Once upon a time, the Keurig company, you know them – they are the ones who make that single sever coffee machine that uses those little plastic pouches, decided that they wanted to expand into new markets. Their product managers looked around and what they discovered is that the rest of us drink a great deal of soda. Coke, Dr. Pepper, etc. They figured that since they had mastered the art of brewing coffees, how hard could it be for them to expand their product development definition and create a machine that would conquer the world of soda?
Say Hello To The Kold Soda Maker
It was roughly one year ago that Keurig held a big press announcement and their product managers told the world that the company was going to be entering the market to allow people to create their own personal 8 oz glasses of soda at home. The name of this new product would be the “Kold” and it was the company’s hope that they could turn it into yet another kitchen fixture just like their coffee machines have become.
The success of the Keurig coffee machine did not happen overnight. It has taken about a decade for the coffee machine to reach the level of popularity that it is enjoying today. The idea behind a home soda “brewing” machine sounded so novel that it attracted a great deal of attention. The CEO of Coca-Cola even went so far as to say that it was a “… real game-changing…” innovation. Not only did he say that, but Coke both purchased a minority stake in Keurig and also agreed to make Coke’s brands of soda available via the new Kold machine. This was starting to sound like something that the Keurig product managers would want to add to their product manager resume.
However, the market did not react well to the Kold. One of the biggest issues that everyone seemed to be able to agree on is that the device was quite large. It took up a lot of space in a kitchen that might not have a lot of space to give. Additionally, it was very loud when it was operating – some said that it sounded like a freight train. Additionally, the unit can take up to five hours to cool down after you use it and that means that it has to remain plugging in during that time. Some users reported that it was possible for the unit to overheat if it was placed too close to the wall. One other key product complaint was that the machine only makes 8 oz drinks when purchased sodas are often 12 oz drinks.
So What Went Wrong With The Kold Machine?
When the Kold machine was introduced to the market, Krurig only ended up selling a few thousand units. The product managers next step was to attempt to do a store rollout. However, that was not successful and Kruig then turned to only selling the Kold online.
A great deal of the potential customer push-back on this product was generated because of the price. The Kold initially cost US$369. The pods that were required to create 8 oz glasses of soda cost $1.25. In order to make a single serving of soda, the machine required roughly 60 seconds. This was in contrast to how long it takes a customer to grab a cold soda from a refrigerator. The Kruig product managers did not give up. They have slashed the product price to $199 and the price of the pods has dropped to $0.50. However, this has had no impact on sales.
Many users of the Kold reported that not every pod was able to successfully create a glass of soda. When a pod failed, the customer saw this an expensive failure. The pods are not small. Some customers have compared them to being almost as large as a can of soda. The end result of all of this negative feedback is that Krurig has decided to discontinue the Kold product line. The company will offer customers who purchased the machine a full refund. The product took more than six years to develop and had cost the company more than $250M.
What All Of This Means For You
As product managers we realize based on our product manager job description that not all products are going to be successful. However, over at Kruig they have been very successful with creating a unique coffee brewing machine and line of coffee pods. The thinking was that they could use the experience that they had gained from this to expand into the market for creating sodas at home.
Kruig spend a great deal of time and money to bring the Kold home soda machine to the market. They were able to attract the attention of the senior management at Coke-Cola who were excited enough to invest in the company and provide them with access to Coke soda products. However, consumers didn’t respond to the machine. There were a number of different reasons for this. The unit started out being very expensive and future price cuts didn’t help. The unit took up a lot of physical space and was quite loud. Eventually, Kruig had to make the decision to drop the product line and provide refunds to customers who had bought the product.
Ultimately the question is why did this product fail? The price and the quantity of soda produced are key. However, I believe that a much bigger issue is that unlike with the Kruig coffee maker, the soda maker did not add any value to the soda that it was creating. The soda that it produced was almost or just as good as the soda that you can get from a can for less money. There was no real motivation to purchase this product. The market told the Kruig product managers this and so the product had to go away.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: How could Kruig have made the soda that they created better than the soda that you can get out of a can?
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What We’ll Be Talking About Next Time
Being a product manager who works in the highly competitive wireless market has got to be a struggle every day. There are not a lot of players in this market, in the U.S. there really is just AT&T, Verizon, Sprint and T-Mobile. However, each of these companies is always looking for ways to steal market share from the other firms. Over at Sprint, their product managers think that they may have come with a plan to do just that.