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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.
l
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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?
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