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8/13/2019 cocacolanewvendingmachine-120901091339-phpapp02

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COCA COLA S NEW VENDING MACHINE

A case analysis by,Abhijit Kumar Sah -302

Abhishek Singh -303Antima Tiwari -365Bikash Pandey -315Ravi Tiwary - 335


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About Coke

Vending Machine

Benefits of VMMedia Reaction

Mechanics of Coke

The Number GameProblems in VM

Recommendation

Objectives of The Case


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ABOUT C OCA -C OLA COMPANY

The Coca-Cola Company is an American multinationalbeverage corporation.

The company is best known for its flagship product

Coca-Cola, invented in 1886 by pharmacist John StithPemberton in Columbus, Georgia.

Coca-Cola currently offers more than 500 brands in over200 countries or territories and serves over 1.7 billion

servings each dayThe company is headquartered on Atlanta, Georgia,United States.


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VENDING M ACHINE

Cokes testing of vending machines that couldchange price according to the weather. The smartVending machine could automatically adjust prices.

If the temperature is high then pricewill be highIf the temperature is low then pricewill be low.


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BENEFIT OF VENDING M ACHINE

Boost sales by providing discount in off season or whentheres less traffic.Facilitates Micro- Marketing and understanding the localcustomers.

Help companies in managing logistics and capture realtime data for analysis.Increase profit as it has been untouched by discount war.Improve product availability, promotional activity and evenoffer consumers an interactive experience when theypurchase a soft drink from a vending machine.


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MEDIA R EACTION

A cynical ploy to exploit the thirst of faithfulcustomers(San Francisco Chronicle)

Lunk- headed idea (Honolulu Star -Bulletin)

Soda jerks (Miami Herald)

Latest evidence that the world is going tohell in a handbasket (Philadelphia Inquirer)

Ticks me off (Edmonton Sun)


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MECHANICS OF C OKE S S TRATEGY

Price DiscriminationSelling the same product to different groups ofbuyers at different prices.

Hot day v.s. Cold day prices

Economic RationaleHigher price (hot) higher profit

Lower price (cold) induces sales higher profit


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THE NUMBER G AME

Normal Vending Machines

Expected price is 70 cents per can.

Expected profit is 5,000 cents per machine.

Smart Vending Machines

Price on a HOT day is 85 cents per can

Price on a COLD day is 55 cents per can

Expected profit is 5,450 cents per machine.


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THE NUMBER G AME ..

Incremental profit per day per machine= 5,450 5,000 = 450 cents

Assuming 200,000 smart vending machines, Annual incremental profit= 450 * 200,000 * 365 days= $328.5 million


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P ROBLEM IN C OKE S VENDING M ACHINE

The new vending machine concept might seemunfair to a thirsty person. The main problemsare:-

Price discrimination- The company segmentedgroup of buyers by the outside temperature.

Communication: - Coke based its strategypurely on demand and supply.


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P ROBLEM CONT

Perceived price :- For product like cokepeople have an idea about its price

Emotional Bonding :- Iconic brand has avery strong emotional attachment.

Competition :- Speech form Pepsi.. we

believe that machines that raise prices in hotweather exploit consumer who live in warmclimates


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RECOMMENDATIONS

Promotion Strategy is not good by sudden publicannouncement.

Strategic placement of machinesHigh traffic areas with few repeat customersExamples: Rest areas, tourist traps, theaters etc

o Emphasis that coke will be cheaper in cold weather

Highly profitable strategy if:Executed with extreme cautionIf increase perceived value of product.


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