Soft Drink and Coca Cola
Coca-Cola’s New Vending Machine (A) Case Questions
1. Is selling Coke through interactive vending machines a good or bad idea? Explain your answer. It is a good idea to sell Coke through interactive vending machines. Over the last three years, the soft-drinking giants have watched their earnings erode as they waged a price war in supermarkets. Vending machines have remained largely untouched by the discounting. Sales of soft drinks from vending machines have risen steadily over the last few years, though most sales still take place in supermarkets. Last year, about 11.9 percent of soft-drink sales worldwide were from vending machines. Vending machines require low cost for companies. Company can just place a vending machine at any corner in malls or schools without distributed by supermarkets. Although the machine can automatically raise prices for its drinks in hot weather, not too many consumers would notice that. And there is nothing wrong for the company try to maximize its profit. There is price discrimination existing everywhere. As long as Coke is not increasing the price for coca in vending machines, it’s a good idea to sell Coke through interactive vending machines.
Pro’s for the Coca Cola company • Technology availability: Electric components are becoming more and more versatile and cheaper. In order to adjust the price with weather change all that is required is a temperature sensor and a computer chip. Therefore, reducing the implementation costs. • Increase competitiveness through Price discrimination: Price discrimination is used all the time in order to increase economic efficency and in prinicple a temperature sensitive vending machine is no different. For example, Airlines pair daily and hourly fluctuations in demand with fluctuations in price and in Japan vending machines already adjust their prices based on temperature. • Increase Profitability: Vending machines are an extremely profitable resource and have the
1. Is selling Coke through interactive vending machines a good or bad idea? Explain your answer. It is a good idea to sell Coke through interactive vending machines. Over the last three years, the soft-drinking giants have watched their earnings erode as they waged a price war in supermarkets. Vending machines have remained largely untouched by the discounting. Sales of soft drinks from vending machines have risen steadily over the last few years, though most sales still take place in supermarkets. Last year, about 11.9 percent of soft-drink sales worldwide were from vending machines. Vending machines require low cost for companies. Company can just place a vending machine at any corner in malls or schools without distributed by supermarkets. Although the machine can automatically raise prices for its drinks in hot weather, not too many consumers would notice that. And there is nothing wrong for the company try to maximize its profit. There is price discrimination existing everywhere. As long as Coke is not increasing the price for coca in vending machines, it’s a good idea to sell Coke through interactive vending machines.
Pro’s for the Coca Cola company • Technology availability: Electric components are becoming more and more versatile and cheaper. In order to adjust the price with weather change all that is required is a temperature sensor and a computer chip. Therefore, reducing the implementation costs. • Increase competitiveness through Price discrimination: Price discrimination is used all the time in order to increase economic efficency and in prinicple a temperature sensitive vending machine is no different. For example, Airlines pair daily and hourly fluctuations in demand with fluctuations in price and in Japan vending machines already adjust their prices based on temperature. • Increase Profitability: Vending machines are an extremely profitable resource and have the