THE COMMODITY VENDING MACHINE

Abstract

This paper describes the groups of players in the vending market and introduces a typology of vending machines. From a commodity perspective, vending includes the discussion of the types of vending machines and their technical demands for storing and preparing goods and services and for installing the vending machine at a certain location. From a marketing perspective, vending is defined as the distribution and selling of goods and services by a vending machine. In addition, a vending machine is seen as a distribution channel of a retailer. In the vending market, four groups of players can be differentiated: (1) the producers of the vending machines and the accessories as well as the goods; or the service providers; (2) the site lessors; (3) the operators, merchandisers and maintenance people; and (4) the customers. The different types of vending machines can be categorized into product-oriented and service-oriented machines. Product-oriented vending machines offer both cold and hot food as well as non-food items. Service-oriented vending machines offer different kinds of services, e.g. entertainment (jukeboxes, slot machines) and non-entertainment (telephones or scales). In addition, from packaging refund machines the customer can get the packaging deposit back. Aims and Methodology Vending is becoming more and more important in consumersurchase decisions as well as in the distribution policy of marketers. Based on a research study on consumer behaviour in shopping malls (Buber 2004), we found a lack in the commodity science literature as well as in the marketing literature to describe the commodity vending machine or vending as distribution alternative in marketing. After a brief historical introduction and the presentation of different vending definitions, this paper aims to conceptually discuss the vending market playerseeds and to theoretically develop a classification of vending machines. Theoretically, the commodity-based and the marketing-oriented approaches are combined.

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THE COMMODITY VENDING MACHINE
Susanne GRUBER, Renate BUBER, Bernhart RUSO, Johannes GADNER
Univ.-Ass. Dr. Susanne Gruber, Institute of Technology and Sustainable Product Management, University of Economics
and Business Administration Vienna, Augasse 2 - 6, A-1090 Vienna, Austria, susanne.gruber@wu-wien.ac.at
Ass. Prof. Dr. Renate Buber, Institute of Retailing and Marketing, University of Economics and Business Administration
Vienna, Augasse 2 - 6, A-1090 Vienna, Austria, renate.buber@wu-wien.ac.at
Dr. Bernhart Ruso, Institute of Knowledge Organisation, Lange Gasse 63/15, A-1080 Wien, Austria, bernhart@ruso.at
Dr. Johannes Gadner, Institute of Knowledge Organisation, Lange Gasse 63/15, 1080 Vienna, Austria,
johannes.gadner@iwo.at
Abstract
This paper describes the groups of players in the vending market and introduces a typology of
vending machines. From a commodity perspective, vending includes the discussion of the types of
vending machines and their technical demands for storing and preparing goods and services and for
installing the vending machine at a certain location. From a marketing perspective, vending is
defined as the distribution and selling of goods and services by a vending machine. In addition, a
vending machine is seen as a distribution channel of a retailer. In the vending market, four groups of
players can be differentiated: (1) the producers of the vending machines and the accessories as well as
the goods; or the service providers; (2) the site lessors; (3) the operators, merchandisers and
maintenance people; and (4) the customers.
The different types of vending machines can be categorized into product-oriented and service-
oriented machines. Product-oriented vending machines offer both cold and hot food as well as non-
food items. Service-oriented vending machines offer different kinds of services, e.g. entertainment
(jukeboxes, slot machines) and non-entertainment (telephones or scales). In addition, from
packaging refund machines the customer can get the packaging deposit back.
Keywords: vending, vending machine, distribution, operator, site lessor
Introduction
The first vending machine was constructed by Heron of Alexandria (Mechanicus, about 100 BC).
After inserting a coin, holy water was dispensed.
1
For more than 100 years people have been able t o
buy goods and services from vending machines. The first commercial vending machines were built at
the end of the 80's of the 19
th
century.
2
On 13 March 1908, the first stamp and postcard-vending
machine of the world was installed in front of the Hotel des Postes.
3
Vending machines are used in different markets, in the retail trade for the selling of food and non-
food items as well as convenience products. Selling cold and hot drinks was the predominant business
in the past, but at present, the variety of goods and services marketed with vending machines is
steadily increasing. Vending Associations in different countries define vending differently.
Basically, vending is defined as the selling of products through vending machines
4
, which are "coin
operated machines for the sale of small articles"
5
. Additionally, vending machines can be designed for
the sale of large quantities of various products, e.g. in Japan, one can buy ten-kilo bags of rice from a
vending machine
6
. Furthermore, for a couple of years, it has been possible to pay for goods and
services by credit card which has to be put in the vending machine’s slot for cards.
The American Association NAMA (National Automatic Merchandising Association) states that
"vend is the delivery of a single unit of merchandise"
7
. In the US, vending is highly connected with
the slogan "Coffee, Candy, Cola"
8
. “Coffee" symbolises the sale of hot drinks like coffee, hot
chocolate, tea, but also soups; the term "Candy" represents sweats, and "Cola" replaces the
enumeration of different soft drinks. In the very beginning, the vending industry started with the 4-
Cs-concept, coffee, cup soda, candy and cigarettes, and later on the range grew to almost 8 Cs -
coffee, candy or confections, chips, cold drinks, canned drinks, cigarettes, cold cup and commissary.
9
In Europe vending includes a wider range of products (EVA, European Vending Association)
10
. The
Vending Association in Germany (BDV, Bundesverband der Deutschen Vending Automaten-
Wirtschaft e.V.) defines vending as the selling of everyday essentials, especially food and drinks
through vending machines. Producers of machines, operators and different associations use the term
vending for all kinds of food and drinks, but they include non-food products as well.
The Austrian Association (ÖVV, Österreichische Verkaufsautomaten Vereinigung) defines all
machines that sell goods, including food, drinks, photos, parking-tickets as vending machines; but
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copying-machines, telephones, lockers, washing-machines, pin balls, slot machines, etc. are also
included.
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The BDV excludes machines which offer amusement features from the vending industry.
12
From a marketing point of view, vending machines are defined as a store format of the retail trade
industry with an automatic selling procedure – the customer has to select the product, to take it with
him/her and to pay for it, everything is done by him-/herself.
13,
In the US, a vending machine utilizes a full glass front to merchandise the product selection inside
the machine. Most often the product is delivered via spirals and is dispensed to a delivery pan located
at the bottom of the machine.
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Summarising, in this article vending is defined as the selling of goods or services by a vending
machine at which the customer has to administer the selection of the product or the service, to pick
up the product and carry it away and to pay for the product or service on the spot – either in cash,
by credit card or by means of other electronically available kinds of payment, e.g. text messaging.
The Vending Market
In the vending market, four groups of players can be differentiated:
• the producers of the vending machines, the accessories and the goods, as well as the service
provider,
• the site lessors,
• the operator (the merchandisers and maintenance people), and
• the customers (see figure 1).
Figure 1: Vending Market Players
The Producer of the Vending Machine
Besides the technical functions (power, water supply, distribution and payment unit), marketing-
relevant aspects (e.g. accessories like spoons, cups, serviettes) have to be considered for the design of
the vending machines. Due to both the high costs of the maintenance and the strong influence of the
functional efficiency on customer satisfaction, the technical equipment and the payment system as
well as the distribution comfort are very important. Therefore, the handling features must be
designed carefully, particularly to protect the vending machines against vandalism or technical
breakdowns.
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The Producer of the Merchandise
Goods and accessories must serve both the technical demands of the vending machines (size,
durability, handling) and the needs of the customers (attractiveness, simple opening to pick up
selected goods, etc.). The packaging must guarantee that the goods do not break, and do not stick in
the spiral when selected and delivered.
The Operator
The operator has to look after the (re-)filling, the cleaning and the functional efficiency of the
vending machine as well as the cost-, and benefit-efficiency of the housing.
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Usually, the operator
assembles the assortment and decides about the payment system (cash, credit card, internet, text
messaging, etc.).
The operator has to know the needs, wants and attitudes of the customers. Without any data about
customer profiles, who buys when, what, in which quantity, one cannot conclude from turnover to
the actual customers´ wishes and needs
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. This lack of information is one of the main problems of
the vending business. Thus, the customer is left alone when buying from the vending machine, and
the operator very often does not know too much about the motives and attitudes of the customer. In
general, it can be stated that from the point of view of the customer, the image of this distribution
channel should be improved.
The Site Lessor
The site lessor is the owner or tenant of the place where a vending machine is installed. He/she lets
the place to the operator and gets paid for it. Usually, vending machines can be found in three
different markets:
• the business market (office, factory, surgery, etc.),
• the catering market (restaurant, cafe, kiosk, etc.),
• the public market (public building, school, university, shopping mall, sports centre, railway
station, airport, street, etc.).
The Customer and the Buying Situation
The customer selects goods from the vending machine, pays for them either in cash, by credit card
or by other means and takes the goods from the delivery unit, either for immediate or later
consumption.
Purchasing from a vending machine can be seen as a particular buying situation. The customer
cannot ask for any help, and he/she is doing the purchase by him-/herself without any advice from a
shop assistant. If the vending procedure works well, the customer is served quite quickly. In the case
of a problem, he/she has to find out how to deal with the situation. Usually, the operator’s phone
number is written on a sign that is affixed to the vending machine. That is, the customer has to make
and to pay for the phone call and ideally the problem can be solved immediately. If the customer
wants to complain about the goods’ quality, the handling comfort of the delivery unit or anything
else, first he/she has to figure out how she/he can get in touch with the contact person. The buying
situation is characterised by indirect communication, the active search for information, and the
customer’s risk of leaving with the problem unsolved. On the other hand, the particular buying
situation can also be seen positively. The customer can select, pick up the product, and pay without
being disrupted or manipulated by a shop-assistant
*
.
*
On the other hand, the reasons for customers not to buy goods from a vending machine are manifold. Some people prefer
to be served. Moreover, in a study by Buber, R. et al. the customers argued that self-service is not as attractive and the
service as well as the ambience of a cafe are more appealing (Buber, R./Ruso, B./Gadner, J./Gruber, S./Atzwanger, K.
(2004): Measuring Consumer Behavior in Recreational and Sales Areas of Shopping Malls. Band 52 der Schriftenreihe
Handel und Marketing (ed. by Schnedlitz, P.), Wien (interview 11, line 78).
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Types of Vending Machines
Product-oriented and Service-oriented Vending Machines
The silent shop assistant is part of our life. 24 hours a day he/she offers different goods, e.g.
photos for passports, business cards, parking tickets, condoms, cigarettes, sweets, food, hot and cold
drinks. On other machines you can play a videogame, make copies, wash your clothes, make a phone
call, gamble, etc.
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Vending machines can be categorized into product-oriented and service-oriented machines.
Product-oriented vending machines are machines that offer both cold and hot food as well as non-
food goods. This category includes packaging refund machines where the customer gets the bottle
deposit back.
Service-oriented vending machines offer different kinds of services, entertainment (e.g. jukeboxes,
slot machines) and non-entertainment (e.g. telephone or scales).
Figure 2 gives an overview of the different types of vending machines.
Figure 2: Types of Vending Machines and Typical Examples
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Usage of Vending Machines
Vending Machines for Food
A food vending machine can offer either only one type of food or different kinds of food.
Especially, if there is little space, combined vending machines with food (cold and hot) and drinks
(cold and hot) in one machine are installed.
Vending machines for food offer:
• cold food: sandwiches, fruits, vegetables,
• hot food: fried food, pastries,
• soups,
• hot drinks: coffee, cocoa, tea, milk,
• cold drinks: ice tea, fresh juices, soft drinks, iced
coffee,
• snacks: biscuits, chocolate, sweets, chewing gum,
crackers, peanuts,
• ice cream.
The technical equipment for vending machines for food
includes:
• Power: for all types of food,
• Water supply or water tank: for machines that offer
coffee, tea, cocoa, milk, soups or fresh drinks,
• Cooling system: to cool drinks, food and ice cream,
• Heating system: to prepare hot food and keep food
warm,
• Waste tanks: for the used coffee and tea powder,
• Selection panel: choice of goods
• Display: as a manual for customers
• Distribution unit: spiral rows, boxes, taps,
• Payment system: slots for coins and cards, etc.
Figure 3: Vending Machine for Hot Drinks
Vending Machines for Non-Food
Figure 4 shows a typical vending machine for cigarettes and illustrates the usual applications of
non-food vending machines in general.
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Usually, vending machines for non-food offer the
following items:
• cigarettes,
• flowers,
• condoms,
• toiletries (soap, towel, handkerchief, tampon,
sanitary towel),
• stamps,
• photos,
• tickets: parking, entering,
• newspapers,
• toys: cars, puppets,
• small articles: jewelleries, stones, stories.
The technical equipment for vending machines for non-
food items includes:
• Power: for lighting and cooling equipment if
necessary,
• Cooling system: to keep goods fresh,
• Selection panel: choice of goods,
• Display: as a manual for customers,
• Handing out system: spiral rows, boxes, slots,
• Payment system: slots for coins and cards.
Figure 4: A Typical Vending Machine for Non-food Items
Vending Machines for Food and Non-Food Items
Figure 5 depicts a typical vending machine installed on platforms in Austrian railway stations.
These machines are filled with snacks, sweets, cold drinks, and tissues.
The technical equipment for vending machines
for food and non-food includes:
• Power,
• Water supply or water tank,
• Cooling system,
• Heating system,
• Waste tanks,
• Selection panel,
• Display,
• Distribution unit,
• Payment system.
Figure 5: Example of a Combined Vending Machine for Food and Non-Food Items
Vending Machines for Packaging Refund
Vending machines for packaging refund scan and register packaging like bottles, jars, cans, and
boxes. The refund is paid to the customer by cash or the customer gets a ticket, which he/she has t o
present to the cashier.
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The technical equipment for vending machines for packaging
refund includes:
• Power: for scanning system, delivery unit,
• Scanning system: for scanning and identify the
packaging,
• Handing in system: boxes, slots,
• Display,
• Printing and handing out system: printing the ticket
and slots for handing out prouducts,
• Payment system: for refund.
Figure 6: Example of a Packing Refund Machine
Vending Machines for Non-Entertainment Services
Vending machines for non-entertainment are:
• scales,
• horoscopes and fortune-telling,
• parking and entering,
• pay phones,
• toiletries and solarium,
• shopping carts,
• banking service: foreign exchange, cash withdrawal,
account services,
• lockers, safe deposits,
• check in: on airports, at railway stations,
• car service: car-wash plant, self service vacuum
cleaner.
The technical equipment for vending machines for non-
entertainment depends on the demands:
• Power,
• Scanning system: for check in and banking service
functions,
• Display,
• Printing system: printing tickets and slots for
handing out,
• Payment system:
Figure 7: Example of a Non-Entertainment Vending Machine
Vending Machines for Entertainment – No Earnings
If the customer has inserted the coins the vending machine starts; it ends after a fixed time or
after the game is over. It can be started once again. These machines sell entertainment.
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Vending machines for entertainment and no
earnings are:
• sports machines: football, darts,
billards,
• fun games: pinball, video games,
• videos: on TV, in video cabins,
• jukeboxes,
• karts: go-karts for adults and children.
• automatic see-saw: animals, cars,
fantasy figures.
The technical equipment for vending machines
for entertainment without earnings includes:
• Power: for the payment system and
the engine,
• Engine: for movement,
• Display,
• Payment system.
Figure 8: Example of an Entertainment Vending Machine (No Earnings Possible): Automatic See-Saw
Vending Machines for Entertainment with Earnings
Vending machines for entertainment with earnings are slot machines, roulette, poker, lottery, etc.
These vending machines sell the game and if the customer is successful, he/she can win cash.
A vending machine for entertainment with earnings has to be
equipped with the following technical items:
• Power: for the payment system and the engine,
• Engine: for movement,
• Product selection,
• Payment system: slots,
• Handing out system.
Figure 9: Example of An Entertainment Vending Machine with Earnings
Installation
When selecting the vending machine’s location one has to consider both the technical
infrastructure and customer-related issues, e.g. visitor frequency, lighting, security.
Table 1 illustrates the technical demand for installing the different vending machines.
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Table 1: The Technical Equipment of Vending Machines
Spiral rows
Boxes
Slots
Dispenser
Accessories
Food Cold Food X (X) X (X) X c c c X
Hot Food X (X) X (X) X c c c X
Soups X (X) X X X (X) X X X X
Hot drinks X (X) X X X (X) X X X X
Cold drinks - juices, milk, water X (X) (X) X X (X) X X X X
Cold drinks - canns, bottles X (X) X (X) X X X X
Snacks X (X) (X) X X X X
Ice cream X (X) X X X (X) X X X X
Ice - packet X (X) X (X) X X X X
Cigarettes X (X) (X) X c c X
Flowers X (X) X (X) X X X
Condoms X (X) (X) X c c X
Toilette articles X (X) (X) X c c X
Stamps X (X) (X) X c c c X
Photos X (X) (X) X c c X
Tickets X (X) (X) X c c X
Newspapers X (X) (X) X c c c X
Toys X (X) (X) X c c X
Small articles X (X) (X) X c c X
XX(X) c c X
Scales (X) (X) X (X) X
Parking and Entering X (X) (X) (X) c c X
Pay phones X X (X) (X) X
Toilettes X
Solaries X (X) (X) X X
Shopping carts X
Banking service X (X) (X) (X) X X X
Lockers, safe deposits (X) (X) (X) (X) X
Check in X (X) (X) (X) (X) X X
Car service X (X) (X) (X) (X) X
Sports machines X (X) (X) (X) (X) X
Fun games X (X) (X) (X) (X) X
Videos X (X) (X) (X) X
Jukeboxes X (X) (X) (X) (X) X
Karts X X X
Automatic See-saw X X X
Horoscopes and fortune telling X (X) (X) (X) X
Slot machines X (X) (X) (X) (X) X
Roulette X (X) (X) (X) (X) X
Poker X (X) (X) (X) X
Lottery X (X) (X) (X) (X)
1 Electricity for electric operated equipment X is needed
c one or more of the given possibilities (X) depends on demands
Power 1)
Water supply
Cooling system
Non-
entertainment
Entertainment -
Earnings
Entertainment -
No earnings
Non-Food
Packaging refund
Scanning system
Engine
Payment system
Types of Vending machines
Selection panel
Display
Distribution unit
Phone or Internet supply
Heating system
Waste tank
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Future Prospects
The spectrum of vending machines is astonishingly wide: From ice-cream to hot coffee, from
cigarettes to parking tickets and from train tickets to horoscopes. Further technological
developments in the vending market are to be expected. Prototypes of fully automated shops, where
the customers’ credit cards are debited according to the goods in their trolleys at the cash point,
without the help of a cashier, are already in use. These shops are, in a manner of speaking, huge
vending machines and the shop assistants’ tasks are reduced to merely servicing the machines. The
rapid development of vending machines and the reduction of the social contact between seller and
buyer mirrors two types of changes in our society. On the one hand, the technical achievements,
which allow for new types of products to be offered and ensure security for both the seller and the
customer. On the other hand, the customers’ needs are changing. Today, on many occasions
customers prefer to buy anonymously, without any personal commitment and without any time limit
- twenty-four hours a day. Furthermore, as wages and rental fees are steadily increasing, shop
facilities without the traditional shop assistant can be run at a more competitive price. As the
customer gets more and more hybrid, he/she satisfies her/his needs by purchasing in different shop
formats (from a discount store to a speciality shop) at different price levels. The customers’
behavior changes dramatically, and it has to be questioned in what direction the development of
purchases from vending machines will go in the future.
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2
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3
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4
BDV (Bundesverband Deutscher Verpflegungs- und Vending-Unternehmen e. V.) (2001): Press
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5
Oxford University Press (1994): The Oxford English Reader's Dictionary, Berlin – Munich, p. 568
6
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,
2004, CET 14:40
7
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8
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9
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10
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11
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13
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16
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17
OVV: http://www.ovv.at, July 14, 2004, CET 16:20
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