Nespresso: Perfect Consistency - What Else?

Perfect Consistency – What Else?

Perfect Consistency – What Else?

Katie Mason, March 2011

©XPotential 2011 3

Contents

Nespresso have created a world around their coffee through clear and strong branding, helping them to succeed in bringing premium-priced coffee into consumers homes, without compromising on quality credentials

In 2010, Nespresso grew 22.5% to $3.13 billion and profit more than tripled

4 Background and Products

7 Consistent Quality

11 Consistent Focus on Indulgence

14 Consistent Retail Experience

18 Consistent Message

23 Consistent Relationship with Customers

27 Summary

• This presentation takes a look at the ingredients that have been combined to make Nespresso a strong pioneering brand, and how other brands could learn from the recipe

Background and Products

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Nespresso is Nestlé's premium at-home single-serve espresso coffee system, with an enclosed business model that locks customers’ loyalty in by being the only manufacturer and retailer of compatible coffee capsules.

In order to compete with far cheaper means of home coffee (such as instant), Nespresso puts a heavy focus on quality, luxury and coffee expertise through all its communications and affiliations. This places the brand in a comparison set with more “high society living” ways of enjoying coffee, such as coffee houses (like Starbucks), home espresso machines and more premium single-serve machines such as Lavazza, compared to which it is relatively better value.

www.nespresso.com

“About us”

The Nespresso Philosophy

Nespresso has revolutionized the way of preparing coffee to deliver the ultimate coffee experience for each one of life’s moments of indulgence. At the heart of this concept is the unique Nespresso trilogy: the hermetically-sealed, iconic capsules with the large variety of Grand Cru ground coffees, the state-of-the-art, easy-to-use, sleek-looking coffee machines, and the Nespresso Club which offers unmatched personal service.

This system consistently yields high-quality espresso – the perfect marriage of aroma, body, taste and crema.

Brand values: Perfection, Pleasure, Aestheticism, Simplicity

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In France, Casino and Sara Lee have both tried to manufacture Nespresso-compatible coffee pods. The new competitors have not stopped Nespresso’s growth and will find it hard to compete with the power of the luxurious brand image and community that Nespresso have built.

“Nespresso offers a unique experience which consumers won’t find, and don’t look for, on supermarket shelves.” CEO Richard Girardot. If bought from a supermarket, rather than ordered from Nespresso, the coffee could become subject to an unfavourable source bias and consumers might not enjoy it as much (see slide 12).

http://michelgutsatz.typepad.com/brandwatch_english/2010/05/nespresso-has-nothing-to-fear-.html

Nespresso has had impressive sales growth, doubling turnover within 2 years

Consistent Quality Reflecting the Brand

Values

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Consistent Quality

Consistent flavour and quality are important to Nespresso’s coffee-loving consumers, and Nespresso delivers this through processing all their coffee at one factory in Switzerland. The coffee is sourced from the top 1% of production in the global market

Even through the recession, Nespresso continued to grow, and be Nestle’s fastest-growing business. It has been suggested that the recession was an opportunity for growth of Nespresso, as a cheaper alternative to money-conscious consumers former coffee shop habits. Nespresso range of coffees was developed reflecting the growing demand for a variety of coffee choices in restaurants and cafes

Brand republic

http://www.guardian.co.uk/business/2010/apr/09/nespresso-uk-sales-soar

Through positioning on quality, based on coffee expertise Nespresso were able to reshape their comparative set, making them seem a better value option than a fresh home espresso machine or than going to a coffee shop, rather than a more expensive option than coffee products in the supermarket. This makes use of the insight that people perceive value relatively; Rolls Royce are able to sell £300,000 cars that would seem extortionate next to other cars, at boat shows where they are a relatively cheap purchase. It is also common for restaurants to add a couple of very high priced wines to their menu to increase sales of their mid-price choices by changing their comparative set and therefore perceived value.

Perfection is one of the Nespresso brand values, and their key advantage over other types of at-home coffee. To uphold this value and maintain their point of differentiation, quality is a consistent focus.

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1996: “Design Innovations” awards at the Essen trade show

2004: Small Electrical Appliance of the Year Award at the UK’s 2004 Industry Awards in London.

2005: A “Red Dot: Best of the Best” prize for highest quality in international product design

Consistent Quality

Simplicity is another of Nespresso’s brand values, and through the external simplicity and ease of use of their machines consistent quality is delivered regardless of the user’s barista skills, making it an easier option to fresh home espresso machines, which involve many more steps (from storage and grinding of beans onwards)

The brand value of pleasure is contributed to by consistent quality, making part of the everyday routine into something special and indulgent

Nespresso’s aestheticism value also contributes to their consistent quality, not just of coffee but of design, winning the brand many awards:

Much consideration has been put into the aesthetically appealing design of the product itself: the capsules and the machines, as well as its user-friendliness and functionality

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Consistent Quality

• Consider who you want to compete with and be compared to and how to position yourself in that comparative set – value is relative.

• Take user experience into account – don’t make things complicated, bring them an experience that they will enjoy

• Everyone appreciates good design – don’t underestimate its importance in communicating the quality/personality of your brand

• Look for trends that could be relevant to your brand and use what you learn (Nespresso saw that consumers were beginning to want variation)

Consistent Focus on Indulgence Across the

Senses


Consistent Focus on Indulgence Across the Senses

Taste is not the only sense that Nespresso uses to create a feeling of indulgence. They have placed importance on the broader sensory appeal of the brand, even creating a new channel (boutiques) to address the advantage that their coffee shop competitors had over them in this area.

http://www.futurelab.net/blogs/marketing-strategy-innovation/2007/11/sensory_marketing_to_jolt_espr.html

Most at-home coffee struggles compete with coffee shops, because although the quality may be just as good, the enjoyment of coffee in e.g. Starbucks is enhanced by sensory marketing in the shop – the music, colours, lighting and the smell all contribute to the experience

Nespresso’s research found that 60% of sensory experience of drinking espresso comes from environment. Similarly, research has shown that a bottle of wine, when labelled from North Dakota was perceived to taste worse than when labelled from California. So the way a product is framed can contribute just as much to consumer perceptions as the product itself

Therefore creating a multi-sensory environment around Nespresso was important to its success, overcoming the “source bias” that makes consumers believe espresso tastes better from a coffee shop than from a machine in your kitchen

To change these perceptions, Nespresso launched upscale Nespresso boutiques in major cities to create an immersive sensory experience, and connect the Nespresso brand with the positive associations of the coffee shop espresso experience. The comparison of these boutiques with the retail experience of a supermarket also helps to set Nespresso apart from less “luxury” coffees

To make the experience of Nespresso at home more indulgent across the senses, they also modified the Nespresso system to release more aroma

Nespresso tasting guide draws attention to the product’s effects on different senses – describing the look, smell, taste and feel of the different coffees


Consistent Focus on Indulgence Across the Senses

• Perception of a product begins even before it is used, so take care to ensure that the information the consumer gets before using the product is in the brand’s best interest (e.g. source bias – where did the product come from? How was it displayed in the retailer?)

• Brand can be strengthened by creating products and environments with multi-sensory appeal

Consistent Retail Experience



Nespresso maintain control over the consumers’ experience of their brand in a retail environment by making their coffee exclusively available through their own online store or boutique outlets. As they are the only retailer of their products, Nespresso can control the experience that the shopper has and the way the products are presented to them

Nespresso make the start point for their brand’s relationship with a consumer (the machine) easy to find, in amongst other home espresso machines in a variety of retailers. However, the only retailer that the consumer can buy compatible coffee capsules from is Nespresso – making loyalty the only option

Nespresso club also offers the following, so consumers need not stray outside the brand for their coffee experience at all:

Coffee capsules

Related snacks

Crockery

Customer service, technical service, machine maintenance

Magazine (portraying Nespresso as a lifestyle choice)


To maintain a fully branded retail experience consistent with Nespresso’s image of luxury, their flagship boutique is located on the prestigious Avenue des Champ Elysees in Paris. It is not a store, it’s a boutique and features a barista bar, machine and capsule galleries, Gallery of the Senses with olfactory columns where temporary exhibitions take place, lounge and concierge service.



• Having a well-publicised brand store is a great way to demonstrate the image and values of your brand, which a shopper will remember, even if they only get to visit once

• Consumers’ relationship with a brand can be strengthened by offering them branded items surrounding the core product (e.g. crockery with coffee, or towels with face-wash)


• To communicate a consistent brand message, there needs to be a focus on retail standards and the impression that these give consumers

• A business model linking products explicitly together can create loyalty and further spending through limiting consumer’s options, Nespresso make this seem like less of a forced choice through their “club” and relationship with consumers. For most of the customers, quality service and ease of ordering outweigh the inconvenience of capsules not being sold in supermarkets

Consistent Message: Nespresso is part of the

High Life


Consistent Message: Patronage

Nespresso patrons include top restaurants such as the Fat Duck (Bray) and Sketch (Mayfair)

"We've tasted all coffee blends on the market, and Nespresso has been the consistent winner throughout." Sketch General Manager

In 1995 SwissAir became the first airline to offer Nespresso on board, after Nespresso and Aerolux Ltd worked to develop an airline system machine. Since then, some 20 different airlines, including British Airways, have been equipped with the Aerolux/Nespresso system. The equipment is used only in First Class, because the time to serve a cup - makes it impractical for the larger numbers of Business or Economy passengers (re-enforcing the luxury concept)

http://www.beveragedimension.com/2009/04/nespresso-delivers-starbucks-experience.html

http://www.allbusiness.com/manufacturing/food-manufacturing-food-coffee-tea/616018-1.html

http://www.independent.ie/lifestyle/food-drink/the-cult-of-nespresso-1115935.html

Nespresso’s message is consistent with their brand personality. Having a consistent message that focuses on the broader values of the brand (i.e. high life and luxury) makes for more effective communication than simply focusing on the products would. This message is communicated not just through advertising, but also through affiliations and patronage.

Aside from the coffee quality, Nespresso offers convenience that may be valued by restaurants for example, saving them the space taken up by a fresh espresso system and the cost of hiring / training baristas.

©XPotential 2011 20 http://www.thedailysail.com/inshore/10/54513/nespresso-cup

Consistent Message: Sponsorship

Golf: The Ryder cup:

Throughout the three days of competition around 360 Nespresso coffee stations will be sited throughout the hospitality marquees, players’ lounge, media and public areas.

Art:

At their Soho New York boutique, they hosted Nespresso Capsule Art Exhibit & Tasting Bar. This was a temporary installation by Ricardo Bellino of profiles of people made up of Nespresso capsules, brought the art-viewing public to the boutique, where they were also offered the usual Nespresso service and tasting opportunities

Movie Stars:

Nespresso –What else? Campaign with global spokesman George Clooney. Showcased boutiques and high life associations and described the rich taste of the blends

Sailing:

Launched the Nespresso Cup , an international regatta exclusively for the Wally Class, held in Portofino. “The Nespresso Cup celebrates the fusion of aesthetics and performance to deliver the most beautiful sailing regatta” said Richard Girardot, CEO of Nespresso. “Inspired by the same passion, Nespresso and Wally share a common philosophy of creative innovation, highest execution on quality, cutting-edge design and technology, delivering elegant but functional solutions.”


Nespresso was one of the first to make use of the internet, launching their online boutique in 1998

They maintain a consistent look and feel across channels, even the design and experience of their official webpage is luxurious

Nespresso protects its brand name on Google:

Although the official sites rank highly on the search results pages, they found themselves increasingly leached off by sponsored links (search engines do not ask for legitimacy from sites purchasing brand names as keywords)

In 2005 Nestle enforced a procedure that only allowed Nestle to purchase the “Nespresso” keyword

Nespresso retailers can request to purchase the keyword for their own campaigns

http://www.brandsweeper.com/docs/case_nespresso_en.pdf

Consistent Message: Online


Consistent Message

• Endorsement from experts in the field is incredibly valuable to brand

• Be selective about patrons to build the brand (e.g. Nespresso is only available in first class)

• Unlike some competitors, Nespresso does not dilute the brand’s strong coffee credentials by diversifying into tea etc.

• Be clear about your brand’s personality and reinforce that 360o with sponsorship, affiliation and endorsement from relevant parties that your target audience can relate to, e.g. the soave George Clooney resonates with consumers aspiring to high society living

• Online brand representation is very important as more and more shoppers go online to research products, so maintaining a consistent message and focusing on SEO to make sure users find the right message is vital

Consistent Relationship

with Customers


Consistent Relationship with Customers

Anyone who buys a Nespresso is automatically a member of the 7 million strong “Nespresso Club”, from this point, Nespresso addresses its consumers inclusively as members of a coffee community, rather than customers (them and us), customers receive a nursing call to talk them through the coffees, then a follow up call after 6-8 months to talk about the blends in more detail

The relationship works both ways, by having a relationship with customers, cutting out retailer middle-men, Nespresso can gain more data and information, to improve their offering

By including consumers in an “exclusive” club, Nespresso promotes passion for coffee, and helps to make itself more of a talking point for consumers, which will lead to the word of mouth which is vital for clubs. The club members become peer-to-peer ambassadors, contributing to the 50+% of new customers that are exposed to the brand through existing members

http://www.slideshare.net/Leonormsilva/NESPRESSO-UK

http://www.marketingweek.co.uk/in-depth-analysis/features/engagement-moves-into-club-class-environment/3012476.article

“We see our mission as having a relationship with consumers about coffee. If you can help the consumer understand the product, they are going to be a better customer for the business.” Brema Drohan, managing director for Nespresso in the UK and Ireland.





To maintain the positive relationship that consumers have with Nespresso, the product is available seven days a week, 24 hours a day, by mail, e-mail, internet, fax, or telephone. “Club members can phone a coffee specialist, with whom they can discuss and ask questions. We find that Club members appreciate the personal contact.”

http://www.slideshare.net/simonmc/nespresso-case-20091130


Nespresso even developed an iphone app for members to access the Club to order capsules, machines and accessories, find the nearest boutique or collection point for used capsules

Through the Nespresso club members’ knowledge sharing activity and their passion, buzz is created, improving the brand’s authentic presence online



• Creating a brand club can make customer service a smoother experience, with the customer feeling more valued and included

• Improving consumer knowledge of a product will lead to their improved satisfaction, interest in re-purchase and word of mouth advocacy (which is essential to online presence, SEO and buzz)

• Being available to consumers is really important to their impression of the brand, Nespresso does this through 24hr phone, web, iphone apps…


Summary

Nespresso have succeeded in bringing the luxury and aspirational feeling of going to an espresso bar into the home, through

Focus on quality

Top customer care

Exclusivity and control over the retail of their product

An air of luxury derived from high class associations, locations and sponsorship

The creation of passion through expertise and club membership leading to invaluable word of mouth promotion and a relationship that benefits the company as well as the consumers

• Consistency strengthens a brand

message

• Through a consistent message you can build a world around your brand so that consumers believe in the brand’s personality and take it deeper into their lives


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Nespresso: Perfect Consistency - What Else?

Business

coffee expertise nespresso

nespresso philosophy

coffee machines

coffee products

coffee houses

simplicity nespresso

growth of nespresso

nespresso brand values