Cola 434jv

Statement of the Problem: Coca Cola, the world's largest beverage company, has been under a tremendous amount of media scrutiny lately. Word got out that Coke is testing a new vending machine technology that changes price based on weather conditions. The core problem which coke is facing here is public relations disaster. They have put their brand image at stake. The way in which the Chairman and CEO of Coke M. Douglas Ivester disclosed about the new vending machines was inappropriate. Price discrimination can be called as a symptom of a problem in this case as it is not the strategic problem. If the customer relations team dealt with the situations properly then this problem would not arise. Issue Analysis: The main issue of this case as mentioned earlier is public relations disaster. The way in which coke disclosed about their vending machines was not proper.  Coke abruptly disclosed that they have invented a new vending machine which fluctuates prices according to the teamprature. They should have known that no consumer will accept this readily. Their customer relationship can be damaged.  Price discrimination is also a main area of concern in this case. Price discrimination is generic but it is the first thing which gets to the consumers mind.  The next problem is that the brand image of the company is at stake. The reputation of coke can be damaged. They claim that from 113 years they have been putting products within the arms reach of desire for its consumers, but now they have messed up the situation.  Coke also can lose its target customers to its arch rival PepsiCo. Alternative courses of action: Some corrective measures can be taken to implement this strategy of price changes. Coke should try to improve their public relations by proper planning. Some of the alternatives are:  Coke must try to show the value of its product to the consumer with this new growth strategy.  Lowering the price at off-peak buying time in order \

New Vending Machine Pricing to Capture Value, or Not? Case Facts Coca Cola planned on introducing new vending machines that are able to automatically change prices according to ambient temperature. How this works: the price of Coke goes up in hot weather where cold drinks are regarded more valuable to satisfy thirst than in cold days. Coca Cola tried to maximize profit from these smart vending machines, after facing price war in supermarkets. This practice is called price discrimination, where a company is charging different prices for the same product to different consumer. In the Coke‟s vending machine case, the differentiation is on how consumer values cold drinks in different weathers.

Case Is price discrimination -in Coke‟s case in particular- a “good” or “evil” practice? Marketing is about customer value, from identifying, creating, delivering, communicating, maintaining to rediscovering. The same goes for price discrimination, it should bring value to customers although the word „discrimination‟ have a negative tone. In short, value proposition is what the customer get for what the customer pays. There are three types of price discrimination which we see in our surrounding .  - First is when a product is sold at different prices to each individual consumer. Price level is set according to consumer willingness to pay for the product. - Second type is when company charging lower price for consumer purchasing in higher quantities or in bulk.  - Third type is setting different price for different consumer groups, such as gender, senior citizen, or student. PROS- ing - Ivester Price=Max(Utility) Utility Function • Utility of Coca Cola varies from moment to moment •In summer the utility of Coca Cola is very high. Hence price it very high.

Price Units Consumed

PROS- ing - Ivester •11.9 % of soft drink sales, world wide, came from vending machines •In US 1.2 billion cases of soft.