June 4th, 2008
Increase Profits With Utility Pricing
In 1999 Coca Cola experimented with vending machines that altered their prices based on local temperature. Utility is the relative satisfaction or derived value a customer receives from a purchase. Coke’s logic was that the utility of a cold Coca Cola on a hot summer day is higher than usual. Customer reaction was decidedly negative. The media had a field day with such nasty headlines as:
- “A cynical ploy to exploit the thirst of faithful customers” (San Francisco Chronicle)
- “Lunk-headed idea”, (Honolulu Star-Bulletin)
- “Soda jerks” (Miami Herald)