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Franciscan University of Steubenville BUS 420 – Strategic Management
Student Name:
Mary Ann Cortese
Questions to address in your case report on the Keurig case.
Note: You may use bulleted lists in your answers, where appropriate, to make answers more concise
(but provide a sentence or two to introduce the bullets).
1. Identify Keurig’s business–level strategy. Has the company’s business-level strategy been
successful? (20%)
Keurig’s business level strategy involves targeting coffee advocates in order to address the needs, wishes
and desires of satisfaction from quick, high-quality coffee (also other forms of hot beverages). Keurig’s
business-level strategy has been that of differentiation in which the company outperforms its rivals by
offering a product that is perceived by consumers to be superior to that of its competitors. Keurig is a
company that is dedicated to quality and wants to give its customers a superior cup of coffee through an
easy single-cup brewing system. Keurig has become a leader in the single cup breaking market though their
patented K-Cup and brewing technology. Keurig was able to differentiate themselves through the idea of
brewing by the K-Cup and continuing the idea to incorporate other hot beverages such as hot coco and teas
from well-known coffee-distributers such as Starbucks or Dunkin Donuts.
In our textbook, it mentions that through the differentiation strategy, a firm produces distinctive products
for customers who value differentiated features more than they value low cost (p. 122). For Keurig,
customers value the convenience and quality of a quick single-cup of coffee and are willing to pay a higher
price for the product because of it. With more people drinking coffee regularly now more than ever,
creating a market where convenience seems to be more of a concern for consumers than price. Thus,
Keurig uses the differentiation strategy to create value for its customers. It offers single-use coffee pods to
reconcile the hassle of making coffee with super convenience and fast service, leading to low-time
consumption and cleaning process, creating a point of differentiation in the market.
Keurig’s business level strategy has been successful, as being one of the first entrants into the single-cup
brewing market and a commitment to fast, convenient and quality coffee has allowed Keurig to dominate
their market segmentation. Keurig has also had a successful market differentiation strategy through their
approach of advertising and development to sell as many brewers as possible to progress demand for their
K-Cups. With their K-Cups and partnerships with large retail coffee brand, such as Dunkin Donuts and
Starbucks, Keurig has been able to successfully strengthen its brand and appeal to many coffee lovers
through their huge selection of coffee beverages offered. Thus, Keurig’s business level strategy that targets
coffee advocates through providing a quick, quality cup of coffee, superior to its competitors has been
successful and has allowed Keurig to dominate the market share of at home coffee brewers in the US and
Canada.
2. How does Keurig’s strategy stand up against competitive rivalry in the industry? (20%)
Keurig is a company that has grown into a market giant by making and selling quality brewers along with
K-Cups. Fortune has been on the companies side and it was able to grow fast and control a majority of the
market in single-serve coffee brewers. However, competition has been a constant for Keurig, especially in
regard to its brewing technology and the coffee pod market.
One company that I personally find as an interesting competitor to Keurig’s market presence/share is
Nespresso. Nespresso has been fighting for a bigger US market share for decades. With Nespresso having a
smaller market share in the US and Canada than Keurig, they dominate the international coffee brewer and
pod market. It is important to note, however, that Americans enjoy larger coffee where Nespresso only
offers tiny cups of quality espresso. Although it will be hard for Nespresso to overcome this barrier to entry
in the US market, Keurig should continue to keep eyes on Nespresso’s North American growth, as the
market for specialty coffee is growing and Nespresso dominates that market better than Keurig, especially
internationally.
