Have you ever thought about the price per kilo of Nespresso ground coffee beans? You pay a good 80 euros per kilo. Nespresso has managed to increase the willingness to pay fivefold. On average, coffee costs +/- 16 euros per kilo. How did Nespresso manage to charge 5 times as much for a kilo of coffee? Which smart marketing techniques underlie this? And how can (e-commerce) brands be smart about this ?
Let’s do that math first. Because when you read that first paragraph, you probably thought, ‘Wait? I don’t pay 5 times as much for a kilo of coffee if I buy Nespresso cups?’ Oh yes! Just count. One cup costs an average of 42 cents. Such a cup contains 5.2 grams of coffee (which was still difficult to find). If you calculate those 42 cents for 5.2 grams back to 1 kilo, you arrive at +/- 80 euros.
Imagine proposing this internally. ‘Let’s see if we can make consumers pay 5 times as much for the product they’ve been buying for years.’ Any manager who assumes a rational consumer would immediately show you the door.
But loyal readers now know that the consumer is not nearly as rational as it seems. We easily transfer thousands of euros to a house, and then drive the same day to a supermarket where you can buy a loaf of bread 50 cents cheaper.
It would have been just as pointless to ask the consumer this. You guessed the answer if you asked if someone would pay 5 times as much for their coffee.
“People don’t do what they say, and they don’t say what they do.” This is pre-eminently our starting point for research in
Enough reasons why Nespresso should not be a success. But that’s it. How did this coffee brand manage to do this? To answer that question, we need to take a look inside the consumer’s brain. After all, every buying decision starts in our braincase.
A coffee moment
The marketers at Nespresso also knew that it would be pointless to charge literally 5 times as much for a pack of coffee. And in that framing lies the first nice insight.
Everything is relative, here too. Because if you compare the price of a cup with a kilo of coffee, you are a thief of your own wallet. But if you compare the outcome of such a cup (a cup of coffee) with the same cup IT Directors Managers Email Lists of coffee from a good barista, then the euros suddenly fall in the right direction. Suppose you pay 2 euros for a good espresso, then 42 cents is obviously a bargain.
Nespresso applies a nice example of mental anchoring here. What is anchoring? This neuromarketing principle plays entirely on the principle of relativity. If a large number is next to a smaller number, that number feels smaller because of that large number.
Albert Heijn applies this principle perfectly ( so far only on their website). Putting the weight (400) of the M&Ms close to the price (3.89) makes that price seem a bit lower. This in turn has a positive effect on the total order value of AH (I got it from reliable sources)