Coca Cola’s New Vending Machine

Coca Cola’s New Vending Machine

Coca Cola is one of the biggest companies around the globe. As a company they have always tried to improve the technology involved in their supply chain. On United States vending machines represent a big percentage of the revenue obtained by Coca Cola.

Coca Cola built and started testing a vending machine that has a temperature sensor and a computer chip. This vending machine would set the price of the drinks according to the weather. If the weather is cold, the Coca Cola can is going to be cheaper, but if it is hot and people are claiming for a cold drink in the summer heat then the can of Coke could be as twice as expensive. Coca Cola’s chief executive officer, M. Douglas Ivester defended the idea with the phrase: “Coca Cola is a product whose utility varies from moment to moment”. However, this breaking news started being rejected, making Coca Cola’s image intolerable.

Later, Coca Cola sent a message on his website, clarifying that they were not introducing vending machines with a temperature sensor, they said that they were just exploring innovative technology that would help offer products people want at affordable prices.

However, Coca Cola’s CEO never took in account the response that this announcement would have from customers and the media. Since 90’s customers began to be more exigent with the products that they buy and started to look for an experience while they were consuming the product. Made this announcement had a really bad impact on Coca Cola’s image because customers started to wonder if the price that they were paying was fair or not. Also, they believed that paid more for a product which the competitor also has was just absurd. Value is based on customer’s perception, Coca Cola lost value because their customers disagree with the idea of this new vending machine.

Coca Cola’s new vending machine: Pricing to capture value or not?

1.     Explain in your own words:

•       Murphy’s Law: Even though there can be more than one way to do something, you’ll end up doing the one that ends terribly.

•       Intelligent Vending: When you use credit card and debit card as payment. They also signal, via wireless, information about the drinks that are currently selling and at what rate.

•       Strategy of Micro-marketing: It’s a strategy focused on a small and particular target, based merely by their ZIP code, job, age, etc.

•       Interactive price setting: When prices are set through interactions between buyers and sellers.

2.     What do you think about pricing according to seasons? What are the expected benefits of this practice?

As they explain it in the case, it’s discriminatory. They’re charging people according to who wants the product more, or who needs it more: The more I need it, the more I have to pay for it. They take advantage of the consumers need. For us, we can see how this is not so beneficial. For the company, ‘’Discrimination means increased efficiency. Actually, price discrimination can actually increase the overall efficiency of a market.’’