Nescafe Brand Study

Suski 1 Luciano Suski MKBU-3435 Dr. Michael Chatallas 29 October 2008 Brand Study: Nescafé Introduction The start point of this study is both the Interbrand and Financial Times Global Brands reports issued in 2008. Among the 100 Global brands, Nescafé was chosen for being directly related to the consumer, making the consumer behavior analysis much clearer and more interesting. Nescafé brand is owned by Nestlé and it is worth around 13 billion dollars. Each year approximately 94 billion Nescafé cups are sold around the word, which is around 3,000 cups every second. According to the Interbrand study, the brand “has benefitted from the increase in demand for premium coffees”, and has also educated its consumers about the health benefits of the beverage. On the other hand, the Financial Times Special Report does not bring the Nescafé brand in its global ranking, but in the sectors ranking, more specifically the coffee rank, this brand is the most valuable. The Financial Times Report also claims that instant coffee market is losing space to the ground coffee. What is shown in this study is less related to market share struggles and more focused on the brands effort to increase consumer awareness and value addition. Moreover, this study focuses on the identification and description of the psychological application of the Nescafé brand strategy.

Brand Perception, Hedonic Consumption Along the years, the Nescafé has changed a lot. The first versions of the product did not taste very well and the package was very simple. Actually, only in 1954, twenty two years after its creation, it was made with 100% coffee, since its previously version used carbohydrates to stabilize

Suski 2 the product. One year later, the Nescafé Blend 37 was introduced and it took nine more years for the product effectively retains the coffee flavor (in 1964). But during the 80’s the brand had a dramatic improvement in its product line, introducing different versions. For example, in 1984 the first premium, freeze dried coffee, Gold Blend, was launched, it had a rich smooth flavor. The following year, Nestlé launched Alta Rica, which was made from a combination of top grade “A” beans from Latin America. It was described as “a full bodied, rich, after dinner coffee”. Nowadays, Nescafé has wide range of choice, from cappucinos, lattes and mochas, to a rich coffee flavor brand named Nescafé Gold Blend. In UK, the most developed brand market in the world, there are around 20 different Nescafé products. Thus, there is a transition from the exclusively utilitarian consumption, when Nescafé was just an instant coffee, to a more hedonic consumption, when the brand started to diversify, creating dozens of different blends.

Brand Perception, Semiotics Besides some packages and products changes, Nescafé logotype was always the same since its origin. The logotype borrowed the same Nestlé format, and the word Nescafé is a combination of the three first letters of Nestlé and “café”, which is “coffee” in portuguese. The semantics of the brand name basically describe the product, and also the phonetics are smooth for most languages. Basically the logotype improvements followed the same improvements made on the Nestlé logotype. The symbol added to convey the brand meaning was the red mug. Most commercials scenes show someone holding the red mug with the Nescafé logotype written in the vertical position. Probably the red color of the mug was chosen to emphasize the energy of the drink, since coffee is a stimulating drink and red is perfect to describe this state of mind. Therefore, the semiotics triangle would display on the sign side, the red mug, on the object side, the granulated instant coffee, or the product itself, and on the interpretant side, the wellness state of a good cup of coffee.

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Pictures - Nescafé Logotype on the Red Mug, and people enjoying coffee with the Red Mug

Object Product Nescafé Instant Object Coffee Product

Nescafé Red Mug Sign Image

Picture - Nescafé Semiotics Triangle

Person Enjoying Coffee Interpretant Meaning

Suski 4 Brand Learning, Stimulus Generalization Nescafé is such a well known brand that in some countries that it tends to be generalized. In the Middle East, in 2005, the brand sales increased 15%, which represented 1.3 billion cups. The region already had coffee drinking as a cultural identity, but instant coffee was not usual. Now, the kick-start of the day and the friends meetings have Nescafé. In Egypt, for instance, it is very common to hear people using the word Nescafe to describe every soluble coffee. Another application of the stimulus generalization is the fact that the brand has more than 200 different products worldwide under the same name. The company strategy around all this different products is being a big success, since each product has its own features, but all contribute to add value to the brand.

Brand Learning, Associative Networks The channel used to construct this net of concepts for Nescafé was based on the brandstag.net. This website allows internet surfers to add any word they have in their mind to the brand they see on the screen. After that, an internal website database register all words typed to the specific brand, counts them and constructs a visual tag net, enlarging and bolding the most repeated tags. So far the website has 77,000 tags of hundreds of brands, and Nescafé is included. Besides that, is also possible to divide the tags by nationality, giving a different perspective over the concepts associated to the brand. Over a global perspective, the main concept associated to the brand is “coffee” and the second is “instant”, after these comes “chocolate”, “cheap”, “hot” and “morning”. The concept “bad coffee” is also emphasized, maybe showing that the quality of the product is not that satisfying. In Brazil, for instance, “coffee” is also the main concept, followed by “delicious” and “bad”. Another interesting concept is “coffee machine”. The brand was associated with the purchase experience. In fact, most coffee machines in Brazil are Nescafé, what explains the association.

Suski 5 Even being a very basic analysis, the concepts “coffee” and “instant” are rooted in peoples mind, whether if it is good or bad, the brand that instantly comes to peoples mind when they think about instant coffee is Nescafé.

Motivations, Product Involvement When it comes to consumer experiencing the product, Nestlé’s strategies around the brand are aggressive. The company wants to broaden consumption opportunities for coffee, getting the product to the consumer whenever, wherever and however is wanted. According to the Food & Drink Weekly article of September 1999 “The goal is to be within arm's reach wherever consumers go. This means setting up coffee bars in malls, movie theatres, on campus and setting up coffee outlets in convenience stores and gas stations. Even transforming the traditional vending machine coffee, which can sometimes be compared to molten-hot liquid mud, Nescafe is redefining the automated coffee dispenser into a gourmet delight.” In Asian and Europe markets, the main idea is to add new ready to drink coffee beverages. Nestlé also want to implement coffee shops with the Nescafé brand as a franchising chain. Thus, Nestlé wants with Nescafé brand to develop alternative channels, other than supermarket, to offer to the consumer high quality products whether hot or cold drinks.

Motivations, Consumer Values This study already shown the history the changes of Nescafé’s along the years. During this period, the values related to the consumer also have developed. During the 50’s and 60’s, the brand values were more family oriented. Advertisements usually shown family reunions, special around the table during the time of the meals. Initial campaigns created awareness of hot instant coffee, its invigorating qualities, and the easy and fast way of making it. The period between the 60’s and the 70’s was more youth oriented. The brand was more focused on the young people, specially the

Suski 6 groups who had relation with the music. Hippies and rock fans were targeted with specific advertisements. The youth oriented values followed the 80’s and 90’s, but as the Nescafé product array broaden, different values were added, such as sophistication (with the Gold Blend) and differentiation (with cappucinos and mochas). The brand has built tradition for being such a long time in the market. In addition, when the head of marketing for beverages at Nescafe in Australia, Tanya Marler, talks about the instant coffee taking over the green tea market, she says that the brand “has a focus on health and wellness and it is really moving to meet a consumer need.” So nowadays, this “wellness” concept, which is based on a healthy lifestyle, is the main value that bond Nescafé to consumers.

Brand personality, General Traits The Nescafé brand usually had a relation with an atmosphere of tasteful coffee pleasure, warm and friendly. According to the article written by Reg Butler to the Tea & Coffee Trade Journal in 1999, “to match the personality of the product, advertising for the past 10 years has concentrated on the present television theme of "the magic world of endless pleasure" precisely targeted to the core target audience aged 17-30. Clever visuals are used to show a transformation into a happy and trendy world of parties and dancing with everything going well. The campaign offers stylish living for the younger generation.” During the 80’s in Greece, for instance, Nescafé tried to differentiate promotion of the soluble product from hot to cold. Nescafe Frappe seemed to be more related to a world of freshness, youth, and pleasure, while Nescafe Classic wanted to target audience aged 25 and older. Today, in Greece, the two age groups overlap, even people in their 50s drink Frappe. The global brand relies more on the coffee tradition, its historical value. It is also down-toearth, what means that is very sincere, warm and honest. Another personality dimension, according to Aaker studies, could be excitement, mainly related to qualities such as friendly, youth and energy.

Suski 7 Brand personality, Nescafé Worldwide As said before, Nescafe has a wide range of products, and in some way some variables in its personalities. But besides this variety, Nescafé has maintaining very well its unity. Across the countries, the brand has being working to respond to all different demands that are based in differences about the culture of drinking coffee. In UK, for instance, although the traditionally tea market, Nescafé coffee market is the number one in the world. The people's favorite flavor is the Original, and it is the clear leader. But there are also other products, such as Gold Blend, Alta Rica, Cap Colombie, Kenjara, Fine Blend, Blend 37, Black Gold, Cappucino, Espresso, Original Decaffeinated and Half Caff. Most of them are hot and strong types of coffee. The main competitor in UK is Kenco In France the brand faces a large Roast & Ground market. Even though, soluble coffee is around one third of all coffee drunk. Most of soluble consumption there is based in chicory mix products. The brand most common products there are Special Filtre (equivalent to Gold), Nescafé Selection and Braséro. The main Nescafé competitors in France are Maxwell, Jacques Vabre, Carte Noire. In Japan, according to the information available on the Nescafé website, the level of coffee consumed is similar to the UK, but, liquid ready to drink coffee in cans & bottles is significant. The majority consumption is of cold soluble coffee, equating to one in five cups, and most of their hot coffee is drunk with creamer. The main competitiors there are Blendy, Maxim. Even traditional coffee drinking cultures faces changes with the Nescafé brand. In Greece, for instance, the traditional Greek Coffee, which is served in a tiny cup with a glass of cold water to be drunk first to emphasize the coffee taste, was substituted in many cases by the coffee-colored beverage in a tall glass with a drinking straw called Nescafé Frappe. The volume of coffee consumption in this country is around 23,000-25,000 tons. Of this total, between 30-35% goes into

Suski 8 soluble, and out of the total soluble market, Nescafe has a 90% share and Nescafe Frappe represents about 60%. In the USA Nescafé has been struggling to get a bigger market share. Roast and Ground dominates, and the advent of Starbucks and coffee house chains has added glamour to the whole coffee market. The largest coffee consumption market in the world still does not drink much Nescafé. Americans have a special interest in flavored coffees and coffee specialities, so the products sold here are Nestlé Taster's Choice, and Nescafé Classico - which is specially imported for the hispanic population. The main competitors are Folgers, Maxwell House.

Recommendations Nescafé is a traditional and historical brand that successfully spread worldwide responding to most consumer needs, on an innovative and creative way. Besides having a considerable variety of products, the brand goes on with its unity. The brand is strong, and it has, by far, the biggest market share among its instant coffee competitors, around 80%. But this fact does not guarantee an eternal profitability. Such as Coca-Cola, which is the number one brand in the World, Nescafé has to work hard on its marketing strategies and develop even more innovative and creative attributes to maintain its position. Specially these days, when the market tends to be taken, ironically, by the old fashioned way of drinking coffee. Maybe, the wellness concept is not the best way to sell coffee. A healthy lifestyle would certainly prefer whole ground coffee to the industrialized instant one, even if it has more anti-oxidants. In such a skeptical and nature oriented society, industrialized and instant are not so positive attributes. On the other hand, hedonic consumption and purchases experiences, specially with services, creates a whole new dimension. The brand seems to be aware about this fact and gradually is building a new way to enjoy coffee. The idea of creating service with franchising stores selling instant coffee based drinks sounds very good. And as innovative as it happened in Greece, with the “Frappe Nescafé”, which changed the way people enjoy coffee, the company can

Suski 9 come up with something completely new, which can drive Nescafé to another direction, maintaing its brand leadership and success.

Suski 10 Works Cited:

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