Keurig at Home Analysis

Problem:

Keurig was founded on the idea that coffee lovers should be able to brew and enjoy one perfect cup of coffee at a time. The problem in the Keurig at home case is the marketing mix. When I talk about the marketing mix, I’m referring to the product (packaging), the promotion, the place and the price. The main problem in the marketing mix is the pricing of the product. My decision factors are based in some Keurig surveys. They were completed and they reflected the feelings of the consumers at the time of testing. Keurig is outsourcing the manufacturing of their brewers. Keurig incurred design and manufacturing cost of their K-Cup and brewer of $700,000. The manufacturer of the B100 included all variable and fixed costs in their calculation of the unit costs for manufacturing the B100 brewer.

SWOT:

One-cup Approach with Brewer

Strengths

• Allows quick entry into the at-home market before competition

• Less customer confusion

• Roasters not required keeping two separate cup inventories (one inventory for

OCS market and one for at-home market)

• Roasters’ production levels will probably increase with the increase in demand,

since the at-home market will include KADs and at-home consumers.

Weaknesses

• Could result in separation of the OCS K-Cup channel

• Decrease in control of pricing with the KADs

Opportunities

• Easier to enter the retail market in the future because of less overall costs

• If Keurig is able to enter the market quickly, then they have more opportunity and

time to come out with smaller and cheaper brewers.

Threats

• Keurig will suffer loss of market share if the brewer pricing does not decrease and competition enters with a lower pricing tactic.

• OCS users experience losses from K-Cup theft, therefore it is not economical for

offices to use the Keurig system.

• Lack of resources to market and sell brewers and cups through retail outlets at

time of launch

Two-Cup Approach with Brewer...