The current pricing and promotion strategy of Nespresso coffee machines and coffee pods present a unique topic, the study of which can provide important information about modern customers’ demands and the importance of value proposition. Furthermore, it is also worth mentioning that several parties are involved in the production and distribution process, but ultimately Nestlé benefits the most through selling coffee capsules. Therefore, a carefully designed pricing and promotion strategy is the main reason for the Nespresso brand’s success in the market.
Firstly, considering the pricing strategy, it was important for the brand to get more people to buy coffee machines to ultimately benefit from the sale of capsules. For this purpose, Nestlé signed an agreement with a major manufacturer of quality coffee machines, Krups. Krups, Philip, and Turmix, are currently engaged in producing and maintaining Nespresso coffee machines, which allows the company to sell expensive coffee machines at a low price (Heed, 2022).
Furthermore, while Nespresso pods cost more than ground coffee and coffee beans, the variety of different kinds of coffee and the easier process of making provide customers with more value (Marshall, 2022). According to Cheng (2018), the association of Nespresso products with the premium segment is vital in competition with other coffee capsule manufacturers and helps justify the high price of individual capsules. Therefore, the pricing strategy allows the company to gain advantages over standard coffee products and other brands of coffee capsules.
Furthermore, Nespresso strengthens the pricing policy through an innovative approach to promotion. For example, the price of the espresso machine can be reduced to 1$ for the customers subscribing to a yearly supply of capsules (Nespresso, 2022).
Moreover, as coffee capsules have a long shelf life and extended product life cycle, Nespresso trusts distributors to conduct promotions, meaning that customers can always find good deals to buy Nespresso machines and capsules. For example, buying an espresso machine can give customers a coupon for a retailer’s gift certificate (TheFreebieGuy, 2022). Lastly, Nespresso also produces limited-edition coffee capsules, increasing regular customers’ interest.
In conclusion, the essay defined that the current pricing and promotion strategy of Nespresso coffee machines and coffee pods is unique and allows the company to lead in the field of coffee capsules. The competitive pricing policy and high-quality products allowed the brand to gain a good reputation among customers. The promotion strategy focuses on giving the client opportunities to try more of the company’s products and services.
References
Cheng, E. (2018). Nespresso and pricing power. LinkedIn. Web.
Heed. (2022). Sales strategy: Nespresso case study. Web.
Marshall, D. (2022). Nespresso cost per pod: The cost of Nespresso pods vs. beans. Latte Love Brew. Web.
Nespresso. (2022). Nespresso subscription benefits. Web.
TheFreebieGuy. (2022). Target: Nespresso VertuoPlus only $124.99 after $25 Targetg Gift card (Reg. $200). Web.