Matthew Ryder breaks down how Coca-Cola uses distribution and convenience pricing to maximize profit. The company's strategy is simple: keep Coke within arm's reach by charging different prices at different places, turning proximity into premium pricing.
Here's how Coke scams the world. Coke runs a really, really interesting business model because essentially, like, on the face of it, they actually only produce syrup. And then, like everyone else, does everything else. But their business is broken down in sales, not by product, but by distribution method. And Coke's mandate and their mission statement is that a Coke will always be within arm's reach. That is a very, very important statement. It's very, very profound because that means that the way that they look at the world is that, like, the level of convenience and how within arm's reach it is and how easy it is to get will dictate the pricing model that you get. So we've all been to the grocery store and all bought a 24 pack of Coke. So you go there and you pay $8 for a 24 pack of Coke. And then from there you go to a convenience store and you go in there and you buy a can of Coke for $4, right? So you're buying the exact same product in the exact same mechanism, exact same tin, exact same costing model, but you're buying it at a totally different price based on the convenience and how close you want to be able to get that. Open it up and have the experience of having a Coke.
