Nespresso Club.
Whereas you can find Nespresso machines at resellers, you won’t be able to find any capsules. In fact, this situation first came from a constraint. Coffee capsules have a short
life scale and Nespresso’s logistics didn’t fit the supermarkets standards (Kashani and
Miller, 2003). But Nespresso turned its weakness into strength and decided to keep the control of its customers’ relationship. Thanks to the Nespresso Club, customers can order capsules online and get some advice according to their track.
In addition to the higher margins that such direct sales represents, it allows Nespresso
to get a strong customer base. Besides, this strategy clearly differentiates Nespresso
from other brands and makes it remarkable.
Besides, Nespresso has always believed in the word of mouth’s power and can count on
a very loyal customer base (Kashani and Miller, 2003).
Early Adopters.
Furthermore, in order to reach the early majority, Nespresso decided to target two
specific kinds of early adopters and opinion leaders:
-
Airline companies including British Airways, SwissAir, Cathay Pacific.
-
Premium restaurants and Chefs
By doing so, Nespresso has built an exclusive brand image based on experience and glamour. Besides, having Chefs offering Nespresso to their clients give Nespresso a great legitimacy.
Diffusion of Nespresso’s innovation (Roger’s Law):
Evolution of sales of Nespresso
(turnover in CHF)
Boutiques & Advertising.
At the end of the 1990’s, Nespresso realized that in spite of a very loyal customer base
and a good word of mouth, the company hasn’t yet reached the tipping point. Nespresso decided to take two further actions:
Concept Stores:
In order to reassure its “exclusive brand image” (Matzler et al, 2013), Nespresso has
opened virtually 300 boutiques worldwide. These stores are always really well-located
and help Nespresso to be perceived as a glamorous and luxury brand. In Paris, for
example, Nespresso has opened in 2007 a 1000 square-meter flagship store in Champs-
Elysées, just in front of Louis Vuitton (Sharp, 2007). In fact, Nespresso has been a lead
sponsor of the Louis Vuitton Act of the America’s Cup (Teichert, Wartburg, Braterman,2006).
What Else?
In 2005, Nespresso decided to go on TV with the famous advertising campaign What
Else? Involving George Clooney as a perfect brand ambassador. Other movie stars such
as Matt Damon, John Malkovich or Elizabeth Hurley have since joined the campaign.
NESPRESSO – DIFFUSION OF THE INNOVATION
Nespresso is not a new technology. In fact, the first Nespresso’s system was introduced nearly 30 years ago but it is only in the 2000’s that the success story really began in Europe (Teather, 2010). The value of Nespresso is based on customization: “Consumers are given the opportunity to prepare their espressos according to their individual preferences” (Matzler et al, 2013). Therefore, Nespresso’s success emerged along with this trend of individualization and customization at the early 2000’s (Matzler et al,2013).
As other product-ecosystem innovations, Nespresso’s idea is to offer affordable machines in order to sell capsules. Comparisons can be drawn with Microsoft and the hardware / software business (Teichert, Wartburg, Braterman, 2006). Nespresso has partnered with 14 manufacturers which are under a license agreement with Nestlé. Nespresso is not earning any money on the sale of the machines. But it has come up with a brilliant idea to support the diffusion of the innovation:
