coca cola japan pricing

7/31/2019 Coca Cola Japan Pricing

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Business in Korea and Japan

Coca-Cola Japan

Minseok Choi, Darshani Sharma, Zhiyuan Lin, Xing Wu, Younjin Lee, Ravi

Mashalkar


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Smart Vending Machine inJapan?

Should we extend existing technolo-gy through smart vending machines,which can automatically adjust prices

as per the weather/climate condi-tion?

If the temperature is high

then price will be high

If temperature is low


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Price Difference Calculation

Assumption:

1. High/Low Temperature is Equally-likely.

2. The marginal cost of temperature variationbe 15 cents.

3. Lastly, Coco-cola is assumed to be risk-neu-tral.

Normal Vending Machine:

Number of cans sold equals to 200.


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Price Difference Calcula-tionContd

Normal Vending Machine:

Expected Price is 70 cents per can.

Expected profit is 200 x 70 = 14000cents

Smart Vending Machine: Price duringHOT weather is 85 cents per can.

Price during COLD weather is 55 cents

per can.

ff


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Price Difference Calcula-tionContd

Incremental Profit per day per ma-chine:

= 14900 14000 = 900 cents

Assuming 50,000 Smart Vending Ma-chine:

Annual Increment Profit


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What went wrong in 1999?

Value proposition

Customers pay higher price for a chilledcan of coke but in this case can of cokecoming out from a vending machine wasthe same irrespective of temperaturedifference.

Emotional Bonding

Coke had been an iconic brand with verystrong emotional attachment in U.S.

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Japanese consumers analy-sis

Tend to agree with the opinion ofother person, rather than to insisttheir own

Be affected by the reputation amongtheir friends and the recommendationby a salesman as well.

Purpose of purchase: practical use orthe ostentation of their social status(especially in case of importedgoods).

Interested in rice cate or : the lowest

Wh diff i l i i


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Why differential pricing suc-cessful in JP?

With correct promotion strategy, Ja-panese consumer consumers will buyhigher price.

Advanced American life style is still

attractive.

Need more here


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Miao~

Interactivevending ma-chine:

To adapt Kawaiicharacter phi-losophy inJapan

ACG, Otaku &Robots

Increase er-

Oth lt ti f ti i


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Other alternatives for timingpricing

Emphasis that coke will be cheaperin cold weather

Instead of mass launch, selectivelylaunch new vending machine in ar-

eas where has low repeat purchaseslike tourist spots

S t V di M hi i


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Smart Vending Machine inJapan?

coca cola japan pricing

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