Coca-Cola's New Vending Machine(a): Pricing to Capture Value, or Not?

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 to increase the overall sales. ?Introducing the vending machine in a proper way by informing the public and explaining them the positive side of the increase in prices. It’s a difficult task but it can be explained to people by proper customer relationship management. ?The can also put a point that such a pricing strategy will increase competency and in turn increase the efficiency of that product range in the market. Plan of Action:

Year in and year out Coke is one of the top 5 brands in the world. It has been around for over 100 years and is known for its top notch marketing and social responsibility. As coke already has an established market position it’s not difficult for them to make good for their mistake. They can launch the vending machine in a proper manner by proper planning and advertising. They should explain the utility of the beverage on a hot day. A person will be more delighted to have a chill coke on a sunny day. Coke should present this idea in a proper method. They can also show the customers that the prices will be down on a cold day.

They should balance it. Coke can portray that this strategy increases competency of the product and as a result the customer will get a better product. Summary: To summaries this case we can say that it’s nothing but a simple case of public relations disaster. Coke disclosed about the vending machine in such a manner that the critics bombarded coke with criticism. It created negativity in the minds of the consumer. It was shown as a case of mere price discrimination. Coke could have maintained good public relations and launched the product. But still they can use the corrective measures as mentioned above.