Kraft Foods: The coffee Pod Launch case Analysis
Founded as a cheese manufacturer in 1903 and Kraft Foods Inc. (Kraft Foods) was the largest food and beverage company in North America and the number two player in the world. Its operations consisted of Kraft Foods North America and Kraft Foods International, and its business was divided into five product categories: beverages, convenience meals, cheese, grocery, and snacks. In 2004, Kraft Foods had operations in more than 155 countries and previously been a division of Philip Morris Companies (since renamed Altria Group), it had become a public company in June 2001. Along with its size and impressive brand portfolio, Kraft Foods boasted a strong distribution network and a well-earned reputation for developing innovative new products and food applications. By 2004, Kraft Foods was the world leader in coffee sales with 15 percent of the global market, and with 32% of the Canada market. The company’s Maxwell House line was Canada’s top retail brand of roast and ground coffee, while Nabob was the leader in Western Canada and number two nationally. Both were available in a variety of flavors, sizes, and formats (see Exhibit 1). All beans used by Kraft were custom-roasted to deliver peak aroma and had a fine grind to ensure a fresh, rich flavor. The mission was to achieve leadership in the markets it served, which it pursued by forecasting innovation, achieving high product quality, and keeping a close eye on profit margins.
SUMMARY OF THE CASE ANALYSIS
This case revolves around the decisions and issues faced by Geoff Herzog, coffee development project manager at Kraft Foods Canada. The main issue being faced is whether a launch of coffee pods within Canada should be done at the same time that the US Kraft division. As pointed out in the case, delaying the Canada launch would give Herzog the chance to study US demand, allowing for better target marketing to Canadian customers, and it would also minimize risk in the event that the launch was to fail. Herzog’s primary business was to come up with a market strategy for single serve coffee pod systems in Canada. In accordance with the rule of investing however where great risks equals great rewards, waiting may allow competitors to get a firm grip within the marketplace, making it more difficult for Kraft’s pods to enter later on.
In order to solve the case study, we have use DECIDE methods so the decision making and case analysis go hand in hand that resulting to a better solutions.
Figure 1.0 Decision Making Process-DECIDE methods
DEFINE THE PROBLEM
Geoff Herzog, product manager at Kraft Foods Canada for coffee development, needs to decide: 1)
whether it is a good idea to simultaneously launch the coffee pods products in Canada at the same time as it is planned in the United States OR 2)
to wait and see how the launch occurs in the United States and test the markets and results. On top of that, well-defined problem outlines the objectives of the decision maker, recognition of constraints, and a clearly articulated success measure, or goal, for assessing progress toward solving the problem. Thus, in this study, Kraft Foods has positioned its product as a high quality brand in line with the company mission and objectives. Kraft Food overall goal was to achieve leadership in markets it served, which it persuaded by fostering innovation, achieving high product quality and keeping a close eye on profit margins. Five operational objectives had been established to achieve these goals; i)
Build superior brand value for consumers by delivering greater product benefits at the right price, compared to the competition. ii)
Enhance product demand among consumers by building relationships with trade partners.
Constantly adjust the product portfolio to align with consumer trends, especially in fast growing channels and demographic groups. iv)
Expand global scale by increasing business...
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