ORLANDO, FL — The National Automatic Merchandising Association celebrated its 70th anniversary with a new convention format, the presentation of new consumer research and recognition of distinguished service to the industry.
Welcoming NAMA members to the general session that kicked off the 2006 National Expo were NAMA senior vice-president and chief operating officer Dan H. Mathews and general convention chairman Barry Frankel, Family Vending (Sunrise, FL). They introduced chairman James H. Terry, The Coca-Cola Co. (Atlanta), who presided at the annual membership meeting.
Terry read a letter sent by President George W. Bush, congratulating the membership on the association’s seven decades of service to the industry. The Coke executive explained that, in 1936, a dozen leaders of the fledgling vending industry met in Chicago to oppose legislative proposals. NAMA was founded at that meeting, and has grown steadily to provide an effective and respected voice for the industry.
For all practical purposes, Terry said, a recognizable vending industry in the United States began with the placement of the first Adams Tutti-Frutti chewing gum machines in public locations in New York City. Steadily developing new capabilities and evolving with the public taste, vending has encouraged today’s consumers to expect high quality and convenience. “And they expect to pay for it,” he added.
The challenge now and for the immediate future, Terry emphasized, is to capture the growth opportunities that certainly exist in the dynamic U.S. economy. “The lion’s share of vending machines are in workplaces,” he pointed out. “But workplaces, and work, have changed. This isn’t a blue-collar market any more. We have to move from selling ‘what’s easy to vend’ to ‘what people want to buy’ in order to satisfy contemporary consumer demand.”
Coca-Cola long has aimed to position its products “within arm’s reach of desire,” the NAMA chairman recalled; and that is what vending is all about.
A highlight of the general session was a preview for NAMA members of a major consumer research project designed to elicit contemporary opinions of vending. Underwritten by Masterfoods USA, it was conducted by Harris Interactive (Rochester, NY).
Jim English of Masterfoods explained that vending, like any retail business, can only please its customers by giving them what they want. He introduced Mike Dabadie of Harris Interactive to share the study’s insights into those desires.
Dabadie led off by observing that the results of the study are productive and interesting. “Technology today allows the vending industry to become an ‘enabler,’” he suggested. “Our objective was to understand the drivers of vending machine use.”
In pursuing that objective and interpreting the information obtained by the study, it is essential to keep some distinction in mind. Attitudes are different from behaviors, and awareness is different from understanding, the veteran market researcher emphasized. “We set out to evaluate the barriers confronting users and non-users of vending machines,” Dabadie said.
The method was to conduct at least 2,000 online interviews. In the event, 73% of the sample consisted of people who reported making some use of vending machines.
In summary, the key findings were that, on the positive side, vending is prized for its convenience and ease of use. On the negative side, though, a substantial number of respondents perceived a lack of healthy and/or fresh foods and a limited product selection. What’s more, many people evidently do not regard vended items as offering “value.”
Dabadie pointed out that “value” can be difficult to pin down. “In the coffee and the cold drink business, about 99% of the product is water,” he noted. “The rest is largely magic. Value is beyond price – it’s the benefit you provide to your patrons.”
The study strongly substantiated the ancient vending maxim that “brands sell.” Dabadie reported that 70% of vending patrons decide what to buy, or whether to buy at all, after browsing the machine; the presence of branded products is the key to the sale.
Asked to “self-report” their desires, 60% of respondents said that they are striving to eat more healthily – “but there is low awareness of the availability of ‘healthy’ snacks in vending machines,” the researcher said. “Most respondents recognize their individual responsibility for the choices they make – but we, the vending and the consumer packaged goods industries, must enable those choices.”
Users expressed high brand loyalty, Dabadie continued, and the research found that promotions are a good way to introduce new products to consumers. And the minority of respondents who said they do not use vending machines reported buying at grocery stores.
The public in general knows little about new vending technology, the study found; only 15% of respondents are aware of it, especially new payment options. “There’s a huge opportunity in equipping machines to accept contemporary payment cards,” the speaker emphasized.
The difference between “image” and “position” is the distance between “what consumers think, and what we’d like them to think,” Dabadie explained. Exemplifying that distance is the study’s finding of the frequency of vending machine use. Of the 27% of survey respondents who said that they never use vending machines, the majority are female, and older than average. Nine percent of respondents make frequent vending purchases, buying several items each week; they tend to be younger and male. Another 27% reported using vending machines about once a month; the balance used them less frequently.
Asked which statements about vending are true, 36% agreed that the machines are convenient and easy to use. Fewer agreed that they are clean, and fewer still agreed that they offer a wide variety of choices, or that they incorporate up-to-date technology.
The interviewers asked what respondents are doing to “eat healthier.” The most usual strategy was to choose water as a beverage; slightly smaller percentages said they seek out fruit, “healthier” snacks, juices and iced tea. Items that “healthier” eaters are striving to avoid include candy, cookies, ice cream and salty snacks.
When presented with the statement “I’ve noticed that the vending industry is including healthier choices among the products it offers,” only 26% agreed; 23% disagreed totally. And 51% neither agreed nor disagreed, while an average 20% said that they are aware of vending industry efforts to offer more items of this kind – 22% of users, but only 23% of non-users.
Asked whether they plan to use vending machines more often, less often or at about the same frequency, a majority of the sample indicated that they intend to use them less frequently. Of all respondents, 82% were not aware of technical advances in vending, and 71% think that vend prices are higher than prices elsewhere.
Consumers are aware of nutritional labels on packaged products, and expressed a strong desire to be able to read those labels, Dabadie continued. They also are concerned with product freshness. Given the statement, “I am more likely to buy if I knew when the item was placed in the machine,” 56% of users agreed – and 32% of non-users suggested that they would be more likely to use a machine if they had that information.
Asked to identify reasons for using vending machines more often, 37% of users cited availability, 19% specified access to a desired product and 18% pointed to convenience. Similarly, reasons for decreasing vending machine usage included the lack of “healthy” and/or fresh items (27%), price (18%), a change in personal lifestyle (15%), lack of need for vended items (15%) and limited access to vending (14%). Principal barriers cited by non-users were “not a good value” and “dislike the selection.”
Addressing the age-old question of when a prospective patron decides whether or not to make a vending purchase, the research found that 68% select an item, or resolve to make a purchase, while standing at the machine; 32% reported knowing what they want in advance. “And 59% said that if what they want isn’t available, they won’t make a purchase at all,” Dabadie reported.
Similarly, asked about brand decisions, 69% agreed more or less strongly that “the brand is important” – 19% of the sample explaining that the brand is always important, and 50% regarding it as important sometimes. Only 7% said that the brand is never important, and 24%, that it seldom is.
“A brand is an experience or a promise,” the veteran researcher pointed out. “A branded item delivers on that promise.'
While the vending industry long has prided itself on the reliability of its equipment, the public appears to be receiving this message very imperfectly. Only 30% of survey respondents agreed that vending machines are dependable, and 30% disagreed; 40% had no opinion.
Finally, the Harris Interactive executive reported, some 75% of vending machine users agreed that new technology will increase usage.
Overall, he summarized, the study illuminated opportunities and challenges. Among the opportunities are helping people respond to the much-publicized need for better dietary choices.
A majority of survey participants agreed that “Parents need help in supporting ‘healthier’ eating habit away from home,” Dabadie instanced. The implications, he said, are that the public will reward those who are successful in educating parents about balanced meal solutions, and that consumer packaged-goods producers should keep this in mind when formulating new versions of their products.
Vending can deploy new technology very advantageously here, through such innovations as networked systems that allow parents to track their children’s vending purchases at at school and to limit or prevent purchases of certain items. An example of such a program is “Meal Magic,” under which schoolchildren use “smart” debit cards to make their vending purchases. Parents can review those purchases, and set permissions, online.
“We can be seen as ‘enablers’ here,” Dabadie said. “This is an opportunity.”
Another opportunity is presented by the increasingly widespread recognition that “weight management is about calories in and energy out; it’s not all about food, but also about activity and exercise.”
The implication here, he explained, is that marketers might affect perception very positively by investing in innovative partnerships with organization that focus on activity levels. The speaker reported that the VERB program encouraged by the Centers for Disease Control has been extraordinarily successful when it has been adequately funded, and there would be benefit in sponsoring it.
The challenges confronting vending are, first, to demonstrate value. “We’re not a commodity business,” Dabadie emphasized. “Don’t focus only on product attributes. Talk about benefits, about value.
“And develop a retail-store mentality to drive sales,” he urged. “Think not only about products, but also about service and convenience – and about atmosphere.” The retailing mnemonic for this, he added, is “CAPS,” for Convenience, Atmosphere, Products, Service.
“Our competitor is the convenience store,” the speaker concluded. “The perception that ‘vending’ and ‘healthy’ don’t go hand in hand is damaging the industry.” Solutions are needed to display freshness and nutrition information in a way easily accessible to patrons; to incorporate the latest technology and publicize it to consumers; and to expand variety.