Coca-Cola’s newest brand is orange-raspberry-vanilla Coke Zero. Or it might be orange-peach Fanta with a shot of strawberry Sprite. The flavour isn’t all that important. The brand Coke is really marketing is something it calls “the Fountain of You,” an attempt to tap into the growing marketing trend of personalization.
The company’s new “Freestyle” vending machines, launched in Toronto in May, soon will pop up across Canada.
They look like normal vending machines with touchscreens on the front. Because the machine uses a fountain to mix drinks rather than dispensing individual bottles, it offers more than 100 Coke-owned drink brands, with endless options for mixing them.
“Everything is becoming more personalized,” said Shane Grant, vice-president of the sparkling business unit at Coca-Cola Ltd. “To the extent that I have choice, it’s the new normal for consumers to be able to create unique experiences ‘for me.’ ”
Since its U.S. launch in 2009, the project has expanded to include thousands of Freestyle machines, including at 14 locations in the Greater Toronto Area. The company is also planning to set them up in Latin America.
It’s easy to see the marketing value of personalization: Companies want to create loyalty by making customers feel special. Allowing them to make personalized choices is one of the easiest ways to do that.
Customization has long been seen as the next big thing in marketing, said professor Frank Piller, a founding member of the Smart Customization Group at the Massachusetts Institute of Technology’s Design Lab. He believes it is now set to become much more widespread.
Today’s young consumers grew up with the Internet’s great personalizer, Facebook. The ubiquity of iTunes means they never buy an entire album just to get the one song they like. This generation is driving the change, Professor Piller said.
“Baby boomersgrew up in mass marketing. You’re part of a consumer segment … consumers knew that they had to compromise, or they had to pay a very high price to customize,” he said.
“This is different now. We have consumers that were never taught to settle.”
Plenty of companies are waking up to the trend. Last year, luxury designer Burberry launched its Bespoke service, allowing customers to build their own trenchcoat (starting at $1,800). Central to the experience is the rich website that renders photos of each particular design. The more personalized extras a buyer chooses – cashmere lining, a Spanish shearling collar, double tan bridle leather cuff straps with matching epaulettes – the more the company charges.
Beyond the luxury segment, where paying extra for personalized service is already de rigueur, other brands are also hitting their stride with customization. NikeID, which offers customized designs and colours for sneakers and other apparel, has refined its website and added mobile apps to become more attractive to consumers. Its Nike+ products sell personalized workouts.
In urban centres across North America, frozen yogurt stores such as Pinkberry, Menchies and Canadian chain Yogurty’s let customers choose how much yogurt they want and apply their own toppings.
Coke’s product and the frozen yogurt chains are among the early examples of in-store customization, Prof. Piller said. “It’s bringing the personalization trend to a place where it hasn’t been yet.”
In a report last year entitled “Mass Customization is (Finally) the Future of Products,” Forrester analyst J.P. Gownder noted that the digital world has created an expectation among customers that they will have options.
While customization is growing, there have been some speed bumps along the way. That is partly because mass production is cheaper than customizing individual items. In 2010, Dell announced it would scale back the “cascade of options” it had given consumers to personalize their computers, saying, “It has become too complex and costly for significant portions of consumer and some portions of our commercial businesses.”
Technology is bridging some of the gap when it comes to affordability. Take configurators, for example – the tools that allow users to build a customized product on a website, and see it in progress. In the past 10 years, the cost of developing and building the software has dropped from $1-million to about $50,000, the Forrester report said.
Customization is not just a way to please consumers. It can also be a rich source of the one commodity marketers chase with relentless fervour: data.
Netflix and Internet radio company Pandora both analyze customer ratings on TV shows, movies and songs to predict which new products might be most popular.
That is what Coke aims to do with its machines. “We are in constant communication with our freestyle machines,” Mr. Grant said. “By looking at this data, we can get an insight into new choices that consumers are making on a daily basis.”
A major change in trends, signalled by the flow of digital data points from each machine, could affect the company’s plans for distributing products, he said.
Coke owns many brands that consumers aren’t exposed to because of the limits of distribution. People will discover new brands via the Freestyle machines, which could help sales. Fanta, popular elsewhere in the world but still an emerging brand in Canada, has been performing well. And the Freestyle machines carry other brands that have not been sold in Canada before.
While Mr. Grant would not share sales data from the Freestyle machines, he said they are ahead of volume targets.
“This is really our next big evolution in the way we engage with people.”