Over the years, Coca Cola has formulated a business model that has enabled it to remain amongst the most successful corporations within the beverage industry. The organization has been the global leader in the industry based on its competitive strategies that enhance the achievement of a competitive advantage. The focus of this paper is to analyze the new vending machine so as to ascertain its suitability. It will also provide recommendations of some of the possible solutions to the various problems associated with the new vending machine.
The Coca Cola Company is perceived to be a corporation whose success is largely attributed to its distribution systems, as well as its marketing techniques. This article reveals that the nature of the challenges that the corporation was experiencing whenever it sought to introduce vending machines that were sensitive to the variations is ecological conditions. When the Chief Executive Officer made an announcement pertaining to these vending machines, he informed the general public about the manner in which they will function. However, it is extremely unfortunate that he did not take adequate time to elaborate the manner in which they will function Clearly. As a result, most of the organization's customers drew a broad range of conclusions with regard to the introduction of the new vending machines. Most of these conclusions were mainly negative conclusions. The majority of the people misinterpreted the message that was being relayed by the Chief Executive Officer.
In addition, the way in which the corporation handled the corporate communications worsened the situation. Communication strategies play an imperative role in the achievement of an organization’s objectives and the organization was failing in this perspective. This is because it allowed various people to convey information pertaining to this subject matter. Every person who was speaking on behalf of the company presented new information, and they did not clarify. As a result, most of the consumers continued drawing negative conclusions about the new vending machines. For instance, the Chief Executive Officer did not clarify the organization was only intending to introduce the new vending machine. In fact, the organization was still embarking on the process of exploring whether the application of such a technology would be suitable.
Over and above that, price discrimination is a common concept in the world of commerce, and it is widely practiced across the globe. Corporations employ price discrimination to enhance their position of profit maximization within a specific market. The Coca Cola Company sought to use the new vending machines as a tool for price discrimination. The new vending machines would serve as the most suitable media of attaining this objective. However, the manner in which Coca Cola handled their communication ruined its opportunity of successfully utilizing this technology for purposes of attaining this objective. This is because the officials of the organization informed the public importance of charging higher prices during warm seasons than cold seasons. This is mainly because during the warm season the demand for Coca Cola Products is usually at an all time high.
The majority of consumers did not welcome this idea. This is primarily because the Coca Cola company did not adequately convince consumers why they should part with more dollars than before for the acquisition of the same product. The officials of the Coca Cola Company informed consumers that the prices of the various Coca Cola products needed to be reviewed northwards during such seasons due to the laws of demand and supply. For the majority of consumers, this appeared selfish for the organization since the implementation of the project would only benefit the organization. The costs of production per unit would remain constant, and it was not justifiable for Coca Cola Company to review the prices of their products in such a fashion.
In light of the aforementioned information, it was essential for the management of Coca Cola Company to formulate strategies that would redeem its corporate image. This is because the company had handled its affairs in a manner that made it lose its popularity. It is imperative for the management of Coca Cola Company to appreciate that this corporation operates in a market that is largely characterized by products that exhibit a lot of similarities. This implies that the primary avenues through which an organization manage to be extremely successful within this industry is through excelling in innovation and creativity. The promotion or cultivation of these two attributes would facilitate the Coca Cola Company to differentiate the various products offered by the organization in different markets. Corporate Communications serves as a key medium through which management can realize this objective. Management needs to improve the manner in which the organization handles its communications. This is because the prevailing situation was largely brought about by the fashion in which the organization had handled its communications.
The managements need to formulate mechanisms that will ensure that all matters pertaining to corporate communications will be in their best interest. This implies that management should ensure that corporate communications are handled in a professional manner. This is because corporate communications have direct implications on the nature of the image that the organization projects. In the event that the organization handles its corporate communications in a professional manner, it will project a positive corporate image. Conversely, if the organization handles its corporate communications in a manner that is unprofessional, it will project a negative corporate image. Therefore, the inability of the organization to handle the communications in a professional manner aggravated the situation. This is because the customers did not perceive any value addition with the introduction of the new vending machine.
In this scenario, the Chief Executive Officer did not handle corporate communications in a professional manner. As a result, his message was misinterpreted by most of the consumers as well as the beverage market in general. The Chief Executive Officer should have informed the market that new vending machine project was still an idea under the supervision of the organization. Alternatively, he should have refrained from conveying information pertaining to a matter that was still under further research and considerations. The manner in which he handled the communications of the organization caused panic throughout the beverage market. The majority of the participants within this market thought that the Coca Cola Company had already decided that it would introduce the new vending machines. This is an attribute that brought about negative implications of the general popularity of the various products that were being offered by the organization.
Additionally, the management of Coca Cola Company should develop a marketing campaign. The primary objective of this marketing campaign was not the restoration of the brand equity of this corporation. Obviously the brand equity of the organization has depreciated due to the fashion in which the corporation has handled its corporate communications. The marketing department needs to formulate messages that will seek to reassure consumers about the pricing of the various Coca Cola products. These messages should be geared towards passage of information to consumers that the organization will not in any way hike its prices. In the event that management still wants to implement price discrimination, it should look for innovative ways of providing additional value to consumers. Such a move would enable it to increase the prices of the various products without generating any negative implications on the popularity of the products. This is largely because consumers will be convinced that the increase in prices is attributed to the increase in the nature of value being provided by the products.
Moreover, the management of Coca Cola Company needs to review its price discriminations strategies. This is because price discrimination is essential to the success of any corporation. However, the corporation needs to ensure that it has developed price discrimination strategies that will facilitate the realization of the highest possible returns. Market research serves as an effective medium that will facilitate management to determine the most suitable price discrimination strategy. Market research will enable management to be conscious of the nature of price that consumers are willing to pay for various products that are being offered. It is essential for Coca Cola to carry out various market researches. The broad range of disparities between the markets in which this organization operates creates the need for marketing research in these markets. Each market has its unique set of characteristics. The prevailing economic conditions are a central factor in regard to the determination of the most suitable price for a specific market. The prevailing economic conditions influence the purchasing power of the majority of consumers within a specific economy. In the event that an economy is characterized by relatively high levels of inflation, there is a high possibility for consumers to experience relatively low purchasing power. As a result, the management of Coca Cola Company should ensure that their products are retailing at relatively low prices in such economies.
Management needs to acknowledge that the introduction of the new vending machines will be extremely costly to the corporation. This is mainly because the costs of introducing the new vending machines go further beyond the costs of procuring and installing these machines. The corporations will be obliged to incur higher costs than before so as to maintain its level of profitability. Evidently, the majority of consumers resent the introduction of the new vending machines. This implies that it is extremely likely for the organization witness a decline its total market share. As a result, the Coca Cola Company will have no other alternative, but to develop new strategies that will facilitate it to maintain its profitability. This corporation can manage to maintain its levels of profitability through aggressive marketing. The formulation and implementation of suitable marketing campaigns can be extremely beneficial to the corporation. This is because such campaigns can facilitate the organization to enhance its brand equity. However, the costs of these marketing campaigns will have negative implications for the general profitability of the organization. This is primarily because the organization will need to invest heavily in marketing campaigns so as to attain the desired outcome.
Forecasted Future Markets
Management of Coca Cola needs to be conscious of the various key attributes of the markets in which it has operations. This is because such attributes determine the nature of habits that consumers will exhibit. For instance, the warmer regions are more likely to resent the introduction of the new vending machines than the cooler regions. The introduction of the new vending machines will be disadvantageous to them. The Chief Executive Officer has indicated that these new vending machines will be sensitive to the prevailing ecological conditions. This sensitivity feature will facilitate in ensuring that the vending machine adjust the prices of the various products that it is dispensing in accordance with the prevailing ecological conditions. Consumers who are found in regions that are characterized by relatively high temperatures are extremely likely to end up procuring substitute beverages. This is because the introduction of the new machine implies that they will be paying more than everybody else whenever they are acquiring the Coca Cola product. The most unfortunate aspect of such a scenario is that there are regions that characterized by high temperatures for most of the year. On the flip side, Coca Cola Company is likely to enhance its market shares in regions that are characterized by relatively low temperatures. This is because the various products being offered by this company will be retailing at a price that is relatively low.
Potential of New Profits
In light of the aforesaid information, it is likely that Coca Cola will record losses if it introduces the new vending machines. This is because this new vending machines will facilitate the Coca Cola Company to implement the proposed price discrimination strategy. This price discrimination strategy will have negative implications for the appeal of the various products being offered by the organization. Coca Cola is likely to record a decline in sales volumes. This is based on the decline in the demand for its products. The new pricing strategy is not practical. The majority of consumers of the various Coca Cola products are found in the warmer regions of the globe. This is because of the prevailing ecological conditions makes persons be dehydrated within a relatively short duration. As a result, the majority of people are willing to consume soft drinks that are served when cold. However, the introduction of the new vending machines will only make the Coca Cola Company record a decline in sales in such regions. Consequently, this will have negative repercussions on the overall profitability of the company.
Additionally, the management of Coca Cola does not indicate how they intend to enhance their presence in the cold regions. This is because management needs to formulate strategies that will facilitate the organization to compensate for the decline in revenues in the warm regions. Management needs to communicate to consumers, whether or not the corporations will be offering discounts to consumers who are situated in the cold regions. The provision of discounts in such regions is extremely likely to bring about positive repercussions on the overall profitability of this corporation. However, it is imperative for management to appreciate that is not likely for the nature of revenues that they will realize, from the colder regions, to compensate or even be equal to the volume of revenues that they will lose from the warmer regions. Therefore, lack of well known strategies to achieve the specified objectives will lead to organization’s failure. The failure of the organization’s communication system will also contribute significantly to the failure of the proposed project.
The management of Coca Cola needs to appreciate the various facets of the prevailing problem. Thereafter, it needs to determine the most suitable solutions for these problems. This paper has clearly defined the prevailing problems in this scenario as well as provided possible solutions. Management needs to factor in the various issues discussed in the analytical element sections so as to establish the most suitable solution. The management of the organization needs to appreciate the early signals of a failing project and the proposed introduction of the vending machine can be considered a failing project. This is because the customers are the major determinants in the success of any organization since they purchase the products. In this case, the customers have made early signals that they would not consider the organization’s product based on poor communications by the organizations as well as increasing prices. Communication plays an imperative role in enhancing the success of an organization. Therefore, the failure of communication systems in the organization will hinder its ability to achieve its objectives in both short and long term.
HBS. Coca Cola's New Vending Machine: Pricing To Capture Value or Not. Boston: Havard Business School, 2000.