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Keurig at Home Managing a New Product Launch Case Solution

Solution Id Length Case Author Case Publisher
2689 1880 Words (7 Pages) Eric T Anderson Kellogg School of Management : 5-105-005
This solution includes: A Word File A Word File

Keurig is a well-established name in the away-from-home coffee segment, and the company has realized that there is a lot of potentials if they expand its business and targets at home market also. To come up with a new product the company has conducted a survey to have an idea of whether they should launch the product or not and also what should be the price of the product. The results of the survey have shown that people are interested in buying such a product and but the major challenge is that they are willing to pay less price for the brewing machine. The company has to decide on a few things; the price of the brewing system, the price of the cups, and whether they should design a new product for the at-home coffee machine or should stick to the original K-cup. The company has also planned marketing for the launch of new products, and for this, they have designed a very lucrative referral plan for their KDAs.

Following questions are answered in this case study solution

  1. What kind of channel conflict the new product will bring to the existing office market? Is it serious? Why Keurig is so concern of such a potential channel conflict? 

  2. Should Keurig use a single K-Cup for all markets or should it launch the Keurig-Cup in the at-home market and continue to use the K-Cup in the commercial market? 

  3. What price for the brewer and for the portion pack (K-Cup/Keurig-Cup) do you recommend? How do coffee profits affect the brewer price? 

  4. Analyze Keurig’s marketing plan and launch strategy. Is it a good idea to target the office segment? Is the incentive scheme to the KAD effective?

Case Analysis for Keurig at Home Managing a New Product Launch Case Solution

1. What kind of channel conflict the new product will bring to the existing office market? Is it serious? Why Keurig is so concern of such a potential channel conflict? 

Keurig already has a well-established product, that is, their OCS, the offer a single cup brewing system in offices. The company is capitalizing on the desires of people to have a great cup of coffee, same as a coffeehouse in their offices. In 2002, through the OCS market, the company generated a revenue of $3.46 billion. Also, the company observed that the product has gained acceptance by the distributors. After the success forms the OCS market, the company is planning to expand its business by introducing a product to reach out to the at-home market. The company has done enough research on the product, and the data collected through surveys suggested that at home market has a lot of potentials and entering into this channel could be very lucrative for the company. Yes, the new product will bring some serious challenges to the existing channel. Before launching their new product, which is targeting the home consumer market, they need to take care of their already well-established office market. The company has some concerns that its new at-home product can impact its existing channels in a bad way. The office managers may feel that the employees will start taking their K cups at home, and the new product could potentially take the sales away from the KADs. 

Another concern is the pricing of the brewer, the home brewer, which is B100, can also be used in offices. The office brewer costs greater than $300; the price of a home brewer is estimated to be $199, $249 or $299. Though the pricing is yet to be decided but still if the same machine can be used in the offices, then why would the office managers will prefer buying an office coffee brewing machine at a higher price. So, the new brewing machine can serve as a potential competitor for the existing channel. Due to this, the KDAs can get demotivated and can impact the sales of an at-home product. Keurig's goal is to come up with a controlled distribution strategy. The new product has the potential to damage the marketing efforts of the KADs, and this could result in the destruction of Keurig's revenue and their installed base from their core segment which is OCS. Also, the company is concerned that will lose control over prices. 

After analyzing the potential challenges, the new product can create in the already existing challenge that the company's goal is to focus on its distribution portion backs and brewing machine to ensure they maximize the launch of the at-home product while also protecting the OCS channel. The company has thought of differentiating the two products by introducing both different channels but the decision has yet to be finalized as the biggest investor of the company has some valid concerns regarding offering two different cups for both channels. 

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