Just recently, I came across something that cannot possibly be true…I just want to get this confirmed. Again, this has to be some weird urban legend.
I read that Disney gets Coca-Cola products in its parks for free because of the advertising value, and then sells them and pockets all the money. This just can’t be true. I do know Disney probably received some sort of consideration/discount (and I know KO, in one press release from Disney, was mentioned to be on the hook to buy a certain amount of commercial time on media platforms owned by DIS) but I would assume KO generates a lot of money for itself with this partnership.
Am I correct? I can’t find any definitive response against this notion…
It’s nonsense. Coke does not give away its product to anyone. They are some of the toughest bargainers in the business and they have the product halo behind it to back it up.
They do have an exclusive contract with Disney so that only Coke products can be sold, but that is fairly standard in that business; try to buy a Pepsi product at McDonald’s, for instance. Any McDonald’s. Anywhere. Ever.
Now having that in the contract doubtless guarantees them a better rate, but it is far from free. Beer companies have “pour” contracts with stadia, too, which involve lots of things including advertising in the venue, sometimes on the radio or TV broadcasts, and hosting of promotional events - but it, like any other, is a profit seeking contract and the beer is paid for , and the beer pays for the advertising, logoed merchandise, etc.
There must be some sharp pencils on both sides. Do you think Pepsi puts in a bid for Disney’s business when it comes up for renewal? Competitive bidding can make for interesting numbers. Volume. Advertising… $$
I’m sure they do even though they know they have no hope of getting the contract.
We used to bid on contracts we knew we would never get, because we didn’t want the incumbent to get a free pass and lower costs. We chased announcers, sports rights, traffic reporters and other high priced things so the competition would have to spend more and have fewer resources for other things like promotion, billboards, etc. (No, we would not chase things we truly didn’t want, because by quirk of fate we might be stuck with it)
In the very competitive commodity chemicals business everyone knows who supplies the largest customers. You routinely send your sales staff in where you don’t have the business–to wine and dine them and maintain contacts. You hope the other guy will make a mistake and give you a shot at the business.
Trying to get business by cutting prices usually does not work. The existing supplier usually matches your offer. Hence, you trim his profits. And in return he often does the same to you going to one of your major accounts and offering a low price.
Of course when multiple aspects are involved such as advertising and large geographies are involved or multiple products, lots of creativity is possible. You may not displace Coke everywhere at Disney but they might give you one or two sites to see how you do and keep Coke on their toes.
Isn’t competitive bidding fun!!!
In the very old days we used to sell certain categories of advertising as “exclusive” to some sponsors. Beer and automotive were the two biggies, occasionally we’d have a bank or some other deep pocketed business, the rest were “non-exclusive”, although we’d keep competitors spots away from each other.
Eventually we split off the pre-game and post-game shows, so we’d have three “exclusive” automotive sponsors, and by the time the 80’s rolled around we’d have “exclusive” domestic and “exclusive” foreign in all three segments, so: 6 “exclusive” sponsors. What a joke. Good for us, tho.
Later, as the automotive market segmented by price rather than “car size” there was some grousing because Cadillac didn’t want to share the space with Lexus. They were fine when it was Datsun, but by that time the die was cast and they had to live with it.
Creativity, that’s the ticket.
Sorry I am so late in replying to this thread I started…thought I already had because I indeed did read it prior (this is a bad habit of mine)…just wanted to acknowledge the work put into the replies, and thanks for the info, some interesting behind-the-scenes business stuff here (I especially found the fact that KO is a tough negotiator interesting)…