SodaStream’s shares reached an all-time low on Tuesday when
they fell by 21%. The stock trades for about $21 a share, up just one dollar
from the IPO price in 2010. SodaStream hit an all-time high in August
2011 at $80 per share. In October 2013, they were still trading for about
$60.
The company’s CEO claimed that the poor results from the
third quarter are mainly due to the fact that haven’t attracted as many new
customers to their carbonation system as they should have. The article mentions
that Americans’ decreasing appetite for soda is one reason SodaStream’s stock
is declining. In July, a Gallup Poll reported that 63% of Americans said they
avoid drinking soda, an increase of 22% since 2002. However, an analyst at Roth
Capital Partners thinks the company’s issues have more to do with flaws in their
advertising and marketing strategies, or lack thereof. He mentions that a good portion of the company’s
marketing budget went to its 2014 Super Bowl commercial which didn’t bring many
new customers to the company.
More competition is also making its way into the home
carbonation market, as Keurig Green Mountain is currently working on producing
its own soda maker.
It will be interesting to see how SodaStream ends up
handling this situation. If they can’t bring in new business when they have had
nearly a monopoly on home carbonation systems, I wonder what will happen when
Keurig Green Mountain releases their product.
SodaStream’s situation really highlights the importance of effective advertising. When it comes to advertising schedules, there are two extremes: continuous and flighting. With continuous scheduling, ads run all year round. This model proves a good option for those products/services that do not depend on the season. With flighting scheduling, by contrast, ads are run at very irregular times with large spans of no advertising at all. SodaStream’s 2014 Super Bowl commercial is a good example of this model. While there does exist a pulsing schedule, a combination of continuous and flighting, I would recommend SodaStream adopt the continuous schedule because of the nature of their product.
ReplyDeleteSodaStream is a very interesting idea, but with people so conscious about healthy alternatives it is causing the company to experience financial damage. I personally love SodaStream, and if people are creative I am sure they can figure out a way to create healthy drinks using SodaStream. The SodaStream marketing team should attempt to appeal to this healthy audience, as opposed to remaining in their niche market of soda drinkers which is slowly dying off.
ReplyDeleteWhen SodaStream came out several years about it was supposed to be the next big thing for carbonated beverages. I have seen the products at stores such as Bed Bath and Beyond, but have not seen any commercials for the products. I watched the Super Bowl last year, but do not remember their advertisement. It is not surprising that their stock has dropped back down to the level of its IPO from several years ago. The new competition, such as Keurig, will continue to put pressure on SodaStream and if it does not adapt and improve its products, then they may not be around much longer.
ReplyDeleteI agree with Hunter. In order for SodaStream to remain competitive, the company needs to find a way to appeal to a more health-conscious audience. However, instead of expecting consumers to figure out how to use SodaStream in a healthy manner, I think the company itself needs to find the ways in which SodaStream can be used in a healthy manner and integrate these healthier ways into a new marketing campaign.
ReplyDelete