Download - NESPRESSO MARKETING ANALYSIS 2014
• Instant coffee – No specific appliance
• Coffee pods – Specific machine
• Ground coffee – Classic coffee maker
• Coffee beans – Automatic coffee maker with grinder
INTRODUCTION
• Coffee shop
• In the street
• In-home
• At work
• Handpresso
INTRODUCTION
INTRODUCTION
Coffee Market
FOCUS ON :
Coffee Pods market in the UK // global coffee market in the UK
INTRODUCTION
t
PESTEL ANALYSIS
POLITICAL
• Stability in government • Cost-cutting plan by Cameron • Britain's corporation tax rate reduced from 24% to 20% • BBC iCan and the Royal Society of Arts have launched
the Coffee Shop Challenge in association with Starbucks, Costa and Caffé Nero to throw again the idea of UK Coffee house
• Trading agreements WTO = World Trade Organisation & ICO/A = International coffee Organisation/ Agreements
X2 in the past 6 years2
56M£ UK coffee pod Market value1
ECONOMICAL
1The rise of coffee pod machine, The Guardian, 10 April 2013 2 Hospitality and catering news.com
7,5% growth in the coffee market in 20122
ECONOMICAL
• Economic crisis since 2008, 3rd recession • The UK deficit is expected to reach 6.1% of GDP in 2013 • The UK’s lost top AAA credit rating for the first time since
1978 • Income inequality • Inflation’s steady at 3% • UK = 3rd rank in the top 10 total purchasing power • Flexible economy
22-28 April 2013 UK Coffee Week
500’000 participants in 4’000 coffee shops
3-6 April 2014
The London coffee festival
SOCIOCULTURAL
COFFEE, SO TRENDY! > Barista is the new job > Latte art trend > A cup in every hand
FROM A DRINK TO A PASSION/DEGUSTATION
SOCIOCULTURAL
CONSUME FRESHER
& MORE ARTISANAL
PRODUCTS
SOCIOCULTURAL
MORE TRANSPARENCY
& PROVIDE INFORMATION ON HEALTH ISSUES
+/-
SMALLER HOUSE Redesign smaller machines
SOCIOCULTURAL
COFFEE SHOP FEELS LIKE HOME
SOCIOCULTURAL
SOCIOCULTURAL
ALWAYS ON THE MOVE
LONGER WORKING DAY
+
SOCIOCULTURAL
CRM &
LOYALTY PROGRAMS MEAN
A LOT
• Biodegradable pods / reusable / washable
• Digital allows the brand to optimize communications > Reducing budget + Eco-friendly
• Hyper connectivity : Mobile and tablet device
• Multiple payment methods : Fingerprint on mobile/ pay with a tweet/ paypal/ contactless payment
• Internet shopping trends
TECHNOLOGIC
ENVIRONMENTAL
• Reusable & Greener cups & pods • Composting of coffee ground • Include water-saving technology in machines • Recycling in store • Development of hybrid vehicles > delivery • Sustainable energy shifting
> solar panels, wind power in factories
LEGAL
• Labelling of ingredients is mandatory in Europe
• Scotland has a GM-free policy, as does Wales.
• In 2012, the GM industry met with ministers to promote the return of GM crops to Britain. In late 2012, Environment Secretary Owen Paterson and Prime Minister David Cameron began to make public statements in support of GM crops.
• Employment laws : working time, age, minimum wages rate with farmers
• Food standards agency is controlling food hygiene for safer goods
DEMOGRAPHIC
63M Of citizens in the UK in 20121
A cosmopolite country with 4 millions of foreigners
> Various tastes
1 Demography of the United Kingdom, wikipedia
AGEING SOCIETY
DEMOGRAPHIC
DEMOGRAPHIC
GENERATION Y Headspace availability,
fickle, instant gratification
Children
DEMOGRAPHIC
Regional GDHI per person UK map, 2011
DEMOGRAPHIC
Proportion of people with no qualifications
GLOBAL
• OECD international tax reforms • International coffee organisation was created in 1963 and is located
in london, in charge of Improving quality, promotion, sustainable coffe, diversification, consultation, private sector, information provider, food safety
• World Trade Organization (WTO): regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements
IN BRIEF PESTEL IN BRIEF
P: Coffee shop Challenge initiated by the government E: Still in crisis, but coffee is considered as an affordable indulgence S: Passion for coffee, but as a strong trend it will fade away T: New means to facilitate consumption and payment E: New means to lower the footprint carbon & be more eco-friendly L: Labelling mandatory & GM future policy? D: Ageing society G: Great # of coffee organisations
PORTER ANALYSIS
RIVAL FIRMS
A VERY STRATEGICAL AND ATTRACTIVE MARKET
70 million # cups of coffee drunk
each day
74% of english people drink coffee and 48% drinks coffee pods
The market is set to grow to a £7bn turnover by 2015
Mintel Coffee UK April 2012 Report.
In 2011, consumer retails spend on coffee was 941M£.
RIVAL FIRMS
HIGHLY COMPETITIVE MARKET WITH APPROXIMATELY 50 RIVALS
• Coffee Shops chain • Independent coffee shops • Traditional cafetieres • Pods machines
Britons spent £56.1m on pods between February 2012 and 2013, up 45.1% year on year.
Nespresso is the best known brand.
Nespresso owns
34% of market shares
The rise of the Coffee Machines, the Guardian, April 10th 2013
The most sales are made by Nescafe Dolce Gusto and Tassimo
RIVAL FIRMS
NOT MUCH DIFFERENTIATION
Coffee, “du rififi dans nos capsules”, Arte, April 10th 2013
Senseo NESPRESSO Tassimo
Same global approach but Nespresso is the only brand to provide a 19 bars power
Filter pods Aluminium pods Plastic pods – T discs
Machines + pods
Different beverages
Only Coffee called
Grand Crus and Variations
Different beverages
RIVAL FIRMS
FIXED COSTS & ECONOMY OF SCALE
Fixed costs are heavier for the Nespresso brand than for the competitors
Stores rent / Own employees are part of this feature
Economy of scale is largely developed for all brands, as their production capabilities are enormous
RIVAL FIRMS
EXCESS CAPACITY & EXIT BARRIERS
Excess capacity is a reality in coffee marketing, but tend to decrease with the Fair Trade organisation work High exit barriers: • Specific assets • Existing contract with customers • Block by the brand importance • Cost of exit • Loss of bargaining power with different parts • Loss of the shareholder confidence • Psychologic and affective reasons
SUPPLIERS
• Numerous suppliers and high concentration but Nespresso choose to build strong and long-lasting relationships with farmers from the rainforest alliance
• Employees solidarity and strong sense of firm’s belonging
• Supplier switching costs are really high as the pods market has setted new habits
• Nespresso choose an ultra premiumisation for its product
HIGH CONCENTRATION &
A CERTAIN DEPENDENCY TO SUPPLIERS
NEW ENTRANTS
• Initial investment costs are high
• Need a lot of time to make the firm profitable
• High communication and advertising campaign investments to
position a new brand : Nespresso /Star endorsement
• Loyalty is very strong in the coffee pod market
• Brand awareness of existing competitors
• Norms and technical standards are required to start a business
• Cultural barriers, even if coffee is growing, the main beverage in the
UK is Tea
• The expected retaliation is very strong, as all the existing competitors
will join to block the new one
STRONG ENTRY BARRIERS
BUYERS
NUMEROUS CUSTOMERS &
NUMEROUS BRANDS
50 Rivals
In the global coffee market
70 million # cups of coffee drunk
each day
3 Major competitors in the pod market
Mintel Coffee UK April 2012 Report.
BUYERS
Different distribution solutions
Multiple retailers / Online More accessible to the customers
Also more dependency to the retailers
DIFFERENT RETAIL / DISTRIBUTON STRATEGY
300 Own stores, Online,
Appliances retailer stores
No other distribution channels
BUYERS
NESPRESSO = VENDOR LOCK-IN EFFECT
BUYER SWITCHING COSTS ARE HIGH
Machine: 100£-130£ 0,25£ per pods
A lot of different range +
Partnerships: Costa/ Kenco
Machine: 89£-500£ 0,29£ to 0,35£ per pods
« Premium » coffees Grand crus
Impossible to use other
brands pods
Machine: 61£-150£ 0,16£ per pods
Different ranges
BUYERS
• Price sensitivity is low as they all have a specific market area. No alignment strategy.
• Differential advantage is high, each brand try to build its own image Nespresso : Premium – Eco-friendly Tassimo : Optimisation of the consumption thanks to the bar code, variety of products Senseo : Cheaper, easy, practical
• Recency is High. Coffee market is old but the pod ones is new • Frequency is High as it’s a day-to-day product • Monetary is High. Coffee isn’t that expensive in general but the pod
products are much more expensive : 3 times more expensive
EACH BRAND ITS STRATEGY
SUBSTITUTES
Buyers can easily change their consumption for a subtitute like: • Tea: Cheaper • Hot chocolate: More expensive • Chicory: Cheaper • Energy drinks: More expensive • Sodas : More expensive • Fruit beverages: More expensive
• Subtitutes are generally expensive. People tend to prefer coffee even if the price per Kilo for Nespresso is 60£. Coffee is still perceived as an more affordable indulgence.
• The perceived level of product differenciation is high as the customer of coffee pods almost belong to a specific community
LARGE SUBSTITUTES CHOICE
• Not a coffee è A Grand Cru + Variations • Product presented in a case (Jewellery reference) • Specific store in premium areas, no prices posted • No sales assistants è Coffee specialists • No classic retailers • Online buying implies registering • High investment in advertising = Star endorsement • Vendor-lock in effect
= EXTREME PREMIUMISATION
NESPRESSO IN BRIEF
INTERNAL ANALYSIS
INTERNE
FINANCIAL
Nespresso SA is affiliated to Nestle SA Nestle : A very profitable company with great financial capabilities
• Value estimated: 228 Billion CHF • Net margin around: 11,4% • Cash flow: 15,8%
Nespresso sales progression: +20% (2011/2012) Nespresso annual turnover= 3 Billion CHF in 2013 Comfortable leader position
TANGIBLE RESOURCES
INTERNE PHYSICAL
• 2 factories for the pods + 1 more to come • Over 300 Nespresso Stores in 2012, compared to 1 in
2000 • In almost 60 countries • One step ahead the competitors thanks to regular
competitive intelligence
HUMAN
• Over 8300 employees around the world including 1’300 coffee specialists
Nespresso employs 7,000 people across countries and has 270 boutiques (including premises on the Champs-Élysées and Beauchamp Place in London) selling 16 varieties of "grand cru" coffee. 28 billion capsule has been sold 7 millions of members
TANGIBLE RESOURCES
INTERNE
TECHNOLOGY
• Great innovation based on Nestle strong R&D capabilities • Nestle was able to partially change the coffee value chain • Nespresso system, a UNIQUE system: The only machine with 19
bars power • 1700 patents, made public since 2012
Nespresso employs 7,000 people across countries and has 270 boutiques (including premises on the Champs-Élysées and Beauchamp Place in London) selling 16 varieties of "grand cru" coffee. 28 billion capsule has been sold 7 millions of members
INTANGIBLE RESOURCES
INTERNE REPUTATION
• The Unique Coffee Luxury Brand • 12’300 cups of Nespresso coffee drunk every minutes • AAA quality coffee • Nespresso Club: the most efficient CRM system in coffee
market: 7 millions members • Transparency policy • Recycling: Begin to implement it, but not convincing enough
CULTURE
• New way to consume coffee: Indulgence • Belonging sense / The club • Coffee culture : Total expertise
Nespresso employs 7,000 people across countries and has 270 boutiques (including premises on the Champs-Élysées and Beauchamp Place in London) selling 16 varieties of "grand cru" coffee. 28 billion capsule has been sold 7 millions of members
INTANGIBLE RESOURCES
INTERNE SKILLS
• Perfect knowledge of coffee industry • Unique R&D department focused on innovation/ Technology • Unique route to market • Nespresso = The big Coffee brother
COMMUNICATION & COLLABORATION
Only few partnerships : Raw material/ the biggest firm of cafetieres manufacturer Advertising+ CRM with big advertising through Star endorsement Nespresso as a sponsor
HUMAN RESOURCES
INTERNE MOTIVATION
• NCS as a chance of being more flexible & agile • Change in management to improve efficiency • Innovative climate • Salesforce considered as Coffee Expert
Nespresso employs 7,000 people across countries and has 270 boutiques (including premises on the Champs-Élysées and Beauchamp Place in London) selling 16 varieties of "grand cru" coffee. 28 billion capsule has been sold 7 millions of members
HUMAN RESOURCES
STP RECOMMENDATION
STP
Segmentation:
Drinkers
Hot drinkers
Coffee drinkers
Espresso drinkers
STP
Main target: Coffee drinkers • People between 24-80 yo, • On average 7 coffees per week • Looking for really good quality • Easy serving method Persona: Kate, 32 years old, saler, she has a part time job and she is a very demanding person
STP Core target: Coffee Aficionados • 25-60 yo • More than 7 coffees a week • Considering themselves almost as coffee Expert • SPC++, very active workers • In search of headspace availability • Easyness and instant gratification • Coffee is a energizer/ and a degustation = daily indulgence Persona: Georges 52, years old manager in an international company, working 9 hours/day,he can’t begin his day without a Grand Cru coffee
STP Secondary target: B2B / Business Offices: Companies, and firms in search of a more qualitative coffee Hotels/ Restaurants Travel: First class in Airlines/ Trains
Influencer group target: Press journalists Offline/Online Bloggers Vloggers
Advantage for main target: Tasting and discovering new affordable, premium and easy coffees at home
Advantage for core target: Enjoying the most premium and easy-making coffee on a day to day basis, with services that make their lives easier (Delivery…)
Advantage for secondary target: Serving premium coffee to their customers, benefiting of the worldwide quality reputation of Nespresso
Advantage for influencer group target: Talking about a trendy and innovative product/brand
STP
4P Product: Machine + Pods + Services Wide range Place: Unique route to market in own distribution networkOnline/ Call-centers/ appliances retailers stores Price: Machine from £89/1530 Pods from £0,26-0,35 Constant promotion on the machine = Vendor lock-in Promotion: Advertising campaigns, Social Media, SEO/SEM, Buzz, dedicated platforms, Event, partnerships, sponsoring, co-branding, mobile, CRM program, Nespresso magazine, limited editions, app, stores, mailing, goodies. A premium brand providing a highly qualitative all-in-one
offer that allow people to consume the best coffee at home
STP
STP
STRATEGIC OPTIONS
FOCUS DIFFERENTIATION • Creating highest quality « Grand Cru » coffees • Creating long-lasting consumer relationships • Creating sustainable business success
Positioned between selling existing products to existing customers
and developing new products to sell to existing customers
groups
STRATEGIC OPTIONS
• Luxe / image of exclusivity • Based on high-quality products • Specific vocabulary • Extensive customer service • Premium pricing • Unique route to market • Exclusive club of like-minded « coffee experts » • Lifestyle / feel to belonging / elite group of customers
FOCUS DIFFERENTIATION THANKS TO
RECOMMENDATION
Machines • Create a new coffee machine range è Smaller ones • Including Water-saving technology • Machine pre-adjustable which make coffee one itself at a precise time,
on the morning è Woke up by the smell of a fresh auto-served coffee Services • Implement an easier collecting service for used pods è the delivery man
takes the used pods • Deepen the experience in store to make a “at home” space for
customers è Hybrid space • Selling branded greener cups è Your Nespresso follows you • Coffee workshop to become a Coffee expert • Implement a new tab on the website to help people repairing
their machines thanks to an interactive FAQ or a video chat system.
CRM programs • Sponsoring your friends in a Win-Win offer • Try the machine for £5
RECOMMENDATION
Possible integration Invest as much as possible in the firms which make our machines like Krups or Magimix Development Develop Pop up stores in smaller towns to test profitability If profitable install new stores Invest in a eco-friendly delivery system è Hybrid vehicles
THANKS FOR YOUR ATTENTION
Q’S & A’s