The coffee industry has experienced resurgence since the 1990s with help from coffee giants like Starbucks and area coffee shops reintroducing the market to gourmet coffee. Keurig Inc. had an effective hold on the commercial market by creating a distribution channel that marketed to the perspective clients' office managers who desired a more convenient, less stressful product that required little preparation and less clean-up. Although the office coffee systems (OCS) were profitable, the firm determined a market for a consumer product line could help further diversify the marketing strategy. This paper will explore the distribution and channel strategies as well as the promotional and pricing strategies.
Distribution channels are best defined as a chain of interdependent businesses or intermediaries through which a product moves through to be brought to market. A channel can be comprised of retailers, wholesalers, or distributors and can be a combination of several varying types. Companies use both direct and indirect distribution channels to move the product to market where a direct channel represents the ability of a consumer to purchase directly from the manufacturer. Indirect channels can present challenges to the firm if not properly managed or if the channel contains partners whose values and mission does not align with the lead agent. According to Mandal and Roy (2012), distribution channel management should be the priority of any firm and that the operation of distribution channels along with sustainable relationship management with its partners prove to be the most effective way to ensure the channel is profitable.
[...] In 2012, the CEO of the firm presented recommendations on increasing the price of the Keurig brewers. Initially, the pricing of the brewing system was priced for adoption with the ultimate goal of market penetration and increased sales on the K-Cup products to help accommodate the initial loss of cash because of this strategy. As the market continues to mature and competition increases, many of the distributors are working to develop better pricing strategies to address the price sensitivity of consumers interested in a Keurig brewing system. [...]
[...] Strategic Marketing (9th ed.). New York, NY: McGraw-Hill Company. Demery, P. (2010). Keurig deepens customer relationships through blogs and product reviews. Retrieved 11/7/ from http://www.internetretailer.com/2010/04/07/keurig-deepens-customer- relationships-through-blogs-and-product George, J. (2011, October). Keurig brews up refreshed packaging, brand positioning keurig streamlines brand positioning across channels, reinvigorates corporate identity. Retrieved from http://www.businesswire.com/news/home/20101216006888/en/Keurig-Brews- Refreshed-Packaging-Brand-Positioning Investopedia. (2013). [...]
[...] Keurig Inc. has developed a network of 180 authorized distributors known as KADs (Keurig Authorized Distributors) to aid in the distribution of its product. Of the 180, a small number of these distributors handled a small portion of the North American market while the remaining manages smaller regions. The firm's network of distributors is responsible for not only distributing the product but also managing the client relationship and reporting any issues back to Keurig. Once a client has been identified, the KADs are responsible for purchasing the product from Keurig at a wholesale price and placing in the client's office. [...]
[...] Promotions Leveraging the number of OCS clients who were already familiar with the Keurig products, the firm introduced a point of sale referral system providing a $15 referral fee to distributors that used the marketing items at the OCS units. This approach attempted to market directly to the potential consumers who are already accustomed to the company's product. Although this strategy proved effective, the company rebranded itself in 2010 to continue efforts to attract new consumers desiring a gourmet brewed coffee in the comfort of their own home. “Keurig introduced an enhanced corporate identity through its new packaging and renewed emphasis on its Choose. Brew. [...]
[...] Impact of marketer's influence strategies on distribution channel partners: A comparison among distribution channel partners. South Asian Journal of Management, 82-97. Retrieved from http://search.proquest.com/docview/1016800009?accountid=35812 Redfield, M. (2012, July). Keurig Brewers: Another Line Of Defense For Green Mountain Coffee. [...]
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