Nespresso segmentation

Nespresso Brand Extension (Tea Pods) Marketing Plan

1. 1. .T By NESPRESSO Group 2: Amanda, Linda, Claire, Kitty, Aaron, Julien, Marie-Sibylle Marketing Management: Term Project May 28th, 2014

2. 2. AGENDA 1. Background of the company 2. Understand the marketplace and customer needs 3. Designing a customer-driven marketing startegy 4. Construct an integrated marketing program to deliver superior value 5. Build profitable relationships 6. Financial feasibility 2

3. 3. 1Background of the company 3 1Background of the company

4. 4. Background of the company Brief history: • Founded in 2014 • Owned by Nestlé: « Good food, Good life. » • Nesquisite.T by Nespresso developed a revolutionary system of portioned, encapsulated tea • Manufacture both machines and the capsules they use 4

5. 5. The Marketing Process 5 Marketing plan is mainly composed of 5 steps:

6. 6. 2Understand the marketplace and customer needs 6 2Understand the marketplace and customer needs

7. 7. a) Market description • In the world: increasing trend of tea consumption: retail value of global tea consumption rose to $40,75 billion in 2012 (50 % more than in 2007) • UK: one of the biggest tea market in the world (history, culture) • Increasing demand of tea pods = +17% between 2007 and 2012 in UK 7

8. 8. a) Market description • New way of drinking tea adopted • Expectations in term of quality and services = not satisfied Unsatisfied demand/need 8

9. 9. b) The major segments on the market of tea pods Two segments of tea pods buyers who have similar buying processes in this UK market: - The 40-50 years old housewives in UK - The youths starting their career: 25-40 years old (tea is more healthy than coffee, trendy, organic product and fair-trade products, high standing of life and incomes) 9

10. 10. c) Customers needs and wants • Usually, to drink good tea you mainly have to buy loose tea not convenient to prepare • Our two segments want to save time Need of high standing tea but easy, convenient and quick to prepare on the market of hot tea 10

11. 11. d) Competitors • Low level of competition but the company implanted are very strong Indirect competitors : Harrods, Teavana, East India Company, Le Palais Des Thes, Kusmi Tea Paris all high price & very good quality, Kusmi Tea for add & distribution 11

12. 12. d) Competitors Direct competitors (differently positioned in order to avoid competing in the same field): - Keurig Green Mountain: specialized in the coffee and tea market, very good know-how and quality of their products 12

13. 13. - The newcomer Unilever: use its reputation to penetrate this flourishing market - The Starbucks’ Verisimo (cheaper): use its stores to catch the most possible market shares d) Competitors 13

14. 14. e) SWOT analysis Strengths Weaknesses - Tea market is huge in the UK- Existing loyal customers- High-end and luxurious image that no other tea pod machine companies can compete with- Famous spokespersons - Premium product quality - Higher prices - Limited distributions of products Opportunities Threats - The demand (UK tea buyers have the highest revenue, so they are more able to buy high-end tea) - Convince new customers (pre-ground tea users) - Huge market, continually growth since 2007 - Find new tastes (UK consumers need of quality), diversify the offer (large range) - Huge and powerful competitor: Keurig - More affordable competitors: Starbucks - Substitute products (soft drinks, coffee…) - Potential entry of new actors (no high entry barriers) - Low switching costs for the customers 14

15. 15. f) Objectives and Issues • First year objective: success in London • Second year objective: extend the product to other countries and continents MKT actions & tea pods adapted to each country 15

16. 16. Issues • To know the same success than the brand got with Nespresso coffee • The coffee pod market nowadays a little saturated Invest a lot in the tea pods market which propose big growth perspectives 16

17. 17. 3Designing a customer-driven marketing strategy 17 3 Designing a customer-driven marketing strategy

18. 18. Selecting Customers to serve Market segmentation: Process of dividing a market into distinct groups/segments of buyers with similar behaviour Demographic: Age: 25-50 years; Income: affluent consumers Geographic: Pilote stores in major cities, first one located in London Psychographic: Social class: High social class, Personality criteria: elegant, hedonic, innovative, want to be part of a private group Behavioral: Loyalty status: people who promote themselves the brand (word of mouth, blogs…) = addictive consumer Market targeting: Process of evaluating each market segment’s attractiveness and selecting one to enter Micromarketing: the company decides to tailor its offer to meet specifics customers expectations: use of local and niche marketing 18

19. 19. Choosing a Value Proposition Positioning Map: Tea pods market Price High Low Orientation LuxuryBasic Nesquisite.T by Nespresso Keurig Green mountain Others Unilever 19 Starbucks

20. 20. Choosing a Value Proposition Differentiation: Differentiate the market offering to create superior customer value Competitive advantages owned by Nesquisite.T by Nespresso: • Image of exclusivity / High brand identity • High-quality & wide range of products • Extensive customer service (home delivery, Nesquisite.TClub) • Premium pricing Positioning strategy: Position the market offering in the minds of target customers Up-market / exclusivity Catch phrase: “Culture in a cup” Value Proposition: “More for More” approach: gives prestige to the buyer 20

21. 21. 4Construct an integrated marketing program to deliver superior value 21 4Construct an integrated marketing program to deliver superior value

22. 22. Product • 16 unique flavours • New flavours yearly • Brand and logo will be on all packaging 22

23. 23. 23 Price • 0.30 Euros per pod • Similarly priced as Nespresso capsules • High price reflects the high quality image that surrounds Nesquisite.T

24. 24. 24 Place • Exclusive Distribution • Online Website • Boutique Stores

25. 25. Promotion • High end parties at flagship store • Membership card • Limited edition teapods 25

26. 26. Online Promotion • Campaigns online, in magazines and on TV with Jamie Dornan and Emma Watson • Social media campaign: contest: – Best tea mix contest (viral mkt) – Customers upload pictures with #nesquisite.T.love 26

27. 27. 4Construct an integrated marketing program to deliver superior value 27 5Build profitable relationships

28. 28. CRM 28 • Huge database information – Newsletters (monthly): news, the specific events, new products or limited editions – E-mailing campaign: attract for Christmas – Catalogues per mail

29. 29. CRM • MEMBERSHIP CARD AND CLUB: = Very select club of original and high quality tea- lovers sense of belonging – “Frequent drinker card”: capsules = credits – 3 levels of membership: privileges • Bronze: acquired by buying Nespresso machine • Silver: limited edition tea flavors • Gold: VIP tastings + new product launching 29 Nesquisite.T

30. 30. 1Background of the company 30 6Financial feasibility

31. 31. Objectives First year: • Financially: Achieved 7% market shares, sales: 39 millions € • Break-even: Reach this point before the end of the year Second year: • Financially: - Double the level of sales in London - Reach the break-even point in all new implementation 31 More experimented & more aggressive

32. 32. Budget: First year 32 Nesquisite.T: Products Tea pods Tea machines Average retail price (ARP) 1 pod: 0,30€ 1 machine: 220€ Global sales 75% 25% Level of sales to profit 29 250 000 € 9 750 000 € First-year retail sales goal: 39 millions € Break-even calculation = FC/(ARP-VC) = …*ARP Tea pods Tea machines Fixed Costs (marketing expenses, payrolls, equipment) 13 000 000 € Variable Costs (average production costs) 0,18 € 120 € Break-even point 24 375 000 € 10 833 460 € Analysis (at the end of the year) Profit 29 250 000 > 24 375 000 Little loss 9 750 000 < 10 833 460

33. 33. Group 2: Amanda, Linda, Claire, Kitty, Aaron, Julien, Marie-Sibylle THANK YOU FOR YOUR ATTENTION QUESTIONS?

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