BRANDS STATUS: LOVEMARK OR NOT?

We have seen in the above street interview videos that customers have a great knowledge of Nespresso and Malongo brands. They are willing to talk with enthusiasm about them, to define brands’ universe and they give a very positive feedback on these two brands.

However, if have a marketing approach and a deeper look on the brands image and positioning: which positioning status have these brands?

Are Nespresso and Malongo what Kevin Roberts (Saatchi & Saatchi CEO) called Commodity, Fad or Lovemark?

The "Lovemark Profiler" is going to provide us with a response! The survey lets the user evaluate by "Yes/No" question his level of Respect, Mystery, Sensuality, Intimacity, for each brand. You can find the survey on the facebook page: IAL Saatchi&Saatchi.

This is how we get the brands positioning! But we decided to do another test in order to confirm these first responses.

Let’s now try the more specific “Lovemarker survey”! 

We have surveyed people on-line from November 25 to December 7, 2013.

If you are interesting about results on this survey, you can find it under the following link: https://docs.google.com/forms/d/115UYVfLz-_QGjxbIOXIqI3j5Dkm6MASIiu1rHY7gFBI/viewform

But in order to be easier for you, we have make a summary of the results!

What are they?

Nespresso Respect Points Mean: 20,7

Malongo Respect Points Mean: 12,9

So from these results, what can we conclude? It seems neither Malongo nor Nespresso are lovemarks regarding this Lovemarker survey!

Nespresso is very close to get its 25 points required to be a lovemark….but doesn’t reach the result! What make this brand “lost” its points?

Results show that Nespresso is loosing a lot of points on criteria based on “Trust” notion and in particular for the “sustainability” point. Interviews we conducted and analyses tend to explain this result by the fact that customers don’t believe or are not aware of the environmental involvment of Nespresso… Are we thus close to say that the popular and sexy George Clooney is a liar?

Nevertheless, because Nespresso is very close to its 25 points, we decided to focus in survey responses regarding the 3 characteristics of lovemarks : Mystery, Sensuality and Intimacy.

What are results on these criteria?

Nespresso Love Points Mean: 20,7 + 18,4 = 49,1

The result is thus above of the minimum requiered for a brand to be call “Lovemark”! We think that Nespresso should be considered as a Lovemark.

And what about Malongo?

Roberts' five recommendations on how to evolve a Brand into a Lovemark:

1.       Increase Emotion about the product

2.      Add Mystery, Sensuality and Intimacy

3.      Think in Paradoxes and exploit them.

4.      Replace Command and Control with Unleash and Inspire

5.      Make the World a Better Place

Based on street-interviews (video to be watched in the previous article), we can see that Malongo is very close to each of these recommendations. People surveyed are talking with enthusiasm about emotions, feelings, intimacy, senses and environmental involvement when they describe Malongo.

PDD

References:

Roberts, Kevin (2005). Lovemarks: The Future Beyond Brands

Elliott and Percy. Strategic Brand Management

http://saatchi.com/en-us/purpose/lovemarks/

http://www.lovemarks.com/?pollresult=true

Street-interview (watch video in the previous article)

FROM BRAND IDENTITY TO BRAND IMAGE: Person-on-the-street interviews

So far, we greatly discuss Nespresso and Malongo business philosophies and how both brands strive to position themselves. For this article, we started from the differentiation we saw in class between Brand Identity and Brand Image and went to see directly their customers in order to collect primary data!  

If we recall,  

“Brand identity is the way the company WANTS to identify or position itself or its product or services.”  

“Brand image is the way the public PERCEIVES this aim.”  

To go further, we decided to carry out street interviews on THEIR customers. Indeed, we think it can be helpful to gather a range of true public opinions. We went in front of a Nespresso Store and a Malongo Store at the heart of Paris to learn more about their in-store experience, feelings, images, beliefs, and the reason why they show loyalty towards these brands.   

First of all we asked customers to describe the brand Nespresso or Malongo in a single word. What’s interesting here is the fact that customers refer Nespresso directly to the brand itself rather than a coffee or its production. Words like “brand”, “prestigious”, luxurious”, “Clooney”, came directly to the mind of Nespresso customers whereas for Malongo, the emphasis is placed on « biological coffee » « fair trade », « small producers », « biological coffee ». As you can see from this interview, Malongo customers are well aware that the company is a pioneer in the area of fair trade and their share in the “equitable commerce”. Rather than a brand, Malongo is perceived as a traditional and ethical roasting company. While both in-store universes highlighted in this video are really different, the “authenticity”, “home made” and « traditional » coffeee is clearly what appeal Malongo customers.  

On the other hand, it is a well-known fact that the more modern and glossy Nespresso produces waste in the form of aluminium capsules. This is definitely a valid argument, and Nespresso points out, that the capsules are recyclable and you can see in the video the famous recycling bag and leaflets given to customers when they come to the store. Indeed, Nespresso is not a non-ethical company only because they do not have the Fair Trade stamp.  

However, the world of social media and as an example the Facebook group « I boycott Nespresso if they don’t go Fair Trade » keep raising awareness about the fact that Nespresso is one of the most expensive coffee on the market but is still not fair trade and has been attacked for the exploitation of third world coffee pickers.  

Whereas Nespresso has recently started rebuilding its image around Sustainabilty and Fair Trade, they need to bridge the gap with these new green and eco-friendly customers.   

The iconic, sexy and highly paid Hollywood actor George Clooney was a very clever marketing move by the Swiss company. Well, the whole world knows that Clooney loves Nespresso. What else? That maybe the time for the bankable star to give this enigmatic question, a sustainable answer!  

ALD

PORTER'S FIVE FORCES ANALYSIS: NESPRESSO & MALONGO

We’re going to deal with the following sections as an analysis of the competitive environment of portion-coffee through Porter’s five-force analysis for both famous coffee brands that are Nespresso and Malongo.

First, there is the threat of substitutes that is always pending above any product. Indeed, substitutes of portion-coffee are the following: filter coffee, instant coffee and traditional espresso. Additionally, substitutes of coffee, in general, are also other hot drinks such as tea or non-caffeine products that imitate coffee such as roasted grain beverages. Portion-coffee is the most expensive system. Costs are high due to the sophisticated machine and capsules.

Switching costs to a substitute product are low. In terms of price, consumers have a propensity to switch to substitute. Nevertheless, portion coffee has a high-perceived product differentiation, which prevents substitution. Portion-coffee systems focus on coffee lovers who are willing to pay the difference in price, in order to enjoy high quality coffee. As portion-coffee sales keep growing at impressive rates, it seems that portion coffee buyers are not price sensitive and do not show propensity to substitutes over other products and hence substitute products do not impose a high threat to the industry.

Secondly, there is the obvious competitive rivalry with any industry. Competitive intensity of the market is strong because of the many multinational that manage the market and who have a couple of coffee brands each one. Furthermore, Nespresso did have a patent for his capsules. But now, different companies have the right to manufacture capsules. Nespresso has not the monopoly on the portion capsules market now, and the rivalry is constantly increasing between the giants of the coffee market. Therefore, even though Malongo is a french based company there are now free to produce their own capsules and provide the entire french market and be a threat for Nespresso.

Thirdly, there is the bargaining power of the buyers. Buyers have no bargaining power with brands that manufacture and/or distribute this portioned coffee. These are brands that are mostly multinational companies leading dance on the market and impose their choice distributors and consumers. For example, Nespresso chooses not to distribute its products in popular point of distribution. When you want to buy some portions you have to go to the nearest concept store, and we know that if you don’t live in a big city it is impossible to find, or you have to order by Internet. But, even if it is not the easy way for consumers to buy, sales continue to increase. Malongo and Nespresso seem to share this exclusive in-store experience only which in someways protects them from having buyers have a say about it elsewhere. There are only Nespresso or Malongo's rules that are pending and that's all!

Finally, when it comes to the bargaining power of suppliers, Nespresso has nothing to fear because they are the only one behind the production of their capsules. The only thing that can seem problematic are the supplier of primary materials needed for their capsules such as Aluminium and Coffee beans price. The threat for substitute of new entrants is quite low when it comes to Nespresso because they are so improved in their field of application that it is hard for their regular competitors to threaten them. New entrants that are often weaker have no chance of competing with the coffee giant Nespresso. Malongo on the other hand seems to have less larger structures to benefit from. Therefore, Malongo is more likely to be the subject of direct threats or bargaining from its producers or suppliers.

Chouaib El Khaoudi

Sources:

http://faculty.insead.edu/adner/Final%20Projects%20May%20June%2005/Nespresso.pdf

NESPRESSO'S KPI

KPI’s Nespresso

High quality and premium coffee

Nespresso club: Nespresso follows each customer. 

The client is in the center of their strategy.

Targeted communication (SM, Mobile app, Direct Marketing) 

and communication strategy

Brand ambassador Clooney

To go deeper... 

Costumers said that they like their targeted communications. Indeed Nespresso follows each of its clients. They know them, they understand them. They know what they need and when.

Register your machines and they will tell you when to clean it and how.

Your favourite taste is for Roma capsule? Guess what? To thank you for your loyalty they just send you a bunch of Roma capsules!

You are a huge consumers and you didn’t buy your capsule yet, Nespresso will call you to know if everything is going well and if you need anything.

They present their products in a smart way. Sober, simple and innovative! We love it!

Of course you have a smartphone … not a problem, Nespresso creates for you the perfect Mobile app. You can follow them on Facebook, twitter, instagram.

Then even follow you in the subway…

They are not too aggressive; they are just here when you need them in your pocket, in your home, in the street. You can’t live without coffee, Nespresso is here to satisfy your need before you know you want it.

This is why Nespresso became what we call a “school case” in Marketing and management schools.

They are really strong and innovative in the marketing and communication departments but they should definitely take a look at Malongo’s sustainable model and make some efforts about recycling in order to respect the environment. This point is not visible enough and you, fans of Nespresso, might be annoyed by their lack of sustainable reliability. 

VL & PDD

KPI’s Malongo

Sustainable business models

Fair trade and high quality coffee

Humanitarian project

Economic, social and environment engagement

To go deeper... 

Their best strength is obviously their sustainable business model. We have to admit we didn’t know this brand really well. They should take a look at Nespresso’s communication strategy and brand awareness to improve this weakness.

Malongo is a brand which is really authentic. When you get to know the brand and its values, you are seduce because they care about the future (environment, sustainable economy, fair trade…).

It’s worth highlighting some of their actions:

=> 100% recycling capsule (they are leader and expect their competitors to follow them on that path).

=> Haiti action as they explain on their website: 

1) “Malongo decided to take action in two ways by boosting coffee plantations and assisting with the development of sanitary and social programs.

2) Malongo creates a wifi network for plantations in Haiti. 
This technological equipment meets the requirements of the innovative system we have recently implemented: total coffee traceability for consumers.

=> Prices over the years about environmental actions, packagings…

OP & AL.D

Two brands, sharing the same love for coffee, selling a premium coffee but different in their model.  If you’re a fan of high quality coffee you have to choose between these two brands, we’ll let you the choice according to the values you want to share with the brands.