Kraft Case

Problem Statement

Geoff Herzog, product manager for coffee development at Kraft Foods Canada, has to determine whether to launch a marketing campaign for single serve coffee pod machines in Canada, at the same time it is being launched in North America.

S.W.O.T.
Strengths:
• Brand recognition • Leader in coffee market in Canada • Global company in 155 countries • Quality product reputation

Weakness: • Short time to make a decision • Limited budget • Cost of the product offering

Opportunity:

• New market • Competition has not launched • Competition does not have product differentiation • Lower initial price than the competition

Threats:

• Coffee chains growing (Starbucks,
Herzog could pursue would be to not go after the market and spend the money in advertising. Mr. Herzog could let the North American marketing campaign launch and see how it does with the introduction of the new single serve coffee pod concept. The Pros: By taking no action, there would be no money that would be spent on the advertizing campaign. This would obviously leave Kraft with money in their budget for other ventures. Another pro would be there would be no risk to Kraft of the product not being favored and losing money on the venture. Kraft would maintain its number one market share in Canada and may even grow it if the competitors would go to market and it fails. The Cons: The cons of taking this approach are that the competition could get to the market first. If the product was a success, Kraft could lose market share and have to spend considerably more money in marketing campaigns to try and recapture the lost market. If buyers like the competitor brand and develop a loyalty to it, Kraft may never recover that lost share of the market. Option 2: Mr. Herzog could use the budgeted money and launch a marketing campaign to potentially grow the single serve coffee pod
This would allow Kraft to offer the new product to their existing customer base and potentially grow it even more by capturing market share from their competitors. The Cons: There is not much time to determine what methods Mr. Herzog will use to advertize to the public. Another con would be if the product did not realize the expected acceptance, the money would have been wasted. There is also a risk if the product was not a success, the brand image could be lessoned from where it is today. Option 3: Mr. Herzog could do a limited launch of the product to the market. Rather than focusing on the entire flavor portfolio, Mr. Herzog could launch what is believed to be the few most popular flavors to determine if there would be product acceptance. Mr. Herzog could focus his advertizing on the few key demographics to yield the optimal results from the target segment that is expected to purchase the ingle serve coffee machines and pods. The Pros: There would be limited budgeted dollars invested in the marketing of the new single serve coffee products. Kraft would be the leader to the market to gain market share and brand