Coca Cola's New Vending Machine

Timur Bagautdinov

Cases in Marketing

“Coca Cola’s New Vending Machine”

The whole case concerns the famous beverage company named Coca-Cola getting in a scandal of introducing new vending machines that introduced price discrimination in the end of the last century. As Coca-Cola officially announced later, they were never planning to introduce these new vending machines but only tested new potential concept. So what was so special about the new Coke vending machines that has shocked the public and shook Coca-Cola’s public image of a customer-friendly company? The answer is pretty simple, although might seem as an awful one from the customer’s perspective. Coca-Cola was testing a concept of a vending machine that automatically adjusted prices of the beverages depending on various factors, mainly outside temperature. So for example when there is a hot sunny day the vending machine would recognize this and adjust the prices for the beverages to a higher level, due to the fact that potential customer demand at this day has a possibility to increase accordingly. The opposite scenario would take place on days that have a lower temperature, where the price will be lowered as the demand for Coke will be low as well. This kind of economical theory of adjusting prices according to different customers according to different conditions is known as price discrimination. It is easy to imagine that from an economical/supplier point of view an introduction of such a smart-vending machine will increase the total benefit of the supplier and the consumer, but obviously from an ethical point of view this innovation in vending-machine technology, especially in a consumer-country like the USA, have raised a serious ethical issue within the customers of the Coca Cola company. People simply thought that they are being ripped-off and Coca Cola caring only for their profits and not customer benefits. From a marketing point of view the Coca-Cola was worse off in letting the news of...