Nespresso marketing analysis assignment

Nespresso positions itself as the deliverer of the Ultimate Coffee Experience by combining pleasure, aesthetics, perfection and simplicity. Its customer driven marketing strategy is based on three main pillars: top quality Grand Cru coffees, innovative and stylish machines and an exclusive, personalized service to its clients. Its market leader position is based on 5 competitive advantages: service excellence, smart machines, optimum convenience, variety & choice and outstanding quality with innovation as a conductor line and philosophy on every level.

Nespresso’s target market was an unexplored area. By applying the marketing concept, Nestle has come up with the right and missing product for the customers by delivering not only a greater satisfaction but creating the “ wow” effect. With two main target customer segments; In-home and Business, the company today enjoys a 25% market share of the world’s capsule coffee market and a 40% share of the French market.

In both cases we can state that machines are elegant, design awarded, innovative, user friendly and convenient. Business line includes the coffee machines with three sub lines: Gemini, ES for an internal use, destined to increase employee and client satisfaction within offices, hotels, luxury boutiques and travel companies, and the Aguila line, destined for restaurants and cafes (launched this month, required 3 years of research, weights 100 kg, prepares the full range of Italian coffees and milky coffees, inbuilt sim card that is connected to the maintenance center, recyclable capsules).

It also includes the 8 round shaped Grand Crus and the accessories. A large choice of targeted and exclusive services come with the product purchase and thus with the membership of the Nespresso Business Club. The services include commercial assistance, installation and training, delivery and technical assistance with 3 months within 48 hours, guarantee, water assessment, machine loans for both events and during servicing, leasing and rental contracts …etc. The In-home line includes machines, capsules and accessories s well. Machine lines are: Essenza, Pixie, Citiz, and Lattissima, depending on size, design function, color and price. Capsules include 16 Grand Crus depending on aroma, intensity and cup size (ristretto, espresso, lungo, and cappuccino). To select the preferred capsule or aroma family the customer is assisted by a “ sommelier circle”. The parallel with the wine sector can be easily drawn, bringing coffee drinking to a degustation, “ connoisseur” and exclusive level.

Once the machine is bought, the individualized service experienced and favorite aromas established and thus a strong emotional connection developed to the brand and its image, the threat of substitution becomes extremely low. Nespresso’s distribution method avoids any intermediaries between the brand and its clients, allowing a direct customer contact and maximize brand impact. As the first step of becoming a Nespresso Club member is the purchase of the machine, Nespresso decided to “ democratize” its machine selling and thus render it available through specialist distribution networks and up market distribution channels such as Gallery Lafayette and Darty in France or the Bijenkorf in the Netherlands.

Capsules and accessories on the other hand are exclusively sold by Nespresso, through their site, phone or one of the 190 boutiques in 50 countries. Note that supply chain as well remains under Nespresso’s strict control, a way to assure high quality standards and deliver the promised services. Nespresso’s communication and design activities are led by FutureBrand (Interpublic) a Parisian design agency. The logo, rounded N, with shapes that complement each other and reminding us of “ Ying-Yang”, vehicles perfection, perfect balance of shapes and both feminine and masculine side of coffee. The color palette (brown, beige, dark brown and black), was chosen to represent elegance, style and exclusivity.

Thorough employee selection process and intensive training (service/technical aspects/product range) are the gauge of success of both personal selling and customer service. Employees and management do believe in the superiority of their product and are proud to be part of the winning team. Nespresso’s marketing process is highly customer focused. The client is taken care of and guided through the entire purchase decision making process being it through the phone, the web site or in the boutique. In case of an in-store purchase the client is enjoying a VIP treatment, can taste and smell the aromas, is reminded of what he or she has bought the last time and is advised on every and any aspect of the product.