NESPRESSO Group Case Study

1 By: Dorji Tshering, Hannah, Dennis and Shahab

Case study on Nespresso, a subsidiary of Nestle

Nespresso Introduction (LO Chapter 1: Marketing: Creating and Capturing
customer Value

Launched 28
leaders of coffee market. The brand became very famous thanks to the coffee maker
c C c W ?
More than a simple coffee, Nespresso managed to create literally
xc vv cc. In this case study we will analyze the company
and its marketing strategies using the SWOT analysis, Positioning, targeting and the
marketing mix.

Believe it or not, during last five years, Nespresso sale rose by 1000% as per the
Sydney Morning Herald dated 20
th
April 2014.

Nespresso: 3 Key growth Drivers

1. Creating highest quality Grand Cru Coffees
2. Creating long lasting consumer relationships
3. Creating sustainable Business success

Nespresso: 6 Core Competencies

1. Unsurpassed coffee quality and deep coffee expertise.
2. Unstoppable drive for innovation, distinctive design and in-house R&D
expertise
3. Passionate global brand community with direct consumer relationships
4. Aspirational, global super-premium brand
5. Unique Business model / route to market and exclusive client services
6. Unique holistic approach to sustainable quality development

The SWOT Analysis L.O Chapter 3. Analysing the Marketing Environment


The Nespresso has been analyzed using the SWOT analysis to gain insight into the
cm cmv v ck. The Strengths and weakness of
the Nespresso

Strength and Weakness




The Opportunities and the Threats


Diagnosis and advices:
Coffee industry is a very thriving business, it has a huge market with great
opportunities as Coffee is the most popular drink in the world. This sector is very
NESPRESSO Group Case Study
2 By: Dorji Tshering, Hannah, Dennis and Shahab
dynamic with famous and useful innovations such as the Capsules or Nespresso
machines; both have a strong potential. Capsules and Nespresso machines are a
strategic growth opportunity. Consumers pay more and more attention to quality of
coffee and some are ready to pay higher price for a more up market coffee. They also
expect a more ease to use relation to coffee. So, Nespresso has to keep on innovating
cm . Az cm d aspirations in terms of
coffee could be a great mean to achieve those objectives and adapt the offer to
consumers needs.

Nespresso has to face a hard competition from their Competitor because the current
trend for health and well being act in favor of so called healthy drinks such as fruit
juices, smoothies and mineral water are gaining popularity. The goodness of the
coffee like its antioxidant content needs to be marketed in depth. Nespresso has to
improve its involvement in issues associated with fair trade and sustainable
development. Brands must therefore deal with the paradoxes that exist in relation to
consumer demand: they must market inexpensive yet high quality products that are
easy to use and not raise ethical questions.

Targeting and positioning
The targets aimed by Nespresso are the consumer in the higher social status,
demographic group between 28 and 49 years and urban residents. The new targets
aimed by Nespresso at present are their young assets.

The creation of the Club Nespresso adds a luxury touch to the concept. They have
already created impressive values using the marketing strategies, which resulted in its
positioning amongst the luxurious consumer goods.


Nespresso Marketing Mix

Product
Nespresso proposes 3 different types of products. The espresso machines: 6 different
companies manufacture them and combine technological technology, simplicity of
use and innovative design. There are 5 different ranges of machines available in
different colors and able to deliver a sufficient pressure to make a true espresso, c
c c mc (S Tm).

c c v m c
v v (16 v). T c c
c mc . T cm c c
m c c c c: v
c.

Nespresso proposes accessories linked to the espresso machines and the capsules. The
customer can buy several objects such as coffee sets, trays, storage racks for capsules
and more sophisticated accessories. The espresso machines are even delivered with a
set of cups especially designed for Nespresso. Buying an espresso machine and
capsules, the customer then enters in a club, which actually permits him to enjoy
Nespresso services. The Nespresso Club offers advices about the coffee, the
maintenance of the machines and permits the customers to order coffee machines and
NESPRESSO Group Case Study
3 By: Dorji Tshering, Hannah, Dennis and Shahab
capsules. The customers can enjoy these services in Nespresso shops, on Internet and
by phone.

Place
There are four different channels of distribution. First, the espresso machines are
distributed in electrical goods shops. The potential customers can only buy a coffee
machine in this kind of shops, the capsules and the accessories are not distributed in
these shops. The customers can also buy espresso machines, capsules and accessories
in the 15 Nespresso shops in France (42 around the world). These shops are the base
of the experiential marketing strategy developed by Nespresso. All has been designed
so that the customers make themselves comfortable: the atmosphere is warm, there
are chairs etc. The potential customers can taste the different flavors of coffee, try the
espresso machines and listen to the advices of the specialized salesmen. The aim is
that the customers see the purchase as a pleasant experiences that will make them
want to come back in the shop and buy other Nespresso products. These shops are a
real show window for the brand, to show to cm k
v. T c mchines, the capsules and the accessories are also
available on Internet and by phone thanks to the Nespresso services. However, these
services are reserved to the members of the Nespresso club. Thus, the customers have
to register trough the website and/or buy an espresso machine to enjoy Nespresso
services and order capsules. Indeed, buying an espresso machines, the customer enters
in the club, which permits him or her to order capsules by phone and on Internet (the
capsules are only distributed to the members of Nespresso club).

Price
The capsule coffees produced by Nespresso are a luxury product. So the price of one
capsule is very high (58 AU cents): we can indeed notice that the price of the product
is the higher of the market, three times higher than
v c mk. B Nespresso is also widely more expensive than some
famous brand like Jacques Vabre for example whose capsule is sold at much lower
price.

T c v m xve because of the image of the
product. Nespresso wants to give a luxury and upscale image to his products and play
on the design and on the quality to justify the c. T c
products that are bought by wealthy customers. The customers are ready to pay a
higher price to have a different and high quality product, but also for a very good
customer services (with the club) and a very personalized relation with the firm.

Promotion
The last advertising campaign on Nespresso was a real success. The advertisement
shows the actor George Clooney in different situation and saying the slogan, which is
m: W E? . T cmmc
campaign and the results are impressive: according to surveys, this campaign has a
66% of knowing and 85% of c c cm. T
memorable for the customers and the popularity of the product knows an incredible
increase.

George Clooney is a very adapted for the product: his image and his style are very
c c cm. A cm m
NESPRESSO Group Case Study
4 By: Dorji Tshering, Hannah, Dennis and Shahab
coffee. This is the first all-c v cm Nespresso, which aim to
have a most important popularity in the public. The previous campaign and
communication was more elitist and aim to reach a reduce target.

Nespresso communicates on the fact that they offer a lifestyle with the product and a
new image to the customers. If they buy the product, they c c
looks like a group of privileged people, they are just living something different. The
advertising campaign is also created to start a buzz. He is announced like a date where
people will be impatient to discover the new spot. The release of the advertising is
always a relevant.

Nespresso communicates also in sponsoring boats on famous sea race like for
xm c Amc. I communication, which is respectful
of the image of Nespresso. They use their image only in upper communication and in
communication representative of their customer.

They also decide to promote a more sustainable and ethic image. They associate their
image and create some product Nespresso faire trade and sustainable development.
They just want to correct their image because their capsules for the coffee are more
polluting than the competitors and have a bad effect on the earth in broader sense.
They also want to associate their image to this because their upper-class customers are
more interested in this ethic aspect than the others customers. In fact, it is a trendy
way of consumption for wealthy people. They want to share the same values with the
other members of the club, which probably is the social status.

They also develop very interesting sales promotion: Nespresso knows that their coffee
maker works only with their capsule. So they make promotion on the coffee maker to
make people buy it and customers who have already bought it at a lower price are
obliged to buy Nespresso capsule and c mk not really
expensive. They play on the exclusivity of the capsule Nespresso on the coffee maker.

The direct marketing make between Nespresso and the customers: Nespresso makes a
one to one relationship with every customer, which is member of the club Nespresso.
The first advertising campaign of Nespresso was on this club. Nespresso is doing
direct marketing in order that the customer feels that he is a privileged and has all the
attention of the firm. The service is, come with a newsletter to inform the customer
about the evolution of the firm (not advertising) and a reminder of order calculated on
the frequency of purchase. This is possible because Nespresso has a lot of information
about their customers and knows what their habits are and what they like.

Conclusion
Throughout this study case we tried x k m
strategy. The brand knew how to take the good opportunities to grow and develop it
by creating a real feeling of belonging and an important loyalty of its customers. This
is a very good model. However, at these times of people awareness about global and
environmental issues, the brand should maybe think more of other solutions, these
capsules being a real disaster for the environment. In marketing terms it's a match
made in moneymaking heaven - but George Clooney, king of cool turned emperor of
the coffee-pod people, may be serving up a less-than-perfect brew as a caffeine
pitchman. Clooney promotes a product whose invasion of our homes may come with
NESPRESSO Group Case Study
5 By: Dorji Tshering, Hannah, Dennis and Shahab
serious environmental consequences. Even if they worked a lot on it, their solution is
still not satisfactory for a lot of people. T cm cc
advertisement and its actions are still a big question for the environmentalists around
the world. At these times of fair trade and sustainable development, what could
happen if a brand gives the image (wrong or right) to, do not be very interested in the
global issues?

Strength of Nespresso according to SWOT analysis:
Nespresso is the part of the Nestle Pty ltd which is the one of the top leading
multinational company in the world due to its quality and a huge range of products.
They have direct contact with their consumers through their promotional team .They
spend a huge budget for their promotional activities. They have some special trainings
programs for their employees about the strategies and marketing skills so that they are
able to capture the maximum market shares. Their team is expanded in about 70
countries in the world to be known and to be a brand leader in the market of coffees .
They organise several programs like carnivals, fun activities, festival celebrations for
keep on connecting with their customer directly and for their instant feedback.
Nespresso is recognised by its own special taste , aroma , quality standards, best
service, smart machine, optimum convenience, variety choice and best in cup quality
They have long term plan and approach .They share the real experiences of
consumers about the life turning points when they switch to Nespresso so in that way
they are keep in touch with the consumers and making good relationship with them.
They designed the unique route of market that is Nespresso e-commerce platform
through which they are focusing the exclusive boutiques and customer relationship
centre for giving easy access to consumer to coffee specialist for advice on their
coffee and machines. They are not just selling their products only but also safe guard
the resources and keeping safe the environment for future generation. They are
working on their core values like integrity, honesty, and fair dealing and full
compliance in their business principles.
Price strategy according to 7 P:
T c c v xv cm e
other famous brand and it almost three times then the other one just because of its
quality and good customer services .It is the brand for the wealthy people so that for
maintaining their standard higher in the society they also use it and enjoy its taste.
Conclusion:
Nespresso is the one of the best choice for the customers . It is just because of its
quality and good customer relations if they want to be the one in the market and want
to have sustain growth and position they should lower the price and more flavours
without compromising on its quality and services because now a days everyone want
to have good quality at low price and something new in taste.










NESPRESSO Group Case Study
6 By: Dorji Tshering, Hannah, Dennis and Shahab
Case Study work distribution
SWOT Analysis

Shahab- Strength
Dennis- weakness
Hannah- Opportunity
Dorji- Threats

Marketing Mix

Shahab, Price
Dennis Place
Hannah promotion
Dorji Products

Learning Objectives covered.

Chapter 1. Marketing: Creating and Capturing customer Value
Chapter 2. Company and Marketing Strategy: Partnering to build Customer
relationship.
Chapter 3. Analysing the Marketing Environment
Chapter 4. Managing Marketing information to gain customer insights
Chapter 5. Understanding consumer and business buyer behaviopur
Chapter 6. Customer-Driven Marketing Strategy: creating Value for target
customers
Chapter 7. Products, Services and Brands: Building Customer Value
Chapter 8. Developing New product and Managing the products life cycle
Chapter 9. Pricing to capture Customer Value
Chapter 10.





















NESPRESSO Group Case Study
7 By: Dorji Tshering, Hannah, Dennis and Shahab
References

Kotler., Denize,, Adam., & Armstrong, (2012). Principles of Marketing.
Australia: Pearson.