Today marked a new era for the Keurig
Company as they launched a new product in attempts to recapture lost sales due
to the flop of the Keurig 2.0 during the 2014 fiscal year. This new product,
the KOLD, is a do-it-yourself soda machine which carbonates beverages in less
than 3 minutes utilizing a pod of syrup from brands such as Coca-Cola Co, Dr.
Pepper, and Pepsi Co. With this new
machine, Keurig hopes to enter into the cold beverage market to compete with
SODA CO. and their product the Soda Stream. The reasoning for this sudden
change in product delivery is due to the fact that the cold beverage market accumulated
over $50 billion dollars in sales last year, as compared to the hot beverage
market that only acquired $10 billion dollars in sales last year.
Keurig CEO believes that given this new opportunity to enter into the cold beverage market, the market will allow for the machine to be priced at $350.00 due to the lack of competitors in the market. With our understanding of how a free market capitalist system works, do you think this price will be sustained or will Keurig be forced to lower the price of it’s new innovative machine?
Keurig CEO believes that given this new opportunity to enter into the cold beverage market, the market will allow for the machine to be priced at $350.00 due to the lack of competitors in the market. With our understanding of how a free market capitalist system works, do you think this price will be sustained or will Keurig be forced to lower the price of it’s new innovative machine?
3 comments:
This sounds like a similar product to Sodastream. I can't see $350 being a very sustainable price since there is some competition already. A consumer could purchase a Sodastream for about $180. Not to mention, cold, carbonated beverages are widely available for $2.50 or less.
I guess people like cold beverages more so there is definitely a bigger market than hot beverage market. Since Keurig did a lot on advertising, it probably will attract a lot of people with the high price still.
I think because Sodastream is already one of the leaders in this part of the industry, they will have a hard time being competitive at the price. However, I do think that they may have some brand loyalty in the market that may give them some leverage in this sector, but I do not think it will be enough to sustain this product. The other factor which Rachael touched on as well is that a carbonated beverage does not cost much to buy and neither does a pack of soda. With the vast price differences in this product and these cheaper alternatives I think it will be a hard sell for Keurig in the long run.
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