A speculative marketing plan for Nespresso Brand Extension into Tea Pods. Aptly named Nesquisite T, it is to be introduced in selected markets and using strategies based on consumer analysis.

1. .T
By NESPRESSO
Group 2: Amanda, Linda, Claire, Kitty, Aaron, Julien, Marie-Sibylle
Marketing Management: Term Project
May 28th, 2014

2. AGENDA
1. Background of the company
2. Understand the marketplace and customer
needs
3. Designing a customer-driven marketing
startegy
4. Construct an integrated marketing program
to deliver superior value
5. Build profitable relationships
6. Financial feasibility
2

3. 1Background of the company
3
1Background of the company

4. Background of the company
Brief history:
• Founded in 2014
• Owned by Nestlé: « Good food, Good life. »
• Nesquisite.T by Nespresso developed a revolutionary
system of portioned, encapsulated tea
• Manufacture both machines and the capsules they use
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5. The Marketing Process
5
Marketing plan is mainly composed of 5 steps:

6. 2Understand the marketplace
and customer needs
6
2Understand the marketplace
and customer needs

7. a) Market description
• In the world: increasing trend of tea consumption: retail
value of global tea consumption rose to $40,75 billion in
2012 (50 % more than in 2007)
• UK: one of the biggest tea market in the world (history,
culture)
• Increasing demand of tea pods = +17% between 2007
and 2012 in UK
7

8. a) Market description
• New way of drinking tea adopted
• Expectations in term of quality and services
= not satisfied
Unsatisfied demand/need
8

9. b) The major segments on the
market of tea pods
Two segments of tea pods buyers who have similar
buying processes in this UK market:
- The 40-50 years old housewives in UK
- The youths starting their career: 25-40 years
old (tea is more healthy than coffee, trendy,
organic product and fair-trade products, high
standing of life and incomes)
9

10. c) Customers needs and wants
• Usually, to drink good tea you mainly have to
buy loose tea not convenient to prepare
• Our two segments want to save time
Need of high standing tea but easy, convenient
and quick to prepare on the market of hot tea
10

11. d) Competitors
• Low level of competition but the company
implanted are very strong
Indirect competitors : Harrods, Teavana, East India
Company, Le Palais Des Thes, Kusmi Tea Paris all
high price & very good quality, Kusmi Tea for
add & distribution
11

12. d) Competitors
Direct competitors (differently positioned in order to
avoid competing in the same field):
- Keurig Green Mountain: specialized in the coffee and tea
market, very good know-how and quality of their products
12

13. - The newcomer Unilever: use its reputation to penetrate this
flourishing market
- The Starbucks’ Verisimo (cheaper): use its stores to catch the
most possible market shares
d) Competitors
13

14. e) SWOT analysis
Strengths Weaknesses
- Tea market is huge in the UK- Existing loyal
customers- High-end and luxurious image
that no other tea pod machine companies
can compete with- Famous spokespersons
- Premium product quality
- Higher prices
- Limited distributions of products
Opportunities Threats
- The demand (UK tea buyers have the
highest revenue, so they are more able to
buy high-end tea)
- Convince new customers (pre-ground tea
users)
- Huge market, continually growth since
2007
- Find new tastes (UK consumers need of
quality), diversify the offer (large range)
- Huge and powerful competitor: Keurig
- More affordable competitors: Starbucks
- Substitute products (soft drinks, coffee…)
- Potential entry of new actors (no high
entry barriers)
- Low switching costs for the customers
14

15. f) Objectives and Issues
• First year objective: success in London
• Second year objective: extend the product to
other countries and continents
MKT actions & tea pods adapted to
each country
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16. Issues
• To know the same success than the brand got
with Nespresso coffee
• The coffee pod market nowadays a little
saturated
Invest a lot in the tea pods market
which propose big growth perspectives
16

17. 3Designing a customer-driven
marketing strategy
17
3 Designing a customer-driven
marketing strategy

18. Selecting Customers to serve
Market segmentation: Process of dividing a market into distinct
groups/segments of buyers with similar behaviour
Demographic: Age: 25-50 years; Income: affluent consumers
Geographic: Pilote stores in major cities, first one located in London
Psychographic: Social class: High social class, Personality criteria:
elegant, hedonic, innovative, want to be part of a private group
Behavioral: Loyalty status: people who promote themselves the
brand (word of mouth, blogs…) = addictive consumer
Market targeting: Process of evaluating each market segment’s
attractiveness and selecting one to enter
Micromarketing: the company decides to tailor its offer to meet
specifics customers expectations: use of local and niche marketing
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19. Choosing a Value Proposition
Positioning Map: Tea pods market
Price
High
Low
Orientation LuxuryBasic
Nesquisite.T
by Nespresso
Keurig
Green mountain
Others
Unilever
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Starbucks

20. Choosing a Value Proposition
Differentiation: Differentiate the market offering to create
superior customer value
 Competitive advantages owned by Nesquisite.T by Nespresso:
• Image of exclusivity / High brand identity
• High-quality & wide range of products
• Extensive customer service (home delivery, Nesquisite.TClub)
• Premium pricing
Positioning strategy: Position the market offering in the minds of
target customers
 Up-market / exclusivity
 Catch phrase: “Culture in a cup”
Value Proposition:
 “More for More” approach: gives prestige to the buyer 20

21. 4Construct an integrated marketing
program to deliver superior value
21
4Construct an integrated marketing
program to deliver superior value

22. Product
• 16 unique flavours
• New flavours yearly
• Brand and logo will be on all packaging
22

23. 23
Price
• 0.30 Euros per pod
• Similarly priced as Nespresso capsules
• High price reflects the high quality image that
surrounds Nesquisite.T

24. 24
Place
• Exclusive Distribution
• Online Website
• Boutique Stores

25. Promotion
• High end parties at flagship store
• Membership card
• Limited edition teapods
25

26. Online Promotion
• Campaigns online, in magazines and on TV
with Jamie Dornan and Emma Watson
• Social media campaign: contest:
– Best tea mix contest (viral mkt)
– Customers upload pictures with #nesquisite.T.love
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27. 4Construct an integrated marketing
program to deliver superior value
27
5Build profitable relationships

28. CRM
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• Huge database  information
– Newsletters (monthly): news, the specific events,
new products or limited editions
– E-mailing campaign: attract for Christmas
– Catalogues per mail

29. CRM
• MEMBERSHIP CARD AND CLUB:
= Very select club of original and high quality tea-
lovers  sense of belonging
– “Frequent drinker card”: capsules = credits
– 3 levels of membership: privileges
• Bronze: acquired by buying Nespresso machine
• Silver: limited edition tea flavors
• Gold: VIP tastings + new product launching
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Nesquisite.T

30. 1Background of the company
30
6Financial feasibility

31. Objectives
First year:
• Financially: Achieved 7% market shares, sales: 39 millions €
• Break-even: Reach this point before the end of the year
Second year:
• Financially: - Double the level of sales in London
- Reach the break-even point in all new
implementation
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More experimented & more aggressive

32. Budget: First year
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Nesquisite.T: Products Tea pods Tea machines
Average retail price (ARP) 1 pod: 0,30€ 1 machine: 220€
Global sales 75% 25%
Level of sales to profit 29 250 000 € 9 750 000 €
First-year retail sales goal: 39 millions €
Break-even calculation = FC/(ARP-VC) = …*ARP
Tea pods Tea machines
Fixed Costs (marketing
expenses, payrolls, equipment)
13 000 000 €
Variable Costs (average
production costs)
0,18 € 120 €
Break-even point 24 375 000 € 10 833 460 €
Analysis (at the end of the
year)
Profit
29 250 000 > 24 375 000
Little loss
9 750 000 < 10 833 460

33. Group 2: Amanda, Linda, Claire, Kitty, Aaron, Julien, Marie-Sibylle
THANK YOU FOR YOUR ATTENTION
QUESTIONS?