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  1. 1. Keurig At Home<br />Post Kotler<br />
  2. 2. Contents<br />Evaluation of the current plan<br />CompanyOverview<br />Suggestion of marketing Strategies <br />Q & A<br />2<br />1<br />3<br />4<br />2<br />
  3. 3. 1. CompanyOverview<br />Post Kotler<br />
  4. 4. Do you like coffee ?<br />Instant coffee?<br />Gourmetcoffee?<br />VS.<br />4<br />
  5. 5. Keurig become a leader in OCS market<br />Peak of coffee consumption (16.5 pounds per capita)<br />Mid-1940s<br />Popularity of soft drinks / coffee consumption decline<br />1960s<br />Low coffee consumption (6.1 pounds per capita)<br />Mid-1990s<br />Keurig’s inception<br />1992<br />Gourmet coffeehouses reinvigorate the market<br />Late 1990s<br />Introduction single-cup brewing system (B2000 model)<br />1998<br />14.8% of brewer distributions offer a single-cup system for the OCS market<br />2000<br />44.8% of brewer distributions offer a single-cup system for the OCS market<br />2001<br />Keurig became a leader in OCS market (Keurig had shipped over 33,000)<br />2002<br />Keurig’s plans to enter into at-home market<br />Provide the largest variety of coffees for single-cup brewing system<br />2003<br />5<br />
  6. 6. Why Keurig?<br />Brewer<br />Delicious coffee<br />K-CUP<br /><ul><li> Fresh
  7. 7. Delicious
  8. 8. Variety
  9. 9. Fast
  10. 10. Convenient </li></ul>6<br />
  11. 11. Biz Model of Keurig<br />Rent/free brewers<br />Sell brewers<br />Fee<br />Office<br />Keurig<br />KAD<br />Sell K-Cups<br />Pay<br />(Wholesale price)<br />Pay : per $0.4~0.5<br />Licensing<br />Arrangement<br />Pay <br />: per $0.25<br />U.S. Single-Cup Brewer <br />Placement In 2002<br />K-Cup loyalty<br />: per $0.04<br />Sell <br />K-Cups<br />Keurig<br />Others<br />Roaster<br />Flavia<br />Filterfresh<br />7<br />
  12. 12. Can Keurig make a success at home market as much as they did in the OCS market?<br />
  13. 13. Possibility of success<br />Strengths<br />Weaknesses<br /><ul><li> High value of B100 - Convenience / taste consistency / fast
  14. 14. Variety of gourmet coffee roasters - more than 75 coffee varieties
  15. 15. Keurig-aware customers in OCS market
  16. 16. Strong partnership with KADs
  17. 17. Limited company resources- not enough time & budget to develop</li></ul> retail channels - insufficient marketing budget - impossible to do mass promotion<br />Opportunities<br />Threats<br /><ul><li> Gourmet coffee market is growing! - 40% of growth from 1996 to 2000</li></ul> - over 110 million Americans drink gourmet coffee<br /><ul><li> 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 </li></ul>9<br />
  18. 18. 2.Evaluation of the current plan<br />Post Kotler<br />
  19. 19. Evaluation - Product<br />GOAL<br />Maximize at-home biz & Protect OCS market <br />STRATEGY<br />Introduction of a second portion pack<br />Current Plan<br />Evaluation<br />11<br />
  20. 20. Evaluation - Price<br />GOAL<br />Maximize at-home biz & Protect OCS market <br />STRATEGY<br />Pay greater attention to the pricing of the Brewer<br />Current Plan<br />Evaluation<br />Manufacturing cost : $200 ~ $220<br />12<br />
  21. 21. Evaluation - Place<br />GOAL<br />Maximize at-home biz & Protect OCS market <br />STRATEGY<br />Direct marketing & leverage KADs<br />Current Plan<br />Evaluation<br />KeurigRoaster<br />End User<br />KeurigRoaster<br />KADs<br />End User<br />13<br />
  22. 22. Evaluation - Promotion<br />GOAL<br />Maximize at-home biz & Protect OCS market <br />STRATEGY<br />Targeting Keurig Office users & Demonstrating<br />Current Plan<br />Evaluation<br />14<br />
  23. 23. 3. Suggestion of marketing Strategies <br />Post Kotler<br />
  24. 24. Marketing Strategy - Product<br />Return to the single cup strategy, but prepare differentiations<br /><ul><li> Prepare the distinct points with OCS</li></ul>- Use a distinct concepts for home market, not different packaging <br /><ul><li> Premium concepts are available for home ex) Organic Arabica coffee, </li></ul> 1 cent charity campaign per one cup etc.<br /><ul><li> Make the price of existing K-cup at home be same as the one of OCS market</li></ul> This policy can protect KAD’s revenues by locking in office managers <br /><ul><li>Return to the Single Cup </li></ul>- Two cup strategies are burdens not only for GMCR but also for other roasters<br />- Potentially two kinds of cup can give confusions of use to consumers<br />16<br />
  25. 25. Marketing Strategy - Price<br />Market skimming for the brewer<br /><ul><li> For the Brewer
  26. 26. Focus on Premium market at first </li></ul> and then penetrate it with mid price <br /><ul><li>Target segment </li></ul> . Core users (based on whole bean)<br /> - $75,000 ↑, 45~54 age, Married <br /> Premium launching : $299<br />▶ Product with competitiveness<br /> . Speedy coffee making<br /> . Ease to use<br /> . Convenience of clean up <br />▶High manufacturing cost<br /> . $220~200<br />  Basic model launching : $130<br />▶Prepare the price war against<br /> competitors like P&G, Kraft<br />▶ Satisfying customer who feel <br /> the price of premium model is<br /> too high<br /><ul><li>Product line with pricing strategy</li></ul>1st<br />Price<br />2nd<br />$299<br />$130<br />Market penetration<br /><ul><li>Price consideration</li></ul>$199<br />. Market penetration<br />. Immediately loss profit<br />$299<br />. Market skimming<br />. Profitable pricing<br />. Less price sensitive segment<br /> & definite value proposition<br />17<br />
  27. 27. Marketing Strategy - Price<br />Market penetration for the K- cup<br /><ul><li>For K-cup
  28. 28. Appropriate price of K-cup according to research : $0.5 ~ 0.55</li></ul> . Intercept respondents : $0.55 (44 %)<br /> . Respondents who were interested in <br /> the system : $0.5 or more (over 30%)<br /><ul><li> The price for basic K-cup : $0.5</li></ul> . Appropriate price based on research<br /> . Same price with KAD’s selling price<br /> Eliminating KAD’s concerns<br /> by preventing office managers’ <br /> breakaway <br /><ul><li> The price for premium K-cup : $0.5↑</li></ul> . For premium segment at home market, it may be a need for premium K-cup : Organic / Arabica / Supremo<br />  It must be profitable & distinct<br /><ul><li> Value chain with price structure</li></ul>KAD<br />Office<br />Keurig<br />per $0.4~0.5<br />per $0.25<br />per $0.04<br />per $0.5<br />Home<br />customers<br />Roaster<br />Premium<br />: per $0.5↑<br />- Solving the KAD’s concern<br />- Giving distinction to home market<br />18<br />
  29. 29. Marketing Strategy - Place<br />Direct marketing through Web and then traditional retails<br /><ul><li> Long term </li></ul>▶Develop traditional retails<br /><ul><li>It’s essential to develop the traditional</li></ul> retails like BBY and wholefood<br /> . To expand market share, online selling<br /> is not enough<br /> . Collaboration with retails is able to <br /> make great demonstration and marketing<br /><ul><li>Building a brand is necessary to succeed </li></ul> at home market<br /><ul><li> Short term </li></ul>▶Direct marketing by E-commerce<br /><ul><li> Context</li></ul> . Not enough resource for retails<br />. No brand awareness for home users<br /> . Spontaneous intenders to buy B100<br /> : About 12,000 <br /><ul><li> Implementation</li></ul> . Using both Keurig and roasters’ homepage<br />  Collaboration with roasters<br /> . Online shopping mall like amazon, ebay<br /><ul><li> Benefits</li></ul> . Selling the brewer and K-cup together<br /> . Various selling packages are available<br /> . Less cost to control distributors<br />▶ Indirect marketing by KAD<br /> - Office users may ask KAD to buy them for their family<br />19<br />
  30. 30. Marketing Strategy - Promotion<br />Experience + Word of Mouth + Building a Brand <br />Free Trial<br /><ul><li>Experience! Experience!! Experience!!!</li></ul> - Product demonstration will increase likelihood of purchasing<br /> - Partnership with hotels, banks, hospitals<br /> department stores, shopping malls etc.<br />Expending <br />Referral<br />Program<br /><ul><li>Expend the incentives program to the office managers </li></ul> - KADs -> monetary compensation, office managers -> coupon<br /> - Office managers’ collaboration is the key factor to promote B100<br /> They can help natural promotion like Point of Sale advertising <br /> near the office brewer <br />Building a<br />Brand<br /><ul><li>Brand power may be more important for the home market </li></ul> - Increasing a brand awareness can be connected to the <br /> purchasing at home market<br /> - Exposure the brand at both Keurig and roaster homepage<br /> - Internet ads through internet portals such as yahoo, AOL<br /> - Capture the online coffee community <br /> They may provide the mass of people with detailed reviews<br />20<br />
  31. 31. Q & A<br />