Why Keurig is Failing and How the Same Problem is Brewing in Automotive Marketing

Perhaps a better way to title this would be to indicate that the same problem has already brewed in the industry. We’re already there, but let’s first discuss Keurig. The popular coffee machine and personal pod maker has seen better days. Stocks have dropped 25% this year already and they’re making big adjustments to salvage things.

What went wrong? The company was sailing in 2013 and 2014. Now, stores are having trouble moving the machines, particularly their latest 2.0 version. Reviews on Amazon are fading. Faithful users are moving on to greener pastures. How could this have happened so quickly.

In short, they outsmarted themselves by overestimating their own internalized popularity. With the original models, users could take the base machine and utilize their own favorite coffees with their popular K-cup accessory. The new model does not have that option. Instead, they are trying to force customers to buy their brand of coffee pods only.

This was done for a few reasons, most notably quality-control and profits. They make more money when people buy their coffee rather than using their own. When they use their own, they don’t get a cut of the ongoing purchases. From a quality perspective, they feel (or at least they’ve convinced themselves of it) that the Green Mountain Coffee they put in their pods is superior to whatever individual users would put into the K-cups.

Sound familiar? Have you ever felt like your OEM was trying to force you to use this service or that provider in an effort to maintain “quality control?” Were you ever concerned that the OEM or the OEMs advertising proxy was getting something in return when their dealers used particular vendors?

Just as there are better (and worse) coffees than what are mandated by Keurig, there are also better (and worse) vendors than what are mandated by the OEMs.

Keurig has learned their lesson and have reduced their annual projections until they can right the ship and bring choice back to their customers in the form of a new K-cup. Will OEMs continue to mandate vendors or will some of them realize that eliminating choice and free will for the sake of “quality control” is actually hurting their overall marketing?

Originally published at www.drivingsales.com on May 7, 2015.