Case Assignment: Keurig Drinkworks

Papers should be double$-$spaced, with $1-$inch margins and $11-$point font; and should be free of any and all grammatical and spelling errors.

In writing your paper you can assume that the instructor has read the case; therefore, there is little value in simply restating background information. Instead, your goal is to use this information to uncover and explain implications, to offer meaningful insights, and to offer recommendations that are supported by logic and rationale.

Questions

$1)$ Which of the consumer segments previously identified in Exhibit $1$ should Keurig focus on$?$ Explain and discuss in an insightful manner.

$2)$ Estimate market potential $($in units$)$ for the Drinkworks machine, given a retail price of $$199,$ $$249,$ or $$299.$ Hint: base your estimates off of the number of households in the U$.$S$.,$ and use information in Exhibit $1$ to calculate the number of households in each segment. Multiply the resulting figures by

purchase intent data shown in Exhibit $3.$

$3)$ Calculate the profit margin per unit of the Drinkworks machine, at a price of $$199,$ $$249,$ and $$299.$ Show and explain your calculations. Keep in mind that Keurig is NOT a retailer, and thus you have to take retailer margins and wholesaler margins into consideration.

$4)$ What price should Keurig charge for the cocktail pod? Explain your reasoning. $($Please note that this question is only about the cocktail pod, not about the mixer or beer$/$cider pod$).$ Given your answer, calculate the profit margin per pod. Given the latter figure, estimate the annual profit per household from sales of cocktail pods. Again, keep in mind that Keurig is not a retailer, and would not be selling direst to consumers. Instead, Keurig would sell the pods to wholesalers, who in turn would sell to consumers.

$5)$ Given your answers, should Keurig proceed and launch the Drinkworks machine and pods? Explain and discuss in an insightful manner.