Huertas, Juan Keurig Cup Response PDF

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Keurig Cup Response...

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Question 1 The innovative creation of the Keurig Cup is a favorably designed product even after the simple flaws that GMCR pointed out. As stated in the in the article "Keurig at Home" by Eric T. Anderson, there are over 12,000 customers who have asked and showed interest in this market. The Keurig Cup in the at-home market may have a volatile impact on the market and meet the needs of the customers. The launch of this product also allows for more "price control" according to Anderson. Also, many people may find the ease and good cup of coffee from a Keurig Cup very useful if they are working from home. Not everyone travels for work. Then, Keurig's other product the K-Cup is its most valuable possession. K-Cup is the commercial product that leads Keurig to become a worldwide product. Secondly, their .04 royalty is an existing source of income if the Single Keurig Cup in the at-home market fails. A company shouldn't remove a primary source of income before the other product is introduced and proves to be an independent revenue source that's greater than their current product. Using the single K-Cup for all the markets may be a weakness such as, lack of innovation, poor customer feedback and poor competition against competitors who are trying to steal market share. Lastly, Keurig should use Keurig Cup in the at-home market and continue to use the K-Cup in the Commercial market.

Question 2 Pricing for the Keurig brewer and Portion pack for both product lines (COS and athome) have raised many concerns since profitability has come to question. The company showed brewer attractiveness around $149 was very popular but would lose money, however at a greater price around $199 and up would be more beneficial. But customer's willingness to pay was more

around to pay $125 for the brewer, only a small percentage would pay more for it. A price that one should consider is around $229 with an addition of a mail-in rebate. Many consumers either don't submit, lose/forget or too much time elapses to gain the money back from the rebate. Under Keurig's pricing strategy the coffee sales are profitable through royalties that they gain $0.04 cents. The K-Cup in the commercial market is sold approximately around $0.55 with a 43.8% percent of respondents to this price from the market according to table 7A "Willingness to Pay for Coffee". The brewer and K-cup pricing together show that as price increases from $100 to $130 less and fewer people are willing to pay for the product. Furthermore, Coffee profits affect brewing price because if Keurig can mass produce more and more of its products they will certainly be able to decrease the cost to the consumer making it more of a desirable/cheaper luxurious coffee brewing system. If Keurig does not come up with good coffee profits they will not be able to innovate for less expensive and more sustainable brewing methods which will help keep the company's unique brewing and tasteful coffee ways. Which result in loss of market share and more expensive brewing because the price of raw products will eventually rise.

Question 3 Single-cup coffee systems is not a new revolutionary technology that Keurig came up with but they did innovate the method of providing it to the customer in a more effective way. The market share and attractiveness for this system is 3.1 billion dollars at-home market for gourmet coffee. With the 157 million Americans who drink coffee daily the market for Singlecup coffee systems is great! There is great attractiveness for those who are in a rush and need a cup of coffee in the morning. Since the system can provide a gourmet flavor of coffee within 2 minutes it will be a great seller. Keurig's internet based survey dictated that 67% of participants

showed interest in the product as well. Other competitors in the Single-Cup market were Salton using the One: One system, Sara-Lee with Senseo pods, and lastly P&G were supposedly under contract to produce a similar version of the product. These four companies are all priced on different scales but the method of brewing and space needed for the machines and coffee beans were different. Evidently, through my analysis, Keurig has a competitive advantage. Many of these companies did not have proprietary systems. They were too much alike and used open systems. The motivating reason behind this was consumer knowledge of the product. Since many of these companies did not originally come up with this idea, they stood to the simplicity of the original design so they would not have to teach the consumers on how to use their product. Teaching consumers may be very costly and diminish their lack of interest in the product if it varied too much and took too long to learn how to use. I am not saying that innovation is bad but in this case, there is not much room for innovation but flavors and method of brewing. Keurig’s fresh, appropriately temperature coffee tagged along side with perfect taste demonstrated fresh and effective brewing practice with their innovative filters.

Question 4 After analyzing Keurig's marketing and launch strategy I have come up with some concerns. Their plans/strategies are not sound and can use some more differentiating factors to improve their sales. My suggestion is, maintain the idea of targeting offices but as well large universities, high schools, and other locations where large groups of people congregate. Limiting themselves to online users, 12,000 consumers who asked Keurig for a similar product, and Keurig office users show they did not put much thought into it. Also, if they were to do a similar strategy by leasing or letting universities and schools have the machine for free this may inspire

the consumer using them to buy the single cup Keurig for their home. The Keurig referral program is a great way to involve KAD's (Keurig authorized distributors) because using your existing customer base is always a great idea. You just can’t be too dependent on them. I understand that their launch may not be strong because the company lacks funds, but if you use students and other small community ambassadors the company can reach a new group of consumers. Also, with these ambassadors, they can provide great launching advertisement/marketing with their social media since they would have great relationships with people within those communities. They could pay a small amount for a number of views or sales that occur through those ambassadors that helped increase sales. Brand ambassadors are great for expanding the business. Keurig's biggest platforms for selling directly to customers seems to be OCS and online so a good portion of their money should be directed in programs that attack those markets. Other than those main points I have mentioned Keurig's launch is solid. It should come up with decent sales and hopefully with an augmenting customer base....