The Vending Machine is Back...

August 1, 2004
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The Vending Machine is Back…

And it’s more versatile than ever
Comfort, convenience and ease are three yardsticks for measuring whether your brand can succeed in this re-emerging channel.
By Peter Mack and Marie Curi
In our time-starved society, one of today’s primary product development challenges is creating more consumer “touchpoints.” Too often, marketers respond by defaulting mainly to thoughts about what could work better on the store shelf.
This narrow-minded thinking neglects other distribution channels for reaching the busy consumer. One of them that deserves a closer look is the humble vending machine.
If you think the vending channel is a necessary evil, providing a stop-gap for workers and students until they can get to a store, you’re already behind the curve.
The $40 billion vending industry serves an estimated 82 million Americans at least once every month. After a lull in 2001 and 2002—when the economy was reeling from the high labor costs of the mid-1990s—the industry is forecast to grow at an annual rate of 4.9 percent over the next few years.
Vending machines are highly relevant marketing tools for extending a brand in our bustling, must-have-it-now culture. By leveraging technology, the machines are making huge strides in improving the efficiency and impact of products and packaging beyond the vending mainstays of food and beverages.
A short list of some items that have recently appeared in vending machines:
- Lotions
- Disposable cameras
- Swim goggles
- Batteries
- Books
For marketers, a successful vending strategy begins by examining their product and thinking about how best to stage its value in this channel. It leverages emerging technology and ensures that the packaging is as optimized for the vending environment as it is for traditional sales channels.
Satisfying the ‘I want it now’ consumer
The vending market has advanced far beyond merely serving a consumer with a growling stomach, who pushes a few coins through the slot, makes her selection and pulls a lever or pushes a button to dispense a product.
What is fueling the re-emergence of vending machines as a distribution option? First, consider what’s going through the consumer’s mind. In their “I want it right now” mentality, they are as likely to purchase a bottle of tanning lotion or a disposable camera at a rest stop along the highway as they are at a retail store.
They want to work on that sun tan or snap that picture now, and they won’t wait until the next store appears on the horizon.
Technology is making the experience of the sale itself easier, faster and even a little more fun. Inexpensive liquid crystal display technology provides touch screens that replace or complement selection number pads. These touch screens can advertise products, re-affirm a purchase or provide short entertainment, such as videos and sounds, as the purchase takes place.
Credit-card, debit-card and cell-phone payment options are also making vending machines more attractive for impulse purchases.
From the brand manager’s perspective, these high-tech machines can benefit the bottom line through increased efficiency in the value chain, which reflects on their specific brand.
Technological advancements such as WiFi Internet connectivity are easing some concerns that consumer products companies have long voiced about vending machines. Primarily, that they’re difficult to keep stocked efficiently and they’re vulnerable to vandalism and mechanical failure.
Marketing through the glass
Improvements occurring inside vending machines are making them more appealing, as well, for a wider array of products. The enhancements answer these marketing challenges.
1. How to best to stage packaging to attract when imprisoned behind a glass screen several feet from the consumer?
2. How to protect against product breakage in systems where a product may fall a couple of feet as it’s dispensed?
3. How to ensure freshness in an environment which may have wider temperature and light variations than grocery or C-stores?
Here again, manufacturing and technology advances are changing the playing field. Stronger plastics and reinforced glass are producing vending machines with broader, clearer windows. New dispensing mechanisms (which can also have a degree of entertainment value) are enabling racks of product to move closer to the viewer’s eyes, inviting closer inspection.
Improved containment systems are bringing precise temperature and light controls. This has brought about vending machines for frozen foods.
Stronger and clearer manufacturing materials are allowing vending machine manufacturers to re-introduce “glass front” machines that give consumers a clear view of the package. When the consumer can see the product that’s selected, he is less wary of loss due to vandalism and theft.
Niche machines
All of these enhancements are making it viable to place vending machines in locations that seemed unlikely even several years ago.
Sports-theme vending machines reside in the entrances of fitness centers. They dispense products such as swim goggles, racquetballs, batteries, combination locks, energy bars and drinks.
Business travelers can purchase toiletries, books and quick meals at any hour from vending machines in the lobbies of extended-stay hotels.
Schools can provide healthful lunch alternatives through the vending machine that was once to blame for excessive candy snacking.
By clustering related products in a theme-oriented vending machine, marketers can improve inventory management and sharply curtail the risk of an empty machine — and lost sales.
Mirroring trends
Marketers should also be aware of vending machines’ potential as a vehicle to reinforce or mirror a greater trend such as “ethnically focused” or “low carb” in their broader brand strategy.
Pepsi is angling to gain market share among younger, trendy customers in Europe by making vending machines in Germany dispense drinks with a phone call. The machine adds the call’s cost to the beverage purchaser’s phone bill.
Watch for Nestlé to broaden appeal of its Kern’s brand of fruit drinks to a younger and more urban population seeking more healthful beverages. Part of the strategy will be to introduce Kern’s branding to vending machines in key parts of the Southern California market.
Machine as advertising
We must not forget the vending machine’s oldest and still important function to the marketer—it’s a large point-of-purchase display. It communicates the advantages of a product and allows for immediate gratification when using the product.
Better plastics molding techniques, lighting and transparency rendering have made the vending machine an amazingly versatile stage for permanent or transient marketing messages. BP
Peter Mack is Executive Vice President, Client Services and Marie Curi is Vice President, Consumer Branding at Enterprise IG, a package design firm that specializes in the vending channel. Mack works in the San Francisco office and Curi is in the New York office, Contact Curi at 212.755.4200, ext. 296, or marie.curi@enterpriseigny.com
Packaging for success in vending machines
Do vending machines loom in your brand’s future? To determine whether the fit is right, answer this question: “Does my product add comfort, convenience, ease to someone who is on the go and has little time?”
What products are ideal for the vending channel? Think in terms of quick indulgences, products that make a busy person’s life easier.
If the answer for your brand is “yes,” examine the packaging challenges:
1. Make it cost-efficient. This is the primary issue when thinking about vending packaging. Understand that sales will be incremental at best.
Follow this rule of thumb: If potential sales are estimated to be 5 percent or more of a product’s total, vending-specific packaging becomes a viable option.
Vending-specific packaging is probably not appropriate if your goal is packaging as a point-of-purchase marketing tool.
2. Consider form and function. Confections and most beverages appear in vending machines in much the same packaging as they do on the store shelf. However, many non-food products and non-traditional food products require vending-specific packaging to maximize “appetite appeal” and protect against damage.
Most products sold through vending machines need to be designed for a single use. Thus, vending packaging for shampoos, conditioners, razors, microwave popcorn and frozen dinners requires reshaping. The serving size must be smaller than in retail stores.
Another approach to this discussion is to re-think packaging to fit a specific type of vending machine. Suntory Water Group has added a PET bottle for its water brands whose dimensions target vending machines that dispense standard 12-ounce cans.
Suntory’s innovative container holds 11.5 ounces of water and works within height and diameter constraints of vending machines that dispense cans. The bottle also meets capacity requirements of the company’s existing filling equipment.
3. The all-important front panel. A third consideration is optimizing communications on the package’s facing panel.
Consumers can’t handle the product prior to purchase. They can’t turn it to inspect the side or back panels, which may sit obstructed from view inside the vending machine.
Key information that will drive the sale must be clearly visible on the front panel. Consumers should be able to see it through glass from two to three feet away in a very visually fragmented environment.
HOW ONE BRAND OBSERVES THE KEY PACKAGING GUIDeLINES
In the vending environment, the package has to work both inside the machine and in the consumer’s possession. Johnson & Johnson shows one way to tackle these challenges.
Its Band-Aid brand shuns paperboard cartons in favor of a clamshell. The package holds a fraction of the adhesive bandages contained in the brand’s store-shelf packages, but it offers two conveniences.
First, the clamshell recloses—a must in a woman’s purse. Second, it withstands the rigors of dispensing from a machine.
Band-Aid’s vending package also makes the brand’s familiar visual cues of red, white and blue prominent.
Overall, this is a good vending package. What could make it even better? A somewhat larger brand flag would “pop” more visually from behind the glass of a vending machine.  Follow these three guidelines as you design your package for the vending machine.
A clamshell for adhesive bandages recloses to keep the contents neat and withstands the harsh dispensing environment of vending machines. The clamshell's size and shape are different from Band-Aid's carton on store shelves.

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