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Keurig K45 Elite Brewing SystemConsumer BehaviorMay 14th, 2015Emily Engelhart, Hannah Erickson, Rob Stromme & Tyler LundbergTable of ContentsSection One………………………………………..3Section Two………………………………………..6Section Three……………………………….……..8Section Four……………………………....………..12Section Five………………………………………..14References...………………………………………..17Section OneProduct DescriptionThe Keurig K45 Elite Brewing system is one of Keurig’s middle of the road products, marked at $119.99 with a one-year manufacturer’s warranty. This single cup brewing system is fast and efficient, offering coffee, tea, and hot cocoa products that brew in under a minute. One of its many great qualities is that it has three cup settings, at six ounces, eight ounces, and 10 ounces, and a 48 ounce removable water tank that holds up to six cups before refilling. Company History Many have the thought that Keurig was a company that became a billion dollar business overnight, but founders John Sylvan and Peter Dragon would say different. In 1995, Sylvan was rushed to the hospital after being conditioned with caffeine poisoning because he had been drinking 30 to 40 cups of coffee a day for three years in hopes to perfect his company, to which you now know as Keurig. And although the corporation had been founded in 1992, they hadn’t made a spark in the market until 1997. Over those first three years of perfecting their product, they made an attempt to find investors to back up their business financially, but were unable to find one, resulting in their first three years without a profit. The name “Keurig” came from the Danish-English dictionary meaning excellence, and the company has been nothing short of that. Fast forward 20 years, Keurig is one of the top leaders in the coffee industry, and have made their presence in 13 percent of workplaces in America. And in the Christmas of 2010, of every four coffee machines that were sold in America, one of them was a Keurig. The brand continues to skyrocket, and has unraveled into quite the idea, generating revenue of nearly $3 billion. Much of that comes from the brewers they sell that range from $79.95 to $249.95, but even more of the profit surprising enough is from the “K-Cup” coffee capsules that bring in over double the revenue. In 2010, the coffee makers totalled for about $350 million, while the “K-Cups” sold over $800 million that same year. The company’s biggest fear was turning into just another kitchen gadget fad, like a breadmaker, but after this many years of success, there appears to be no sign of slowing down for this company. Target MarketPrimary Target MarketKeurig’s primary audience has an age ranging from 18-25 years old. This targets coffee drinkers who are going to college or already attending. This also includes college graduates who are working their first job and may be moving into new apartments or homes. This audience usually stays updated on pop culture, are responsible and mature and have a fast pace lifestyle. This target market does not need an entire pot of coffee on their own, their for are drawn to the one cup brewing system.Secondary Target MarketKeurig’s secondary audience are aging from 45-65 who are parents or grandparents. They are able to afford and provide a luxurious lifestyle for themselves and or their children/grandchildren. This audience is not the main focus, but should not be ignored. Tertiary Target MarketAs for Keurig’s tertiary audience, they are going to directly or indirectly use the Keurig products, but have little to no influence on the purchasing decision. People fitting this mold would be anyone that possibly receives it as a gift or simply wanted to try a new coffee maker. So the most important part of this to Keurig is that they are coffee drinkers, just not Keurig’s first target.The K-Cups are $17.99 for a 24 count, and the coffee makers range anywhere from $79.95 to $249.95. Given the prices of the coffee machines, plus the additional costs due to all of the K-Cups that need to be purchased, Keurig’s target customer will be one of a higher socioeconomic status. Section TwoMarketing CommunicationKeurig’s overall marketing communication is very diverse, and just like most companies, very heavily relies on the media that has been increasing at such rapid rates. The biggest and most impactful way of marketing communication is, as I’m sure you guessed, social media. They have a foot in the door with Facebook, Twitter, Youtube, Instagram, and even snapchat. Facebook is the social media account that is most followed, and part of the reason behind that is because of the fact that more people have Facebook in general. But another reason is because Facebook as of right now is most used by middle to upper aged women, and as we all know, that is a very popular age of women to be drinking coffee. Their primary audience though is college aged students, so how is Keurig reaching out to them? Well, although parents may not be aware, everyone else knows that kids go wherever their parents aren’t. Keurig has done a tremendous job keeping up with the current trends, such as their newest addition to social media: snapchat, and it has allowed them to stay connected to their primary audience. They are very active with these accounts, answering questions and putting out fun pictures and games that allow them to interact with the consumers. Another form of advertising they use is commercials on the television and Youtube, but this is their least used form of advertising. They only have one commercial that airs, and although it is good and gets their message “Brew the Love” across, it is not one that shows up very often, because let’s face it, there are plenty of other ways to advertise now that are just as effective, and also free. Speaking of free, word-of-mouth is another way that Keurig gets communicated, and they emphasized on their site that it plays a large role in their success. Keurig has a very high customer satisfaction rate, so every friend they recommend the product to is just as good as any other kind of advertisement. Sponsorship is a wonderful way for an organization to get involved with the community, and also be a part of something bigger, and Medicines for Humanity is just that. Medicines for Humanity is a non-profit organization that is out to make a dent in the world, and it is a very good publicity move for Keurig to sponsor them. MFH has a heart of compassion for children that lack supplies of basic medicines and primary health care, and are doing what they can to make a life and death difference for as many lives as they can. One more use of marketing communication within Keurig is a game called “Battle of the Brews,” and is a bracket like March madness, but uses coffee rather than basketball, and is a tremendous way to keep the consumers involved with the company. Section ThreePsychographic DataVALS TypesThe “Values and Lifestyles” method, or VALS, is a popular psychographic method in consumer research that divides consumers into groups based on resources and consumer behavior motivations. VALS breaks consumers into 8 segments based on resources available and 3 primary motivations. The segments include: Innovators, Thinkers, Achievers, Experiencers, Believers, Strivers, Makers, and Survivors. The Primary Audience for Keurig includes the Experiencers segment. According to VALS, “Experiencers are self-expressive consumers who tend to be young, impulsive, and enthusiastic. These consumers value novelty and excitement.” Keurig’s Primary Audience falls into this category because they are marketing towards a younger audience going through pivotal times in the their lives (starting/graduating college, starting a new job, moving around a lot). This age group is often innovative and eager to jump onto the next new thing, like a brand new way of brewing coffee. Keurig’s Secondary Audience fits into the “Believers” category. According to VALS, “Believers are ideal motivated and conservative. They are generally mature, reflective people who value order and knowledge. They follow routines, and their lives largely center around home, family, and church. They do not have the amount of resources that some of the other categories have.” Keurig’s Secondary Audience fits into this category because they value their families to share in their lifestyle. They follow routines and are generally mature, reflective people who value order and knowledge.LifeMatrix SegmentsLifeMatrix is a psychographic tool that examines personal values, lifestyles, and life stages to segment consumer markets into ten basic categories. The segments include: Priority Parents, Struggling Singles, Settled Elders, Home Soldiers, Dynamic Duos, Fun/Antics, Renaissance Me, Tribe Wired, Rugged Traditionalists, and Free Birds. The Primary Audience for Keurig would fall under the “Fun/Antics” category because they are typically young, active singles that lead a fun-filled lifestyle. This category makes up for 10% of the population in the United States. The Secondary Audience for Keurig falls under the “Settled Elders” category because they have traditional values, often driven by faith, and they live a sedentary lifestyle. This category makes up for 12% of the population in the United States.Means-End Chain AnalysisThis analysis maps the value of an asset, functionally and psychosocially. The map goes as follows:[Attribute] -> [functional consequence] -> [psychosocial consequence] -> [value]The main attribute that consumers associate with Keurig is the pre-prepared, single-cup brewing system. The following functional consequence of that attribute is that the product is easy and convenient. The psychosocial consequence following that, is that the consumer feels efficient. The end value of the product then becomes that it makes the consumer’s busy life easier.[single-cup brewing] -> [easy & convenient] -> [I feel efficient] -> [Makes my busy life easier]Ideocentric and Allocentric OrientationIn consumer behavior, different consumers and activities can be categorized into having ideocentric or allocentric orientation. Consumers that are ideocentrically oriented are focused on themselves and their own goals, more so than the goals of others. In contrast, consumers with an allocentric orientation are people who center their attention and actions on other people before themselves. The Primary Audience for Keurig has Ideocentric Orientation, because they use the fastest, single-cup coffee brewing machine to meet their own needs as quickly and efficiently as possible. Keurig’s Secondary Audience shows more of an Allocentric Orientation, because they intend to use the product to brew individual coffee for the masses (family coming over for dinner, entertaining, etc). They use the product with intention for it to be shared.Personality and Trait TheoriesThere are so many traits that contribute to personality and consumer behavior. In regards to the Primary and Secondary Audiences for Keurig we have identified some common personality traits that are relevant to the consumer. We see a general level of Innovativeness with our consumers because they are increasingly open to new ideas and tend to be relatively early in adopting new products, services, or experiences. The idea of single-cup brewing of pre-packaged coffee cups is completely new, and both of our Primary and Secondary Audiences have adopted to it very well and very quickly. Our Audiences also show a high level of Productivity Orientation because they have a tendency to focus on being productive, making progress, and accomplishing more in less time. The product sells itself as just that- the most efficient way to make coffee! Our audience appreciates this aspect of it the most. Innovativeness and Productivity Orientation were the two most commonly found traits in both of Keurig’s Primary and Secondary Audiences.Lifestyle DimensionsLifestyles refer to the ways consumers live and spend their time and money; lifestyle is closely related to personality. The attitudes, interests, and opinions of an audience all play into their lifestyle, and ultimately, their personality. Lifestyles as the questions, “What do you do with your time? How do you spend your money?” and assumes relation of the answers to the major value in the consumer’s life. Lifestyles have proved extremely valuable to marketers when analyzing buying patterns. Keurig’s Audiences demonstrated very common attitudes that affected their lifestyles. These consumers valued efficiency and responsibility above all. The Primary Audience demonstrated a “pop-culture” attitude that had a need to stay up-to-date on current products. The Secondary Audience would demonstrate similar opinions.Section Four Coffee Attributes AspectsThese aspects influence and affect the coffee consumer according to their personalization, quality and convenience of their coffee. When it comes to Keurig, personalization is not a problem. There are over 400 varieties of drinks and 60 different K-Cup brands. Convenience is another attribute that can draw in certain coffee consumers. The Keurig is by far the most consumer friendly system on the market. It provides a fast and hot cup of coffee with little clean-up required. Lastly, the quality of the coffee is an aspect that may bring or drive consumers away from purchasing the Keurig. The Keurig is a superior brewing system that provides a consistent cup of coffee with each use. Personalization39% believe having a particular brand of coffee drinks are important32% like to try different brands of coffee drinks29% like to try different flavors of coffeeConvenience47% want a coffee maker with no clean up35% want a coffee maker that makes coffee quickly 18% like to drink coffee on the way to workQuality67% believe great tasting coffee is important 33% like gourmet coffee Consumer Influences Internal FactorsFor each target market the internal factors include the quality, convenience and upkeep of the product. Also, consumers are aware of the cognition of the brand and how others perceive it. Examples: High-end technology, innovative, convenient and brand cognitionExternal Factors For each target market the external factors include timely efforts to use the product, the product experience, family influence and media advertising the product uses. Examples: Quick, easy, reliable, personalization and media advertisementSection FiveABC Model:Attitudes are a consumers overall evaluations of a product or service and play a critical role in consumer behavior. Recognizing the ABC Model allows us to identify the affects, behaviors, and cognitions of consumers. Examples of these three components are listed below.· Affecto “I love my Keurig K45 Elite Brewing System”· Behavioro “I use my Keurig every morning before class”· Cognitiono “Using the Keurig K45 is a great way for me to make a single cup of coffee, tea, or hot chocolate”Understanding the consumer’s affect, behavior, and cognition is a great way for us to see their side of the consumption process. Further analysis of these statements will allow us to critique and adjust our Keurig system, marketing tactics, and overall selling strategy. High-Involvement Hierarchy:Purchasing a Keurig Brewing System requires high involvement from the consumer. Since the Keurig is an innovative product that is relatively new to the market, consumers formed beliefs early about our brewing system. Although the Keurig is expensive, we believe that its technical features place it above any other brewing systems in the market. This means that is it vital for us to have positive relationships with customers and ensure effective word-of-mouth. By doing this, we will be able to establish ourselves in the market and continue to grow.Variety-Seeking Behavior:The Keurig Brewing System is designed to reach consumers with variety-seeking behaviors. Consumers want to purchase the Keurig because it is an innovative coffee maker that removes the boredom of standard coffee makers. As we know, some consumers will switch brands or look for new a product simply because they want something different. The Keurig will fulfill this need because it is the first of its kind. However, we want to understand what draws consumers to changing their consumption tastes and purchasing different products. We need to understand the changes to ensure our Keurig is continually evolving and retaining customers.Perceived Risk:We want to understand consumers perceived risks to determine what we can do better to ensure sales and customer relationships. Identifying consumers perceived risks early on will allow us to make changes to our product and ensure it is operating to its best ability and eliminating consumers fear or hesitation to purchase it.References ................
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