Nespresso case study

How nespresso changed its fortunes through effective brand positioning

1. Nespresso was created in 1986 as a subsidiary o f the Swiss Group Nestle. It nearly went bankrupt. However, Its current turnover is in excess of $ 3 billion.

2. created in 1986 as a subsidiary o f the Swiss Group Nestle. So why is Nespresso so successful?

3. created in 1986 as a subsidiary of the Swiss Group Nestle. Effective Brand Positioning!!

4. What is Effective Brand Positioning? It is the act of designing a company’s offering and image to occupy a distinctive place in the minds of the target m arket.

5. Brand Positioning has the following steps: Identifying a competitive frame of reference. Identifying POD’s & POP’s. Formulating a brand mantra.

6. The Main principles that Nespresso operates on are: High Quality Coffee Excellent Customer Service Strong & Original Communication Practically Designed Coffee Machines

7. Competitive Frame of Reference A competitive frame of reference defines which other brands a brand competes with and w hich should thus be the focus of competitive analysis

8. Competitive Frame of Reference Starbucks,Vergnano,Delta Q, Mondelez , Douwe Egberts . Faces stiff competition from Jacobs Douwe Egberts which is the current #1 coffee company with a worldwide turnover of $4 Billion.

9. Points of Differnce Points of Difference POD’s are attributes or benefits that customers s trongly associate with the brand, positively evaluate, & believe they could not find to the same extent with a competitive brand.

10. Points of Difference Nespresso distributes its products through the internet, & mobile devices or through its one of a kind boutiques

11. Points of Difference Customers who buy Nespresso machines automatically become members of the brand club. Thus Nespresso cultivates a sense of belonging to a privileged community.

12. Points of Parity POP’s are attributes that are not necessarily unique to the brand but in fact be shared with o ther brands. These are of 3 types: Category, Correlational, and competitive

13. Points of Parity It shares Parity in terms of its service, high q uality coffee, premium price & design

14. Brand Mantra It is 3-5 word articulation of the essence & heart Brand For Nespresso : Unique, Elegance, Prestige, Ultimate Coffee Experience. These qualities are personified by their brand Ambassadors, George Clooney & Penelope Cruz

15. Why has Nespresso’s repositioning on the consumer market led to the success of the brand? Nespresso’s repositioning on the consumer market led to success of the brand due to several reasons as follows : Practically designed coffee machines. High quality coffee, excellent customer service . Nespresso’s customers become member of their brand club and benefit from exclusive offers ad receive a magazine subscription. Nespresso also manufacture its own capsules which added to their overall sales. Nespresso sells its coffee only through the internet, through mobile devices & through exclusive coffee boutiques. High profile celebrity endorsements.

16. Will the Unique Positioning of Nespresso enable it to resist New competition from Jacobs Douwe Egberts ? No because: Jacobs is also producing capsules which can fit in Nespresso machine. Nespresso’s stronghold markets are only European countries and it does not have a substantial market in North Americas( only 3%). Jacobs has more turnover than Nespresso which enables them to invest more money in advertisement and also let them sell their products at a lower price.

17. RECAP About Nespresso Reason for Nespresso’s Success Concepts related to Brand Positioning Questions

18. DISCLAIMER Created by Abhijeet Nasery, COEP, during Marketing Internship by Prof Sameer Mathur , IIM Lucknow