Case write-up Prep – read the Kraft Foods (The Coffee Pod Launch) case in the at
ID: 365048 • Letter: C
Question
Case write-up Prep – read the Kraft Foods (The Coffee Pod Launch) case in the attachments below.
Part 1 – Turn in the answers to these points
9B06A019 KRAFT FOODS: THE COFFEE POD LAUNCH (A) Aleem Visram prepared this case under the supervision of Professor Robin The authors do not intend to ilustrate either effective or ineffective h provide material for class to discussion authors may have manageriliu disguised certain names and other identfying information to protect confidentiaitymanageria sitution. The Rproduction of this ome reproduced in any form or by any means without the www.veycases.com chool Westenm Version: 2014-05-27 confidentiaity. may not be transmitted. photocopied, digitized or otherwise o order copies or request permission to reproduce materials, contact ivey any of the copynignt holder. Reproduction of this material is not covered un uthonization by any reproduction rights Univeraityo order cpies r University, London, Ontario, Canada, N6G ONT: )519 661.3208 (e) cases@ivey.ca www organízation. T INTRODUCTION coff Herzog, product manager for coffee development at Kraft Foods Canada (Kraft), sat in his office ter reviewing encouraging results for the single-serve coffee pod system in Europe. On a typical day Herzog would his own cup using a single-serve coffee pod Kraft Foods North America was planning an aggressive launch of coffee pods in the United States. He less than a month to decide whether Kraft should proceed with a simultaneous launch in Canada, or await have used the office coffee station for his moming cup of coffee, but today he had brewed was July 6, 2004, and Herzog had just learned that had machine. It the U.S. results. If Herzog went ahead with the launch, he would have to make several decisions. First, since Kraft owned two major coffee brands in Canada, Maxwell House and Nabob, a suitable branding strategy would be needed. Herzog would also have to set a wholesale and a suggested retail price for the coffee pods, choose which flavors to offer and decide whether Kraft should use traditional distribution channels or direct-to- store delivery (DSD). In addition, he would have to develop an effective advertising and promotion strategy on a relatively limited budget. Herzog knew that whatever recommendations he made, he would need to make a convincing case that his plan would help Kraft expand its share of the Canadian coffee market, while generating a satisfactory return on the company's marketing investment. KRAFT FOODS INC. Founded as a cheese America's largest food and beverage company and the number two Foods had operations in more than 155 countries. Although the company had previously been a division of manufacturer in 1903, Kraft Foods Inc. (Kraft Foods) had evolved into North player in the world. In 2004, Kraft Philip Morris Companies (since renamed Altria Group), it had become a public company in June 2001. ons consisted of Kraft Foods North America and Kraft Foods International, and its business lio was among the strongest of the global consumer packaged goods players, with more Kraft operatt five product categories: beverages, convenience meals, cheese, grocery and snacks. The was divided into five product cateExplanation / Answer
1. Bullet point out what are the key issues that Hertzog needs to resolve
2. Profile the customer in Europe. What is he/she like? How does this compare / contrast with the Canadian customer?
Canadian customers’ profile would be Coffee lovers at the core, age group of 25-55 years, well-educated, decent earning capacity (above the mean salary), generally living in single-detached homes.
The customer profile in Europe would also be by and large the same with minor differences such as slightly larger family size, more active outdoors etc.
3. Explain the unique selling proposition that the coffee pod provides customers
The USP of coffee pods is the delight a homeowner would feel when he treats his/her guests with home-made fresh coffee as compared to dip coffee which might have the same taste as in any other shop.
4. Discuss the options for what price the company should charge and why each might be valid
We would need exhibit 4 to answer this but still from page 7 and topic “Price” we can deduce that the company has 2 options either to charge slightly less than competition (18 pods for $3.99) at 25% margin
OR
To charge higher than the competition in line with the brand image of Kraft foods. But this would mean a difficult relationship with the retailers who command a high channel power in the system.
5. Discuss the options for the distribution network that the company could utilize: benefits and problems of each
As we see there are 2 options for distribution: