Executive Summary
In this market analysis report we will present a market report of the prospects of the new product, The Soda Stream Source, outlining the needs the product will serve, the relative advantages it has over other soda production and distribution methods, the macroeconomic environment in which the product will be sold, and the forces that will influence the sale of the product. At the end of the report, we have looked at the cultural and other environmental factors that may influence the purchase of this product followed by a summary of our findings at the end of the report. In this market study we have considered facts and figures from our main market, that is, The United States of America. The report begins with a description of the product and then proceeds to the needs it will serve, the macroeconomic environment in which it will be introduced, and a final summary statement.
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General Information on the Product
- Description
Soda Stream Source is a new model of the many developed by Soda Stream; it was designed by the world-renowned designer Yves Béhar. Soda Stream Source effortlessly carbonates water at home hence effectively reducing the consumer and environmental impact of packaged soft drinks. Soda Stream Source has an elegantly designed carbonating bottle which easily fits into the drinks maker that houses carbon dioxide (CO2) cylinder. The refined design of Soda Stream Source allows the user to see the level of carbonation through the transparent glass of the carbonation bottle. This gives the user visual feedback on the process of carbonation. The user can always see how the bubbles are growing gradually.
Soda Stream Source is designed for domestic use and was inspired by the need to reduce bottle usage since the user will be able to make their fizzled drinks in the comfort of their homes. This reduces the number of bottles they have to carry home from the shops and stores which greatly contributes to reducing the impact on the environment.
When a consumer uses the Soda Stream Source for carbonation all he/she needs to do is to add the liquid for carbonation into the carbonation bottle and fix it into the drinks maker. When the bottle is fixed in place and there is no gas leak, the user can then start the carbonation of soda using the appropriate button for the model located on the top of the Soda Stream Source, and the carbonation will start. The Soda Stream Source allows for two levels of carbonation, standard carbonation and strong carbonation.
- Needs met
The consumption of soda and other carbonated beverages across the globe has tremendously increased due to the increase in the world population. This in effect has increased the volume of packaging containers for soda that are disposed annually resulting in a lot of garbage which is harmful to the environment (Scholas, 2011). Soda Stream Source is built using eco-friendly materials and is designed to ensure the minimal release of the harmful material to the environment. In addition to being eco-friendly, device application will greatly reduce the volume of soda containers that are disposed because people will be able to make soda in the comfort of their homes and serve directly just like coffee.
Lastly, the Soda Stream Source will provide a fresh soda as opposed to the soda from stores where you find that soda in some containers has fizzled out and the flavor is gone.
- Relative advantage
There are several advantages that consumers will enjoy over other products in the market when they purchase the Soda Stream Source.
- Soda Stream Source works fast to produce instant soda at the convenience of the customers home. There won’t be any necessity to go and queue in stores every time a soda is needed. The customer will be able to have a soda at any time of the day, and the device allows the customer to make different flavors of soda.
- The device produces fresh and delicious soda in a matter of seconds. Compared to other packaged sodas which are never fresh in most cases, using the Soda Stream Source gives the consumer the pleasure of creating and enjoying a delicious soda; he/she can choose the level of carbonation for the soda, standard of high carbonation.
- The consumer will not have to deal with the problem of carrying cans and bottles from stores.
- The consumer has the liberty to mix different flavors to produce a soda flavor he/she desires. Stream Source allows up to 25 great-tasting flavors which include regular, diet, and caffeine-free options. Buying a packaged soda does not allow the customer use preferred flavors since he/she can only select the preset flavors of soda in the market.
- As compared to other home soda makers in the market, Soda Stream Source has an upper hand since it is very easy to use and portable compared to the industrial largescale carbonators which require technical knowledge and a lot of metric measurements to produce soda.
- Soda Stream Source has reusable BPA-free bottles and concentrated soda mix which will greatly reduce the volume of garbage introduced into the ecosystem.
Soda Stream Source does not require such sources of energy as electricity or batteries. Therefore, it means that the consumer can have soda anywhere as long as he/she has access to clean water.- Compatibility with existing products
The Soda Stream Source is the latest model of the soda stream products and is very compatible with the other products in the market since its design is based on the other initial models. It is built to such that if you take the Carbon dioxide cylinder from the Soda Stream C100 or Soda Stream Pure, the cylinder will fit exactly as it fits in the original soda maker. This applies to the bottle. The container bottle from any Soda Stream Soda Maker can fit into the Soda Stream Source perfectly and vice versa.
- Can consumers try this product easily?
The Soda Stream Source can be tried by any consumer who is ready for fresh delicious soda and needs to cut on the cost of soda consumption. The product is also very eco–friendly, and for the health-conscious consumers, there is the benefit of deterring how much of each ingredient one intends to consume.
- Possible problems and resistance to product acceptance
The major resistance and problem that the Soda Stream Source may face would be the price. When a customer buys one unit, in order to be able to start saving money compared to going to the store to buy packaged soda, the customer will have to use the soda maker for at least 12 months for ordinary consumption before he/she starts to save from using it. This estimation is illustrated bellow:
The average cost of the Soda Stream Source is $130 and on purchase you are given a free Carbon Dioxide (CO2) Cartridge. A single Cartridge is sold at for about $15. When you do the calculations for making pure sparkling water without any flavors since one CO2 cartridge can make 60 liters of soda, one liter of sparkling water will cost $0.25 when using Soda Stream. Since a liter of packaged sparkling water costs $0.79, the customer shall have saved $0.79-$0.25=$0.54.
As a result, for a consumer to get a return of $130 which was the buying price of the soda maker the consumer has to use $130/$0.54 per liter = 240.7 liters.
In order to consume 240 liters of soda the consumer will have to use at least 22 ounces of soda every day for 365 days so that they can start enjoying the savings in soda.
When you do the calculations for making flavored soda water without any flavors, since one soda mix bottle costs $5 and can make only 12 liters of soda, to make 60 liters of soda one will require 5 soda mix bottles ($25), and one liter of sparkling water will cost $0.67 when using Soda Stream. Since a liter of flavoured soda water costs $0.89, the customer shall have saved $0.89-$0.67=$0.22.
As a result, for a consumer to get a return of $130 which was the buying price of the soda maker, the consumer has to use $130/$0.22 per liter = 590.9 liters. In order to consume 240 liters of soda, the consumers will have to use at least 1.62 liters of soda every day for 365 days so that they can start enjoying the savings in soda.
- The Macroeconomic Market Environment
- Economic environment, does the state of the economy affect the prospects for this type of product?
The macroeconomic environment has a great influence on the prospects of product success or failure in the market. The macroeconomic environment is always determined by external parameters that consumers have no control over. These parameters include among others the following:
- Interest rates
The current interest rates have consequently skyrocketed but not high enough to reduce the demand for our product. When the interest rates are high, the economic environment encourages consumers to save more than they spend. This greatly reduces demand for goods. When the rates are low, the consumers become more spenders than savers.
- Taxes
The general tax rates and tax rates on specific products affect the market of any individual product extensively. The Soda Stream Source will be able to sell best in those countries which require minimal tax demands since the base selling price will be lower and our company will still have its profits.
- Currency exchange rates
The value of the country currency in the global market also greatly influences the potential demand for goods in the market (Hairault, 2002). Exchange rate for the currency that consumers are using is high which means that the value of their currency has weakened and therefore they are not able to purchase non-essential products including our product. This will negatively affect the sales of Soda Stream Source.
- Consumer discretionary income
Consumer discretionary income is the amount of income an individual is left with after the payment of taxes and basic necessities. This is the amount that an individual is left with to use luxury items and other non-essential services and goods. The discretionary income is the major determinant in the market demand for any good. When we look at the Soda Stream Source, we realize that it is a luxury item since the soda is not a basic human need. When we consider the American market, about 73 million households currently have discretionary income as compared to 2002 when only 57 million households had discretionary income. The lowest discretionary income in the United States is observed in the West North Central region: Iowa, Missouri, Nebraska, North Dakota, Minnesota, and South Dakota. In mentioned states the average household discretionary income is $20,749 per household. This means that any individual in the United States can be able to purchase Soda Stream Source which costs on average $130.
- Consumer confidence levels
Soda Steam was the first to produce and put into market the first domestic soda maker and given that enjoyed the market presence and understood what was required by the consumers. After a long market presence, customers are always happy and eager to try out new products of the company. The long market presence has ensured that we understand the consumers need and always strive to serve those needs. The Soda Stream Source is an advanced version of the previous model hence it will be better placed in the market, and consumers will definitely appreciate it.
- Unemployment rate
The American unemployment rates are at all time comparatively high along with the inflation rate. This has negative implications on the market and may end up reducing the demand for our new product. When the unemployment rate in the economic system is as high as it is at the moment, the disposable income in the economic environment reduces and this greatly affects demand for non-essential goods, especially luxury items (Hairault, 2002).
- Impact of the social and cultural environment, if any
The contemporary society is becoming more health sensitive, and with the rising environmental challenges posed by industrialization and technology, people are beginning to look for alternative ways to stay healthy and conserve the environment. Since the Soda Stream Source is designed to be environment-friendly, most people will support the option of making their own soda at home instead of having to purchase industrial soda and save on the amount of garbage that they have to dispose.
Secondly, for health reasons, most individuals choose to make their own soda from pure water and a little flavor instead of purchasing packaged soda which has additional preservatives like sodium benzoate commonly found in Coke, Pepsi, and Sprite which pose a major health risk. This will greatly influence consumers to shift from packaged soda to homemade fresh soda and in doing so boost the sales of Soda Stream Source.
Conclusion
In conclusion, we can say that the Soda Source Stream is a great product and considering the success of our previous product and the customers’ trust we managed to gain, we can release the new product into the market based on the facts and expect the product to be a success.
References
Guyton, A. (2009). Liquidity, interest rates and banking. New York: Nova Science Publishers.
Hairault, J. (2002). Market imperfections and macroeconomic dynamics. Boston: Kluwer Academic Publishers.
Mendicino, C., & European Central Bank. (2007). Credit market and macroeconomic volatility. Frankfurt am Main, Germany: European Central Bank.
Sabillon, C. (2005). World economic historical statistics. New York: Algora Publishers.
Schloss, A. (2011). Homemade soda. North Adams, MA: Storey Publishers.
64% of Americans Have Discretionary Income. (n.d.). MarketingCharts. Retrieved September 19, 2014, from http://www.marketingcharts.com/traditional/64-of-americans-have-discretionary-income-2340/
Soda Alert: Sodium Benzoate, A Preservative Used In Sodas, Found To Cause DNA Damage. (n.d.). Pureinsight. Retrieved September 19, 2014, from http://www.pureinsight.org/node/4649
The Conference Board. (n.d.). The Conference Board. Retrieved September 19, 2014, from http://www.conference-board.org/
United States Fed Funds Rate 1971-2014. (n.d.). The United States Fed Funds Rate. Retrieved September 19, 2014, from http://www.tradingeconomics.com/united-states/interest-rate
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