Keurig case

Green Mountain Coffee Roaster’s Keurig Single Brew system is dominating the U.S. market with an overwhelming market share. Analysts expect sales of single-cup brewing systems to continue to grow in the U.S. and competitors are eyeing a piece of the pie. An analysis of Keurig’s current position, based on Michael E. Porters 5-Forces, highlights a number of key areas of opportunity and risk for the company. Handled correctly, the Keurig product line should continue its growth, however, a number of significant pitfalls threaten its dominance.

The “Coffee Wars – The Big Three: Starbucks, McDonald’s and Dunkin’ Donuts” article focuses on the company analysis of the Starbucks brand and how its main competitors, McDonald’s and Dunkin Donuts, has affected their brand and driven competition higher. Even though there are many companies trying to enter the specialty coffee market, these three companies own the majority of the market share. With Starbucks’ top quality and above average prices they hold a different market than the fast coffee/food market of Dunkin’ Donuts and Starbucks; yet the competitive moves Dunkin’ Donuts has made over the years in order to compete with Starbucks and surpass McDonald’s has driven competition up between all three companies. The competition has stiffened ever more in the past ten years due to the changing economy. This led to “the big three” to come up with different techniques to gain competitive advantage over the other. Although the competition between these companies is to gain most of the market share, consumers are still loyal to a certain brand; this makes it difficult to gain each other’s clientele. McDonald’s continues to appeal to customers who want value and speed, Dunkin’ Donuts focuses on the middle-class, while Starbucks a customer who desires a higher quality product along with being recognized for using the brand.

* Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.

As competition in the single-cup brewing market continues to increase, the barrier to entry remains relatively low. This encourages competitors to enter the market. The competitors are aware that creating a lower-cost brewing machine that can brew coffee in the pod style (non-patented) would give them a competitive advantage over Keurig, whose products are considered quite expensive. Three main competitors include Nestle, Starbucks, Kraft and Mars. All three companies have greater financial, marketing and operating resources.

The alluring aroma of freshly brewed java is both tantalizing and calming to the senses, so much so, that most individuals are unable to fathom a morning or a day without a cup of fragrant, hot coffee in hand. Coffee is one of life’s little indulgences that have become a necessity for some, who find it increasing difficult to live without, as a result, Keurig created an innovative, and unique form of preparation. The Keurig machine makes it possible for a single serving of coffee, tea, hot chocolate, or water without the need to clean the machine in between its use. It eliminates the “stale-tasting” waste that results from the remnants of old coffee, which no coffee drinker desires, and it eradicates the need to clean the pot or brew basket, all this in less than a minute!

In looking at our product, Folgers Coffee, a sure way to see where a product is going sometimes is to look at where it has been. In 1992, Kraft’s brand of coffee, Maxwell House, had gained the lead in market share and appeared to be poised

Although the company is known for their coffee, they also drive a great portion of their revenue from baked good sales, which differs greatly from the Keurig Green Mountain strategy. Dunkin does compete against Dunkin intensely in the New England market, as both companies were founded and based in the area.

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:

The Keurig coffee brewer is the leader in the retail market for single serves coffee brewers but it can do better. Keurig has been slowly losing some of its share of the retail market in recent years. In 2011 Keurig controlled 54 percent of the market which is down from its 2010 number of 60 percent and 2009 number of 63 percent (Geller). Keurig needs to take its product and it has to offer and enter into new markets and segments. It mainly needs to focus on the younger and lower income level of its

They have focused on building brand recognition and profitability by growing the business gaining assets to grow the company and products for greater customer satisfaction (About GMCR, 2004-2009). GMCR’s strategy to incorporate current large brands, such as Tully’s, Diedrich, and Keurig has helped to expand their customer base and satisfaction as well as the markets for their products (Phillips, 2011). Their focus on increasing their market shares in other companies will facilitate their expansion into new geographical markets and promote the brand. GMCR’s partnership with Keurig creates a larger consumer choice and the addition of agreements to create portion packs for the Keurig with companies such as Starbucks, Dunkin Donuts, and Newman’s Own helps set them apart from the competition (Invest in the Markets, 2011).

High levels of competition are increasable augmenting in the foodservice market. I order for General Mills to survive that intensive competition; the company would need to invest funds in Research and Development department (R&D). The R&D team, will periodically scan the environment to capture new trends and preferences in food products, investigate what the competition is doing, find new market segments, and develop easy, cheaper, and simple ways to manufacture new and existing products. This project will take a year to develop with quarterly investment of funds.

Keurig, Inc. was founded on “excellence”, which is the Dutch meaning of its name, and the innovative principle of allowing consumers to be able to make a single excellent cup of coffee whenever they wanted it at home or work with their K-cup single cup brewing system. The Keurig system was such a hit in offices that the company knew the next step was to position themselves to sell units to individuals for use in their homes. At home coffee brewers were always faced with two things loose coffee grounds to clean up and coffee that never quite tasted right. The Keurig system would eliminate both of those issues for the

Keurig Inc has been founded on an amazing idea that coffee making systems that uses individual portion packs of freshly roasted and ground coffee with unique coffee maker designed to brew perfect cup of coffee at a time. At that time there are already established gourmet coffee houses like Starbucks, which is making coffee consumers to spend more money with an average of $ 1.50 or more for a cup of gourmet coffee. This change is consumer behavior created opportunity to Keurig to offer gourmet coffees by a single-cup in offices in 1998. Within a span of four years (1996-2000), Keurig have noticed sales increased by 40% in US at home coffee market. With these facts Keurig´s management got convinced, to develop an at home one-cup coffee brewer especially for gourmet coffee lovers.

Keurig Inc.’s main concern is how to obtain the position they want in the at-home coffee market

Under the Weaknesses and Opportunities (WO) strategy, the company needs to utilize product innovation, in research and development to create healthier coffee options to attract emerging markets and to retain health conscientious U.S. customers.