Nestle - Nespresso Marketing Strategic
Nestle is a Swiss multinational food and beverage company headquartered in Vevey, Swiss. Nestle’s products include baby food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. 29 of Nestle’s brands have annual sales of over 1 billion Swiss francs including Nespresso, Nescafe, Kit Kat, Smarties, Nesquik, Stouffer’s, Vittel and Maggi. Nestle has 447 factories operates in 194 countries and employs around 333,000 people. Nestle was formed in 1905 by the merger of the Anglo-Swiss Milk Company, established in 1866 by brothers George Page and Charles Page, and Farine ...view middle of the document...
Nestle believed that continuous innovation was key to meeting the company’s growth target which cause in 1986, Nespresso is founded as the fasting growing brand in the Nestle Group. Its headquarters are in Lausanne, Switzerland, with over 7,000 employees worldwide. In 2012, Nespresso had 270 boutiques in 50 countries. The brand’s growth strategy involves three main components: premium coffee capsules, ‘mated’ with specially designed machines, and accompanied by exceptional customer service through the Nespresso Club. Nespresso offers 16 varities of Grand Crus coffee; 7 espresso blends, 3 pure origin espressos, 3 lungos (for larger cups), and 3 decaffeinated coffees. These capsules are designed to be used exclusively with Nespresso-brand machines, which are equipped with a patented high-pressure extraction system designed for optimum release of the coffee. These machines, of which there are 29 models, are developed with 6 machine partners, and Antoine Cahen, from Ateliers du Nord in Lausanne, designs most of them. The Nespresso Club promotes ultimate coffee experience as an everyday luxury, whereby café-quality coffee can be enjoyed in the privacy and comfort of Club members’ homes. Nespresso was set up as a subsidiary unit within the Nestle Group with a view to target the office and fine restaurant sector.
By the end of 1987, Nespresso was behind target on sales for both the machines and the capsules. Only half of the machines that had been manufactured were actually sold and without the machines, further coffee capsules would not sell. Nestle management felt the need to bring someone from the outside with new ideas to save Nespresso from an early death and in 1988 a new management team was formed.
1. Segmentation, Targeting and Positioning
The new strategy involved positioning Nespresso away from the more utilitarian office coffee and targeting consumer at the top of the household market. Management identified as a profitable segment for the Nespresso householders headed by well-educated, affluent 35-45 years old men and women, who enjoyed drinking restaurant quality espresso at home could constitute. Market trends evident in the late 1980s supported this idea as Cafes and Bistros were opening across Europe and the success of gourmet and specialty coffee chains in the US had led espresso to be perceived as a trendy, socially elite drink.
2. Marketing Plan
Nespresso introduced modifications to the design of the coffee capsules that cut material costs while making them recyclable. Machines kept being produced in Switzerland under exclusive agreement with a leading manufacturer of espresso machines. To support global market, machine partnerships were subsequently developed with several international producers and distributors of household appliances like Matsushita, Krups, Phillips, Alessi, Jura and Magimix.
Target consumer price of the coffee capsules was 40 centimes...