Definition of merchandising
Merchandising is a part of the commercialization process that includes studies and techniques used, separately or jointly, by distributors and producers, which allows increasing the profitability of the point of sale and the flow of products by permanently adapting the assortment to market needs and proper presentation of goods. Which means: the right assortment, at the right time, in the right quantity and at the right price in order to achieve the maximum balance between product supply and consumer demand and thus maximize profits.
The main means of merchandising are: commercial information, merchandise management, space management, traffic flows, promotion and advertising at the point of sale. (Académie des Sciences Commerciales).
It is conceived as the marketing actions carried out at the point of sale (in the store itself). Therefore, it is based on the same combination of the «4Ps» of the Marketing Mix: the «P» (Place) of distribution means for the retailer the location and implementation decisions; the "P" for product is identified with the assortment available; the price "P" with the store's pricing policy; and the "P" for promotion with advertising, sales promotion, public relations and personal selling activities. It is the set of techniques based mainly on presentation, rotation and profitability; comprising a set of actions carried out at the point of sale aimed at increasing profitability, placing the product in the most convenient place, shape, price and quantity. (Team Vértice, p.35 and 36)
It is the marketing of the point of sale. They are all actions aimed at highlighting the products, animating and making the linear (the shelves or surfaces on which the products are displayed) profitable and enhancing the point of sale. One of the organizations dedicated to the study and development of merchandising techniques, the French Merchandising Institute, tells us that: «It is the set of methods and techniques conducive to giving the product an active role in sales due to its presentation and environment, to optimize their profitability ”. (Garrido, p.17)
It is any action aimed at bringing the product closer to the consumer at the point of sale, in order to seek greater product turnover that will result in greater benefit, both for the retailer and the manufacturer. (Ferré and Ferré, p.81)
Types of merchandising
It can be classified according to its nature, according to the customer's situation and according to the life cycle of the product.
According to its nature
According to the product life cycle
| Of birth | Of attack | Of maintenance | Defense |
|---|---|---|---|
| When the new reference as a distributor is obtained, the location, the first order, the linear agreed to the product is generally defined. | With the positive development of the product especially compared to the other products of the families, it is necessary to negotiate and obtain an extension of the shelf for this product. | Once a suitable linear has been achieved, it is about defending this situation as effectively as possible. The weapons are the following: Personal dedication. Good personal relationships with managers. Promotions and animation of the linear. | With the decline in product sales, the life of the meters or centimeters obtained in the fight for the linear is increasingly in danger. In this phase of the life of the product, it is about stopping the reduction of the shelf and trying to inject a bit of animation through aggressive promotions. Not defending the linear in this case means the immediate acceleration of the decline to complete disappearance. The manufacturer has to fight for the distributor to collaborate in defending the product. |
| Source: Salén, p.66-68 |
Basic principles of merchandising
The premise of merchandising development is how to sell without vendors and rests on three basic principles:
- the discount, which consists of reducing the commercial margin in order to sell much more; free service, which corresponds to two needs, the desire for autonomy on the part of the consumer who wants to decide on their purchases and the reduction of costs on the part of the merchant; and the rapid rotation of stocks, which guarantees the consumer quality, freshness and better prices of the products and the merchant allows him to optimize profits since he pays for the merchandise after having sold it (without financing costs), generating a high cash flow which has driven the rapid growth of businesses.
And three minor but necessary principles that correspond to the principles of personalization of the store: advertising, assortment and location. (Salén, p.61-64)
Here are a couple of educational videos through which the main elements of merchandising are presented.
Bibliography
- Académie des Sciences Commerciales. New Dictionary, Merchandising, Vertex Team. Product knowledge. Your presentation to the client. Editorial Vértice, 2007. Ferré Trenzano, José María and Ferré Nadal, Jordi. Sales promotion and merchandising policies and strategies. Ediciones Díaz de Santos, 1996. Garrido Pavia, Jordi. Sell more in your store: Comprehensive management of the retail point of sale, Profit Editorial, 2011. Martínez Martínez, Inmaculada José. Communication at the point of sale: communication strategies in real and online commerce, ESIC Editorial, 2005. Miquel Peris, Salvador and Others. Commercial distribution, ESIC Editorial, 2006. Rivera Camino, Jaime and Juan Vigaray, María Dolores. Sales promotion: Key variable of marketing, ESIC Editorial, 2002.Salem, Henrik. The secrets of active merchandising,Editions Díaz de Santos, 1994.
