Case Study #5:
Yuma Puma Energy Drink: "The Price is Heating Up"
Group 3: Tracy Brown, Ryan Jones, Robert Putnam, Tom Stevenson
Fall 1 2015
Florida Institute of Technology
Yuma Puma Chip Technology Overview
Yuma Puma’s business operations seek additional revenue streams to continue growth, which include new vending technologies. Exploratory concepts in the vending machine industry are “chips,” which can adjust vending machine prices based off environment or timing factors. This includes increasing prices when the temperature rises or the flexibility to adjust prices based on the time of day.
Yuma Puma approaches this technology as a means for increased revenue as pressures grow to meet quarterly growth. Yuma Puma’s business forecast projects a million-dollar incremental profit generated in the short-term if this technology is adopted. Additionally, the business has invested significantly in enhancing the distribution model, but has fallen short of expected returns.
While chip technology would enable Yuma Puma to meet short term objectives, consumer response may pose long-term negative effects. Chip technology which fluctuates pricing based on environmental factors may be viewed as price gouging. While not illegal, this strategy may be viewed as unethical by consumers.
The Decision on Implementing Chip Technology
Yuma Puma has the option to employ a new computer chip that would allow the vending machines that dispense energy drinks to change price at any time of the day. Yuma Puma could program its machines to charge more money on hotter days and during times of the day when demand is at the highest. After careful review, we have decided it would not be a good idea to deploy thi...
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