Keurig

Keurig At Home
Post Kotler

Contents
Evaluation of the current plan
CompanyOverview
Suggestion of marketing Strategies
Q & A
2
1
3
4
2

1. CompanyOverview
Post Kotler

Do you like coffee ?
Instant coffee?
Gourmetcoffee?
VS.
4

Keurig become a leader in OCS market
Peak of coffee consumption (16.5 pounds per capita)
Mid-1940s
Popularity of soft drinks / coffee consumption decline
1960s
Low coffee consumption (6.1 pounds per capita)
Mid-1990s
Keurig’s inception
1992
Gourmet coffeehouses reinvigorate the market
Late 1990s
Introduction single-cup brewing system (B2000 model)
1998
14.8% of brewer distributions offer a single-cup system for the OCS market
2000
44.8% of brewer distributions offer a single-cup system for the OCS market
2001
Keurig became a leader in OCS market (Keurig had shipped over 33,000)
2002
Keurig’s plans to enter into at-home market
Provide the largest variety of coffees for single-cup brewing system
2003
5

Why Keurig?
Brewer
Delicious coffee
K-CUP
Fresh
Delicious
Variety
Fast
Convenient
6

Biz Model of Keurig
Rent/free brewers
Sell brewers
Fee
Office
Keurig
KAD
Sell K-Cups
Pay
(Wholesale price)
Pay : per $0.4~0.5
Licensing
Arrangement
Pay
: per $0.25
U.S. Single-Cup Brewer
Placement In 2002
K-Cup loyalty
: per $0.04
Sell
K-Cups
Keurig
Others
Roaster
Flavia
Filterfresh
7

Can Keurig make a success at home market as much as they did in the OCS market?

Possibility of success
Strengths
Weaknesses
High value of B100 - Convenience / taste consistency / fast
Variety of gourmet coffee roasters - more than 75 coffee varieties
Keurig-aware customers in OCS market
Strong partnership with KADs
Limited company resources- not enough time & budget to develop
retail channels - insufficient marketing budget - impossible to do mass promotion
Opportunities
Threats
Gourmet coffee market is growing! - 40% of growth from 1996 to 2000
- over 110 million Americans drink gourmet coffee
Competitors are about to come! - Large consumer product companies are preparing to enter the market - showing the adaptation of traditional espresso pod system for American-style
9

2.Evaluation of the current plan
Post Kotler

Evaluation - Product
GOAL
Maximize at-home biz & Protect OCS market
STRATEGY
Introduction of a second portion pack
Current Plan
Evaluation
11

Evaluation - Price
GOAL
STRATEGY
Pay greater attention to the pricing of the Brewer
Current Plan
Evaluation
Manufacturing cost : $200 ~ $220
12

Evaluation - Place
GOAL
STRATEGY
Direct marketing & leverage KADs
Current Plan
Evaluation
KeurigRoaster
End User
KeurigRoaster
KADs
End User
13

Evaluation - Promotion
GOAL
STRATEGY
Targeting Keurig Office users & Demonstrating
Current Plan
Evaluation
14

3. Suggestion of marketing Strategies
Post Kotler

Marketing Strategy - Product
Return to the single cup strategy, but prepare differentiations
Prepare the distinct points with OCS
- Use a distinct concepts for home market, not different packaging
Premium concepts are available for home ex) Organic Arabica coffee,
1 cent charity campaign per one cup etc.
Make the price of existing K-cup at home be same as the one of OCS market
 This policy can protect KAD’s revenues by locking in office managers
Return to the Single Cup
- Two cup strategies are burdens not only for GMCR but also for other roasters
- Potentially two kinds of cup can give confusions of use to consumers
16

Marketing Strategy - Price
Market skimming for the brewer
For the Brewer
Focus on Premium market at first
and then penetrate it with mid price
Target segment
. Core users (based on whole bean)
- $75,000 ↑, 45~54 age, Married
 Premium launching : $299
▶ Product with competitiveness
. Speedy coffee making
. Ease to use
. Convenience of clean up
▶High manufacturing cost
. $220～200
 Basic model launching : $130
▶Prepare the price war against
competitors like P&G, Kraft
▶ Satisfying customer who feel
the price of premium model is
too high
Product line with pricing strategy
1st
Price
2nd
$299
$130
Market penetration
Price consideration
$199
. Market penetration
. Immediately loss profit
$299
. Market skimming
. Profitable pricing
. Less price sensitive segment
& definite value proposition
17

Marketing Strategy - Price
Market penetration for the K- cup
For K-cup
Appropriate price of K-cup according to research : $0.5 ~ 0.55
. Intercept respondents : $0.55 (44 %)
. Respondents who were interested in
the system : $0.5 or more (over 30%)
The price for basic K-cup : $0.5
. Appropriate price based on research
. Same price with KAD’s selling price
 Eliminating KAD’s concerns
by preventing office managers’
breakaway
The price for premium K-cup : $0.5↑
. For premium segment at home market, it may be a need for premium K-cup : Organic / Arabica / Supremo
 It must be profitable & distinct
Value chain with price structure
KAD
Office
Keurig
per $0.4~0.5
per $0.25
per $0.04
per $0.5
Home
customers
Roaster
Premium
: per $0.5↑
- Solving the KAD’s concern
- Giving distinction to home market
18

Marketing Strategy - Place
Direct marketing through Web and then traditional retails
Long term
▶Develop traditional retails
It’s essential to develop the traditional
retails like BBY and wholefood
. To expand market share, online selling
is not enough
. Collaboration with retails is able to
make great demonstration and marketing
Building a brand is necessary to succeed
at home market
Short term
▶Direct marketing by E-commerce
Context
. Not enough resource for retails
. No brand awareness for home users
. Spontaneous intenders to buy B100
: About 12,000
Implementation
. Using both Keurig and roasters’ homepage
 Collaboration with roasters
. Online shopping mall like amazon, ebay
Benefits
. Selling the brewer and K-cup together
. Various selling packages are available
. Less cost to control distributors
▶ Indirect marketing by KAD
- Office users may ask KAD to buy them for their family
19

Marketing Strategy - Promotion
Experience + Word of Mouth + Building a Brand
Free Trial
Experience! Experience!! Experience!!!
- Product demonstration will increase likelihood of purchasing
- Partnership with hotels, banks, hospitals
department stores, shopping malls etc.
Expending
Referral
Program
Expend the incentives program to the office managers
- KADs -> monetary compensation, office managers -> coupon
- Office managers’ collaboration is the key factor to promote B100
They can help natural promotion like Point of Sale advertising
near the office brewer
Building a
Brand
Brand power may be more important for the home market
- Increasing a brand awareness can be connected to the
purchasing at home market
- Exposure the brand at both Keurig and roaster homepage
- Internet ads through internet portals such as yahoo, AOL
- Capture the online coffee community
They may provide the mass of people with detailed reviews
20

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Keurig

by Eric Moon on Dec 15, 2009

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Keurig — Presentation Transcript