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Merchandizing: Some Core Concepts

Merchandizing involves optimizing product placement and shelf space allocation to increase sales. Key concepts include gaining prime shelf positioning for top brands, maximizing exposure of products to consumers, and maintaining a clean and organized store appearance. Proper merchandizing provides benefits such as increased sales, standardization, simplified consumer choice, and optimized space utilization and portfolio performance. Research shows that 30% of purchases are decided in-store, and signs, displays, and stock availability greatly influence purchasing decisions.

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Shantanu Saha
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92 views25 pages

Merchandizing: Some Core Concepts

Merchandizing involves optimizing product placement and shelf space allocation to increase sales. Key concepts include gaining prime shelf positioning for top brands, maximizing exposure of products to consumers, and maintaining a clean and organized store appearance. Proper merchandizing provides benefits such as increased sales, standardization, simplified consumer choice, and optimized space utilization and portfolio performance. Research shows that 30% of purchases are decided in-store, and signs, displays, and stock availability greatly influence purchasing decisions.

Uploaded by

Shantanu Saha
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Merchandizing

Some Core Concepts


What is Merchandizing
Space optimization through effective
Brand/Package allocation
Focusing on gaining first position
Providing greatest exposure of brands to all
consumers
Creating a consistent, orderly and clean
appearance for the products
Maximize use of POS to increase consumer
awareness of brand and promotions
Benefits
Increase Sales
Establish standardization
Simplify consumer choice
Optimize available space
Optimize portfolio
Simplify a sales call
Simplify servicing of the account
Benefits
It is estimated that 30% of purchasing
decisions is made in the outlet – the
remainder is pre-planned. It is also
true that people are five times more
likely to make a buying decision if the
product is well displayed at the point of
purchase. It also helps if the price is
clearly marked.
Fixture Layout Issues
Over 80% of handling costs are
attributable to the labor cost of refilling
shelves and the cost of space given to
each product on shelf. For the retailer
to increase profit he must minimize
handling costs and optimize the use of
space.
Fixture Layout Issues
 Profit – Overall cash profit generation
and the development of profitable
brands/categories.
 Movement – Reference to brand
movement ensures that stockholding
and space costs are minimized.
 Turnover – The consistent generation of
cash flow.
Fixture Layout Issues
 Growth Trends – It is important that market
trends are reflected within merchandising
plans.
 Market Share / Regionalism – The relative
strength of categories and brands often
varies depending on geography.
Merchandising plans should reflect this.
 Ranging – The range stocked should be
designed to attract the target consumer
Merchandizing Standards

PIES
Merchandizing Standards
Position
The locations of your displays in the
outlet can dramatically influences sales.
For example, in the case of supermarkets, people
always walk around the perimeter but may not
always walk down a particular isle. It has been
measured that by moving a display from a central to
perimeter location, sales increased by 274% and with
this display is in the front part of the store it
increased by 426%.
Impact on volume
FACINGS VOLUME

4 – 2 = - 48 %
5 – 2 = - 58%
Impact on volume
SHELF LOCATION VOLUME
(5 Shelves)

Top (5th shelf) to bottom = - 80 %


Bottom to 3rd shelf = + 43 %
4th shelf to bottom = - 45 %
4th shelf to 3rd shelf = + 10 %
Impact on volume

Unadvertised Promotion - + 420 %


Merchandizing Standards

Impact
Check that the overall display effect
creates a strong visual impact.
Merchandizing Standards
Extent
There is no end to the number of
secondary displays you can put up
particularly in the larger outlets.
Dominant floor displays can be placed
in high traffic areas through out the
store. Extent also means additional
shelf facings for your products.
Merchandizing Standards
Stock
Research shows that where consumers
have a planned intention to buy a
garment. 40% will put off their
purchase or buy elsewhere if the brand
they want is out-of-stock.
Principles and Techniques
Allocate shelf space in line with brand
volume and profit, ensuring that the space
devoted reflects their enormous value.
Never leave display space empty.
Brands should be blocked together by
product category, and similar brands should
be sited together in clearly defined sectors.
Principles and Techniques
Higher priced products should be
placed first in flow within each
category, working down the fixture to
the cheaper lines.

This will encourage consumers to shop the whole


fixture and to trade up to more profitable lines.
Principles and Techniques
Major brands, which have high growth
and profit, should have more space in
order to maximize their potential.
Take advantage of the heavy
advertising support given to the major
brands by displaying well known and
well advertised brands
Principles and Techniques

Do not forget the importance of local


brands.
Be aware of seasonal sales patterns.
Principles and Techniques
The fastest selling lines should be
displayed on the deepest shelf to avoid
losing sales through being out of stock.
‘Eye level is buy level’
Adjust shelves to match sizes and price
products clearly. Avoid too much
symmetry
Principles and Techniques
Direct Product Profitability (DPP)-Is
the measure of real profit retailers
make from each product in their stores.
It takes into account the actual costs
involved in stocking each product,
offsetting such things as rate-of-sale,
distribution, handling, storage and on-
shelf costs against gross profit margins.
Interrupting the Purchase Cycle

There are 5 opportunities to interrupt the


purchase cycle of a consumer
Interrupting the Purchase Cycle
POS Outdoor/Display
Push/Pull sign on door
Display in main traffic area
POS at point of purchase
Cash register
The Core Strategy

Coke
Fanta
Sprite
The Core Strategy

Spearmint
Doublemint
Juicy Fruit

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