Answer

1. Case Overview

   Keurig is a beverage brewing system for both commercial and home use that was founded to develop a unique technique that allows lovers of coffee to brew up one perfect cup of coffee at any given time. The company, which was started in 1992, leveraged investments from venture capital funds in order to transform its concept of a single cup brewing system into a commercial viable business. In order to grow faster, the company entered into an agreement with some known coffee roasters such as Green Mountain Coffee Roasters Inc. (GMCR) to pack its specialty coffees in Keurig’s patented containers known as K-Cup (Kienzler & Kowalkowski, 2017). The company which distributed its products in offices and homes grew very fast and sold some of its share to other partners in order to get more funds and penetrate the market that was highly growing. It is in this context that it sold some of its stock to companies such as Van Houtte and Memorial Drive Trust which became the major shareholders of the business. As in any business, Keurig has faced several challenges in order to reach where it is today. While some of the issues have been solved as a result of great management team and effective distributors, there are certain key issues that still face the company which require solution.

   Summary of Key Issues

   The firs key issue is the competition. Keurig faces stiff competition both locally and internationally. One of the organizations that create competition is Kraft which partnered with another organization known as Braun. The two organizations introduced tassino hot beverage system in 2005. Another competitor that also emerged in 2005 is Brunn, a manufacturer of drip coffee makers for commercial and AH applications. Other competitors include Procter & Gamble (P&G), Cuisinart, Krups, Braun, and DeLonghi. However, it is important to note that Procter & Gamble and Brunn are the current major competitors with a extensive customer base.

    Pricing strategy: The organization through its different managers has had issues with pricing its products based on the market demand and the quality of their coffee. Based on the case study, the company has partnered with some of the best roasters in the market that produce a variety and best flavors. It is in this context that they opt for high prices as compared to the competitors. However, the company is at crossroad since they are likely to lose potential customers as a result of high prices

   The last key issue is the evolution of coffee market. In terms of coffee consumption, research showed that 44 percent of all U.S. consumers had a daily cup of coffee and 75 percent of that consumption was done in the home.

   Evaluation of Key Issues

   While competition has the ability to motivate employees and the management as a whole to work hard and bring out the best performance, it has several negative effects on individual employees and the company as a whole if not handled carefully.  According to Anderson (2017b)., competition offers an excellent way of benchmarking marketing strategies, quality of products, and pricing; however it can stifle the growth and development of a business or company. It is important to note that entrance of several companies offering the same product divides the customers hence an organization cannot command the same customer base when a new entrance providing  similar and quality product has entered into the market.  Based on this case study, Keurig is facing stiff competition from potential competitors that include Procter & Gamble (P&G), Cuisinart, Krups, Braun,  DeLonghi, and Brunn. On the same note, there is low barrier to entry in the industry hence there is likelihood that some competitors will emerge. This, therefore, puts Keurig at a tight condition as it is likely to lose more customers to the competitors.  Based on this, it is important for the organization to create barrier to entrance or produce quality products that the competitors cannot match.

    Pricing, which refers to the decision-making process that goes into establishing a value for a product or service, is the second key item that is emerging for the company. There are many different strategies that a business can use when setting prices, but they are all a form of pricing. A study conducted by Caplan et al (2017) reveals that pricing is one of the key factors of attracting and retaining customers. It is important to note that pricing determines the quality of a product as most customers believe that products that are priced too low are of low quality. On the other hand, most customers are attracted to companies that price items in manner that is affordable.  Keurig, being associated with big roasters such as Green Mountain Coffee Roasters Inc that produces quality flavors of coffee, makes it to price its products relatively higher than the competitors. Pricing is one of the issues that have made easy entry into the market as some new entrants price their products relatively low in order to attract and retain customers.

   The last issue is evolution of the coffee market.  It is important to note that the coffee market has been changing since the inception of Keurig Company. Basically, the business manly focused their market on office and homes. However, while there are an increasing number of coffer users globally, most of them love to make their coffee at home (Anderson, 2017b).  Based on the case study, in terms of coffee consumption, research showed that 44 percent of all U.S. consumers had a daily cup of coffee and 75 percent of that consumption was done in the home. Therefore, the trend is likely to affect the market of Keurig.

   Proposed Solution

    Enhancement of quality of the products: One of the means through which a company can create barrier to entry is increasing the quality of the products and services. Chen et al. (2018) say that quality services do not only attract new customers but also retain the existing ones which create barriers to new entrance. Although Keurig has been the leader and innovator of single cup brewing system, other companies have emerged creating competition and providing better offers than Keurig. It is in this context that the company should improve on quality.

   Secondly, fair pricing is a perfectly strategic move the firm should employ. In the event that the company prices their products relatively higher than the competitors, most customers tend to move to other companies with lower prices. This leads to loss of several customers hence loss of revenues. In the event that Keurig is the leading single cup brewing system, reducing prices to match those of the competitors will be significant to them in existing retaining customers and attracting new ones.

   Lastly, the company should identify a new target of customers. There is an evolution of coffee users which is quite different from the one that Keurig used to get entry into the market. The company targeted individuals in the offices and at home; however, this market in currently not lucrative for the business.

   Justification Of Solutions

   The main aim of the above solution is to attract more customers in order to maintain a big customer base. For example, high quality products create a barrier to entry to other companies hence limit competition, which is the major issue of Keurig. Additionally, lowering prices will enable Keurig to come in terms with market prices, which shall enable them to attract more customers, particularly the ones that have been retained by the competitors that offer lower prices. 

    

    

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