Coca-Cola’s New Vending Machine

1. List arguments in favor of selling Coke through an interactive vending machine. Also list arguments against it.

Favor

 Nothing wrong with company trying to maximize profit while keeping its market share intact

 Also, the technology can be used to provide a fun experience for customers purchasing Coca Cola at their high tech vending machines

 Coca Cola can use the interactive vending machines without implementing the dynamic pricing strategy to increase their customer base and appeal to younger customer segment

 It is a good pricing strategy to induce variable pricing during off hours and service customers in need

 This technology can provide customer data relevant to their demand trends during a particular day/time and thus provide a platform for making marketing strategy

Against

 A customer might be in a time-sensitive situation and would not want to get involved in a conversation

 Variable pricing implementation through the interactive vending machine can lead to reduction in customer base

 Installation of this technology across vending machines could lead higher cost without much change in sales

 Brand switchers can shift to different cola brand if they feel they are being exploited by being charged higher based on climate or high demand

 Can lead to public outcry of the technology in case it doesn’t function as expected as was seen in the case of Microsoft AI chatbot which spurred racially insensitive statements

2. When, how, and for whom does this technology create value? Destroy value? Think about segments within the soft drink market while answering this question. [Hint: consider loyal Coke customers, switchers among cola products, loyal Pepsi customer, etc. while thinking about segments.]

Create Value

When

 The weather changes occur leading to increase or decrease in the consumption of Coca Cola

 The availability of the units is either high or low in the vending machines

 The partnership between Coke and other snack vendors to provide other complementary eatables at the vending machines

 While designing marketing campaigns targeting different customer segments

 Compete with other brands in terms of providing better customer experience through utilization of latest technology

How

 Price discrimination based on the weather and demand situations can lead to profit maximization

 Track the customer trends in terms of type and cost of coke preferred

 Coke can partner with retail chains to provide additional discounts based on the sale patterns and negotiate deals

 Target a particular customer segment like students, business executives and brand switchers with particular types of colas

For whom

 This technology creates value for Coke in terms of getting an insight into customer expense patterns

 Provide an opportunity to increase profits for Coke executives

 This technology creates values for different stakeholders in the situation like customers, Coca Cola executives, suppliers, retail chains etc.

Destroy Value

When

 A competitor can provide a cheaper option in type of colas and can pounce on the chance to hurt Coke’s brand image in the public opinion

 Dissatisfaction among customers if the price discrimination is introduced and could lead customers churning or switching to other cola brands like Pepsi

 Technology requires considerable amount of money for implementation and maintenance

 Loyal and long term Coca Cola customers might not like the change and prefer the “traditional” vending machines

How

 Competitors can reduce the prices temporarily to dampen the effect