Canadian Vending

Features Business Operations
Dispensing Strategies: What Customers Want

What Customers Want


June 17, 2008
By Michelle Brisebois

Topics

 “You can have any colour you want, as long as it’s black.”
This was Henry Ford’s response to the question “What colours does your Model T Ford come in?”

 “You can have any colour you want, as long as it’s black.”
This was Henry Ford’s response to the question “What colours does your Model T Ford come in?”

You have to love a monopoly – it’s great for efficiency from a business standpoint. Very few companies have monopolies these days. You can bet that Ford now spends lots of money on market research to try and understand just what shade of red customers would like.
 
When you’re fighting for your place on the consumer’s shopping list, it pays to get inside their heads to be able to understand market behaviour. Market research is the means by which this is accomplished.
 
For the vending industry, methods of obtaining solid data can run the gamete in terms of complexity. Simple research methods can still be highly effective, the key is to find the research plan that fits your budget and business needs. It’s a little bit of science – a little bit of crystal ball gazing but without it, you’re navigating in the dark.

Define the problem
A solid research plan starts with defining what question you want answered. Have you noticed a change in sales patterns for a specific product, product SKU or machine location?
 
Your strategy for zeroing in on the solution is a bit like golf. The game begins with a driver to get some distance and then utilizes different clubs to get closer to the pin.
 
If there is an area of your business that puzzles you, it is here that you want to dig in. Your first club will be “secondary research.”

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Secondary Research
Secondary research is defined as information that exists for purposes unrelated to the specific problem under investigation. Secondary research can be internal or external in nature.
 
Sources of internal secondary research include: your own sales reports, statements, receivables, inventory analysis and production reports. You’ll be amazed at how much information you have within your own paper trail.
 
External secondary research can be obtained in a variety of ways. Newspaper articles, annual reports, trade journals and the Internet are all very viable sources for great research. Statistics Canada is a gold mine of information often broken down by region.
 
Don’t forget to tap into your suppliers. Because vendors deal with a wide variety of businesses, they can often let you know if what you’re seeing in your own business is an industry wide trend or something that is specific to you.

If your budget permits, consider
purchasing some research from companies that specialize in compiling reports specific to your industry such as AC Neilson or Ipsos Reid. Many other companies offer similar services and can customize packages to fit your needs and budget.

Primary Research
Primary Research is defined as new information that is gathered, which directly relates to a specific problem or question. This is usually done by questioning the customers directly.

The challenge for the vending industry is in intercepting the customer to get the information. There are a few ways to work around this issue. Consider hiring a student to wait at the machine in question and interview people as they make a transaction.
 
If you’re more interested in obtaining behavioral information than attitudinal information, simply having someone watch the machine and document consumer behavior can be effective.
 
The grocery industry regularly employs people to watch how we navigate the aisles in our favourite store. It’s through this sort of research that we know people read labels and look for recipe ideas on boxes. Alternatively, you could create an online survey and post it to a website. By simply placing a sticker on the machine, you could invite people to log on, take the survey and win a prize.

Do what we say. Say what we do.
Internal and external research breaks down further into attitudinal and behavioral research.
 
Attitudinal data shows us how people feel, what they believe (or say they believe). Behavioral research shows us what they actually do.

It’s important to make the distinction because often we will answer survey questions based upon what we think we should do rather than what we actually do. Consumers have been known to don a halo and tell researchers that they’re very concerned about healthy food choices while filling their grocery cart with high fat sweets.
 
The best approach is to get attitudinal and behavioral data if possible and use both pieces to cross check each other. The attitudinal information will hold keys to future trends since it often takes time for our actions to catch up to our desires.

The strategy that fits
Choose a research strategy that fits the needs of your business. For smaller operators with a few machines, manual research methods similar to those described above will fit the bill.
 
However, there are exciting tools entering the market that can be vital to the success of larger operations. Kane’s Distributing Ltd. of St. Catharines, Ontario has developed a software program called Vendit.

Some versions of Vendit can analyze sales data, manage product replenishment and tailor customized dispensing programs for closed markets such as prisons, hotels and schools.
 
The media is chosen by the customer and could be e-keys, smart cards, mag stripe or even fingerprint scanning. The media is pre-loaded with a set amount of money or linked back to accounts for payment. Since the media is linked to specific individuals, the machines can now track time of purchase, item purchased and user.
 
A computer generated report can easily be imported into an excel document or an html web page to be emailed to others. It will be easy to spot whether sales are related to a number of unique purchasers or one heavy user. Profitability can be monitored by product, category and by machine.
 
This type of information can be powerful in terms of identifying changing consumer trends as they occur and making less profitable locations more successful by altering the product mix.

As our society becomes increasingly “cashless,” it’s probable that vending will be on the cutting edge of mining electronic data generated by consumer transactions. Whether one uses software with all the bells and whistles or a good old fashioned clipboard and paper questionnaire – getting that customer feedback will keep you in the game.