How Nespresso Reinvented The Coffee Experience
Nespresso has managed to successfully reinvent the coffee business. They’ve turned a cheap commodity into a perceived luxury item that generates billions of dollars every year.
Nestle was able to redefine this category of their business through shrewd marketing, distribution, pricing, and a strategic retail business plan.
How did they manage to quadruple the price of coffee?
1. Nespresso Machine
Nestle came out with the Nespresso machine and turned it into a ‘must have' household item. With the machine in your home, it signified as a sign of good taste.
The machine was priced at the $200-600 price point. Many companies that rely on customers to buy a machine to get their customers to refill on items for it to be at use, usually price the machine at a very low price. Think about a printer and the ink cartridges. A printer is $50 to $80 but the ink can cost you $50 every time you purchase it.
Nespresso was wise to keep the status of their machine as a desirable luxury item by keeping it at a high price point. This was positioned where you could buy it as an expensive gift or as a treat for yourself.
Their wide range of designs, models, and colours meant that there’s always a Nespresso machine that is ‘right for you.’
2. Luxury Marketing
Nespresso launched a global marketing campaign that was fronted by George Clooney. This campaign took place across TV, movie theatres, billboards, and etc.
The luxury and premium feel worked well with Clooney. He’s a global superstar who is perceived as a ‘sex symbol.’ He exuded the aura of suaveness and silent debonair that reflected well with the positioning of the Nespresso machine.
3. Nespresso Capsules
The Nespresso Capsules came in a variety of colours. Each pod has a shine to it which gives the feeling of richness and premium.
The capsules came in all sorts of flavours and had an indicator of the “strength” of the coffee, letting customers experiment with different types of coffee.
The angle with this was to reel in the customers to make them feel and own the experience by allowing them to be ‘connoisseurs’ in the subject of coffee.
Before Nespresso, nobody thought of coffee ‘by the cup.’ It was brilliantly positioned in a way where the nearest price comparison would be buying a Starbucks coffee at $4-6 a cup. When you were to compare them, it made Nespresso look like a great bargain
4. Nespresso Shops
Nespresso upped the ante by not allowing customers to access the customers at the local supermarket. To get the capsules, you have to order them online or go into one of the state-of-the-art shops located in metropolitan cities around the world.
The Nespresso shops reek of pure luxury and opulence. It was another strategy towards their precedence in marketing the product. The design of the store makes patrons feel as if they are shopping in a high-end designer store to buy coffee.
Nespresso used exclusivity to make their customers feel like they are part of a prestige community. When you get a Nespresso machine, you join an ‘exclusive’ club which means you can call 24/7 to buy capsules. You also get emails inviting you to events at your nearest ‘boutique.’
Takeaway: We’ve got to give to Nespresso for creating such an incredible brand and excelling at every touch point. They managed to turn a cheap commodity into a beautiful, desirable and iconic ‘affordable luxury.’