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Nespresso Marketing
Plan
Elizabeth Bula
Yoanna Gueorguiev
Victoria Marques
Jeni Martin
Glorymarie Reyes-Muniz
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Table of Contents
Executive Summary 3
Current Market Situation 4
Competitor Analysis 7
Macro Situation Analysis 9
SWOT Analysis Matrix 11
Issues Analysis 16
Market Segmentation 17
Marketing Strategy and Objectives 20
Action Plans 22
Appendix 37
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Executive Summary
The following report analyzes ways that sales of Nespresso’s VertuoLine can grow in the United
States. It will break down and evaluate the current market situation, competitive and macro
situational analyses, internal and external factors, and Nespresso’s issues.

We will specify our target market and how each segment will be reached through creative
promotions and store setups. We also decided to use both B2B and B2C markets in our action plans to
make a larger impact.

Our group discovered that Nespresso’s VertuoLine is not very successful in the United States. The
report will break down how we plan to become more relevant in the coffee drink market.

The pod industry is thought by many to have reached maturity, with the Keurig system continuing to
dominate the market. Nespresso lacks market share and popularity compared to other brands in the
United States. When shopping for a single-serve brewing system, Americans may gravitate to ones
they recognize rather than spend more on an unfamiliar Nespresso product.

In order to gain traction, there needs to be better accessibility and visibility in places where
VertuoLine machines and capsules are sold and used. We have to make sure Nespresso’s offer is
properly communicated and experienced by people willing to purchase at their price.

The report evaluates how Nestle’s operations in the United States and influence over Nespresso affect
our plan’s execution.

We analyze how Nespresso’s VertuoLine product would gain from focusing on certain marketing
tactics to increase brand awareness and sales. We want wealthier customers to switch over to our
brewing system and choose our product over coffee machines and ordering at cafes. Vertuoline’s
drinks will be marketed as the perfect middle ground.

The action plans collectively position our product as more than a just fun and functional way to make
coffee and espresso drinks. It is more convenient and faster than ordering at a coffeehouse, but tastier
and more authentic compared to other at-home appliances’ beverages.

Our group came to the conclusion to highlight Nespresso’s strong suits to attract who we believe
are the ideal customers for VertuoLine. Nespresso’s brand will become a more competitive market
leader. We will gain market share and popularity by noting our European origins, sustainability
efforts, advanced technology, and superior flavor through creative selling, customer relations, and
experience.
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Current Market Situation

Nespresso Today

Nespresso was founded in 1986 with the goal of creating a perfect cup of espresso coffee. They wanted to
focus on delivering the “highest quality coffees and ultimate coffee experiences to consumers cup after
cup.” The brand is currently present in over 60 countries and has over 12,000 employees worldwide. The
company operates under 3 key growth drivers; the first one being the creation of the highest quality coffee
for consumers, hence only an estimated 1 to 2% of the world’s green coffee crop meets the Nespresso
requirements for taste, aroma, and quality1. Furthermore, Nespresso places high importance on creating
strong relationships with customers, for which they have the Nespresso Club that allows them to have direct
communication with consumers. Finally, the company focuses on creating long-term business sustainability
in all operations. Examples would be coffee sourcing, capsule recycling, and the formation of shared value
for the business and society2. Their product lines consists of single-serve coffee pods OriginalLine and
VertuoLine3.

VertuoLine: Experience the Revolution of Coffee

In 2014, Nespresso launched the VertuoLine system in the United States. The line was distinct due to the
fact that it was an innovative large-cup coffee system designed for North American consumers. It can create
both American style coffee as well as its traditional European espressos4. The VertuoLine pods come with
barcodes in the rim that allow the machine to detect what kind of coffee is being prepared and reduce the
need to adjust settings manually5. VertuoLine offers twelve types of coffee pods, including flavors like
vanilla and decaffeinated, which increases the options for customers who could potentially purchase the
product. Another distinguishing feature of the VertuoLine is the innovative formation of crema, which
is foam created from coffee and air. Nespresso VertuoLine has a premium target market and prides itself
in its high quality coffee. Their drinks provide a luxurious, unique experience for every cup of coffee, an
aspect that the company believes differentiates them from other single-serve brands. When discussing the
competition for VertuoLine in America, the CEO of Nespresso, Jean Marc Duvoisin, said “We’ll be focusing
on the premium top quality coffee…we don’t feel like we have direct competitors, we will be creating a new
market,6”
1 “Our Company,” Nestlé Nespresso, , accessed October 26, 2017, https://www.Nestlé-nespresso.com/about-us/
our-company.
2 “Our Strategy,” Nestlé Nespresso, , accessed October 26, 2017, https://www.Nestlé-nespresso.com/about-us/strat-
egy.
3 Nespresso - Corporate Backgrounder. PDF. Nestlé Nespresso, Corporate Communications, May 2016.
4 “New Nespresso system aims to reshape North American coffee industry,” Nestlé Canada, February 19, 2014, ,
accessed October 23, 2017, https://www.corporate.Nestlé.ca/en/media/newsandfeatures/new-nespresso-system.
5 Drew Prindle, “Nespresso launches VertuoLine: a stylish new Keurig alternative,” Digital Trends, February
20, 2014, accessed October 26, 2017, https://www.digitaltrends.com/home/nespresso-launches-VertuoLine-styl-
ish-new-keurig-competitor/.
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market,6”

Means to a Blend

Since Nespresso VertuoLine’s promises a high quality, luxury coffee experience and hopes to reach a
premium target market, Nespresso employed carefully curated marketing campaigns surrounding the
product launch to raise awareness.

Nespresso organized a roadshow across the country under the motto “Tasting is Believing” and had
approximately 600,000 tasting sessions to introduce the new system. During the roadshow, both public
tastings and VIP events where coffee was paired with food and wine were held7.

One of the events held took place in Boston where the company hired an upscale New York-based planner
to coordinate a free coffee event in Boston’s financial district. They put together a 4900 square-foot, brown
dome in Dewey Square and had a dozen baristas making coffee during Wednesday 8 am rush hour8. The
goal of the event was to get people to try the machines and possibly purchase them. The location of the
event was essential because it made it possible to reach their target market.

Finally, VertuoLine made an appearance on Jimmy Kimmel Live9. When the show was scheduled to
start, Kimmel found Penelope Cruz and Nespresso VertuoLine coffee backstage. After trying it, Kimmel
pretended to give up his hosting responsibilities to relax and enjoy his coffee. By doing this, VertuoLine
is getting celebrity endorsements from two successful, classy individuals in front of a large audience that
includes new possible customers.

These marketing tactics allowed for customer awareness of the newly introduced VertuoLine, however the
company managed to do so in a way that was true to their vision of luxury and that was appealing to their
target market.

Industry Analysis: United States coffee Industry Background10

• During 2017, approximately 29% of coffee drinkers in the United States used a single-cup brewer.
• The average amount of money spent on coffee per week is $21 dollars.
• Approximately 58% of Americans usually drink coffee to wake up.
• On average, 26% of coffee drinkers drink four cups per day.
• The amount of coffee retail sales was about 5.17 billion U.S. dollars in 2016

6 Arjun Kharpal, “Nespresso takes a sip of US coffee market,” CNBC, February 21, 2014, accessed October 26,
2017, https://www.cnbc.com/2014/02/20/nespresso-takes-a-sip-of-us-coffee-market.html.
7 “VertuoLine Roadshow takes US by storm.” Nestlé Nespresso. Accessed October 26, 2017. https://www.
Nestlé-nespresso.com/newsandfeatures/VertuoLine-roadshow-takes-us-by-storm.
8 Grillo, Thomas. “Nespresso takes pop-up retailing to a new level in Boston’s Dewey Square.” Boston Business
Journal, May 21, 2014. Accessed October 26, 2017. https://www.bizjournals.com/boston/real_estate/2014/05/nespresso-
takes-pop-up-retailing-to-a-new-level-in.html#g/34531/4
9 PR, Newswire. “Irresistible Nespresso VertuoLine™ Coffee And Penelope Cruz Distract Jimmy Kimmel From His
Nightly Duties.” PR Newswire US, May 09, 2014., Accessed October 26, 2017,Regional Business News, EBSCOhost.
10 National Coffee Association USA. Trends Report. “Daily Coffee Consumption Up Sharply.” News release, March
25, 2017. National Coffee Association. http://www.ncausa.org/Portals/56/PDFs/Communication/NCA_NCDT2017.
pdf?ver=2017-03-29-115235-727.
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Within the coffee industry in the U.S., the main types of coffee consumed are roasted coffee, soluble coffee
and single-serve coffee pods. In past years, the popularity of single-serve pod coffee machines has been
increasing due to is convenience and quality. Because of this, it would be beneficial for Nespresso to focus
on the single-serve coffee segment of the coffee industry.

Top Market Competitors for Single serve coffee-pod industry 201611

Single-serve coffee industry

The single-serve coffee industry is made up of machines that make single cups of coffee using pre-packaged
pods. The market for single-serve coffee pods is expected to keep increasing at a steady rate. An estimated
27% of homes in America own a single-cup coffee machine, making it the fastest growing segment of the
coffee industry overall. In 2013, North America was the fastest growing region in $10.8 billion global single-
serve market and made up 45.4% of this market12. Some of the strong competitors for Nespresso VertuoLine
are Keurig, Tassimo and Flavia. While Nespresso has a global leadership in this market, it has failed to
increase market share in the U.S. market. In order to be successful in the U.S. market, Nespresso VertuoLine
should focus on increasing awareness and visibility to increase market share and sales.
Below are the market leaders for the single-serve coffee industries in 2012 and their market share.

11 Chaudhuri, Saabira. “Trouble Brewing for Nestlé in Coffee-Pod Market.” The Wall Street Journal, February 23,
2016. https://www.wsj.com/articles/Nestlé-loses-a-round-in-coffee-pod-fight-1456214403.
12 Daryani, Shiv. “Nespresso: Stirring up the pod.” Editorial. Ivey Business Review , March 24, 2016. Accessed Octo-
ber 26, 2017. http://iveybusinessreview.ca/cms/5342/nepresso-stirring-pod-2/.
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Introduction
Competitor Analysis
In 1990, Keurig patented the K-Cup Pod, paving the way for a new type of coffee machine. From drip coffee
came the idea of single-serve coffee, a machine where one pod could be enough coffee to brew exactly
one cup. With the patent in place, Keurig had an
immediate competitive advantage. This patent
prevented any other brand from using the new
technology. Keurig began to rise in popularity in
2006, dominating the North American market. In
2010, Keurig sales of single-serve coffee makers had
exponentially increased, allowing they to have a
large market share before their patent expired13. In
2012, the K-Cup Pod patent expired and competitors
were quick to join the game14. Brands such as
Nespresso, Mr. Coffee, Cuisinart, and Hamilton
all released their single-serve coffee makers. This
increase in variety caused sales to quadruple in the
2010s and continue to increase every year. Single-
cup brewers have been the 2nd most common coffee
preparation method since 2012, after traditional
drip brewer15. Additionally, Keurig partnered with
companies such as Starbucks and McDonald’s to
specially
license K-Cup
Pods with
those blends.
Now, 29% of US coffee drinkers use a single-serve coffee maker16.

As for Nespresso, the company was at an immediate setback as

Keurig had time to obtain and retain market share. However,
Nespresso has two competitive advantages; European presence and
espresso capabilities. While Keurig had been dominating the North
American market, the European market had been left unsaturated
allowing for Nespresso to fulfill that demand internationally17.
13 “Retail sales of single serve coffee makers in the United States from 2006 to 2010 (in million
units).” Statista. Accessed November 28, 2017. https://www.statista.com/statistics/220409/market-share-by-retail-unit-
sales-of-coffee-makers-in-the-us/.
14 D’Ambrosio, Dan. “With K-Cup patent expired, others try to cash in.” USA Today. October 29,
2013. Accessed November 28, 2017. https://www.usatoday.com/story/money/business/2013/10/29/life-after-the-k-cup-
patent/3307187/.
15 “Six Surprising Single-Cup Statistics.” The First Pull. May 16, 2017. Accessed November 28,
2017. https://nationalcoffeeblog.org/2016/07/13/six-surprising-single-cup-statistics/.
16 “Statistics & Facts on the Single-serve Coffee Market.” Www.statista.com. Accessed
November 28, 2017. https://www.statista.com/topics/2219/single-serve-coffee-market/.
17 “Keurig’s Dominance Is Proving a Hindrance To Pod Coffee Expansion in North America.”
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Additionally, while Keurig had perfected its machine, Nespresso had to find a way to differentiate itself
from other brands. The company did so by allowing their single serve machine, the VertuoLine to also brew
espresso.

Porter’s Five Forces

Threat of Substitute Products or Services
Despite the direct substitute competition that Nespresso faces against other single-serve coffee makers,
it also faces the indirect competition of the coffee chain industry. Companies such as Starbucks, Dunkin
Donuts, and Caribou Coffee have been on the rise with Starbucks holding 39.8% of that industry market
share and earning approximately $22 billion every year worldwide18. This industry gives people the
opportunity to get coffee on-the-go and better accommodates the lifestyle of busy commuters with drive-
throughs. If people prefer convenient to-go coffee (at a higher price than single-serve coffee would cost in a
year) then both drip coffee and single-serve face a growing competitor.

Bargaining Power of Suppliers

Another important part of the competition between VertuoLine and other brands is the cost of the pods
themselves. While the machines cost relatively the same price, the cost and environmental sustainability can
sway customer opinion. Nespresso pods cost about $0.95 cents per pod to consumers while Keurig K-Cup
pods (vary with the licensed brand) but generally cost about $0.56 per pod. In this case, the third party
manufacturers and producers of the pods have bargaining power with these companies and can drive the
cost of the individual pods up or down. Furthermore, the cost of coffee itself can affect the cost of Nespresso
VertuoLine pods. However, the higher price of VertuoLine pods compared to Keurig K-Cup Pods gives
Nespresso an advantage. Due to the higher price, consumers perceive that Nespresso coffee is of higher
quality than Keurig. In reality, it actually is. Nespresso is known for paying top dollar for quality coffee
from Narino, a region in Columbia known for its high-quality coffee19.

Bargaining Power of Buyers

This refers to the demand and pressure that companies are under to meet customers needs for higher quality
products. In the single-serve coffee maker industry however, buyer power is not very high. There are a
lot of buyers and a handful of sellers. It is for this reason that Nespresso can increase its market share by
differentiating itself from similar brands and by lower switching costs for consumers. By giving consumers a
new reason to purchase a single-serve coffee maker in the first place as well as give an existing user a reason
to switch, the company can carve its way into the North American and International market.

Threat of New Entrants

As stated before, the expiration of the K-Cup Pod patent has allowed an increase in growth with the number
of single serve coffee makers on the market. As the popularity of this machine increases and more people
are looking to replace their drip coffee machines, Nespresso faces the prospect of incoming competition. At
the moment, Keurig and Nespresso are leading this industry but the need to stay new.

Euromonitor International Blog. June 20, 2017. Accessed November 27, 2017. http://blog.euromonitor.com/2017/04/
keurigs-dominance-proving-hindrance-pod-coffee-expansion-north-america.html.
18 “Starbucks - Statistics & Facts.” Www.statista.com. Accessed November 28, 2017.
https://www.statista.com/topics/1246/starbucks/.

19 González, Ángel. “Single-serve coffee revolution brews industry change.” The Seattle Times.
February 19, 2014. Accessed November 28, 2017. https://www.seattletimes.com/business/single-serve-coffee-revolu-
tion-brews-industry-change/.
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Macro Situational Analysis

Legal Regulations
Nespresso is a coffee brand that is part of the Nestlé Company. Nestlé is a Swiss company with many
brands across the globe. Therefore, Nestlé is binded to the legal regulations for Nespresso in the United
States. You can only get Nespresso capsules in their physical or online store, which tend to be more on the
expensive side. In Europe, there has been a few legal disputes about the coffee pods. Today, in France, some
stores offer cheaper coffee pods that fit into a Nespresso machine. The same regulations may change in the
US as well soon20.

Corporate Social Responsibility

Nespresso takes pride in sustainability when it comes to all of their operations such as coffee sourcing and
shared value for the business and society. They came up with a long-term program called The Positive Cup
which provides a framework21 for partnership and innovation to drive ongoing, sustainable development.
The Positive Cup is divided into four components:

Company
Nespresso has valued sustainable growth for 30 years. They aim to implement this mentality with the
people in their company and the members part of the Nespresso Club. It is important for the company to
maintain strategic partnerships. They started a Nespresso Sustainability Innovation Fund to strengthen their
internal processes and improve decision making. The goals are to invest $500 million in the Positive Cup
program, empower people to be part of the sustainable growth, and to catalyse innovation all by 2020.

Coffee
Nespresso values a reliable source of the highest quality coffee. With economic uncertainty and climate
change, they believe that it is in the best interest to work closely with the coffee bean farmers by training
them and paying premium prices. Nespresso AAA Sustainable Quality came out in 2003, which is a
program that builds long term relationships with farmers, embeds sustainable practices on farms and the
surrounding landscapes, and improves the yield and quality of harvests. This program also improves
the life of the workers and their communities. The goals are to source the coffee 100% through the AAA
Sustainable Quality, increase the share of certified coffees in AAA, and better the livelihood of the farmers in
more origins by 2020. So far, they were able to source the coffee 82% through the AAA Sustainable Quality
and expand in origins such as Cuba and South Sudan.

Aluminium
Nespresso uses aluminium packaging to keep their high quality coffee fresh. However, this usage has been
seen negatively by society due to environmental implications. They partnered with the IUCN (International
Union for Conservation of Nature) to watch the socio-environmental performance and global standard
traceability of the aluminium industry. The goals are to offer easy recycling solutions for all consumers,

20 Worstall, Tim. “US And EU Regulation; The Difference Between Keurig And Nespresso.”
Forbes. September 15, 2014. Accessed November 28, 2017. https://www.forbes.com/sites/timworstall/2014/09/15/us-
and-eu-regulation-the-difference-between-keurig-and-nespresso/.
21 “Our Company.” Https://www.nestle-nespresso.com. Accessed November 28, 2017.
https://www.nestle-nespresso.com/about-us/our-company.
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continue to increase the capsule recycling rate, and source ASI certified by 100% by 2020. Although the
latter goal has not been even closely reached, the recycling solution for all consumers has reached up to 86%
collection capacity.

Climate
Nespresso wants to make sure to make an impact on climate change. They are aware that coffee cultivation
is affected by the climate. Nespresso also knows that every cup of coffee leaves a footprint on Earth. The life
cycle assessment has motivated the company to reduce the materials that have a big footprint. They believe
that agroforestry is a solution for climate change, which is a land use management system that provides
diversity, healthy, profitable, and productive land. The goals are to reduce the carbon footprint of a cup of
Nespresso by 28%, inset 100% of the company’s operational carbon footprint (which has been 100% fulfilled
already), and strengthen coffee landscape resilience by planting trees extensively towards 5 million by 2020.
So far, there has been 1.4 million trees planted through this program.
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SWOT Analysis Matrix

Internal Strengths Weaknesses
• Nestlé, a successful company • Lack of transparency
in the U.S., has ownership of with their management of
Management Nespresso sustainability
• Operates business in a • Since Nespresso is under

Marketing Mix
Promotion • Membership program for • Not promoted well in the US
customers
• Established international

Price • Higher price than most

Place • Convenient online purchase • Only physically sold in

method (e.g. website and high-end retailer stores (e.g.

Product • Strong brand name • This machine can only use

• Special product lines VertuoLine capsules (limited)
introduced - vintage selection • Only 12 flavors
2014 • Pods create unnecessary waste
• Offers options for cup size
and machine color
• Focus on quality of coffee

• Medical, Dental, Vision, • Employee complaints of

401(k), Life and Disability stressful work environment
Personnel Insurance and inconsistent management
• Tuition reimbursement

• Recent investment in Blue

Bottle for expertise and
Finance working team
• Nestlé continues to do well in

• Invested in reviving coffee

production in South Sudan
R&D which lowers coffee prices
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• Coffee capsules manufactured

under Nestle
• Strategic partnership with
Breville, De’Longhi and
KitchenAid to create high-
Manufacturing quality, innovative machine
• Coffee itself sourced from 11
different countries (ranging in
South America and South Asia)
• Perform several quality checks

External Opportunities Threats

• Customers will most likely not • Since Nespresso does not
switch to a substitute due to approach a broad market
investment in machine and chooses a more high-end
• First Nespresso store in appeal, the choice of the brand
America, second store in depends on the American
Consumer the world (New York City consumer’s preference
location)
• Growing market in coffee pod
consumption
• More and more people are

• Differentiates their product • Keurig has the largest market

against other single-server share in the U.S.
coffee (premium experience) • Keurig has more variety in
Competitive • Customized drinks flavors and drinks
• Exclusivity • Keurig partners with beverage
companies to license specialty
drinks
• Amazon made it available
for people to buy machines/
capsules online
Technology • New CentrifusionTM technology
achieves high level precision to
deliver perfect cup
• Consumer disposable income • Stock market is at a historical
is relatively high compared to high and is due for a decline
the beginning of 2017
Economic • Inflation is lower than it was at
the beginning of 2017
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• Customers have the • Coffee pods take 150-500 years

opportunity to recycle to breakdown in landfills
aluminum pods at Nespresso
stores
• Quantis research concluded
Environmental that aluminum pods are
the least harmful for the
environment
• Conserve and recover energy
during roasting processes

• Past expiration of patent • Lack of patenting could lead

for single-serve cups offers to lack of innovation and
opportunity to expand increased competition
Legal/Regulatory consumer market
• Trademarked new
CentrifusionTM technology
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Strengths
Nespresso’s biggest strength is its supreme product offering. Nespresso ensures that only the highest quality
coffee makes its way to Club Members and consumers through the selection of the finest green coffees.
Nespresso also has become a strong brand name owned by Nestlé Group, which is based in Lausanne,
Switzerland. They started introducing special product lines in 2014 with their vintage collection. Currently,
there is a variety of options and machines to choose from depending on what the coffee-goer is looking
for. Nespresso focuses on brewing quality coffee for its consumers from the comfort of their own home.
The loyalty and respect of the brand has even caused the company to create a membership program for its
customers.

Another company strength is the coffee machine manufacturing. The coffee capsules are manufactured
under Nestlé’s strategic partnership with Breville, De’Longhi, and KitchenAid to create a new innovative
coffee machine. It is sourced from 11 different countries ranging from South America to South Asia.

Weaknesses
Nespresso’s pricing is higher than its competitors and the product is not promoted well in the United
States. Since Nespresso is under Nestle, management can quickly change with little input from Nespresso.
The problem with this is that there is often little agreement on which factors most influence transformation
initiatives of the product.

Another weakness that Nespresso has is in their pods’ composition. The aluminum pods create unwanted
waste. These pods cause resource consumption and waste generation, and often contain polluting
aluminum. The complexity of the packaging, often a mix of materials along with the dregs of organic waste
from unused ground coffee at the bottom of the pod, makes them difficult to process in standard municipal
recycling plants.

Opportunities
According current market trends, the future of single-serve coffee machines sales will continue to soar.
More consumers are choosing to brew coffee from home instead of purchasing coffee at independent stores.
As more brands enter the market, customers who already own a Nespresso machine are more likely to not
switch to another product due to the high quality of the machine. In turn, our product differentiation which
provides a premium experience, will encourage others to switch to Nespresso.

Furthermore, Nespresso has technological advantages. The company has teamed up with Amazon to make
the coffee pods and machines available online for customers to purchase. Additionally, the VertuoLine’s
new Centrifusion technology achieves prominent level precision to deliver a perfect cup of coffee each
serving.

In terms of the environment, customers have many opportunities and ways to recycle their Nespresso’s
aluminum pods. Consumers receive a recycling bag that they can ship to Nespresso center or drop off at
pod recycle kiosks. For consumers living in big cities, they can take their used pods to a Nespresso boutique
and the store will recycle it properly for them. In their research, they discovered that around a fifth of the
Nespresso capsules’ impact on climate change came from its wrapping including manufacture, assuming it
was recycled properly.
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Threats
Nespresso’s biggest competition is Keurig, holding the largest market share in the United States. This puts
Nespresso at a disadvantage because Keurig has already saturated the single-serve coffee machine market.
Additionally, Nespresso only specializes in brewing their own coffee and are not partnered with other
beverage companies to license specialty drinks like Keurig has. This provides less variety to consumers and
can be a large purchase determinant.

A significant consumer threat that Nespresso faces is ensuring that as a high-end brand, they do not reach
lower income consumers. Competitors such as Keurig and Faberware are able to reach a broader audience
due to their purchasing power.

Lastly, the plastic coffee pods take 150-500 years to breakdown in landfills. The pods are made from
a combination of plastic and aluminum with organic matter inside of them. This makes the pods
nonbiodegradable, contributing to a global environmental dilemmas, with billions of the sleek aluminum
and plastic capsules ending up in landfills.
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Issues Analysis
1. How do we increase our brand awareness?

2. How do we increase our market share in the United States?

3. How do we successfully promote our products to a broader audience?

4. How can we improve our brand image?

5. How do we differentiate our products in order to expand while maintaining our current customer base?

6. How do we increase and retain new customers?

7. How can we create customer awareness through word of mouth?

8. How do we continue to be socially responsible and reduce our material waste?

9. How do we get new customers to switch to VertuoLine?

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Market Segmentation
Profile Type Description
• 60% men, 40% women
• Median age 40, range from 25-60
Demographic • Likely live in suburban or urban areas
• College/university students and graduates
• Average household income: $108,000

• Urban areas in the United States

Geographic • Big cities such as New York, Houston, and Chicago

• Healthy, but like to treat themselves

• Taste and quality are important to them
• Coffee connoisseurs
Psychographics • Individuals who value efficiency
• Enjoy the finer things in life
• Like traveling and vacationing

• Likely shop at higher end stores like Nordstrom, Banana Republic, or

Bloomingdales
• Strong preferences and loyalty to brands that they view as superior
or deluxe
Behavioral • Value their time and do not like to waste it
• Busy and “on-the-go” lifestyle
• Appreciate technology that enhances and simplifies shopping experi-
ence
• Allegiant to companies with good customer service

General Goals

Through our marketing plan and campaign, we primarily want to reach individuals who live a more high-
end lifestyle. Our group believes the following target markets are a suitable focus because they appreciate
a daily, luxurious experience and high quality taste. Nespresso does this by delivering excellence with its
efficient coffee machine. We plan to access this market by placing ads in high end stores or magazines which
highlights our brand. We will also give out free samples in fancy department stores such as Nordstrom.
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Primary Target Market22

Young Digerati

This group consists of rich, educated, middle aged (35-54 year olds) homeowners mostly with kids. They
live in urban areas and enjoy a fashionable, trendy lifestyle including enjoying microbrew or juices and
shopping at boutiques. They are tech-savvy but also enjoy travel and adventure. Overall, they are wealthy,
active hipsters. There are 1,846,276 US households (1.50% of the population) and the median household
income is $128,498. They typically own luxury cars and indulge in the newest electronic devices.

Families who live a more high-end life are among the executive suites. They are between the ages of 35 and
54 who mostly have kids. They have professional jobs with an upscale income in which they can afford
homeownership. Lifestyle for them means appreciating new technologies and different cultures. Their
life is hectic and busy, so they like products that can make their life easier. Executive suites like to watch
independent movies or go to the theatre for the night. Although they are not driving a Mercedes around
town, they like to enjoy the finer things in life without showing off their money.

Executive Suites

Families who live a more high-end life are among the executive suites. They are between the ages of 35 and
54 who mostly have kids. They have professional jobs with an upscale income in which they can afford
homeownership. Lifestyle for them means appreciating new technologies and different cultures. Their
life is hectic and busy, so they like products that can make their life easier. Executive suites like to watch
independent movies or go to the theatre for the night. Although they are not driving a Mercedes around
town, they like to enjoy the finer things in life without showing off their money.

Networked Neighbors

This group of consumers is the epitome of suburban wealth and premium lifestyle. People in this group
are typically between the ages of 35 and 54 with children. A majority of them own houses in suburban
neighborhoods. They are university graduates with jobs as business executives, managers, and professionals
that pay well and allow them to have large disposable income/high spending power. They indulge in high-
end cars, expensive houses, and other status symbols. Networked Neighbors are also characterized by their
high technology usage and by being one of the segments with the highest level of household technology
understanding. This group enjoys building a upscale image by purchasing electronic toys, high-end
appliances, and expensive big ticket items.

Secondary Target Market

Urban Elders

This group is made up of middle aged adults who are college educated with established careers. Their ages
range from 44 and 55 years old. Urban Elders consist of adults who are single or in stable relationships that
do not involve children. Their median household income is with $64,00, with a high disposable income

22 “Segment Details.” Claritas MyBestSegments. Accessed November 28, 2017.

https://segmentationsolutions.nielsen.com/mybestsegments/Default.jsp?ID=30&menuOption=segmentdetails&pa-
geName=Segment%DEtails.
 Page 19

and spending power. While they can afford to own a house they tend to rent their property instead. Urban
Elders enjoy eating at Starbucks and enjoy listening to Jazz music. They enjoy convenience and led a more
mature/sophisticated lifestyle consisting of various cultural opportunities in their community..

Money & Brains

This group consists of individuals with high incomes, advanced degrees and sophisticated tastes. People
in this particular group usually live in the city and have few children who have, more often than not,
moved out. This group typically owns high-end, expensive cars. They are often graduates who work as
managers and professionals which a wealthy income. Furthermore, they are usually aged 55 and up and
are homeowners. Since their children are probably working, they have a median household income of
around $145,556. This means that they have a large amount of disposable income that they can spend on
sophisticated activities and higher end items such as travelling, tennis and luxury cars.

Connected Bohemians

This market represents the nation’s most liberal lifestyles. Connected Bohemians are typically between the
ages of 25 and 44, mostly with no children. Their income is midscale ($50K-$70K). However, connected
bohemians range from young singles, couples, families, students, and professionals. Checking out new
things quickly as early adopters is a lifestyle they acquire. Meanwhile they live in rented row houses or
apartments and own hybrid cars
 Page 20

Marketing Strategy and Objectives

Marketing Mix Nespresso’s VertuoLine Machine & Capsules

• Freshly brewed coffee and authentic espresso

• With a rich and generous naturally formed crema
• Various capsules
• 12 coffee and 4 espresso flavors
• Limited editions flavors
Product • Assortments and package deals
• Innovative machinery
• Centrifusion technology (aroma and flavor extraction)
• Automatic blend recognition for each capsule
• Fast heat-up
• Optional stylish accessories and free recycling bag

• High price point that reflects quality and taste

• Expensive compared to other single-serve coffee makers
Price
• Provides more luxurious, premium offering

• Business Partnerships
• Hotels
• Corporate Companies
• Conferences
• Traditional Mass Advertising
• TV ads on news and travel channels
• Business and current events magazines
• Store Experience
Promotion • Appealing visuals and displays
• Taste-testing
• Social Media Platforms
• Coffee creation contest
• Generate buzz from celebrity endorsement, events, and campaigns
• Miscellaneous
• Online simulation
• Product placement in shows
• Recycling Event

• Kitchenware retailers like Williams Sonoma

Place • High-end department stores
• Airports
• Pop-up shops
 Page 21

The marketing strategy’s main goal for Nespresso’s VertuoLine machine and capsules will be to become a
more popular product and gain market share in the United States. Right now, it is more well known and
appreciated in European countries. We will differentiate our offering by presenting it as not only convenient
and quick (like its dominating competitor Keurig), but also decadent and upscale. We will emphasize
the VertuoLine’s advanced machinery, sustainability initiatives, premium quality, and delectable flavors
through our various promotion techniques.

The price point will be higher than other competitors because of our better quality and taste. We provide a
more luxurious offering, which is reflected in the price.

Our promotions will focus on increasing the awareness and exposure while gaining new customers. This
will be targeted to B2C and B2B markets. Our techniques include utilizing business partnerships, traditional
mass advertising, store experience, social media platforms, and other unique methods. We have to make
sure that our promotional efforts will be seen by wealthy consumers, or people willing to buy at our price
level.

Nespresso has started to make strides to become more popular in the U.S., but we believe changes with
location, distribution, and logistics will be advantageous. Along with expanding to more high-end
kitchenware retailers and department stores, we want to place our product in airports and pop-up shops.
This will give VertuoLine access to new customers and create more excitement for the product. We will also
continue an online platform (website and sites like Amazon) because of the growing preference for online
shopping.

We plan to increase sales and loyalty through various outlets described in our action plans. Nespresso’s
VertuoLine machine and capsules provide a delicious drink that is backed with a great company; we believe
if this can be properly communicated and offered to Americans, it can do well in this market.

.
 Page 22

Action Plans
Action Plan #1
Title: Online Nespresso Machine Simulation

Objective: To educate consumers about the product offering and raise awareness about our brand.

Issues:

How do we increase our brand awareness?

How do we successfully promote our products to a broader audience?

How do we increase and retain new customers?

Target Market: Tech Savvy People (i.e: Young Digerati, Executive Suites, Networked Neighbors)

Description: We will start a program on the Nespresso website based in the United States, where consumers
can try out the VertuoLine Machines online in an interactive way. Completing the simulation will provide a
coffee cup, or some other kind of incentive, that comes with a purchase of a VertuoLine coffee machine.

Responsibility: Website Development, Marketing Research, Promotions

Budget:

Marketing Research (What would be the best customer incentives?): $150,000

Website Development (Creation of the simulation)23: $50,000

Promotion of the simulation: $100,00

Total:
$300,000

Measurement: Amount of VertuoLine coffee machine purchased through this simulation

23 Wong, Connie. “How Much Should a Website Cost You? A Definitive Pricing Guide For You.”
Website Builder Expert. October 31, 2017. Accessed November 28, 2017. https://www.websitebuilderexpert.com/how-
much-should-a-website-cost/.
 Page 23

Action Plan #2
Title: Breakroom VertuoLine Coffee Capsules Dispenser

Objective: To gain more market share from working class customers through a natural environment.

Issues:

How do we successfully promote our products to a broader audience?

How do increase our market share in the US?

How do we get new customers to switch to VertuoLine?

Target Market: Corporate Companies, Fast-Paced Workplace, Higher Income Employees, B2B Market

Description: We want to sell our machines to big corporate companies and let workers choose their favorite
coffee capsules through an upscale table top “vending machine.”

Responsibility: Distribution and Logistics

Budget (per office):

Tabletop Vending Machine24: $2,150

Machine**25: $130

Pods (per 100): $50

Budget for 100 offices: $221,300*

Maintenance service (10 staff members): $400,000

* more if they order more pods. Pods will be sold from the machine for $1

Measurement: Amount of coffee capsules sold through break room installations

24 “Selectivend® Coffee Pod Single-Serve Vending Machine.” Quill.com. Accessed November

28, 2017. https://www.quill.com/selectivend-coffee-pod-single-serve-vending-machine/cbs/53103216.html?hidedisrup-
tive=1&cm_mmc=SEM_PLA_NULL_53103216&mcode=SEM_PLA_NULL_53103216&gclid=Cj0KCQiAjO_QBRC4A-
RIsAD2FsXPcL7bfLacaQkvUzprYl2DB28iXKvgkULRudmLGQ4C-0LdIPZ6E2nUaAvWpEALw_wcB&gclsrc=aw.ds.
25 “Espresso Machines and Coffee Makers from Nespresso.” Nespresso. Accessed November 28,
2017. https://www.nespresso.com/us/en/machinelistblock.
 Page 24

Action Plan #3
Title: Business Conference Beverage Provider

Objective: To increase awareness of Nespresso VertuoLine machines and allow potential customers to try
the coffee.

Issues:

How do we successfully promote our products to a broader audience?

How do we get new customers to switch to VertuoLine?

How can we create customer awareness through word of mouth?

Target Market: Business Professionals (like Executive Suites)

Description: We plan to provide Nespresso beverages at prestigious events and business conferences such
as Forbes Women’s Summit or WSJ.D. This allows our target market to taste the product in a natural setting
without being “sold” it in a direct way.

Responsibility: Public Relations, Event Planning, Distribution, and Logistics

Budget (per event):

12 oz. Cups (per 1,000)26: $35

Coffee (per 1,000): $500

Total:
$535

Measurement: Satisfaction survey results from the coffee tables

26 “Choice 12 oz. White Poly Paper Hot Cup - 1000/Case.” WebstaurantStore. Accessed
November 28, 2017. https://www.webstaurantstore.com/choice-12-oz-white-poly-paper-hot-cup-case/50012W.html.
 Page 25

Action Plan #4
Title: Hotel Room Partnership

Objective: To increase awareness of Nespresso VertuoLine machines and allow potential customers to try
the coffee.

Issues:

How do we increase our brand awareness?

How do we increase our market share in the United States?

How do we successfully promote our products to a broader audience?

How do we increase and retain new customers?

How can we create customer awareness through word of mouth?

How do we get new customers to switch to VertuoLine?

Target Market: Hotels with Business Travelers, Corporate Office Employees, Wealthy Vacationers; B2B
Market

Description: Nespresso will partner with certain hotel chains (i.e. Embassy Suites, Marriott) to place
VertuoLine machines in every room as the default caffeine appliance.

Responsibility: Public Relations, Distribution, and Logistics

Budget (per room):

Machine: $130

Pods: $12

Total: $142

Measurement: Number of rooms booked, frequency of bookings, and number of pods used in a year at the
hotels
 Page 26

Action Plan #5
Title: Limited Time Pop-Up Shops

Objective: To raise excitement and encourage people to shop and purchase VertuoLine.

Issues:

How do we increase our brand awareness?

How do we increase our market share in the United States?

How do we successfully promote our products to a broader audience?

Target Market: High-End and Experiential Shoppers; people who enjoy having an in-store shopping
experience and like to engage in hyped up events

Description: A pop-up shop will create excitement and make buying the VertuoLine more of an experience
rather than just a purchase. Given a time pressure, many people may feel inclined to check out what it is all
about and shop while they can. Responsibility: Promotion, Marketing Research, Distribution, and Logistics

Budget:

Pop-Up Booth27: $2,000-$10,000

Staff (2 people): $20,000

Total: $22,000-$30,000

Measurement: Revenue generated by pop-up shops.

27 Brown, Carolyn M. “New Opportunities In Retail, Pop-Up Shops, and Franchises.” Black
Enterprise. June 27, 2016. Accessed November 28, 2017. http://www.blackenterprise.com/small-business/new-opportu-
nities-in-retail-pop-up-shops-and-franchises/.
 Page 27

Action Plan #6
Title: In-Store Demonstrations and Taste Testing

Objective: To give customers the opportunity to see the VertuoLine in action and see how it works/why it
is better than other coffee machines.

Issues:

How do we increase our brand awareness?

How do we successfully promote our products to a broader audience?

How can we improve our brand image?

How do we increase and retain new customers?

Target Market: High End Shoppers

Description: Nespresso baristas and staff will demonstrate the abilities of the VertuoLine and create sample
artisan coffees for shoppers. They will also be able to answer any questions that shoppers may have about
the product.

Responsibility: Distribution and Logistics

Budget:

Sales person salary: $40,000

Measurement: Monitor foot traffic in stores and track sales

 Page 28

Action Plan #7
Title: In-Store Display and Visuals

Objective: Create a better and more visually appealing shopping experience

Issues:

How do we increase our brand awareness?

How do we successfully promote our products to a broader audience?

How can we improve our brand image?

How do we increase and retain new customers?

Target Market: Young Families, Suburban Parents, Homeowners

Description: Incorporating in-store displays and visuals will help customers navigate the stores easier.
Being able to clearly see where the product will allow for more exposure. Aesthetically pleasing visuals will
entice potential purchasers to check out VertuoLine.

Responsibility: Promotions, Graphic Design, Distribution, Logistics

Budget:

In-Store Display28: $2,000 (per store)

Measurement: Monitor foot traffic in stores and track sales

28 “The Ultimate Guide To Effective In-Store Display Advertising.” Ballantine. November 03,
2016. Accessed November 28, 2017. https://www.ballantine.com/ultimate-guide-store-display-advertising/#In-Store
Retail Sign Displays.
 Page 29

Action Plan #8
Title: Print Advertisements in Time and New Yorker Magazines

Objective: To generate more exposure and demand for the Nespresso’s VertuoLine

Issues:

How do we increase our brand awareness?

How do we increase our market share in the United States?

How do we successfully promote our products to a broader audience?

How can we improve our brand image?

How do we differentiate our products in order to expand while maintaining our current customer
base?

How do we increase and retain new customers?

Target Market: Wealthy, Educated Business People and Readers

Description: To gain more popularity and visibility among Americans involved with business,
advertisements will be place in top-rated magazines. Time and New Yorker29 are read by people who are
willing to buy at Nespresso’s prices. Those who read these forms of media tend to feel like thought leaders
and want to have innovative, prestige technology, which is how the machine and coffee will be marketed.

Responsibility: Promotion, Public Relations, Media

Budget:

Full Page Color National Ad (ROB 44x)30: $366,600

Measurement: Number of VertuoLines purchased after the ad was placed

29 “Magazines for the mega-rich.” New York Post. December 08, 2014. Accessed November 28,
2017. https://nypost.com/2014/12/08/magazines-for-the-mega-rich/.
30 “Advertising Rates.” TIME Media Kit. Accessed November 28, 2017.
https://www.timemediakit.com/2016-advertising-rates/.
 Page 30

Action Plan #9
Title: Celebrity Endorsement

Objective: To attract new audiences and demographics by making a celebrity the face of “VertuoLine”

Issues:

How do we increase our brand awareness?

How do we increase our market share in the United States?

How do we successfully promote our products to a broader audience?

How can we improve our brand image?

How do we differentiate our products in order to expand while maintaining our current customer
base?

How do we increase and retain new customers?

Target Market: Young Adults and Growing Families

Description: We will have Oprah endorse our product to attract customers that trust and admire her. Those
unaware of our product offering will become interested and have a positive association with Nespresso’s
VertuoLine.

Responsibility: Public Relations, Media, Promotions

Budget:

Varies based on celebrity31: $20 Million

Measurement: Number of VertuoLine purchased after celebrity was added to promotional material

31 Brandt, James. “An Endorsement for Celebrity Endorsements.” Talent Zoo. Accessed
November 28, 2017. http://www.talentzoo.com/beneath-the-brand/blog_news.php?articleID=6445.
 Page 31

Action Plan #10

Title: Commercials on News and Travel Channels
Objective: To generate more exposure and demand for the Nespresso’s VertuoLine.
Issues:
How do we increase our brand awareness?
How do we increase our market share in the United States?
How do we successfully promote our products to a broader audience?
How do we differentiate our products in order to expand while maintaining our
current customer base?
How do we increase and retain new customers?
Target Market: Wealthy, educated people interested in business, traveling, and culture
Description: On popular and heavily viewed channels, advertisements will produce
exposure and interest in Nespresso’s VertuoLine. TV programs like Travel Channel or
HGTV reach our target market (ranging from millennials to baby boomers). Viewers of these
channels are interested in culture and current events; the VertuoLine’s global association and
technology will be emphasized in these ads to entice the audience.
Responsibility: Promotion, Public Relations, Media
Budget:
One 30-second ad on prime time32: $12,000
Measurement: Amount of viewers exposed to advertisements

32 “What is cost of TV advertising on Travel Channel?” Quora. Accessed November 28, 2017.
https://www.quora.com/What-is-cost-of-TV-advertising-on-Travel-Channel.
 Page 32

Action Plan #11

Title: Product Placement in TV Shows

Objective: To increase awareness and exposure of VertuoLine’s product offering

Issues:

How do we increase our brand awareness?

How do we successfully promote our products to a broader audience?

How can we improve our brand image?

Target Market: Wealthy people who watch shows on TV or streaming

Description: Subtly seeing our product in use by their favorite characters, viewers of TV shows like Modern
Family33 will be aware of our product’s offering. The audience may seek to learn more about what we have
to offer, or at the least recognize our product after the initial exposure. See Appendix for chart of highly
rated TV shows among affluent viewers.

Responsibility: Public Relations, Media, Logistics

Budget34: $1.5 Million

Measurement: Amount of viewers of episodes featuring our product

33 De Moraes, Lisa, and David Bloom. “What TV Series Do Rich And Smart People Watch? You
Might Be Surprised.” Deadline. June 11, 2014. Accessed November 28, 2017. http://deadline.com/2014/06/tv-series-
most-watched-rich-educated-viewers-787403/.
34 Jones, Stacy. “How To #29: How Much Does Product Placement Cost.” Hollywood Branded
Blog. November 13, 2017. Accessed November 27, 2017. https://blog.hollywoodbranded.com/how-much-does-product-
placement-cost.
 Page 33

Action Plan #12

Title: Environmental Sustainability/Recycling Sponsored Event

Objective: To associate our brand with sustainability and other environment issues

Issues:

How can we improve our brand image?

How do we differentiate our products in order to expand while maintaining our current customer
base?

How can we create customer awareness through word of mouth?

How do we continue to be socially responsible and reduce our material waste?

Target Market: Environmentally friendly and conscious consumers

Description: We will host and sponsor and events for recycling and cleaning up areas, including recycling
material associated with VertuoLine consumption. People will feel good about participating and consuming
our products knowing we care about our planet.

Responsibility: Event planning, Promotion, Logistics

Budget35: $7 Million

Measurement: Amount of attendees at events

35 Symonds, Peter. “How to Budget for Tradeshows and Events.” MarketingProfs. September 8,
2014. Accessed November 28, 2017. http://www.marketingprofs.com/articles/2014/25969/how-to-budget-for-trade-
shows-and-events.
 Page 34

Action Plan #13

Title: “Show Us Your Creation” Social Media Campaign

Objective: To facilitate interactive and direct marketing to reach and in return encourage consumers to
promote our product.

Issues:

How do we increase our brand awareness?

How do we successfully promote our products to a broader audience?

How can we improve our brand image?

How do we differentiate our products in order to expand while maintaining our current customer
base?

How can we create customer awareness through word of mouth?

Target Market: Tech Savvy People, Social Media Influencers, Coffee Connoisseurs

Description: We will ask our customers on social media to post their coffee drinks made with our
VertuoLine machine with the hashtag, #MyNespresso. Our favorite creative ones will be featured and the
posts with the most likes will win a prize.

Responsibility: Promotions, Marketing Research

Budget: Free

Measurement: Amount of responses (likes, comments, posts, follows) on social media resulting from
campaign
 Page 35

Action Plan #14

Title: Airport Placement Promotion

Objective: To reach customers in new areas and gain more exposure

Issues:

How do we increase our brand awareness?

How do we increase our market share in the United States?

How do we successfully promote our products to a broader audience?

How do we increase and retain new customers?

How do we get new customers to switch to VertuoLine?

Target Market: Wealthy Travelers

Description: We want to provide retail experiences in areas that have not been reached yet. Airports have
a lot of traffic with people willing to buy and ship products to their home. We believe this give VertuoLine
more exposure and bring in more sales.

Responsibility: Promotion, Marketing Research, Distribution, and Logistics

Budget:

Backlit Diorama (Gate/Terminal and Baggage Claim)36: Range of $3,500 - $9,900 per ad per 4 week
period

Measurement: Revenue generated at airport stores

36 “Airport Advertising.” Bluelinemedia. Accessed November 28, 2017. http://www.bluelinemedia.com/airport-ad-

vertising.
 Page 36

Action Plan #15

Title: International Campaign

Objective: To connect the way Americans view VertuoLine to its success and European image

Issues:

How do we increase our brand awareness?

How do we increase our market share in the United States?

How do we successfully promote our products to a broader audience?

How can we improve our brand image?

How do we differentiate our products in order to expand while maintaining our current customer
base?

How do we increase and retain new customers?

Target Market: Wealthy, sophisticated consumers interested in travel and culture

Description: The campaign will promote Nespresso’s association to other countries. Those who admire
European tastes will be attracted to the VertuoLine when they see it used by different cultures. The
campaign will show that while we all live in different places we all love coffee and Nespresso.

Responsibility: Promotion, Public Relations, Media

Budget:

Distribution: $350,000

Filming37: $500,000

Total: $850,000

Measurement: Number of VertuoLine Machines bought after ad aired

37 “How much does it cost to produce a video or television commercial?” Pikewood Creative. June
16, 2017. Accessed November 28, 2017. http://pikewoodcreative.com/how-much-does-it-cost/.
 Page 37

Appendix