Coca-Cola’s New Vending Machine: Pricing to Capture Value, or Not?

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Table of Contents

Introduction
Background
Recommendation
Basis of Recommendation
Alternatives, Risks, and Assumptions
Action Steps
Works Cited

Introduction

Coca-Cola is a soft drink product that is one of the best familiar products available anywhere in the world. Its value may change periodically according to its demand and supply which causes to alter the uneven price of this product. “Coca-Cola has begun testing vending machines that could adjust prices of their drinks in vending machines according to any number of factors that cause momentary fluctuations in supply and demand, particularly the weather.” (Coca-Cola’s New Vending Machine: Pricing to Capture Value, or not? Brief Introduction Coca-Cola has begun Resting Vending Machines that could adjust prices of their Drinks in Vending Machines according to any Number). In today’s competitive business world, pricing is a key ingredient of a marketing approach; only an effective pricing policy can lead to a successful business.

The pricing policy influences the approach of consumers of Coca-Cola towards its usage. The action towards this is to be initiated by the production and marketing managers keeping their hands together. The discussion will result in the need of varying the price of Coca-Cola according to the change in weather conditions and whether it will affect the production as well as the marketing of the product. Also, they should have help from the finance manager with regard to financial resources.

Background

The vision of the company is to reach maximum consumers. The marketing personnel focuses on implementing the variable price strategy in the market. The weather condition has a great influence on the increase or decrease in the demand for this product. The sale will be at its peak during hot weather conditions; on the other hand, it will be low during winter. So, the price strategy variation implementation is based on the above criteria.

Recommendation

The price alteration may be least entertained. Variation in price strategy should not be implemented. During extreme hot weather conditions, the demand for soft drinks increases. Mostly, workers doing heavy jobs are the major consumers of soft drinks; the increase in price can change their preferences. A slight decrease can result in increased sales of the product. Also, a portion of regular users of the product may refuse to accept the increased cost.

Basis of Recommendation

The recommendation is deduced from the analysis of the various levels of people in society. The marketing and economic factors are also considered for this recommendation. The following can be an adequate basis for this proposal.

Decrease in sale
Exposure to a different product
Loss in share price

Decrease in the sale

During the summer season, the tendency of people to consume soft drinks will increase due to increased exhaustion. The increase in cost may lead to a decrease in the sale because many people cannot afford more consumption of the costlier product.

Exposure to a different product

A change in the price of a product prompts the consumer to make a comparison between various similar products. In the summer season, as people opt for more quantities of soft drinks for the amount of money in hand, they refuse to buy the product having a higher cost. It will also give a chance for the other products to get more market share resulting in loss of market to the product having higher cost, even during off-seasons.

Loss in share price

When the demand for a product decreases, the number of people who prefer this company’s shares decreases. This lowering of popularity paves way for depreciation in the company’s share price.

Alternatives, Risks, and Assumptions

A number of key assumptions are made while formulating the recommendation. The main assumption made in the study is that the people from all economic levels of the society are consumers of this product, Coca-Cola. It is also assumed that the company will be able to meet the contentment of the consumers of Coca-Cola. In order to get a backup for the analysis, it is supposed that no other companies are decreasing or increasing the price of their products.

The main uncertainties identified in the proposal can be viewed in a proper manner. There is a chance for a mismatch in the number of consumers with the target fixed while planning the pricing strategy. If the product goes behind and beyond the stock kept at the production department, the hope will be a bit diminished. There cannot be any certainty in other companies’ ideas to decrease or increase the price of their products.

Action Steps

First, an estimate should be prepared on the expected consumption in the summer and winter seasons separately. Next, the annual budget should be prepared, and based on this, strategic planning should be formulated. There should be proper advertisements and enough marketing should be carried out. All these steps should be observed with a keen approach and should be implemented in full swing.

Works Cited

Coca-Cola’s New Vending Machine: Pricing to Capture Value, or not? Brief Introduction Coca-Cola has begun Resting Vending Machines that could adjust prices of their Drinks in Vending Machines according to any Number: Have s Little Read. Coursework. Info: Inspiration in an Instant. 2009. Web.

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