2023/2024

BA in Business Administration

PRINCIPLES OF MARKETING

NESCAFÉ

By

Diana Pereira
Elin Janssens
Marian Zamfirescu
Michał Nemś
 2023/2024

Table of contents

1. Introduction………………………………………………………………………………..3

2. The Marketing Mix..……....………………………………………………………………5

2.1 Product ..……....…...……………………………………………………………5
2.2 Price……...……....………………………………………………………………6
2.3 Promotion..……....………………………………………………………………6
2.4 Place..……....……………………………………………………………………7

3. The STP Strategy..……..………………………………………………………….…….8

3.1 Segmentation………………………………..………………………………….8
3.2 Targeting…………………………………………………………………………9
3.3 Positioning ……………………………………………………………………...9

4. The External Environment……………………………..……………………………....11

4.1 Economic Factors….………………………..…………………………………
11
4.2 Social Analysis……………………………..…………...………………..……12
4.3 Technological Advances…………………..…………………………...…..…12
4.4 Environmental sustainability...……………..…………………………………13
4.5 Political Impact………………..……………..……………………...…………13

5. Conclusion...……………………………………………………………………………14

6. Bibliography……………………………………………………………….…………...16

2
 2023/2024

1. Introduction

In the rich tapestry of coffee history, NESCAFÉ stands as an enduring testament to

innovation, resilience, and a commitment to quality that transcends time. Born out of
a visionary response to the aftermath of the Wall Street crash in 1929, the journey of
NESCAFÉ commenced when the Brazilian government approached Nestlé in 1930,
seeking a solution to manage the surplus coffee generated by the economic
downturn. This momentous request marked not only the inception of a
groundbreaking product but also the establishment of a lasting alliance with Brazilian
coffee growers, a bond that persists to this day.

The fruit of eight years of relentless innovation and development, the brand officially
made its debut on April 1, 1938, introducing the world to soluble coffee that was not
only revolutionary in its convenience but also symbolized a pioneering spirit that
would define the brand for decades to come. Over the years, it has evolved into the
world's largest coffee brand, reaching more than 180 countries, including its
presence in Portugal since 1958.

The brand's history is woven with threads of adventure and exploration. NESCAFÉ
accompanied the first expedition to the summit of Mount Everest in 1953, and in
1969, it became the first coffee to journey to the moon, accompanying the Apollo 11
mission. Today, the resonance is felt globally, with over 5,500 cups consumed every
second, an extraordinary testament to its enduring popularity.

Having accumulated over 80 years of expertise in the art of selecting, roasting, and
blending the finest coffee beans, the commitment extends beyond delivering a
moment of caffeinated bliss. Sustainability has been an integral part of NESCAFÉ's
ethos, with a robust commitment to supporting coffee farmers and minimizing the
environmental footprint associated with coffee production. Remarkably, 75% of the
coffee is produced responsibly, reflecting a dedication to environmental
conservation.

In the spirit of respect towards farmers, communities, and the planet. The brand
empowers coffee growers, enhances local communities, and safeguards the
environment. By investing in sustainable coffee production, not only ensures the
quality of its product but also contributes to the prosperity of those cultivating it. This
commitment extends to innovative farming techniques that prioritize the protection
and conservation of natural resources.

3
 2023/2024

As we navigate the rich history and commitment of NESCAFÉ, this report seeks to
critically assess the brand's marketing mix, Segmentation, Targeting, and Positioning
(STP) strategy, and its external environment. By unraveling the layers of NESCAFÉ's
success, we aim to provide insights that will inform strategic recommendations,
ensuring the brand continues to thrive in the ever-evolving landscape of the global
coffee industry.

4
 2023/2024

2. The Marketing Mix

The marketing mix of a brand consists of something that is known as the 4Ps, which
the brand uses to plan and execute marketing strategies. The 4 Ps stand for
Product, Price, Promotion and Place. Product refers to the service or item that the
brand sells, which must satisfy a consumer’s need or desire. It is important because
when a consumer is satisfied, they will buy from the brand again. Price refers to the
selling price, which cannot be too low nor too high and be according to the
consumer’s expectations. Promotion is what the brand needs to do to let the public
know about the product and why they need it. Consumers need enough information
about how the brand can fulfill their needs or desires. Lastly, place refers to the
location where customers can purchase the product (Yasar, 2022). In the following
paragraphs, these 4Ps will be analyzed for Nescafé.

2.1 Product
The main product that Nescafé sells is instant coffee. They met the desires of their
consumers, which was the tea drinking experience, by creating Nescafé 3 in 1. This
is a premix of coffee, dairy creamer, and sugar. Later they created more foaming
mixes of Cappuccino, Choca Mocha and Vanilla Latte to cater more to younger
people and to offer more variety. Other products are Nescafé Mild, which was
created for those who don’t like the strong taste of coffee, and Nescafé Gold that
offers many flavors and is a little more expensive than regular Nescafé coffee. They
also sell Nescafé Sunrise which was launched to be similar to filter coffee in regard
to taste, and continue to create other blends such as Nescafé Azera (Nescafé, n.d.).
To make sure they are distinguished from, and better than, other coffee makers,
Nescafé also has other products relating to coffee. These products include vending
machines and E Nescafé which is a coffee maker that can prepare instant hot coffee
(Roy, 2021). By offering so much variety and so many different flavors, it is clear that
Nescafé wants to meet the needs of all coffee lovers, and even the people who don’t
like the taste of coffee. They want to make drinking coffee an easier and quicker
experience with the instant coffee products they sell, and by doing this they satisfy
consumers’ needs and desires.

5
 2023/2024

2.2 Price
Nescafé’s products have many different prices, depending on various factors. The
pricing is influenced by the quality of the production of the coffee. Nescafé also takes
into account the market competition and demand levels. Some products are of
premium quality, such as Nescafé Gold, and for those products they therefore
implement higher pricing. Next, Nescafé has also implemented changes in their
product lineup, providing new flavors and a diverse selection, which is also reflected
in their relatively higher prices. The quantity provided to the customers is linked to
the selling price of the products. However, Nescafé has also introduced sachets to
broaden its customer base, but also to accommodate budget-conscious coffee
lovers. Lastly, the broad variety of flavors of Nescafé’s coffee are also offered in
multiple different quantities. Therefore, the prices are set according to the packaging
of those coffee flavors (Shastri, 2023).

2.3 Promotion
Nestlé uses a multitude of advertising strategies throughout the years to enhance the
appeal of Nescafé, which has been pivotal in its immediate success. Nescafé's main
priority is ensuring comprehensive communication with customers about their range
of products. Their advertisements are innovative and are designed to capture
customer attention and generate product interest. (Shastri, 2023). The brand
employs diverse channels such as radio, TV, newspapers, PR activities, and the
internet for advertising. Nescafé has maintained consistency throughout all its
promotions, including its logo. They do this to contribute to widespread brand recall
or brand recognition (Team, 2023).
They have a big following on social media and actively engage with their audience
through web video campaigns, for example (Team, 2023). An example of a
successful campaign by Nescafé is the “#For the Moments that Matter” campaign.
The campaign was launched to promote the relaunching of Nescafé Gold and
presents a compelling and emotional story that aims to emphasize the importance of
spending time with loved ones. This campaign helped Nescafé to play into the
emotions of its customers and to build a strong relationship with them. However, they
also introduce campaigns to reaffirm its market position. For example, the "Switch on
the best in you” campaign, was launched amid rising competition from brands like
Bru. It featured Bollywood actress Deepika Padukone, which helped to add appeal to
the Nescafé -brand (Shastri, 2023).

6
 2023/2024

2.4 Place
Since its existence, Nescafé has become a household name due to its extension into
various ventures. The brand employs a strategic placement strategy for its products,
targeting urban and semi-urban areas, characterized by high population density,
where coffee consumption is prevalent. This strategic approach guarantees that
Nescafe products are easily available to its target audience and intended
consumers. The distribution mix plays a crucial role in efficiently and effectively
delivering the brand's coffee products to consumers (StudyMoose, 2023). The
company employs an extensive distribution network to make certain their products
are properly supplied worldwide. Their expansion reaches almost all regions where
their customers are located (Shastri, 2023). Nestlé, which includes Nescafé, adheres
to the FMCG distribution strategy. This is effective because it breaks the bulk and
volume of a common distribution channel into two channels:
● Manufacturing – C&F agent – Distributors – Retailers
● Manufacturing – Bulk buyers – Consumers

Nestlé has a stronger distribution and sales network than the majority due to its draw
from the market. To increase product sales and ensure sustained high sales
volumes, Nescafé extends trade discounts to bulk buyers. However, the company
still faces competition from other companies, such as BRU and Cadbury (“Nescafe
Marketing Mix [2023] – Marketing Mix of Nescafe”, 2023).

7
 2023/2024

3. The STP Strategy

STP from English, this acronym stands for segmentation, targeting and positioning.
The first part, segmentation, involves segmenting the market into smaller, distinct
groups of potential customers. The division can take place in terms of, for example,
demographics, needs, psychographic or behavioral characteristics.

The second stage of the STP strategy, targeting, is the overall selection of the
previously segmented customer groups in terms of their profitability. This is an
important stage because, depending on how many groups the company selects, it
will have to prepare to use more resources

The last final stage is positioning. This refers to how to reach the selected target
groups of customers. In today's internet age, a large part of this activity is browser
positioning, but this is not all that can be done, as the aim is to build a specific brand
image in the eyes of the customers we are interested in. A very simple example is
car brands. Toyota, for example, is associated with reliability, comfort and elegance
is Mercedes, and safety is Volvo.

3.1 Segmentation
Market segmentation in the case of Nescafe, is very intuitive. They segment by:
geography, demographics, revenue, disposition and behavior.

In terms of geography, they focus mainly on urban areas - large and medium-sized
cities. In some countries they also have products targeting people in non-urbanised
areas, albeit a small proportion. They also distribute customers by parallel. It could
be said that people from northern countries drink coffee differently - they drink more
instant coffee - from people from the south - nominally they consume more coffee
and prefer the essence taste of a stronger roasted coffee.

From a demographic perspective, the most relevant variables are age and life stage.
Their target group is people from about 18 to 30 years old. At the same time,
campaigns targeting younger people have different characteristics. Life stage is
mainly associated with income. Products, by design, are intended to be affordable
for most people. However, there is no shortage of products associated with greater
luxury.

8
 2023/2024

From a disposition and behavioral perspective, the company assumes that people
associate drinking coffee with class, ambition and a convenient income. In order to
provide this feeling to as many people as possible, it tries to make the products
attractive in quality, and affordable.

3.2 Targeting
To begin with, it is worth describing the company's typical customer, whose age is
mainly between 18 and 30 (possibly older than 30), living in at least moderately
urbanized areas. They are people of all genders, full of ambition, active and open to
development.

NESCAFÉ mainly targets coffee enthusiasts, especially those looking for a fast,
high-quality solution. It's for people who want to enjoy their coffee without hassle,
ready in a flash in the comfort of their own home. The brand offers coffee that can be
enjoyed to your taste, wherever you are.

In addition to the classic flavors (regular, rich, mild and intense) and canned coffee in
Latte and Mocha versions, NESCAFÉ also has variants tailored to local markets.
Nescafe is one of the outstanding brands among traditional instant coffees, both hot
and cold, available in practically every corner of the world in different forms and
varieties. Its products are present in more than 30 countries.

3.3 Positioning
A survey of young people showed that although coffee drinkers are a minority of the
population, as many as 9% of young people expressed an interest in this beverage.
In addition, nearly 40% of them drink both tea and coffee. This group is susceptible
to the influence of the media, especially Nescafe's promotional campaigns, indicating
a growing interest in coffee among younger generations and a shift in preference
from tea to coffee.

When it came to their choice of coffee, almost 92% of respondents pointed to

Nescafe. What only stood out was the Valentino brand, which has gained some
popularity by serving coffee through beverage machines. Nescafe is encouraging
other brands and distributors to promote coffee, seeing this as an opportunity to
expand the market.

9
 2023/2024

The slogan '1 cup of coffee 1 good feeling with Nescafe' associates the brand with
various positive values, such as love, the red cup, happiness or human relationships.
This is part of the brand's strategy, linking it to special moments and experiences.
The red Nescafe cup has become a symbol of sharing the joy associated with the
brand.

"Nescafe is a contemporary, upbeat brand with exceptional quality that offers me a

satisfying coffee experience every time, everywhere." - This is the phrase the
company would like to put in the minds of its customers.

10
 2023/2024

4. The External Environment

The large and dynamic external environment in which NESCAFÉ works must be
acknowledged as we delve deeper to grasp the brand's strategic position and
potential. Numerous elements that both directly and indirectly affect NESCAFÉ's
market performance, brand image, and growth trajectory make up this ecosystem.
The external environment poses both possibilities and difficulties for NESCAFÉ,
ranging from evolving regulations and technical breakthroughs to shifting consumer
tastes and competitive landscapes. In the upcoming section, we will dive deeper into
these important external elements, offering crucial insights for strategic decision-
making and guaranteeing the brand's sustained success in the dynamic global
marketplace.

4.1 Economic Factors

The growing middle-class population in India, combined with changing consumer
preferences and an expanding café culture, has resulted in a rise in demand for
coffee goods. This represents an opportunity for NESCAFE to increase its market
presence and introduce new product offers customized to Indian consumer tastes.
According to Statista, India's coffee market has been steadily growing, driven by
urbanization, increased disposable incomes, and a burgeoning café culture. For
example, the café chain industry in India was estimated to be worth $250 million in
2022 and is predicted to develop at an annual rate of growth of over 12% in the
coming years. To properly capitalize on this expanding market demand, NESCAFE
must evaluate local competition, pricing tactics, and distribution networks.

NESCAFE confronts issues as a result of coffee output unpredictability, particularly

in major sourcing regions like Brazil. Global supply and pricing dynamics may be
impacted by variations in production levels brought on by external variables such as
weather. To reduce these risks, NESCAFE is employing trading measures,
diversifying its sourcing locations, and keeping up optimal levels of stock. NESCAFE
can assure a regular and reliable supply of high-quality coffee beans for its products
by proactively managing its supply chain and adjusting to production issues as of
their 10 year sustainability plan.

11
 2023/2024

4.2 Social Analysis

Increased consumer awareness and regulatory attention on environmental and

social responsibility are driving the global transition toward sustainable and ethical
coffee manufacturing practices. To meet customer expectations and legal
requirements, NESCAFE prioritizes sustainable sourcing, improves supply chain
transparency, and invests in ethical efforts such as land restoration, implementing
regenerative agriculture and helping farmers transition to such advances. NESCAFE
is developing trust, improving brand reputation, and gaining a competitive advantage
in the market by implementing responsible practices and promoting its sustainability
initiatives to consumers.

They began experimenting with financial support schemes in Côte d'Ivoire,

Indonesia, and Mexico as part of the Nescafé Plan 2030, involving approximately
1000 farms in each country. Because each area faces unique obstacles and
situations, they devise a curriculum that is adapted to each country. As the world's
largest coffee brand, they must ensure the success of smallholder coffee growers.

4.3 Technological Advances

NESCAFE has been a leader in utilizing digital technologies to improve customer

experience and reinvent its coffee makers. For instance, the "Smart Brew" machine
from NESCAFE uses Internet of Things (IoT) technology to communicate with
smartphones and provide customized brewing options according to user
preferences. With the help of a dedicated smartphone app, users of this smart coffee
maker can adjust the brewing parameters, personalize beverage settings, and get
real-time notifications and suggestions. NESCAFE increases consumer
engagement, collects valuable data insights, and encourages brand loyalty by
delivering a personalized and convenient coffee experience through the integration
of smart technology into its coffee machines.

12
 2023/2024

4.4 Environmental sustainability

The environmental impact of producing coffee is substantial and includes problems

associated with deforestation, water use, and carbon emissions. As said priorly
NESCAFE is allocating resources towards environmentally conscious farming
methods, encouraging sustainable land management among its suppliers, and
mitigating its overall environmental impact by means of innovation and ongoing
improvement projects such as Agroforestry, they go more in depth regarding this
process in their annual report as of means of propagating such innovative
technology for other companies too, making an actual change in the current
environment.

NESCAFE is helping in hitting global sustainability goals, reducing environmental

risks, and creating a robust and ethical supply chain by incorporating environmental
sustainability into its company strategy and operations.

4.5 Political Impact

With a presence in over 180 countries, Nescafe boasts the largest worldwide coffee
footprint, making it highly susceptible to changes in global trade policies and
geopolitical dynamics. For instance, in an effort to resolve trade conflicts with trading
partners like China and the European Union, the United States has recently imposed
tariffs on a range of goods, including coffee imports. These tariffs have significantly
increased import charges and introduced potential supply chain disruptions for coffee
importers and distributors like NESCAFE. As a result, NESCAFE faces elevated
operational costs, supply chain complexities, and competitive pressures in navigating
the evolving trade landscape. Additionally, the company must strategically adapt its
sourcing strategies, pricing models, and market approaches to mitigate the impact of
tariffs and maintain its market leadership position in an increasingly challenging
global environment.

13
 2023/2024

5. Conclusion

In conclusion, our exploration of NESCAFÉ's reveals a brand deeply rooted in history

yet continuously reaching for new heights of innovation and sustainability. As we
examined the marketing mix, it became evident that his success is a delicate
balance of a stellar product, strategic pricing, effective distribution channels, and
compelling promotional efforts. The legacy of the brand's inception in 1938, crafted in
response to a global economic crisis, underscores the brand's resilience and
adaptability, attributes that remain ingrained in its DNA.

The STP strategy employed is a testament to its ability to understand and cater to
diverse consumer segments. From the first sip on Mount Everest to the lunar
landscapes explored by Apollo 11, the brand's positioning transcends geographical
boundaries and captures the spirit of exploration. NESCAFÉ has not merely sold
coffee, it has woven itself into the fabric of human achievement and shared
experiences.

Furthermore, the examination of the external environment underscores the brand's

ability to navigate and thrive amid dynamic global dynamics. Economic trends,
technological advancements, and socio-cultural shifts have been met with an
unwavering commitment to sustainability and responsible coffee production.
NESCAFÉ's investment in sustainable practices not only preserves the environment
but also uplifts coffee farmers and sustains local communities, a testament to the
brand's dedication to leaving a positive impact on the world.

NESCAFÉ's journey is one marked by a pioneering spirit that echoes through its 80-
year history. The brand's ability to evolve with the times, from the inception of soluble
coffee in the 1930s to its current global dominance, showcases an agility that is
crucial in a changing market.

In our critical assessment, it is clear that NESCAFÉ's success is not accidental. It is

the result of strategic decisions, unwavering commitment to quality, and a
foresighted approach to marketing. As it continues to serve over 5,500 cups every
second worldwide, it is poised for the future by embracing sustainable practices and
staying true to its founding principles.

As we reflect on NESCAFÉ's journey, we are reminded that marketing is not just

about selling a product, it’s about creating a narrative that resonates with consumers,
building relationships, and leaving a positive impact on the world. This brand has
accomplished this and more, and its story continues to unfold with every cup brewed.

14
 2023/2024

Bibliography

Gomini Gupta (2016) Nescafe - It all starts campaign analysis

https://www.slideshare.net/GominiGupta1/nescafe-2014-ad-stp-
analysis-94443369

MBA Skool Team (2020) Nescafe PESTLE Analysis

https://www.mbaskool.com/pestle-analysis/companies/18040-
nescafe.html

Nescafe Marketing Mix [2023] – Marketing Mix of Nescafe. (2023, 13 october).

Business Marketing Strategy. https://bsmarketingstrategy.com/nescafe-
marketing-mix/#Place_in_the_Nescafe_Marketing_Mix

Nescafé (n.d.). https://www.nestle.com/brands/coffee/nescafe.

Nestlé (2022, 4 october) Nestlé launches Nescafé Plan 2030 to help drive
regenerative agriculture, reduce greenhouse gas emissions and
improve farmers' livelihoods
https://www.nestle.com/media/pressreleases/allpressreleases/
sustainable-coffee-nescafe-plan-2030

Roy, S. (2021) Nescafe Marketing Strategy: Lesson in pull Marketing.

https://thestrategystory.com/2021/09/03/nescafe-marketing-strategy-
plan-mix/.

Shastri, A. (2023) 'Comprehensive marketing mix of Nescafe 7Ps explained |

IIDE,' IIDE, 31 August. https://iide.co/case-studies/marketing-mix-of-
nescafe/.

StudyMoose. (2023, 15 november). Marketing Analysis: Nescafe’s 4Ps

Strategy Free Essay example. https://studymoose.com/marketing-mix-
of-nescafe-essay

Team, M. S. (2023, 15 november). Nescafe Marketing Strategy & Marketing

Mix (4Ps). MBA Skool.
https://www.mbaskool.com/marketing-mix/products/16754-nescafe.html

Term Paper of segmenting, targeting and positioning of Nescafe (2013)

https://assignmentpresentationedu.blogspot.com/2013/06/term-paper-
on-segmenting-targeting-and.html

Yasar, K. (2022) 4 P’s marketing mix.

https://www.techtarget.com/whatis/definition/Four-Ps

15
2023/2024

16