Nespresso Case Study

Terlisha Valery

September 8, 2016

Nespresso Case Study

BA511

John Jordan

Nespresso's story retreats to 1986 with a basic, yet progressive, thought: empower anybody to make the perfect cup of coffee simply like gifted baristas. The core concepts of the brand include the machine and capsule design interacting to deliver a consistent cup of high quality coffee from the comfort of home, as well as customized customer service. Since its starting point, the organization, internationally oversaw business of the Nestlé bunch with premium situating, experienced quick market development of more than 20% in past years, with twofold digit deals increments in all business sectors around the world. In 2000 Nespresso had just 1 boutique store and 331 representatives. End of 2013, it was available in 60 nations around the world, with more than 9,500 representatives and more than 320 boutique stores offering espresso, machines and adornments.

Nespresso has brought the portioned coffee business model to the global market, establishing a premium brand for coffee connoisseurs worldwide. In this model consumers select a branded “system” of portioned coffee by purchasing a machine for their home or office. The consumer uses the respective coffee portion - in pod, capsule or cartridge form, and the machine automatically prepares the finished coffee, ready to drink. Nespresso coffee machines are specifically developed to optimally reveal and enhance the aroma and taste of the Nespresso Grands Crus. The customer then purchases the portioned coffee from retail sales channels that offer the Grands Crus. Machines last several years and tend to be priced in the US$99 to US$449 price range for home use.

The portioned coffee industry primarily makes money through sales of portioned coffee. The home or office-based machines are supposed to “lock in” the customer to a specific brand. Most consumers only have one brand of machines at their home or office, so the branded companies need to compete for customer loyalty and then offer a convincing and attractive value proposition to drive selection and purchase. Organizations contend on different worth attributes, fundamentally: nature of espresso, value/estimation of espresso, assortment of accessible taste profiles, capacity to effectively buy parceled espresso for their machines, style and engaging quality of the machines, usability and dependability of the machines and client administration (for purchasing, questions, problems).

The Nespresso value proposition is based on three pillars: highest quality coffees, innovative stylish machines and personalized services. Nespresso also takes a long-term, holistic approach to sustainability. It is committed to ensure sustainability across all operations, from coffee sourcing via its AAA Program, a unique sourcing model, to capsule recycling, setting clear targets and seeking to create shared value for the business and for society as a whole. The brand welcomes clients and invites them in to an exclusive relationship. Television, social media and print advertising featuring noted brand ambassadors, such as George Clooney and Penelope Cruz, help position Nespresso as an attractive, up-scale, high-quality coffee brand. Consumers purchase a machine of their choice - either online, at a Nespresso boutique or another retail outlet - and automatically become members of the Nespresso Club (Nespresso’s consumer channel).