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Group 6 Case 2 Keurig At Home

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Keurig at Home: Managing a New Product Launch

Question 1

Keurig should launch the Keurig-Cup in the at-home market and continue to use the K-Cup in the commercial market. The reasons of separating these two series are listed as follows:

a. Protect the benefits of KAD and Roasters.
Keurig should insist on their plan to launch the new Keurig-Cup even if the GMCR holds the opposite view since it can protect the profits of KAD and roasters when new products are introduced to the market. If Keurig differentiates the at-home market from office market, the previous office brewer users could not go to the direct commercial channel to purchase K-Cups at a lower price (if the at-home used Cups is cheaper). It won’t cause the customer loss of OCS
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To calculate the optimal the Keurig-cup price, we first considered the data from Case Exhibit 7B, to determine the total percentage of consumers who are willing to purchase at each of the price points.
Keurig-cup Pricing Range
Pricing points
Cumulative Percentage

1 cup/Day
2 cups/Day
$0.55+
$ 0.57
5.10%
14.60%
0.50-0.54
$ 0.52
16.70%
30.70%
0.45-0.49
$ 0.47
20.50%
33.60%
0.40-0.44
$ 0.42
22.00%
41.50%
0.35-0.39
$ 0.37
28.20%
48.20%
0.30-0.34
$ 0.32
41.00%
58.50%
0.25-0.29
$ 0.27
60.30%
75.60%

Then we multiply the cumulative percentage by the ticket price points and coffee consumed per day, we can obtain the potential ticket revenue per Keurig-cup, as shown below.
Keurig-cup Pricing Range
Pricing points
Cumulative Percentage

1 cup/Day
2 cups/Day
$0.55+
$ 0.57
$0.03
$0.17
0.50-0.54
$ 0.52
$0.09
$0.32
0.45-0.49
$ 0.47
$0.10
$0.32
0.40-0.44
$ 0.42
$0.09
$0.35
0.35-0.39
$ 0.37
$0.10
$0.36
0.30-0.34
$ 0.32
$0.13
$0.37
0.25-0.29
$ 0.27
$0.16
$0.41

In the long run, we would lower the new brewer’s price to $99 and increase the Keurig-cup price to $0.5.
Using the same approach stated above, we multiply the cumulative percentage by the ticket price points of both Keurig-cups and the brewers, and coffee consumed per day. This time, not
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