1. Personally speaking, coming from a consumer’s point of view, I think that selling Coca Cola through interactive vending machines is a bad idea. Nonetheless, it is a good idea coming from the company’s standpoint. Even though conventional economic theory would say that it is wise for Coca Cola to execute price discrimination to increase market efficiency, dual entitlement theory says otherwise. Since consumers already have a reference price and firms have a reference profit they should stick with, consumers would be upset because they think that the firms are trying to receive extra benefits. Moreover, as the interactive vending machine that Coca Cola plans to implement does not change price based on consumer’s willingness to pay, but rather
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Price discrimination is a practice in which firms can maximize profit from charging different prices for the same product to different consumers. There are three types of price discrimination: first-degree, second-degree, and third-degree. First-degree price discrimination happens when a product is sold at different prices to each different customer. The price level is determined by a consumer’s willingness to pay for the product. Second-degree price discrimination happens when a company charges difference prices for different quantities bought by a consumer. The price level is determined by the quantities bought. Lastly, third-degree price discrimination happens when a product is set at different price level for different groups, such as gender and …show more content…
I think that Ivester did not understand the core value proposition of Coca Cola at all and seemed to undermine the power of the dual entitlement theory. Also, as consumers are expecting the same level of utility and consistency from consuming a can of coke, Ivester should not have proposed the idea that the price change of coke depends on the temperature since it is an exogenous factor that cannot be considered as a reason for a price change. Moreover, since Coca Cola is a brand of happiness and is customer-friendly, Ivester should frame his ideas in a way that is acceptable to the customers, instead of stating what a conventional economic theory dictates about changing prices to maximize efficiency and
Price discrimination is a practice in which firms can maximize profit from charging different prices for the same product to different consumers. There are three types of price discrimination: first-degree, second-degree, and third-degree. First-degree price discrimination happens when a product is sold at different prices to each different customer. The price level is determined by a consumer’s willingness to pay for the product. Second-degree price discrimination happens when a company charges difference prices for different quantities bought by a consumer. The price level is determined by the quantities bought. Lastly, third-degree price discrimination happens when a product is set at different price level for different groups, such as gender and …show more content…
I think that Ivester did not understand the core value proposition of Coca Cola at all and seemed to undermine the power of the dual entitlement theory. Also, as consumers are expecting the same level of utility and consistency from consuming a can of coke, Ivester should not have proposed the idea that the price change of coke depends on the temperature since it is an exogenous factor that cannot be considered as a reason for a price change. Moreover, since Coca Cola is a brand of happiness and is customer-friendly, Ivester should frame his ideas in a way that is acceptable to the customers, instead of stating what a conventional economic theory dictates about changing prices to maximize efficiency and