SodaStream International Limited - Major Problems and Alternative Solutions - Case Study Example

CASE STUDY ANALYSIS REPORT Name Course Tutor Date Table of Contents Table of Contents 2 Executive Summary 3 Findings 3 Problems and Solutions 3 Discussion 4 Summary of Major Problems and Alternative solutions 4 Conclusion 6 Recommendation 6 Implementation 7 Bibliography 9 Executive Summary SodaStream international limited is a company that manufactures, distributes, and markets home beverage carbonation systems and an assortment of related products. The company has markets in Western, Eastern and Central Europe, America, Africa, Asia-Pacific and Middle East. The company mainly provides its consumers with carbon-dioxide cylinders that they can use to transform ordinary water into carbonated water. Additionally, the company also provides the carbon dioxide refills, flavors for the carbonated water, and re-usable carbonation cans. The company’s headquarters is based in Israel. The case study outlines the marketing campaigns that were used by SodaStream to reach its customers while at the same time leveling off its competitors. The ads in turn attracted some legal battles as well as rejection by the CBS, which is America’s largest broadcasting network. The marketing strategy that SodaStream used was not well researched and was costly. Secondly, the promotional strategy used did not follow the generally accepted principles in products promotion that is the 7ps of marketing. It also seems that the company did not conduct a SWOT as well as PESTEL analysis on its own prior to investing in the ads. Findings Problems and Solutions The main problem with these campaigns, however, is that, it lured quarrels between the SodaStream and Coca Cola which were represented as part of the ads. First off, the campaign ad dabbed: marketing with cage portrayed the weaknesses of the competitors; Pepsi and Coca Cola, in terms of use of bottles that were environmentally unfriendly as per the case (Birnbaum, 2014). Secondly, the game changer campaign, which was banned by CBS, still the competitors appears (Birnbaum, 2014). The ad whose cost was about $4 million went up in flames due to lack of proper planning and scrutiny prior to presentation for approval by the CBS approval committee (Birnbaum, 2014). Thirdly, the alternative campaign ad: The effect, which was approved by CBS still yet, had some portrayal of the competitors though in an indirect way. SodaStream’s marketing budget is very high initially it was $75 million and by the year 2012 it rose to $11 billion (Birnbaum, 2014). As a marketing strategy it should be cost effective and balanced with the returns instead of using the dollar made to garner more customers by fighting competitors. Discussion Summary of Major Problems and Alternative solutions The aforementioned problems including costly marketing strategy, poor product promotion mix and legal battles due to the product promotional strategies can be avoided in a variety of ways. First off, concerning the controversial ads, the company should conduct a PESTEL analysis of itself. PESTEL analysis includes the evaluation of the political, economical, social, technological, environmental and legal factors that are likely to affect a business and its strategies (Yuksel, 2012). It is in a way similar to SWOT analysis where strengths, weaknesses, opportunities and threats of an organization are evaluated. The political factors include things such as government regulations and laws (Yuksel, 2012). The economic factors deal with the daily operations of the business including interest and exchange rates, inflation, consumers’ disposable income and the profit margin. Social factors on the other hand are associated with the social and cultural factors of the consumers in the market. This provides a basis of segmenting the market and coming up with proper marketing strategies that target the individual segments (Yuksel, 2012). These factors include age, population growth, health consciousness and other demographics. Technological factors include the changes in the landscape and infrastructure and its significant impact in the market. This includes innovative ways of products creation, distribution and communication with the various target markets (Yuksel, 2012). The environmental factors deal with the ethical sourcing of the raw materials for the product as well as the sustainability of the source. Lastly, the legal factors define issues such as compliance, advertising standards, products labeling, product safety, and consumer laws and rights (Yuksel, 2012). If the company had conducted a proper evaluation through PESTEL analysis the wrangles with other companies would be completely mitigated. There are several advantages of PESTEL analysis. First, it is a simple framework that can be applied in various management decision making processes. Secondly, it facilitates the understanding of the business environment from different points of view (Yuksel, 2012). Thirdly, it encourages the development of internal and external as well as strategic thinking for the management (Yuksel, 2012). Thirdly, it allows the management to plan for future actions and threats, thus minimizing the associated impacts. It is a key determinant of the organizations opportunities and Strengths thus opening avenues for the organization to exploit them for its own good (Yuksel, 2012). There are also disadvantages associated with this analysis method. First, too much data that is meaningless to the management might be captured (Yuksel, 2012). Secondly, the assumptions used to make the analysis may be good or bad. Thirdly, it needs to be taken regularly and might consume a lot of time and resources, especially where external resources have to be accessed (Yuksel, 2012). The company should as well come up with a good promotion strategy. Promotion strategy refers to the method an organization uses to reach the segments in the market for example the consumers, the public in general and the stakeholders (Shankar & Carpenter, 2012). After segmenting the market and identifying the target market it is good to come up with a good promotional strategy. SodaStream, as evident from the case study, has a promotional strategy that did not consider the consumers, but instead the competitors (Birnbaum, 2014). The promotion strategy is reflected though a variety of methods. These include referrals, public relations, personal selling, advertising, and sales promotion (Shankar & Carpenter, 2012). These can be propagated in various media including print media, televisions, and the internet as well as word of mouth. SodaStream does not have a well researched marketing mix. The ad is only seasonal; when the Super Bowl is being aired (Birnbaum, 2014). This is because in the adverts none of the 7ps of marketing can be singled out. The 7ps include; product, place, position, pricing, packaging and promotion. The cost of the marketing strategy currently used is costly compared to the profits accrued by the company while it should be cost effective. The advantage of having a well researched promotional strategy is that most of the customers will be aware of the product and opt to try it out. It increases the sales and value of the product. It also creates a good customer base and market for the product. If SodaStream adopts a good promotional strategy that is market and consumer focused instead of the competitors it will be able to be competitive advantage over its peers. Predictable promotional strategies often put off the consumers and potential buyers. Some of the product promotional avenues might be costly (Proctor, 2014). The time taken to completely reach the customers might be long and the legal ramifications governing every promotional method may be stringent (Proctor, 2014). However, with a proper research of the market and the different segments the organization can leverage on this and end up being competitive. Conclusion SodaStream is one of the suppliers of carbonating machines and assortment of products. The marketing strategy that is used to promote the products is predictable, costly and has attracted a number of legal battles with the competitors such as Coca Cola who are also in the same industry and are negatively reflected in the ads. All the three ads are predictable and lack some standards leading to such, except that the third alternative one is a bit adhering to the standards but still portrays the picture of its competitors. Additionally, the ads are costly and seasonal. Recommendation Considering the advantages of a well researched promotion strategy that is part of marketing, the company should adopt PESTEL analysis so as to be able to determine the requirements it needs to meet prior to advertising (Yuksel, 2012). This will mitigate the legal battles and aid the management in coming up with a proper marketing strategy that takes account of the market and the consumers. The sum total of all this will be a proper positioning in the market (Yuksel, 2012). Additionally the company will be able to realize its strengths and weaknesses as well as opportunities and address them adequately. Prior to even developing the promotion strategies the company should consider segmenting the market (Proctor, 2014). This is the process where the market s divided into groups based on their similarity of demands and needs. The market can be segmented based on demographics, psychographics, behavior and geographical location (Proctor, 2014). Some of the best promotional methods the company should consider using are the social media such as twitter, Facebook, instagram and other social platforms. The social media marketing has a wide coverage. This will help the company to reach many people (Belch, A. & Belch, B., 2011). The other method is the direct marketing where the company markets using sales agents. In essence the company will be able to use little costs and increase the profit margins (Proctor, 2014). The company can also opt to use email marketing based on the list of consumers it has. This will help it in maintaining customer loyalty (Belch, A. & Belch, B., 2011). Implementation The above mentioned recommendations and solutions in the discussion section can be implemented at various levels in the company. However, most of the work lies with the executive management team that comprises of the board of management and the owner of the company. PESTEL analysis of the company might be costly depending on the source of information. For example if surveys, questionnaires, and interviews are used as data collection methods, some cost has to be attached to their preparation as well as the process of evaluation and analysis. The management might outsource this to companies that specialize on the same. The time and cost may vary according to the issues in the company and its environment (Yuksel, 2012). Tagging a rough estimate cost may be impossible. The company should also develop a good promotion strategy based on its market research. Once again the duration of market research differs in accordance with the factors inside and outside the organization. Marketing segmentation can be done by the management through delegation of the duty to the marketing department. After careful analysis, decision making and implementation the organization is likely to be successful. However, there are certain barriers that might impact the whole process. Firstly, the cost and time of analysis might be much compared to the returns (Shankar & Carpenter, 2012). Secondly, the whole process of analysis and promotional strategy making is tiresome and needs a lot of human resources (Belch, A. & Belch, B., 2011). Third, most of the data received for analysis might be useless. The competitors could also be having secret methods they are using to reach the market. Bibliography Belch, G. E., & Belch, M. A. (2011). Advertising and promotion: An integrated marketing communications perspective. Boston, MA: Irwin/McGraw-Hill. Birnbaum, D. 2014. How I Did It: SodaStream’s CEO on Turning a Banned SuperBowl AD into Marketing Gold. Harvard Business Review, 39-42. Proctor, T. 2014. Strategic marketing: An introduction. London: Routledge. Shankar, V., & Carpenter, G. S. 2012. Handbook of marketing strategy. Cheltenham, UK: Edward Elgar Pub. Yuksel, I. 2012. Developing a Multi-Criteria Decision Making Model for PESTEL Analysis. International Journal of Business and Management, 7(24), 52-66. Read More