to customers in beyond product itself is experience, is
lifestyle

7. Illy's strategy to challenge assignments in
the Global Market
Illy has involved into a global brand
I. By targeting the right markets, areas of business and line of products
 understanding different ethic and cultural segments
U.S.→highly developed consumers-at-home segment (brewed coffee)
South Europe→highly developed coffee bar culture (cafes serve Illy
exclusively)
Italy→moka pot coffee (Italian's morning habit)

8. Illy's strategy to challenge assignments in
the Global Market
Illy has involved into a global brand
II. By choosing to invest heavily in quality and in scientific and
technological innovation and education
 quality: Illy pay Brazilian producers a higher premium if their product
matches their high standarts (a clear example of growing the pie
larger)
 scientific and technological innovation: innovative shipping containers,
bi-chromatic system detecting and eliminating beans that do not meet
color standarts, qualified technologies to control all aspects of
production, collaboration with universities and scientific centers
 education: a fontamental Illycaffe and Groupo Illy's strategy was the
Universita del Caffe

9. Illy's strategy to challenge assignments in
the Global Market
Illy has involved into a global brand
III. By enlisting artist and designers to produce beautiful espresso machines
and cups
 ''The Illy brand has always been assotiated with the arts'' said Fea
Soho New York art gallery helped to built the brand by using publing
relations efforts and experiential marketing over traditional advertising
IV. By charging higher price in partnership with Coca-Cola
 Ilko Coffee International, bringing a line of Italian ready-to-dring
products entered in a dominated by Japan market (with three-
quarters of the global market) and in one year achieved 30% market
share globaly
''we are not company that makes rash desitions when it comes to our
coffee''

10. Illy's strategy to challenge assignments in
the Global Market
Illy has involved into a global brand
V. By following strategic acquisitions:
40% share in Agrimontana, 80% share of Domori, a stake in Damman
Freres and in Mastrojanni
 reinforce positioning on the top quality segment
 strengthen internationalization
 facilitate the procedures and reduce costs for distribution and
organization
 long-term growth oriented by acquistion & cross selling

11. Illy and Nespresso's marketing strategy
Simillarities
 Both focused on high-quality coffee experience.
 Having stores at the best locations.
 Sharing their knowledge (not an act of charity but a business model)
Differences
 Illy also offers open products like E.S.E. (easy serving espresso)
 Whereas, Nespresso has been following a closed strategy. Its coffee
capsules or pods are restricted to be used only by its own coffee
machines.

12. Illy and Nespresso's marketing strategy
Differences
 When Nespresso is a part of Nestle group then Illy has acquired a share
in small companies (in order to reduces risk, divers portfolio…etc).
Therefore, Nespresso can use resources from Nestle while Subsidiaries of
Illy are able to use resources and sharing technology from Illy in term of
building sustainable capability and competences.
 Nespresso “seems” to focus on promoting their brand by using
social media and digital marketing.
Nespresso has a huge plan as its advertising campaigns are concerned
mainly by using star's endorsment and George Clooney as an
Ambassandor

13. Illy and Nespresso's marketing strategy
Differences
On the other hand, Illy believes that in order to really convert a consumer
in drinking Illy, they need to actively engage them. The company
launched plenty of projects, in which customers can try the Illy coffee
(or machines) then assosciated members talk to them a little bit and
educate them about the coffee.
 Distribution:
Nespresso: focus on certain channels (e-shop)
Illy: many different channels.
 Price:
Nespresso is really expensive compare with Illy.

14. lessons can be learned from Illy case
 A strategic planning based on corporate's culture increases loyalty
between the company and its customers
 By investing in quality, education and scientific and technological
innovation strengthens your brand and your corporate value
 Market segmentation and targeting are of paramount importance for
producing tailored-made products fitting in the markets needs and
tendencies
 A loylty relationship with your suppliers, avoiding middlemen, save you
more money to invest in other sectors
 A long-term plan helping you to avoid obstacles and diversify when it
is required by creating the right partnerships
''we don't make coffee, we deliver the passion for quality lifestyle
and expirience''

15. suggestions for Illy's future marketing
activities
 Illy is tagged along with fine dining
suggestion: collabotation with premium-beer and fine-wine companies in
order to bring its customers a full-proof experience
 The illy brand has always been assotiated with arts
suggetion: new progects as for illy to discover the artists who will be the
great masters of futeres
 There is always room for further expansion
suggetion: long-term planning for potetional markets illy could invest
 Illy is constantly focused in research and its braning
suggestion: should keep following its uncompromising quest to provide the
perfect coffee, from bean to cup
The is no doupt illycaffe is a lucrative business that pursues excellence.

16. the huge success of italian companies in
the Global Market
Main reasons:
 Reducing lack of Consumers Awareness
 Focus on History and Art
"Coffee isn't grown in Italy, so why should we buy Italian coffee?”
Italian coffee companies as Illy, Lavazza have overcome this obstacle by
stressing their commitment to quality, tradition, years of experience as
master roasters and dedication to the "art" of authentic Italian
espresso. For example:

17. the huge success of italian companies
in the Global Market
In case of Illy, by 2010, there were 230 espressamente illy cafés in 34
countries on 5 continents. Each café provided “an authentic Italian
coffee experience starting with its design where the art of Italian café
culture meets the love of all things beautiful. In other words, the
''ultimate coffee experience''.
Or with Lavazza, the company has catchphrases, illustrate this marketing
strategy: "a century in a cup" and "a world of experience." Lavazza uses
the slogan, "For more than 100 years, Danesi has meant coffee with
passion, dedication and excellence.” or : "Danesi Caff means history,
tradition and quality." By contrast, many U.S. roasters have only been
in business for about 10 years-not long enough to make these claims.

18. the huge success of italian companies
in the Global Market
 Creating a Recognizable Brand
 The biggest challenge faced by Italian coffee companies is creating a
recognizable brand. Breaking into the psyche and behavior of
consummers takes time. Those companies being willing to put in the
effort to educate distributors and consumers, the reward is an increase
in market share. Italian coffee companies have extended their brand
image in the United States by opening caffe. Illy Caffe and Lavazza
Caffe are two examples. Lavazza caffe have been particularly helpful
in building market share and creating brand awareness for Lavazza
coffee in middle America. Segafredo is unique in that it offers
franchises.

19. the huge success of italian companies
in the Global Market
 Creative marketing is also an important element of success for Italian
companies. Many companies make point-of-sale items, ceramic cups
and accessories available to their distributors and customers. These
items reinforce their brand and the rich tradition of Italian coffee. Illy
Caffe is one such company. In addition to its distinctive logo cups, the
company offers signed and numbered limited-edition cup collections
designed by famous and emerging artists, including Jeff Koons and
James Rosenquist.

20. the huge success of italian companies
in the Global Market
 Expanding Total Market Demand
 Coffee competition has caused a few of the major coffee producers to
diversify the distribution channels such as vending machines and home
or espresso office-machines (e.g. espresso machines 'My Way' Lavazza
or 'Nespresso' Nestlè).
 Developing Blends to Suit customer Tastes, that is a success story of
Lavazza. They offer a full line of products, including espresso, filter
coffee, pods and even Rainforest Alliance-certified coffee that appeals
to the American audience. Lavazza has not changed its blends for the
American market but has added new blends to suit American tastes.
 Expanding into the Ready-to-Drink Canned Coffee Product. A story of
Illy in Japan is an example.

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