This marketing plan for Nespresso was prepared by Khan Mohd Eshtiaque and Naye Carla Farid Moussa, two students at IE Business School. The project was personally supervised by Professor Ramón Méndez of IE Business School & Partner at BMC Strategic Innovation. The marketing plan includes the Market Analysis, Consumer Analysis, Competitive Overview, Brand Equity Analysis, SWOT Analysis, Brand Benefit Ladder, Positioning and finishes with Objectives, Marketing Strategies and the 4P's. Naye Moussa has been an intern with the e-commerce and online marketing department of Adolfo Dominguez, a leading Spanish fashion designer. She has also worked with the European office of New York University and has been a store model for Abercrombie & Fitch. Khan Mohd Eshtiaque has previously interned as an M&A summer analyst with BDO Corporate Finance and also interned in the Private Banking department of HSBC. You can contact them at eshtiaque@student.ie.edu or nmoussa.bba2010@student.ie.edu.

1. Marketing Plan
for Nespresso
Prepared
by
Naye
Moussa
&
Khan
Mohd
Esh4aque,
students
of
IE
Business
School
Supervised
by
Professor
Ramón
Méndez
of
IE
Business
School
&
Partner
at
BMC
Strategic
Innova4on

2. Situa4on
Analysis
Objec4ves
&
Strategies
360°
Execu4on

3. Situa&on
Analysis
Market
Analysis
Consumer
Analysis
Compe44ve
Overview
Brand
Equity
Analysis
SWOT
Objec4ves
&
Strategies
360°
Execu4on

4. Market Analysis

5. Market
Share
Value
for
On-­‐Demand
Total
Market
Value
in
2012:
€801m Total
Market
Value
for
On-­‐Demand
in
2012:
€272m
!"##$%&'()*$+&,-)$
()*+,)**-$ .-/0)$12*3-$ 45**67-$ 89:,-7)$
&&#$
'#$
!"#!$%&'()*$+&,-)$
'()*+()),# -,./(#01)2,# 34))56,# 789+,6(#
Brand 2011 2012
Nespresso €87m €119m
Dolce
Gusto €52m €68m
Tassimo €18m €26m
L’Arome €0m €60m
Total
Market
Value €156m €273m
Increase
in
value
from
2011
to
2012 37%
%%#$ !"#$
!!"#
$%"#
&"#
$$"#

6. Market
Share
Volume
for
On-­‐Demand
Market
Volume
in
2012:
35769
tons Market
Volume
for
On-­‐Demand
in
2012:
9300
tons
!"##$%&'()*$+,-./)$
'()*+()),$ -,./($01)2,$ 34))56,$ 789+,6($
!"#$
!%#$
&!#$
%#$
!"#!$%&'()*$+,-./)$
)*+,-*++.$ /.01*$23+4.$ 56++78.$ 9:;-.8*$
%(#$
Brand 2011 2012
Nespresso 2378 3162
Dolce
Gusto 2084 2725
Tassimo 733 1023
L’Arome 0 2390
Total
Market
Volume 5195 9300
!"#$
%&#$
''#$
Increase
in
volume
from
2011
to
2012 33%

7. Household
Penetra4on
for
On-­‐Demand
!(%$$$%$$$!!
!'%#$$%$$$!!
!'%$$$%$$$!!
!&%#$$%$$$!!
!&%$$$%$$$!!
!#$$%$$$!!
Households
Penetrated
in
2012:
5.4m
Brand 2011 2012
Nespresso 12% 17%
Dolce
Gusto 5% 7%
Tassimo 2% 4%
L’Arome 0% 9%
Total
Penetra&on 19% 37%
Increase
in
penetra4on
from
2011
to
2012 42%
Number
of
Households
in
Spain
in
2012:
14.5m
Household
Penetra4on
For
On-­‐Demand
!"!!!!
)*+,-*++.! /.01*!23+4.! 56++78.! 9:;-.8*!
'$&&!
'$&'!

8. Coffee
Consump4on
Per
Household
Brand
Nespresso
L’Arome
Tassimo
Dolce
Gusto
Coffee
Usage Number
of
Packs Price
of
Pack Expenditure
on
Coffee
1.4kg
0kg
2.26kg
2.8kg
28
0
14
25
€3.70
€3.41
€4.98
€4.85
€104
€0
€68
€121
Brand
Nespresso
L’Arome
Tassimo
Dolce
Gusto
Average
spent
per
household
on
coffee €73
Coffee
Usage Number
of
Packs Price
of
Pack Expenditure
on
Coffee
1.26kg
1.8kg
1.92kg
2.67kg
25
36
12
24
€3.70
€3.41
€4.98
€4.85
€93
€123
€58
€116
Average
spent
per
household
on
coffee €98
2011
2012

9. Consumer Analysis

10. Demographics
&
Psychographics
79% Drinks
coffee
Male
Female
Students
Professionals
38%
62%
77%
22%
115
Online
Survey
Par4cipants,
5
In-­‐Depth
Age
Groups
36%
46%
5%
4%
18
-­‐
20
Years
Old
21
-­‐
29
Years
Old
30
-­‐
39
Years
Old
40
-­‐
49
Years
Old
85%
lives
in
a
coffee
drinking
culture
Values:
Family
and
friends
are
important
Belief:
Finding
4me
for
oneself
is
fundamental

11. Category
Mo4vator
79%
Students
Professionals
To
wake
up It
tastes
good To
have
a
break To
treat
myself
91%
60%
58%
51%
50%
33%
50%
Why
do
you
drink
coffee?

12. Category
Mo4vator
70%
Students
Professionals
Energized Happy Relaxed
75%
44%
25%
21%
33%
How
does
coffee
make
you
feel?

13. 26%
Usage
Students
Professionals
1-­‐3
Cups 3-­‐5
Cups 7-­‐10
Cups 10+
Cups
8%
26%
17%
28%
25%
21%
50%
How
many
cups
of
coffee
do
you
drink
in
a
week?

14. Usage
When
do
you
drink
coffee?
Breakfast 63%
Breaks
&
Leisure
Time 52%
Where
do
you
drink
coffee?
At
Home 79%
At
Work/School/
University 70%
Work
Hours 50% Coffee
Chains 55%
Lunch 32% Cafeteria/
Restaurants 39%

15. Nespresso
Purchase
&
Usage
43%
30%
Owns
a
coffee
capsule
machine Owns
a
Nespresso
machine
Nespresso Other
capsules
Both
60% 51% 79%
Which
coffee
capsule
brand
do
you
use?
Why
do
you
use
other
capsule
brands?
44% 38% 31%
Convenience/
Store
Loca4on Taste Price
25%
Variety

16. Consumer
Insight
I
want
to
feel
special
with
whatever
I
buy,
wherever
I
go,
whatever
I
do
and
whoever
I
choose
to
do
it
with.
Quality
is
important
to
me
and
I
don’t
want
to
have
to
compromise
on
that
in
any
aspect
of
my
life.

17. Competitive Overview

18. Compe4ng
in
the
same
segment
Average
number
of
capsules:
10 Average
capsule
price:
€0.31
or
€0.66
Average
capsule
price:
€0.34
High
and
fast
penetra4on
Compa4bility
with
Nespresso
machine
Distribu4on
in
mass
market
Heavy
promo4on
Comparable
quality
Strong
imita4on
of
Nespresso
Average
number
of
capsules:
16
or
8
Size
of
pormolio:
41
flavors
Mass
market
Size
of
pormolio:
16
flavors
High
innova4on:
barcodes
Leverages
on
Mondelez
brands
Partnership
with
Bosch

19. Domes4c
appliances
brand:
Phillips
Average
number
Average
capsule
price:
€0.16
Size
of
pormolio:
30
flavors
High
innova4on:
Hot,
tea,
cold
beverages Size
Different
Objec4ves
Exploi4ng
growing
market
Flooding
market
with
cheap
capsules
Price
sensi4ve
consumers
who
don’t
care
about
taste
but
just
want
coffee
Compa4ble
with
Nespresso
machine
Average
capsule
price:
€0.30
of
capsules:
16
Average
number
of
capsules:
16
Mass
market
but
can
adopt
flanker
role
of
pormolio:
6
flavors
Leverages
on
Nestle
brands
Same
machine
brands
as
Nespresso:
Krups

20. Average
number
of
capsules:
12
Average
capsule
price:
$0.99
Size
of
pormolio:
18
flavors
High
innova4on:
Kits
offering,
holiday
blends
In-­‐house
developed
brewing
machine
Strong
and
established
brand
Loyal
customer
base
Buy
lape
in
the
morning
and
leave
with
capsules
to
take
home
Price
Per
Capsule
Analysis
!"#)"$
!"#(%$
!"#("$
!"#'%$
!"#'"$
!"#&%$
!"#&"$
!"#"%$
!"#""$
*+,-./0$ 1.230$
4567.$
80960.$ :;66</.$ *;2;9=0$ >;-70$?.<-$ 1<@-;7.$ ?06A-066.$

21. Brand Equity
Analysis

22. Brand
Awareness
Nespresso
25%
is
top
of
mind
Recalled
Nespresso
when
asked
what
3
coffee
brands
they
knew
Recognized
Nespresso
Knows
where
the
nearest
place
to
buy
Nespresso
is
63%
74%
52%
50% Non-­‐coffee
consumers
have
been
inside
a
Nespresso
store
How
did
they
hear
about
Nespresso
50% 50% 43%
Nespresso
Store Adver4sement Word-­‐of-­‐mouth

23. Brand
Image
Brand
Associa4on:
Brand
Apributes
George
Clooney Expensive Quality Tasty
Brand
Associa4on:
User
Imagery
Rich Young Coffee-­‐lover Wealthy Trendy Sophis4cated
How
par4cipants
rated
Nespresso’s
func4onal
benefits
on
a
scale
of
1-­‐5
4.3 4.4 4 3.9 3.1 2.7
Packaging Variety Quality Taste Convenience Price

24. SWOT Analysis

25. Strengths
-­‐Market
leader:
34%
volume,
43.8%
value
-­‐Strong
brand
equity
(high
awareness/top
of
mind,
consistent
brand
image)
-­‐Store
experience:
exclusivity
&
personalized
service
-­‐Loyalty
&
membership:
Nespresso
Club
-­‐Consistency
in
product,
ease
of
use,
packaging
&
variety
-­‐Nespresso
machine
(Art-­‐deco,
Fashion
statement,
Design)
-­‐Strong
communica4on:
George
Clooney
Weaknesses
-­‐Lack
of
easy
accessibility
due
to
limited
distribu4on
-­‐Inconvenience
for
purchase
(only
located
in
city
centers)
-­‐Consumers
too
heavily
relate
brand
to
George
Clooney,
brand
reliance
on
Clooney
-­‐Machine
can
only
be
used
for
coffee
-­‐Lack
of
awareness
of
online
shopping
Opportuni&es
-­‐Capsule
market
€800
million
&
growing
74%
p.a.
-­‐17%
brand
penetra4on
&
poten4al
to
increase
-­‐Increase
average
purchase
to
365
capsules
p.a.
from
252
-­‐Increase
price
to
match
perceived
value
-­‐Selec4vely
expand
distribu4on
-­‐Expand
flavor
pormolio
-­‐B2B
Threats
-­‐Compe4tor
capsules
in
mass
market
-­‐Increasing
compe44on
can
lead
to
price-­‐wars
-­‐Increasing
penetra4on
from
compe4tors:
L’Arome
-­‐Mul4-­‐use
machines
by
compe4tors:
Senseo,
Tassimo
-­‐Compa4ble
capsules
from
other
brands
-­‐Patent
on
capsules
expired
-­‐Image
dilu4on

26. Situa&on
Analysis
Objec4ves
&
Strategies
Benefit
Ladder
Brand
Posi4oning
Objec4ves
Proposal
of
Strategy:
4Ps
360°
Execu4on

27. Benefit Ladder

28. Emo&onal
Benefit
Let’s
you
feel
special,
self-­‐fulfilled,
and
well
Emotreated
4onal
every
Benefit
single
4me
and
with
every
single
sip.
You
feel
exclusively
part
of
an
iconic
experience.
Consumer
Benefit
An
effortless,
superb,
and
unique
espresso
experience
that
Consumer
Benefit
revitalizes
and
uplits
your
mood
while
allowing
you
to
take
a
special
moment
for
yourself
from
your
everyday
rou4ne.
Product
Benefit
Product
Benefit
Perfec4on,
convenience,
unique
pleasure,
choice,
superior
taste
Product
ADributes
The
perfect
Product
Espresso
Apributes
brewed
from
beau4fully
designed
compact
capsules
of
a
variety
of
aroma.

29. Positioning Statement

30. To
cosmopolitan
men
and
women
who
seek
exclusivity
and
want
a
special
moment
to
fulfill
their
day,
Nespresso
is
the
brand
of
coffee
for
all
seNngs
which
offers
an
exclusive,
superior,
and
premium
coffee
experience
that
goes
beyond
the
typical,
because
it
embodies
elegance,
quality,
and
superior
taste.

31. Objec4ves

32. Nespresso
Performance
Nespresso
Market
Share
Volume
Market
Share
Value
Household
Penetra4on
Average
Expenditure
Per
Household
2011 %
Change
2378
tons
€87m
1.74m
€104
+33%
2012
3162
tons
€119m
2.47m
€93
+37%
+42%
-­‐11%
2013
Forecast
4174
tons
€163M
3.26m
€83
%
Change
+33%
+37%
+32%
-­‐11%
✔
✔
✔
✘
✔
✔
✔
✘
Revenue €181m +18% €230m +8% €269m
Future
Objec&ves
Maintain
average
expenditure
per
household
at
2012
levels
without
decreasing
penetra4on.
Increase
average
expenditure
per
household
to
2011
levels
within
two
fiscal
years
without
decreasing
penetra4on.
Increase
frequency
of
purchase
within
exis4ng
penetrated
households
to
bring
average
expenditure
per
household
to
2011
levels.
Increase
average
purchase
from
252
capsules
to
365
per
person
capsules
per
annum
within
three
fiscal
year.

33. Strategy Proposal and 4P’s

34. Strategy:
Broaden
the
Nespresso
Experience
Majority
of
coffee
drinkers
don’t
just
drink
at
home,
but
also
drink
coffee
heavily
at
University/Work Coffee
chains Cafeterias/Bars/Restaurants
Majority
of
coffee
drinkers
don’t
enjoy
drinking
coffee
alone
Broaden
experience
by
increasing
social
points
where
Nespresso
could
be
shared
Nespresso
drinkers
find
inconvenience
and
lack
of
accessibility
to
brand
but
s4ll
like
to
feel
exclusive
Broaden
experience
to
bring
them
closer
to
brand
while
maintaining
exclusivity

35. Product
Product
Place
-­‐Premium
espresso
brewed
from
coffee
capsules
of
a
variety
of
flavors
-­‐Beau4fully
designed
machines;
B2B
and
B2C
solu4ons
-­‐Superior
store
experience
and
service
Price
-­‐High
compared
to
direct
capsule
compe4tors
(4
cents
more
per
capsule)
Price
-­‐But
s4ll
an
affordable
luxury
compared
to
newly
defined
Frame
of
Reference
-­‐Gradually
increase
price
to
match
perceived
value
to
move
further
away
from
direct
compe4tors
Promo4on
Place
-­‐Currently:
32
Nespresso
stores
in
Spain
+
availability
in
15
El
Corte
Ingles
+
Online
-­‐Increase
distribu4on
but
remain
exclusive
(to
accommodate
to
consumer
feedback
of
lack
of
convenience
and
to
in
increase
frequency)
-­‐Increase
B2B
placement
(cosmopolitan
workplaces
and
universi4es)
-­‐Open
bou4que
Nespresso
bars
Promo&on
-­‐Keep
adver4sing
the
same
(mass
media)
as
it
has
been
highly
effec4ve
in
brand
awareness
-­‐Adver4se
heavily
on
Online
ordering
because
there
is
lack
of
awareness
(and
this
will
sa4sfy
lack
of
convenience
and
increase
average
purchase)
Strategy:
Broaden
the
Nespresso
Experience

36. Situa&on
Analysis
Objec4ves
&
Strategies
360°
Execu4on

37. Push
Out
Nespresso
Towers
&
Capsule
Vending
Machines
At
Select
Cosmopolitan
Workplaces
and
Universi4es
Encourages
the
Nespresso
experience
outside
of
home
Directly
increases
frequency
of
consump4on
at
loca4on
Will
replace
vending
machines,
cafeterias,
coffee
chains
Broadens
Nespresso
experience:
allows
consumer
to
try
different
flavors
and
variety
Experience
remains
exclusive
Payment
only
accepted
by
scanning
Nespresso
Card
Recharge
card
at
point
or
online
Nespresso
Card
can
be
used
on
any
Tower
anywhere
Increases
convenience
to
purchase
capsules
for
home
Poten4al
for
trial
amongst
non-­‐consumers
Convert
non-­‐consumers
into
regular
consumers
Increases
penetra4on

38. Introduce
Bou4que
Nespresso
Cafés
in
Cosmopolitan
Centers
Brings
the
Nespresso
experience
while
on
the
move
The
experience
doesn’t
have
to
end
at
home
or
at
work
Directly
increases
frequency
of
consump4on
at
loca4on
Amplifies
the
Nespresso
experience
to
greater
heights
Stylish
and
fashionable
cafés
An
exclusive
place:
Go
to
see
and
to
be
seen
Enjoy
Nespresso
like
George
Clooney
does
A
new
3rd
place:
forget
Starbucks
Poten4al
for
trial
amongst
non-­‐consumers
Convert
non-­‐consumers
into
regular
consumers
Increases
penetra4on
Purchase
capsules
for
home:
take
the
experience
back
home
with
you

39. Take
Nespresso
Everywhere
With
You
Expand
the
Experience
Into
The
Palm
Of
Your
Hands
Nespresso
Club
Nespresso
Black
Dedicated
lounge
Nespresso
Magazine
Updates
Gits
Invited
to
store
openings
Call
to
have
order
ready
Nespresso
Gold
Fast
Track
Personal
Shopper
Free
delivery
(standard
>100
capsules)
Express
delivery
(standard
>200
capsules)
Special
Price
for
Nespresso
Towers
Exclusive
Events
Gold

40. All
rights
reserved
by
the
authors.
Work
cannot
be
reproduced
without
the
prior
permission
of
authors.
Prepared
by:
Naye
Moussa
&
Khan
Mohd
Esh4aque
Contact
us
at
esh4aque@student.ie.edu
or
nmoussa.bba2010@student.ie.edu