Report for Coca Cola Case:
1. Whether Coca cola should introduce the concept of vending machines that charges
different price during different weather?
2. What did Coca Cola do right? What did it do wrong? How would you do it?
3. What is price discrimination and when does it work?
Coca cola plans to introduce the concept of price discrimination in its market through vending machines that will charge different price according to weather.
Price discrimination can be defined as charging of different prices for different quantities of a product, at different times, to different customer groups or in different markets, when these price diffference are not justified by cost differences.
Selling Coke through vending machines that charges different price from a different class of buyers according to weather is a classic example of Third Degree price discrimination on the basis of time i.e. Time pricing.
Consumers will be charged more in hot season as compared to the cooler season.
There are certain criteria's that must be fulfilled before the decision of Price Discrimination. The coca cola's decision has been evaluated on these criteria as under:
I. The market must be segmentable and must show different intensities of demand - this is possible as there can be clear segments on the basis of weather, also we have the machine doing this task of identifying segments automatically for us. Besides, the different segments definitely have different intensity of demand - the hot season segment consumers will have high desire for the drink than the cold season.
II. Lower price segment must not be able to sell in the higher price segment - not posible because coke is priced high during the summers and low during winters. There is less likelihood that the consumers will store the drink...