Soda Stream Business Model
The Business model of Soda Stream involves different business processes in the company. Firstly, Soda Stream has distinctive and elaborate operations. The operations facilities of the company comprise of eight filling and 14 manufacturing plants of carbon dioxide. The manufacturing facilities consist of different featured and distinctive facilities producing flavors, bottles, carbonator and soda makers. Additionally, the facilities included printing and plastic bottle blowing machines, machining and metal operations, and equipment for making different kinds of flavors. The business model of Soda Stream is ‘razor/razor blade’ model. This business model is different from the conventional business model of carbonated drinks in various ways. For starters, in the conventional business model, companies and firms operated on the usage of networks of independent bottlers, concentrate producers on high margin and operations on low capital. Additionally, beverages were available to consumers in bottles and cans especially in the in-home markets through out-of-vending machines, fountain drinks, convenience stores, hypermarkets and merchandisers. On the other hand, in the ‘razor/razor blade model, there is a starter kit consisting of an exchangeable carbon cylinder, samples of flavors, carbonations bottles and soda makers that enables easy creation and access to carbonated beverages to active consumers.
Challenges of Soda Stream
Soda Stream faces different challenges in different sectors. In the operations sector of the company, the continual challenge remains having the capacity of manufacturing to meet the global demands. Another challenge facing the company is the market challenge in the US. The US is the largest beverage market in the world. It is a huge market with different business operations. Moreover, it is a complex market with the existence of different institutions. Therefore, household penetration and distribution strategies continually pose a challenge to the company. Despite the company succeeding in distribution strategies with different phases, household penetration remains low. Additionally, increasing user awareness through use of the TV, which is the key driver of this awareness, proves costly for the company. Another challenge facing Soda Stream is the billion-dollar challenge with competitive threats from other organizations including the Primo Water Corporation and the Green Mountain Coffee Roasters, all of which use the razor and razor blade model to become market share leaders in the coffee category of single-serve. These imminent competitive threats pose a challenge for the company to reach its goal of realizing a billion dollars in sales by 2016.
Recommendations for Soda Stream CEO, Daniel Birnbaum
The following recommendations for the CEO would be elemental to solve some of the company’s challenges and propel the company towards realizing its goals. Firstly, the CEO should work to increase the operations facilities in different regions of the world. This increase in facilities should include proper evaluation of markets and employment of market penetration techniques in potential market areas. Increasing facilities will help in meeting the global demands for the manufacturing capacity of the company. The CEO should also allocate enough revenue in the market and awareness creation sector to cater for the use of the TVs to create awareness. Use of the TVs will enhance the awareness of the company and its products in various regions. Lastly, the CEO should promote brand equity, brand extension, brand identification and brand updating to penetrate the market further and be in a flexible state in the competitive threats posed by the Primo Water Corporation and the Green Mountain Coffee Roasters.