Coca Cola New Vending Machines

7/24/2019 Coca Cola New Vending Machines

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Coca colas New VendingMachines (A):

Prof. Prem P. DewaniFellow: IIM Ahmedabad

Assistant Prof. IIM Lucknow


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Agenda of the Case

How firms can leverage power of internet to

translate better information of customers

needs into greater customer value?

Price Discrimination and Dynamic Pricing


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How firms can leverage the internet to gather

more information about customers, customie

product for individual tastes, create uni!ue "and

,

e#tract higher prices using dynamic pricing models

that permit prices to vary across purchase

occasions and customer


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$s selling coke through interactive vending

machines a good idea ? Why?


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)ewer 'tock out, availability of the productto those who value more

$ncreased social welfare from interactive

Argument in Favor

technology? $t gets a limited supply of theproduct to customers that value is most


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Dynamic pricing would be norm in most

markets. Coca cola would be better off if it

were ahead of others on this front

Argument in Favor


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$f it can be done for the other product and

service categories i.e. airlines, then why not

for soda

Argument in Favor


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*lthough the price on a hot day might be

higher but average price across multiplepurchases occasions might not change "or

Argument in Favor

Average customer is able to

understand that?


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Different prices at different places arealready we pay?

Argument in Favor


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%his goes against customer e#pectations. $t is

against the very core of what Coke stands for+

alue, ubi!uity and affordability.

Argument Against


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-reaks and e#ploits the relationships with thecustomers the coke has made.

Argument Against


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Consumer will feel betrayed by suchopportunistic behavior and stop buying Coke

Argument Against


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Price (nfairness

Argument Against


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Consumer market is not ready for dynamic

pricing of routinely purchased products suchas Coke

Argument Against


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ot advisable to change the most profitable

channel with this paradigm shift. )ailure mayerode Coke/s profitability significantly

Argument Against


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Changing price if cost goes up is 0ustifiable,

but changing price if temperature goes up isnot. $t has hard to believe that cost of the

Argument Against

Further, temperature is exogenousvariable and can not be used as a

reason for raising prices


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Competitors view is negative in this regard sothere are chances that Coke would lose out

Argument Against


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What is Coke? What does Coke mean

to the average consumer?


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For God Country and Coca cola: The unauthorized history of thegreat American soft drink and the company that makes it

What is a brand?

'ecret )ormula+ How -rilliant 1arketing and 2elentless 'alesmanship

1a e Coca Co a t e -est nown pro uct n t e wor

$/d like the world to buy a coke+ 3ife and 3eadership of 2oberto

4oiueta by David 4reising

Classic Cooking with Coca Cola


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ariegated iew on Coke?

Customer loyalty with culture5region


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Where, how, and for whom does this

technology create 5 destroy value? for

e#amp e, oya o e cus omers,switchers among Coke products, loyal Pepsi

customers etc?


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$dentifying that whether the interactive

vending machines are about creating greater

customer value , or selectively e#tracting agreater part of the value "for consumer

surplus6 created, or a combination of the two


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Customiing Price

Customiing Product? how this would lead to


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*re there any pricing related issues that canadversely affect the firm?

Price )airness? 3oyal Customers?


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What did Coca Cola do right? What did it dowrong? How would you have done it?


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%he firm has not yet launched the product.

%he hue and cry is more about what $vester

did or said than about what the company has

Done right

one


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%he focus is enhancing the consumes

consumption e#perience, not on changing

prices. Changing temperature is only the

Done right

beginning. Coca Cola can easily e#tend itstechnology to customie other attributes to

individual consumers. $t is the essence of

relationship marketing


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%he firm has spent a lot of time perfecting the

technology before its introduction

Done right


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$nteractivity is the wave of the future andCoke is clearly trying to be a leader in this

area of marketin

Done right


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$f coca cola is all about the Coke brand andimage, the current actions could significantly

erode its brand e uit

Done Wrong


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$vesters 7by the numbers/ approach to talkingabout the laws of supply and demand revel

little understandin of the com an /s business

Done Wrong


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%he company should have clarified the prices

will not only go up on warm or hot days but

also go down on cool or cold days. )raming

Done Wrong

the issue would have gone a long waytowards toning down the negative reactions


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%he press release posted by the firm was notsufficient to undo the negative publicity

enerated b $vester/s comments

Done Wrong


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What is price discrimination and when does

it work?

)irst Degree Price Discrimination

'econd Degree Price Discrimination

%hird Degree Price Discrimination


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How does the internet affect the ability of

firms to price discriminate acrossconsumers?


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What do you think of $vester and hiscomments?

Thanks


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Thanks

Coca Cola New Vending Machines

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