Wk 5 Keurig Case Study

Keurig, Inc. Case Study

MKT575/Strategic Marketing

February 18, 2013

Tracee Wilson

Keurig, Inc.

Keurig began providing single-serving brewed coffee to the office coffee service (OCS) market in the 1990s during a time when coffee consumption had reached an all-time low. By 2002, Green Mountain Coffee Roasters (GMCR) owned 42% of Keurig and there were 33,000 brewers across the nation in the OCS market, totaling $3.46 billion in revenues. As the resurgence of coffee consumption began to grow, thanks in no small part to Starbuck’s, 2003 saw the introduction of Keurig’s home brewers as nearly 20 million Americans were enjoying their special brew each day. The OCS market placed 143,000 single-serve brewers in offices across the nation and there were five coffee producers providing coffee (and tea) in K-cups (the patented single-serve packaging) used in the Keurig brewing systems (Cravens & Piercy, 2009). This paper will discuss the appropriateness of the channel and distribution strategies, and the pricing and promotion strategies. Recommendations will be given in certain situations. An organization will be most effective when the processes and strategies of the organization are aligned.

A strong distribution and channel network is an important way to gain competitive advantage. Keurig had in place a channel and distribution system for their OCS operations, the challenge has been the introduction of the consumer market into that strategy. The concern was that the consumer market would affect the productivity and success of the OCS market. “Concern about this would diminish the KADS’ (Keurig authorized distributor) marketing efforts in both the OCS and at-home markets, resulting in erosion of our installed base and revenue stream from our core OCS segment and a less effective launch in the at-home market” (Cravens & Piercy, 2009, p. 581). The goal was to introduce a controlled distribution of brewers and portion packs that would maximize the launch of the...