This blog post is my analysis on the economic podcast “Episode 416: Why the Price of Coke Didn’t Change for 70 Years.” This podcast appeared on the planet money website on November 13, 2012. The podcast summarizes how The Coca Cola Company used the strategy of having a fixed cost for 70 years. The price of coke was only 5 cents for 70 whole years. The way the company did this was advertising that their product was only 5 cents.. This made it that the retailers were unable to charge a higher price than what was being told. The contract of the fixed cost be Coca Cola was unable to change because so. People may have thought at first that the companies plan to charge at a fixed rate would be dumb, but I think their smart business strategy to advertise made it irrelevant. Another way they maintained the fixed cost was because of their vending machines. Coca Cola company manufactured their own vending machines where the machine would only take one coin. That coin was a nickel. After later trying to have Eisenhower issue a 7.5 coin value Coke was turned down.
The Coca Cola Company is a very smart Company and is why they have been around for so long. It would have been great only paying a nickel for a soda, but thats not the world we live in today. With tons of competition the price values rise and drop. A soda today ranges from about $1.50 to $2.00. Coke is still a major power in the beverage distribution and their business strategy has to do with that.
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