Coca-Cola & Keurig’s New Product Design

Abstract

The paper explores how Coca-Cola and Keurig, Inc designed and developed a new product, a soft drinks machine for home use. The paper also analyzes the product’s design process in detail, paying attention to the collaboration between two brands, the idea incorporated in the design of the Keurig Cold, and the design problems and challenges, particularly the problems associated with emerging technology. The evaluation of the advantages and disadvantages of resolving such a problem shows that the brands managed to use collaboration to their benefit because they successfully defined the target customer.

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On the other hand, the paper is also to give recommendations concerning the process of product design and development. Thus, the major recommendation refers to the post-production stage of the process; namely, the delayed launch of the product and prolonged analysis of the target market caused the problem with emerging technology, allowing the competitor brands to create similar products on the more innovative basis.

Introduction

In the modern business environment, companies face ever-growing competition that often forces them the launch new products or combine efforts with other firms. Even the most well-known brands in the world, such as Coca-Cola and the major retailers in their sphere, such as Keurig Incorporated, sometimes have to risk designing and developing an entirely innovative product. The Keurig Cold is a machine for making customized soft drinks at home. It helped to incorporate new Coca-Cola technology under the brand name and agenda of Keurig, Inc, thereby developing a completely new product.

The objective of this paper is to present the background information concerning two companies, the context of the soft drinks market, and the factors that lead them to create the new product. Another important objective is to analyze the process of the product’s design in detail, paying attention to the collaboration between two brands, the idea incorporated in the design of the Keurig Cold, the design problems and challenges, as well as primary features of the product and the factors for its success. The paper is also to review the constraints of the market, the product’s marketing strategy, and the pros and contras of the ways developers used to cope with those issues. Finally, our objective is to provide an overall assessment and recommendations concerning the process of design and development of the Keurig Cold.

Background information and the context of the soft drinks market

Coca-Cola is perhaps the best-known brand all over the world. The brand is owned by The Coca-Cola Company but is mainly operates “with franchisees across the world” (Making the World’s Best-Known Product: Coca-Cola, 2015). Moreover, with the time in the market of soda drinks, Coca-Cola not only did not lose its leading position but also made numerous attempts to expand the area of its specialization. In particular, the company has its shares in different companies related to the food and beverage industry, with the prospect to cooperate in creating a new product. One of such companies is the Keurig Incorporated, the distributor of coffee and coffee-making machinery and equipment.

Overall, the Keurig Incorporated is best known for introducing to the market the notion of Keurig K-Cup. Before this invention, the only traditional way of brewing coffee was with the use of pot, whereas Keurig introduced the idea of a single-serve portion. Nevertheless, even though the invention was successfully patented, the company had a long way ahead before launching its first machine. Moreover, only in 1998, “after eight years of development, Keurig released an industrial-strength, single-serve machine that delivered a perfect cup of coffee or tea every time” (Case 29: Keurig Coffee, 2008, para. 10). However, it is most important to point out that the experience with the K-Cup created for Keurig, Inc, the reputation of a technology company in the industry, made it a valuable asset for investment.

As the company started growing, it collaborated with other major retailers and distributors, and those companies bought some of its shares. Eventually, it has become a part of the company’s position that “Keurig’s integrated engineering team drove fast and innovative product development in all three areas that supported Keurig’s single-cup system: brewers, portion packs, and high-speed packaging lines that manufactured the portion packs” (Case 29: Keurig Coffee, 2008, para. 12).

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Eventually, with a portfolio of the technologically leading company, Keurig entered a partnership with The Coca-Cola Company, as the latter bought 12 percent of its shares. A few years later, Keurig’s CEO, Brian Kelly, considering all the factors at the coffee industry market, decided that the company needed to expand its appeal to the related areas, and Keurig began to work on a new product alongside Coca-Cola.

The Keurig Incorporated are spreading the spectrum of their products with the creation of the Keurig Cold. It is a recently developed machine for making cold drinks. So far, it has only been sold on the Internet, but it is working on its full launch. The benefits, factors for success, and marketing strategies of the Keurig Cold machine are the result of an attempt to combine Keurig coffee machines’ benefits and consumers’ appeal for soda drinks.

Design Problem

The main design problem was to make the product appealing to its target customers, as well as to ensure that the Keurig Cold creates differently from other soda machines for home use.

Crucial parts of the design

As for the Keurig Cold machine itself, it is a rather minimalistic and exquisitely designed kitchen gadget. Unlike instant beverages that are associated with unhealthy living and are more oriented to lower-class consumers, the Keurig Cold is designed to fit into the modern understanding of a privileged lifestyle. Also, it is not that cheap; therefore, it is branded like a fashionable fancy device, rather than a product for everyday needs.

The Keurig Cold design took several steps, from the original idea of the technology used for the machine to the eventual market analysis and product branding. Traditionally, there are several problems associated with the process of design and development. The major ones include problems with the management, problems with the workforce, problems associated with emerging technologies, and problems linked to the theoretical and strategic framework of design and development (Richey & Klein, 2014).

For design, the problem with emerging technology was one of the concerns about the product. The Keurig Cold operates based on using pods with double chambers, containing flavoring syrups and distilled water, respectively. The customized amount of the syrup is incorporated into the water. Then, after the mixture is consistent, a requested amount of carbon dioxide is released into it. The Keurig Cold also simultaneously uses “a thermoelectric conductor, similar to devices used to prevent computers from overheating, to chill the beverage” (Gasparro, 2015, para. 14).

However, one of Coca-Cola’s competitors developed a slightly different technology, as “Soda Stream machines use gas canisters to carbonate bottles of already cold water, into which users pour syrup” (Gasparro, 2015, para. 14). Despite a similar purpose of two machines, they can be branded quite differently.

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For that reason, Coca-Cola is promoting the product alongside Keurig. While soda drinks companies can be associated with unhealthy production, Keurig brands itself as an eco-friendly company, since the time they introduce single-serve coffee brewer. It would give Coca-Cola an advantage over its competitors designing similar technologies. On the other hand, the machine creators may run out of their creative potential to invent new flavors. It would influence sales badly if the consumers were most interested in the technological innovation of the product.

Product Requirements

Who is the product for?

Of course, like any other product, the Keurig Cold needs its potential consumers. The first group of consumers is certainly people with the love of exclusive and innovation. Furthermore, the marketing strategy Kelley decided to use for them is already working. Keurig did not put the product on the shelf of the supermarkets at once. They started advertising long before the launch, and then the company only sold the Keurig Cold on the Internet to make it more rare and exclusive. This group of potential consumers is looking for innovation and novelty of the product rather than its functions.

The second group of potential consumers consists mostly of the young people, the Millennials, for whom the primary purpose of such a product would be the creative element of the Keurig Cold, the ability to make each drink authentic, and to turn the process of its preparation into something less routine. This group of consumers is more interested in the functions of the product.

Why should the product be developed?

Keurig has been struggling to design a new type of product that would occupy its niche. Firstly, they introduced the new coffee maker with a vast number of regimes and options, but it was proved unsuccessful. This time, it is different due to the new CEO. Kelley tries to occupy an entirely new niche in the market. Therefore, if it is successful, Keurig will be automatically leading the company in this category.

Eventually, the strategy with the Keurig Cold was to develop the new product based on two products consumers already like. The purpose of its development is to add a stylish and exquisite note in design to the general public’s love for soda drinks. Therefore, for Keurig, it is not so much a development of the innovation, as an improvement of two existing consumers’ favorites.

Constraints of the market and marketing strategy

One of the first constraints that the developers of the Keurig Cold faced when they needed to introduce it to the market was the need to find the product’s target customer. The highly innovative nature of the Keurig Cold itself made it challenging to construct the customer appeal. It affected the process of product development because not only the Keurig Cold needed to be designed with the consideration for target customers, it also required the strategy for its development and introduction to the market that would appeal to a certain category of customers.

However, even though the product development was conducted with a strategic orientation on a certain sector of the target customers, there are still some worries and constraints concerning the new product designed by Coca-Cola and Keurig.

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It is important to point out that those concerns rise in two different fields related to the Keurig Cold. First of all, experts are worried about the very concept of customizable soft drinks that gains popularity both in the U. S. market and overseas. Coca-Cola was a pioneer in the sphere of customization of soft drinks that were introduced to the market with various dispensers that allow the customers to flavor their drinks individually. Many of the company’s competitors followed the example set by Coca-Cola and introduced their versions of similar products. However, it is also important to focus attention on these products being introduced as an element of domestic technology.

Nowadays, there is an increasing competition against the Keurig Cold in terms of soft drinks flavoring dispensers designed for home use. The newly emerged competitor products include Pepsi Spire recently developed by Pepsi and Soda Stream. Not only such products drifted from restaurants to the customers’ homes, but they also have numerous opportunities for further development. For example, these technologies will eventually migrate into 3D printing and utilize the Internet of Things to transform soft drink use. While it will not be as easy, or even possible, to print adult fermented beverages, such as beer, wine, and spirits, it does not mean that the trend toward frictionless markets is not happening today” (Buffington, 2016, p. 84).

The other reason is the rough competition among the producers of coffee machines. These products became an indication of a fashionable lifestyle, and it became more challenging to meet the consumers. In the highly competitive business environment, it is hard to improve both functionality and the look of the product.

Thus, in this respect, the technology was both the major inducer of creating the Keurig Cold and its biggest constraint. This is because, nowadays, similar technology is available to Coca-Cola’s main competitors, so it would be hard to sustain the leadership in the sphere of proving self-serving machines making customized drinks for home use.

Nevertheless, another concern is that such technologies as the Keurig Cold tend to change consumer behavior. In particular, because Coca-Cola still makes the majority of its revenues from providing and distributing ready soft drinks, there is a potential danger that, with the introduction of customized drinks, the market will change drastically, and sales of traditional packaged soft drinks will decrease.

Advantages and disadvantages of methods

Coca-Cola and Keurig, Inc managed to use their joint effort to several advantages. Firstly, the Keurig Cold machine is presented as a fashionable and modern product, mainly oriented to the consumers who want to be aware of technological trends. Apart from that, there is one significant factor for guaranteeing its success – it is the individualization. The Keurig Cold provides room to customize the product. It makes it less routine and allows the customer to add some creativity.

Secondly, an assortment of drinks available has its benefits. Keurig’s CEO, Brian Kelley, works for The Coca-Cola Company and knows, that usually with soft drinks consumers have to make a choice and buy perhaps less different kinds of the product than they wanted because beverages take a lot of space in the fridge. Furthermore, the more vast assortment is, the more flavors consumers would want to try because the very slogan of the Keurig Cold is “Pick and Choose. And Choose. And Choose.” Moreover, the compact form of the product consents to it. The major disadvantage is that it took quite a long time to design and develop the product. A continuous process of design and development is typical for Keurig, Inc. However, in a competitive market of soft drinks and with constantly emerging technologies, it is a significant drawback.

The success of the resulting product

The Keurig Cold gained success because, firstly, it was pioneering in creating an entirely different kind of product with a very specific target customer, and, secondly, it is also due to collaboration between two well-known brands.

First of all, it is important to point out the fact that, in the modern business context, Coca-Cola is not restricted to produce sodas solely. With the growing popularity of a variety of soft drinks, the company now manufactures different types of iced tea, flavored and seltzer water, etc. Over time, the company emphasized its “simple mission, which is to get a brewer in every home and every place of work, and then have a beverage for every occasion” (Kowitt, 2013, para. 6).

For that reason, collaboration with Keurig was a reasonable next step from the company’s strategic policy, mainly because “there is opportunity to use the Keurig brand name and platform to be able to offer more beverages than what [Coca-Cola] offer today” (Kowitt, 2013, para. 14).

At the moment, given the fact that more than 15% of the Keurig Inc. belongs to Coca-Cola Co., the variety of drinks the Keurig Cold can make includes not only iced teas, craft sodas, mixer, flavored waters, and seltzers but also all-favorite Coca-cola sodas (Gasparro, 2015, para. 3).

As for the Keurig Cold machine itself, it is a rather minimalistic and exquisitely designed kitchen gadget. Unlike instant beverages that are associated with unhealthy living and are more oriented to lower-class consumers, the Keurig Cold is designed to fit into the modern understanding of a privileged lifestyle. And it is not that cheap; therefore, it is branded like a fashionable fancy device, rather than a product for everyday needs.

Conclusion

Overall, designed by Coca-Cola and Keurig, Inc, the soft drinks machine for home use the Keurig Cold is a worthy example of how a well-known brand can introduce an entirely new product. Despite several problems associated with design and development, the product has some strategic advantages and market potential.

Opinion evaluation suggestion

In my opinion, companies need to be involved with different kinds of products in the modern context. Hence, the design and development of the Keurig Cold, both Keurig, Inc, and Coca-Cola engaged in the new segment of business by working together. The major strategic drawback of the design and development process was the amount of time it took.

Naturally, the quality expected from the product required a thorough and methodical approach. However, the amount of time spent on branding and introducing the product to the market resulted in a problem related to emerging technologies used by the competitor brands.

For that reason, the major recommendation refers to the post-production stage of the process, particularly the marketing analysis’s longevity. Because Coca-Cola and Keurig are well-known brands, their new product would be welcomed without the delayed launch.

References

Buffington, J. (2016). 2030: Frictionless Markets. In Frictionless Markets (pp. 79-90). New York, New York: Springer International Publishing. Web.

Case 29: Keurig Coffee, 2008. Web.

Gasparro, A. (2015). ‘Keurig’s Kelley Bets Big On Soda Maker.’ The Wall Street Journal. Web.

Kowitt, B. (2013). Green Mountain Looks Beyond Coffee. CNN Money. Web.

Making the World’s Best-Known Product: Coca-Cola 2015. Web.

Richey, R. C., & Klein, J. D. (2014). Design and Development Research: Methods, Strategies, and Issues. Oxford, United Kingdom: Routledge. Web.

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