Keurig: Convenience, Choice, and Competitive Brands
In 1990, John Sylvan and Peter Dragone entered the coffee brewing industry by launching their company Keurig built upon on the question of, “why do we brew coffee by the pot when we only drink it by the cup?” Within a few years after their start-up, they were able to secure multiple patents as well as acquiring $1 million from venture capitalists to improve upon their prototype. By 1998, Keurig, which is German for excellence, was finally able to launch their first industrial strength, single-serve machine delivering a perfect cup of coffee every time. Keurig was lucky to join the coffee market at the dawn of its explosion, when consumers’ wants and needs began to shy away from traditional coffee pot brewing and shifted more towards a single cup of premium, gourmet roasted coffee. As the coffee market continued to grow, it exhibited two trends. First being the “mainstreaming” of specialty coffees and secondly, only brewing one cup of it at a time. Keurig focused its efforts towards adapting to these changes by dramatically boosting innovation, technology, and their R&D department. Keurig changed the game in the single cup sector by introducing their patented K-Cup and partnering with Green Mountain Coffee Roasters (GMCR). These were tiny plastic cups that contained the coffee grounds already within the filter and sealed with an aluminum lid. All the consumer then has to do is place the cup within the Keurig machine (without removing the aluminum), close the lid and press a button, and in less than a minute, a fresh cup of coffee awaits. From the time of its launch in 1998, Keurig offered only 8 varieties of GMCR coffee and by the early 2000’s consumers had the choice of over 200 varieties from 30 different brands. When it comes time that Keurig’s patents will expire, competition will skyrocket, so it is extremely important that they pay close attention to their competitors’ moves. After an in depth analysis of the entire coffee industry, its competitors, and major market players, I have determined three recommendations to go forward with: Recommendation 1: Expand internationally using a transnational strategy. Recommendation 2: Follow GMCR’s 2012 initiatives with increased innovation Recommendation 3: Pursue a recycling initiative or biodegradable K-Cups With the coffee drinking market growing as fast as it is along with the amount of competition that can present in the market, it is important that firms build their brands and are constantly improving what they have to offer. Recommendation 1: Expand internationally using a transnational strategy. Current in the industry, the top market players have established themselves in the United States as well as in other various parts of the world such as Europe and Asia. In order to be a serious competitor, Keurig must consider the advantages to expanding internationally, not only for sales but for manufacturing purposes as well. That being said, it is extremely important that companies pay close attention to other cultures and certain characteristics that effect each community differently. Especially when you are attempting to enter somewhat of a segmented market. Keeping foreign cultures in mind, implementing a transnational strategy would be the most advantageous in terms of serving the needs of other countries. Keurig would impose a think global, act local strategy or “glocal”. The book describes this as a middle ground strategy for when there are relatively high needs for local responsiveness as well as appreciable benefits to be realized from standardization. Although coffee is somewhat the same all over, different cultures prefer different types or blends. It is crucial that a company understands a cultures preferred wants and needs before embarking abroad. Although it may be difficult to implement, the benefits of sharing information and resources across boarders along with flexible...
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