Nespresso Analysis, Essay Example

Nespresso is a well-known market leader and worldwide pioneer in providing clients with high-quality portioned coffee. The company was launched in the year of 1986. It is an autonomous international business unit of the Nestle Company. The corporation has managed to deliver the luxury Nespresso brand to its clients through offering different types of coffee products. Some of these products include up to sixteen different flavors of the Grand Cru capsule varieties, and coffee machines that assist in the coffee preparation and help. This paper aims to analyze how the Nespresso brand managed to use the club membership concept to acquire more than ten million customers. The content of this paper will additionally highlight on the business development strategies used by the Nespresso Company to promote their products.

Building measurable and sustainable growth for the Nespresso business was a key directive objective that continually ensured that all the company segments were still operational. Nespresso accommodates to both business sector and even to private consumers. Nespresso has had an impressive market share growth rate over the past decade making it Nestlé’s fastest-growing operational unit, thanks to its marketing approach. The business model used by Nespresso involved the creation of the highest quality of Grand Cru coffees, the creation of long-lasting customer relationships and the implementation of sustainable business success (Matzler, p 34). The Nespresso Company had a unique business model that ensured the clients requirements were met by using a system that provides personalized customer service.

The Nespresso Club

The Nespresso Club delivers a wide range of products and services to its members. The Nespresso Club offers a customer relationship management system that primarily drives the Company’s brands. Its tremendous success was through enabling clients to make inquiries, receive company news, place orders and seek assistance or support from coffee experts (Jean, p 299). The Club helps both the Company and the customers to gain access to a comprehensive database of information that can be shared among the approved members. Using the club membership approach as a strategy to lock in the client, proved to be successful. It was effective because, for one to become a member, they had to provide contact details and the machine features they wanted as private customers or business.

The club membership model made it possible for the Nespresso marketing team to collect accurately client information and initiate a business channel of communication. The club system further helped them build a personalized relationship with their respective customers from the very start. The Nespresso Company has a total control over sales coming through the Club member’s channel (West, John and Essam, p 467). Thus, they possess the competitive edge of being able to give personalized services to particular consumer sectors. The Nespresso brands have been made known through special events, like cooking classes, coffee tasting, and sporting tournaments.

The Nespresso clienteles tend to be emotionally connected to Nespresso brand, for example, the company utilized the power of celebrity endorsement to promote the image of the Company and act as the brand ambassadors.  The customers as well are often included in  Nespresso Company’s advertising activities to ensure there is satisfactory social involvement. The classy lifestyle model offered by Nespresso to its consumers confidently develops a feeling of pride that has subsequently generated credible and positive word-of-mouth effects that bring in more interested clients. The business development model described above shows how effective Nespresso’s positioning strategy and approach to improving customer loyalty was promoted via targeted advertising.

Positioning and Strategic Approach

The method applied by Nespresso used a differentiation strategy aimed at providing the customers with a wide range coffee varieties.  The club membership concept was first introduced in the year of 1989, and its distinctive growth was entirely consumer driven. The creation of the club membership concept aided the company in research and design of consumer preference brands. The company managed to achieve an image of exclusivity through the provision of high-quality products, and furthermore via providing an extensive customer service (Kourdi, p 9).

Clients tend not to mind the premium pricing for membership since they feel the sense of ‘belonging to an elite group’. A significant driver of the Nespresso’s exceptionality in business is the approach it takes towards targeting the premium market. The company aimed to promote its image sales and marketing to maintain and gradually grow its market share. One major component or concept implemented within the Nespresso business that has ensured its success is the customer-centered approach. The ‘customer is king’ approach has created a wide familiarity of its products among its customers.

The company has developed a consumer-centered approach aimed at providing patented services to its members. The innovations within the Nespresso business are protected by legal and commercial laws that ensure that other potential imitators or competitors in the market find it difficult provide the same products or related services. For example, the machines used by the Nespresso Company are made widely accessible through a system of retailers. The coffee capsules that used together with the machine can only be acquired or bought through the Nespresso’s e-commerce website platform. The introduction of new products and use of technology systems were the main driving factors in the process of the Nespresso business development.

The simple but revolutionary idea of premium portioned coffee offered maximum convenience by giving the client a variety of coffee products. The marketing effort presented by Nespresso utilized a technique that entails collecting and studying the customer behavior over time (West, John and Essam, p 468). The Nespresso Company was able to come up with a brand that made emphasis on its products as part of a lifestyle. For instance, customers believe that using Nespresso products relates them to an exclusive club of compatible “café connoisseurs”.

Therefore, the Nespresso Company’s existence is fundamentally pegged on its extremely loyal client base that has resulted in a step by step growth of the enterprise. The company database keeps track of all the client information and data about the business. The information provides vital knowledge that can be used by the marketing team to study consumer behavior, product usage and even attitude or preferences towards a service product.

Conclusion

The Nespresso Company has developed a strong business model over time that has cemented its client base in the market. The innovative method of controlling the retail chain and client relationship can be costly, but has established as a viable method for forming strong ties between the company brand and the customer. This is a great method of sponsoring customer and loyalty retention. The innovative approach of using club membership is a key concept that offered a competitive advantage for Nespresso. Although, Nespresso still has the task of innovating fantastic products to fulfill the growing consumer expectations.

Work Cited

Jean-Paul, Former CEO. “Changing the Strategy at Nespresso.” European Management Journal 18.3 (2000): 296-301.

Kourdi, Jeremy. Business Strategy: A Guide to Taking Your Business Forward. London, Eng: Economist in association with Profile Books, 2009. Print.

Matzler, Kurt, et al. “Business model innovation: coffee triumphs for Nespresso.” Journal of Business Strategy 34.2 (2013): 30-37.

West, Douglas C, John B. Ford, and Essam Ibrahim. Strategic Marketing: Creating Competitive Advantage. , 2015. Print.