Today’s lecture topic was the total customer cost, that is, all the monetary and non-monetary costs the customer encounters when engaging in a purchasing process. In addition, the strategies of value-based pricing and cost-based pricing were discussed in the lecture. Different costs such as purchase costs (search of options, information of options, travel to the store etc.), use costs (energy and water use, maintenance, switching etc.) and post-use costs(collection, storage, disposal etc.) were introduced, and examples of both value- and cost-based pricing strategies were thought through in groups.
One example of a sustainable brand using value-based pricing that came to my mind is Nespresso. Nespresso is a quality coffee brand offering capsule coffee machines and a variety of different Grand Cru coffees provided in recyclable capsules. Nespresso positions itself as a high-quality brand, quality and freshness being probably the most important aspects in its brand strategy. Many of the brand’s coffee machines are energy-efficient, for example they use less water than many other capsule coffee machines and turn off automatically after a certain period of time. Additionally, the aluminum capsules are completely recyclable.
It can be argued whether capsule coffee machines and capsule coffee in general are sustainable or not. I think Nespresso has both made and communicated sustainability pretty well to consumers. It practices an AAA Sustainable Quality Program, paying premiums of 30-40% above the market price to promote quality coffee farming practices. The program also helps small-scale farmers to improve their businesses and aims to continuously reduce its carbon footprint and emissions. Nespresso uses Life Cycle Assessment (LCA) in its processes, considering the sustainability of its products and actions throughout the supply chain. And this is just a few of the brand’s sustainability efforts, that are vastly described in the company’s web site http://www.nespresso.com.
Nespresso’s pricing strategy is definitely value-based, since the customer and the ultimate, unique, luxurious coffee experience is at the core of the brand. I think, because of the variety of its sustainability actions, and, more importantly, the proofs and evidence of its actions on the web site www.nespresso.com, make Nespresso a perfect example of a sustainable brand engaged in value-based pricing.