Capitalizing on the Nostalgic Appeal of a Product to Build Brand Loyalty - Case Study Example

Marketing Audit Report for Nespresso (Student Name) (Institutional Affiliation) Marketing (Instructor) May 1, 2013 Marketing Audit Report Nespresso Table of Contents Content.........................................................................................................Page 1.  Introduction.....................................................................................3 2.  The Target Market.........................................................................3 3.  The Marketing Mix.........................................................................4 3.1Product …......……………………………………….…4 3.2 Price................................................................................5 3.3 Promotion... ………………………………….………..6 3.4 Place............................................................................... 7 4.  Competitive Advantages.................. ...........................................8 5.  The success of the firm.................................................................9 6. References.....................................................................................11 Appendix……………………………………………………………12            Graph 1Source http://www.Espresso.com.au/Pages/product-information 1. Introduction The product that I chose to study in Australian market is the most famous product called Nespresso coffee. This coffee is prepared by Nespresso Company which was launched in 1986 in Switzerland before it became a global brand. This type of coffee is harvested, roasted   and packed once in hermetically capsules to seal its aroma thus maintaining its freshness. This coffee in capsules is brewed us an easy to use coffee machine (Nespresso, 2012). Since the introduction and production of Nespresso coffee in 1986, the brand has redefined how millions of people enjoy the today not only in Australia, but the world over.               In this report, I am going to describe the target market, which needs Nespresso, the competitive advantages, how this product has a greater achievement in Australian                                        coffee market and   how it has persistently grown and evaluate its marketing mix up to registering annual gross turnover of almost US$ 3Billion as per the 2011 coffee analysis.      2. The target market Nespresso coffee has increasingly become a drink of most of Australians. Nespresso aims at providing nutritional requirements and giving a refreshing tastes to its customers. The biggest consumers of this product are adults though even children like it. Nespresso coffee as a consumer’s daily necessity, supplies the rich proteins and fats. Not only do the consumers of Nespresso expect to gain nutritional value, but also sipping a cup Nespresso with friends or family members is an occasion to always remember (Nespresso, 2012). The total Nepresso market in Australia can be segmented as per the following aspects: The Market Segment Profile  Demographic Characteristics: Age group: I spent two days in Perth City to observe the consumers of Nespresso coffee. Their ages looks like 25-70 years. Most of them were parents who also buy Nespresso for their children. Gender group: Nespresso coffee attracts almost all Australian males and females who take upto50% respectively. Because of the brand’s unique taste, most people prefer it to its competitor like Espresso manufactured by Ethical Coffee. Geographic Characteristics Region: From the figures of Nespresso website, Australia makes 50% of the Nespresso sales in Oceania. (Nepresso, FAQs, Q10, 2012) this therefore suggests that almost 64% of Australian population do enjoy this beverage. Life style: Nespresso connects with a good percentage of Australians whereby around 65% of households have Nespresso (Nespressso, FAQs, Q3, 2010). A good number of Australian adults ranging from house wives to top Executives always consume Nespresso coffee. Therefore, this shows that Nespresso coffee has become their daily necessity, and sipping a cup of Nespresso with friends or spouse has become the Aussie life style. Behavioural Characteristics Benefit expectation: Nepresso is a very health beverage which is rich in proteins and it does give a refreshing taste and an ever alert mind to students and adults. Moreover, Nepresso is a kind of a beverage that contains natural fats and carbs (Nestle Annual Report, 2011). Volume usage:  Nespresso is packed in capsules of 5 and 6grammess where each capsule is sold as a single entity. Therefore, this affords the Nespresso customers to buy the number of their capsules according to their abilities.     3.0 The market mix 3.1 The product. The product l have chosen to study is Nespresso coffee. This is a type of coffee that is harvested, produced and packed in capsules with aluminium foils to preserve its freshness and aroma. This coffee is then brewed from capsules using a Nespresso machine. Graph 2 (Nepresso machine) source http://www.Espresso.com.au/Pages/product-information Not only is Nespresso rich in proteins, but also its unique taste and refreshing ability is amazing. In fact, sipping a cup of Nespresso is becoming a life style of choice. According to the product classification, Nespresso can be classified as convenient products. The reason behind the choosing of this product is, its unique nature in terms of production, packing, and even brewing before enjoying your hot cup of coffee is mind refreshing. It is a kind of drink that almost everybody will wish not to miss in his or her house. Also because of its simple packing in capsules, customers can choose to buy the number of capsules according to their ability. The price of Nespresso isn’t prohibitive given its superior and unmatched quality. One capsule of Nespresso costs between US$0.57-Us$0.63. Nespresso provides the daily needed mind stimulation especially after a tedious work or during a cold period. Indeed from my own observation, Nespresso has become a daily necessity for Australians (Nespresso, 2012). The core product of Nespresso is a kind of coffee which meets the consumers’ expectations from a refreshing drink. For the part of expected product, l will evaluate from branding, packaging and gains of Nespresso. For the packaging aspect, this brand is packed in capsules with aluminium foils in it so as to preserve its freshness and aroma. In terms of branding, Nespresso has a unique brand of Capital’ N’ that distinguishes it from other beverages including its imitators. Graph 3Nespresso capsules) source http://www.Espresso.com.au/Pages/product-information The benefits of Nespresso as discussed earlier, are many, key among them: a mind stimulating which is also rich in proteins and calories. The product life cycle is in growing stage. It has been in Australian market since 1988(Nespresso 2012) the managers of this product sell it through its boutiques or customers placing an order for their capsules through online or a toll free telephone. This strategy is adopted to bolster a strong bond between the producer and the customers. I think this is the major secret behind the growth of Nespresso sales which have soured not only in Australia, but world over with a gross annual turnover of US$ 3Billion in 2011 and a growth rate of 20% (Nespresso, 2012).      3.2 Price. Nespresso is a classy coffee of high quality that is very convenient. Because of this uniqueness, its cost is a bit high but not prohibitive to coffee lovers though some people call it ’the beverage of the mighty’. I surveyed one major retail store (boutique) in Perth – Murray sent mall and the pricing of different Nespresso capsules are as follows Variety of Nespresso Price Arpggio Us$ dollar .057 Folgo black silk Us$ dollar .89 Sight glass Us$ dollar .93   Us $ dollar .97       Because of its popularity Nespresso company always keeps similar prices in different Boutique in Australia. According to Vieira (2012) the major competitor of Nespresso is Espresso coffee which is a product of ethical which was launched in Australia in 2010. Because of this company’s late entry into this coffee market, Nespresso has always remained the major industry player. From the research I conducted from most Australian in Perth city I can say that Nespresso coffee is large in terms of preference to nespresso and their respective prices of similar capsule are as follows-: Average Price of one capsule of Nespresso Average Price of one capsule of Espresso 0.70 Us dollars 0.58 Us dollars   Price strategy is a good way of attracting customers, but it seems not working for the coffee market in Australia. For instance the price of espresso is slightly lower than that of Nespresso. But because of Nespresso strong brand as a resort of many years in the Australia coffee market espresso has not been able to out complete Nespresso. Because Nespresso is still in the growth stage of the life cycle, its strategy of promotion and advertisement through different media is in line with this stage .and also to; keep link between the product and customers Nespresso always seels its coffee through the boutique for their customers to make an order either online or toll telephone (Nespresso, 2012). 3.3 Promotion. graph 4) source http://www.Espresso.com.au/facebook/product-information To cement its dominant position in the Australia coffee market of producing quality coffee, Nespresso deploys a distinctly promotion strategy through the image of exclusivity, based on high quality products an extensive customer care service; and premium pricing. Also, Nepresso advertises its products through TV programmes like the common programme ‘Kash Back’ launched on 24/03/2009 with an aim of promoting the company sales and appreciating their customers. Also Nespresso uses other forums and twitter to reach its wide range of customers and also persuade other people to join the growing Nespresso family. Additionally with increased internet usage Nespresso puts its products on the internet where additional information pertaining to the company products. In its Website, the company gives detailed information like, its history, customer care et cetera. Also through YouTube, the company this media, Nepresso puts a range of its product pictures for its customers to see. Furthermore, the company unveil its magazin, Nespresso magazine which it uses to reach other customers who do not access the internet. all this promotion measures have real been successful in boosting the company’s product(s) visibility not only in Australia but also throughout the world and from the increased company profits it can be adduced that, the brands sophisticated promotion strategy has really been very successful in transforming this coffee brand into a global product with an annual turnover of almost 3billionUs dollars as per the 2011 coffee market analysis. Besides the above promotion strategies, the company operates a membership club programme that is also aimed at making the brand customers to own the company. The effect of this is that, the brand has attracted more and more customers most of whom are acting as its ambassadors.      3.4 Place Graph 5 5Source: http://www.Espresso.com.au/Pages/product-information-Espresso.aspx The distribution strategy is to provide a close link with their customers. The boutique of Nespresso in western Perth is where any customer can access these products like the coffee machine easily. When I researched my product in pert hi found that the boutique has a variety of Nepresso capsules, the coffee machine and its accessories. Besides this there is a good number of Nespresso product experts who are willing to advise their customers on arrange of issues pertaining to, their coffee, the coffee machine and its accessories. Because of its uniqueness and its peculiarity, Nespresso price is relatively suitable and affordable for the price of necessity. As discussed early the company’s choice of distributing the product directly to its consumers as real helped it to strengthen its customer base and even acquires more. Unlike other companies that sell the product through third parties who often mishandle and exploit the consumers of the product, Nespresso has always maintained a strong connection with its customers. This has been achieved through the selling of its products through boutique where customers besides buying coffee, the coffee machine and its accessories can also get advice from the coffee experts at this selling point. Also the operates a toll free telephone services where customers can call and order for the delivery of their coffee capsule or machines launch any complaint or seek advice from the company experts (Nestle Annual Report, 2011). Because of this cutting edge strategy Nespresso has remained in the upward trend in terms of growth of registering a gross annual turnover of Us$ dollars 3 billion from its global sales and growing by 20% as per 2011 coffee analysis (Nespresso. FAQs, 2012).   4 Competitive advantage Nepresso has nearly 25 years in the Austria coffee market. The company’s competitive advantage cannot be ignored. Nespresso has registered  a lot of achievement and long term growth in competitive Austria coffee market because it has differentiating characteristics in the marketing mix and the company’s promotion strategy is highly sophisticated and customer friendly (Nestle.com). The most unique aspect of Nespresso are ,its conspicuous test, sweet aroma and amazing freshness .Nespresso keeps and maintains the coffee’s original test, aroma and freshness through the use of 100% renewable aluminium foils when packing the coffee in capsules (Nepresso, FAQs, Q2,2011) The second advantage of Nespresso is its 25 years in Australia coffee market this has enabled the product to become a brand of  choice amongst Australian therefore, it must be emphasised that sipping a cup of Nespresso with friends ,family members or spouse has become the tradition of many Australians. Because of the brands high quality as a result of sorting, producing, packaging and not forgetting the rare promotion strategy that the company deploys Nespresso has become a global brand with a near fanatical liking in Australia. Even though its cost may be slightly higher, it’s unique test and packaging where a customer can buy the number of capsules according to the number of hi/her ability. Nespresso coffee is thus affordable to many who like and like it. From this analysis it can be emphasised that Nespresso is a product that is a cut above the rest (Espresso and Nespresso Case Study, 2008). 5. The success of the firm As the trend of more and more people is attracted to more health beverages, I think and believe that Nespresso coffee is a good example for this case. Nespresso has continued on the growth trend regardless of the competitive global coffee market. In Australia, Nespresso major competitor is espresso coffee a product of ethical coffee company but espresso doesn’t sell l so much in Australia like Nespresso. Indeed Nespresso is a star in the Australia coffee market. This achievement is based in meeting the consumers every day demand. Nespresso provides the daily requirements of every consumer like proteins and stimulating the brain to be always alert. though the price is high but it’s popularity has never windowed additionally, the firms always promotion strategy of always selling their products directly to; their customers through the chain of boutique producer customers trust also this strategy avoid exposing the highly valued to often greedy third parties whose major drive is drive is cash minting. finally the company strategy of providing toll free telephone services to the customers who don’t access internet has made the company to reach all its customers’ and this explains a  constant growing trend of the Nespresso brand not only in Australia but globally think Nespresso has achieved a lot but I think there is room for further achievement. 6. References FQAs, Q.1, Nespresso 2012, http://www.nespresso.com.au/Pages/Nespresso-faqs.aspx FQAs, Q.2, Nespresso 2012, http://www.nespresso.com.au/Nespresso-faqs.aspx FAQs, Q.10, Nespresso2012 http://www.Nespresso.com.au/Pages/Nespresso-faqs.aspx Nespresso 2012 http://www.Nespresso.com.au/Pages/product-information-Nespresso.aspx Vieira, G 2012, ‘Nespresso’s growth, Maclean's; 6/4/2012, Vol. 125 Issue 21, p31-31, 1/3p, Business source complete, EBSCOhost, http://web.ebscohost.com/ehost/detail?sid=4fba7b0f-1e4b-4c19-97e0-0684f2e29266%40sessionmgr13&vid=1&hid=11&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=76358164 http://www.Nespresso.com.au/Pages/Nespresso-surfgroms.aspx Myresources 2012, ‘Toast to Australia ‘, http://myresources.com.au/downtime/food-and-drink/13-general/4919-toast-to-australia Espresso and Nespresso Case Study. (2008, October). Capitalizing on the Nostalgic Appeal of a Product to Build Brand Loyalty, p1-11, 11p, 3 Color Photographs, 1 Chart, 2 Maps, Business source complete, EBSCOhost, http://web.ebscohost.com/ehost/detail?vid=3&hid=16&sid=0f06dffc-2a9a-4213-b8d9-3d2cf41d1d2d%40sessionmgr4&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=36349304 Graph 1, Espresso, source: http://www.Espresso.com.au/Pages/product-information-Espresso.aspx Graph 2, source: source http://www.Espresso.com.au/Pages/product-information. Graph 3, source: http://www.Nespressoe.com.au/Pages/Nespresso-surfgroms.aspx Graph 4, source http://www.Espresso.com.au/Pages/product-information Graph 5, source http://www.Espresso.com.au/Pages/product-information Mulier, Tom (4 March 2011). "Denner to Resume Nespresso-Compatible Capsule Sales After Ruling". Bloomberg. Nestle Annual Report 2011 The Nestlé Coffee Report Faces of Coffee, Nestlé, 2012.The Nestlé Sustainability Review, May www.nestlé.com www.coolbeans.com www.commoditycentral.com www.nespresso. APPENDIX SURVEY OF THE PRICES Variety of Nespresso Price Arpggio Us$ dollar .057 Folgo black silk Us$ dollar .89 Sight glass Us$ dollar .93   Us $ dollar .97     Read More