Keurig Kold at-home soda machine
A large firm skipped the feasibility questions a start-up cannot afford to skip.
- Sector
- Consumer appliances and beverages
- Source
- Week 5 tutorial resource (What Went Wrong? feature, Barringer and Ireland, 2018)
The case in brief
Keurig Green Mountain is a specialty coffee company whose pod-based Keurig brewing machines are very popular; its coffee makers are estimated to be in about 17 percent of US households. In 2015 it launched the Keurig Kold, a machine for making single servings of soda at home, and suggested it might outsell its coffee makers.
The Kold was withdrawn nine months after its debut. The case lists five causes: it was too expensive; it was big, loud, bulky and needed mains power; the pods made only one 8-ounce size; soda consumption was falling for health reasons; and people had never made soft drinks at home, so the product required a change in behaviour.
The case concludes that it is vital to determine whether a product or business is feasible before, rather than after, it reaches the market — and that this applies to all four stages of feasibility analysis, not only the product stage.
Key facts
- Launch
- 2015
- Launch price
- $369 (cheapest SodaStream model: $79)
- Cost per drink
- About 50 cents per 8-ounce Kold soda vs about 37.5 cents per 12-ounce branded soda from a discount-store 12-pack
- Outcome
- Pulled from the market nine months after its debut
Analysis through module theory
Product/service feasibility
Desirability failed on size, noise, power dependence and a single drink size. Demand failed more fundamentally: the Kold asked people to adopt a behaviour they had never had, unlike the coffee machine, which made an existing habit more convenient.
Industry/target market feasibility
An attractive industry is growing rather than shrinking. The Kold entered a market where Americans were cutting back on soda, and the case gives no sign that a specific target market was identified.
Financial feasibility
At $369 per machine and a higher cost per drink than supermarket soda, the customer’s economics did not add up, whatever Keurig’s own margins might have been.
Discussion questions
- 1.Which of the five failure causes was the most damaging, and why?
- 2.What feasibility analysis should Keurig have done before launch, and how would the product have differed?
- 3.How would you persuade people that making soda at home is a good idea?
Takeaways
- Size and past success do not replace feasibility analysis.
- A product that requires customers to change their behaviour faces a much harder demand test.
- Check all four stages; a failure in any one is enough to sink the launch.