Coca-Cola New Vending Machine: Pricing To
Capture Value or Not?
Coca-Cola, the renowned beverage is a flagship product of The Coca-Cola Company. The company is not only a manufacturer but also a distributor and a marketer of many other non-alcoholic beverage concentrates and syrups. Coca-Cola was invented by pharmacist John Stith Pemberton in 1886. The Coca-Cola formula and brand was bought in 1889 by Asa Candler who incorporated it in The Coca-Cola Company in 1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 400 brands in over 200 countries. Originally Pemberton only sold 9 glasses each day. The Coca-Cola Company now sells more than 1.6 billion cans each day. Coca-Cola means much more to its customers than being just a soft drink. It is a preferred drink during summers and social gathering and so has become an integral and essential part of each one’s life. But lately Coca-Cola has been under a tremendous amount of media scrutiny. On December 17, 1999, The Wall Street Journal ran a front page story headline “Tone Deaf: Investor has got all skills of a CEO but One: Ear of Political Nuance. A few months later came a public relations gaffe, word got out that Coke was testing a new vending machine technology that changes price based on weather conditions. Coca-Cola would have earned $328.5 million annually if they sold cans at 85 cents on HOT days and for 55cents during the colder days. This rampant price discrimination had angered the consumers, since Coca-Cola was taking undue advantage of their necessity. After carefully analyzing the case, three key points for this controversy were addressed. 1. Temperature reading technology itself.
2. Pricing and Promotional matters
3. Brand Image
The first issue is the temperature reading technology itself. Chairman M.D Ivester was interviewed by a Brazilian newsmagazine, Ivester had described how the demand increases during the sports championship finals held in the...
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