Marketing in a Vending-Machine World

Posted on by Chief Marketer Staff

A growing trend in the U.S., building upon its success in Japan, brings a new wrinkle to the store-within-a-store approach: high-end vending machines. Vending machines offering consumer electronics retailing for upward of $300 are cropping up in department stores, malls, airports, and hotels, with Sony, Motorola, and Apple leading the charge. If these devices succeed, marketers will have a compelling new tool in their repertoire for distribution and communications.

Macy’s has become an Apple retailer, selling all flavors of iPods and accessories via sleek, space-age vending machines. Just swipe your credit card, and instead of a Snickers, you’ll be reaching in for new hot-pink Nano. Motorola’s Instantmoto machines sell the latest in cell gadgetry (yet I expect this process is complicated somewhat by that pesky issue of the service provider). Sony is reportedly planning to add USB ports to machines already in place in several cities, so in addition to buying PSP games, headphones, or handheld devices, consumers can download Sony MP3 files right there.

Cool ideas all. And the ingredients are there for this type of distribution to proliferate. With more and more purchasing taking place online, people are increasingly comfortable buying even expensive items without interfacing with a human. Many probably prefer a salesperson-free experience. For products that “sell themselves” and require no touch (unlike, say, clothing), buying from a machine can be quick and easy–as long as the user experience is, indeed, quick and easy.

Who’d have thought that the good old vending machine could create a retail revolution? Sleek devices that invite consumer interaction and are IP enabled to allow credit-card purchases (maybe even cell phone or PayPal purchases) and to permit inventory management are really the perfect store, the quintessential clicks-and-mortar solution.

The implications, if this all actually works, could be pretty interesting.

Distribution: New and nontraditional distribution channels are now easier than ever to address. You can now access logical points of distribution, places where your target customer is but where traditional models may not permit your brand to go, by an off-the-shelf solution that gives you a retail presence uncluttered by your competitors. (That is, of course, until the model evolves to the equivalent of Coke/Pepsi/Snapple machines standing side by side.)

Sampling and testing: It’s generally easier to test-market products in owned-and-operated stores than when working with a traditional retailer. Branded vending machines make test-marketing easier still. And you can test not only products but distribution as well. Have a hunch that a branded store might be a hit in Houston or Cincinnati or Newport? Perhaps you test the waters with a vending machine. This can be a great testing ground in an area like pricing too. Marketers can play with price elasticity based on times of day or location or for preferred members. Yes, this can all be done online too – but the isolated and distinct setting offered by the vending environment may make this more palatable and manageable.

Media: The machines themselves–which are typically at least the size of a refrigerator and located in a high-trafficked locale–can essentially double as media placement. Yet add in some other functionality, such as touch screens for directions and demos or dedicated online access for a true one-to-one consumer experience, and you can target the messaging in this offline medium as effectively as you can online. And the cash register is built right in.

Experience management: Vending machines give brands another way to build a direct connection with the consumer, unfettered by the behavior and performance of the retailer. But what if it doesn’t work? What if the product needs to be returned? What if the vending machine delivers a Shuffle instead of a Nano, or a Sony Portable Reader instead of a PlayStation Portable? Not only must glitches be minimized, but vendors need to make all resolutions as quick and as painless to the consumer as possible. One bad customer experience by one particularly loud (read: blog-happy) consumer can doom mainstream acceptance of vending before it ever has the chance to develop.

The novelty of buying by machine today may be as appealing as the trendy new product being bought. Yet this may change. There is a faddish appeal to vending machines that will surge and, ultimately, wane. Should these machines proliferate, the latest gadget will begin to look like just another piece of candy waiting to be purchased. While consumer-electronics companies treat portable electronics as essentially disposable items that are yesterday’s model within a few months, they certainly do not intend for mainstream consumers to think the same. Striking the right balance between novelty and old hat, between must-have and has-been, is vital to the long-term viability of vending as a legitimate distribution channel.

Should Apple and/or Sony and/or Motorola figure this all out by creating a satisfying customer experience, immediately fulfilling a consumer’s needs in a novel and compelling fashion while keeping the experience special enough to feel like a mini-luxury purchase, marketers may have a whole new environment in which to experiment with and learn about their customers.

Jonathan Paisner is brand director of CoreBrand, a New York-based branding consultancy.

Other articles by Jonathan Paisner:

Internal Branding: Six Keys to Success

Think Before You Cobrand

Seven Tips for Better Customer Experience Automation

User-Generated Content: The Good, the Bad, and the Ugly


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