Analyze Keurig’s marketing plan and launch strategy; is the plan sound? Make suggestions that may improve the launch

Keurig At Home:

Managing a New Product Launch

A Wednesday afternoon in February 2003 found Keurig Inc.’s president and CEO Nick

Lazaris heading south on Interstate 89 back toward his Wakefield, Massachusetts, office and

mulling over the day’s events in preparation for a briefing with his senior management team (see

Exhibit 1). He realized that the next two weeks would be critical to the success of the company’s

newest product initiative in the single-cup coffee market. Lazaris had just wrapped up a

presentation to the Green Mountain Coffee Roasters Inc. (GMCR) management team, one of the

company’s strategic partners and an investor in its business. While reviewing the company’s

progress toward the launch of its innovative coffee-brewing system into the at-home consumer

market, GMCR had asked Keurig to reconsider its decision to use a different version of the coffee

portion pack, known as a K-Cup, in the consumer market. In making its request, GMCR had

offered a number of compelling reasons for using the existing commercial portion pack in both

channels.

As he drove, Lazaris passed a new Starbucks and reflected on how gourmet coffeehouses had

helped pave the way for Keurig’s single-serve brewing system. The proliferation of soft drinks

since the 1960s had caused coffee to lose its place as a central component of social gatherings,

spurring a precipitous drop in coffee consumption to an all-time low of 6.1 pounds per capita in

the mid-1990s from a peak of 16.5 pounds per capita in the mid-1940s.1

The entrance of gourmet

coffeehouses had reinvigorated the market, developing a distinct subculture of coffee drinkers

and educating younger consumers about great traditional coffees as well as espresso and milk-

based specialty beverages. As a result, by 2003 an estimated twenty million Americans were

drinking gourmet coffee on a daily basis.

Keurig’s launch of a single-cup brewing system in the office coffee service market in the late

1990s had benefited from coffee drinkers’ increasing sophistication. Office employees could

appreciate the greater variety, freshness, and convenience derived from the ability to brew a

single cup of coffee on demand. Office managers recognized the advantages garnered from less

coffee waste, increased employee productivity, and decreased hassle associated with tending the

coffee machine.

February 2003 found Keurig poised to launch its new model B100 system in the at-home

segment with hopes of repeating its success in a much larger but more competitive market. With

rumors of other single-cup competitors ready to enter the market, Lazaris knew Keurig needed to

1

Source: United States Department of Agriculture.

©2005 by the Kellogg School of Management, Northwestern University. This case was prepared by Elizabeth L. Anderson under the

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This document is authorized for use only by Hussain Alkhabaz in Marketing Strategy taught by Melenchuk, Mount Saint Vincent University from February 2017 to July 2017.

KEURIG AT HOME KEL021

move quickly in order to obtain its desired positioning in the emerging single-cup consumer

market. Revisiting the decision to proceed with a two-K-Cup strategy had the potential to derail

the company’s launch efforts and demanded rapid attention by Lazaris and the senior

management team. Reevaluation of the K-Cup decision would also force them to rethink other

elements of their product plans, including pricing and marketing. With less than six months until

the September launch, time was of the essence.