Tuesday, September 06, 2011

The Magic Of Nespresso: The Duality Between Mass Market Product And Luxury

What is unique also with the case of Nespresso is its ability to turn a mass market product into a luxury one:
  • Coffee is by definition a mass market product, retailed in hypermarkets and supermarkets like Tesco or Walmart for years
  • It has adopted pricing, brand codes and a positioning of luxury brand.
It is fascinating to see how they got to this point:
  • It took a while: Nespresso has been founded in the early 70s, but really started off in 1987. Over the time, it build its luxury brand codes. Indeed, you may launch a brand like Tide, but you create a brand like Vuitton (quote of Kapferer, a French expert in branding). The goal is to create the conditions which will make the customers accept the high prices. And Nespresso managed to do it over the time.
  • Their communication is based on television advertizing, a mass market medium, which allowed to spread to the largest scale the "premium mindset" of the product.
  • Also, the machines are sold in traditional retails, but not the capsules, which once again may attract the mass market customer, but which will ultimately lead him to the luxury world of Nespresso.
This is also this duality between luxury and mass market product which makes it difficult to copy the Nespresso strategy. It has been innovating, but I believe it is hard for other businesses to do the same...