Keurig Case Study
Summary:
The coffee brewing company Keurig was founded in 2003 by Nick Lazaris, who
soon partnered with Green Mountain Roasters and Van Houtte Inc. to bring an
innovative way to the market to brew a single serving of coffee. Before the Keurig,
coffee was brewed in a pot-style that served multiple people. This way required a lot of
clean up and usually lead to coffee waste. The rise of specialty coffee shops brought a
new excitement about coffee to Americans. Thus, it was a great time for Keurig to enter
the market.
The Keurig and K-cups first launched with away-from-home office coffee service.
The intent of this was to expose the Keurig to consumers at offices so they would be
excited about the upcoming launch of the at-home Keurig. Away-from-home Keurig’s
and K-cups were distributed through Keurig authorized distributers (KADS). Keurig
executives created a strategy where the at-home Keurig would launch with the Keurig-
cup instead of the K-cup to reduce competition between the at-home and away-from-
home Keurig markets. Six months before the at-home Keurig launch date, majority
stakeholders in Keurig decided that they did not like the two cup system because they
thought it would be confusing for consumers. This left the company in a tricky situation
because they had already invested a lot of money in the Keurig-cup. Without an agreed
upon at-home product vision, issues arose over determining the price point of the at-
home Keurig and the Keurig-cups or K-cups price/ royalty. Therefore, Keurig tried to do
market research so they could gather as much information as possible to make the best
decisions about the at-home Keurig launch.
Question 1:
As GMCR is a part of the largest shareholder agreement for Keurig, we should
take GMCR’s request to switch to the single K-cup approach very seriously even though
it is inconvenient for the business to back track on the home Keurig-Cup development.
Regardless of the money Keurig already invested in the Keurig-Cup, GMCR has a valid
point that because of “long–term simplicity” and the “desire to move quickly because of
the competitive systems coming to market” Keurig may be better off with the single K-
cup system. In order to make this decision, an analysis needs to be done of the degree
of behavior change required versus the degree of product change involved. While the
Keurig-Cup has a slightly different design than the K-cup, the overall degree of product
change is relatively low because the product has the exact same function. The degree
