Creating A Category And Staying In The Game
The simple question -- "Why do we brew coffee a pot at a time when we drink it a cup at a time?" launched both the concept for Keurig Inc. and also a popular new category in the coffee industry. Keurig, in large part, was the creator of the single cup coffee brewer category in the late 90's and has remained the gourmet leader in North America since then. We are one of the first companies to move into the larger consumer segment by leveraging the patented technology that took us to a leadership position in the office/commercial market. Since the single-cup brewer product represented a revolutionary change in the coffee industry, our company experienced rapid growth due to widespread interest and popularity. The event was similar to the Mr. Coffee revolution in the 1970's where drip coffee practically replaced the coffee percolator.
One of the inevitable obstacles in building a new category (that proves successful) is the strong notice larger brands will take. That notice may lead them to design their own version of the product thus creating strong competition for your company. This is the issue Keurig faced a few years ago when a number of successful brands began to enter the single cup brewer category. Maintaining significant profits year after year suddenly became an uphill battle as large competitors emerged from all sides. But there are critical methods to competing successfully against such larger brands when you yourself represent a small player in the industry.
Whether you're creating a brand or adding a new product to your line, the methods of maintaining superiority over larger brands in your category represent the general insight needed to dominate any market. Here are some successful concepts Keurig has put into practice to do just that:
Develop proprietary technology and focus your efforts on being the technological leader of your category. In our case, Keurig conducts itself like a technology company that is in the coffee business. Since our brewing system is a major advancement for the coffee industry, we dedicate ourselves to the technology of the machine and to finding ways to improve it. By instituting more engineering resources focused on your technology than any other company in the game, your result will be a flawless product. You may be competing against Fortune 500 players, but the key is to remain focused on your one category and nothing else. Demonstrating product superiority through high quality craftsmanship is the best way to gain customer trust and dedication.
Partner with companies that own reputable brands to lend credibility to your product. In 1998 we could have developed our own "Keurig" brand of coffee. Instead, we chose to partner with strong brands that were already recognized and valued by the general public. Those brands include Tully's Coffee, Ghirardelli Hot Chocolate, Twinings Tea, Van Houtte, Bigelow, Celestial Seasonings and Green Mountain Coffee Roasters. Customers will make purchases based on what they already know and trust, so affiliating oneself with a household brand can in turn make you a household brand. Also, by allowing multiple brands to market your product through a variety of channels, you're employing 3 or 4 times the promotional support the company would have had alone. When possible, maintain brand partners to provide instant credibility to your product and to differentiate it from the others in your category.
Focus sales and marketing efforts on key leverage points that drive results instead of using a scattershot approach. Many large competitors spend millions on television advertising to establish their product in consumers' minds -- but that approach might not be the best for your brand. A successful backdoor route is to focus on increasing the awareness already built by the retail partners. By targeting spending on in-store demonstrations, you can show people the benefits of the product and its superiority over others. Educating the market causes customers to think of your company when they talk about the category.
Aiming to build "tipping point" brand awareness via a targeted celebrity gifting campaign and product placement in television and movies has proven successful these days as well. By featuring your product at award shows brand recognition is guaranteed and celebrity buzz creates a higher demand.
Creating a category with a successful product is only half the battle when you're aiming to hold a continuous gain in market share. Any small private company can succeed despite the likes of giants such as Procter & Gamble, Kraft, and Phillips entering their category. By continuing to improve your product, partnering with well-known brands, and determining the most valuable avenues for sales and marketing, you'll target the customer effectively and further establish your brand as a leader in the industry.
Nick Lazaris is CEO of Keurig, Inc. Keurig is a single cup brewing pioneer in North America and first introduced its gourmet single cup brewing systems to offices in 1998 and to home users in 2002. The Keurig brewer makes a single cup of gourmet coffee in less than 60 seconds, and eliminates the hassle of grinding beans, measuring coffee, handling filters, or any messy clean up. Keurig brewing combines sophisticated technology with a selection of over 100 gourmet coffees and teas that is unmatched by other single cup systems. The company website is www.keurig.com.
