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Keurig
Keurig

Keurig

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  • Pages: 6 (2735 words)
  • Published: October 2, 2019
  • Type: Research Paper
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Ian Greenwood and Peter Dragone with the belief that the coffee should always be served fresh, at home or at the office. The concept of coffee house taste by the cup was unique and new to the market. Ian Greenwood attained the idea of brewing coffee with which he approached, Peter Dragone, a Harvard business school pass out and with an established background in the food industry. The concept was to create portion packs of premium coffee. The main idea was to serve fresh coffee as there will be no oxygen in the packs, it'll be taken out using special packaging techniques.

To establish his point, Ian used a yogurt cup to display the concept, which has a more refined version now called K-cup, sealed with a foil. It was a new concept, which developed from the revolutionary question: Why brew coffee a pot at a time when we drink it a cup at a time? The two was a combination desirable for a successful business. Greenwood developed a make-shift coffee maker to prove his point that it can work. And Peter worked on the business plan, making presentations to various experienced enterpreneurs and ventured capitalists. They presented the plan to Northeast Office Coffee Association.

This was the big organization involved with distributors, equipment manufacturers and other companies for marketing coffee along with other services to businesses. Keurig wanted an own brand of coffee line called True North Coffee. In 1993 after getting the financial help Keurig was able to convince the idea of K-cup to the appliance manufacturers and roasters. But

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the appliance manufacturers were not sure of having the mass production at the economic cost and roasters thought that the coffee machines will never able to work flawlessly. In late 1994, Dunkin Donuts agreed to purchase two prototype brewers for $15,000.

Dunkin Donuts believed that the Keurig's idea was promising and they needed a machine for non-store settings. This gave Keurig a platform to soon be called as a company. In 1994, Keurig got the patent and came up with a prototype. Keurig received small funding from Food Fund that helped them to create handful of higher quality brewer prototypes. Keurig presented the business plan to Green Mountain Coffee Roasters, a premium coffee producer, they wanted to do business with them because that will make them earn lots of rewards. Green Mountain Coffee Roasters agreed to get into he business with Keurig only if they allow them to use their own brand name coffee products. In 1995 Keurig got financial funding of $1 million that gave MDT (Memorial Drive Trust) and Food Fund 45% equity stake in the company. Ian Greenwood was good with product ideas but lacked in management skills because of which he was transferred from CEO to chief engineer responsible for development of reliable brewer and a packaging line capable of mass producing K-cups. And Peter Dragone became the new CEO. In 1996 MDT invested another $1 million in the company that gave them the ownership of 58%.

In 1997 when Nick Lazaris took over leadership of the company discovered that the company was unable to meet the deadline

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to launch neither the brewer nor the packaging line was ready. Nick Lazaris along with other board of directors decided to outsource more of the development work for both brewing and packaging line. Sweeney who always worked with Greenwood describes his ideas to be great however difficult to be implemented. Further structural changes were made in the organization looking at the delay in meeting the deadlines. Greenwood was moved to R& D and Sweeney was the new head of engineering.

However, they still felt it was difficult to work with Greenwood ideas and hence a major decision of firing Greenwood was taken by Dragone. In 1996, Peter Dragone decided to move on as well, and Kernan, explored the idea of getting a new for which he took an outside help and Nick Lazaris was appointed for the position, with the background in marketing and manufacturing industry. Nick Lazaris with other board of directors assessed overall business model and decided to outsource more of the development work on both brewer and packaging side.

Keurig evolved from its traditional away-from-home, business-to-business (B2B) product offering, served through KADs, to a new line of at-home, business-to-consumer (B2C) products. Keurig contracted ePartners, a Microsoft-based software and services consultancy, to design and implement a system consisting of an integrated suite of products. The complete solution included a system based on Microsoft Dynamics GP(formerly Great Plains), Microsoft Commerce Server, The Great? Plains Siebel Front Office, and Microsoft SQL Server.

System included a highly customized, easy-to-use, and professional B2B and B2C e-commerce site with full integration to Great Plains and Great Plains Siebel Front Office. The hosted nature of the system allowed Keurig to keep IT costs low, maintain high availability, and focus on selling Keurig systems. The IT system served as the foundation for Keurig’s ongoing business and allowed Keurig to keep pace with the tremendous growth it continued to experience. The Green Mountain Coffee was good with their prestige, channels, manpower and marketing experience, Keurig came into an agreement with them in 1997.

Keurig kept the licensing for K-cup that gave them four to five cents per cup almost pure profit. This plan gave Keurig good profits, cash flows but lower sales. GMCR and Keurig sold the system through select distribution channels. The system featured the single-cup Keurig brewer and eight varieties of Green mountain coffee, including blends, flavored, decafs and estate coffees. Keurig’s K-cup packaging guaranteed that each cup of coffee was as fresh as “the first cup of coffee”. Keurig divided the market into three categories: office users, f ood service establishments and household.

They wanted to target first two categories before launching into the household sector. Office Coffee Systems also called OCS were first placed at the Thomas H. Lee, Goldman Sachs’ Boston Office, a Toshiba manufacturing facility and the Executive Educational building at the Harvard Business School for testing. Office Managers thought OCS would bring enhancement at work. Instead of running out of workplace for a hot cup of coffee every chance they get, now the employees can stay at their work desks and can make the coffee per cup in 30 seconds. It involves less time,

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