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 opportunity to be even more profitable for Coca Cola. Further profitability can be achieved through: o Having the ability to lower prices to consumers who would usually not buy the product but at the same time charging a higher price to those who can o Lowering the price at off peak buying times to increase overall sales o Providing information nowing when a machine is out of stock. • Facilitates micro marketing, e.g. Coke bottlers can use machines to relay information to the internet so people can figure out what sells better where. Pro’s for the consumer
• Interactive experience when purchasing a soft drink could produce added value as micro marketing can be used to satisfy the demand of consumers more easily. • Enjoy more promotions and pay less when the product is less valued.
2. What is Coke? What is Coke to the average consumer?
Coke is a strong soda brand: A brand is defined as a ‘name, term, sign, symbol, design or combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.’ (Kotler P., et al, 2004). Coca Cola is sold in nearly 200 countries over the world and is the world’s favorite soft drink. • Brand Image: Coca-Cola have very strong marketing techniques, from advertising to sport sponsorship. They have various taglines that are associated with Coca Cola to provide the image of a drink that quenches your thirst, is high quality, great tasting and that is part of daily life. For example: ‘Always Coca-Cola’, ‘Welcome to the Coke side of life’, ‘It’s the real thing’ and ‘I’d like to buy the world a coke’. • Brand Personality: Brand personality forms emotional constructs that helps to form brand/consumer relationships. Even the type of drink a customer buys will have a brand personality and so it will express their own self. Coca-Cola is known as ‘cool, all- American and real’, whereas Pepsi is for the ‘young...
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