Product Extension: Example

free essay In modern day economies, merging of companies is a common practice, but sometimes, merging of products leads to success, as well. This is a good way of adding value to the product and achieving competitive advantage through enhancing the product’s performance.

Annie Gasparro’s article Maker of coffee pods adds new flavor: Soup describes decision making process that two companies face. Green Mountain manufactures and sells Keurig coffee brewers, and Campbell sells soup cups. Idea that has been considered is about redesigning coffee makers for preparation of both coffee and soup in cups by the same machine. For several reasons, Green Mountain management believes that many of present consumers will use their machines for making soup. First, previous research indicated that some consumers already were using machines for adding hot water to soup mixes. It means that some will welcome the innovation. Second, soup is positioned on the market as a low calorie snack which will be attractive for existing Green Mountain consumers. Third, 84 percent of Campbell customers are Keurig users at the same time. Additionally, research data confirmed that some of the present Green Mountain customers have doubts about compatibility of coffee and soup tastes in one appliance, but they are willing to give it a try and trusting that the company can solve this issue. Last, Keurig consumers expressed readiness to pay more for added value of extra feature if the quality of Campbell soup will increase. Partnership of Green Mountain and Campbell might be beneficial for few reasons. First, the target audience will grow by including students and office dwellers that will see the machine as a good alternative for preparing lunch time snack. Second, business of Green Mountain will be diversified, and Campbell will get an opportunity to win a greater market share through sales of its product in a new department stores and retail outlets. Considering that Green Mountain suffers loss of market share and increased competition, it is vital for the company to develop and find new ways of expansion. Thus, many contributing factors suggest that addition of new features will significantly increase competitive advantage. Potential risk of partnership might be in the need to increase quality and price of Campbell soup because it could affect the ability of former target group to continue consuming the product. Also, if Keurig machine will not solve the issue of the mix of coffee and soup tastes, it will turn off many consumers.

In general, customers who tend to look for fresh foods are looking for health foods. One strategic argument for soup is that it is a low calorie product, convenient and portable. Importantly, marketing should emphasize that soup in K-cup comes with vegetables. Both Green Mountain and Campbell should find a solution to K-cup being sold in the coffee aisle. On one hand, it will help not to associate soup with packaged and canned foods and will not affect fresh food oriented Keurig consumers. On the other hand, it might result in a loss of some of 16 percent of Campbell consumers that are not Kuerig consumers. Also, winning new consumers will be problematic and might prevent the growth of sales because people that want soup do not look for it in coffee aisles. Hopefully, access to new retail outlets will compensate this drawback. Recommendation would be to use advertising to inform existing consumers about a new location of soup in stores.

Conclusion

Overall, the whole situation looks promising for both companies. The article is about how profitability and relevance to contemporary market require that some companies resort to extending features or functionality of their products. The example of Green Mountain and Campbell confirms that this is an effective way of adding value to the product and achieving competitive advantage through enhancing the product’s performance.

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