In a saturated market, finding the right growth strategy often plays a significant factor to a company’s survival. In order for a company to remain competitive, it must make improvements without straying too far from the brand’s fundamental purpose or losing sight of the consumers’ needs. A successful brand presents a unique identity that consumers perceive and can rely on to address their needs.
By understanding the consumers’ need for quality, convenience, and consistency in their brewing experiences, Keurig and its K-cup pods became wildly popular. Keurig is currently one of the biggest brands in the highly competitive and saturated brewer market. However, last year’s rollout of its latest machine, Keurig 2.0, was a great disappointment to investors as well as consumers. According to Business Insider, the new machine “alienated [many] customers because it [only functions] with [new, larger pods] licensed by Keurig…while others complained the machine [didn’t] work well.” Trying to innovate and stay competitive, Keurig 2.0 strayed too far from Keurig’s fundamental brand image and the original Keurig’s ability to deliver convenience and consistency.
Although Keurig pioneered the, now ubiquitous, single serve brewer and dominated the single serve brewer market, the brand has continued to steadily lose sales and its consumer appeal. The company is counting on its September debut of Kold, its first cold brewer machine built in partnership with Coca-Cola, for its future growth. According to Business Insider, Keurig “claims that the cold-beverage market is five times the size of the hot-beverage market.” Keurig believes Kold and its new strategic partnerships with Coke, and Kraft Heinz Co.’s Maxwell House will help the company reach a new customer base in the cold-beverage market. By entering a new product market, Keurig hopes to maintain its competitive edge as well as expand its brand image.
Despite Keurig’s optimism, many analysts remain skeptical of Kold’s success. The Wall Street Journal points out Kold’s high price point at $299 to $369 in comparison to that of the leading cold beverage brewer, Soda Stream International Ltd., at $80 to $200. Furthermore, “Keurig is rolling out Kold at a time when Americans are scaling back on soda consumption amid health concerns…[per capita soda consumption has declined from 52.4 gallons to 41.4 gallons since 2004.]”
Consumers have become increasingly aware of the importance of not only a healthy life style but also sustainability. Keurig received a great deal of backlash in March of 2015 for ignoring the sustainability of its products. Although components of Keurig’s K-cups, such as the aluminum lid and the paper filter, can be recycled, the plastic shell is not made of recyclable materials, which exacerbates the worldwide waste issue. Keurig is aiming to create 100% recyclable K-cup packs by 2020,whereas, its competitor, Lavit, has been incorporating the sustainable solution for single-serve products in its 100% recyclable capsules. The process of cleaning and separating the K-cup is simply taxing and inconvenient, which ultimately counteracts the convenience of the single-serve brewer. In an effort to revitalize the brand’s consumer appeal, Keurig may have overlooked the consumers’ needs and current trends.
Finding the right growth strategy often requires companies to choose between further developing a brand or creating a new brand in order to keep its original brand alive. Rather than addressing the problems Keurig encountered with Keurig 2.0, the company chose to seek opportunities by expanding into another market. Whether Keurig has taken a step towards a successful growth strategy is unclear, but there is a crucial fact the company can no longer disregard: a brand’s success derives from its consumer appeal, which companies must actively strive to earn. In many instances, the evolution of a brand is an essential part of a brand’s growth strategy. Companies simply cannot rely on figures and statistics over the consumer.
Leslie Park, MSD Intern