150326 Coffee

When someone gets greedy and attempts to control more than he should, oftentimes it will backfire. This is what’s currently happening to Keurig Green Mountain Inc., the company who sells the popular Keurig single-serve coffee machines. In 2014, the company announced a new line of coffee machines: the Keurig 2.0. The Keurig 2.0 can now brew four servings of coffee at once (something traditional coffee makers have been doing forever). The most significant, albeit hidden, change is a special scanner inside of the coffee maker that scans the K-Cups and only allows Keurig-licensed coffee cups to be used.

This is KGM Inc.’s attempt to try and artificially gain market share, by preventing consumers from using third-party coffee cups. In theory, this would raise Green Mountain profits because of the increased market dominance. However, consumers have decided otherwise. Although the drink portion packs have sold 9 percent more, the company has announced that sales of the coffee maker have fallen by at least 18 percent. The company’s shares are also down from 96 cents to 80 cents a share. There is no empirical measurement for it, but customer trust has most likely been lost as well. Even the internet is fighting back; home modifications to the coffee maker are ubiquitous online in order to bypass the new scanner. Third-party companies are also beginning to create products to bypass this new scanner, including a product accurately called the “Freedom Clip” (link below). Although these modifications exist, customers don’t want and shouldn’t have to hack their coffee makers to enjoy a cup of coffee, and the decline of sales supports this. Keurig Green Mountain has failed to see that customer satisfaction and company reputation, and not arbitrary control, is what drives sales forward.

Link to “Freedom Clip”: https://www.gourmet-coffee.com/Keurig-DRM-Freedom-Clip.html



Comments (1)

  1. J.Gill


    A company cannot increase their sales when they try to control their customers. The same thing happened with Honda, they introduced all of their cars in India with petrol only options but diesel being cheaper, their sales never matched the sales of other companies. Honda wanted monopoly of the petrol car sales but people likened diesel cars more as they were cheaper to own and diesel costs less per gallon. So they finally gave in to the market demands and introduced diesel versions on all of their cars in India.

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