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
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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 Café a single pod machine that launched in Canada in November 2004. My Café 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