Nespresso, Nestle's Single Serve Espresso System, has been the latest brand to spark our interest at XPotential. This case study was inspired by a recent office purchase...

1. Perfect
Consistency
– What Else?

2. Perfect Consistency
– What Else?
Katie Mason, March 2011

3. Contents
4
Background and Products
7
Consistent Quality
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
11 Consistent Focus on
Indulgence
In 2010, Nespresso grew 22.5% to $3.13
billion and profit more than tripled
23 Consistent Relationship with
Customers
14 Consistent Retail Experience
18 Consistent Message
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
©XPotential 2011
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4. Background and Products

5. Background and Products
Brand values: Perfection, Pleasure, Aestheticism, Simplicity
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.
“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.
www.nespresso.com
©XPotential 2011
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6. Background and Products
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).
Nespresso has had impressive
sales growth, doubling
turnover within 2 years
http://michelgutsatz.typepad.com/brandwatch_english/2010/05/nespresso-has-nothing-to-fear-.html
©XPotential 2011
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7. Consistent Quality
Reflecting the Brand
Values

8. Consistent Quality
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.
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.
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
©XPotential 2011
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9. 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
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
©XPotential 2011
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10. 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)
©XPotential 2011
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11. Consistent Focus on
Indulgence Across the
Senses

12. 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.
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
©XPotential 2011
http://www.futurelab.net/blogs/marketing-strategy-innovation/2007/11/sensory_marketing_to_jolt_espr.html
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
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13. 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 multisensory appeal
©XPotential 2011
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14. Consistent Retail Experience

15. 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 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)
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
©XPotential 2011
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16. Consistent Retail Experience
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.
©XPotential 2011
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17. Consistent Retail Experience
• 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
• 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)
©XPotential 2011
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18. Consistent Message:
Nespresso is part of the
High Life

19. Consistent Message: Patronage
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.
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
©XPotential 2011
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20. 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.
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.”
http://www.thedailysail.com/inshore/10/54513/nespresso-cup
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
©XPotential 2011
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21. Consistent Message: Online
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
©XPotential 2011
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22. Consistent Message
• 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
• 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.
©XPotential 2011
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23. Consistent
Relationship
with Customers

24. 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
“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.
http://www.slideshare.net/Leonormsilva/NESPRESSO-UK
http://www.marketingweek.co.uk/in-depth-analysis/features/engagement-moves-into-club-class-environment/3012476.article
©XPotential 2011
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25. Consistent Relationship with Customers
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.”
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
http://www.slideshare.net/simonmc/nespresso-case-20091130
©XPotential 2011
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26. Consistent Relationship with Customers
• 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…
©XPotential 2011
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27. 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
©XPotential 2011
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28. Who are XPotential?
XPotential is a brand focused strategy consultancy
that helps to align individuals, functions and
organisations throughout the world to create and
deliver Brand Value.
We work with some of the world’s biggest brands to
deliver outstanding results. We orientate individuals and
teams in the organisations to focus their responsibilities
to deliver value to their most important asset - their
brand. We are proud to have worked with over 30
companies in over 50 countries and touched tens of
thousands of individuals, delivering some of their most
impressive business results.
We do this through working closely with the leadership of
organisations to develop Brand Centric Vision and
Strategy through a deep understand of the challenges
and opportunities for the Brands and the Company, the
Brand Vision and the key audience for change.
We then design and implement a programme of brand
centric change including communication, engagement,
training and follow up. We have worked both cross
functionally and also through specific areas including
sales, supply chain, innovation, marketing, R&D, finance
and HR.
©XPotential 2011
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29. “We align individuals, functions and organisations,
throughout the world, to create and deliver brand
equity”
Take a look at our website
to find out more about us:
www.xpotential.co.uk
©XPotential 2014
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