THE TRUTH BEHIND

Whats brewing at

Nespresso was created in 1986 as a subsidiary of the Swiss group Nestle

Nespresso machines brew espresso and coffee from coffee capsules, or pods in bar machines.Nespresso manufactures both coffee machines and capsules, with majority of its revenue coming from the latter

Nespresso is a premium priced coffee, with turnover totals close to $3 billion.

The brand has more than 300 boutiques in 60 countries spread across the world.

So what made Nespresso so Successful?

EFFECTIVE BRAND POSITIONING

Nespresso owes its global success to its unique positioning in the high-end coffee market. The Nespresso system is based on several criteria:Practically designed coffee machinesHigh quality coffeeExcellent ServiceStrong & Original Communication

Brand positioning is the act of designing a companys offering and image to occupy a distinctive place in the minds of consumersBrand positioning has three aspectsChoosing a competitive frame of reference Identifying optimal POPs and PODsCreating a Brand Mantra

Competitive frame of reference defines which other brands a brand competes with and is closely linked to target market decisions

Competitive Frame of ReferenceNespressos unique and original brand positioning has allowed it to keep its competition Tassimo (Mondelez), Senseo (Sara Lee) and Nespresso compatible capsules at bay.

However the company faces stiff competition from Jacobs Douwe Egberts, which is currently the number one coffee company in the world with a turnover of $4 billion.

Competitive Frame of Reference

Points of difference are attributes or benefits that consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent with a competitive brand

Points of Difference (PODs)While all its competitors sell in retail stores, Nespresso sells through the internet ,mobile devices or boutiquesCustomers who buy Nespresso machines become members of the brand club which has more than 8 million members

Nespresso creates a sense of belonging to a privileged community that reinforces the brands positioningPoints of Difference (PODs)The brand has located fully automated distributors called Nespresso Cube in prominent airports across Europe.

Points of Parity are attribute or benefit associations that are not necessarily unique to the brand but may in fact be shared with other brands. These types of associations come in three basic forms: category, correlational and competitive

Points-of-Parity (POPs)Nespresso shares category POPs with its competitors in terms of quality, service and design.Other POPs include premium price, R&D and innovation.

Brand Mantra is a 3-5 word articulation of the essence and heart of the brandBrand mantra for Nespresso is : unique, elegant,Luxurious in experience

Brand MantraThe communication strategy of Nespresso strongly contributes to the success of the brand. Brand ambassadors George Clooney and Penelope Cruz embody the brand in terms of elegance and prestige. In Asian countries Nespresso symbolizes the perfect cup of coffee.

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Competition from JDEThe mini case raises the question, if Nespresso can resist competition from JDE. Owing to its unique nature, elegance, and premium positioning Nespresso has a loyal user base and a cult following, which will allow the company to ward off any competition from JDE.

SUMMARYThe chapter discusses the process of developing and establishing brand position with focus on competitive frame of reference, POPs, PODs and Brand Mantra. The mini-case on Nespresso supplements the theory with relevant examples and cases.

DISCLAIMER

Created by Karthik Prasad , BITS Pilani Goa, during a Marketing Internship by Prof. Sameer Mathur, IIM Lucknow.