Kraft Food: the Coffee Pod Launch

Geoff Herzog is the product manager for Kraft Foods Canada; He has learned that Kraft Foods North America was planning on a launch of coffee pods in the United States. He had less then a month to decide if Kraft should proceed with the launch in Canada. Because Kraft owned the two major coffee brands in Canada, Maxwell House and Nabob the branding strategy would be needed. He had to also set a wholesale and retail price for the coffee pods, also their flavors to decided on and should they use traditional distribution or direct-to-store delivery (DSD).

He also had to develop an effective adverting and promotion strategy with a limited budget. There are four major brands in Canada that are competitors for Kraft, the first one is One-To-One an Germany’s Melitta which joined Salton the maker of the George Foreman Grill, together they made the Melitta One-on-One SSP Machine; it can brew two sizes of coffee using a filtered system the could provide a coffee-bar value at home. You can also change the spout of the coffee machine to make cold or hot tea.

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The One-to-One Machine is available In Canada with six-flavor javapod samplers. Melitta was the only SSP system that used 9. 7-gram javapod; Home Cafe, Senseo and Bunn, which used the 7-gram coffee pod. Even thought the other coffee pods were interchangeable across manufacturers they could not be used on the Melitta and vice versa. They were sealed with oxygen-free foil to keep the flavor; they retailed at $4. 99 for a package of 16 they had three different flavors, 100% Arabica Medium Roast, 100% Colombian, and Light Roast.

The second competitor is Home Cafe system, which partnered with Proctor and Gamble, and two leading makers of small appliances: Applica Inc. (owner of Black & Decker) and Jardine Corporation (owner of Mr. Coffee, Rival and Sunbeam). Home Cafe used a pressured-brewing technology that delivers a single serving fresh coffee, which brewed less, then a minute bring out the flavor of the coffee beans. There are three different cup sizes that could be brew, it has a removable flat-form to avoid spilling. The machine came with a free bag of Folgers coffee pods.

The third competitor is Senseo they partnered with Phillips Electronics and Sara Lee Corporation, the world’s second largest coffee roaster. The Senseo machine worked with coffee and water, it had a mild pressure and a special spray that filtered rich froth on top of the each cup. It was an easy one-touch system the brewed a cup of coffee in 30 seconds, and it had an auto shut-off after an hour. You could chose from four different colors and it was dishwasher safe. If you registered your machine you would receive a free bag of coffee pods and a $2 off your next purchase.

The fourth company was Bunn My Cafe a single pod machine that launched in Canada in November 2004. My Cafe works with large array of pods and teabags; it has removable easy filled reservoir patented spray to maximum flavor extraction, which brew a cup of coffee in 30 second. The brewing systems have nine settings of coffee strength, with dishwasher-safe parts. The target market in Canada are typically coffee lovers between the ages of 25 to 54, well educated with average house income of $91,000. With three quarters married, and 88 percent live in urban areas.

Primarily population-rich provinces of Ontario, Quebec, British Columbia and Alberta, the focus group research for SSP machine owners like the fact that they can us different coffee brands with their brewers. Kraft was expecting that the SSP machine would be accepted in the 12. 5 million households in Canada by six percent at the end of 2004 and eight percent by 2006. The average intake of the coffee pod of SSP machine owners are between seven to fourteen pods per week. Kraft would have to take at least 35 percent of the coffee pod segment with 45 percent of the market share at the end of 2006.

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Kraft Food: the Coffee Pod Launch. (2017, Jan 25). Retrieved from