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Coca Cola: New Vending Machine

In: Business and Management

Submitted By Bull909
Words 861
Pages 4
COCA COLA
VENDING
MACHINES

COCA COLA VENDING MACHINES

11/22/2015

Selling coke through interactive vending machine a good or bad idea?
From the coke’s perspective, selling through vending machine is a good idea because they have earned higher margins for the firm. This channel has been untouched by the price wars unlike the distribution through supermarket where price wars have lowered the margins considerably. Sales of soft drinks from vending machines have risen steadily over the last few years, though most sales still take place in supermarkets ( in 1999, 11.9 percent of soft drink sales worldwide was generated by the help of vending machines). Vending machine isn’t a costly machine. It can be installed in any corner of schools & colleges, offices and mall. An interactive vending machine again is not a big cost to the company since cost of computer chips have fallen and uses a temperature sensor that raise price of soft drink when it is hot outside. This strategy is known as price discrimination i.e. charging different prices to different consumers depending (in this case) on the time of the day consumer purchases the drink. In economics, it is shown that price discrimination increases market efficiency and company should take steps to increase market efficiency. Price discrimination is now prevalent in almost all kind of business, especially the web based businesses.
However, what customers perceive matters the most. If coke introduces a machine as mentioned, customers might perceive the high price during hot summer days as exploitation. When the news of such machine was floated in the market, Coca Cola received negative reactions such as “a cynical ploy to exploit the thirst of faithful customers” (San Francisco Chronicle), “lunk-headed idea”. Such negative publicity impacts brand image of coke which is its biggest asset. Though

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