Injustice - Developers Among Us (SciFiDevCon 2024)
Coca cola new vending machine
1. COCA COLA’S NEW
VENDING MACHINE
A case analysis by,
Abhijit Kumar Sah -302
Abhishek Singh -303
Antima Tiwari -365
Bikash Pandey -315
Ravi Tiwary - 335
2. Objectives of The Case
About Coke
Vending Machine
Benefits of VM
Media Reaction
Mechanics of Coke
The Number Game
Problems in VM
Recommendation
3. ABOUT COCA-COLA COMPANY
The Coca-Cola Company is an American multinational
beverage corporation.
The company is best known for its flagship product
Coca-Cola, invented in 1886 by pharmacist John Stith
Pemberton in Columbus, Georgia.
Coca-Cola currently offers more than 500 brands in over
200 countries or territories and serves over 1.7 billion
servings each day
The company is headquartered on Atlanta, Georgia,
United States.
4. VENDING MACHINE
Coke’s testing of vending machines that could
change price according to the weather. 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.
5. BENEFIT OF VENDING MACHINE
Boost sales by providing discount in off season or when
there’s less traffic.
Facilitates Micro- Marketing and understanding the local
customers.
Help companies in managing logistics and capture real
time data for analysis.
Increase profit as it has been untouched by discount war.
Improve product availability, promotional activity and even
offer consumers an interactive experience when they
purchase a soft drink from a vending machine.
6. 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)
7. MECHANICS OF COKE’S STRATEGY
Price Discrimination
Selling the same product to different groups of
buyers at different prices.
“Hot” day v.s. “Cold” day prices
Economic Rationale
Higher price (hot) higher profit
Lower price (cold) induces sales higher profit
8. THE NUMBER GAME
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.
9. THE NUMBER GAME………..
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
10. PROBLEM IN COKE’S VENDING MACHINE
The new vending machine concept might seem
unfair to a thirsty person. The main problems
are:-
Price discrimination- The company segmented
group of buyers by the outside temperature.
Communication:- Coke based its strategy
purely on demand and supply.
11. PROBLEM CONT………
Perceived price :- For product like coke
people have an idea about its price
Emotional Bonding:- Iconic brand has a
very strong emotional attachment.
Competition:- Speech form Pepsi.. “ we
believe that machines that raise prices in hot
weather exploit consumer who live in warm
climates”
12. RECOMMENDATIONS
Promotion Strategy is not good by sudden public
announcement.
Strategic placement of machines
High traffic areas with few repeat customers
Examples: Rest areas, tourist traps, 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.
Notas do Editor
Economists use the term "price discrimination" to describe the practice of selling the same product to different groups of buyers at different prices in recognition of the fact that consumers assign a different value to the same product based on varying degrees of need. If possible, a company would prefer to charge a high price to those who place a high value on the good, while charging less to those that do not. In the case of Coke, its consumers were segmented based on their buying habits during hot & cold days. Based on these buying habits, Coke would adjust its prices accordingly. When it was hot outside, Coke earned a higher profit by selling its products at a higher price. Similarly, Coke could generate higher profits even when it was cold outside by sufficiently lowering its prices to induce customers to buy more of its products (See Appendix I for detailed calculations).
hence any upward movement without any proper justification has created negative effect.