Subscription models may offer unique marketing opportunities
Feb. 24, 2015
More food and beverage companies are experimenting with on-line subscription services in an effort to generate sales and attract and engage customers. The programs shorten the supply chain and may allow marketers to achieve a level of interaction with consumers that is unheard of through more traditional on-line retail programs. The on-line model is just one more example of how e-commerce is altering the way many companies do business.
Earlier this month, Keurig Green Mountain said it is launching a subscription-oriented service as a new way to engage its customers and sell its brewers. Through the company’s Keurig Choice program, consumers may subscribe to the service, which allows them to buy a brewer and pay for it over a set period of time. In discussing the program, Brian Kelley, chairman and chief executive officer of Keurig Green Mountain, noted that how consumers are shopping for goods and services is changing, and consumer packaged goods companies like Keurig Green Mountain must keep pace.
“To align with the changes we are seeing in the marketplace, particularly with the younger demographic, we are testing a number of unique Keurig system shopping and pricing models,” he said. “They’re designed to make it even more appealing for a broader segment of consumers to join the Keurig system.”
A few weeks after Mr. Kelley made his remarks, the Starbucks Coffee Co. launched its fresh delivery subscription service, giving on-line customers access to its selection of small-lot coffees roasted at the company’s Seattle Reserve Roastery and Tasting Room. A subscription ensures customers receive prompt shipment of their coffee — within three to five days of when the beans are roasted, depending on location in the United States. The program allows Starbucks to tap into several trends, most notably a demand for fresh, authentic products that feature a level of exclusivity.
It isn’t only coffee companies that are gravitating toward subscription programs. Such small companies as Popcorn Willy, Washington, Pa., have services designed to introduce its products to new consumers, and General Mills Inc. launched a snack subscription service called nibblr this past year. Each $5.99 box contains four portion-controlled snacks and is delivered by mail. Users may order on-line at nibblrbox.com.
Packaged in individually sealed trays, the snack mixes feature nuts, fruits, chocolate and such flavors as curry, chili pepper and chai. A variety called Chai It, You’ll Like It contains golden raisins, raisins and vanilla chai raisins. The Tokyo Heat Wave mix has wasabi-coated peas, sesame sticks and peanut crackers. Gorilla-A-Go-Go contains dried bananas, peanuts and dark chocolate-covered raisins. Subscribers may choose the snacks they receive via a rating system and the frequency of delivery. Much like Starbucks, nibblr allows General Mills to offer premium snacks in non-traditional flavors that may be perceived as adventurous.
It is easy to dismiss initiatives such as these as insignificant niche efforts, particularly when measured against other initiatives their parent companies are currently undertaking. But there is a race under way to identify the most effective on-line business models and such experiments are paving the way for what is sure to be significant future investment.
Subscription services have the potential to allow a company like General Mills, which sells a diversified portfolio of products, to connect with consumers and achieve a level of brand loyalty that is far beyond current efforts, whether they are of the brick and mortar or on-line variety. There will not be a single, winning strategy in on-line commerce. Much like the brick and mortar retail sector is continually undergoing evolution, so will on-line efforts. Subscription services may be one way for companies to achieve a more personalized relationship with its consumers.