Keurig Inc free essay sample

At home coffee brewers were always faced with two things loose coffee grounds to clean up and coffee that never quite tasted right. The Keurig system would eliminate both of those issues for the at-home consumer. Distribution Keurig based their start on the away-from-home market, or offices, because a consistently good cup of coffee is always a plus. The market was ripe for a less costly more convenient alternative in the workplace. Once Keurig excelled in the away-from-home market it was only logical to move towards the home consumers. The strategy was to seek to develop a product for the changing market and develop a product that everyone would want, positioning them to move ahead in the market (Hooley, Piercy, amp; Nicoulau. 2008. Pg. 8). Consumers purchasing for their homes would order through a different venue than their office counter parts who used an office coffee service, OCS, or a Keurig authorized distributor, KADS. The at-home brewer would be able to order K-cup coffee products via fax or the internet, and they would have more flavor choices as well, through a licensing arrangement made with a variety of gourmet coffee roasters. Office placement of the Keurig units had shown an increase of close to 50% by 2001, with close to 143,200 single cup systems in place by 2003 (Cravens amp; Piercy, 2009. Pg. 574). Interviews with focus groups found that customers were interested in consistent great-tasting coffee with minimal cleanup and a full variety of gourmet flavors. Channel Keurig’s channel marketing strategy hinged on three key elements; a brewer that controlled the amount, temperature and pressure of water, a consistently great tasting cup of coffee and a unique packing and distribution system that contained coffee and a filter in a single K-cup package. The system allows consumers to buy a variety of coffee and make a cup of coffee that has the quality like the one you would buy in a gourmet coffee house for upwards of $3 to $5. Based on the surveys and focus groups that had been conducted people were looking for convenience, minimal clean-up, and great taste. Keurig made its decision to promote the system based on those factors and with units succeeding in local businesses now was the time to strike, while the â€Å"iron is hot†, a large percentage of survey takers said they would gladly buy the units that were proposed based on the information they were given. Pricing strategies The successful market of Starbucks and other successful coffee houses has made it okay to spend $1. 50 or more for a good quality coffee and even more for specialty drinks. Considering the trend in successful coffee houses and the cost of the drinks, it opened the door for Keurig to produce high quality low maintenance units for the home and office. Keurig conducted multiple market research polls to reach its price points, ensuring that once units are released they are something that customers will buy without hesitation. Price points were anywhere in the range of $199 to $299 (Cravens amp; Piercy, 2009. Pg. 582) with coffee pods at about fifty cents each. Keurig wanted its units to be competitively priced and wanted to ensure that the taste quality would make people want to stay home and enjoy the quality of the coffee, instead of having to travel to get it and wait in line. Pricing strategies and market research are extremely important when a company is preparing to bring a new product out in the market. Keurig used the strategy of placing the units into offices, generating interest in the units and the specialty coffee products that you could get at home. A smart move n any book, the company did not bring out a new product with no consumer interest, it brought out a product that people already wanted before it ever hit the showroom floor. Promotion Keurig had a plan all along, concentrate first on the â€Å"away-from-home† market and use its success to springboard the company into homes nationwide. The core strategy was to remain unchanged, â€Å"we are committed to a mult i-roaster strategy that relies on strong relationships with selected gourmet coffee roasters who take a great deal of pride in the coffee consumption experience that supports the meaning of their brand to consumers (Cravens amp; Piercy, 2009. Pg. 573)†. After Keurig saw the interest in the units and once the research was completed they had an idea of what people were willing to pay for the units, demonstrations of the units were a selling point, along with sales and free coffee. Keurig was not the only single cup brewing system out there; others existed but did not promote the â€Å"care free† clean up that Keurig did. One company had loose coffee grounds that had to be cleaned out this made everything about Keurig stand out to the consumer who wanted easy and quality all in one. Keurig took the success of the away-from-home market, moved over to a referral system, and eventually to point-of-sale advertising and marketing (Cravens amp; Piercy, 2009. Pg. 583). Once units are purchased there is a continual need for K-cups in order to continue to enjoy the quality coffee from the unit. In order to keep customers coming back for more it is important to make the K-cups profitable for the company yet enticing to the consumers. With so many flavors to choose from different promotions can be used to entice customers to buy, anything from free shipping on fax or internet orders to coupons in the mail. Keurig could offer free â€Å"taste tests† when a consumer purchases from them, giving a free cup or two to try a different coffee blend, with every order. There are many ways to entice consumers in, but you have to be creative along the way. Conclusion Keurig has had a large amount of successs in the office coffee market and the next logical step in the marketing program would be to move into consumer homes so that the flavorful quality could be enjoyed there as well. The company has remained true to its core including the refusal of allowing any offee roaster or other commercial business partner to sit on their board (Cravens amp; Piercy, 2009. Pg. 573). The coffee business can fluctuate with the weather, in some areas and with some consumers they will drink coffee continuously, while others only drink it when it is cold. Because consumers can purchase their favorite, in most cases, coffee house coffees it makes sense that they can save time and money purchasing the Keurig c offee system for their homes and still enjoy the rich flavorful coffee they are used to getting while paying less money in the meantime. References Cravens, D. W. , amp; Piercy, N. F. (2009). Strategic marketing (9th ed. ). New York, NY: McGraw- Hill. Retrieved April 22, 2013 from the University of Phoenix website. Hooley, G. , Piercy, N. F. , amp; Nicoulau, B. (2008). Marketing strategy and competitive positioning (4th ed. ). Upper Saddle River, NJ: Pearson. Retrieved April 22, 2013 from the University of Phoenix website.