Monday, May 14, 2007

The Nickel Coke

Why did Coca-Cola remain at five cents for 70 years? For starters, vending machines didn't take pennies. Hi-tech vending machines ensure that prices can go up quickly: Solving the mystery of the 5-cent Coca-Cola. - By Tim Harford - Slate Magazine

1 comment:

Steve said...

Another little tidbit of information that might explain Coke's reluctance to raise their price was Pepsi Cola.

At one point, short of money and market, Pepsi got hold of a bunch of 12 ounce bottles at a nice discount. They decided to use them and make it part of their marketing: "Pepsi Cola hits the spot 12 ounces that's a lot..." Pepsi then seized that part of the market as that was looking for a bargain cola.

This would make me thing that for many years Coke also felt the price pressure of Pepsi. They could claim quality and hence a smaller serving (6 ounces), but could not go higher for fear of driving more cost-conscious consumers to Pepsi.

Of course, it didn't all go Pepsi's way either. After the depression and WWII Pepsi was dogged for many years with the perception of being a low cost, poorer substitute for Coke, and had to work to build brand loyalty based on taste and image.