Introduction 2
Business Orientation 2
Advertisements 3
Understanding Consumers 3
Research & Development 4
Recommendations 4
Conclusion 4
References 5
Introduction
It is a brand of Nestle. Nespresso is the coffee brewer operating under the name of Nestle group. It utilizes coffee capsules to make espresso coffee. The distribution of the espresso machines is worldwide however; certain product lines are limited to North America and Canada only. The company has different competitors. The one offering perfect substitute to the Nespresso is Keurig. Both these companies are in a constant war for supremacy. A comparison of the marketing tactics of Nespresso with Keurig is given below
Business Orientation
Both the companies have a marketing orientation. They are competing on the same grounds of knowing customers better. The companies are making efforts to deliver most suited to the customers’ needs and taste. The focus of Nespresso is more on relationship building. The company has huge workforce estimated at more than 70,000 workers to maintain a direct contact with the customers. This huge workforce has two fold benefits. Firstly, these people are able to deliver maximum information to the customers. Secondly, these employees are a direct contact between the company and the customers. They take the data from customers to the company and also serve the purpose of research and development.
Environmental Advantage
According to Euromonitor the market of coffee capsules is increasing at a much faster rate than the whole coffee industry. Currently Nespresso is the market leader in the coffee capsule sales capturing a majority market share in overall $11 billion sales. Nespresso is maintaining market supremacy everywhere except North America. On the other hand Keurig is selling its products by making bundles with other accessories. In 2013 a major chunk of sales of Keurig was due to these bundle sales. The maximum sales of the company originated from North America (Kline, 2014)
The sales of Nespresso in North America are less due to number of issues. In these issues cultural impact can never be denied. The concept of Espresso was introduced in US by Starbucks. The coffee offered by Starbucks is espresso based but not pure espresso shots. The Americans are not used to intake small servings. They consume more in form of large servings. They consume coffees with a lot of cream and added sugar to kill the bitter taste of espresso. These features are not provided by Nespresso. Therefore, the sales in North America are less.
Nespresso is in constant effort of capturing US market. For this purpose they have introduced a product line particularly for US and Canada to increase their market share. They have introduced Vertouline for this purpose. On the other hand, Keurig is in constant effort of increasing sales globally to compete with Nespresso. They are planning to introduce single cup brewer to introduce in UK and rest of the world to increase their sales (Kline, 2014)
Advertisements
The advertisements are carried out by both companies. However, Nespresso surpasses Keurig in advertising. They are heavily advertising their products by exploiting all possible resources at their disposal. They use print, digital and electronic media for this purpose. The company spends large budgets on promotion and advertising. They are using famous personalities in their TV and print media advertisements. They are efficiently using these endorsements by personalities to persuade and influence their prospective customers. Famous personalities like Matt Demon and Cruz have appeared in their advertisements. The advertising efforts of Keurig are less. They are more focused on promotions. Mostly they promote their K cups or coffee brewers by bundling them with accessories. Discounted prices are offered for these product bundles.
Understanding Consumers
Both the companies understand their consumers well. The ongoing war is not a war of more sales but to cater to the customers well. A clear depiction of this fact is the efforts of both companies discussed above. Nespresso understands the needs of its customers based in US and Canada. The company has developed dedicated product line to cater to the people of this region. It is more efficient in customer understanding than Keurig. However, to increase the sales, Keurig is also taking an initiative of single cup brewer to capture market globally. Moreover, Nespresso is using every media to maintain a contact with their customers. They have a huge workforce for this purpose. They are exploiting the potential of social media to reach out to their customers. They hear from their customers, keep them informed and maintain a constant contact with them. The company has presence at all social media platforms like Facebook, Instagram and Twitter. They have thousands of followers at each social media (Penenberg, 2013)
Research & Development
Nespresso has a dedicated R&D department not for the whole company but for each manufacturing unit. They are investing heavily on research and development. The company has the ability to test the products with in the manufacturing premises. They had different patents. The patents were more than 1700 at a time but now the availability of technology is to rivals as well. It is the result of their excessive R&D that they are able to manufacture state of the art and stylish espresso machines. The machines of Nespresso are like Apple gadgets. They are state of the art, sophisticated and stylish. These machines have fine design cuts and are easy to operate. The R&D efforts at Keurig are also commendable however; they do not match with Nespresso. They also have a dedicated R&D department and hire researchers for their company as well (Knobloch, 2014)
Recommendations
It is recommended for Nespresso to educate their potential customers in areas where there sales are low. They should educate or make familiar the masses in US and Canada with the traditional taste of Espresso. In this way they will be able to share joy of an outstanding espresso with their American customers. Moreover, the company should focus on the after sales services. It is not possible for customers to get their espresso machines repaired through Nespresso if they break down.
Conclusion
The crux of the whole matter is that Nespresso and Keurig are perfect competitors and are fighting for supremacy in the coffee brewers and capsules industry. The marketing comparison of both these firms has been discussed in the paper. It can be rightfully said that the machines of Nespresso are more like apple, focused on designs and technology. On the other hand Keurig is more like Microsoft and is focusing more on working and process.
References
- Kline, D., 2014. Keurig vs Nespresso: The Battle for Single-Cup Coffee Supremacy. [ONLINE] Available at: http://www.fool.com/investing/general/2014/04/07/nespresso-vs-keurig-the-battle-for-single-cup-coff.aspxAccessed 01 December 14].
- Knobloch, K., 2014. SMACKDOWN! KEURIG VS. NESPRESS. [ONLINE] Available at: http://carleyk.com/eat-entertain/smackdown-keurig-vs-nespresso/ [Accessed 01 December 14].
- Kotler, P., 201). Reinventing marketing to manage the environmental imperative. Journal of Marketing, 75(4), pp. 132-135.
- PENENBERG, A., 2013. Nespresso is the Apple of coffeemakers and Keurig is like Microsoft. [ONLINE] Available at: http://pando.com/2013/12/17/nespress-is-the-apple-of-coffeemakers-and-keurig-is-like-microsoft/. [Accessed 01 December 14].
- Peter, J. P., Olson, J. C., & Grunert, K. G., 1999. Consumer behavior and marketing strategy (pp. 329-48). London: McGraw-Hill.
