Keurig Case Study

Holley Boren BUAD 6300

Keurig Inc.

• Problem Identification & Objectives

Keurig, Inc. was founded on the idea that coffee lovers should be able to brew and enjoy one perfect cup of coffee at time without the waste of brewing an entire pot of coffee allowing it to sit for an extended period of time. With the establishment of gourmet coffee houses like Starbucks, consumers began stretching their pocketbooks a bit more by spending on average $1.50 or more for a cup of gourmet coffee [1]. This change in consumer behavior opened the door for Keurig to offer gourmet coffees by the single-cup in offices in 1998. Keurig noticed that from 1996 to 2000 gourmet coffee sales increased by 40 percent in the U.S. at-home coffee market. This statistic persuaded Keurig’s management to develop an at-home, one-cup coffee brewer specifically for gourmet coffee lovers1.

Keurig must develop a strategy to enter the at-home coffee market that will best position the Keurig brand as the leader in single-cup coffee brewing while maintaining a positive relationship with its current distributors and customers in the OCS market. Keurig must also carefully price its brewers and K-cups in a way that will help them quickly penetrate the at-home market without losing money on the high cost of their brewers.

• Review of the Situation

o Organizational Background

The actual brand name Keurig comes from the Dutch term for “excellence” and the company has built its reputation around the very meaning of the word. “Everything the company does – from its innovative line of Keurig coffee machines to its customer service - is centered on excellence”[2]. Founded in 1992, by coffee lovers who wanted to enjoy the same quality and consistency of coffee enjoyed in their favorite coffee houses allowing Keurig to rapidly position themselves in the gourmet coffee market. However, in 1996, they became a subsidiary of Green Mountain Coffee Roasters,...