The document outlines Nespresso's marketing and sales strategy, detailing its transition from a B2B focus on office coffee to a B2C model targeting affluent consumers at home. It emphasizes their innovative product offerings, customer service excellence, and strategic partnerships that have contributed to a significant market presence and over 10 million club members. Future challenges include maintaining brand experience and navigating competition after the expiration of Nestlé's patents.

1. Aydan Asgarova
Diego del Olmo
Gavin Montgomery
Manfred Malle
Matthew Rule
Raffy Karamanian
THE SECRET OF THE CAPSULE
Marketing & Sales Management – Group Assignment – IE S2 – Group A
IE – EMBA
December 2015

2. 1986
Baristas were becoming famous around the world.
“Gourmet” coffee market rapidly increasing in the US
and other countries.
Gourmet
R&G
95%
80%
Instant
Nestle joining the Gourmet R&G Market
Products Strategy
Pricing Strategy
High Quality Coffee (Barista Experience)
Distribution Strategy
Vending & coffee machine distributors
Target Segment
Offices – CEO, Senior management - Luxury
Premium – Office segment not sensitive to pricing
Strategy: Join Gourmet Coffee Market
70%
World Coffee
30%

3. The creation of Nespresso (Nestle + Espresso)

4. Produces 5 gr of
Refined quality
coffee
Individual Portioned Sealed Capsules
to preserve the freshness for six months
at temperature of
86°C to 91°C
Single Press
of a Button
Eight
available varieties
Nespresso’s Innovative Product
A beautifully
crafted machine

5. Nestlé's
home
market
World's
largest
espresso
drinking
nation
World's
fastest
growing
coffee
markets
Nespresso’s Product Launch
sold only 50% of machines
- Behind sales target both machines &
capsules
- Machines defects absorbing large part
of the maintenance and service budget
- In Japan, the losses were deepening
1987 The Challenges
Switzerland
Italy
Japan
Target Segment:-
Office Coffee
Market

6. needed to rethink their Strategy !

7. Nespresso shifts strategy towards Consumers
Customer
Relationship
From
B2B
Value
Proposition
Strategic
Partnerships
Distribution
Channels
To
B2CShifting strategy towards household market

8. Value Proposition & Target Segments
Executives, senior
managers,.. enjoying the
luxury of coffee drinking
in the office, hotels, etc..
35 to 45 Year Olds -
Well-educated, men and
women, who enjoyed
drinking restaurant-
quality espresso at home
Upper Segment Office
Affluent Consumers
Same innovative value
proposition & refined
quality of coffee

9. They Built Strategic Partnerships
Variety of Machines built through producers & distributors of appliances
Nespresso
Machines
Manufactured & Distributed Through
International Appliances Brands
Specific
Retailers
Nespresso earns 0% margin on machine
Strategic pricing scheme to encourage sales and build franchise
0% Margin 30% to 35% Margin 25% to 35%

10. Building relationship & Service Delivery
Order Nespresso capsules or request
support anytime & anywhere
24/7 Support
Deliver fresh capsules in 2 Business
days – Good for 6 Months.
2 Day Delivery
Coffee specialists advise about the
flavors & provide assistance.
Personalized Advice
Phones answered within 3 rings; and
staff dress in reflection of luxury image
High Quality Service
Machines holders become club members
“to stay close to the customer”
THE NESPRESSO CLUB
Full list of products available online
nespresso.com (not e-commerce)
Online Product Catalogue

11. Successfully Penetrating the B2C Market
10
Clubs
7,000
Capsules per Day
350,000
Club Members
1% MS
Roast & Ground
Nespresso Successfully Re-
Launched their business
* The timeline above is a visual representation of the Aqualisa’s milestone related to this case and is not a an accurate illustration of the
company’s full strategy. Sources are listed in the last slide.
₣3
Billion
Breakeven
B2C
Strategy
19951990 1999
Past

12. objective was to expand the business to ₣3 Billion
through an innovative & strategic marketing
approach

13. The Strategy
Create a Lifestyle & Complete Customer Experience
Expand
Offering &
Accessorize its
Surrounding
Psychological &
Strategically
Positioned
While Integrating Relationship, Service Excellence, Quality & Efficiency
Across Customer’s Journey
Build
Retail & Digital
Experiences
Launching
campaigns reflecting
Brand Tone &
Lifestyle
Product
Channel
Promotion
Price

14. A Variety of Choices - Nespresso Machines
Variety of Models
meeting the
aspirations of
many
Not too few, not too many. A
beautiful variety of machines
through partnerships.
Price Range €59 to €449
Over 135 Machine Versions
9 Partnerships

15. The Grand Crus - Nespresso Capsules
Capsules are the
Secret
Emphasizes that this coffee
is the precise opposite of
instant coffee. A large
collection for all tastes.
Standard: 22 Grand Cru
More: Special Collection
Items + Accessories
* Grand Cru: as in ‘great growth’ Traditionally used to classify vineyards

16. Retail experience
to satisfy your
every desire
Symbolizes the brand's
values: perfection, pleasure,
aestheticism & simplicity.
First Boutique in (Paris)
Now over 400 world wide
and Nespresso Cube
The Boutique - Nespresso Boutiques

17. Innovative Digital
Delivery
Channels
Digital customer experience
beautifully matches brand
journey – delivery complete
offering and services
Alternative channel: Web,
mobile, tablet, and call centre
Going Digital - Nespresso Mobile Application

18. The Nespresso Club
Expand Member
Activity &
Engagement
You’re a real VIP. Beside the
norms, they provide higher
quality of service, more
events and activities and
even a members Nespresso
magazine.
Currently Over 10 Million
members

19. Just like a Car !
Servicing? Nespresso will
collect it and loan you a
machine until yours is fixed.
Assistance available 24/7;
and service deliveries in
some areas under 2 hours
Nespresso Breakdown Assistance

20. Nespresso Going Eco Friendly
‘Eco friendly’
20,000 dedicated capsule
collection points in 19
countries around the world

21. Nespresso sets
the Tone
Guys want to be him, girls
want to be with him.
George Clooney Nespresso
Commercial with God
(Malkovich)
The Clooney Effect

22. AAA Sustainable
Quality
Highest quality beans and
economic viability -
Contributing to the well being
of farmers and their
communities.
Nespresso takes top 1% of
the world’s coffee crop
Nespresso AAA Sustainable Quality(tm)

23. 10,500
Employees
400+
Boutiques
62
Countries
+10 Million
Members
+27 Billion
Capsules Sold

24. Future Challenges of Nespresso

25. Nestlé’s Patents have Run Out !
Recommendations: Focus on
maintaining product & brand experience, from
machine to service. We are not selling coffee out
there – We’re selling them an experience.
• Price should remain untouched despite the competition
• Deliver superior service & customer care
• Stick to perfection at all levels (Like now)
• Maintain the exclusive distribution model – no expansion

26. Thank you.
Case Study Innovation and Value: The Nespresso Case
Marketing Innovation GFM Marketing Trend Conference
Nespresso History www.nestle-nespresso.com
Sustainable brands Investing $550 Million to Achieve Carbon
Bloomberg Business Face Competition on Machines From Ethical Coffee
Nespresso Nestlé Investor Seminar 2014
Environmental Magnet Nespresso Hits 75% Capsule Recycling
Kellogs The Nespresso Case
Econsultancy Experiential marketing at its best
HBR A Better Way to Think
Nicholas lovell Nespresso and the coffee brand
Marketing Magazine Champions of Design: Nespresso
The Entourage Lessons in strategy from Nespresso
Other Pictures, Videos, and other material from random internet
sites, google, YouTube
Sources:
MARKETING & SALES MANAGEMENT – GROUP ASSIGNMENT – IE EMBA - S2 – GROUP A