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ECONOMICS: Coca-Cola case - Essay Example

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The researcher of the paper will tries to solve some tasks imagining that Coca-Cola has developed a soft-drink vending machine that adjusts the price according to the weather (price rises during warm weather and decreases during cooler weather). …
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ECONOMICS: Coca-Cola case
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ECONOMICS: Coca-Cola case

Download file to see previous pages... The author of this research examines the soft-drink vending machine by Coca-Cola in terms of market economics that is, as having demand and supply. He will also assume the supply curve is vertical to reflect that the machine gets refilled on some frequency, such as weekly. In the hot weather, cold drink not only helps in quenching the thirst, but it provides a welcome relief from the heat waves. Therefore, the consumption levels also go up. In case the supply is limited then the stock will disappear in no time, because the consumers tend to collect some stock before it disappears from the dispenser. Coke will therefore not be available to people who feel the need of it in later hours. Therefore when prices is increased, there will lesser amount of hoarding of personal stock by the consumers, and the supply will be taken up by two types of consumers basically;
i. Those having enough paying capacity
ii. Those who are in dire need of it

In this case price is playing a stabilising role by applying discriminatory pricing. Price discrimination by charging different prices from different groups of consumers under different circumstances helps in yielding good business to the company. In addition such a pricing helps in making the product available to the targeted customer segment.
The prevailing system of machines having fixed pricing helps in attracting more customers, and making loyal customers. Customer can plan a budget for his needs as per the requirements. ...Download file to see next pagesRead More
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