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MMGP Keurig Green Mountain 1

Liberty University

Group 3 MMGP

Lainie Long, Timothy Mauntler, Joshua Minor, Douglas Powers,

Brittany Tillage, Cierra Wilson, Daniel Stanley

BUSI 520-D03

Professor George Young

MMGP Keurig Green Mountain 2

Abstract

The purpose of the work completed and compiled by the aforementioned team of

individuals was to take an informative approach on researching, analyzing, and in the end,

suggesting possible new approaches and strategic tactics to improve upon the organization the

group researched on. Keurig Green Mountain, or GMCR, has proven themselves to be more

than just what even they originally thought their business would be, a niche business. They have

created a solid business model which creates long-term sustainability through internal and

external efforts that has lead them to receive consumer favorability and a brand image which

consistently creates repeat purchases by the consumer. The preceding pages will give the reader

the information needed to see the company’s past and present business strategy and will end with

suggestions for improvement going into the future.

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MMGP—Background Information

Provide a description of your product/service and a brief history of the firm that produces

your product/service.

The coffee maker has been a staple appliance in many homes around the world since its

invention in the late 1960s. We chose the Keurig for our research project because of the inventive

idea of taking an everyday appliance and reinvigorated it to be convenient and accessible to

everyday coffee drinkers. Keurig founders wanted to make the coffee maker “a device that could

make traditional coffeepots obsolete” (McGinn, 2011). The one-cup brewer concept is genius

and inventive because a user can make a specific drink to his liking from one single K-Cup and

the next user can make a completely different drink in a matter of seconds.

“Keurig” is the Danish word for excellence and excellence it has produced. In 1992 the

company was founded by two young men hoping to revolutionize coffee. In 2006, Keurig

“acquired complete ownership of Keurig including patents protecting key components in the

brewing process (Treadway, 2015). Chapter three of “Marketing Management” discusses demand

and how to forecast what consumers want. Not only did Keurig founders John Sylvan and Peter

Dragone have a love of coffee, but they were able to predict the demand by the millions of

consumers who drink coffee every day. While coffee is their primary focus, the Keurig machine

can make a variety of drinks from green tea to hot chocolate to even hot water used for quick

meals requiring just water. Keurig has had much success since its inception in the early 2000s

and continues to have success.

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Part of the marketing process is the ability to research on what the consumers want or

will want after using a previous product. Kotler writes “Every firm must organize and distribute

a continuous flow of information to its marketing managers” (Kotler, 2000). The founders did

not have marketing managers at first, however, they were able to know and understand that

people were going to continue to drink coffee every day and took the data and ran with it. Author

of “Secrets to Marketing Success” says “The media is your friend…blogging platforms,

websites, and social media” (Anonymous, 2013). In 2006 when the Keurig was gaining

popularity, social media platforms were becoming increasingly popular. Technology has

advanced exponentially during the early 2000s and Keurig become the “technologically

advanced” version of the traditional coffee maker. Since the 1960s, Americans have been

infatuated with making life more convenient. From fast food to online shopping everyday chores

have become more convenient with the advancement of technology. The Keurig fell in line

perfectly with the desire for life’s convenient factors and the social changes contributed to the

success of Keurig. Facebook was in its early years, internet surfing was a popular trend and the

Keurig by 2010, Keurig had sold over $330 million in brewers ranging from home/office

brewers to more industrial brewers fit to accommodate continuous use. (McGinn, 2011). The

company has celebrated 25 years of success and understanding how and why two coffee-lovers

became successful after years of failure will help us understand how marketing plays a role in

business success.

Describe and discuss the Old 4 Ps associated with your product/service.

Marketing your product is how you place it to meet your market’s needs. There are eight very

important elements that are needed in order to market your product. In this discussion, we will

concentrate on the Old Four Ps of Product, Price, Place, and Promotion. Product is the right

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product to meet the needs of your target audience. Price is the right product offered at the

optimal price. Place is having the right product for the right price being available in the right

place to be bought. Promotion is getting the word out to the right people of the availability, price,

and place. The other Four Ps that make up the marketing mix are: people, processes, programs,

and performance (Kotler & Keller, 2016, p. 25-26).

Product

Keurig, which is a division of the Green Mountain Coffee Company, introduced the single-

cup brewing concept back in 1998 with the K-Pod and Keurig coffee machine. The customers

like the fact that this machine enables someone to brew a perfect cup of coffee in less than a

minute by heating the water temperature to 200 degrees where the most flavor is released from

the coffee. Another advantage of the single-cup concept is the ability to switch from their wide

variety of coffee, hot chocolate, or tea. Since its invention, Keurig brewers come in different

sizes, shapes, and colors (such as peacock blue, turquoise, imperial red, violet, sandy pearl,

white, black, serenity, rhubarb, plus more). From the K15 Classic Series that is portable and fits

into small spaces, to the K575 Plus Series that features temperature and strength controls, and

hot water on demand. An added feature for the commercial version of the Keurig brewers is the

ability to remove the pods automatically so it is ready for the next brewing. Also, if it is

connected to a water line the reservoir doesn’t have to be refilled. The K-Pods have also

increased their variety to include K-Cup Pods (4-12 oz), K-Mug Pods (12-18 oz), and K-Carafe

Pods (22-30 oz) (Keurig.com).

Price

As stated earlier, the Keurig brewers come in a variety of sizes and functions. Starting with

the most basic brewer with the least amount of functions, the Keurig K15 is priced at around

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$99.99, depending where you are shopping. Again, this has limited features with no water

reservoir and brews 6-10 oz. with K-Cup Pods. The ultimate Keurig brewer is the Keurig 575

and is priced around $179.99. It has all the bells and whistles of an 80oz. water reservoir,

strength and temperature control, hot water on demand, customizable settings, and brews a cup,

mug, and carafe. So for under $200, the customer has the ability to choose the machine that fits

them perfectly (Keurig.com,2015).

Place

The Keurig brewers and K-Pods can be purchased via many channels. Whether it be as

Direct Sales like Keurig.com or thru Reseller Sales like Wal-Mart, Target, etc. Choosing the

Reseller Sales route will provide a wider distribution. It looks as though Keurig has chosen to

have a widespread placement in as many places as possible to reach as many customers as

possible.

Promotion

The biggest selling point of Keurig is that it provides a quality, personalized product every

time. A person can choose what beverage they want, whether it be coffee, tea, or hot chocolate.

They can choose what size fits them. And then a perfect beverage is brewed. Then it is ready for

the next person.

Discussion of the New 4Ps: People, Processes, Programs, and Performance

Marketing has expanded ever since the dawn of the internet, social media, and web

advertising. Therefore, the marketing mix has expanded or changed along-side the ever changing

global economy. The new four Ps of the marketing mix are as follows: people, processes,

programs, and performance. Kotler and Keller (2016) describe an updated version of the four Ps

with the following information, “Given the breadth, complexity, and richness of marketing,

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however—as exemplified by holistic marketing—clearly these four Ps are not the whole story

anymore” (Kotler & Keller, 2016, p. 25). The four Ps that Kotler and Keller are referring too are

the original as not the whole story are product, price, promotion, and place. To be honest, the

new four Ps are composed of the original four Ps as well.

In terms of defining the new four Ps, people are an integral part of the internal operations

of the marketing mix. This primarily revolves around employees and how they implement

marketing strategies (Kotler & Keller, 2016, p. 26). Processes can be defined simply as

everything a company does to sell its product from leadership, strategies, culture, and must

importantly growth. Utilizing these qualities makes way for important long-term relationships

(Kotler & Keller, 2016, p. 27). As stated in the previous paragraph, programs, does actually

implement the old four Ps as it involves and effects marketing strategies that contract or detract

the brand (Kotler & Keller, 2016, p. 27). Performance revolves around holistic marketing,

marketing that encompasses many different factors (Kotler and Keller, 2016, p. 27). One such

factor would be the sustainability that every up and coming company that seeks to continue

growing implements on a consistent basis.

Discussion of the New 4Ps in Relation to Keurig

People

Keurig is an exceptional company that thrives due to critical thinking, creativity, and the

resolve of its employees and leadership. A look at Keurig’s website at

www.keuriggreenmountain.com allows consumers and researchers alike to see that Keurig is

quite well. With over 6,000 employees around the world it only makes sense that the respective

company would utilize both the new four Ps with the old four Ps mixed in

MMGP Keurig Green Mountain 8

(www.keuriggreenmountain.com, 2016). The Keurig website is an excellent example of optimal

employee marketing skills. The website, something usually maintained by marketing employees

and marketing management, is laid in quite a colorful fashion. The colors represent Keurig and

Green Mountain themselves. In short, one can easily figure out from this sophisticated website

that Keurig means something amazing, which makes one think that what Keurig is selling is

amazing as well.

Processes

Keurig Green Mountain is still growing as a major company in the global business

network, however, Keurig Green Mountain is the United States number one coffee brewer brand

(www.keuriggreenmountain.com). While every P in the four Ps is important for any particular

goal, processes would happen to be the most important in regards to long-term relationships.

Earlier this year Sonic added Green Mountain Coffee to their breakfast line up. This is the start

of a long-term relationship if Keurig Green Mountain continues to follow through on its

increasing success. Keurig Green Mountain obviously takes it processes seriously by consistently

changing marketing strategies as needed to increase its customer base. Sonic executives took

note of consumer demand for Green Mountain Coffee and Keurig Green Mountain products,

which in turn pushed them to make a deal with this respective company.

Programs

Keurig Green Mountain has a long reach in the coffee brewing industry from a local and

global perspective. It is quite evident that Keurig has an optimal Research and Development

department along with its respective programs. The company spent $84.7 million in fiscal year

2015 in this department exemplifying what we as consumers see today. A good example of this

MMGP Keurig Green Mountain 9

Keurig Green Mountain consumer-directed activity comes from it’s website as well. The

company’s first hot cocoa K-Cup pod was riddled with arduous tasks to get to the desired end

result. This result, the first hot cocoa K-Cup pod, paved the way for more consumer directed

beverages and the like such as tea, hot apple cider, iced coffees, etc (keuriggreenmountain.com,

2016).

Performance

Performance is key to an ideal and optimal marketing mix strategy. It is also key to

marketing management. Each of term of the four Ps is significant in its own right, but

performance truly seems to encapsulate the primary goal of any respective company that seeks to

grow locally and globally. Keurig Green Mountain is one such company, seeking to grow from a

holistic standpoint, with the strength of increasingly optimal employees, processes, and

programs. However, Keurig knows its weaknesses as well marketline.com (2016) states the

following from the company’s SWOT analysis, “KGM has a concentrated customer base. The

company relies on Wal-Mart and Costco Wholesale Corporation for a substantial portion of its

revenues” (marketline.com, 2016). These two companies make up over 31% of Keurig Green

Mountain’s annual revenue. This is not necessarily a performance issue, but the fact that Keurig

Green Mountain or KGM noticed this problem is exemplary of optimized performance. Overall,

from a marketing and business analysis perspective one can easily notice that KGM performs

incredibly well both financially and non-financially. For example, ibisworld.com (2016) provides

a market share 26.8% for KGM making it the leader coffee production industry (ibisworld.com,

2016).

Keurig Demographics and Variables Used to Segment Target Markets

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Keurig dominates the single serving home coffee brewing market. Dominance of today

does not translate into future performance. In maintaining its position at the top, Keurig must

actively develop new markets. It must develop new strategies to keep its customer base, as well

as reach a new audience.

Describe and discuss demographics and variables used to segment target markets

Key metrics of demographics are population, including the size and growth rate in cities,

regions, and nations; household patterns; educational levels; and age distribution and ethnic mix

(Kotler & Keller, 2016, Ch. 3). Trends are examined to determine future performance and

provide a strategic direction for a product (Kotler & Keller, 2016, Ch. 3). The careful analysis of

demographic trends will allow a company to target areas in which a product may be poorly

performing and allow a targeted campaign to penetrate an underutilized group or geographic

region.

Market segmentation divides a market into separate and well-defined segments,

consisting of a group of consumers who share similar wants and needs (Kotler & Keller, 2016,

ch. 9). The major variables in segmenting a market, according to Kotler and Keller (2016), are:

geographic, demographic, physiographic, and behavioral (ch. 9). These variables are broken

down into several subgroups, such as gender, income, race, and religion (Kotler & Keller, 2016,

table 9.1).

Geographic Segmentation

Geographic segmentation divides a market into defined geographic areas, such as nations,

states, regions, cities, or neighborhoods (Kotler & Keller, 2016, Ch. 9). In 2012, single-serve

brewing systems accounted for 13% of coffee consumption in the United States (Ferdman,

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2014), with Keurig accounting for more than 75% of that market (Clark, 2012). In 2015, more

than 25% of all American homes owned a single-serve coffee machine, up from 15% in 2014

(Shah, 2015).

International expansion is part of GMCR’s long-term strategy (Niles, 2014). Single-serve

brewing machines outsold traditional drip coffee brewers in Western Europe in 2013 for the first

time (Ferdman, 2014). A Starbucks-GMCR alliance is leading the charge to tap into the

international market (Rudarakanchana, 2013).

Demographic Segmentation

Demographic segmentation divides a market into groups based on demographic

variables, such as age, race, religion, nationality, income, gender, life cycle stage, generation, or

sexual orientation (Kotler & Keller, 2016, ch. 9). In the United States, household income is

directly related to coffee consumption. 60% of households with incomes less than $50,000

consume coffee, rising to 62% with incomes of $50,000 to $100,000, 66% with incomes of

$100,000 to $150,000, and 70% with incomes above $150,000 (Fletcher, 2015).

An important demographic target of Keurig is college students. In an effort to reach this

large demographic, Keurig embarked on a 25 school tour in 2013 to promote its brewer (Scanlan,

2013). Coinciding with the tour was the release of Mini Brewer Plus, customized with decals of

the schools in order to make the brand more relatable for both students and alumni (Viveiros,

2014).

Another demographic desired to be targeted is minorities. Crawford (2016) contends

currently, single serve pods are tilted towards white households, with a 27.7% penetration. In

comparison, single-serve brewers are only in 14.4% of Hispanic households (Crawford, 2016). In

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other minority segments, “Asian respondents seek out espresso-based coffee beverages [and]

flavor variety may be the gateway into Black households” (as cited in Crawford, 2016).

Physiographic Segmentation

Physiographic segmentation divides a market into groups based on psychological traits,

personality traits, lifestyle, or values (Kotler & Keller, 2016, Ch. 9). One important group in this

segment is Millennials, who are willing to pay more for products that come from companies

committed to positive social and environmental impact (National Coffee Association, 2016b). In

order to cater to this environmentally-conscious group and to have a positive environmental

impact, GMCR has vowed to make all of its K-cup pods recyclable by 2020 (Ferdman, 2014).

Behavioral Segmentation

Behavioral segmentation divides a market into groups based a specific product’s understanding,

attitude, usage, or response (Kotler & Keller, 2016, Ch. 9). Coffee is widely consumed and

understood. According to the National Coffee Association (2016a), 76% of US consumers drank

at least a cup of coffee in 2015, with the coffee industry contributing $225.2 billion of total

economic output, approximately 1.6% of US GDP.

What are economic trends?

The USA economy did not develop to what it is in 2016 by accident, but there is a history that

has helped shape our economy to what its condition is in today’s first century; “The third lasting

legacy of 1914–1945 was the emergence of the United States, the world’s largest and most

innovative economy, as the natural leader of the [free world]” (The American Century is in Full

Swing 2008-03-12). Throughout the course of the 2oth century the US economy has experienced

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its highs as well as its lows in events such as the great depression. Now, within the present first

century, economic trends; “state of the marketing environment that influence both marketers’ and

customers’ decisions and activities (Ferrell & Pride, 2012, p. 68) are unpredictable, and affected

by; competition, technology, legal/regulatory, political and sociocultural forces. Baumohl stated

that the federal government and private groups release dozens of economic reports on a weekly,

monthly, and quarterly basis and that these reports measures activity on a specific segment of the

U.S. economy (2005). By observing and analyzing these results marketers can determine what

the current trends are and what affect it will have on their product or service.

Describe and discuss the current economic trends.

In foreign countries such as India who is commonly known for being a tea-drinking country has

currently had thousands of coffee shops have sprouted across the country and coffee

consumption has doubled with young Indians were the earliest converts (Young people Get India

Interested in Coffee, 2012). Being that coffee shops are growing within their societies, this could

also potentially mean that soon the market of in-home coffee appliance will be adapted.

In the US where coffee shops have been around nearly 500 years and in the past decade they

have experienced a dramatic expansion (Routledge, 2011). In 2016 it has become common and

trendy to find coffee shops, coffee bars, and kiosks in places where they were once rare or non-

existent-places like Hong Kong, Mexico City and so forth (Routledge, 2011). Many factors have

contributed to this expansion such as globalization of consumer culture, a growing appreciation

of high quality coffee, and the public’s eager acceptance of casual spots to study, relax, and

socialize (Routledge, 2011). Another economic trend that is playing a role in helping to grow the

coffee appliances industry is the world wide web, which allows for there to be internet within

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coffee houses and cyber cafes. “In the USA coffee shops are the fastest-growing segment of the

restaurant business [Coffee statistics online 2010]” (Routledge, 2011). The large coffee

consumption and popularity for coffee shops represents the potential, positive outcome of it

overall business cycle. Although the rates may fluctuate from time to time, coffee is now still a

customary drink (Routledge, 2011).

What are the influences that the economic trends will have on the sales of the Keurig?

These economic trends will have a positive effect on the sales of the Keurig because Keurig

changed the dynamics of the coffee manufacturing industry when it embraced the Keurig concept

of a single-serve home brewer and subsequently in 2006, and because of this GMCR sales

skyrocketed as the single serve brewer became nationally renowned (Treadway, 2015). The

company was an innovative and disruptive invention and even though competitors followed

closely behind they have not been able to have the same outcome as the Keurig yet (Treadway,

2015). GMCR, is known for environmental stewardship, and because of its values and wanting

to help protect the environment, it has created a positive marketing effect that helps to grow loyal

customers and sales.

Marketing Theory

Define technology. Dean and LeMaster (1995) professionally define technology as,

“firm-specific information concerning characteristics and performance properties of production

processes and product design” (as cited in Li-Hua, 2007, para. 4). However, although unwritten,

the world has unquestionably defined technology as a life-style, a movement of constant

evolving changes. These changes are no stranger to the coffee manufacturing industry, but more

specifically, owners of Keurig, Green Mountain Coffee Roasters (GMCR). They understand that

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technology has, and will continue to influence not only the industry, but consumer acceptance of

the Keurig as well.

GMCR’s technological standard. In order to stay relevant in the world of technology,

GMCR has embraced their true opportunity: “How do we stay in the lead and continue to stay on

leading edge” (“Green Mountain Coffee Roster, Inc.: CEO Dialogue,” as cited in Treadway,

2015, p. 43). They have considered the technological environment and the importance of four

technological trends that affect consumer acceptance: (1) accelerating pace of change, (2)

unlimited opportunities for innovation, (3) varying R&D budgets and (4) increased regulation of

technological change (Kotler & Keller, 2016, pp. 82-83).

Describe and Discuss the Technological Changes That Have Affected Consumer Acceptance

of Your Product/Service.

Research

Accelerating pace of change. An industry’s ideas are often times based on several

aspects. These aspects include, but are not limited to the current market and technological

changes. Unfortunately, the time between the idea and the implementation of the product is rare

(Kotler & Keller, 2016, p. 82). Before one idea is fully implemented, there is usually another on

its way.

Keurig 2.0. In 2012, two of GMCR’s essential patents for the Keurig expired. Patent 765

protected much of the basic K-cup, including its shape and patent 189 protected an earlier filter

used inside the K-pod (Treadway, 2015, p.54). But more importantly, patent 189 prevented

GMCR’s competition from producing generic K-cups (Treadway, 2015, p. 54). Needless to say,

GMCR’s competition did not delay in flooding the market with low-cost, third party cups

(Colon, 2014, para. 2). However, GMCR’s competition did not have time to take over the

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market, as GMCR had already developed a more refined filter for the new series of Keurig’s that

produced a richer cup of coffee for its consumers (Treadway, 2015, p. 54).

According to Kelley, President and CEO of GMCR, owners and non-owners of the

Keurig wanted the ability to brew both a single serving and a pot of coffee from one system with

Keurig speed, convenience and brand choice (“Green Mountain Coffee Roasters,” 2014, para. 3).

Without delay, GMCR introduced the Keurig 2.0. According to Colon (2014), the changes that

have been made to this series seem like a logical step in the evolution of single-serve brewers

(para. 16).

The new 2.0 technology eliminates the risk of consumers and potential consumers

purchasing third-party cups (considering that the cups will not work in this series). But other

than this, the brewer has the ability to recognize the inserted pack and optimize the

recommended, customized setting for the exact beverage (coffee, tea, hot chocolate) that the

consumer has chosen (Colon, 2014, para. 10). Also, the temperature on the Keurig automatically

adjusts and it is quieter than previous machines (Colon, 2014, para. 11). Lastly, the most popular

characteristic that sets this series a part from its competition is the idea that consumers are now

able to decide whether to brew enough coffee for a single person or a small party (Colon, 2014,

para. 2).

Unlimited opportunities for innovation. Innovation is critical, especially for

companies such as GMCR (Kotler & Keller, 2016, p. 47). However, while moving forward with

innovation, companies must also recognize that there is a possibility that the company may

experience long-run consequences that are not fully foreseeable (Kotler & Keller, 2016, p. 82).

Thus asking the question, “What will we do if ____ happens?”

MMGP Keurig Green Mountain 17

Keurig 2.0. According to Zacks Investment Research (2015), “GMCR has stirred up a

revolution with its innovative and exclusive offerings in its single-serve coffee category in order

to remain competitive” (para. 1). However, they failed to completely analyze the question,

“What will we do if ____ happens?” Consumers were disappointed with GMCR when the

company stopped making “My K-Cup.” This ultimately made the Keurig 2.0 series

“incompatible with any K-cups that already existed, as well as with any unlicensed disposable K-

cups made by other companies” (Barbash, 2015, para. 5).

For example, Rhonda Ungericht’s sister purchased a Keurig from the Keurig 2.0 series

not knowing that this particular Keurig would only work with Keurig K-cups. Unfortunately, the

Jamaican Blue Mountain coffee (not a Keurig product) that Ungericht purchased for her sister for

Christmas could not be used because it was not a Keurig K-cup (Barbash, 2015, para 10). The

consumer was upset because GMCR was technically forcing consumers to purchase only Keurig

K-cups.

Ungericht was one of many furious consumers and sales did not prove otherwise. Keurig

sales began to decline, leaving most of the inventory on the shelves (Barbash, 2015, para. 15).

Both brewer and accessories declined by 23 percent and stock prices fell by 10 percent in after–

hours trading (Barbash, 2015, para. 15). In response to the disappointment of the consumers and

the harsh impact on sales and stock, Kelley made the decision to bring back the “My K-Cup”

because the company misjudged the passion that the consumer had for the product (Barbash,

2015, para. 19).

Varying R&D budgets. R&D is not a standardized term, it covers a wide range of

activities that need to be integrated into the firm/company in order for the firm/company to

succeed through innovation (Forbes & Wield, 2004, pp. 275-275). From a technological

MMGP Keurig Green Mountain 18

perspective, GMCR’s main concerns are to keep its product(s) current and at the forefront of

science, while investing in rudimentary and developmental research. They must also focus on

building creditability with their consumers. By approaching these concerns, this will create an

environment where their product(s) will continue to evolve, allowing them to remain paramount

within the industry (Kotler & Keller, 2016, p. 83).

Increased regulation of technological change. The government has taken a stance on

the reality of unsafe products and they now investigate and ban any products that are or may

seem potentially dangerous to consumers (Kotler & Keeler, 2016, p. 83). GMCR has always

been concerned with its consumers and because of this they decided to be committed to

environmental stewardship from the very beginning (Treadway, 2015, p. 56). They started with

waste reduction and responsible energy use and today, they have made every effort to be a totally

environmentally sustainable company (Treadway, 2015, p. 56). According to Treadway (2015),

consumers are enticed by GMCR’s socially conscious decision (Treadway, 2015, p. 56). This

also helps consumers to feel confident about GMCR’s product(s).

Discussion/Analysis

Although GMCR owners of the Keurig have had a few setbacks in regards to how

consumers have responded to their product(s) technological changes, they have managed to hold

their rank as number 43 under: The World’s Most Innovative Companies (“Forbes The World,”

2015). By acknowledging technological environment and the importance of four technological

trends that affect consumer acceptance: (1) accelerating pace of change, (2) unlimited

opportunities for innovation, (3) varying R&D budgets and (4) increased regulation of

technological change GMCR has set the standard (Kotler & Keller, 2016, pp. 82-83). They have

also “inspired consumer passion for its products by revolutionizing beverage preparation at home

MMGP Keurig Green Mountain 19

and in the workplace” (“Forbes The World,” 2015). The technological changes that have

occurred has ultimately solidified the acceptance of GMCR and the Keurig.

Describe and discuss the consumer’s tastes and preferences for your product/service.

Consumers tastes and preferences are driven by many different items. In a research

project done by Experian Marketing, we see that the average U.S. household consumes over 4.2

cups per day of whole or ground coffee. [ CITATION Fet09 \l 1033 ] The diversion here is in

brand, flavors, and of course, regular or decaf. We go on to see that 89% intake regular and 46%

intake decaf. [ CITATION Fet09 \l 1033 ] So what drives the consumer to purchase which brands

and which flavors? In our text we see the five-stage buying decision that shows the

psychological process that consumers use that gives us a base to start off in understanding what

drives consumers in general. (Kotler & Keller, 2016, pg. 172) We see the consumer goes through

an information search and then starts to evaluate the alternatives. (Kotler & Keller, 2016, pg.

173) In the case of Keurig, we see the consumer was not happy with what the market was

offering for in office and at home coffee. Therefore, this innovative company, which ended up

merging with one of its investors and became known as GMCR, created a niche in a market that

was previously unheard of getting into by other competitors and is now a successful, sustainable

business. Now we will look into the market and its consumer.

The coffee industry is growing at an annual rate of 3.8% for the 10-15-year outlook and

2.3% for 15-30-year outlook. (IBISWorld, 2016) The coffee industry is said to be a $37.5-billion-

dollar annual market that, as you can previously see, is continually growing. With this much

growth comes a lot of options for the consumer to choose from. So what is driving these shifts in

preferences towards coffee? We see upon further research that over 54% of Americans consume

coffee who are 18 years of age or older. That is up 11% from prior years according to this study.

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[ CITATION Sta151 \l 1033 ] The study moves forward to point to the fast paced environment

Americans have created for themselves that has created a need for the beverage. [ CITATION

Sta151 \l 1033 ] When we look at the marketing research process, we see the first step as

figuring out what the problem is and what the decision alternatives actually are. (Kotler & Keller,

2016, pg. 102) Here we see Keurig trying to penetrate a market where there is considerable

market share established by competitors, and at their time of inception there was other corporate

distributors of work place coffee. The consumer had many different choices to choose from, so

why take on a new guy who you do not even know about?

With that said, Keurig saw there was an opportunity in the market to deliver fresh coffee

that had a quality taste. There was an overwhelming complaint that office coffee was either too

hot, too cold, and or the taste was undesirable. At this point and time there was a need to move

to step two, which was to develop a research plan to create their niche. (Kotler & Keller, 2016, p.

103) Over the preceding years the company did survey research, behavioral research, and other

various types of research to find out what the consumer was looking for. (Kotler & Keller, 2016,

p. 106) Keurig spent eight years developing their office machine and in 1998 they came out with

an industrial single-serve office machine that the market immediately stuck. (Leder, 2004) We

can see step 3, 4, 5, and 6 of the marketing research process come to life in the development of

this machine from their roll out of the office machine to the creation of the in-home unit. (Kotler

& Keller, 2016, pp. 113-114)

Keurig spent over 7 years developing an office version that would hopefully serve as

niche business and go from there. Little did they know once this concept became a reality, the

coffee world would never be the same. With this innovative idea, we see the public demanding

an at home version of this machine to have quality coffee with consistent taste, temperature, and

MMGP Keurig Green Mountain fi

size at home. The information here shows us that the market is demanding a product that is

currently not there. Keurig and Green Mountain has done the proper research and has dialed into

the key psychological processes that drive the buyer. One such buyer who was asking for the

product after experiencing it inside her office told the company that she would be willing to pay

the price to have one custom made for her own home! (Leder, 2004) It became very clear that the

market was demanding good, consistent, and quality coffee and was not afraid of paying a

premium price for the ask. As the aforementioned section showed us regarding preferences and

with the rise of coffee drinkers and the demand of coffee, this company is set to take over some

market share. The motivation here was for the aforementioned items. The perception, which we

see in our text is considered more important than actual reality itself, is that this machine can

deliver all of that to an ever-growing market segment that is demanding these things. (Kotler &

Keller, 2016, p.167).

At this point we can see that for quite some time the consumer was receiving

inconsistency in their coffee and this was, at one point, an acceptable concept until Keurig

introduced a single cup that created consistent flavor and temperature. Now the consumer is

asking for that and the market is reacting favorably. We have established the fact that Keurig is

an innovator in their field and that consumers are asking for their product due to taste and

consistency, but what else drives the consumer to their product? We see a few more items that

drive customers to this brand and it really circulates around the corporate responsibility the

company has done. Keurig, now GMCR, does many different things to create social

responsibility. As we read in our text, “Marketers must exercise their social conscience in

specific dealings with customers and stakeholders” (Kotler & Keller, 2016, p. 666). GMCR

realized that and practice an inception to delivery practice that promises that each step along the

MMGP Keurig Green Mountain 22

way they will do their best to conserve the environment and do the right thing for the community.

(Treadway, 2015) Their delivery trucks use biodiesel, they encourage their consumer to recycle

the K-Cups, and they use oxygen to bleach their fixtures instead of dioxin, which is known to be

a carcinogen. (Treadway, 2015) There are many other activities the company does, this is just a

few.

The consumers have responded very favorably with this brand which has really drove

their market share and desirability. The ability to have a single cup of coffee in a matter of

seconds at a price that averages $0.40 a cup seems much more desirable than waiting in line at

Starbucks and paying over $5.00 a cup. The consumer generally pays somewhat of a discounted

rate for the brewers, which is at or under cost, and the margin comes in the cost for the actual K-

Cups. (Foxbusiness, 2015) Keurig currently has a market share of 26.8% and annual revenue was

$3.4 billion. (IBIS World, 2016) The information here shows us that their plan for consistent

taste, temperature, size, and overall corporate responsibility has paid off for this company with

its consumers and overall market.

Cultural Factors.

Cultural factors in any given setting can change dramatically based on the audience you

are referring to as well as the environment they are in. We see culture defined as, “…the

fundamental determinant of a person’s wants and behavior” (Kotler & Keller, 2016, p. 157).

Within the context of wants and behavior we can see that there is great variation in what people

would identify based on their own demographic and geographic locaiton. To satisfy the ability to

identify trends for marketing and or business purposes one would need to segment the areas to

truly identify the markers for cultural trends. We read, “A market segment consists of a group of

customers who share a similar set of needs and wants” (Kotler & Keller, 2016, p. 246).

MMGP Keurig Green Mountain 23

Therefore, when you segment your markets you will then be able to find reliable trends to

establish the cultural factors in each area.

Cultural factors that influence consumer purchasing.

The coffee category in any given grocery store comes with a variety of choices for

modern day consumers. Consumers are able to see name brands such as Folgers, Maxwell

House, and Starbucks in the United States as well as Nescafe, illy, and Melitta in the United

Kingdom and Canada [ CITATION Dic14 \l 1033 ].These are iconic brands that people recognize

and have grown up with. The company’s listed have worked hard to brand their consumers to

look for their product as they shop. So what drives consumer to GMCR? Why would someone

purchase a Keurig machine and single serve offerings over their competition? While there are

many different reasons behind the purchase of these machines, we are going to focus on the

cultural factors that influence the overall purchasing decisions that create the end product, which

of course is a Keurig machine in the purchaser’s home.

GMCR has a very large target market. We see that over fifty percent of Americans who

are over the age of 18 drink coffee each and every day, which breaks down to about 150 million

daily coffee consumers in the United States alone (E-Imports, 2016). When a company or

industry sees this kind of market activity, it is not one that began overnight. For many years

families of various ethnic backgrounds have consumed coffee in a variety of ways. This of

course translates to repeat buyers and the hand me down affect that happens as the children

watch their parrents consume coffee, they to are going to be more naturally inclined to do so

themselves. Each family generally picks a brand they like and sticks with it. The house we grew

up in favored Foldgers coffee, so for quite some time, that is what all the family members

consumed, including the siblings as they grew up on their own. The age range for this product is

MMGP Keurig Green Mountain 24

therefore not as segmented as some other products on the market. With that said, GMCR has a

very broad focus on each of its target markets. There seems to be a lot of capital invested in the

college market, which would be the millennials or Gen Y. In one article we see that GMCR

targets the individual experience of each owner, even of the collegian level with customizable

machines with college logos on them (Viveiros, 2014). There seems to also be a uniting factor

with many coffee drinkers according to one article that shows that there is a cultural dynamic

regarding each of the coffee producer’s organizations (E-Imports, 2016). When consumers, or

researchers, look into the coffee industry they quickly see that the market from the grower’s

perspective is very volatile and, depending on the company, the ethical or lack thereof when it

comes to how each purchaser works with them is tantamount for branding purposes. In one

article we read that Fair Trade agreements in this industry with growers is the only way to

produce positive results for the smaller growers in developing nations which will help them be

competitive with the product they are bringing to the market place (Pantano, 2011).

When we look at the bulk of the specialty coffee purchasers, which happen to be the

millennial group (E-Imports, 2016), we see that they expect different actions from the businesses

and corporations they are purchasing from. We read that, “…Millennials are also often highly

socially conscious, concerned about environmental issues, and receptive to cause marketing

efforts” (Kotler & Keller, 2016, pg. 253). GMCR has set up the corporate culture to reflect this

type of feeling, not just because Millennials are looking for it, but because it is the right thing to

do for the business and world they operate in. In GMCR’s 10-K filing we read the following,

“We view sustainability as integral to our success. We have a long history of supporting

sustainability initiatives, particularly where we have business interest or expertise” (KEURIG

GREEN MOUNTAIN , 2013, p. 5). Today’s coffee consumer is looking for a product that

MMGP Keurig Green Mountain 25

identifies with their personal immediate need, single servce coffee, as well as a company that is

delevering that on a scale that meets their personal expecations, which GMCR is committed to

accomplishing.

Cultural drivers have a large affect on purchasing, in fact it is noteworthy to say that cost

and branding play a very relevant part in what consumers actually choose to purchase regarding

various products. As consumers develop their own desires regarding products, those who can get

the brands they want may not care as much about price as they do quality or brand name.

Naturally if you grew up in a home that afforded better items, you will have a taste for those

brands and that quality so stepping down may be an issue for that consumer. Many assume that

price is the major variant when it comes to discretionary spending in today’s consumer.

Although that has an influence, it is not the deciding factor for many consumers according to a

study done on this topic. We read that, “…the model shows how consumer’s perception of these

products influence the subsequent behaviour, by affecting the average expenditure but not the

frequencey of purchase” (Pantano, 2011). GMCR has went to great lengths to ensure the

consumer percives the product as a want and desire by its customer through quality, consistency,

and sustainabilty. These actions, as well as partnering with the compeition by securing rights for

many brands to produce products that are integrated with GMCR, meets and drives the cultural

factors for the decision in purchasing their products.

Social Factors

When any company goes to market with a product that is enjoyed, shared, purchased, or

consumed socially, their marketing efforts and plans must be driven by those social factors to be

able to produce the greatest results for their product. Social factors are great influences for

MMGP Keurig Green Mountain 26

consumers and any organization that does not recognize this would be in a negative place. We

read that, “…social factors such as reference groups, family, and social roles and statuses affect

our buying behavior” (Kotler & Keller, 2016, p. 159). Many of us, if not all, can recall a time

where a family member, friend, or neighbor has offered us to try a new product which in turn we

enjoyed and went out and purchased ourselves. This is the social factor that is mentioned above

and creates a large marketing ability for all companies who recognize it.

Social factors that influence consumer purchasing

Millennials, as we mentioned before, are big consumers of specialty coffee, but where

did that desire come from? From reference groups to aspirational groups, there are many social

factors that drive society towards a specific brand. For example, in Mexico, many families grew

up with the brand Altura Coatepec, which comes from a mountainous region of the

area[ CITATION Cof15 \l 1033 ]. As a result, many people from that region only drink that

coffee. Social factors have had a large influence over the lifetime of the coffee industry which

has brought it to where it is today. To put that into perspective, in the United States alone, coffee

consumption is at an average of 3.1 cup per day, up from 2.9 a year ago (E-Imports, 2016).

Furthermore, from a financial perspective, coffee shops alone, which presently there are over

24,000 in the United States, equal over $12 billion in annual sales (E-Imports, 2016)! When we

look into the past we see from what our text calls the “Silent Generation” all the way to “Gen Y.”

there has been social factors that have passed down the tradition of consuming coffee through

many generations (Kotler & Keller, 2016, pp. 252-254).

When we look at the staggering number of coffee shops in the United States and

understand that this only represents a certain segment of the total coffee business, we see why

MMGP Keurig Green Mountain 27

GMCR has invested into creating the coffee shop experience, which is a good, consistent, quality

cup of coffee each and every time as we read from one article (Viveiros, 2014). GMCR

understands that there is an enormous opportunity to create that experience for each consumer as

well as do it in a cost efficient way that encourages repeat purchases. We read that the total

coffee market in the United States alone is over $40 billion dollars each year. (National Coffee

Drinking Trends, 2010, NCA, 2012) Understanding that and the fact that $12 billion is from

coffee shops, that leaves a lot on the table for companies to go after. GMCR has made drinking

coffee personal by creating a machine that gives each person a choice in what type, flavor,

amount, and strength of each cup for their personal consumption without paying the coffee shop

prices. This appeals to many Gen Y, as mentioned before, since they are just entering the market

without a large amount of discretionary income to spend.

In close, social consumption is on the rise with coffee. Many people see this as not just

caffeine intake, but a chance to talk about what’s going on at work, home, or in general. Gallup

did a recent survey showing that Americans consumption is up on single serve coffee, especially

in a social setting which lends itself to GMCR’s product of single serve coffee with choices for

all consumers at a price that fits most people’s budget (Saad, 2015).

Marketing Theory

Consumer behavior. The marketing strategy of GMCR depends greatly on the way the

consumer behaves and how he or she proceeds with the buying decision. Consumer behavior is

defined as “the study of how individuals, groups, and organizations select, buy, use, and dispose

of goods, services, ideas, or experiences to satisfy their need” (Kotler & Keller, 2016, p. 157).

Keurig has conducted lengthy studies to determine how their consumers’ feel about the product.

Michelle Stacy, the president of GMCR’s Keurig business unit said that their customer

MMGP Keurig Green Mountain 28

satisfaction research has proved that the Keurig has generated an astonishing appeal among

consumers (“Green Mountain,” 2013, para. 1). Research determined that “consumers are

passionate about its [the Keurig brewer] simplicity, convenience and the quality of brew”

(“Green Mountain,” 2013, para. 1). With the previously stated example, it is easy to see how

consumer behavior research can help GMCR determine how to develop products, how to set

prices and how to communicate with the consumer.

Although the concept of consumer behavior seems elementary, understanding the exact

behavior of the customer can be a bit challenging, especially when it comes down to convincing

the consumer to purchase the product (Pelau, 2011, p. 102). Consumer behavior is the point of

the pyramid, however, several elements fall under this broad topic. These components assist

companies like GMCR with developing a successful marketing strategy. Two of the many

elements included are personal and psychological factors.

Describe and Discuss the Personal Factors That Have The Most Influence on Consumers

Purchasing Your Product/Service.

Research

Personal factors. T. Gherasim and A. Gherasim (2009) presents personal factors as the

personal characteristics of individuals (as cited in Gherasim A. & Gherasim D., 2013, p. 63).

These characteristics include (but are not limited to) age and stage of life cycle, occupation,

economic status, personality, self-image and lifestyle (Gherasim A. & Gherasim D., 2013, p. 63).

The personal factors that have the most influence on consumers purchasing GMCR’s Keurig

include age and occupation

Personal factors that influence consumers purchasing the Keurig. Coffee drinkers

exist all over the world and most of them drink just over three cups (Crawshaw, 2009, p. 30).

MMGP Keurig Green Mountain 29

For most, the act of drinking coffee allows the consumer to confidently move forward with a “get

up and go” type of attitude. Many consumers believe that coffee allows them to “feel more like

themselves” (“Brew NEWS,” 2011, p. 6). With this said, GMCR must always be attentive to its

consumers in terms of their behavior.

Age. According to the National Coffee Association (NCA), more than half of the adult

population drinks coffee daily (as cited in “Coffee Culture,” 2006, p. 3). These coffee consumers

range from ages 18 to 39 (“Strong future,” 2011, p. 46). This group of coffee drinkers are certain

that their daily dose helps them get through the day.

The NCA conducted a study in 2011 that revealed 86 percent of coffee consumers chose

to drink their daily “cup of Joe” at home (“Strong future,” 2011, p. 46). Of this percentage, 35

percent of them own a single-cup brewer (“Strong future,” 2011, p. 46). This data suggests a

solid customer base for future growth while giving GMCR the ability to determine its

consumers’ loyalty towards the Keurig and Keurig products.

Occupation. According to Dr. Yeung, companies that offer their employees hot

beverages on site are truly helping its employees be productive throughout his or her work day

(“A motivational force.” 2010, p. 14). But not just any hot beverage. Employees insist on

having coffee brewed from a high quality, convenient, reliable coffee system. Mars Drink’s

research revealed that 76 percent of “decision makers believe that there is a positive impact on

morale based on the choice of coffee systems” (“A motivational force.” 2010, p. 14).

Several important business people have purchased a Keurig for the office. For example,

Jerry Lawrence, the vice-president of a public relations firm sees the use of the Keurig as a

networking opportunity. The Keurig draws colleagues into “Café Lawrence” (his office).

Employees are able to use Mr. Lawrence’s Keurig multiple times a day while holding brief

MMGP Keurig Green Mountain 30

conversations (Bertagnoli, 2007, para. 9). Instances such as Mr. Lawrence’s is a great indication

of how GMCR’s Keurig is beneficial in the occupational arena.

Discussion/Analysis

The key personal factors that influence GMCR’s consumer purchasing are age and

occupation. The age range of consumers allows GMCR to see exactly what consumers are either

interested in and/or what products they are currently utilizing. The occupation of consumers also

affects the marketing strategy of GMCR. Research shows that in-office brewers create a positive

environment for employees and increases morale. With this said, it is extremely likely for the

Keurig to remain at the top of the list for single-cup brewers in the future.

Describe and Discuss the Psychological Factors That Have the Most Influence On

Consumers Purchasing Your Product/Service.

Research

Psychological factors. Kotler and Keller (2016) believe that in order for marketers like

GMCR to understand the concept of consumer behavior, they must thoroughly understand the

stimulus response model (p. 165). This model, in a sense, makes it possible for companies to

enter into the consumer’s consciousness. By doing so, marketers better understand how

psychological factors impact both the consumer’s decision processes and purchase decisions

(Kotler & Keller, 2016, p. 165).

There are “four key psychological processes—motivation, perception, learning, and

memory” (Kotler & Keller, 2016, p. 165). These factors have the ability to be the determining

factor of whether or not a consumer decides to purchase a company’s product. GMCR must

acknowledge the importance of understanding its consumers’ psychological factors, especially

the process of perception.

MMGP Keurig Green Mountain 31

Perception/Emotions. The decisions of GMCR consumers weigh heavily on the

consumer’s perception and emotions of the product. Kotler and Keller (2016) mention selective

attention as it pertains to perception, but more specifically, the idea that “people are more likely

to notice stimuli that relate to a current need” (p. 168). For example, today’s people are

purchasing most of their snacks and meals from vending machines. Refermat (2011), reveals

that they are looking for their soon-to-be-new favorites (p. 20).

When a person purchases a snack from the vending machine or uses a branded hot

beverage machine like the Keurig, their main focus is to find something new. For example,

consumers will be more inclined to purchase an item (that they are familiar with) if it is a new

flavor (Refermat, 2011, p. 20). They have (1) retained information from snacks of the same

brand and (2) they are not necessarily concerned with any other product other than the new

flavor of the product displayed. In 2010, GMCR announced the Green Mountain Brew Over Ice

K-cup Portion Pack that introduced more coffee flavors than the traditional K-cup (Refermat,

2011, p. 22). The consumers’ response generated an element of excitement (Refermat, 2011, p.

22).

Discussion/Analysis

The most important psychological factor that influences GMCR’s consumer purchasing is

perception/emotions. GMCR’s consumers perceive many elements of the Keurig and other

products through their senses (Kotler & Keller, 2016, p. 167). The information obtained helps

the customer to decide on whether or not to purchase a product. GMCR must consider its

consumers’ psychological factors in order to create an effective marketing strategy.

Consumer Behavior

MMGP Keurig Green Mountain 32

“Consumer behavior is the study of how individuals, groups, and organizations select,

buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants”

(Kotler & Keller 2015 p. 158). “A consumer’s buying behavior is influenced by cultural, social,

and personal factors. Of these, cultural factors exert the broadest and deepest influence (Kotler &

Keller” 2015 p. 158). The buying decision process begins long before the actual purchase and the

consumer will typically pass through five stages: Problem recognition, information search,

evaluation of alternatives, purchase decision and post purchase behavior (Kotler & Keller 2016

p. 163). Understanding this process helps marketers to develop activities, and programs that

reach consumers at all decision stages (Kotler & Keller 2016).

Describe which aspects of consumer behavior your product/service emphasizes in its

marketing plan, and why.

Evaluation of Alternatives

There are two kinds of new consumers: one is the new generation; for instance, young

people moving into their first home, who are entering the category directly with single serve, and

other consumers who were previously buying their coffee somewhere other than retail (Retail

Intelligence coffee, 2013). These customers evaluate their alternatives including GMCR within

their choices. We know that the consumer is trying to satisfy a need, they are looking for a

certain benefit from the product solution, and the consumer see’s each coffee product as a bundle

of attributes with different benefits and these attributes will vary by each product (Kotler &

Keller, 2016, p. 175). In terms of coffee the types of attributes these customers will look for in

coffee are quality of taste, flavor, origin, temperature, price and so forth while having other

alternatives to choose from. These include brands such as Starbucks, The J.M. Smuckers

Company, Folgers, Dunkin’ Donuts, and Millstone (Treadway, 2016) as well as smaller brands of

MMGP Keurig Green Mountain 33

coffee within local shops and stores. GMCR consumers each form an attitude, belief, and

expectancy measured by the expectancy value model). The differences between GMCR products

and other products that for their loyal customers is that they value social responsibility.

According to research by the NPD Group and Civic Science, when consumers were asked how

important a company’s social consciousness was in determining where they shop and what they

buy, 74% stated that it was either “very” important or “somewhat” important (Horovitz, 2013)

and being able to conduct business with a socially-conscious company made the consumer feel

more engaged in making a difference (Retail Intelligence coffee, 2013).

Purchase Decision

In the evaluation stage, the consumer will form preferences among the brands and may

also form an intention to buy the most preferred brand (Kotler & Keller, 2016). When it comes to

making purchase decision customers will often take “mental shortcuts” called heuristics or rules

of thumb in the decision process (Kotler & Keller, 2016). These consist of the conjunctive

heuristic where the consumer sets a minimum acceptable cutoff level for each attribute and

chooses the first alternative that meets the minimum standard for all attributes (Kotler & Keller

2016 p. 176) for example, products on the shelves should be regrouped in the following order:

brewing system, type of beverage, brand, price tier (retail intelligence coffee, 2013) when this is

done the customer can easily identify each attribute and choose its minimum standard.

The lexicographic heuristic is when consumer chooses the best brand on the basis of its

perceived most important attribute (Kotler & Keller, 2016, p. 176) for example “the single-serve

format is also helping increase at home consumption because of the flexibility it offers with

individual portions such as Keurig’s K-Cup® packs, consumers are more willing to experiment

MMGP Keurig Green Mountain 34

and have multiple types of coffee on hand” (Retail Intelligence coffee, 2013).

Then there is the elimination-by-aspects heuristic, where the consumer compares brands on an

attribute selected probabilistically—where the probability of choosing an attribute is positively

related to its importance—and eliminates brands that do not meet minimum acceptable cutoffs

(Kotler & Keller, 2016, p. 176). “Single-serve technology has changed the way people brew their

coffee. It allows them to brew the perfect cup of coffee in the blink of an eye, every time,” says

Toutant (Retail Intelligence coffee, 2013).

Evaluation of Segment Attractiveness

Theory. To understand how Keurig Green Mountain, Inc. evaluates its identified market

segments one must first understand market segmentation. In a nutshell market segmentation is

the division of the market, or mass market, into clearly defined segments (Kotler & Keller, 2016,

p. 246). To evaluate the attractiveness one has to have already established the respective

company’s segment. In the case of Keurig, it would be behavioral and benefit segmentation as it

applies to the homogenous Keurig customer base through a handful of aspects. These include

benefits sought, occasions, and usage rate. Each of these categories fall into the behavioral

segmentation category. Rizal Ahmad of the University of Kent at Canterbury (2003) provides an

astute observation of market segmentation and benefits sought, “Benefits sought are

manifestations of both consumer requirements (needs and/or wants) and the value that consumers

such as Ms Smith are willing to pay in return for the sacrifices that they are willing to make”.

Occasions can be defined as the instances when a consumer will purchase a product or

essentially need the product in question (Kotler & Keller, 2016, p. 259). In the case of Keurig,

the identified target market of respective coffee drinkers tends to need coffee in the mornings

MMGP Keurig Green Mountain 35

before work and throughout the day as well. From a usage rate perspective Keurig has light,

medium, and heavy coffee drinkers. The heavy coffee drinkers would be the office workers and

medium coffee drinkers would be the average homeowner, which brings us to the evaluation of

Keurig’s segment attractiveness. Segmentation attractiveness can be described as the potential

growth, increase in customer base, risk potential, and competition intensity that can be derived

from the established market segmentation strategy.

Discussion and Analysis

Keurig has done and is currently in the process of increasing its attractiveness to the at

home (AH), away from home (AFH), and consumer direct channels (SEC 10-K Keurig Green

Mountain, Inc., 2014). Keurig is constantly evaluating its attractiveness to the market because its

competitors are doing the just the same. The primary goal is to gain a competitive edge, the basis

of segmentation attractiveness and market segmentation, and create market growth from that

competitive edge. Keurig is competing on with Starbucks, Nestle SA, The J.M. Smucker

Company, and Kraft Foods Inc. on a major scale (IBIS World, 2016). Each of these companies

are seeking to capture or expand their target market. For instance, Canada has undergone a

market shift in coffee drinking as of 2012. While this may be Canada and not the United States,

Keurig focuses its assets on the U.S. and Canada making this relevant. The article from NPD

Group, Inc. (2012) states that there was a 27% increase in at home coffee consumption, but the

same percentage consumes less coffee when they are out of their home. To supplement this

article, an article from the U.S. News (2016) states that the United States economy is in a

restaurant recession (Soergel, 2016). Each of the channels, primarily AFH channels, are being

affected and will be affected by the recession thus creating an increased boost in sales for Keurig

versus major competitors. Based on the current situation, the restaurant recession, Keurig can

MMGP Keurig Green Mountain 36

continue to gain a competitive edge by driving lower prices than its competitors, continue

growing the already largest brand portfolio, increase advertising online and circular advertising

as well. Implementing a segmentation attractiveness strategy based on these action plans seems

achievable for a company that already has segmented the market by 70% (McLoughlin, 2015).

Marketing Coverage

Market Segments. Coverage patterns are ways a company may choose to allocate

products to the various segments. There are a variety of coverage patterns, which are usually

categorized into five possible patterns: full market coverage, market specialization, product

specialization, selective specialization, or single-segment concentration. A company should take

into consideration their resources and risks in these different coverage patterns before making

decisions about which and how may segments to choose. One mistake a company has to avoid is

the temptation to pursue a coverage pattern that requires resources it does not have.

Explain why your firm should or should not pursue full market coverage, market

specialization, product specialization, selective specialization, or single-segment

concentration.

Research

Single-segment concentration: The company selects a single segment on which to

concentrate. For example, Porsche focuses on the sports car enthusiast. This is a good approach

when resources are limited. Through this approach, the company can focus on the segment’s

needs and achieve a strong market presence (Kotler & Keller, 2016, p. 266).

Product specialization: The company focuses on making a particular product and selling

it to a variety of segments. A strong reputation in a specific product category is built. However,

MMGP Keurig Green Mountain 37

there is the possibility of a downside risk of your product being made obsolete by another

product (Kotler & Keller, 2016, p. 266).

Market specialization: The company focuses on a specific segment and provides a

variety of products or variations of a product which match the benefits that customers in that

segment care about. This pattern also helps to build a strong reputation and provides you with

specific experience benefits by serving a particular segment. However, you will lean more

heavily on this segment, which may be costly if the segment suffers a budget cut or shrinks in

size (Kotler & Keller, 2016, p. 266).

Selective specialization: The company selects a number of segments and appeals to them

with different products. This approach allows you to diversify your risk since if one segment

becomes unattractive, you can continue to make money in other segments. An example of this

would be Crest White strips initially targeting newly engaged women as well as gay males

(Kotler & Keller, 2016, p. 265).

Full-market coverage: The company serves all segments with all products. This

approach is viable for firms with a large amount of resources, such as Microsoft, General

Motors, or Coca-Cola, via differentiated or undifferentiated marketing (Kotler & Keller, 2016, p.

264).

Discussion/Analysis

There are several aspects that a company should consider on which marketing coverage

to pursue, like: size of segment, growth rate of segment, competition in segment, and brand

loyalty in segment to name a few. The coffee drinking market category is growing fast and wide.

Coffee is consumed around the globe every day. Reaching college students to

businessmen/women, and into the homes. With this in mind, Keurig should pursue the Product

MMGP Keurig Green Mountain 38

Specialization marketing strategy. Capturing all the coffee drinkers around the world at home, in

the office, and to the sports arena, with a variety of brewers to fit everyone’s needs along with a

wide variety of K-Cup flavors and product (coffee, tea, hot chocolate, etc.…) (www.keurig.com).

Target Market

In order to define a target market, marketers must first determine the market segment they

want to look for. Market segment “consists of a group of customers who share a similar set of

needs and wants” (Kotler & Keller, 2016). Whether it is a specific gender, certain demographic,

or age range, every product has a target market it is trying to reach in order to maximize

marketing strategies which leads to increased profits.

Research

While an individual or group of individuals may have a great understanding on their

target market, it is still important to do research outside one’s demographic to determine what the

consumers really want. Authors Peter Rossi and Rob McCullough write, “Our results indicate

there exists a tremendous potential for improving the profitability of direct marketing efforts by

more fully utilizing household purchase histories” (Rossi, 1996). Marketers have to ability to

look at what customers are buying for their households on a consistent basis.

Initially, the Keurig brewer’s target audience was middle and upper class households that

enjoyed the comfort of high priced coffee in convenience of their own home. Then, when Keurig

started losing customers to “copycat” brewer systems, Keurig decided “to drive the volumes, the

company lowered its net pricing for brewers” (Team, 2014). The drop in price expanded the

target audience for brewers, causing sales to increase and allowed the company to come out with

different brewer systems that would reach an even larger target audience.

MMGP Keurig Green Mountain 39

Discussion/Analysis

While the target audience for the Keurig started out as one thing, it has expanded

tremendously from the original 2012 design. Since the coffee maker was already a staple

household good in many homes across America, all Keurig had to do was to convince consumers

to ditch their old coffee machines and investing in a Keurig for daily coffee use. And that they

did. From students with limited space in a dorm room to organizations with high traffic break

rooms, the Keurig has something for everyone. Although the Keurig is a household item that

only needs to be purchased once every few years, consumers are still required to buy the K-Cups

that make the beverages of choice as often as once a month. It is important for marketers to first

determine a target audience and once they do that, they can determine how they can maximize

marketing strategies to reach the consumer.

Describe What Specific Needs your Product/Service Addresses for Each Target Market.

Market Needs

There millions of innovative ideas and concepts that are attempted but never succeed

because of the market needs at the time. Whether it’s the current state of the economy, wrong

target audience, or poor marketing practices, it is important to determine the needs of customers

before executing a product. Kotler and Keller identify that “not everyone who buys a product has

the same needs or wants the same benefits from it” (Kotler & Keller, 2016).

Research

Maslow’s Theory. Human beings have three basic needs to survive: food, water, and

shelter. Anything beyond those three things are simply a convenience to make one’s life easier.

Maslow’s Theory is that “human needs are arranged in a hierarchy from most to least pressing…

MMGP Keurig Green Mountain 40

people will try to satisfy their most important need first and then move onto the next” (Kotler &

Keller, 2016). Author Mahmoud Wahba writes that “part of the appeal of Maslow’s Need

Hierarchy Theory is that it provides both a theory of human motives by classifying basic human

needs in a hierarchy”(Wahba, 1976). “For many people all over the world, I would argue that

coffee is near the top of most pressing needs of course following necessities to live such as food,

shelter, and water. Company’s such as Keurig have found great success in the caffeine market

because of its convenient and economic benefits that come from having café quality drinks in the

comfort of one’s home or office.

Discussion/Analysis

The need for the Keurig is to first and foremost, provide a hot beverage in a single-serve

machine by simply adding water and the K-cup of choice to the machine. In an age where

consumers want everything faster, the Keurig fits in well with the concept of having coffee on-

the-go rather than in one’s home in the morning. In the current year 2016, the Keurig has reached

a myriad of consumers from doctors working long shifts at a hospital who do not have time to go

down to the café to the elderly widow who does not want to waste a pot of coffee every morning

when she makes coffee. While it is a luxury to some, may do not see coffee as such and classify

it as a “need” in their daily routine.

Positioning Statement

Positioning Statement. Author Hui-Ju Wange states that “Brand positioning is regarded

as a key tool for brand implementation in competitive markets” (Wang, 2012). While it is

obvious statement, where and how a brand is positioned is key to successful marketing.

Adjusting a few words in a sentence can make the difference in a consumers’ willingness to try

or continue to use a product. “Placing a brands image means identifying its position on the

MMGP Keurig Green Mountain 41

market” (Iordache, 2014). When a brand is shown to consumers, the product establishes its place

in society. The company, or brand, needs to know where they are in the market in order to try to

reach its target audience. Take the Honda Civic, for example. Honda does not need to advertise

their brand of Honda on the Disney Channel because that audience does not even have the ability

to drive, much less be interested in a vehicle that is common amongst all Americans. Or the

Cuisinart Kitchen-Aid. A mixer used in various ways around the kitchen, the target audience for

the brand is most likely not watching ESPN on a regular basis. They would, however, get a large

response from Lifetime channel, a station that is primarily geared towards women and moms.

Choosing the Lifetime as a target audience to reach women or the Disney Channel to reach

children does not make those audiences exclusive to the channel. Many women love to watch

ESPN and some men may enjoy watching Lifetime, however it is important to understand the

demographics of who you are advertising to and where one chooses to advertise.

Create an Appropriate Positioning Statement for Your Product/Service and

Explain the Statement. Keurig provides everyday people with an unforgettable experience

better than any other coffee company. We do this by quick service, eco-friendly products, and a

delicious taste you can trust”. The statement identifies the target audience, everyday people. It

hits on the value we are giving to the consumer, an unforgettable experience. “Quick service,

eco-friendly products, and delicious taste” is the promise to the consumer. They should believe

the statement because most are already familiar with major coffee distributors such as Dunkin

Donuts and Starbucks which have already established rapport with its customer base (Holland,

2015).

Discussion/Analysis

MMGP Keurig Green Mountain 42

Keurig. While the coffee maker is not a new idea, Keurig was able to take an everyday

device, modernize it, and market it in such a way to convince consumers they needed to ditch

their old coffee maker and purchase a Keurig for their home, office, or even dorm room. As

mentioned earlier, Keurig partnered with companies such as Starbucks to start putting their brand

coffee into the K-Cups. “The year 2011…whereby Starbucks coffee became available in K-Cups,

and Keurig brewers were sold in Starbucks locations. A similar deal was struck with Dunkin

Donuts later that year” (Treadway, 2015). Not only were these companies putting their coffee

into cups to be sold in stores all over the world, but also the machines themselves were being

sold within their locations. Keurig did an excellent job taking their concept and using other

established entities to market their device to their consumer base.

MMGP—Marketing Positioning

Definition. In order to create a distinction between brands, a company’s unique image is

discovered thru positioning, which will create an image in the customer’s mind. The customer

will remember the positioning of the product or service. In order for a brand to stay fresh and

innovating, good positioning would have a hand in the past and in the future (Kotler & Keller, p.

276).

Describe how your product/service is positioned in the marketplace. Provide examples and

a detailed explanation.

Research

Keurig has taken positioning very seriously since its origin. Keurig’s frame of reference

is the coffee industry. The proper positioning for Keurig is to provide a memorable experience at

an affordable price better than their coffee competitors. They will accomplish this by providing

prompt service, eco-friendly products, and an unbeatable taste that is perfect each time. Keurig is

MMGP Keurig Green Mountain 43

not creating something new, but rather renovating the everyday coffee maker to a perfect and

personalized experience with every cup of coffee in their home, office, or barracks/dorm room.

Keurig has gone one step further than just improving the coffee maker. It has partnered with

some leading brand name coffee companies such as Starbucks and Dunkin Donuts to name a

couple, to put their brand of coffee in the Keurig K-Cups. Also with this partnership, Keurig

machines were being sold at these company’s locations. In order to reach every coffee drinker,

Keurig can be found in stores around the world and on the internet. Both the K-Cups and the

machines can be found in stores like Wal-Mart, Target, and Kohl’s, and on the internet at sites

like Amazon and Keurig.com. With the increased number of certified coffee brands offered by

Keurig Green Mountain, it is able to provide close to 500 different varieties of coffee, tea and

other beverage options. As mentioned earlier, Keurig has augmented its pace in partnering with

key coffee brands and other retail chains such as Dunkin Donuts, Peet’s Coffee, Starbucks,

Nestle U.S. division and Kraft Foods Group. These deals are very advantageous for the company

to widen its market base in the single-serve coffee segment, because these brands establish three

quarters of the total U.S. coffee consumption. For the coffee lovers who like Maxwell House,

Starbucks, Dunkin’ Donuts coffee, or Nestle’s creamer, enjoy their favorite cup of coffee at home

instead of going to the respective coffee outlets to get a cup. Keurig did an excellent job taking

their concept and using other established entities to market their device to their consumer base.

Market Leader

Keurig Green Mountain is and has been the market leader in coffee production, single

serve products, specialty coffees, and coffee makers since at least 2012. Currently Green

Mountain Coffee Roasters Inc. has a market share of 25.8% while its market challengers have a

share of 22.2% for Nestle SA, and 19.1% for The JM Smucker Company (IBIS World, 2016).

MMGP Keurig Green Mountain 44

The market follower is Kraft Foods Inc. with a market share of 10.5%, primarily due to the

Maxwell House coffees it sells and the Starbucks coffees it sells under license (IBIS World,

2016). One of the most prominent market niche companies is Starbucks with an estimated 4%

market share (IBIS World, 2016). Over 22.4% of the market share in the coffee production

market segment is dedicated to other less prominent companies (IBIS World, 2016). With the

market challengers, follower, and niches established Keurig must remain relentless in its quest to

continue being the market leader. Kotler and Keller (2016) describe the much needed action plan

that every market leader should adopt, “Although marketers assume well-known brands are

distinctive in consumers’ minds, unless a dominant firm enjoys a legal monopoly, it must

maintain constant vigilance (p. 337). Keurig continues to dominant its market segment year after

year with fresh and never before seen innovations. These innovations continue to attract new

consumers and keep the respective company’s loyal customer base focused on Keurig alone.

Despite Keurig’s takeover of the single serve coffee market with its ever increasing coffee

portfolio of flavors and brands, one of its major strengths, it is not without its weaknesses.

Strengths

Keurig Green Mountain’s notable strengths are its massive product portfolio and

prosperous strategic agreements with competitors such Kraft Foods, Dunkin Donuts, Starbucks,

etc. (Marketline, 2016). In 2014 Coca Cola Company became a major shareholder in Keurig

Green Mountain as the company approached releasing its new Keurig Cold brewing machine

(www.forbes.com, , 2014). From a marketing and financial standpoint this shareholder

investment bolstered and continues to bolster Keurig Green Mountain’s place in coffee

production. In 2015 Keurig Green Mountain was taken private by JAB Holdings Co., a European

MMGP Keurig Green Mountain 45

investment firm that is coming forward as the leader in global coffee production and sales

(Gasparro, , 2015). The deal was one of the most valued of 2015 and the biggest coffee

acquisition in history (Gasparro, , 2015). Keurig going private could be a strength, a threat, an

opportunity or a weakness, which path Keurig is currently on remains to be seen. However, J.B.

Holdings Co. hopes to expand Keurig internationally, in Europe, which is something the

company has not been able to do (Gasparro, , 2015). Its primary market challenger Nestle SA has

a strong international presence, however, its weaker product portfolio makes it second to Keurig

Green Mountain. It is expected that Keurig’s top executives recognize that Nestle SA is close

behind them in the coffee product market. Thus, going from public to private will be more of

strength and opportunity for Keurig as it may pave the way for international growth and increase

sales in the United States and Canada.

Weaknesses

One of Keurig Green Mountain’s primary weaknesses is its dependence on the U.S. and

Canada market (Markeline, 2016). Even though this is true the company may have an action plan

to become more of a global presence due to its private takeover in December of 2015 by J.B.

Holdings Co. (Gesparro, , 2015). Also, it has a concentrated customer base in the wholesale

category, which it seeks to rectify with strategic agreements (Marketline, 2016). A more recent

problem for Keurig that has created a weakness for the company is the discontinuation of the

Keurig Kold single serve cold brewing soda machine. The machine was discontinued due to its

high cost, over $369, amount of counter space it took up, and the cost per k-cup pod (Esterl, ,

2016). The company is giving its customers a full refund for the product they purchased. The

discontinuation of the Keurig Cold will allow Soda Stream International Ltd, a leader in

MMGP Keurig Green Mountain 46

countertop carbonation makers to further advance amid Keurig Green Mountain’s mistake. Not

only is this a weakness for Keurig Green Mountain, but it is a potential threat as well.

Describe which brand elements would be most useful for differentiating your

product/service’s brand from the competition.

Form,

Form is the size, shape, or physical structure of a product (Kotler & Keller, 2016, p. 371).

The Keurig has a size that is very much similar to other coffee makers but it’s shape in that it was

designed to produce a self-serve component is what makes it different.

Features

Features are things that enhance the basic function of a product (Kotler & Keller, 2016).

To name a few, features that Keurig offers are accessories that include my k-cup reusable filter,

carafes and drinkware, pod-storage, cleaning and maintenance services, spare parts, and e-gift

cards (www.Keurig.com). The Keurig Green Mountain company can continue to identify and

select appropriate new features by surveying recent buyers and then calculating customer value

versus company cost for each potential feature (Kotler & Keller, 2016).”

Performance quality

Performance quality is the level at which the product’s primary characteristics operate.

(Kotler & Keller, 2016). The overall performance quality of the Keurig is sustainable, easy to

operate and appealing to its customers.

Conformance quality

MMGP Keurig Green Mountain 47

This is the degree to which all produced units are identical and meet promised

specifications (Kotler & Keller, 2016). Again the Keurig and other standard coffee making

machines have a similar size but provide different functions within a home, or any other business

or organization.

Durability

Durability is a measure of a product’s expected operating life under natural or stressful

conditions (Kotler & Keller, 2016). The Keurig just like any other coffee machine can last for

years, they also offer maintenance and warranty deals which is up to the customer at the point of

purchase offering a good source of durability and options for continued service.

Reliability

Reliability is a measure of the probability that a product will not malfunction or fail

within a specified time period (Kotler & Keller, 2016).

Reparability

This is another brand element that differentiates the Keurig from other products.

Reparability is the ease of fixing a product when it malfunctions or fails (Kotler & Keller, 2016).

Style

Style describes the product’s look and feel to the buyer and creates distinctiveness that is

hard to copy (Kotler & Keller, 2016). The Keurig offers many different versions and styles to

serve to values of different customers such as home, work, office, foodservice, hospitality,

convenient store, health care, and college or university; offering different styles, colors and sizes

(www.Keurig.com) .

MMGP Keurig Green Mountain 48

Services Differentiation

“When the physical product cannot easily be differentiated, the key to competitive

success may lie in adding valued services and improving their quality service” (Kotler & Keller,

2016, p. 372). With the Keurig the physical product can be easily differentiated, and it also

provides service differentiations as well. “Differentiators include ordering ease where free

shipping is offered, customer consulting, maintenance and repair, and returns” (Kotler & Keller,

2016, p. 372).

Brand Promise

Marketing Theory

Brand promise. According to Light and Kidon, a “brand promise is a framework based

on which distinct and related experience with brand are recognized for consumer by the

enterprise in different times and places and certain situations” (as cited in Karvandi, 2016, p.

557). In other words, a brand promise embodies the organization’s vision of what the brand must

be and do for the customer (Kotler & Keller, 2016, p. 303). Swystun believes that a brand

promise also has the ability to build relationships (positive and/or negative) that often times

reflect the true image of the organization and the nature of the relationship amongst the brand

and the consumer (as cited in Karvandi, 2016, p. 557).

Brand promise impact. Organizations have several priorities, including presenting itself

in such a way that the customer perceives the brand precisely as the organization intended. With

this said, it is extremely vital for an organization to build a solid brand. Gallup research shows

that an organization’s brand promise matters to the consumer and it has a weighty impact on

business outcomes (“Companies Only Deliver,” 2015, para. 4). According to Nasr (2014), this

essential role brings success to the organization and the customer’s mind is stamped with a good

MMGP Keurig Green Mountain 49

image of the company and the product’s identity (p. 1077). A strong brand promise will

potentially deliver strong top-line growth, customer loyalty, and shareholder value if the

organization follows through (Barron, 2003, para. 1).

Explain What the Brand Promise for Your Product/Service is. If There is a Similar Brand

Promise That Another Product/Service Uses, Discuss The Attributes and Benefits of Your

Product/Service. Explain How They Relate to Your Target Market.

Consumers are exposed to brand promises several different ways. Brand promises are

displayed on signs, they are written as a slogan or a basic name; a brand promise can be anything

that identifies a product, service or company (Timmerman & Shields, 2014, p. 35). For example,

organizations such as Roundtop Mountain Resort believe that roadside billboards are a crucial

part of their media mix (Walter, 2015, p. 15). Roundtop has attracted 10 percent of their total

business by utilizing straight forward, clutter-free billboards (Walter, 2015, p. 15). Regardless of

how an organization chooses to present its brand promise (billboard, etc.), the brand promise

should exude the integrity of the organization and how well it performs over every customer

touchpoint or the “occasion when a customer encounters the brand and product (Kotler & Keller,

2016, p. 146; Timmerman & Shields, 2014, p. 35).

Research

The Keurig brand promise. Keurig presents its brand promise via slogan, “Brewing

excellence, one cup at a time,” ensuring to place the emphasis on “one cup at a time” (Motacalli,

2014, p. 55). But what does this mean to the consumer? The Keurig brand promise implies a

pleasing cup of coffee in seconds, while maintaining quality and simplicity (Motacalli, 2014, p.

55).

MMGP Keurig Green Mountain 50

Keurig’s brand promise and its target market. The Keurig brand has succeeded in

reaching consumers in both the home and the office (together, they create the grocery

consumers) with its single-cup brewing technology. Green Mountain Coffee Roasters (GMCR)

accomplished this by first launching the Keurig in the workplace (Motacalli, 2014, p. 55). This

created an environment where potential consumers were able to test and become familiar with

the Keurig and its products before investing in a brewer for his or her home (Motacalli, 2014, p.

56).

Consumers have the option to choose from an array of their desired coffee, tea and even

hot chocolate. Once they have chosen their preferred beverage, the only step left is to place the

K-Cup in the brewer. Once brewed, consumers are able to enjoy a perfectly prepared single cup

of his or her choosing, leaving no mess or clean-up (“Keurig®,” 2008, para. 5).

Benefits of Keurig’s brand promise. Over the years, consumers have taken advantage of

the Keurig brand promise. Research shows that the organization’s net income was well over

$350 million dollars in 2012 with a fi percent increase in K-Cup volume (Motacalli, 2014, p.

56). Although the Keurig, K-Cup brewing method is more expensive than the traditional

method, one would think that consumers would gravitate toward the least expensive method.

However, the Harvard Business Review reveals that consumers are more concerned with

brewing their beverage with speed and convenience rather than the cost of the product

(Motacalli, 2014, p. 55).

Keurig is one of GMCR’s most prominent brands. Don Barberio, the Vice President of

GMCR’s Home Sales department believes that it is “the strength of our [their] brands, combined

with the overall convenience and value proposition of the Keurig® single cup brewing system,

allows us [them] to create a powerful offering for the grocery channel” (“Green Mountain,” para.

MMGP Keurig Green Mountain 51

4). GMCR is confident that the convenience and quality of the Keurig and its products builds

brand strength, brand position, and drives consumer purchases (“Green Mountain,” para. 5)

Other Brands and Their Promises

Walmart. Walmart’s consumers are very familiar with the brand promise: “Save money.

Live better” (Laird, 2013, para. 4). With this said, Walmart strives hard to make sure each of its

locations has the lowest prices, but more importantly, ensuring that their customers are aware

(“Consumers,” 2013, para. 1). Walmart’s ultimate goal is to offer its customers a better quality

of life with stress-free access to necessities.

Walmart targets those consumers who are looking for convenience (groceries, electronics,

home décor, etc.) and savings all in one. They accomplish this through retailer flyers and

everyday low prices (Laird, 2013, para. 12). They also offer layaway. David Kincaid, CEO of

Level5 Strategy Group believes that because Walmart has consistently kept their promise with

the consumers—to lower the cost of living, they will remain one of the top brands in the country

(“Brand Doctor.” 2014, para. 5).

GEICO. GEICO promises a lower insurance rate for its customers with their

longstanding promotion: “15 minutes or less can save you 15% or more on car insurance”

(Frazier, 2005, para. 5). This brand promise seems a bit tricky to keep because the company is

dealing with time. However, GEICO has done an excellent job maintaining their image when it

comes to reaching their target market.

At one point, GEICO believed that their target market was everyone, however, after

noticing that older drivers were not quite good to go on change (so they stuck with their current

insurer), they revised the idea of their target market (Dinger, 2007, para. 7). With this said,

GEICO determined that they are able to appeal more to younger drivers between the ages of 25

MMGP Keurig Green Mountain 52

and 40 (Dinger, 2007, para. 7). GEICO is able to offer fast and friendly service (insurance

coverage) to over 11 million people making them the third-largest private passenger auto insurer

in the United States (“GEICO,” 2012, para. 4-6).

Discussion/Analysis

“First impressions are lasting impressions.” With this said, it is vital for brands to put

their best foot forward and reflect exactly what it is that they want their consumer to see. Like

Keurig, Walmart and GEICO’s brand promises are tailored to suit their consumers, both promises

are simple and easy for consumers to remember.

Walmart, GEICO, Keurig and brands all over the world have invested time and energy

into their brand’s promise which embodies the organization as a whole. By fully embracing the

organization’s promise and following through with each element of that promise, the company is

able to build a strong brand (Barron, 2003, para 1). This will potentially deliver strong top-line

growth, customer loyalty, and shareholder value (Barron, 2003, para. 1).

MMGP Packaging, Labeling and Brand Image

Brand Image

Today’s generation is one that is very impressionable and due to that fact it is important

that organizations design their brands to have these new consumers gravitate towards them.

Brand image is what consumers believe is the makeup of an organizations brand(s). One article

correctly states it as, “This brand image is simply an impression or an imprint of the brand

developed over a period of time in the consumer’s mindset”[ CITATION Bha16 \l 1033 ]. Green

Mountain Coffee located in Vermont, has spent large amounts of time and capital investing into

their brand image. When the consumer looks at the actual Green Mountain Coffee brand itself,

they can see imagery, color coding, and graphic design that was made to identify with the

MMGP Keurig Green Mountain 53

consumer. For example, the colors represent what exactly each bag or K-Cup is, such as blue for

cold brew and red for hot brew. The Mountain represents not only the origin of the coffee beans

but also the deep roots the company has in its home state of Vermont [ CITATION Fur15 \l

1033 ]. With that said, we want to establish exactly what brand image is and what it means to

businesses and consumers. We read, “Brand image is the current view of the customers about a

brand. It can be defined as a unique bundle of associations within the minds of target customers”[

CITATION Man15 \l 1033 ]. For businesses, this means investing the time and capital into

imagery, slogans, packaging and labeling. GMCR must understand that their brand image is the

consumer’s perception about the overall product. Therefore, the overall means everything from

the design of their logo, color, shape, packaging, and labeling to price and perception by the

markets they are in.

When we look at Green Mountain Coffee and Keurig, although they are the same

company to the consumer, they have some distinct differences internally. Keurig is of course the

machine that people have come to know and love but being able to brew a single cup, or more, of

coffee and have the quality and consistency of a coffee shop, but without the high price tag.

Green Mountain Coffee is who partnered up with Keurig and produces the K-Cups that go into

each machine. Additionally, GMCR has partnered with many competitors to be able to offer

many different variations and brands for the Keurig machine. We see brands such as Starbucks,

8Oclock Coffee, Campbell’s, Lipton, and more that have signed up with GMCR to produce K-

Cups for its different machines. From a consumer perspective, all of these are now part of

GMCR’s overall brand image! Consumers do not do the research on why they are available,

they just know that there is now a correlation between Keurig machines and all the other brands

that go into it. Since consumers develop various associations with different brands, based on

MMGP Keurig Green Mountain 54

those associations, consumers start to form brand image [ CITATION Man15 \l 1033 ].

Therefore, each brand image that is represented in the portfolio of GMCR must understand and

maintain the parent company’s vision or the damage could be across the board. GMCR will have

to be diligent in monitoring each of its allies to make sure they are all promoting good brand

imagery so the total portfolio stays successful.

Packaging

Companies have learned over time that there is more to marketing than television

commercials, radio adds, magazine spots, or mailers. Marketing involves every part of the

process. Therefore, marketing is every part of the process from beginning to end. GMCR has

done a great job an understanding this marketing concept. As the aforementioned text described,

GMCR has used marketing in each step of their production and design process which has lent

itself to brand imagery and branding for the consumers that purchase the product. When we look

at marketing, specifically the packaging aspect, it is important to understand what that is and

how GMCR can apply it. We read in our text, “Packaging includes all the activities of designing

and producing the container for a product”[CITATION Kot16 \p 390 \l 1033 ]. Consumers use

packaging to help identify the brands they are searching for. With that said, how can GMCR use

their current packaging to attract new and retain current consumers?

GMCR has a wide and diverse range of consumers which leaves a lot of room for

consumer interpretation for their packaging and how best to market it to their target markets.

Regarding the notability of their K-Cup, consumers have come to know and understand the

shape, and design of each K-Cup, no matter the brand, and associate it with Keurig machine.

Therefore, it would seem as though improving on that aspect of the packaging may be most

impactful for their business. In one article we read that one drawback many consumers or

MMGP Keurig Green Mountain 55

various age ranges said was the fact that the K-Cup was being compared to bottled water with

the refuse it is creating [ CITATION Luk15 \l 1033 ]. They went on to talk about how the single

serve coffee cup must be disposed of and is causing an increase in non-biodegradable waste in

landfills around the country [ CITATION Luk15 \l 1033 ]. This is where the article warned that

if there was not a change in GMCR’s thought process, the market would eventually punish the

company for not being environmentally responsive and move on to another product or

competitor. Keurig would need to make and promote that their K-Cups are made out of

recyclable material and that once used, can be recycled as well.

In September of 2015, Keurig announced that their goal is to have all K-Cups produced

from 100% recyclable material and that their able to recycle them once they are used by the year

2020 according to an article by Sustainable Brands News [ CITATION Fur15 \l 1033 ]. We read

that up to this point, K-Cups were made out of plastic that was not only non-recyclable, but that

their product was too small to be sorted and recycled[ CITATION Fur15 \l 1033 ]. Now, K-cups

are all made out of polypropylene, which is 100% recyclable and have started transitioning all

their lines in every production facility they own to be able to make and recycle the damaged K-

Cups they produce [ CITATION Fur15 \l 1033 ]. Furthermore, GMCR’s allied brands that they

are in contract with have started down the same path of social responsibility. We read that some

of the brand name K-Cups such as Canterbury Coffee Corp’s, Rogers Family Company’s, and

Republic of Tea’s have started producing biodegradable alternatives which furthers the brand

image in consumer’s eyes [ CITATION Fur15 \l 1033 ]. It will be important for GMCR to point

this out to their consumers through proper methods, such as labeling, so they can take credit for

giving the consumer what they are asking for and gain a better brand image through better

MMGP Keurig Green Mountain 56

packaging. The consumer was clearly asking for an answer to the environmental impact of the

product they love, and through this process GMCR is delivering.

Labeling

As important as the packaging to a product is, how it is made and what that

communicates, labeling is equally important as it communicates the message to the consumer

about what the company is trying to say. We see in our text that the label does several different

things for an items such as identify, grade, describe, and promote [CITATION Kot16 \p 392 \l

1033 ]. GMCR has a great way of labeling their product that makes the different types of coffee

they make identifiable to the consumer by way of color coding. Other variations of the K-Cup

from the allied brands that they distribute use their own labels that draw the brand’s attention

such as Starbucks and Folgers Coffee. The labeling needs to call out a certain need that the

consumer sees as being met by purchasing that product. GMCR, as mentioned before, has made

the move to be more environmentally responsible and this needs to be called out on all K-Cup

labels by way of graphic design and stamped on each K-Cup. This will help consumers see that

what they are purchasing not only is in the packaging they recognize but also in a sustainable

manor that helps the communities that each consumer is in.

Coffee in general has some legal requirements in the United States when sold to the

public either in K-Cup form or bag form. When we look into labels for food in general, we see a

plethora of items that are mandated by the U.S. Food and Drug Administration. In the coffee

industry, they are somewhat of the exception if they actually produce and sell 100% pure coffee.

In one article we read, “The U.S.D.A. states that there’s an exemption for foods that contain

insignificant amounts […] of all of the nutrients and food components required to be included in

the nutrition label”[ CITATION Foo16 \l 1033 ]. This helps this industry out by not being

MMGP Keurig Green Mountain 57

required to have large amounts of information on an already small package. The information

they have to place are items such as name of the product, net weight, company information,

ingredients, and barcode [ CITATION Foo16 \l 1033 ]. Additionally, companies can add various

claims to their packaging if they are accurate and true. We read, “For example, if your coffee

blend is 100% organic, you can state that on the label and make your product more appealing to

people who prefer organic food”[ CITATION Foo16 \l 1033 ]. This of course adds product

differentiation and value to the brand itself.

In an article about the coffee industry, we see that Keurig has done a great job of dual-

branding through the way they have designed their internal architecture [ CITATION Bel15 \l

1033 ]. What that exactly means is that Keurig is not only a competitor but a buyer as well.

They have dual purpose in the market and have used that leverage to dual-brand by having other

name brands now being associated with the Keurig machine. The use of this dual-branding has

allowed them to have the brand image of their competitors which they now produce K-Cups for

associated with their own company through the labeling that each provides! This is an amazing

way to go to market by using other major brand identities to further your own brand image. With

that said, it is important that GMCR works with the other allied brands on the importance of

social and environmental responsibility so their consumer understands that all involved are

following the idea of the parent company and the labeling is consistent within all brands. This

will further the brand image for GMCR and allow them to retain market share and even grow

share and brand image by continuing to update their labeling with what the consumers are asking

for.

Describe what support services buyers of your product/service want and need.

Marketing Theory

MMGP Keurig Green Mountain 58

Support Service. With any business producing a product, there needs to be a way for the

customer to receive service. Whether it be a question on how to operate the device or a concern

on the safety of the product, consumers need a way to reach back to the business providing the

product especially if there is some sort of warranty involved. Kotler and Keller (2016) define

service as “any act or performance one party can offer to another that is essentially intangible

and does not result in the ownership of anything”. Service cannot be bought and in many cases,

consumers are more willing to pay more for a product or service were the company provides

service even after the product is bought. Mercedes-Benz is an excellent example of service to its

customers after a vehicle is purchased. Author Joan Federicks (1995) says “companies have

spent millions of dollars measuring customer satisfaction when these attempts often do nothing

to improve the bottom-line performance”. While service does not cost anything and does not

impact a business’ bottom line, it keeps customers coming back and using products or services

and as a result creates loyalty amongst consumers. Once a customer purchases a car, Mercedes

gives all of their customer’s two-year service for anything related to the vehicle. Oil change,

deep clean, or transmission service, the local Mercedes dealership will take your car and give

you a Mercedes rental of your choosing for the duration of your service. It is convenient for the

customer because they no longer have to wait for their car to be serviced and can pick up their

vehicle at their availability.

Research

Author Christopher Meyer discusses the differences between indirect and direct contact

between a consumer and a business. Direct contact, he says, “occurs in the course of purchase,

use, and is usually initiated by the customer”. On the other hand, indirect contact “most often

involves unplanned encounters with representations of a company’s products…and takes the

MMGP Keurig Green Mountain 59

form of word-of-mouth recommendations or criticisms”[ CITATION Chr07 \l 1033 ]. Companies

and businesses have different ways of reaching and being able to be reached by customers and

many times, that is crucial in the long-term success of the business.

Discussion/Analysis

For a product such as the Keurig, it is imperative that customers have a way to reach back

to Keurig to find replacement parts for their machine, learn how to use their machine, and see

what machines are coming for future purchases by loyal customers. Author Bradley Gale states

in his book “Managing Customer Value” says “U.S. quality experts did not think customer

opinions could be measured with the same rigor as the conformance of products to

specifications”[ CITATION Gal \l 1033 ]. He goes on to prove how wrong they in fact, were and

how customer satisfaction is more than crucial in the success of a company. Since Keurig is an

innovative concept, they have done an excellent job making themselves available at all times.

Their customer service line is available 24/7 for all customers around the globe. They also offer a

troubleshooting website that has instructional videos on how to work or even fix a machine.

Keurig does not waste paper putting a lot of instructions in the box of the machine but rather

offer many resources online on how to operate your device. I recently have purchased a Keurig

and they include several K-cups with the machine so one can use the as soon as it is taken out of

the box. Since Keurig has taken an old idea, the coffee maker, and made it new again, it is

imperative that their customer base stays loyal to them so they can be and stay successful.

Describe What Support Services Your Firm’s Main Competitor Offers. Explain How Those

Efforts Affect Its Sales

Marketing Theory

MMGP Keurig Green Mountain 60

Services. Kotler and Keller (2016) define a service as “any act or performance one party

can offer to another that is essentially intangible and does not result in the ownership of

anything” (p. 400). The concept of services is a broad topic that allows the provider to decide

what services will be offered and how they will be offered—for example, equipment-

based/people-based, personal need/business need etc. (Kotler & Keller, 2016, p. 400).

Whichever route is taken, it is ultimately the provider’s responsibility to develop the proper

strategy and tactics based on the customers’ definitions of service rather than depending solely

on themselves (Withers, 1995, para. 4). In order to accomplish this, organizations must

anticipate and exceed customers’ needs by gauging the consumers’ demographic characteristics,

lifestyles and attitudes (Withers, 1995, para. 5). In other words, companies should be structured

and managed around the customer—evolving with the market (Talpau & Boscor, 2011, p. 51)

Starbucks, a leader in the industry. Starbucks Corporation is a prime leader in the

industry. They have managed to maintain this position by acknowledging their most valuable

asset—the customer. Howard Schultz, the CEO of Starbucks once said, “We aren’t in the coffee

business, serving people. We are in the people business serving coffee” (as cited in Talpau &

Boscor, 2011, p. 53). Fortunately, it does not stop there, Starbucks’ mission statement confirms

just how customer-oriented this organization is: “apply the highest standards of excellence to the

purchasing, roasting and fresh delivery of our coffee and to develop enthusiastically satisfied

customers all of the time” (Talpau & Boscor, 2011, p. 53). It is easy to see that Starbucks makes

every effort to please its customer, while remaining optimistic when opportunities arise that call

for them to adapt and evolve with the market (Talpau & Boscor, 2011, p. 52).

Keurig’s Competition. According to Treadway (2015), the Starbucks Corporation is

Keurig’s main competitor (p. 53). There are several reasons why Starbucks is ranked higher

MMGP Keurig Green Mountain 61

than the Keurig. For example, the most obvious is based on the number of locations that are

available to consumers all over the world, making Starbucks the largest coffeehouse company on

the planet and the release of the Verismo, a home-brew, single-serve coffee/espresso machine

(Treadway, 2015, p. 53). But the most understated reasons involve the support services that

Starbucks offers, which have positively affected sales.

Research

Starbucks’ support services. Considering Starbucks is a global, innovative

organization, it is now responsible for meeting the needs of consumers worldwide based on both

cultural preferences and differences. Starbucks understands that in order for a customer to

respond with loyalty, strong relationships need to be established between the customer and the

organization. But more importantly, strong support services should be provided by the

organization for the customer (Kotler & Keller, 2016, p. 401). Without instituting this detail,

customer loyalty is threatened (Kotler & Keller, 2016, p. 401). With this said, Starbucks prides

its organization on effectively serving its customers by providing services that will ultimately

satisfy the customer. In a sense, customers are able to choose instead of having the company

choose for them.

Drive-thru. Starbucks provides services for people all over the world, Jim Donald, the

president and chief executive of Starbucks once said, “We have a habit of giving people what

they want…” (Devine, 2007, para. 10). Drive-thru provide a sense of convenience, especially

for those customers who do not want to deal with the hassle of taking their children out of the

car. Customers may even be deterred from getting out of the car to buy coffee if the weather is

unsuitable (i.e. rain/snow, etc.) and some customers just prefer to have their coffee on the go.

MMGP Keurig Green Mountain 62

According to Talpau and Boscor (2011), areas such as Europe prefer to drink coffee “in-house,”

while United States consumers have created a habit and prefer their coffee to go (p. 54).

Drive-thru at Starbucks increases sales. Although the drive-thru has been known to

create somewhat of a fast-food feel. Starbucks understands the need to adapt to countries where

cars are considered royalty (such as the United States). Some consumers just do not want to

leave the car and because of this, the idea of being able to drive-thru at Starbucks stays on at the

top of the chain (Devin, 2007, para. 4-5). With this said, Starbucks locations that have a drive-

thru profit about $285,000 more a year than traditional stores (Gillespie, 2005, para. 14). It is

safe to say that drive-thru will continue to add to Starbucks, says Donald (Devine, 2007, para.

13).

Mobile order/loyalty program. Starbucks is known for its innovation and creating a

positive customer experience and the Mobile Order and Pay initiative is a prime example. This

initiative is reflected in the Starbucks app. The convenience of this app allows consumers to

place their order before reaching the Starbucks location, which in turn decreases the wait time

and queue when the customer arrives (Kulkarni, 2015, para. 1). Customers are even able to use

the “Starbucks Rewards” program on the app, which rewards customers for purchasing items at a

location or for purchasing any Starbucks product at other stores (Jennings, 2016, p. 58). Adam

Brotman, the chief digital owner of Starbucks reveals that this app is about meeting the

customers’ needs of convenience and customization at any time of the day (“Starbucks coffee

company,” 2015, para. 2).

Mobile order/loyalty program increases sales. Ove the last few years, approximately

20% of all transactions were placed using the mobile app and spending though the loyalty

program increased by 22% in the last year and (Jennings, 2016, p. 58; “Zack’s investment,”

MMGP Keurig Green Mountain 63

2015, para. 1). Net earnings have also increased by 16% and shares have increased by 6 cents

sense last year (Jennings, 2016, p. 58). Schultz believes that the Starbucks app and loyalty

program is unique and will continue to create significant changes to the equity of the brand and

the customer’s experience (Jennings, 2016, p. 59).

Discussion/Analysis

Starbucks Corporation is a leader in the industry and Keurig’s main competition.

Starbucks has developed the proper strategy and tactics through services that ultimately appeal

the consumers’ wants and needs. The organization has created convenience for the consumer via

drive-thru and the Mobile Order and Pay initiative, creating a positive customer experience.

These tailored innovations have made an impact on the company by increasing the organization’s

overall sales.

MMGP— Post-Sale Service

Post-Sale Service

All product-based businesses need to provide some sort of post-sale service to their

customers. In order to provide the best support, the company needs to identify what services the

customers value the most and their relative importance. The service should include both pre-sale

and post-sale services (Kotler & Keller, 2016, p. 424). MP Equipment is a great example of

service to its customers after the sale of one of their machines. They manufacture meat

processing equipment (such as fryers, breaders, meat-cutters, meat presses, etc…) to sell to big

name meat suppliers such as Tyson, Pilgrims, Perdue, Koch, and many more. They have a 24/7

On Call Tech and Inventory Clerk that will help the customer at any time, because they know

that when a line is down in one of these plants it is costing that customer a lot of money. If MP

MMGP Keurig Green Mountain 64

Equipment cannot fix it on-site, they will replace it with a loaner until they can get their machine

up and running properly.

Research

One thing that can cause irreparable damage to a business is an unsatisfied customer if

left undealt with. If a customer is treated poorly or receives poor service, they will leave and

pass that un-satisfaction to their family and friends who will then turn around and do the same.

Pretty soon business is hurting and they cannot keep their doors open.

Discussion/Analysis

It is crucial that Keurig has a post-sale service in place to meet the needs of every one of

their customers. Whether it be for replacement parts or to learn how to use their product. Keurig

has done an outstanding job making themselves available to all of their customers around the

world by making their customer service line available seven days a week from 7 am to 12 am.

They even broke down the telephone numbers to Hot Brewers and Kold Drinkmakers. A

customer can also email or mail them their concerns or questions. On their website, they have

broken down the different categories of support to make it easier for the customer to get the help

they truly need. The categories are: Appliance Support (where there are How To Videos and

Appliance Registration); Purchase Support (for help with ordering, shipping, and returns);

Beverage Support (for questions about the K-cups and Pods); Account Support (for managing

your account). It seems obvious that Keurig strives to satisfy each and every customer by

making information and support readily available to them. Word of mouth advertising can either

make or break a company, and Keurig wants to earn their customers’ loyalty thru great

experiences and service.

Explanation of Repair and Service Efforts in Regards to Customer Satisfaction

MMGP Keurig Green Mountain 65

Theory

Customer satisfaction based on respective company repair and service efforts is a primary

determinant in overall customer satisfaction. Repair efforts involve how a company handles a

customer question or complaint regarding a product. Questions or complaints could range from

simple to complex and how the customer service representative (CSR) handles the situation

depends on satisfied the customer will be. In many ways the length to which a company will go

in its repair efforts is actually a service effort within itself. The primary goal is to keep the

customer satisfied and to not create a negative review of the respective product or products. Most

companies have a customer support system that could include various support options including

over the phone customer service, online support, and how to videos. Customers more often than

not will opt to call customer service because they seek to be lead in the right direction. Top

companies have honed in on this fact and have sought to empower customers, enhance their role

clarity, overall ability in the process, and incorporate technology that keeps customers informed

about their product (Kotler and Keller, 2016, p. 408). By implementing the above aspects of

support a respective company effectively renders a repair effort along with its services. In the

case of helping a customer through their complaint or question an employee is rendering the

services of the company to create a comfortable and satisfied customer as an end result. Now the

repair and service efforts of Keurig Green Mountain will be discussed and analyzed.

Discussion and Analysis

Keurig is known for its customer satisfaction due in part to the outsourcing of its

customer analytic needs or wants. However, Keurig has had two major issues in the past two to

three years that reflect on the company’s handling of customer dissatisfaction. The first is the

release of the Keurig 2.0 which did not allow customers to use previously purchased K-cup pods

MMGP Keurig Green Mountain 66

or K-cup pods from older generation models (Boardroom Insiders, 2016). Due to this issue sale

declined over 23% making Keurig eventually bring back its previous coffee pods (Boardroom

Insiders, 2016). It is important to note that Keurig learned its lesson in this scenario by listening

to customers in the long run and the reintroduction of the old K-cup pods. As an example, many

companies chose to ignore customers thus imperiling the respective company. The second

scenario is the recent rollout of the Keurig Kold in late 2015. This rollout was important to both

Keurig and Coca-Cola as the Keurig Kold can produce ice cold Coca-Cola beverages through the

single serve brewer technology (coca-colacompany.com, 2016). However, due to price, size, and

speed customers became and are becoming unsatisfied with the product. This has led Keurig to

develop two customer resolution plans revolving around the Keurig Kold situation. The first

resolution is customers that have purchased the device will be able to receive a full refund up to

August 31, 2016 (coca-colacompany.com, 2016). The second resolution is a separate Keurig

Kold customer support toll free number to assist in facilitating the refunds. Despite this ongoing

and quite costly matter with the Kold machine, Keurig has managed to remain a leader in

customer service, marketing, coffee production sales, the list goes on. In an interview with

Adrian Slywotzky, a prominent business design specialist, the business model of Keurig was

discussed in comparison to Nestle S.A. (Euchner, 2015). The fact that Keurig is a retail based

company is discussed along with a business design that has clearly beaten out Nestle S.A.

(Euchner, 2015). This business model involves better customer service and consistent desire to

improve on customer satisfaction. One such example of this is how Keurig handled the Mini Plus

Brewing System safety issue in Canada. The affected machines were leaking hot water when

used. Keurig quickly initiated a voluntary recall by calling the U.S. Consumer Product Safety

MMGP Keurig Green Mountain 67

Commission (CPSC) and Health Canada (Proquest, 2015). Customers that purchased affected

machines could also call and receive a free repair kit (Proquest, 2015).

Keurig has indeed had its fair share of problems in the past two to three years. However,

because this respective company understands the value that customers bring to the company, it

makes recovery that much more simple. Even though the initial rollout of the Keurig Kold was

not successful this does not mean that single serve cold beverages are gone for good. Keurig

Green Mountain and Coca Cola signed a 10-year agreement in 2014, which gives the two

companies plenty of time to try again if financially feasible (Boardroom Insiders, 2014). One

reason Keurig has been able to understand, satisfy, and increase its customer base is through the

use of GSI Commerce and Radial business analytics services. GSI Commerce is a partner with

Radial. Radial handles Keurig’s customer service support system and Omni channel technology

needs. These services enhance Keurig’s customer service experience and include the following:

customer service representatives that track and analyze customer complaints or questions, social

media management, Omni channel technology services, and so on (radial.com, 2016). Omni

channel technology revolves around providing customers with various purchasing options for the

respective company’s products and also creating a seamless process as well. Keurig joined with

then GSI Commerce in 2003 and then renewed a three-year contract with them in 2010 (General

One File, 2010). The goal of GSI Commerce was to assist Keurig with customer escalation issues

and thus reduces those numbers over time (General One File, June 16, 2010). With the help of

GSI Commerce Keurig was already on the road to amazing customer satisfaction and achieved a

six ranking from ForeSee in 2010 (General One File, 2010). Keurig, for the most part, seems to

have the customer in mind on a consistent basis. The companies it outsources to are a testament

to this fact as they are all top of the line in customer satisfaction from a service and repair

MMGP Keurig Green Mountain 68

perspective. To continue supplementing this fact, Keurig outsources to Greenwich Harbor

Partners for talent research. Greenwich Harbor Partners recently recruited Behzad Soltani as Vice

President of Digital Strategy and ecommerce (greenwichharborpartners.com, 2015). Behzad will

be in charge of the ecommerce site and be the lead on digital marketing strategy. He has an

abundance of experience in Omni channel marketing (greenwichharborpartners.com, 2015).

Keurig continues to remain a leader in customer satisfaction because it does an incredible

job of listening to its customers. For instance, in the past, back to 2011, Keurig had a confusing

website product comparison system that at times turned the customer away (Resnick, 2011).

However, Keurig has since become more self-aware and created a more dynamic and customer

friendly website. Lastly, upon further research of Keurig’s social media customer communication

one will find that Keurig is quite responsive. Over 90% of replies to customers were within five

to ten minutes on Facebook and no reply was exactly the same (facebook.com/keurig, 2016).

Customers appreciate this desire to attend to their questions and complaints. Keurig exemplifies

how it can use the services of other companies as its vehicle to render optimal customer support

services itself.

Price adaptations GMCR firm should include in its marketing plan

Geographical Pricing

In geographical pricing, the company decides how to price its products to different

customers in different locations and countries (Kotler & Keller, 2016). This type of method

would help to Keurig Green Mountain to determine how to price their different products in

different locations and countries. In doing this they will know when to offer not too much or too

little of a price based off of the demand, and demographic details in each location.

MMGP Keurig Green Mountain 69

Price Discounts and Allowances

Price discounts are reductions to buyers who pay bills promptly; these are beneficial but

should be monitored and applied effectively because if it is overused because word can get

around fast that the company is “soft” which implies that their product or service has no value

(Kotler & Keller, 2016).

Allowances are extra payments designed to gain reseller participation in special programs

(Kotler & Keller, 2016, p. 483). Two different types of allowances that Keurig Green Mountain

company’s pricing program could adapt to is; Trade-in allowances, where allowances are granted

for turning in an old item when buying a new one and Promotional allowances which are reward

dealers for participating in advertising and sales support programs (Kotler & Keller, 2016). This

would increase customer satisfaction and higher promotion.

Promotional Pricing

“This is a method that can stimulate early purchases” (Kotler & Keller, 2016). There are

various promotional pricing methods and the methods that are found to be most effective for

Keurig are, Loss-leader pricing, for example, supermarkets and department stores often drop the

price on well-known brands to stimulate additional store traffic. This pays if the revenue on the

additional sales compensates for the lower margins on the loss-leader items. Downfalls to this

method is that this practice can dilute the brand image and bring complaints from retailers who

charge the list price (Kotler & Keller, 2016). Another method would be the special customer

pricing approach where sellers will offer special prices exclusively to certain customers (Kotler

& Keller, 2016). This would be an effective method for Keurig to adapt to because it would

persuade different types of customers to purchase the item and increase satisfaction. Also being

MMGP Keurig Green Mountain 70

that the Keurig is not something that you would not buy every day, if this method is applied to

other products in their product line it would create consistency and encourage the buyer to make

future purchases. Other methods include Warranties and service contracts. Keurig Green

Mountain can promote sales by adding a free or low-cost warranty or service contract, (Kotler &

Keller, 2016) and this would ensure that if something does go wrong with the product, they are

able to trade it in for a better experience and that way, dissatisfaction is avoided. Psychological

discounting is a strategy that sets an artificially high price and then offers the product at

substantial savings; for example, “Was $359, now $299 (Kotler & Keller, 2016).” This is a great

method to adapt to because in doing this, it will reach those customers who are not accustomed

to buying products, early on, but later once they know that it will perform effectively.

If these methods work, competitors will usually copy them and they will lose their

effectiveness. If they don’t work, there is a chance that money will be wasted (Kotler & Keller,

2016).

Product form Pricing is when different versions of the product are priced differently, but

not in proportion to their costs (Kotler & Keller, 2016). This is something that Keurig can set in

motion, to offer a different look and form for the same product and price them differently. For

example, putting one of their coffee products in a vending machine or retail store and upping

and/or lowering the price. Lastly location pricing is when the same product is priced differently

at different locations even though the cost of offering it at each location is the same (Kotler &

Keller, 2016). This ties into geographical pricing, where based upon each location demand and

demographics, Keurig marketers can determine how to price their products.

MMGP Pricing

MMGP Keurig Green Mountain 71

Marketing Theory

Pricing. At first, most think that pricing is a subject centered around the advertised price

of any given item. For example, you drive down the road and pass a car lot that has advertised

tags on their vehicles for a said amount or you are at the grocery store and there are thousands of

tags communicating the prices of all the different items located in that store. Although that is

true, pricing is much more than the face value that consumers see when they purchase any given

item. We read, “Price is not just a number on a tag. It comes in many forms and performs many

functions. Rent, tuition, fares, fees, rates, tolls, retainers, wages, and commissions are all the

price you pay for some good or service” [CITATION Kot16 \p 461 \l 1033 ]. Each price

consumers see is the culmination of many different factors such as cost of goods, production,

delivery, packaging, research and development, and more.

Learning how to price in the market is very tricky and involves understanding the

environment you are operating in as well as having a direct line in understanding your net

revenue and needs of your business from a cost based accounting perspective. Our text does a

great job at showing the various different forms of pricing as well as going into how companies

actually price. We see reference prices, price-quality inferences, and price endings as some of the

examples in our text. [CITATION KEU13 \p 465-466 \l 1033 ] Once you understand these

elements it becomes time to set the price. It is imperative to understand the steps in this process

as failure will affect the entire organization. In our text we see six variables that must be taken

into account. Selecting the pricing objective, determining demand, estimating costs, analyzing

competitors’ costs, prices, and offers, selecting a method and selecting the final price.

[CITATION Kot16 \p 466 \l 1033 ] To sum up this piece we will top line each part. First, why

are you in the market and what are your intentions? This will help you understand where you

MMGP Keurig Green Mountain 72

should place your price point. If it is profit, then you need to maximize your price points, if it is

share, your approach will be different. Next, determine demand will help you understand what

you will need to produce, which of course will help in cost projections and savings through bulk

purchasing or relying on a just in time system for smaller demands. Third, understanding

demands will help estimate costs. The company may need large amounts of capital invested into

production, which of course will eventually drive down the cost, understanding demand

translates into estimating and potentially eliminating costs. For example, Keurig started out hand

making their K-Cups and at one point hired 250 temp workers to come in and make 40,000 K-

Cups for their start-up demonstrations [ CITATION Kel14 \l 1033 ]. Next you must analyze your

competitor’s costs, prices and offerings. You must understand the market you are in which

includes what all your competition is doing so you do not price yourself out of the market. One

article tells us the importance of being a price leader and ensuring your price is competitive, but

not necessarily the cheapest to ensure your market position and the best possible revenue

[ CITATION Ent10 \l 1033 ]. Next is selecting a pricing method which will determine how you

present yourself to the market. At last, you will select the final price. Here you want to ensure

you have calculated all your cost to ensure your price will cover your overall objectives.

Research

Keurig/GMCR. What is the average cost of owning a Keurig machine when you add in

all the extra’s that are involved? When looking at the current price points, the ask is if we should

change pricing at all when it comes to our chosen company. It is worth noting at this point if you

are wanting to change pricing for this particular company, it will involve more than just the

coffee you buy to put into each machine. Keurig has partnered with many different companies to

create and maintain their competitive advantage in the market so a price change for any one of

MMGP Keurig Green Mountain 73

those has the potential to create backlash for the others if not properly handled. We will look at

the average cost now of machine to bean.

First, let us look at the cost of the famous Keurig machines. The story behind the

invention is amazing and deserves the time it takes to read on it, but for now, we will say it was 7

years in the making and involved a lot of sacrifice from the founding members, including

caffeine poisoning and a trip to the hospital for one of them! With that said, there is a lot of time

and energy in the research and development of the machine itself. The average cost ranges from

$69.00 – $249.00 for the in home brewing system [ CITATION Bre06 \l 1033 ]. This of course

changes from different distributors such as Bed Bath and Beyond to Wal-Mart. Keurig offers

machines for college dorm rooms to larger units with carafe’s for multiple cups. They now offer

Keurig Cold which boasts of making soda and other cold items on demand. They are in the

market with Tassimo, Bunn, and other competitors that offer similar price points, so with that

said, they are not really out pricing the market with the machines. Albeit a traditional coffee pot

can be picked up within the same price range, the benefit and repeat purchases come from the

consumer who can have a cup of coffee in less than 30 seconds verses several minutes.

When we look at cost per machine, we see a relatively similar market give or take a few

dollars when it comes to the competitive landscape. The product differentiation comes in

consistency and time to brew for the machines. In a trade show where all these machines where

being debuted, the overall crowd consensus fell to Keurig for the consistent taste and timeliness

of the machine [ CITATION Kel14 \l 1033 ]. The price people are willing to pay to save time

seems to be at a premium, which could indicate Keurig could even go up on their cost, if the

market would accept it or not would be left to chance.

MMGP Keurig Green Mountain 74

Next we see the cash cow of the entire operation, the coffee. With reported revenue of

over $1.2 billion the Green Mountain Coffee partner in this business is truly the revenue driver

[ CITATION KEU13 \l 1033 ]. The average cost per K-Cup regarding production seems to land

around $0.13 per cup [ CITATION Elk15 \l 1033 ]. This is expected to change due to the fact

that they have started switching all lines to produce bio-degradable K-cups, but for now, that is

the stated cost that could be found. With that said, the average cost per cup, all brands included,

is around $0.40 per cup. In one article we read that that averages to $50 a pound for Keurig,

which equals over $800 a year in coffee expense [ CITATION Bre06 \l 1033 ]. At first glance,

this seems to be high and could put them at a disadvantage to their competitors, but after further

research, other brands such as Tassimo is running $0.65-0.95 a cup [ CITATION Elk15 \l 1033 ]!

The only cheaper alternative at first glance is the MY BUNN single serve maker but its cost is

$.20 for 8 ounces and $.40 for 10 ounces, which means they have higher floor cost due to

holding various sizes for their machine while Keurig can use the same K-cup to select from 4-12

ounces, making it the better value [ CITATION Elk15 \l 1033 ]. At this point, Keurig is the

market leader in price and again, based on the voice of the customer, could possibly take their

price up a few cents if they wanted to so they can increase their net revenue.

Discussion/Analysis

Price action. The conclusion of this study lends this group to three possible paths

regarding pricing. First, they could maintain their current price and allow cost of goods to

fluctuate their pricing and continue to be the market price leader. Second, they could increase

their current price, assuming there is alignment with all other business partners, so they can

increase their total revenue potential. Third, they could reduce their price point to potentially

force out other competitors but would take the risk of becoming a value brand and lose their

MMGP Keurig Green Mountain 75

current market position. This group think currently that they should take option one and hold

their current price point. Green Mountain/Keurig has recently lost their initial patent which is

why they have increased competition so any move now could harm them in the market. By

holding the price, they have they will not be seen as a value company nor a company that looks

shaky in the new competitive landscape. Additionally, there are so many offerings for Keurig

machines that get some brands down to $0.26 a cup, they have no need to change the course until

the market deems it necessary through consumer preference or the competitor landscape changes

[ CITATION Tut12 \l 1033 ].

Describe, Discuss, And Analyze all of the Various Integrated Marketing Communication

(IMC) mix components your Product/Service Uses

Marketing Theory

Media. Media has been in existence since the creation of the radio in the early 1900s.

Now, in 2016, it is the main source of reaching out to people for both information as well as

advertising products and services. Author Ali Backscheider says in her speech on advertising that

“technological developments have opened up several media outlets for the advertising industry” [

CITATION Ali14 \l 1033 ]. There are more ways to advertise now than 20 years ago. Companies

can buy ads on popular social media sites such as Facebook and Twitter. In recent years,

Facebook has started a concept known as “target advertising” where they take a user’s basic

information such as age and general location and use those things to determine what type of

advertisements go on their page. It has gotten more complex and borderline invasive because

now ads popping up on Facebook are tailored towards recent google searches by the user.

Another way companies such as Keurig can use the site is by creating a “fan” page which is free

and users can go and “Like” the page and receive updates as often as the company updates their

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page [ CITATION Kat10 \l 1033 ]. Keurig has their own Facebook page where consumers can

“Like” and receive updates on their News Feed every time their fan page gets updated.

Audience. Keurig, in Danish means “excellence”. For the Danish, everyone understands

the play on words and understands that the creators of the machine are trying to create a home

coffee system that produces excellent beverages every time. As an American however, I had no

idea what Keurig meant except that it was an interesting name for a new coffee gadget on the

market. Since Keurig is an international business, they have to take into account the different

cultures and markets they are trying to reach.

Research

Kotler and Keller define Integrated Marketing Communication (IMC) as “a planning

process design to assure that all brand contacts received by a customer or prospect for a product,

service, or organization, are relevant to that person and consistent over time” (Kotler 2016).

When a product is created and ready to go on the market, advertising and communication to the

target audience is key to success. Green Mountain Coffee has undergone several initiatives to

make the Keurig friendly to a large populace. From their “Go Green” initiatives, to the

innovation of new machines, Keurig does an excellent job taking shortcomings and attempting

improvement. Author “GMCR’s dynamic sustainability imitative, which evolved from simple

environmental measures to sophisticated shared value initiatives, illustrate the possibilities

dynamic capabilities enable” (Treadway, 2015). Part of what makes Keurig so successful is its

ability to adapt to change and improve upon their change to make products more

environmentally and user friendly.

Keurig also offers ways for big businesses to regenerate funds after providing “free”

coffee to its employees rather than paying $3 for a drink at a competitive business. “To limit

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expenses, owners have a “collection jar” for employees to drop in each time the employee makes

a cup of coffee” [ CITATION Lar12 \l 1033 ].

In terms of advertising it is important for Keurig to market themselves in an aesthetically

pleasing way. Photographer Michelle Gibbons says “From an advertising point of view, the

photos should give you an idea of what the product is, how and where it is used, and even

persuade the buyer into buying it”[ CITATION Mic16 \l 1033 ]. The photo she displayed was a

Keurig and Swiss Miss box of hot chocolate. While the advertisement was for Swiss Miss, the

company was debuting their new hot chocolate in K-Cup format which by default, includes the

Keurig.

Discussion/Analysis

Keurig has stayed ahead of their game when it comes to getting to know their audience and

properly reaching out to them. From social media to advertisements geared towards different

cultures, the brewing company is competent when it comes to understanding their customer base.

Additionally, by adding other companies such as Swiss Miss and Dunkin Donuts to their line of

K-Cups, they are able to advertise in many places where they typically would be seen as

competition.

MMGP— Internet Marketing

Definition

Online marketing comes in four categories: web sites, search ads, display ads, and email.

This allows companies to send or offer personalized information and messages that hit on their

customer’s interests, which is one of many benefits with online marketing. Another benefit is that

the company can see how well their online marketing is doing by tracking how many unique

customers visited their page or ad and their actions while there. Some more advantages are that

MMGP Keurig Green Mountain 78

the company can buy ads on sites that are similar to their own offerings and also match up their

advertising with keywords their customers type into search engines. The internet is attracting

both customers and marketers of all kinds. And with the internet becoming more and more a way

of life for just about everyone, marketers need to take advantage of this opportunity (Kotler and

Keller, 276).

Describe, discuss, and analyze the Internet marketing possibilities for your product/service.

Research

Keurig has truly taken advantage of marketing online. Keurig’s huge success, and

continuing rise for many years was an unswerving result of its marketing campaign, which

consisted of superiority performance, diversity and expertise.

Keurig flourished because of its steadfast focus and prospered greatly from an online

marketing campaign that pushed back their competitor’s products and focused on offering their

customers a quality and customized experience. Focusing their online marketing by portraying

their vast array of products allows the customer to choose the product that best fits their need.

Being mindful of the wide-ranging product line Keurig has to offer is fascinating. When

consumers visit keurig.com, they will be able to view all the different products as well as their

in-depth support information and videos.

Keurig has arranged their website in a way that is easy for the consumer to find exactly

what they are looking for and need. Right now keurig.com displays some enticing promotions

like: Save 20% when signing up for auto-delivery or Get a free K-cup sample box when you buy

2 boxes of select pods. It is also advertising their first recyclable K-cup pods (keurig.com, 2016).

Underneath those advertisements displays a few graphic designs stating “Consistently

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Delicious”, “Refreshingly Simple”, and “Endless Possibilities” in which one may be tempted to

explore further. This is a subtle offer extended to see what else could possibly be offered for

Keurig lovers to experience next. Keurig wants its customers to see and experience all that they

have to offer. The focus on providing quality and personalized products, has inspired their total

online marketing strategy. The online campaign has focused around providing their customer’s

interest and unbeatable support.

Keurig has taken the necessary steps to succeed. The company’s internet marketing

strategy involves promoting quality products, personalized experience, and what the company

anticipates their customer’s future interests are.

Describe, Discuss, And Analyze the Use of Social Media in Marketing for Your

Product/Service

Marketing Theory

Social media. Approximately one-and-four Americans (26%) utilize some short of social

media daily (“Keurig Green,” 2014, para.1)! They are sold on the idea that without social media,

it would be extremely difficult and/or impossible to keep in touch with others. (“Keurig Green,”

2014, para. 1). With this said, it is easy to see why organizations may want to incorporate social

media within its marketing mix. Research shows that organizations are able to create new

opportunities to communicate with their customers when utilizing social media strategies, all

while generating more exposure to the organization, increasing traffic and improving search

engine rankings. (as cited in Schaupp & Bélanger, 2014, p. 187).

Defining social media. Social media does not only consist of the infamous FaceBook,

YouTube, and Twitter sites, it also includes online communities, forums, blogs, etc. (Kotler &

Keller, 2016, p. 6fi). In other words, social media consists of online tools that allows people to

MMGP Keurig Green Mountain 80

reveal his or her opinion, perspective, and insight, but most importantly, build

relationships/connections amongst one another and organizations (Nair, 2011, p. 45). Kotler and

Keller (2016), believe marketers should encourage consumers to utilize effective social media, as

this will allow the consumers’ to learn/know the organization’s brand on a deeper, broader level

(p. 622).

Utilizing social media effectively. The author of “Outside Innovation,” Patricia Seybold

believes that in order to have an effective social media strategy, organizations must completely

reconsider how they are communicating with the consumer (as cited in Saperstein & Hastings,

2010, para. 13). This means that the organization must take into account: (1) who the customer

is, (2) what they care about, and (3) what they are trying to do (as cited in Saperstein & Hasting,

2010, para. 14). In other words, the organization must understand the customer.

Research

GMCR, Keurig and social media. GMCR has taken advantage of social media by

implementing online forums and surveys into their marketing strategy. These tools of online

communication allow customers to get more information, search, evaluate, choose and review

products and services. The organization is also able to gauge and evaluate the following: a

perspective of the consumers’ attitude, peer-to-peer communication, and online consumer

reviews (as cited it Chanthinok, Ussahawanitichakit, & Jhundra-indra, 2015, p. 36). This helps

the organization understand the customer on another level.

Say Hello with Keurig® 2.0. The “Say Hello with Keurig® 2.0’s” main intent was to

bring people together in order to share their favorite Keurig brewed drinks (“Keurig Green,”

2014, para. 1). This idea initially came into fruition in 2014 by way of the Keurig Coffee

Connections Survey. This online survey revealed the results of exactly what percentage of

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Americans utilize social media, text, or email, what they use social media for, and who they

would most likely want to connect with (“Keurig Green,” 2014, para. 1). The results revealed

that although consumers enjoy connecting with their loved ones on social media, they would

much rather see them face-to-face, hence the “Say Hello with Keurig® 2.0” campaign (“Keurig

Green,” 2014, para. 5). GMCR was able to use the information gathered from the Keurig Coffee

Connections Survey to create an online campaign (HelloKeurig.com) that would give a very

special customer a chance to reconnect with a loved one in New York City (“Keurig Green,”

2014, para. 4).

BzzAgent. GMCR partnered with BzzAgent to create an online forum with the intent to

educate consumers about fair trade benefits and drive sales (Schiff, 2012, para. 1). This forum’s

main goal was to separate “organic” and “fair trade” in a way that consumers would understand,

thus pushing to promote the fair trade-certified coffee line. They believed that the act of drinking

coffee was more so on the social side, so it would make sense to conduct a social media online

forum.

This online forum engaged “BzzAgents” (consumers who voluntarily participate in

campaigns), these agents linked their social media accounts to the BzzAgents network,

generating chatter/feedback and building brand advocacy among members (Schiff, 2012, para.

5). This strategy revealed 10,000 frequent coffee drinkers where around the age of 38 and lived

in areas where fair trade products were available. These individuals were given kits to enjoy for

themselves and/or to pass along to others (coupons, samples, educational packet with

background information, etc.). Ultimately, this strategy engaged people online, but reinforced

the key themes that drives offline activity (Schiff, 2012, para. 9).

Discussion/Analysis

MMGP Keurig Green Mountain 82

According to Chanthinok, Ussahawanitichakit, and Jhundra-indra (2015), “social media

has come to a higher degree of popularity in the online world” and most organizations have

chosen to integrate this strategy into their marketing plan (para. 1). Social media consists of

more than just Facebook and Twitter, it also incorporates other platforms such as forums and

surveys. Organizations are able to use this strategy to communicate effectively with their

consumers.

Research reveals that companies, such as GMCR benefit from the utilization of social

media. For example, GMCR was able to learn exactly what percentage of people use social

media to connect with others, but more importantly how many people enjoy seeing their

connections/loved ones face-to-face via the Keurig Coffee Connections Survey. GMCR has also

been able to engage consumers using an online forum. This forum informed consumers of the

difference between “organic” and “fair trade” products, while promoting the fair trade-certified

coffee line.

Keurig’s Value to its Customers

Value and loyalty are closely related. If a customer perceives a product delivers value,

that customer will be more likely to loyally stay with that product. Customers tend to be value

maximizers; they will choose a product that they believe will deliver the highest value (Kotler &

Keller, 2016, Ch. 5). Subsequent purchases will be made based in part on the delivered value

(Kotler & Keller, 2016, Ch. 5). In order for Keurig to become and remain successful, it must

correctly choose value, provide value, and communicate value to its customers (Kotler & Keller,

2016, Ch. 2).

Keurig’s Value

MMGP Keurig Green Mountain 83

The value Keurig delivers to its customers is not in its price. Keurig’s brewers are more

expensive than traditional drip-brewed coffee makers. Making coffee by use of K-cups is more

than twice that of traditional drip-brewed coffee. The overall consumer’s cost is about 66 cents

per cup of K-cup brewed coffee, compared to a cost of about 28 cents per cup in a traditional

drip brewer (Tuttle, 2015). Where Keurig delivers value is through its ease of operation, speed,

and the wide selection of quality coffees. Keurig also delivers value and inspires loyalty through

its own website’s promotional sales.

Value in Product Diversity

As coffee consumption in the United States has grown, the market has responded in kind.

A walk down the coffee aisle in any grocery store or Wal-Mart will present the coffee aficionado

an amazing number of choices. Today, not only are the shelves stocked with large canisters of

ground coffee, but now feature bags of whole beans and a dedicated space of a wide variety of

K-cups. In addition to its own line of coffees from GMCR, Keurig has formed partnerships to

manufacture, distribute, and market K-cups containing coffee from Starbucks (Starbucks and

Seattle’s Best Coffee), J. M. Smucker (Folgers, Café Bustelo, and Millstone), Reily Foods

Company (New England Coffee, New Orleans Famous French Market Coffee, and Luzianne

Iced Tea), Kraft Foods Group (Maxwell House, Gevalia, and Yuban), McDonald’s (McCafé),

illy, Dunkin’ Donuts, Krispy Kreme Donuts, and Caribou Coffee (Hall, 2016; Watrous, 2014;

Watrous, 2015; Trefis Team, 2014b; Keurig Green Mountain, 2016). In all, Keurig offers K-cups

in more than 70 brands and more than 445 beverage varieties (Keurig Green Mountain, 2016).

The variety offered does not end with coffee. Keurig offers Campbell Soup K-cups

(Brown, 2013). Keurig also delivers a line of Nestlé hot chocolates, and 2-in-1 K-cups featuring

coffee with creamer (Trefis Team, 2014a). Finally, a wide variety of tea and hot cider K-cups are

MMGP Keurig Green Mountain 84

available featuring products from Celestial Seasonings, Good Earth, Lipton, Snapple, Tazo, and

Tetley (Keurig Green Mountain, 2016).

Value in Quality

Keurig’s K-cups are made of #7 composite plastic (Oatman, 2014). The cups contain 11

grams of ground coffee, vacuum-sealed in nitrogen, with a thin aluminum lid (Hamblin, 2015).

Because coffee is perishable, the construction of the K-cup is designed to maintain the quality of

the coffee by preventing degradation due to light, oxygen, and moisture (Oatman, 2014).

The coffee beans that GMCR selects for its own line of coffees are top quality as well.

GMCR boasts that it is “personally invested in upholding the highest standards of quality,

integrity, and commitment” (Green Mountain Coffee, 2016). Throughout the process of raw

material to finished product, GMCR is committed to deliver the highest quality coffee. GMCR

selects only the top 10% of coffee beans in the world, ships the beans in burlap or jute bags to

preserve flavor and quality, and will “meticulously test and rate small samples of our beans to

make sure they’re up to our standards” throughout the selection and roasting process (Green

Mountain Coffee, 2016).

Promotional Value

Sales promotions add to customer value by employing premiums or gifts, sampling,

coupons, rebates, continuity programs, and point of purchase displays (Kotler & Keller, 2016, p.

561). Keurig utilizes promotional sales throughout the year and is currently promoting a price

pack that gives consumers a 15% discount on K-cup pods when signing up for auto delivery

(keurig.com, 2016). Keurig also employs short run promotions, such as currently offering a free

K-cup sample box with the purchase of two boxes of K-cups (keurig.com, 2016). With this

MMGP Keurig Green Mountain 85

promotion Keurig is utilizing incentives to give customers a discount and sign up for a service.

The sample promotion allows customers to try out different flavors for free, which could lead to

future sales for Keurig. Keurig has created Club Keurig, providing points to customer as they

purchase products. Those points can then be redeemed on at keurig.com for brewers, accessories,

and selected pods at a 50% discount (keurig.com, 2016).

From the online promotion standpoint, Keurig offers free shipping on orders over $49,

which is an added incentive for both loyal customers and those visiting the website infrequently

(keurig.com, 2016). From an in-store perspective, Keurig benefits from promotions through

point of placement displays at supermarkets such as Target, Kroger, and Wal-Mart. Keurig incurs

the expense of the display, but generates greater exposure and revenue throughout the promotion.

(Brittany Tillage section N/A)

Social Responsibility

Define. Social responsibility takes on many forms in today’s world due to an increase in

consumer sensitivity to the needs and issues of the world around them. An article from Business

News Daily said it best, “The next generation of employees is seeking out employers that are

focused on the triple bottom line: people, planet, and revenue”[ CITATION Car16 \l 1033 ].

Social responsibility is a large driver for the new workforce and it is not something that is taken

lightly by the communities that organizations are located in. So what is this new phenomena?

Corporate social responsibility generally refers to a business practice that involves certain

initiatives that benefit society. We read in our text that, “Increasingly, people want information

about a company’s record on social and environmental responsibility to help them decide which

companies to buy from, invest in, and work for”[CITATION Kot16 \p 666 \l 1033 ]. Today’s

MMGP Keurig Green Mountain 86

society is not only looking for, but expecting organizations to do their part when it comes to

social responsibility. One article shows us categorically how the aforementioned statement

comes to life in the form of environmental efforts, philanthropy, ethical labor practices, and

volunteering. [ CITATION Car16 \l 1033 ] Each one of these categories focus on different

methods of corporate social responsibility. When we look at each individually we can see how

Keurig Green Mountain can really make an impact past what all they are already doing.

Application. Keurig has a long history of social responsibility. It is the writer’s opinion

that Keurig has long ago decided that social responsibility is not just a strategy for them, but a

culture which is intrinsic and cannot be changed. We will look the three aforementioned items

and how Keurig currently practices social responsibility in each category and then address ways

they can do it better. With that said, the first one we will look at is environmental efforts.

As a coffee drinker and a Keurig owner, there are two main things that come to mind

when thinking about social responsibility and long-term sustainable growth regarding

environmental efforts and that is K-Cup waste and water usage. As of a few years ago, Keurig

did not produce any biodegradable K-cups, they were all made out of non-recyclable plastic

which of course leaves a huge foot print in a years’ time. In one article from 2010 we see that

more than 80% of Green Mountains $803 million in sales actually came from the K-Cup itself,

which as mentioned before was non-biodegradable.[ CITATION Kha14 \l 1033 ] Let’s do the

math really quick on that number. The average cost is $0.26 a K-Cup for Green Mountain and

80% is $642,400,000 dollars which roughly equal 2,470,769,230 K-cups consumed and thrown

away. That puts waste into perspective very quickly when you see those types of numbers. Next,

we look at water usage with that many K-Cups. There are 128 ounces in a gallon which averages

MMGP Keurig Green Mountain 87

out to 14 K-cups per gallon of water. That number equates to 176,483,516 gallons of water used

to make that many cups of coffee. What is Keurig Green Mountain doing about this?

First, Keurig is now producing a lot of their K-Cups from biodegradable material

[ CITATION Tre15 \l 1033 ] Of course this is a huge step, but what are they doing about the

aforementioned number of K-Cups that are left behind as well as their business partners that

have the rights to produce K-Cups, but do not use biodegradable material to do so with. That

question leads me to my first social improvement, which of course is negotiated contracts with

outside suppliers as well as a recall-recycle program for existing non-biodegradable K-Cups.

Keurig Green Mountain should require their business partners to conform to their corporate

culture by producing biodegradable K-Cups. Of course companies cannot move to this

overnight, but there should be a hard date recorded of when the expectation is. Next, much like

Homestead Creamery, Keurig should offer a return value on used K-Cups to get the consumer to

keep them from the landfill and Keurig can dispose of these in a more environmental way until

the conversion has happened with all parties involved.

Second, Keurig has done a great job creating efficient machines that optimize water

usage. When we look at optimization, we see that is one of Keurig’s Green Standards when it

comes to sustainable social responsibility. [ CITATION Oxe151 \l 1033 ] With water usage that

high, giving back more than just efficiency will buy more good nature than advertising that you

have an efficient machine that uses less water, that is probably at minimum, the expectation from

consumers and touting that fact as being socially responsible is likely to get you put in the

penalty box. Instead, some beverage companies like Deschutes Brewery, gives back actual water

to the river they use it from! [ CITATION Des16 \l 1033 ] Keurig can use a percentage of the

MMGP Keurig Green Mountain 88

profit for clean water initiatives around local communities and globally to invest back into what

they are taking from the environment.

Philanthropy. Philanthropy is a $10-dollar scrabble word for putting your money where

your mouth is! Keurig has a rich history of doing this, and doing it well. We read, “Annually,

the company donated 5% of pretax earnings to economic and social projects”[ CITATION

Tre15 \l 1033 ] Again, simple math, that is $40,150,000 in charitable donations to either

research, water projects, or other areas that really have needs in the global community. As for

improvement, Keurig Green Mountain does a great job abroad with working with suppliers and

other areas to ensure they are trained, and treated fairly, but locally there can be improvement. It

is the writer’s opinion that investing into local communities as well would help the social

responsibility factors for the organization. Things such as K-Cups for college where students

who save the most can get a grant and not work as much through college, or at least afford the

coffee! Other items such as, ‘Every K-Cup sold equals a meal for a hungry child’ during a local

awareness campaign in inner-city or rural areas.

Ethical Labor Practices. Coffee comes from all around the world and how it is payed

for and packaged prior to going to Green Mountain can be of ethical concern for any

organization. With that said, ethical labor practices are something any global business has to

face and deal with no a daily basis. Mattel had issues with lead paint on their children’s toys

which caused a massive recall due to a distributor in China not following company protocol.

[ CITATION Sto07 \l 1033 ] The coffee industry has the same opportunities, just in different

ways. One thing Keurig Green Mountain has already started to do is be an active participant in

Fair Trade Global community, which ensures that small growers are getting what they deserve

from a cost perspective and not cheated due to not being a big distributor. [ CITATION Keu06 \l

MMGP Keurig Green Mountain 89

1033 ] With that said, an improvement they can make in light of Fair Trade is ensuring that

where they get their supply is also practicing the same ethical guidelines that they hold their

internal team accountable for as well. You would not want a front page ad showing Keurig K-

cups being filled by underage workers in the middle of the jungle in east Africa! Doing this

would ensure they are doing all they can to practice ethical labor laws.

Volunteering. Keurig encourages each of its employees to volunteer in their

communities each year. As a matter of fact, they actually offer 52 paid hours a year for certain

employees who can volunteer their time in their communities for qualifying events. [ CITATION

Tre15 \l 1033 ] That type of commitment to the communities they operate and live in is another

testimony of how important social responsibility is to the organization. Looking at some of the

other aforementioned topics and explanations, volunteering falls in line with each of those to

create a social responsibility behavior profile for the organization. By giving time, money,

expertise, and energy to their communities and global surrounding, this will continue to show

their consumer how important social responsibility is and how it is a part of their long-term

sustainable growth plan, not just a strategy they are using to temporally gain share or sampling.

Thank you and God bless!

Recommendations and Conclusion:

Keurig Green Mountain has traveled down an interesting road that has taken it from an

idea of a niche company to a multi-billion-dollar organization that has crossed considerable

boundaries to become what they are today. This company has carved out a unique place in the

market that even their competitors cannot cut into. As we read in the aforementioned section,

during a test of all single cup companies, Keurig consistently came out number one in taste,

MMGP Keurig Green Mountain 90

timing to brew, and consistency. After countless hours of research and comparison, Group 3

recommends the following items for growth and next steps for GMCR.

There was an overwhelming pattern in the research regarding environmental impact of

the original K-Cup itself. When you do any amount of research on K-Cups, you will

undoubtedly be subjected to countless pages of criticism for the design and makeup of the K-

Cup. The consumer has made it very clear that the inability to recycle this product is having a

negative impact on their carbon footprint. While we have learned that the company is making

strides to have all their Green Mountain K-Cups biodegradable by 2020, there was still left the

question about the current waste that is in the market. GMCR has done more than most

regarding short-term and long-term sustainable projects and with that said, we would recommend

adding this to the portfolio. Most elementary schools around the United States have projects for

planting seeds. [ CITATION Pla16 \l 1033 ] With that said, GMCR can start a sustainability

project that encourages users of K-Cups to rinse and repurpose the used K-Cups like they do

with bottle tops, and box-tops. The K-Cup is the perfect size for single seed planting and the

used grounds can even be used for composting. The schools would benefit from the K-Cups and

the students could draw on them and plant their seeds, thus repurposing the waste and reducing

the cost for parents and teachers for the projects they already do.

Additionally, to repurposing the K-Cups, they can also lean in on their allies to do the

same with their K-Cups that are being made for the machine. This sustainability effort would

produce good will for all companies involved and could be launched nationally to increase brand

awareness for all involved. It truly is a win-win situation for all organizations as well as our

communities.

MMGP Keurig Green Mountain 91

Looking at other recommendations, Keurig has a reputation, upon research, of having a

higher cost per cup then that of its competitors. This is an opportunity for GMCR to showcase

their quality and price point via advertising on product and package labeling to ensure the

consumer understands that they are actually very competitive versus the market. With that said,

we recommend they post their cost per cup verses their competitors cost to show they are

meeting or exceeding their consumer’s expectation. Albeit there is a large amount of margin

built into this end of the business and they could afford to take rate down, with the current

market trend and year over year growth, it is the groups opinion that holding price and showing

value is the better option to drive incremental revenue versus cutting cost and reducing margin.

GMCR does not do a large amount of advertising, which is good the affect that their base is so

large and people naturally talk about their products which drives the sales itself, but it has

negative drawbacks as well. If the company took the time and capital to invest in advertising,

they could showcase their brands, which of course involve all of the competitor brands that have

joined with them to use the machine, and this could drive brand awareness as well as push the

agenda regarding pricing, sustainability, and community involvement. When we look at

advertising campaigns, we see a large cost involved with this process. We see that as of 2013, a

commercial can cost anywhere from $50,000 to $750,000 to write, shoot, and produce!

[ CITATION Sev141 \l 1033 ] When you are looking at doing this on a national or global

platform with several different types of commercials targeting certain markets, one can easily see

the cost could be astronomical. With that said, GMCR is in a unique position to leverage their

brands allies to contribute to each of these commercials as it would benefit all that are involved.

This cost-sharing method would lower the total cost for GMCR as well as produce quality

advertising that could address all the aforementioned items at a much lower and efficient rate.

MMGP Keurig Green Mountain 92

GMCR has done a fantastic job at showing the market that they have a need that, at the

time, only they could meet. As previously stated, when this company was a startup business,

they were kicked out of more board room meetings then one would care to document. Their

machines blew up upon presentation, one of the co-owners almost died from caffeine poisoning,

and the company almost went out of business before they even got off the ground! Seven years

into the venture, everything came together and this niche company is now what we all know it is

today. They should keep expanding their scope with additional add-on’s such as Keurig Kold

and continue the innovation to the consumer. With the business plan they have, there is no

reason that this organization should not be a staple 10-15 years down the road in everyone’s

mind. With the recommendations this group has provided as well as the continued path they are

on, we look to see more great and innovative items from this company that will fuel their growth

into the future. Thank you and God bless.

MMGP Keurig Green Mountain 93

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