Definition of Merchandising
Merchandising refers to the strategy and process involved in promoting and selling products to consumers. It encompasses a wide range of activities aimed at ensuring that the right merchandise is presented to the consumer at the right place, time, quantity, and price. Effective merchandising involves understanding consumer behavior, planning inventory, executing promotional activities, and creating appealing visual displays.
- Planning Involved: According to the American Marketing Association, merchandising includes planning to market the right merchandise or service at the right place, at the right time, in the right quantities, and at the right price.
- Promotional Sales Activities: It also involves promotional sales activities led by an advertiser’s sales force, including advertising, point-of-purchase displays, guarantee seals, special sales, and in-store promotions.
Examples of Merchandising
- Point-of-Purchase Displays: Strategically placed displays in a store that draw attention to certain products, encouraging impulse buys.
- Endcap Displays: Promotion of featured products on the shelves at the end of aisles to increase visibility and encourage sales.
- Seasonal Promotions: Retailers often stock and promote merchandise relevant to specific seasons, such as holiday decorations or summer wear.
- Cross-Merchandising: Placing complementary products together, such as chips next to salsa, to boost sales of both items.
Frequently Asked Questions (FAQs)
What is the main goal of merchandising?
The main goal of merchandising is to maximize a retailer’s sales and profitability by ensuring customers find the right products in the right quantities at the right times and prices.
How does visual merchandising impact sales?
Visual merchandising enhances the store’s appearance and appeals to customers’ senses, which can increase foot traffic and sales by creating an inviting shopping experience.
What is cross-merchandising?
Cross-merchandising refers to the practice of placing complementary products together to encourage customers to buy more items.
Why are point-of-purchase displays important?
Point-of-purchase displays are important because they draw attention to certain products at the moment when a consumer is ready to buy, leading to increased impulse purchases.
Can merchandising strategies vary by industry?
Yes, merchandising strategies can vary significantly by industry, with different approaches needed for food retail, fashion, electronics, and more.
Related Terms with Definitions
Inventory Management
The supervision of non-capitalized assets (inventory) and stock items, tracking the flow of goods from manufacturers to warehouses and from these facilities to a point of sale.
Category Management
A retailing and supply management practice in which the range of products purchased by a business is broken down into discrete groups of similar or related products.
Supply Chain Management
The management of the flow of goods and services, including all processes that transform raw materials into final products.
Visual Merchandising
The practice of developing floor plans and three-dimensional displays to maximize sales, focusing on the way products are presented to the customer in physical stores.
Online References
- American Marketing Association - Definition of Merchandising
- Investopedia - Merchandising
- Retail Dive - Best Practices in Visual Merchandising
Suggested Books for Further Studies
- “Visual Merchandising and Display” by Martin M. Pegler
- “Retailing Management” by Michael Levy and Barton A. Weitz
- “The Art of Retailing” by A.J. Lamba
- “Managing the Retail Supply Chain” by John Fernie and Leigh Sparks
- “Omni-Channel Retailing: The Future of Brick-and-Mortar” by Tim Brown and Geraldine Molinia
Fundamentals of Merchandising: Marketing Basics Quiz
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