Brewing Success: Discovering Fresh Consumer Perspectives in the Nespresso Experience

This is a summary of a research proposal I developed for Nespresso as part of my Statistical Methods for Market Research module. A full version is available for review on my GitHub profile.

Introduction

The client brief emphasised Nespresso's goal to stay at the forefront of the premium coffee market. To achieve this, Nespresso intends to focus on product innovation and enhancing the customer experience. Additionally, the company seeks to strengthen positive perceptions of its coffee pods’ sustainability. This study will address these objectives over a six-month period, providing strategic recommendations to support Nespresso in reaching its goals.

This study aims to contribute to Nespresso's objectives by addressing three primary research aims (RA) outlined in the client brief:

• RA1: To understand customers’ preferences for new coffee blends and new brewing technologies.

• RA2: To understand any customer pain points to identify areas for improvements in product quality, packaging, and customer service.

• RA3: To evaluate the effectiveness of Nespresso’s sustainability initiatives and identify opportunities for further improvement.

After identifying the research aims, we establish a set of research questions and objectives to explore these aims in greater depth.

Methodology

The market research approach combines exploratory, descriptive, and causal designs to understand customer preferences, market characteristics, and the impact of campaigns and technology on perceptions and loyalty.

A cross-sectional design is suggested for a three-month timeline, capturing a snapshot of customer traits and testing promotional effects on perceptions. Data will be gathered through online surveys, focus groups, and secondary sources.

Statistical analysis will be conducted in SPSS, utilising the following methods to meet the research objectives (RO):

• RO1.1: 2-Group Discriminant Analysis

• RO1.2: Paired Samples T-Test

• RO1.3: 2-Way ANOVA

• RO2.1: Focus Group

• RO2.2: Multiple Linear Regression

• RO2.3: Chi Squared test of homogeneity of proportions

• RO3.1: 1-Way ANOVA

• RO3.2: Chi squared test of association

Data Collection

With an average response rate of 33% and a population size of at least 5,000 Nespresso consumers, a minimum sample size of 1,160 is required to achieve a 95% confidence interval and a ± 5% margin of error.

Stratified random sampling will be used to select respondents from the Nespresso database, categorising customers by demographic groups to ensure a representative sample, while convenience sampling will target avid coffee drinkers through social media.

Online focus groups will facilitate discussions and enhance participant confidence. A recommended maximum of 10 members per group will be observed, with 50 interested respondents selected and moderated by two facilitators. Discussions will last 90 minutes and be recorded for reference.

The study will include both focus groups and online surveys for high geographic flexibility and quick data collection. Questions will use 5-point Likert scales for clarity, with a neutral option included to avoid uniform responses. A pilot test with 35 respondents will identify potential issues in the questionnaire. The target demographic is individuals aged 18 and above, ensuring informed perspectives while requiring computer literacy for effective participation.

Data Analysis

RO1.1 Examine the relationship between customers’ willingness to try new coffee blends and the following variables: Age, Annual Household Income, Importance of brand, Weekly frequency of coffee drinking.

2-Group Discriminant Analysis is a statistical technique used to classify observations into two predefined categories based on several predictor variables. In this case, it examines how age, annual household income, importance of brand, and weekly frequency of coffee drinking relate to customers' willingness to try new coffee blends. The analysis calculates a discriminant function that combines these predictor variables into a single score, maximising the variance between the two groups (e.g., "Willing to Try" vs. "Not Willing to Try") while minimising the variance within each group. This score is then used to classify individuals into one of the two categories, allowing for insights into the factors that influence consumer behaviour regarding new coffee blends.

RO1.2 Determine if the new brewing technology is effective in improving customers’ loyalty.

To determine the effectiveness of Nespresso’s new brewing technology, the Vertuoline, in improving customer loyalty, a paired T-test will be employed. This statistical method compares loyalty scores collected from the same group of consumers before and after they use the new brewing technology, thus allowing for the assessment of changes in loyalty attributable to the product. By utilizing a one-group pre-test post-test experimental design, researchers will measure customer loyalty scores prior to product testing and again after exposure to the Vertuoline. The paired T-test will then evaluate whether any observed differences in scores are statistically significant, indicating whether the new technology effectively enhances customer loyalty.

RO1.3 Examine the extent to which customers’ monthly expenditure on Nespresso products are related to their preference for new coffee blends and brewing techniques.

To examine the relationship between customers' monthly expenditure on Nespresso products and their preferences for coffee blends and brewing techniques, a two-way ANOVA will be utilised. This statistical method evaluates the impact of two independent variables—coffee blend and brewing technology—on the dependent variable, which is the monthly expenditure. By analysing the interactions between the two independent variables, the two-way ANOVA will help determine if different combinations of coffee blends and brewing methods significantly affect spending. This approach allows for a comprehensive understanding of how customer preferences influence their financial commitment to Nespresso products, highlighting potential areas for targeted marketing or product development.

RO2.1 Examine customers’ pain points and their suggested improvements.

To examine customers' pain points and gather suggestions for improvements, we will conduct a qualitative focus group study. This method enables direct interaction with customers to gain insights into their challenges and identify areas for enhancement. Given the evolving landscape of consumer preferences, it's essential to collect firsthand feedback on the specific factors influencing their experiences with Nespresso products. The moderator will facilitate discussion using open-ended questions, such as “What do you think of Nespresso's coffee machine features?” and “Can you share a specific instance where you faced challenges while using Nespresso products?” Participants will also be encouraged to ask questions, fostering a dynamic conversation. This valuable information will empower Nespresso to adapt to customer expectations effectively and improve the overall customer experience.

RO2.2 Examine the relationship between the overall profit earned and the amount spent on product quality, packaging, and customer service.

To examine the relationship between Nespresso's overall profit and the expenditures on product quality, packaging, and customer service, multiple linear regression (MLR) will be employed. In this analysis, the predictor variables will include the quarters of the year and the quarterly amounts spent on the specified areas, while the dependent variable will be Nespresso’s total annual profit. MLR allows us to assess how changes in the independent variables impact the dependent variable, providing insights into the extent to which investments in product quality, packaging, and customer service contribute to profitability. By identifying significant predictors, Nespresso can make informed decisions on resource allocation to optimise profit outcomes.

RO2.3 To determine if the proportion of consumers who prefers Nespresso over its direct competitor differ across the mentioned variables.

To determine whether the proportion of consumers who prefer Nespresso over its direct competitor, Keurig, varies across different product aspects, the Chi-Squared test for homogeneity of proportions will be utilised. In this analysis, the independent variables will include product quality, packaging, and customer service, while the dependent variable will be the proportion of consumers favouring Nespresso. The Chi-Squared test will compare the observed proportions of preferences across the different product aspects to the expected proportions, assessing whether any significant differences exist. This statistical method helps identify which factors influence consumer preference, allowing Nespresso to understand its competitive position and improve areas that may enhance customer loyalty.

RO3.1 Investigate the relationship between the education level of a customer and their perception score on the sustainability initiatives.

To investigate the relationship between customers' education levels and their perception scores regarding sustainability initiatives, one-way ANOVA will be employed. In this analysis, the independent variable will be the education level of the customers, while the dependent variable will be their perception score on sustainability initiatives. One-way ANOVA allows for the comparison of means across different education levels to determine if there are statistically significant differences in perception scores. By assuming that the data is normally distributed for each education level, the analysis will help identify whether education has a meaningful impact on how customers view Nespresso's sustainability efforts, thereby informing strategies for enhancing customer engagement and promoting sustainable practices.

RO3.2 Examine the relationship between the marketing strategies employed by the company and the perceived effectiveness of sustainability initiatives.

To examine the relationship between the marketing strategies employed by Nespresso and the perceived effectiveness of its sustainability initiatives, the Chi-Squared test for association will be used. In this analysis, the independent variables will represent the various marketing strategies implemented by the company, while the dependent variable will be the perceived effectiveness of those sustainability initiatives. The Chi-Squared test will evaluate whether there is a significant association between the different marketing strategies and the levels of effectiveness as perceived by customers. This statistical method will help Nespresso understand how its marketing efforts influence consumer perceptions of sustainability, enabling the company to optimise its communication strategies and enhance the impact of its initiatives.

Further Recommendations

To further support business objectives, additional research can be proposed in several key areas:

1. Competitor Benchmarking Study: This study would involve a comprehensive analysis of competitors in the premium coffee market, focusing on identifying successful strategies in product innovation, customer experience, and sustainability practices.

2. Market Expansion Feasibility Study: This research would explore the potential for Nespresso to expand its market presence into regions with untapped opportunities for premium coffee. It would examine cultural nuances and preferences, providing insights to tailor marketing and product strategies for successful market entry and growth.