Nescafé and Consumer Perception

Company Background

Nestlé is the world leader in the consumer packaged goods industry. The company operates from its headquarters in Vevey Switzerland. The company produces about 6000 successful and popular brands.

In 1905 Nestlé was created after a merger between the Farine Lactee Henri Nestlé Company and Anglo Swiss Milk. Currently the company employees over 30,000 people and its global operations have reached 86 countries. Nestlé’s main competitors are other packed food manufacturers such as Unilever, Kraft Foods, Cadbury Schweppes, Hershey Foods and GROUPE DANONE.(1)

Products

Nestle manufactures a range of consumers goods.

• Baby foods e.g. Cerelac, Nestum

• Bottled water e.g. Nestle Pure life

• Cereals e.g. Chocapic

• Chocolate & confectionery e.g. Aero

• Coffee e.g. Nescafe

• Culinary, chilled & frozen food e.g. Buitone

• Dairy e.g. Carnation

• Drinks e.g. Juicy juice ,Milo

• Food service e.g. Chef, Chef Mate

• Healthcare nutrition e.g. Boost

• Ice cream e.g. Dreyers

• Petcare e.g. Alpo

• Sports nutrition e.g. Power bar

• Weight management e.g. Jenny Craig

Research estimates that 95%of UK households consume Nestlé products. Nescafe is one of these household brands. Nescafe claim to be “The World’s Favorite Coffee”. Every second up to 3,000 cups of this valuable brand is sipped by coffee lovers all over the world.

Global Presence

Nestlé’s superior geographic presence is key to its success over competitors. From the initial beginning in Switzerland the company has grown by leaps and bounds and now enjoys a presence in almost every country in the world. Today, Nestlé’s presence in most markets, including emerging markets, dates back many generations, and in some cases more than a century.

The long standing presence in local communities has contributed to close and loyal relationships between Nestlé brands and consumers. Also a deep insight of local needs and trends wherever Nestlé operates is attained through this. Local management teams, manufacturing, R&D have all been developed, as well as long-term relationships with farmers and other suppliers.

Nescafe

The concept of an instant coffee was not new. In fact it was first invented in 1901.But until Nestlé introduced Nescafe, Instant coffee was not popular with consumers .This Instant coffee brand was introduced by Max Morgenthaler in 1938 in Switzerland. The invention was a result of the Brazilian government approaching Nestlé, about preserving their huge coffee surpluses, by developing coffee that was soluble in hot water.

The name Nescafe was an amalgamation of the words Nestlé and cafe. Nescafe has the distinction of being the first soluble coffee that became a commercial success.

The success can be attributed to the new process developed by Nestlé for dehydrating the concentrated coffee. This improved the quality of the product immensely. In Nestlé’s process a fine mist of the solution was sprayed into a heated tower where the droplets turned to powder almost instantly.

Over time, the Nestlé company has kept the focus on innovation of the product, in 1952 pure soluble coffee was in introduced In 1965 solely using roast coffee beans, freeze dried soluble coffee was developed and in 1967 coffee granules were introduced. In 1994 Nestlé invented the full aroma process, which improved the quality of the product further.

These innovations have ensured that Nescafe maintained the position as the world’s leading coffee. (2)

Case study

Introduction

Nescafe is a brand of instant coffee produced by Nestlé. It is acknowledged as the world’s leading instant coffee brand, estimated to be worth $12bn. It is the fourth most popular beverage after Coca-Cola, Pepsi and Budweiser. Nescafé competes with ground coffees for market share. The market for ground coffee is growing, especially in developed markets like US.

In 1901, Satori Kato, an American chemist invented instant coffee. It was a controversial discovery and initiated a lot of debate among experts. Majority of coffee experts believed that only highly qualified baristas could make a good cup of coffee with ground coffee.

Nescafe was introduced to consumers as a new product in 1949.The product was able to get positive feedback in the test stage. The Unique Selling Proposition (USP) of Nescafe was that it dissolved in hot water in three minutes.

First marketing campaign

But the initial sales results were much lower than expected in the US market. Nestlé conducted to research to explore the cause for such disappointing sales after the success during the test phase. Consumers were asked ‘Why don’t you buy an instant coffee?’ Most common answer was ‘I don’t like the taste’.

To gather a more detailed analysis, the company carried out a focus group. Two groups of housewives were assembled and given a shopping list and requested to describe the woman who wrote it. Only one item in the list was different. Group A’s list contained Nescafe instant coffee and Group B’s ground coffee. Participants in group A claimed, the woman who wrote the shopping list was a lazy, disorganised, careless, spendthrift, bad wife and mother.

The real reason behind low sales of Nescafe was identified as perception not taste. At that point of time, quick or fast was not viewed as benefit of Nescafe. Female consumers felt, that they would be considered bad mothers and lazy housewives if they allocated less time for their household duties such as making coffee.

Alter the message

Nestlé realized that the message they were communicating to the target market was wrong. Therefore they launched a brand new campaign aimed to alter the image the American public, particularly women, held about instant coffee. The slogan was “The instant coffee will allow you to dedicate more time for more important things!” The’ more important things’ were highlighted as being a good housewife and dedicating the time saved to look after her family.

Case Study Question

How did Nescafe influence the perception of consumers regarding instant coffee?

Case Study Answer

Perception is the process by which an individual selects, organises, and interprets information inputs to create a meaningful picture of the world. Circumstances of low Nescafe sales in the 50’s are a good example of consumers perception. The picture housewives had about Nescafe posed a challenge to overcome for the company. The advantages of the product had to be communicated to potential market without going against their wish to be seen as dedicated housewives.

Basically, Nescafe’s marketing had to be modified to maintain an idea or an illusion of a perfect wife and mother. Commercials introduced the concept of instant coffee allowing consumers to do things they didn’t have time for earlier. One ad portrayed the idea that with instant coffee, now there was no excuse for not writing to relatives. The slogan was: “it’s a long time since you’ve written them a single letter¨.

This approach of focusing on consumers perception in the marketing campaigns has proved successful for Nescafe from the 50´s.

Changes in consumer behaviour with time

The notion that, using time saving devices is ‘lazy’ has changed with time. Today woman want to save time as much as possible because it gives to some quality time with their families and for themselves.

As the role of women is society evolved so did the Nescafe campaigns. In the beginning the housewife was the core target. However in the 80’s campaigns were designed to the growing population of independent career women as well. In recent times Nescafe moved beyond just women and utilized the concept of friendship for reaching young people.

Nescafe managed to accomplish a nearly impossible task of preserving the image of a good housewife while maintaining the core attributes of the brand. The key to their accomplishment was the empathy to understand the consumers perceived reality and adjust the message accordingly. This is undoubtedly a great marketing strategy. (3)

References

1. Nestlé [homepage on the Internet]. No date [cited 2012.01.10]. Available from: http:// www.nestle.com/

2. Nestlé [homepage on the Internet]. No date [cited 2012.01.10.]. Available from: http:// www.nestle-family.com/

3. Adwomen [homepage on the Internet]. No Date [cited 2012.01.10.]. Available from: http://adwomeninenglish.blogspot.com/2009/02/how-nescafe-convinced-women.html