Soda Stream Takes On Coke and Pepsi Harvard Case Solution & Analysis

Introduction

Soda Stream is an Israel based company, which was founded in 1903. In the year 1955, the company madeits first carbonated machine. It focuses only in Europe and UK and seeks significant growth and popularity. Initially, the machine sold to only elite class families due to its high pricing strategy.The company made different acquisitions but did not see significant success until 2012. Itis using the business model of razor blade and focusing on the sale of devices in order to increase the sales of the consumable products, which is the main source of revenue for the company.

In addition,by using this strategy Soda Stream claims that its products are cost effective and environmentally friendly as it is producing fewer cans and plastic bottles than Coke and Pepsi. Moreover, Soda Stream penetrates its product in US, Asia and all around the globe in order to take advantage of the increase in demand of carbonated soft drinks.

Problem Statement

United States is the largest market of carbonated soft drinks with the market capitalization of 40 billion dollars. Initially, the main focus of Soda Stream is on UK and European market. The retail revenue from the carbonated soft drinks decreased in last few years. But in US market the market capitalization of the carbonated soft drinks has been increasing continuously.

Soda Stream entered into the US market in order to take the advantage of greater market capitalization. However, theUS market is saturated and there are already many large competitors present in the market. Soda Stream aimsto achieve 2% terminal growth and 410% annual growth in the US market but could not achieve due to the saturation in the market. The companyis also facing a problem of targeting only femalesin the political sociocultural stance.

SWOT Analysis

Strengths

 Soda Stream is operating since1904 in the carbonated soft drinks market. Initially the main focus of the company was upon UK and Europe market but in order to take the advantage of increased proportion of carbonated soft drinks market all around the globe, Soda Stream penetrates in other countries of the world and it is operating more than 60000 stores all around the world, which makes Soda Stream a market leader in carbonated soft drinks.

Soda Stream is providing more unique and innovative products as compared to its competitors like Coke and Pepsi. Its products are supposed to be environment friendly and cost effective, which provides Soda Stream an edge over its competitors. The people of the developed countries are more sophisticated and preferring Soda Stream’s products contain low carbonate as compared to the products of Coke and Pepsi which contain more percentage of carbonates in its products.

With the passage of timeSoda Stream madedifferent acquisitions and partnerships with the flavor name brand companies and electronic companies like Samsung in order to provide its customers more innovative and customizes carbonated soft drink. The wide range of flavors of Soda Stream also provides the company an edge over its competitors who don’t have such wide range of flavors.

There has beena significant decrease in the demand of carbonated soft drinks in last few years but again now increasing. Instead of this fluctuation in demand the revenue and profit margin of the company have increased significantly like there is approximately 117% and 60% increase in revenue in the year 2011 and 2012 respectively. Increases in revenue also provide the company confidence related to the market and shows that there is a significant potential of growth for the company, which sends a strong signal towards the management related to the performance of the company and increase in revenue and profit margin could also acquire greater number of investors which is also a good sign for the company and increases its core strengths........

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