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Product Positioning And Merchandising In The Retailer Outlet

Jul 7, 2008
Positioning and Merchandising in the outlet are a part of a process of presenting the product to the consumers. Good positioning is the key of the success in selling the product. It is important to understand that not all locations within outlet are good for the specific product.

Usual "good" positions within the outlet are:

- Near the entrance ( or in front of entrance in some cases )

- In front sides of the racks, not behind

- Before competitor

- In areas where consumers spend most of their time while shopping ( Hot Spots )

- In the eye level of consumer ( not too high or not too low )

- Next to the cashier

After getting the "good" position, the next thing that we should take care about is the "Size". The Size means space that our products occupy on the rack in term of sales versus the competition. The space dedicated to our product should be equal or bigger than is the share of sales of our product in the market. This is "Space to Sales" rule. This rule is simple and it helps to retailer but also the supplier with the significant market share.

In some cases customers ( owners of the outlet ) are not respecting this rule, for some reason. Example, they are giving too much space to slow moving product, maybe because high stock accumulated due to low sales. The problem is that this product will not sell more proportional to extra space given, at same time some other fast moving products will not have a chance to sell at full potential. The solution for this problem is the right order in the first place. This means that we have problem with space given to our product since our customer is overstocked with slow-mover product, we can try to educate our customer to place right order for all product, proportional to their sales and potential and to dedicate right space range in the shelves according the sell-out of each brand, product or category.

Finally, when we have a good position and space for our product, it is time for the Merchandising of the products. There are several definitions of Merchandising like:

"Merchandising is effective arranging of the product in the place of sales, with purpose of accelerating the sales."

"Merchandising is process of exposing the product in the danger of being bought." :-)

Effective arranging of the product means applying the group of rules to the products on the shelf:

- Corporative block ( all products of your company are arranged in the block, which give you the impact through synergy and visibility

- Space to sales to your SKUs

- Brand order, by the sales in the traffic flow ( Top selling Brand is leading your block )

- Pack vertically aligned, the different pack size on the different shelf level

- Price tags placed, with visible price ( with included VAT, discount etc. ) and product code

- FEFO Rule ( First Expires First Out ). For the products with life limit, which is usual for the FMCG product, you should always place the product with shorter life remained in front of the others.

- Promotional signs

- Keep the product clean and undamaged

Who does Merchandising? Primarily this is the role of the Salesmen responsible for specific outlet, meaning that the same person is selling the product, but also merchandising the product. In some cases, special dedicated person - Merchandiser is hired to do only Merchandising. This is quite common for supplying companies that have big share and sell-out, so they can employ Merchandiser in large size outlets Supermarket/Hypermarkets only to do shelving and arranging the products. This is justified for huge sell-out outlets. Otherwise, employees of this Super/Hypermarkets cannot do this job good enough, because other obligations.

Merchandising is different for distinguished businesses and product types. E.g. Merchandising and positioning of TV sets is done in different way than positioning of Fast Move Consumer Goods (FMCG ) like food, beverages, ...

The benefits of good positioning are increased sales volume, increased number of "unplanned" (impulse ) purchases, increasing the corporate image. All this brings additional profit for the supplying company, but also for the retailer who is dealing these products. This profit can be used as a Profit Story as a negotiation tool for better position.

At same time the consumer have it's own benefits out of good Positioning and Merchandising: ease of shopping, favorite brands at the reach of hand and less effort invested in looking for specific product within outlet.

Based on previously said, we can conclude that good and effective positioning is beneficial for everybody involved in transaction of product; the Supplier, the Retailer and the Customer.
About the Author
Laurus Nobilis has 11 years of experience in FMCG business. He has been working primarily in Sales and Supply Chain. Since 2007 he is running the www.biz-development.com web site dedicated to development of managerial skills and knowledge, necessary for the business running.
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