Internet Marketing Business Strategies

Amid all the gloomy news of contracting sales and the current business downturn, one company is bucking the trend in a big way and enjoying a recession boom. I’m not talking about a company that has moved fast to corner the market in selling cut-price goods, or cheap food. I’m talking about Nespresso, the luxury espresso capsule-coffee provider which is an offshoot of Nestle.

If you don’t think it’s possible to grow a luxury business in the middle of a recession, read on…

In 2008, Nespresso’s worldwide sales rose to two billion Swiss francs, 30% higher than the total in 2007. Nor was the figure is a flash in the pan or the result of a new recession strategy. Nespresso has enjoyed growth rates of more than 30% for the last eight years.

When you buy a Nespresso coffee machine, you are effectively committing yourself to buying coffee from Nespresso, because only espresso coffee capsules fit the machine. Nespresso capsules can only be bought from the Nespresso website, or by telephoning Nespresso, or from one of a severely limited number of Nespresso “boutiques”.

Nespresso does not make any money off sales of its coffee machines. Most of the profit comes from the capsules, which of course customers must buy again and again if they are to continue enjoying Nespresso coffee.

The Nespresso system is easy to use. You don’t have to deal with messy coffee filters or spilling coffee granules. You simply pop a capsule into the machine and press a button.

Exclusivity is the key. Customers are made to feel that they are members of an elite club. They can choose from a range of high-quality, exclusive coffees. They get personal service. They get to own beautifully designed coffee machines. And they receive a glossy magazine three times a year to reinforce the message that they are special.

Of course, Nespresso’s image is greatly helped by the hearthrob effect of George Clooney, who advertises the brand and adds to its aroma of luxury, taste, and allure.

So what can business owners learn from this business model?

The first lesson is that it is certainly possible to grow a luxury business in the middle of a deep recession if you get your product and your marketing model right. Here are some of the factors that are involved.

1. Look for a product that will generate high repeat sales.
2. Win customers by selling your front-end product at a discount.
3. Use the front-end product to lock in your customers.
4. Make your company the exclusive source of the back-end product.
5. Make your customers feel very, very special.
6. Offer a product that is high-quality, easy to use, and unique.
7. Give your customers the illusion of choice without the confusion of choice.
8. Invest in your marketing campaign. Focus on the core emotion. If possible, hire a famous heartthrob to do it for you!

If you can get all these factors into place and generate multiple streams of income you will not need to worry about how long the current recession is going to last or how deep it is going to go. Remember, many of the most famous business success stories have started during recessions and survived to enjoy the boom times.

Now check out your own business recession strategy and see how it measures up to the Nespresso challenge, the business impact of which is strong enough to enable Nespresso to ignore the recession altogether. Very nice. Especially if your name is George Clooney.

by David Hurley
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