Buyer Behavior - Factors Influencing Nespresso's Target Consumers

This report analyzes the factors that influence buyers to opt for expensive coffee machines like Nespresso. It evaluates the key demographical factors of the target consumers and the factors like culture, motivation and status that affect or influence them in their decision making process. With that understanding, a market strategy that would effectively enhance their sale, has been created and recommendations regarding that has been made.

Running head: BUYER BEHAVIOR
Buyer Behavior
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Executive Summery
Nespresso is a brand that offer its customers with luxury coffee drinking experience even in
the comfort of their own home. They provide espresso machines to leading restaurants,
airports and businesses who believe in enhanced customer experience. The purpose of this
report is to understand the factors that influence buyers to opt for expensive coffee machines.
The key demographical factors of the target consumers and the factors like culture,
motivation and status that affect or influence them in their decision making process has been
evaluated. With that understanding, a market strategy that would effectively enhance their
sale, has been created and recommendations regarding that has been made. The report
concludes that the position of Nespresso falls on the premium segment and thus must exercise
caution while retargeting the market.

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Table of Contents
1 Introduction........................................................................................................................3
2 Findings..............................................................................................................................3
2.1 Identification and Profiling the Target Market............................................................3
2.2 Product Positioning Strategy.......................................................................................6
2.2.1 Environmentally Sustainable...............................................................................7
2.2.2 Ethical Practice.....................................................................................................8
2.3 Internal Influence of Buyer Behavior..........................................................................8
2.4 External Influences of Buyer Behavior.......................................................................9
2.5 Leading to Identification and Development of a Market Strategy............................10
3 Conclusion and Recommendation....................................................................................11
References................................................................................................................................13

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1 Introduction
Nespresso has become one of the leaders of coffee market (Matzler et al. 2013).
Nespresso’s position in the market has always been as premium products and service
provider. The aim that they follow is to deliver to its customers the “Ultimate Coffee
Experience” (Brem, Maier and Wimschneider 2016). In order to do that, they aspire to
combine perfection, aesthetics, pleasure and simplicity to create an experience that is
beyond the imagination of the consumers. They focus on three deliverable in order to
achieve this: they make sure that the coffees that they supply to the market are top
quality Grand Cru production, the machines that they produce are innovative, exclusive
as well as stylish so that it appeals to the customers and providing personalized service to
the consumers (Oliveira and Rodrigues 2015). In this report, the target market of
Nespresso and the factors that influence it has been explored, the strategy that Nespresso
use for positioning of their product has been discussed and the internal and the external
influences of buyer behavior has been analyzed. Depending on that, an effective
marketing strategy for Nespresso has been developed.
2 Findings
2.1 Identification and Profiling the Target Market
Nespresso has become one of the leaders of coffee market. They maintain their
competitive advantage with their outstanding service, premium machines, innovation,
quality, variety and personalization (Niemuth et al. 2014). The main targeted market
for Nespresso are the upscale consumers who want to consume coffee as good as they
do get in cafes and the business market. They concentrate on the capsule coffee market

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and provide them in various taste aroma and flavors (Brem, Maier and Wimschneider
2016).
Demographically, they have targeted the premium customer segment. Upscale places
like offices, hotels, airlines, airports, premium caterers and designer or couture stores;
in short, places that intend to give their consumers a superior experience and the
Nespresso coffee in those places add a value to their services (Mohan, Sivakumaran
and Sharma 2013). The age group that they target are people aged from 20 to over 50,
thus creating the possibility of a large customer base. The main target of Nespresso has
been the hotels and restaurant industry. By entering into the market of personalized
sale, they have managed to create a culture of exclusive coffee experience. The price
range they have selected so far has remained on the higher side. Presently, it is time that
they target a larger base by including average consumer segment (Weinstein 2013). The
inclusion of the customer base will ensure more profit for the company.
As for geographic segment of the consumers, the company has established over 700
boutiques all over the world (Matzler et al. 2013). Here, the customers can come and
taste various kinds of coffees and then choose what suits them the most. These are
called boutiques for a reason. They are not only shops that sell the products but are like
champagne tasting centers that give the customers a complete experience and guidance
so that they can make an informed decision. The locations of these stores are prime,
generally on the main roads and malls where most posh customers are likely to travel
(Niemuth et al. 2014). There are also more than 100,000 recycling points where the
customers can drop the capsules and buy new ones. This has helped them deliver the
customers their desired product every time while maintaining sustainability. They even
collect the used capsules from home and deliver them at the same time. They facilitate

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next day delivery to ensure that their customers would not have to wait for it
(https://www.nestle-nespresso.com, 2019).
The psychographic segmentation includes the consumers that are in the high-income
group and the businesses that believes in enhanced customer experience (Weinstein
2013). The main target are the urban consumers who depend on the caffeine to start
their day and use it as fuel for their whole day of work. The kind of experience they
create when customers go to the boutiques to buy their machines is one of a kind
(Brem, Maier and Wimschneider 2016). They have the opportunity to taste several
brews before they decide which one suit them the most. It is not just going to a shop
and picking out a product from display shelf. The experience has helped the brand to
make sure that their clients remain loyal to them, as after tasting and using their
products, it is unlikely that they will buy any shelved product from the market
(https://www.nestle-nespresso.com, 2019). This strategy might differ in other countries
where people might prefer instant coffee, as they are cheaper and easier to acquire than
this coffee. It is to be noted here, that in many countries, beverage like tea still is more
popular and marketing the products in these segments are not going to prove fruitful.
The behavior segmentation of a product indicates the pattern of customer loyalty,
occasion, knowledge and many more (Carvalho et al. 2015). In this segment, this brand
has high potential. As the coffee is made from high quality organic green coffee beans,
they can be consumed regularly without any adverse effects (Dekhili and Achabou
2014). This feature appeals to the clients who prefer to live a healthy life. This also
reduces the carbon and water footprint from the production as more chemicals means
more carbon footprint and water usage (https://www.nestle-nespresso.com, 2019).

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2.2 Product Positioning Strategy
Product positioning is a strategy use by marketing managers and specialists to create
the consciousness of a product and the way a consumer perceives a product (Adina,
Gabriela and Roxana-Denisa 2015). The main strategy to successful product
positioning is in the difference that they create between their own product and the
existing products in the market. They create this difference using strategies like using
advertisements as per the requirement of the product, packaging of the product, the
channels that are being used for advertisement and the pricing of the product
(Akpoyomare, Adeosun and Ganiyu 2013). The main question that lies at the heart of
any marketing strategy for product positioning are what features of the product should
be highlighted so that the target customers can be attracted and the mediums of
advertisements that will enable them to reach their targeted customers easily. If these
two aspects are aligned then successful positioning of the product is possible (Lindee
2014).
The product positioning strategy that Nespresso has adopted is limited advertising and
using a brand model that scream class (Malik et al. 2013). Nespresso being a premium
product and the target customers being the high-income group, avoids popular
marketing (Oliveira and Rodrigues 2015). Rather it depends on personal positioning
and tasting sessions at premium places from where only, the clients who are able to
afford the brand will come to know about it. Other sectors of the market are aware of
the brand and the product and services they provide, although they have very limited
experience of them in real life. They even deliver the machines at home to control the

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quality aspect of the product. When consumers think of Nespresso, they are reminded
of class, elegance, premium taste and aroma and customized experience. Nespresso
have managed to break through the practice of using instant coffee for regular use
(Dekhili and Achabou 2014). They have focused on the exact opposite; they have
turned the making and drinking a cup of coffee to a ritual. In order to redistribute their
machine, the product positioning that need to consider is the middle class clients. The
first aspect that appeals to this segment is reasonable price and availability nearby.
Creating products that can be sold at a relatively lower price and making more
distribution and collection centers will ensure that they become interested in this
product (Foxall, G., 2014).
2.2.1 Environmentally Sustainable
Sustainability has always been a concern for Nespresso. Coffee production is a
business, where the carbon as well as the water footprint is huge (Dekhili and Achabou
2014). They have applied sustainable business practices. They continuously try to
create a balance among social, environmental and cultural impact of the actions that
they take. The production of coffee cherries are done in a completely organic way
where no pesticide, fertilizer and insecticide is used. They only use premium cherries
that too from selected farmers. This enhances the lives of the farmers, as they are able
to produce better quality beans and sell them at high price. Nespresso is also related to
Ecolaboration, which aims to implement sustainability to all of their operations, not
only farming. They are also reducing the use of aluminium by recycling the capsules
that they provide the customers. So far, they have managed to recycle 75% of their
capsules, which is a feat in itself (https://www.nestle-nespresso.com, 2019). They are
reducing their own production footprints by planting trees in the production areas. The

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community engagement and customer support that they have in mitigating the
environmental impact are examples how much influence they have had on them.
2.2.2 Ethical Practice
Ethics is necessary in any operational activity (Oliveira and Rodrigues 2015). The idea
of ethical practice concentrates on application of standards and morals in the activity of
marketing. The decision-making process of the brand, their behavior and fairness in
campaigns are all included in the ethical practices.
 Nespresso have created a brand image of class and luxury. The way they have
campaigned and advertised their products has been extremely pricey. They
have maintained a practice of honesty and transparency, autonomy and
sustainability (Raheem, Vishnu and Ahmed 2014). They have maintained all
aspects that contribute to their popularity.
 The Stakeholder approach is also necessary to develop an ethical framework.
They should project the same set of ideals to the stakeholders as they have
done for the clients. They must include their targets about market segments,
consumers and competitors and present a clear picture of their present
condition and future prospect.
2.3 Internal Influence of Buyer Behavior
 Perception- if a closer look is taken at the present scenario of Nespresso, it is
easily understandable that other competitors are already targeting the market
that they were operating alone until now. They have already come up with
alternative capsule options that fit into the Nespresso machine. After all, it is
the taste and the aroma of the coffee that actually influences a consumer to
buy a specific brand (Rani 2014). If they become accustomed with these

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alternatives, then it is quite likely that they will opt for the machines that are
cheaper and they would not need special capsules. In many countries the
practice of coffee drinking id not so popular and thus may be perceived by the
consumers as unnecessary.
 Motivation- the major motivating factor that drive coffee consumption is
indulgence. In a fast paced life, coffee has become a necessity for most people
and majorly so in the western culture (Ozmen et al. 2013). Many offices and
showrooms provide coffee as refreshments and perk so that the employees are
more driven towards work and their clients develop a positive image towards
them.
 Personality- the concepts and notions of personality and appearance are
largely driven by media and advertisements. Coffee has become representative
of urban life and recent trend (Foxall 2014). This influences the buyers to opt
for better brands of coffee. The establishments that provide Nespresso coffee
are also conscious of their brand image. The have created a value for their
name and they intend to uphold that. For gentlemen all over the world, coffee
gives them a more masculine personality attribute than drinking other
beverages (Rani, P., 2014). This mentality drives them to buy this product for
consumption.
2.4 External Influences of Buyer Behavior
 Culture- as it has been stated earlier, the practice and popularity of coffee
drinking is large influenced by culture (Jisana 2014). In western culture, life
runs at a fast pace and people rarely have time to distress. They need continuous
energy and consciousness to be able to operate (Gajjar 2013). People generally
can afford only a little bit of time for themselves and thus they try to find out

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products that will make that limited time enjoyable. With Nespresso coffee
machines and capsules, the consumers are able to enjoy those limited time with
a perfect cup of coffee every day.
 Status- the idea of status is another driving factor for the consumers people
enjoy being in a place where most people do not belong. Because of the higher
price range and personalized service, the clients feel privileged and special
(Jones and Morgan 2014). This ensures that they will come back for the
experience repeatedly.
 Demographic- demographic for coffee play important role. For premium coffee
machines like Nespresso, only the people who belong to a high income group
can afford it. This creates a trend and more and more people aspire to use the
product thus creating a larger customer prospect (Carvalho et al. 2015).
 Group Influence- the influence of group reference is extremely important for
luxury brands like Nespresso. Most people are driven to buy products that are
positively reviewed by their peers (Khanna and Karandikar 2013). Luxury
brands mostly depend upon group references and reviews for their popularity.
As they are highly priced, people only buy them when they are completely sure
of the result that they will get (Jisana 2014).
2.5 Leading to Identification and Development of a Market Strategy
Identifying the potential market is mandatory for any business (Jones and Morgan 2014).
Nespresso is a brand based in Britain. Most of their stores are located there and some are
located in other continents. The target segment of the consumers are aged from twenty to
over 50, mainly those who are working professionals and belong to the upper class of the
society (Oliveira and Rodrigues 2015). The machines that they sell are unique and
expensive. Their design is classy and the coffee that they offer are one of a kind. They

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launch special edition coffee each year to maintain their couture culture. The competition
that they have in the market are with the average coffee and machine brands (Dotti
2015). The marketing strategy they have develop to create the brand image is quite
different. They refrain from excessive advertisement, have used the same brand
ambassador for more than 10 years and believe in personalized marketing. They know
their customer segment and have modelled their strategy accordingly. The redistribution
of Nespresso is likely to become successful, as the income level have increased all over
the world. People now are willing to spend a substantial amount for a product that they
like (Raheem et al. 2014). There could be customers that come in their target market
while not yet aware of them. Thus, recreating the brand consciousness and giving people
what they are known for, customized experience and top class product, will lead to more
customer generation.
3 Conclusion and Recommendation
From the above analysis, the conclusion that can be drawn is that Nespresso, one of the
leaders in the coffee machinery market providing the customers to have a perfect cup of
coffee each time in the comfort of their home, must consider and reconsider before they
make any decision regarding the redistribution of their coffee machine. The targeted
market segment, the ‘gentlemen’, prefer much reasonable and easily available equipment
and supply. In the fast-paced life of theirs they sometimes drink coffee from the shops
that provide readymade coffee. Thus, the requirement of this machine seems to be
limited for them. In order to ensure that they are able to recreate their demand in the
market, some recommendations have been made:
 They should aim to include more levels of the society into their target market.

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 They should research about their new target demographic and decide what
their goal and aspirations are and create product according to that.
 They should establish more collection and tasting centers so that more people
come to know about the brand.

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