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Search, Select and Satisfy - Innovative Self-service Dispensing Technologies

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November 01, 2009
Future of Vending
Michael Kasavana, PH.D., NCE, CHTP - kasavana@msu.edu

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In the past few months the Coca-Cola Company introduced two unique interactive beverage dispensing machines that have already started to impact both the self-service and quick-service foodservice industries. These new devices represent a significant departure from anything Coca-Cola has previously offered and feature touchscreen interfaces enabling consumers to select from a variety of regular and low-calorie beverage brands. One of the machines, labeled Video Vender, only recently introduced commercially, was field-tested during the 2008 Beijing Olympic Games and is widely regarded as the vending machine of the future.

Diners at select quick-service restaurants (QSRs) now have the opportunity to interact with a self-serve drink dispenser offering more than 100 varieties of calorie and non-calorie sodas, juices, teas and flavored waters (some of which have not been available in the U.S. market). Although Coca-Cola plans to install these high-tech drink dispensers nationwide, to date market testing nearly five dozen machines in select food eatery locations. These new machines, called Freestyle, extend the flexibility of product customization and thereby provide a base for reverse marketing. The Freestyle machine is being hailed as the beverage dispenser of the future.

The Video Vender is an unattended point-of-sale device that internally operates like a traditional vending machine. Credit is established, product selection is made, and product dispensing follows. What is revolutionary about the Video Vender is the consumer interface. The interface involves engagement with a large LCD touchscreen that featuring videos, graphics, animation and sounds designed to render the transaction a unique experience. The Video Vender offers a finite selection of predetermined, packaged drinks for sale. Global Brand Manager of Coca-Cola Anthony Phillips said, “The new machines incorporate sight, sound and motion video to take the vending experience from transaction to true interaction. We wanted the machines to be eye-catching in a way that would turn heads and command attention.”

Although the Video Vender provides a sleek and vivid display of branded beverage icons, its storage section is not configured differently than a standard cold drink vending machine that normally features 12 product selections and a refrigerated holding capacity of about 540 cans.

By contrast, the Freestyle machine allows consumers to create beverage recipes, customizable flavor combinations, and vitamin-enriched drinks as flavors and additives are not premixed. The Freestyle dispenser contains 30 flavor cartridges that can be combined to yield more than 100 different drinks (for example, tangerine-flavored Sprite, raspberry-flavored Diet Coke, and vitamin-infused Dasani water). The dispenser makes drinks to order, collects data on what customers concoct, and uploads that information to analytical sales software. The company uses the data to assess the overall success of drink sales as well as identify regional preferences. Freestyle dispensers consume about the same amount of floor space as a standard eight-valve Coca-Cola restaurant fountain dispenser.

POS Data
The Video Vender provides a platform that allows the customer to touch a digital display to navigate through product offerings and make a purchase selection. The Video Vender captures traditional vending machine transactional data, often referred to as DEX data, and is connected to a Wi-Fi-enabled network for remote data polling. A vending machine controller captures such DEX data as product inventory, product movement and payment detail. DEX data is designed to assist with machine replenishment strategies, product mix rotations and payment auditing.

Traditionally, DEX monitoring is provided in two separate data sets: interval and cumulative. An interval reading includes only DEX data collected since the last data reading. After an interval reading is concluded, the interval tracking mechanism is reset to zero, thereby ensuring that the next interval reading contains only data aggregated since the last reset. A cumulative reading is maintained in summary indicating a perpetual total since DEX data collection was initialized. A cumulative metric represents all data collected to date, while the interval metric involves only data recorded since the last interval reading. While interval readings reflect recent activity, cumulative readings can be used to prove the accuracy of interval values. Instead of relying on interval readings alone, computing differences between cumulative readings tend to provide a higher level of accuracy.

The Freestyle dispenser incorporates RFID-based flavor dispensing cartridge tagging that enables accurate tracking of consumed beverages by flavor. For example, a customer can select a brand, such as Sprite, and then formulate a personal variation (peach Sprite, grape Sprite or cherry Sprite). The real-time nature of this analysis provides a sound basis for a definitive tracking of product movement as well as dynamic replenishment of beverage inventories. Besides collecting POS data on flavor dispenser usage, Freestyle also can alert product suppliers and foodservice management when to order and how much of each cartridge to order. Freestyle machines also generate graphical drink consumption reports, by day-part sales, through an e-business portal located on a supplier network.

The RFID-enabled Freestyle dispensers keep track of consumption trends (flavors, quantities, times, etc) and transmit that information over a wireless network to POS management software from SAP, and then to Coca-Cola’s SAP BW data warehouse in Atlanta. The data is used for operational activities (automatically scheduling refills, stopping distribution if there’s a product recall of a particular cartridge, etc.) and for analytics: assessing how new drinks are doing in the market, identifying differences in regional tastes, and helping fast food outlets decide which drinks to serve. Coca-Cola plans to use its new analytic power to speed up and improve test marketing processes, with the ability to try new flavors with almost real-time feedback. That information can then be quickly shared throughout their worldwide distribution channels.

Consider the POS data available at a QSR that collects beverage data using a POS system. The POS will only capture beverages by serving size and number sold as fountain drinks tend to be self serve. As a result there is little or no data on beverage preference since customers typically do not indicate or determine a beverage choice until confronted with the drink dispenser and available products. The choices often lead consumers to ignore a singular product and to blending multiple products to taste. When this occurs at the Freestyle machine all flavors used would be accurately tracked.

In the past few months, Kraft Foods and Samsung announced a joint venture in a snack vending machine. This new machine, built on the Video Vender concept except that instead of cold beverages the machine focuses on a variety of snack foods. The snack machine is named the Diji-Touch, which features a giant touchscreen (46-inch) panel on its front that is capable of displaying product icons, graphics and nutritional information for the food products being sold. For Kraft, these Internet-connected machines are a channel for selling additional products to customers while Samsung intends the energy screens promote self-service LCD applications (http://www.techfresh.net/samsungs-21st-century-vending-machines).

During the Beijing Olympics, Coca-Cola deployed 20 interactive vending machines featuring Samsung 46-inch touchscreen front panels. The networked units’ sales mix data to a central server while the vendor-supported Flash technology, motion graphics, high-definition video and Bluetooth capabilities for mobile downloads, creating an unique interface. Given the success of these field-tests, the company is working with Simon Malls to test large scale Video Vender deployment.

The Video Vender was developed by Coca-Cola in partnership with technology innovator Samsung and specialty interactive marketing agency Sapient with commercial implementation by Simon Malls.

Coca-Cola VP of Global Design David Butler said, “The video vending machine is a great example of our approach to creating value and innovation through design. We created a user-friendly touchscreen interface that can be very functional when we need it to be, but also drive emotional connections for our brands.”

Freestyle Dispenser
Freestyle self-serve dispensing fountains represent a significant departure from equipment offered previously. The dispenser has been in secretive development for nearly four years. The units enable customers to select from more than 100 calorie and no-calorie brands, including varieties of waters, juices, teas and sparkling beverages. Given that soft drink purchases have been declining at foodservice outlets in recent years, the intent is for Freestyle machines to lead to increased beverage sales by giving customers more beverage choices. Freestyle is a software-driven, front-line robotic device built on self- service, business intelligence and flavor preference analysis. The dispenser is connected to a network that monitors each consumer choice, and if a unique combination becomes popular, this could represent the birth of a new flavor choice for wide-scale production. The Freestyle name was selected to capture its ability to deliver unprecedented beverage variety in an innovative and interactive fountain drink experience. Additionally, the unit features an inline ice dispenser, allowing customers to press a cup against a lever for the desired amount; customers also can similarly control the amount of beverage dispensed.

From a business perspective, part of the attraction of this dispenser is the cost containment resulting from stocking and replenishing condensed cartridge packaged fountain supplies as opposed to legacy, bulky bag-in-the-box supplies. In addition, the supplier (Coca-Cola) gains insight into what new products have potential for future marketing, including identification of regional preferences.

This dimension renders Freestyle a reverse marketing tool in that it measures regional and global beverage preferences indicated by consumer choice, as opposed to marketing driven by the supplier. Dispensers have been installed in select Jack in the Box, Subway, Carl’s Jr., El Pollo Loco, Noodles and Pei Wei Asian Diner restaurants.

 “We have captured the essence of what is so magical about Coca-Cola and the fountains of the past and partnered with technology leaders across a variety of industries to create a completely new beverage experience,” said Gene Farrell, vice president, special projects, Coca-Cola North America. “I believe we have created a concept that will become the soda fountain of the future – a representation of the way people will experience our beverages years from now.”
Coca-Cola recently introduced two beverage dispensing machines that enable interactive transactions. The Video Vendor features a large LCD touchscreen with sights and sounds designed to engage consumers by changing the customer-machine interface. In a recent news release, Global Brand Manager Coca-Cola Company Anthony Phillips said, “We wanted the machines to be eye-catching in a way that would turn heads and command attention.” So far, Coca-Cola reports results have been impressive.

The Coca-Cola Freestyle machine is a proprietary fountain dispenser with the ability to deliver unprecedented beverage variety. Senior Director of Marketing and Business Development for the Coca-Cola Freestyle machine Chandra Stephens-Albright said, “It brings back the magic of the fountain of the past, re-imagines it for the future and then takes it a step farther by celebrating the idea that consumers can truly have their say at the fountain–with choices tailored completely for them.”

Michael Kasavana, PH.D., NCE, CHTP, is a NAMA Professor in Hospitality Business for the School of Hospitality Business at Michigan State University. He can be reached at kasavana@msu.edu.


Video Vender
In June 2009, the Coca-Cola Video Vender earned the Gold Lion Award in the point-of-sale category at the Cannes Lions International Advertising Festival. The festival is widely considered the world’s premier showcase for excellence in advertising and design. Besides being a free-standing unattended POS device with a large flat, touchscreen digital display the Video Vendor has Bluetooth capabilities. Cold beverages are purchased via an innovative user interface.

Video Vender allows consumers to select a preferred branded product while viewing educational, informative and promotional materials. The machine can be programmed to accept cash, electronic payments and gift cards and relies on a combination of sight, sound and motion to enhance the transaction experience. This machine is recognized for emphasizing design as a strategy for heightened consumer interactivity (transaction through interaction). The Video Vender was jointly developed by Coca-Cola, Samsung and Sapient. Future models of the machines are slated to offer mobile phone downloads in the form of music files, ringtones and wallpaper, along with alternate forms of cashless payments.
Freestyle Dispenser
The Freestyle dispenser has a footprint that occupies the space of a standard counter-top eight-valve fountain machine. The Freestyle machine uses high-concentrate ingredients dispensed from micro-dosing containers that can be replaced as easy as changing a print cartridge on an ink jet printer. The Freestyle dispenser is dependent on several technologies, including RFID-enabled micro-dosing cartridges, and an uplink to specialty point of sale and warehousing software. Technologies involved in the construction and operation of the Freestyle machine, include:

Reverse Marketing–a selling proposition by which the consumer drives product choice or design; based on preference indexing based on consumer behavior as opposed to marketers targeting consumers based on quantitative research.

Mechatronics –a hybrid formed from the words mechanic and electronics: a construct used to create an advanced machine component and assembly scheme resulting in highly automated functionality.

Micro-dosing Dispensers–micro-dosing technology rely on highly concentrated oils to dispense flavor additives thereby replacing bulky five-gallon bag-in-box containers with 46-ounce ultra-concentrated cartridges.

RFID–micro-dosing cartridges are tagged with radio frequency ID chips, with each dispenser containing an RFID reader. The device uses the RFID tags to track usage of the ultra-concentrated PurePour flavor cartridges.

Cellular Uplink–used to establish data uploading from a Freestyle machine to a host network for POS and business intelligence analysis.

POS Software–RFID tagged flavor monitoring, demographics, day part, and machine location variables are collected and processed.

Business Warehouse Software–relies on uploaded flavor cartridge use to determine dynamic scheduling of product replenishment by machine location and device component.

PurePour Technology–enables customers to create dozens of branded beverages fresh to order thereby providing extensive flavor customization.

Touchscreen LCD–15.1 inch LCD capacitive screen enables display of sequential menus depicting choices, settlement, and dispensing.

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