Nespresso's Neuromarketing Success: A Case Study

This blog first appeared on Frankwatching (with 16,200 views & counting).

Have you ever considered the price per kilo of Nespresso's ground coffee beans? You pay a hefty 80 euros per kilo. Nespresso has managed to quintuple the willingness to pay. On average, coffee costs around 16 euros per kilo. How has Nespresso managed to charge five times the price for a kilo of coffee? What clever marketing techniques underpin this? And how can (e-commerce) brands cleverly emulate this 😉?

Let's first do the maths. Because you probably thought when reading that first paragraph: ‘Wait? I don't pay five times as much for a kilo of coffee when I buy Nespresso pods, do I?’ Oh yes, you do! Let's calculate. One pod costs an average of 42 cents. Each pod contains 5.2 grams of coffee (which was quite tricky to find out). If you convert those 42 cents for 5.2 grams back to 1 kilo, you end up with around 80 euros.

Imagine proposing this internally. ‘Let's see if we can get the consumer to pay five times as much for the product they've been buying for years.’ Any manager who assumes a rational consumer would show you the door immediately.

But loyal readers will know that the consumer is not as rational as they appear. We easily bid thousands of euros over the asking price for a house, only to drive to a supermarket the same day to buy bread 50 cents cheaper.

It would have been equally pointless to ask the consumer this. You can guess the answer if you asked whether someone would want to pay five times as much for their coffee.

‘People don't do what they say, and don't say what they do’. This is exactly what we assume in neuromarketing research.

Plenty of reasons why Nespresso shouldn't be a success. But it is. How has this coffee brand managed to achieve this? To answer that question, we need to take a look inside the consumer's brain. Every purchasing decision begins in our minds.

A Coffee Moment

The marketers at Nespresso also knew it would be pointless to ask five times as much for a pack of coffee. And in that framing lies the first beautiful insight.

Everything is relative, even here. Because if you compare the price of a pod to a kilo pack of coffee, you're robbing yourself. But if you compare the outcome of such a pod (a cup of coffee) to the same cup of coffee from a good barista, the price suddenly seems much more reasonable. Suppose you pay 2 euros for a good espresso, then 42 cents is obviously a bargain.

Mental Anchoring

Nespresso applies a fine example of mental anchoring here. What is anchoring? This neuromarketing principle plays entirely on the principle of relativity. If a large number stands next to a smaller number, that number feels smaller because of the large number.

Albert Heijn applies this principle perfectly (so far only on their website). By placing the weight (400) of the M&M’s close to the price (3.89), that price seems a bit lower. This again has a positive effect on AH's total order value.

The Brand in the Brain

Nespresso also applies this anchoring principle, but takes it a psychological layer deeper. They don't show a higher price, but build on the unconscious (implicit) association in the brain. They want you to compare Nespresso not with a pack of coffee, but with a barista.

The second insight quickly follows the first. To achieve that mental anchoring, we need to work on branding. 

Say branding, and you say associations. A brand is nothing more than a network of associations in the brain.

Byron Sharp: Mental and Physical Availability

To deepen the mental path from ‘thinking about coffee’ to ‘choosing Nespresso on the shelf’, I'll briefly take you into the thinking of Byron Sharp. This scientist has researched that a smart brand has perfected two principles: mental and physical availability.

• Physical availability is ‘simply’ about having your product within reach when the shopper is in buying mode.
• Mental availability, simplified, ensures that when the consumer starts thinking about buying something, they also immediately think of your brand.

Sharp calls that ‘when’ the ‘category entry points’. And all things around your brand ‘brand assets’.

For Nespresso, it is therefore important to be mentally present whenever people think of coffee. Then ensure that the shopper recognises your brand directly on the shelf through various brand assets, such as the unique pod.

Brand Assets in a Nespresso Commercial

A perfect way to achieve this is through good old-fashioned commercials. Just take a look at this beautiful example of a recent commercial from them. In the first 6 seconds, the brain is flooded with Brand Assets.

In these 4 specific scenes, I can identitfy a total of 8 brand assets.

1. The characteristic pod
2. The ‘N’ of the Nespresso logo on the machine
3. The unique metal coffee cups that Nespresso repeatedly shows
4. The last drop of coffee in the cup
5. The glasses Nespresso always uses for their coffee
6. The specific shape of their coffee machine
7. George Clooney, of course
8. And last, but not least: the famous guitar jingle

The coincidence is that this commercial deviates tongue-in-cheek from ‘Nespresso, what else?’ with ‘Nespresso, what more?’ Otherwise, we could have counted that one too 😉.

The category entry point in this case is, of course, making a nice cup of coffee. Where the design of the coffee glass also more resembles a cup of coffee in a restaurant than one from home.

Brand Assets in a Douwe Egberts Commercial

Contrast this with a recent commercial from Douwe Egberts. You immediately see a completely different focus:

In this commercial, I count 4 brand assets:

1. A coffee maker (with filter)
2. A pack of coffee (ground)
3. A coffee scoop
4. A warm mug

Here too, the category entry point is making a nice cup of coffee, but with a slightly different focus: filter coffee. The rest of the commercial also focuses on this. Specifically, the cup of coffee is one you might also have in your kitchen cupboard at home.

Strong Branding ☕

Let's make it clear that I wouldn't say one commercial is better than the other. I'm purely interested in the difference in impact on the brain. Nespresso goes for a different cup of coffee than Douwe Egberts.

If you were to conduct an (implicit) association test, you would probably find this too. In such a test, you measure the reaction speed in the brain. Because from neuropsychology we know: ‘what wires together, fires together’. Based on the reaction speed, you can attach an exact number to the strength of two concepts. In this case, for example, the concepts ‘Nespresso’ and ‘barista coffee’.

Many serious brands use such tests to measure their brand image. And in the case of Nespresso, I expect there is a strong association with ‘barista coffee’. Thanks in part to George, of course.

A case of strong branding, if you ask me!