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COCA COLA’S NEW VENDING MACHINE

A case analysis by,
Abhijit Kumar Sah Abhishek Singh -303 -302

Antima Tiwari
Bikash Pandey -315 Ravi Tiwary

-365
- 335

Objectives of The Case About Coke Vending Machine Benefits of VM Media Reaction Mechanics of Coke The Number Game Problems in VM Recommendation .

Coca-Cola currently offers more than 500 brands in over 200 countries or territories and serves over 1. . Georgia.ABOUT COCA-COLA COMPANY  The Coca-Cola Company is an American multinational beverage corporation. United States.7 billion servings each day   The company is headquartered on Atlanta.  The company is best known for its flagship product Coca-Cola. Georgia. invented in 1886 by pharmacist John Stith Pemberton in Columbus.

The smart Vending machine could automatically adjust prices. If the temperature is high then price will be high If the temperature is low then price will be low.  .VENDING MACHINE  Coke’s testing of vending machines that could change price according to the weather.

 Facilitates Micro.  Increase profit as it has been untouched by discount war.BENEFIT OF VENDING MACHINE Boost sales by providing discount in off season or when there’s less traffic.Marketing and understanding the local customers. promotional activity and even offer consumers an interactive experience when they purchase a soft drink from a vending machine.  Help companies in managing logistics and capture real time data for analysis.  Improve product availability.  .

MEDIA REACTION  “A cynical ploy to exploit the thirst of faithful customers” (San Francisco Chronicle) “Lunk-headed idea” (Honolulu Star-Bulletin) “Soda jerks” (Miami Herald) “Latest evidence that the world is going to hell in a handbasket” (Philadelphia Inquirer) “Ticks me off” (Edmonton Sun)     .

MECHANICS OF COKE’S STRATEGY  Price   Discrimination Selling the same product to different groups of buyers at different prices. “Cold” day prices  Economic   Rationale Higher price (hot)  higher profit Lower price (cold) induces sales  higher profit .s. “Hot” day v.

THE NUMBER GAME Normal Vending Machines  Expected  Expected price is 70 cents per can.  Expected .450 cents per machine.000 cents per machine. “Smart” Vending Machines  Price  Price on a HOT day is 85 cents per can on a COLD day is 55 cents per can profit is 5. profit is 5.

450 – 5.. Annual incremental profit = 450 * 200.5 million  .000 = 450 cents Assuming 200.  Incremental profit per day per machine = 5.000 * 365 days = $328.000 “smart” vending machines.THE NUMBER GAME……….

The company segmented group of buyers by the outside temperature.PROBLEM IN COKE’S VENDING MACHINE The new vending machine concept might seem unfair to a thirsty person. The main problems are: Price discrimination.Coke based its strategy purely on demand and supply. Communication:.  .

Speech form Pepsi.PROBLEM CONT………  Perceived price :.Iconic brand has a very strong emotional attachment.For product like coke people have an idea about its price Emotional Bonding:.. “ we believe that machines that raise prices in hot weather exploit consumer who live in warm climates”   . Competition:.

Strategic placement of machines High traffic areas with few repeat customers  Examples: Rest areas. tourist traps.RECOMMENDATIONS  Promotion Strategy is not good by sudden public announcement.  . theaters etc   o  Emphasis that coke will be cheaper in cold weather Highly profitable strategy if: Executed with extreme caution  If increase perceived value of product.