Case Analysis 2 Keurig
Introduction – An Overview
Incepted in 1992, Keurig Inc. is a coffee provider. Keurig launched its first brewer, i.e., B2000 targeting the office coffee service market. A licensing contract permitted GMCR to pack its specialty coffees in Keurig’s patented K-Cup container (Anderson, 2017). This saw Keurig avail and sell eight (8) brands of coffee to offices. Keurig’s use of brewing techs and provision of diverse range of beverages continues to give it’s a competitive edge over rivals. Keurig aims to obtain and maintain a strong and competitive position in the emerging single-cup consumer market in the coffee manufacturing industry. From the SWOT perspective, Keurig’s has strengths, weaknesses, opportunities, and threats in the coffee market. This report will identify the key marketing strategy issues facing Keurig, evaluate these issues, propose solutions to the identified concerns, and recommend strategies for achieving each proposed solution.
Key Marketing Strategy Issues
Keurig’s system has both strengths and weaknesses. The convenience of brewing, negligible clean-ups, and variety of coffees in Keurig’s operations amount to minimal workers complaints and improved productivity. Competitive-wise, Keurig enjoys a competitive advantage on the at-home single-cup segment because it was the first entrant (Anderson, 2017). Despite Keurig’s market dominance, the company faces various marketing strategy issues that derail its growth. Among the key marketing strategy issues facing Keurig include the cost/pricing of the brewer, supply chain problems and distribution challenges, environmental impact concerns, and retail channel concerns.
Determination of the pricing strategy: The key marketing strategy issues associated with Keurig’s pricing strategy are the pricing of the B100 brewer, manufacturing costs of the new brewer, and determination of pricing for the Keurig-Cup (Anderson, 2017). Quality, cost, and convenience of Keurig-Cup and the B100 brewer influences purchase decision by Keurig’s customers. K-Cups and the B100 brewer are expensive for consumers.
Perceived environmental impact of the K-Cup portion packs: The other key marketing strategy issue for Keurig is the advancing concern in environmental effect with the utilization of K-Cups plastics (Anderson, 2017). Key to the freshness and quality of Keurig’s coffee, K-Cup’s design and recycling is complex. Recycling single-use pods and plastic cups is difficult; their accumulation is thus not environmentally friendly.
Controlled distribution structure issues: Keurig’s has unique distribution issues. This cuts across its supply chain structure and inherent risks that range from labor shortages and unpredictable weather (Anderson, 2017). This means that Keurig buys coffee beans at higher prices than usual. As a result, issues like customer dissatisfaction resulting from the use of Portion Park in the wrong brewer are unavoidable.
Retail channel Issues: Keurig lacks adequate resources to launch the B100 brewing system via the retail channel.
Conclusion and Recommendations
The four proposed solutions include adopting a differential pricing strategy, designing biodegradable and compostable K-Cups, the one-cup model, and product differentiation. To accomplish each proposed solution, Keurig should adopt SMART strategies, i.e.., specific, measurable, achievable, realistic, and time-bound strategies. These are recommended below:
Differential pricing strategy: Keurig’s senior management should employ competition-based, flexible, and dynamic pricing strategies to broaden the market base. In the 4Ps of the marketing mix, product is a key element and relevant to Keurig’s case. However, Price for Keurig’s coffee products should be flexible, dynamic, and competitive for consumers to afford and for the company to make profits. With potential competition, Keurig should launch Promotions to attract consumers to their KADs. Also, Placement of products in retail stores is a critical factor for Keurig to consider.
Biodegradable and compostable K-Cups: Keurig’s top management should enact laws and regulations governing the design and disposal of K-Cups. Also, Keurig’s marketing team should develop mass awareness programs to educate all supply chain stakeholders about environmental sustainability benefits. Also, engaging in CSR projects such as waste management is a perfect strategy for Keurig. Besides, providing good quality coffee that satisfies consumers’ tastes and preferences will help.
One-cup model: The best approaches for Keurig’s management to consider in this initiative are optimizing inventory and supply chain demands across multiple channels, mitigating supply chain risks, improving speed and quality in the supply chain, lowering supply chain distribution costs, and employing a flexible and seamless supply chain software module.
Product differentiation: Keurig’s senior management should differentiate their coffee products in terms of price, reliability and performance, and location and service. As an element of the 4P’s of the marketing mix, Keurig can use price to differentiate its products by being cost-conscious to buyers and charging prices lower than those charged by entrants/competitors. Also, Keurig should make their coffee products more durable, fresh, and tasty to acquire a positive reputation in the market. Also, Keurig should offer its coffee products in diverse geographical areas to help increase the target market.
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