Earlier this week Nespresso announced that it was investing in its first national television campaign in the United States. This is big news.
Nespresso, of course, is Nestle’s remarkable growth engine, a highly profitable business with 2011 sales of over $3 billion, growing about 20 percent per year. The national television advertising is a big shift for Nespresso; the brand has done limited marketing in the United States to date.
Does the move make sense? I posed the question to my marketing strategy students today.
The average student score: B+
My score: A-
To understand this situation it is important to look at the strategy and then the creative execution.
The strategy makes perfect sense. Nespresso is a terrific, profitable product with little awareness in the U.S. and even less household penetration. The current slow growth approach is prudent. But there is a simple problem: Starbucks is preparing to launch its own high-end espresso machine later this year. Starbucks is a threat because the brand is strong and well-known, with deep credentials in coffee. Starbucks is certainly a stronger brand than Nespresso in the United States.
The Starbucks move changes the game dramatically. Nespresso now has to move very quickly; there is just a little time to build penetration before the competitor arrives.
With this in mind, a national television campaign is very smart. Nestle hasn’t released spending levels, but I hope it is significant.
The creative is pretty good. Importantly, Nespresso is using a café as the comparison point; this is a way to enjoy café quality drinks at home. The benefit is convenience. The imagery is high-end, relaxed and elegant. The branding is strong.
The spot isn’t perfect; the ad doesn’t have much break through and the imagery is a bit little odd. I wonder if they made a mistake by not using their George Clooney or John Malkovich, both of whom have been important for the brand in other countries.
Nespresso is clearly on the right track. But this is just the first part of the bigger battle to come. It will be a fun one to watch.