Tidewater Community College Virginia Beach Campus Vending Machines 1

Memorandum

Letter of Transmittal

To: Edna V. Baehre-Kolovani

From: Bianca Harold, Tidewater Community College Student

Date: 11/26/2017

Re: Tidewater Community College Virginia Beach Campus Vending Machines

Dear Dr. Baehre-Kolovani,

I am pleased to submit my report on Tidewater Community College Virginia Beach Campus

Vending Machines. The first goal of this report is to understand the high prices of goods sold in

the campus vending machines and understand how big business negatively affects the sales of

those vending machines. The second goal of this report is to consider alternatives that would not

only put additional money into Tidewater Community Colleges pocket but satisfy the students

as well. I appreciate your time in reading this report.

Sincerely,

Bianca Harold
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Tidewater Community College Virginia Beach Campus Vending Machines

Convenient yet costly?

Bianca Harold

Tidewater Community College

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Abstract

The purpose of this report is to consider how Tidewater Community College can reduce

the prices of the goods in its vending machines. The history of vending machines is introduced.

How pricing is determined and by who for products within the vending machine is explored.

Alternative methods are given.

Keywords: vending, machine, Tidewater, Community, College, reduce, price

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Table of Contents

Letter of Transmittal 1
Abstract 3

Introduction 6

Methodologies of the Studies 9

Results 10

Solution 12

References 14
Glossary 15
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List of Figures

Figure 1: Industry Revenue in Billions (2017 State of the Industry Report - Vending &
Micro Markets.) ....7

Figure 2: What do you think of the price of food and beverages sold in vending machines
here? (Design by meta-chart.com)..............................................................................................10

Figure 3: How often do you purchase from the vending machines? (Design by
meta-chart.com)...........................................................................................................................11
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Introduction

Here at Tidewater Community College (TCC), there is an option to help reduce tuition by

Barnes & Noble offering to price-match textbooks for students in the event a student finds the

same copy of a textbook already purchased for a cheaper price; thus, granting a student the

opportunity to save some money (newsobserver. (2017). Barnes & Noble launches price-match

program at college stores.). Compared to the same item sold in a store, goods offered in

Tidewater Community Colleges vending machines are much higher. For example the cost of a

regular Snickers bar is a $1.25 here versus $0.89 at a Dollar Store. The costly prices of food sold

in Tidewater Community Colleges vending machines should decrease in order for students to

recharge themselves without hurting their bank accounts.

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Background

The first known use of the vending machine dates back to ancient times specifically the

first century. It was Heron of Alexandria that created a baser version of the vending machine we

know today in order to dispense holy water at temples to people. As time progressed so did

vending machines becoming a market and 1888 with companies like the Adams Gum selling a

piece of Tutti Frutti gum for a penny (Smith, E. (n.d.). Atlas Obscura - Curious and Wondrous

Travel Destinations. The History of Vending Machines Goes Back to the 1st Century - Atlas

Obscura.).

Figure 1: Industry Revenue in Billions (2017 State of the Industry Report - Vending &

Micro Markets.)

The vending industry has reached a 21.6 billion revenue at the end of 2016 with food,

beverages, and candy/snacks as the third, fourth, and fifth most importantly ranked product
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categories, respectively. As products, equipment, and services get more expensive operators

continue to raise prices, ((n.d.). Vending Machine-Coffee Machine-Vending Business-Micro

Markets | VendingMarketWatch.com. 2017 State of the Industry Report - Vending & Micro

Markets.). These operators are many of the big name-brand companies, such as Pepsi Coca-Cola,

Frito-Lay, and Mars-Hershey. These companies have more of a sway when it comes to their

products being sold in vending machines. They decide to increase the prices on stocked vending

items resulting in vending companies needing to raise their prices in order to maintain the same

margins. With educational institutions, like colleges, these companies pay millions for exclusive

pouring rights to place their vending machines and products on campuses ((n.d.).

Encyclopedia.com | Free Online Encyclopedia. Vending machine facts, information, pictures |

Encyclopedia.com articles about vending machine.). All in all, the end consumer may become

reluctant and deter from the vending machines.

However, educational institutions tend to readily accept what contract prices are agreed

upon for products because the contracts from national vendors usually provide incentives, such

as large donations or higher commission rate for the school.

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Methodologies of the Studies

The following methodologies were used:

Research:

Rising prices of vending machine products

Vending machine industry

Vendors and contracts

Survey:

Conducted on Tidewater Community College Virginia Beach Campus at random

Questions were given only to students

Questions included thoughts of price and amount of time purchasing from vending

machines
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Results

Figure 2: What do you think of the price of food and beverages sold in vending machines

here? (Design by meta-chart.com)

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Figure 3: How often do you purchase from the vending machines? (Design by

meta-chart.com)

Analysis

The survey responses proved that my research pertained to Tidewater Community

College students. When asked of the price of food and beverages in the vending machines?,

70.91% of students said too high!. In relation to the second graph asking the question how

often they frequent the vending machines, the percentage of responders fall into the categories of

Only if I am hungry. at 52.7% and I rather bring my own food or buy something from

somewhere else. at 36.36%. Extrapolating these responses, this survey shows that Tidewater

Community College students took into account the price of a snack or drink here in the vending

machine versus somewhere else.

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Solution

Vending Machine Concerns:

When considering ways to reduce the prices of products distributed in vending machines, there

are a few things to look into: what products to choose from, where to purchase those products

from, and the cost of a vending machine.

Considerations

Instead of selling what a vendor outlines in the contract, if Tidewater Community College were

to self-operate its own vending machine, it could see a rise of 15,000 to $20,000 in gross sales

per year according to Jim Dillingham, CEO of Vend-ucation (Lacey, K. (2013, November 12),

which could more than pay for a single vending machine as they run at $3,000 to $5,000 each.

Tidewater Community College could also form new contracts and purchase from independent

vendors since they offer more flexibility in regards to the length of the contract, rates of

commission, and selection of items.

Recommendation

There is a plethora of wholesale vendors ranging from every type of snack and beverage. I

recommend using Vending Connection, a site where institutions may contact local or national

vendors. Among various reputable vending machine manufacturers, Vendweb is a useful choice

to look into as they offer new or refurbished vending machines with several financing options.

Conclusion
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Ultimately, the impetus behind vending machines is convenience in relation to location and cost.

However, Tidewater Community COllege is not upholding the second factor. If Tidewater

Community College were to switch to a self-operated vending machine, they could see a

substantial rise in revenue. Tidewater Community College should be able to make these changes

based upon my research.

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References

(n.d.). Encyclopedia.com | Free Online Encyclopedia. Vending machine facts, information, pictures |
Encyclopedia.com articles about vending machine. Retrieved from
http://www.encyclopedia.com/science-and-technology/technology/technology-terms-and-conce
pts/vending-machine
(n.d.). Vending Machine-Coffee Machine-Vending Business-Micro Markets |
VendingMarketWatch.com. 2017 State of the Industry Report - Vending & Micro Markets.
Retrieved from
http://www.vendingmarketwatch.com/document/12347120/2017-state-of-the-industry-report-ve
nding-micro-markets
(n.d.). Vending Machines, Vending Companies, Vending Business Suppliers. VENDING YELLOW
PAGES SUPPLIERS DIRECTORY Vending Machines & Wholesale Products Suppliers.
Retrieved from
http://www.vendingconnection.com/yellow-pages/yp-vending-business-suppliers-directory/
(n.d.). Vendweb.Com Vending Machines - New and Used Vending Machines . Vendweb.Com
Vending Machines - New and Used Vending Machines . Retrieved from
http://www.vendweb.com/
(2014, January 1). Vending Machines Tucson, Office Coffee Tucson, Vending Service Tucson |
Prestige Vending. Are the Prices for Snacks in your Local Vending Machines in Tucson
Rising? | Prestige Vending. Retrieved from
http://prestigevendingaz.com/2014/01/are-the-prices-for-snacks-in-your-local-vending-machine
s-in-tucson-rising/
(2017, June 19). Welcome to Dietitians for Professional Integrity - Dietitians for Professional
Integrity. Pouring Rights Contracts: Big Soda's Infiltration of Public Universities - Dietitians for
Professional Integrity. Retrieved from
http://integritydietitians.org/2017/06/19/pouring-rights-contracts-big-sodas-infiltration-public-uni
versities/
Anderson, B. (n.d.). Breaking News, Sports, Weather & More | News & Observer. Barnes & Noble
launches price-match program at college stores | News & Observer. Retrieved from
http://www.newsobserver.com/news/business/article82494022.html
Lacey, K. (2013, November 12). District Administration Magazine |. Business of: School vending
machines | District Administration Magazine. Retrieved from
http://www.districtadministration.com/article/business-school-vending-machines
Smith, E. (2015, August 3). Atlas Obscura - Curious and Wondrous Travel Destinations. The History
of Vending Machines Goes Back to the 1st Century - Atlas Obscura. Retrieved from
http://www.atlasobscura.com/articles/the-history-of-vending-machines-goes-back-to-the-1st-ce
ntury
Thomson, J. (n.d.). Compare Suppliers to get multiple quotes for your business | Companeo | UK.
Pros and cons of school vending machines | Companeo.co.uk. Retrieved from
http://www.companeo.co.uk/vending-machines/guide/pros-and-cons-of-school-vending-machin
es#0
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Glossary

1. Pouring Rights: contracts between a business and an institution