Coca Cola New Vending Machines
Coca Cola New Vending Machines
Machines (A):
Pricing to Capture Value or not?
Prof. Prem P. Dewani
Fellow: IIM Ahmedabad
Argument in Favor
There is nothing new here. Interactive
machines are very common in countries like
Japan. So why not in US?
Argument in Favor
Argument in Favor
Dynamic pricing would be norm in most
markets. Coca cola would be better off if it
were ahead of others on this front
Argument in Favor
If it can be done for the other product and
service categories i.e. airlines, then why not
for soda
Argument in Favor
Although the price on a hot day might be
higher but average price across multiple
purchases occasions might not change (or
could even go down
Average customer is able to
understand that?
Argument in Favor
Argument in Favor
There is always a negative reaction to any
radical change. It is a question of customers
getting used to new way of doing business
Argument Against
This goes against customer expectations. It is
against the very core of what Coke stands for:
Value, ubiquity and affordability.
Argument Against
Argument Against
Argument Against
Price Unfairness
Argument Against
Consumer market is not ready for dynamic
pricing of routinely purchased products such
as Coke
Argument Against
Not advisable to change the most profitable
channel with this paradigm shift. Failure may
erode Cokes profitability significantly
Argument Against
Changing price if cost goes up is justifiable,
but changing price if temperature goes up is
not. It has hard to believe that cost of the
product goes up because of the temperature
Further, temperature is exogenous
variable and can not be used as a
reason for raising prices
Argument Against
What is a brand?
For God Country and Coca cola: The unauthorized history of the
great American soft drink and the company that makes it
Customizing Price
Done right
The firm has not yet launched the product.
The hue and cry is more about what Ivester
did or said than about what the company has
done
Done right
The focus is enhancing the consumes
consumption experience, not on changing
prices. Changing temperature is only the
beginning. Coca Cola can easily extend its
technology to customize other attributes to
individual consumers. It is the essence of
relationship marketing
Done right
Done right
Done Wrong
Done Wrong
Done Wrong
The company should have clarified the prices
will not only go up on warm or hot days but
also go down on cool or cold days. Framing
the issue would have gone a long way
towards toning down the negative reactions
Done Wrong
Thanks