.TBy NESPRESSO

Group 2: Amanda, Linda, Claire, Kitty, Aaron, Julien, Marie-Sibylle

Marketing Management: Term ProjectMay 28th, 2014

AGENDA

1. Background of the company2. Understand the marketplace and customer needs3. Designing a customer-driven marketing startegy4. Construct an integrated marketing program to

deliver superior value5. Build profitable relationships 6. Financial feasibility

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1Background of the company

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1 Background of the company

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

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The Marketing Process

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Marketing plan is mainly composed of 5 steps:

2Understand the marketplace and customer needs

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2 Understand the marketplace and customer needs

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

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a) Market description

• New way of drinking tea adopted • Expectations in term of quality and services = not satisfied

Unsatisfied demand/need

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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)

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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

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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

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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

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- 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

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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

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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

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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

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3 Designing a customer-driven marketing strategy

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3 Designing a customer-driven marketing strategy

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 consumersGeographic: 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

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Choosing a Value PropositionPositioning Map: Tea pods market

Price

High

Low

Orientation LuxuryBasic

Nesquisite.T by Nespresso

Keurig Green mountain

Others

Unilever

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Starbucks

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

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4 Construct an integrated marketing program to deliver superior value

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4 Construct an integrated marketing program to deliver superior value

Product

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

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Price

• 0.30 Euros per pod• Similarly priced as Nespresso capsules• High price reflects the high quality image that

surrounds Nesquisite.T

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Place

• Exclusive Distribution

• Online Website

• Boutique Stores

Promotion

• High end parties at flagship store

• Membership card

• Limited edition teapods

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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

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4 Construct an integrated marketing program to deliver superior value

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5 Build profitable relationships

CRM

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• Huge database information – Newsletters (monthly): news, the specific events,

new products or limited editions– E-mailing campaign: attract for Christmas – Catalogues per mail

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

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Nesquisite.T

1Background of the company

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6 Financial feasibility

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

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More experimented & more aggressive

Budget: First year

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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) = …*ARPTea 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)

Profit29 250 000 > 24 375 000

Little loss9 750 000 < 10 833 460

Group 2: Amanda, Linda, Claire, Kitty, Aaron, Julien, Marie-Sibylle

THANK YOU FOR YOUR ATTENTION QUESTIONS?