Keurig Kold So-Duh Machine: The Tale of an Undead

    By: Elizabeth Conner on Jul 13, 2016

    Keurig Kold So-Duh Machine: The Tale of an Undead

    Less than 10 months after the official Keurig Kold launch, it lost its fizz. Keurig, which built its empire on single-serve, pod-based beverages, just announced its discontinuation of Kold, the expensive home soda machine. But its exorbitant cost – $370 dollars – isn’t the only hurdle. Soda consumption in the U.S. is on the decline, falling to a 30-year low.

    The company had high hopes for Kold, even suggesting it could be bigger than its coffee brewers. Now it’s humbly admitting the product wasn’t successful. It’s hardly the first: 72 percent of new products fail to meet their financial targets or they fail entirely.

    Keurig’s misguided assumptions about Kold pushes such staggering statistics back into the spotlight. Clearly, something is seriously wrong with the way companies bring new concepts to market. Like so many before it, Keurig is showing what happens when you fail to design product around price and launch hoping to meet sales expectations instead of actually knowing you would.

    Ensure your product thrives by talking with customers early in the product development process. Long before you draw up engineering plans and long before any manufacturing resources are committed and configured to build something, talk to customers about their needs and what they’d value in a product. Over the last 30 years and in thousands of conversations involving customers in the product development process, we’ve learned 10 important insights on how to conduct what we call the “willingness-to-pay” (WTP) talk with customers:

    1. Don’t forget to tap into pockets of internal excellence: Before you have customer conversations, form a group of internal cross-functional experts (product, sales, marketing, finance and engineering) and conduct an expert judgement workshop.

    2. Position customer discussions as the “value talk”: Don’t position the talk as “pricing” or “willingness to pay.” Rather, frame the talk as “we want to talk about our latest innovation ideas and how we can continue to add value for you.”

    3. Valuable insights come from the simplest questions: Direct questions often yield important insights.

    4. Make 25 percent of the questions “why” questions: As simple as it sounds, the “why” question is the most powerful one.

    5. Mix it up: If you stick to a standard script, you might only learn what you already know.

    6. Involve others in the action: Have key people from across the organization (product, sales and marketing) sit in on focus group meetings and interviews to hear the voices of your customers.

    7. Avoid the “average trap”: When you analyze the answers to your WTP questions, look at the distribution not just the average response. The average response can be misleading.

    8. Don’t rely only on quantitative numbers: You need to have qualitative discussions before doing a quantitative study.

    9. Be precise with your language: The questions: “Would you buy this?” and “Would you buy this for $20?” are totally different

    10. Garbage in is garbage out: Use your business knowledge and common sense to isolate the most important variables to test.

    Shockingly, 80 percent of companies don’t have this type of discussion with customers early. Instead they develop a product, prepare it to go to market and slap a price on it without understanding whether customers value it and are willing to pay. Design your product around what customers value and are willing to pay for. In other words, design the product around the price.

    Parts of this article were adapted with permission of the publisher Wiley from “Monetizing Innovation: How Smart Companies Design the Product Around the Price by Madhavan Ramanujam and Georg Tacke. Copyright (c) 2016 by Simon-Kucher & Partners. All rights reserved. This book is available at all bookstores and online booksellers


    Madhavan Ramanujam is a co-author of “Monetizing Innovation: How Smart Companies Design the Product Around the Price,” with Georg Tacke, and a board member and partner at Simon-Kucher & Partners based in its San Francisco/Silicon Valley office. Advising companies of all sizes, from Fortune 500s to startups, Ramanujam has led more than 125 monetization projects for internet, software and technology clients, helping bring numerous new products to market. Follow Madhavan on Twitter and connect with him on LinkedIn.

    Released: July 13, 2016, 9:16 am
    Keywords: PDMA Blog

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