Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership

From 2002 to 2011, coffee-machine manufacturer Keurig Incorporated had grown from a privately held company with just over $20 million in revenues and a plan to enter the single serve coffee arena for home consumers, to a wholly owned subsidiary of Green Mountain Coffee Roasters, Inc., a publicly traded company with net revenues of $1.36 billion and a market capitalization of between $8 and $9 billion. In 2003 Keurig had introduced its first At Home brewer. Now, approximately 25 percent of all coffee makers sold in the United States were Keurig-branded machines, and Keurig was recognized as among the leaders in the marketplace. The company had just concluded agreements with both Dunkin' Donuts and Starbucks that would make these retailers' coffee available for use with Keurig's specialized brewing system. The company faced far different challenges than when it was a small, unknown marketplace entrant. John Whoriskey, vice president and general manager of Keurig's At Home division, had to consider the impact that impending expiration of key technology patents and the perceived environmental impact of the K-CupA? portion packs would have on the company's growth. Whoriskey also wondered what Keurig's growth potential was, and how the new arrangements with Starbucks and Dunkin' Donuts could be leveraged to achieve it.

Authors :: Eric T. Anderson, Elizabeth Anderson

Topics :: Sales & Marketing

Tags :: Marketing, Pricing, Product development, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership" written by Eric T. Anderson, Elizabeth Anderson includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Keurig Coffee facing as an external strategic factors. Some of the topics covered in Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership case study are - Strategic Management Strategies, Marketing, Pricing, Product development and Sales & Marketing.

Some of the macro environment factors that can be used to understand the Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership casestudy better are - – there is backlash against globalization, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, increasing transportation and logistics costs, increasing commodity prices, increasing energy prices, etc

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Introduction to SWOT Analysis of Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Keurig Coffee, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Keurig Coffee operates in.

According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership can be done for the following purposes –
1. Strategic planning using facts provided in Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership case study
2. Improving business portfolio management of Keurig Coffee
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Keurig Coffee

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Strengths Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Keurig Coffee in Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership Harvard Business Review case study are -

Operational resilience

– The operational resilience strategy in the Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.

Learning organization

- Keurig Coffee is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Keurig Coffee is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

Analytics focus

– Keurig Coffee is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Eric T. Anderson, Elizabeth Anderson can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

High switching costs

– The high switching costs that Keurig Coffee has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.

Highly skilled collaborators

– Keurig Coffee has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.

Low bargaining power of suppliers

– Suppliers of Keurig Coffee in the sector have low bargaining power. Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Keurig Coffee to manage not only supply disruptions but also source products at highly competitive prices.

Ability to lead change in Sales & Marketing field

– Keurig Coffee is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Keurig Coffee in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Digital Transformation in Sales & Marketing segment

- digital transformation varies from industry to industry. For Keurig Coffee digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Keurig Coffee has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.

Cross disciplinary teams

– Horizontal connected teams at the Keurig Coffee are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.

Training and development

– Keurig Coffee has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Ability to recruit top talent

– Keurig Coffee is one of the leading recruiters in the industry. Managers in the Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Superior customer experience

– The customer experience strategy of Keurig Coffee in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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Weaknesses Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership are -

Need for greater diversity

– Keurig Coffee has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

Interest costs

– Compare to the competition, Keurig Coffee has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.

High cash cycle compare to competitors

Keurig Coffee has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Slow to strategic competitive environment developments

– As Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership HBR case study mentions - Keurig Coffee takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.

Aligning sales with marketing

– It come across in the case study Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership can leverage the sales team experience to cultivate customer relationships as Keurig Coffee is planning to shift buying processes online.

Slow decision making process

– As mentioned earlier in the report, Keurig Coffee has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Keurig Coffee even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.

Capital Spending Reduction

– Even during the low interest decade, Keurig Coffee has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Keurig Coffee is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Skills based hiring

– The stress on hiring functional specialists at Keurig Coffee has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.

High bargaining power of channel partners

– Because of the regulatory requirements, Eric T. Anderson, Elizabeth Anderson suggests that, Keurig Coffee is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.

Workers concerns about automation

– As automation is fast increasing in the segment, Keurig Coffee needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.

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Opportunities Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities highlighted in the Harvard Business Review case study Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership are -

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Keurig Coffee can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Keurig Coffee can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.

Leveraging digital technologies

– Keurig Coffee can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Better consumer reach

– The expansion of the 5G network will help Keurig Coffee to increase its market reach. Keurig Coffee will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.

Building a culture of innovation

– managers at Keurig Coffee can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Keurig Coffee can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Keurig Coffee can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Learning at scale

– Online learning technologies has now opened space for Keurig Coffee to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Keurig Coffee can use these opportunities to build new business models that can help the communities that Keurig Coffee operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.

Creating value in data economy

– The success of analytics program of Keurig Coffee has opened avenues for new revenue streams for the organization in the industry. This can help Keurig Coffee to build a more holistic ecosystem as suggested in the Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership case study. Keurig Coffee can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

Developing new processes and practices

– Keurig Coffee can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.

Loyalty marketing

– Keurig Coffee has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Keurig Coffee can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Identify volunteer opportunities

– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Keurig Coffee can explore opportunities that can attract volunteers and are consistent with its mission and vision.

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Threats Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership are -

Shortening product life cycle

– it is one of the major threat that Keurig Coffee is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Environmental challenges

– Keurig Coffee needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Keurig Coffee can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.

Aging population

– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Keurig Coffee business can come under increasing regulations regarding data privacy, data security, etc.

High level of anxiety and lack of motivation

– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Keurig Coffee needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.

Increasing wage structure of Keurig Coffee

– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Keurig Coffee.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership, Keurig Coffee may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .

Easy access to finance

– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Keurig Coffee can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Keurig Coffee in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Keurig Coffee can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership .

High dependence on third party suppliers

– Keurig Coffee high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.

Instability in the European markets

– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Keurig Coffee will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.

Technology disruption because of hacks, piracy etc

– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.

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Weighted SWOT Analysis of Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants. We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –

First stage for doing weighted SWOT analysis of the case study Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.

Second stage for conducting weighted SWOT analysis of the Harvard case study Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.

Third stage of constructing weighted SWOT analysis of Keurig: From David to Goliath: The Challenge of Gaining and Maintaining Marketplace Leadership is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Keurig Coffee needs to make to build a sustainable competitive advantage.

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