Caso Keuring At Home

Keurig At Home:
Managing a New Product Launch
A Wednesday afternoon in February 2003 found Keurig Inc.’s president and CEO Nick
Lazaris heading south on Interstate 89 back toward his Wakefield, Massachusetts, office and
mulling over the day’s events in preparation for a briefing with his senior management team (see
Exhibit 1). He realized that the next two weeks would be critical to thesuccess of the company’s
newest product initiative in the single-cup coffee market. Lazaris had just wrapped up a
presentation to the Green Mountain Coffee Roasters Inc. (GMCR) management team, one of the
company’s strategic partners and an investor in its business. While reviewing the company’s
progress toward the launch of its innovative coffee-brewing system into the at-home consumer
market,GMCR had asked Keurig to reconsider its decision to use a different version of the coffee
portion pack, known as a K-Cup, in the consumer market. In making its request, GMCR had
offered a number of compelling reasons for using the existing commercial portion pack in both
channels.
As he drove, Lazaris passed a new Starbucks and reflected on how gourmet coffeehouses had
helped pave the way forKeurig’s single-serve brewing system. The proliferation of soft drinks
since the 1960s had caused coffee to lose its place as a central component of social gatherings,
spurring a precipitous drop in coffee consumption to an all-time low of 6.1 pounds per capita in
the mid-1990s from a peak of 16.5 pounds per capita in the mid-1940s.1 The entrance of gourmet
coffeehouses had reinvigorated themarket, developing a distinct subculture of coffee drinkers
and educating younger consumers about great traditional coffees as well as espresso and milkbased
specialty beverages. As a result, by 2003 an estimated twenty million Americans were
drinking gourmet coffee on a daily basis.
Keurig’s launch of a single-cup brewing system in the office coffee service market in the late
1990s hadbenefited from coffee drinkers’ increasing sophistication. Office employees could
appreciate the greater variety, freshness, and convenience derived from the ability to brew a
single cup of coffee on demand. Office managers recognized the advantages garnered from less
coffee waste, increased employee productivity, and decreased hassle associated with tending the
coffee machine.
February 2003 foundKeurig poised to launch its new model B100 system in the at-home
segment with hopes of repeating its success in a much larger but more competitive market. With
rumors of other single-cup competitors ready to enter the market, Lazaris knew Keurig needed to move quickly in order to obtain its desired positioning in the emerging single-cup consumer
market. Revisiting the decision to proceed with atwo-K-Cup strategy had the potential to derail
the company’s launch efforts and demanded rapid attention by Lazaris and the senior
management team. Reevaluation of the K-Cup decision would also force them to rethink other
elements of their product plans, including pricing and marketing. With less than six months until
the September launch, time was of the essence.
The Company and ItsProducts
Keurig Inc. had been founded to develop an innovative technique that would allow coffee
lovers to brew one perfect cup of coffee at a time. Beginning with the company’s inception in
1992, the word “Keurig,” from the Dutch word for excellence, had been the guiding principle
behind the development of its products and services. The company leveraged investments from
venture capital funds totransform its concept for a single-cup brewing system into a
commercially viable business with the development and patenting of a single-portion pack and a
revolutionary new coffee brewer. The first brewer targeting the office coffee service market, the
B2000, was launched in 1998. A licensing agreement allowed GMCR to pack its specialty coffees
in Keurig’s patented container, the K-Cup (see...