Canadian Vending

Features Coffee Service
Think Outside the Box

The need for a paradigm shift exists


April 29, 2008
By Stacy Bradshaw


Topics

Vending operators approach their business much like those in the marketing and advertising industries. Whereas marketers think in terms of product positioning for specific market segments, vendors think in terms of location.

24Consumers want more on-demand choice

Vending operators approach their business much like those in the marketing and advertising industries. Whereas marketers think in terms of product positioning for specific market segments, vendors think in terms of location.

For a vending operator, just finding a high-traffic location isn’t enough. Product offerings must be tailored to appeal to the social demographic in a given location. Sometimes it’s simple: an office populated by over 70 per cent women will most likely see more success with granola bars and pita chips than an office populated by mostly men. The client is often a valuable source for determining what will sell in a location and what won’t.

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But if the Canadian vending industry is going to live up to its potential, there needs to be a sustainable shift in the perception of what constitutes a vending item. The potential can only be realized if marketers and vending operators start thinking more alike.

Extending a product brand in our “must-have-it-now” culture is easily accomplished when marketers focus less on how their product will work on the store shelf and more on how it will work in a vending machine.

The good news is some marketers are starting to think more like vending operators. Helena Myers, marketing manager for Turtles chocolates, was touted in Strategy marketing magazine for bringing home two gold medals for brand  marketing at the Packaging Association of Canada’s national award gala. Why? Because Myers thought outside the traditional Turtles cardboard shell.

Myers led a complete brand overhaul of her product, taking it outside of the conventional Turtles tray and into a stand-up, expandable box. At the same time, she introduced a new three-piece bar in hopes of re-positioning Turtles as an everyday snack.

“The perception is that it’s grandma who has Turtles in her closet. We want to enliven the brand, give it a facelift,” explained Myers, noting that the bar targets 18-34-year-old males and females.
In less than 12 months, the Turtles brand, which was in apparent financial trouble, repositioned itself back on the top-sellers list.

Increasing market diversity means new opportunities are arising for vending operators. Take Band-Aid brand bandages, for example. Band-Aid shunned their cardboard cartons in favour of a plastic clamshell to withstand the rigours of dispensing from a vending machine. The package holds a fraction of the adhesive bandages found in the store-shelf packages, but it offers something far more valuable to today’s on-the-go consumer – convenience.

In Brand Packaging magazine, Peter Mack, executive vice president of Enterprise IG, a package design firm that specializes in the vending channel, said in their “I want it right now” mentality, consumers are as likely to purchase a  bottle of tanning lotion or a disposable camera from a vending machine at a rest stop as they are at a retail store.

Enhancements in vending technology, allowing for frozen foods, fresh foods, and other non-traditional vending items, are making it viable to place vending machines in locations that seemed unlikely even several years ago. By clustering related products in a theme-orientated machine or even dedicating a few rows in the right location to a non-traditional vend, operators can use these innovations in packaging to their own advantage.

Because many non-food products require vending-specific packaging, Mack has formulated a set of guidelines for suppliers. Packaging for vending success, he said, requires several considerations, including whether the product is designed for single-use and if it’s cost-efficient.

In the vending environment, the package has to work both inside the machine and in the consumer’s possession. Products that fit into the cup holder of a car, or can be consumed using only one hand, like Campbell’s Soup-to-Go, are all the rage.

Whether these savvy single-serve innovations are designed specifically for vending or not, it’s apparent that suppliers and marketers who aren’t optimizing their packaging for the vending channel are already behind the curve.

Those who are ahead of the curve, like Guelph, Ontario’s Terry Ackerman of Organic Meadow, are actually seeking out vending operators to sell their product and extend their brand.

“We’re looking for more vending operators,” he said.

Organic Meadow’s certified organic, two-per cent chocolate, strawberry and white milk, in 250-millilitre tetra-paks, does not require refrigeration and has a shelf life of nine months.

“They’re perfect for vending,” said Ackerman. The milk is heated to extremely high temperatures to reduce bacterial growth, then immediately cooled and stored in a hefty seven-layer tetra-pak and wrapped in a nitrogen blanket (similar to that used for potato chip bags), giving it a nine-month shelf life. It took Organic Meadow almost two years to develop the packaging, which allows milk to be frozen and de-thawed, thrown around and nestled in a cup holder.

But what really pushes Organic Meadow “outside the box” is their dedication to organic food production. The organic food category is one of the fastest growing market segments. The organic industry in Ontario alone is growing by 30 per cent every year. Organic retail sales in Canada exceeded $1 billion in 2004. Ackerman said Canadians are purchasing organic because they perceive it to be better for them, and better for their environment.

The perceived value of organic is partly what allows foodservice operators to charge premium for these products. And as mass-market providers like Wal-Mart and chain outlets continue to offer organic, they will likely cause increased production and drive down the price. DeDe Priest, senior vice president, Wal-Mart Stores Inc., told Rueters that Wal-Mart is picking up organic products in hopes to “knock out the myth that it’s just for the rich.”

Wal-Mart is speculating that what happened to products like green tea and pita bread will happen to organic; national chains have helped them transform from relatively obscure or foreign goods into mainstream trends. Green tea created such a substantial (and sustainable) shift in the marketplace that we’re seeing green tea frappucino from Starbucks, green tea latte from Canada’s own Kingsmill Foods, green tea iced tea, green tea moisturizer, diet pills, and even pet food. When products move from specialty stores into the mainstream, they simultaneously find themselves in the realm of “grab n’ go,” an arena where vending rules.

“People seem to perceive that with their lack of time, they lose control of [their diet], finding it hard to eat healthy if they’re on the go. A corresponding ‘prepped and ready-to-go’ industry has developed,” according to Dr. Susan Jones of Ipsos Reid. She said 86 per cent of Canadians would like to do better in terms of a healthy diet. “These are huge numbers in terms of market research.” Of those 86 per cent, 24 per cent said healthy snacks are the most difficult to source over all other eating occasions.

Canada has become more cosmopolitan in attitude, she noted. Consumers are considering it their right to have access to a wide variety of inexpensive, high-quality and nutritious foods.

Consumers’ expectations are changing. The criteria for what makes a successful product, a successful marketing campaign and a successful vending item are all changing. As long as marketers continue to see vending as a versatile point-of-purchase display for their latest in package innovations, operators can continue to expand their offerings outside the typical vending lineup. Throw cashless vending into the mix, and higher-price point items start looking more like opportunities then setbacks. The possibilities truly are endless, assuming these industries continue to think outside of the box. o