Kraft Food Case Study

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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, McCafe)
• Price to the consumer
• Risk of a new product offering
• Cheaper price could risk eroding brand image

Solutions
Option 1: The first option that Mr. 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...
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