Coca Cola Vending Machines Case Study

Coca Cola a Vending Machine Case Study Problem Statement: Coca Cola Co. , the world’s largest beverage company is facing a public relation nightmare which can ultimately put their brand image at stake. Their Chairman and CEO, Ivan Ivester, abruptly announced the introduction of interactive vending technology which will lower the price of coke during off-peak buying time and increase the price during very hot weather conditions, Ivester virtually confirmed the vending machines will be introduced to the market soon.
The core problem is not if the vending machine should be brought to market but WHEN and what the public relations/marketing strategy should be in the midst of the current media scrutiny to rebuild loyalty with avid coke drinkers and Coke’s image. Critical Factors: Increasing the vending machine profit, which has been the main profit resource for the company, serves the purpose of the new technology. Sales of soft drinks are on the rise. Last year, about 11. 9 % of soft drinks world- wide derived from vending machines. Intelligent vending has already begun in Japan using the same technology.
Taking full advantage of the law of supply and demand, price fluctuations occur all the time in several industries such as the airline and movie industries and are not new to the general public. It often occurs when the supply for any product is high and the demand is low; basic economics. Price discrimination also can occur demographically or geographically and is hard to eliminate from a customer’s mind once disclosed in a negative light ultimately setting the stage to lose customers to Coke’s #1 competitor, PepsiCo. Additionally, their brand image is at stake.

Ivester’s statements regarding the new technology was disclosed too soon and the response from the public relations team was not sufficient to the loyal coke drinkers and the media, spurring several negative articles and backlash from their customers. Strategic Alternatives: Option A. Eliminate any option of introducing the interactive vending machines to the public in the near future and create a new public relations and marketing strategy focusing on Coke’s loyalty to its customers to include re-establishing the value of drinking coke during extreme hot and cold temperatures.
Option B. Proceed with a plan to implement the intelligent vending machines at a later date than plan originally plan, while working to develop a new public relations and marketing strategy to curtail the current media damage, focusing on Coke’s loyalty to its customers and re-establish the value of drinking coke during any weather conditions. Evaluation of Alternatives: Option A: ?Pros: Build trust with consumers; on same level with competitors regarding technology. Cons: This strategy does not coincide with the company’s marking plan to pump more sales of the flagship coke into the market, most likely utilizing the heat sensitive vending machine as one of the core tactics to increase revenues. Option B: ?Pros: Technology availability and costs to implement the new vending machines is inexpensive due to falling prices of the temperature sensors and computer chips; ? Internet connectivity associated with the technology makes it very easy to track daily and hourly demand based on fluctuations thus making it easy to determine the price point offered in any region; ?
The new public relations and marketing campaign will slowly educate the consumer of the inevitable; ? Increase profitability during the peak season due to lower costs compared to competitors. ?Cons: Run the risk of losing loyal customers due to the price gaps urging many consumers to search for lower price from the competitor’s vending machine; ? Largest competitor, PepsiCo announced they have did not have any plans to introduce the new technology Recommendation: Option B Corrective measures must take place to implement a strategy of price changes.
Coke must improve their public image with a well executed public relations and marketing strategy. Justification: As a consumer, I am not sure why corporations continue to insult our intelligence. If a product is in the testing stage, then it is just a matter of time before the new technology, (if worthy) is introduced to the market. R in this case, serves the sole purpose of creating new technology in order to maximize efficiency and costs, thus increasing profits. And, quite frankly there is nothing wrong with a company trying to maximize profits.
Vending machines have remained largely untouched by discounting and although the machines can automatically raise prices for its drinks in hot weather, in my opinion not too many consumers would notice. Coca Cola Co. can also be the first in the SDC market to introduce new innovation that will be able to effectively gauge the buying interests of their customer by the touch of a button. This technology will help to predict sale revenues and take the guesswork out of customers’ wants and needs.
It will also allow Coca Cola Co, to always stay ahead of the competition and remained the leader in the industry. Additionally, price discrimination exists everywhere, across all industries and the new technology will connote increased efficiency for the entire SDC market. The public relations and marketing campaign will help to educate and prepare the average consumer of the inevitable introduction of heat sensitive vending machines. The goal in mind for the campaign is to continue to establish Coke as the number one thirst quencher regardless of the weather.