Merchandising

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A coffee mug is a classical merchandising article employed by a broad range of entities from very small businesses up to multinational companies like IBM, and is also frequently used by musical groups. IBM merchandising coffee mug with company logo.jpg
A coffee mug is a classical merchandising article employed by a broad range of entities from very small businesses up to multinational companies like IBM, and is also frequently used by musical groups.

Merchandising is any practice which contributes to the sale of products to a retail consumer. At a retail in-store level, merchandising refers to displaying products that are for sale in a creative way that entices customers to purchase more items or products.

Contents

In retail commerce, visual display merchandising means merchandise sales using product design, selection, packaging, pricing, and display that stimulates consumers to spend more. This includes disciplines and discounting, physical presentation of products and displays, and the decisions about which products should be presented to which customers at what time. Often in a retail setting, creatively tying in related products or accessories is a great way to entice consumers to purchase more.

Merchandising helps to understand the ordinary dating notation for the terms of payment of an invoice.[ clarification needed ] Codified discounting solves pricing problems including markups and markdowns. It helps to find the net price of an item after single or multiple trade discounts and can calculate a single discount rate that is equivalent to a series of multiple discounts. Further, it helps to calculate the amount of cash discount for which a payment qualifies.

Promotional merchandising

The annual cycle of merchandising differs between countries and even within them, particularly relating to cultural customs like holidays, and seasonal issues like climate and local sporting and recreation. Events such as Chinese festivals and Japanese festivals are incorporated in an annual cycle of shop decorations and merchandise promotion.

Christmas shopwindow at Selfridges department store in London with a Paddington Bear theme to mark the release of the 2014 film Paddington London, England (15753498599).jpg
Christmas shopwindow at Selfridges department store in London with a Paddington Bear theme to mark the release of the 2014 film Paddington

In the United States, the basic retail cycle begins in early January with merchandise for Valentine's Day, which is not until mid-February. Presidents' Day sales are held shortly thereafter. Following this, Easter is the major holiday, while springtime clothing and garden-related merchandise is already arriving at stores, often as early as mid-winter (toward the beginning of this section, St. Patrick's Day merchandise, including green items and products pertaining to Irish culture, is also promoted). Mother's Day and Father's Day are next, with graduation gifts (typically small consumer electronics like digital cameras) often being marketed as "dads and grads" in June (though most college semesters end in May; the grads portion usually refers to high school graduation, which ends one to two weeks after Father's Day in many U.S. states). Summer merchandise is next, including patriotic-themed products with the American flag, out by Memorial Day in preparation for Independence Day (with Flag Day in between). By July, back-to-school is on the shelves and autumn merchandise is already arriving, and at some arts and crafts stores, Christmas decorations.

(Often, a Christmas in July celebration is held around this time.) The back-to-school market is promoted heavily in August, when there are no holidays to promote. By September, particularly after Labor Day, summer merchandise is on final closeout and overstock of school supplies is marked-down some as well, and Halloween (and often even more of the Christmas) merchandise is appearing. As the Halloween decorations and costumes dwindle in October, Christmas is already being pushed on consumers, and by the day after Halloween retailers are going full-force with advertising, even though the "official" season does not start until the day after Thanksgiving. Christmas clearance sales begin even before Christmas at many retailers, though others begin on the day after Christmas and continue on at least until New Year's Day but sometimes as far out as February.

This trend of stocking stores with merchandise many weeks prior to the actual holiday and the period of consumption can be described by the term advance selling. Although it may seem disadvantageous for sellers, advance selling can have the opposite effect. For example, this practice works to counteract a lack of abundant capacity in stores during prime seasons and a lack of value in premature products. [1]

Merchandising also varies within retail chains, where stores in places like Buffalo might carry snow blowers, while stores in Florida and southern California might instead carry beach clothing and barbecue grills all year. Coastal-area stores might carry water skiing equipment, while ones near mountain ranges would likely have snow skiing and snowboarding gear if there are ski areas nearby.

Silent persuasion

As promotional merchandise acquires a larger portion of companies' annual budgets, its appearance in the hands of unintended recipients increases. However, this has been found to generate a positive outcome for companies without any additional effort after producing the merchandise because of the concept of silent persuasion. The concept theorizes that even without the acknowledgement of the brand being promoted on the merchandise, the individual utilizing it is affected in their future actions as a consumer. Furthermore, a 2019 study found that the tactile usage of the products produced a greater response in consumers than a solely visual interaction with a product such as posters. [2] This study concluded that considering allotting a greater sum of money to smaller pieces of merchandising that promote a brand would benefit newer companies that have yet to become quickly recognizable.

Retail supply chain

Merchandising at a Walgreens in Chicago Walgreens Obama Merchandise.jpg
Merchandising at a Walgreens in Chicago

In the supply chain, merchandising is the practice of making products in retail outlets available to consumers, primarily by stocking shelves and displays. While this used to be done exclusively by the stores' employees, many retailers have found substantial savings in requiring it to be done by the manufacturer, vendor, or wholesaler that provides the products to the retail store. In the United Kingdom, there are a number of organizations that supply merchandising services to support retail outlets with general stock replenishment and merchandising support in new stores. By doing this, retail stores have been able to substantially reduce the number of employees needed to run the store.

While stocking shelves and building displays is often done when the product is delivered, it is increasingly a separate activity from delivering the product. In grocery stores, for example, almost all products delivered directly to the store from a manufacturer or wholesaler will be stocked by the manufacturer's/wholesaler's employee who is a full-time merchandiser. Product categories where this is common are Beverage (all types, alcoholic and non-alcoholic), packaged baked goods (bread and pastries), magazines and books, and health and beauty products. For major food manufacturers in the beverage and baked goods industries, their merchandisers are often the single largest employee group within the company. For nationwide branded goods manufacturers such as The Coca-Cola Company and PepsiCo, their respective merchandiser work forces number in the thousands.

Channel merchandising

This concept can be linked to marketing channels which bring products from the possession of the producer into the possession of the consumer. In recent decades, these methods utilized by companies to provide merchandise have expanded from in-person only, to online-only for some stores during the COVID-19 pandemic, to a mixture of both, sometimes referred to as omnichannel retailing. The combination of both options for consumers provides a favorable encounter with retailers that makes them more likely to purchase products and return to the seller again at a future date. However, these strategies can be difficult for sellers to maintain as it can require many more physical and technical resources that may not be currently available to them. [3] [4]

Online merchandising

A challenge that online retailers face in comparison to the traditional in-store shopping experience is the sensory exploration that isn't available to consumers through a screen. An area this is especially prevalent in is clothing or fashion retail in which potential sizing issues can be a large factor in a customer refraining from purchasing an item online. Moreover, accurately portraying the texture and quality of a product in all areas of retail, not limited to fashion, remains a challenge in the field of online merchandising as the lack thereof has been proven to result in more indecision for consumers. [5] Because of this, many companies look for ways to improve their online shopping options to make browsing merchandise as similar to an in-store experience as possible while keeping up with the growing online market.

Licensing

In marketing, one of the definitions of merchandising is the practice in which the brand or image from one product or service is used to sell another. Trademarked brand names, logos, or character images are licensed to manufacturers of products such as toys or clothing, which then make items in or emblazoned with the image of the license, hoping they'll sell better than the same item with no such image. [6] For the owners of the IP (intellectual property) in question, merchandising is a very popular source of revenue, due to the low cost of letting a third party manufacture the merchandise, while the IP owners collect the merchandising (royalty) fees.

In 1903, a year after publishing The Tale of Peter Rabbit , English author Beatrix Potter created the first Peter Rabbit soft toy and registered him at the Patent Office in London, making Peter the oldest licensed fictional character. [7] [8] Erica Wagner of The Times states, "Beatrix Potter was the first to recognise that content—as we now call the stuff that makes up a book or a film—was only the beginning. In 1903, Peter hopped outside his pages to become a patented soft toy, which gave him the distinction of being not only Mr. McGregor‘s mortal enemy, but also becoming the first licensed character". [7]

Children

Merchandising for children is most prominently seen in connection with films and videogames, usually those in current release and with television shows oriented towards children.


Merchandising, especially in connection with child-oriented films, TV shows and literature, often consists of toys made in the likeness of the show or book’s characters (action figures) or items which they use. This was first seen with the Peter Rabbit soft toy in 1903, with the Smithsonian magazine stating Beatrix Potter "created a system that continues to benefit all licensed characters, from Mickey Mouse to Harry Potter." [8] However, sometimes it can be the other way around, with the show written to include the toys, as advertising for the merchandise.

Sometimes merchandising from a television show can grow far beyond the original show, even lasting decades after the show has largely disappeared from popularity. In other cases, large amounts of merchandise can be generated from a pitifully small amount of source material (Mashimaro).

Adult

The most common adult-oriented merchandising is that related to professional sports teams (and their players).

A smaller niche in merchandising is the marketing of more adult-oriented products in connection with similarly adult-oriented films and TV shows. This is common especially with the science fiction and horror genres. Occasionally, shows which were intended more for children find a following among adults (for example, Gundam model kits). An early example of this phenomenon was the cartoon character Little Lulu, who became licensed to products for adults, such as Kleenex facial tissue. [9]

Sometimes a brand of non-media products can achieve enough recognition and respect that simply putting its name or images on a completely unrelated item can sell that item. An example is Harley-Davidson branded clothing.

Idol goods

The Rolling Stones merchandise sold in Carnaby Street, London Rolling Stones pop shop.jpg
The Rolling Stones merchandise sold in Carnaby Street, London

Idol goods or idol merchandise are various types of merchandise related to celebrities ("idols"). Consumption of idol goods is a significant part of the idol fandom. [10] Such goods create and reinforce a more physical connection between fans and celebrities. [11]

Examples of common idol goods include stationery items, compact discs, photo albums, calendars, telephone cards, T-shirts (see also concert T-shirt), key chains, lapel pins, and various other goods. [12] [13] Virtual idols can be considered an idol good themselves as they can be bought and sold. [10] An idol can have a tremendous effect on sales of merchandise, an example being David Beckham upon his arrival at Real Madrid in 2003, with an Adidas spokesman stating, "Put Beckham's name on any product and Real Madrid didn't stop selling". [14]

In the 1960s The Beatles were pioneers in conventional retailing in music, setting up their own retail store in London, Apple Boutique, that sold Beatles merchandise. [15]

See also

Related Research Articles

<span class="mw-page-title-main">Supermarket</span> Large format of grocery store

A supermarket is a self-service shop offering a wide variety of food, beverages and household products, organized into sections. This kind of store is larger and has a wider selection than earlier grocery stores, but is smaller and more limited in the range of merchandise than a hypermarket or big-box market. In everyday United States usage, however, "grocery store" is often used to mean "supermarket".

<span class="mw-page-title-main">Wholesaling</span> Sale of goods or merchandise to retailers rather than end consumers

Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers and related subordinated services. In general, it is the sale of goods in bulk to anyone, either a person or an organization, other than the end consumer of that merchandise. Wholesaling is buying goods in bulk quantity, usually directly from the manufacturer or source, at a discounted rate. The retailer then sells the goods to the end consumer at a higher price making a profit.

<span class="mw-page-title-main">Shopping</span> Buying goods

Shopping is an activity in which a customer browses the available goods or services presented by one or more retailers with the potential intent to purchase a suitable selection of them. A typology of shopper types has been developed by scholars which identifies one group of shoppers as recreational shoppers, that is, those who enjoy shopping and view it as a leisure activity.

<span class="mw-page-title-main">Retail</span> Sale of goods and services

Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and then sells in smaller quantities to consumers for a profit. Retailers are the final link in the supply chain from producers to consumers.

Sales promotion is one of the elements of the promotional mix. The primary elements in the promotional mix are advertising, personal selling, direct marketing and publicity/public relations. Sales promotion uses both media and non-media marketing communications for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include contests, coupons, freebies, loss leaders, point of purchase displays, premiums, prizes, product samples, and rebates.

<span class="mw-page-title-main">Variety store</span> Retail store that sells a wide range of inexpensive household goods

A variety store is a retail store that sells general merchandise, such as apparel, auto parts, dry goods, toys, hardware, furniture, and a selection of groceries. It usually sells them at discounted prices, sometimes at one or several fixed price points, such as one dollar, or historically, five and ten cents. Variety stores, as a category, are different from general merchandise superstores, hypermarkets, warehouse clubs, grocery stores, or department stores.

Consumers Distributing was a catalogue store in Canada and the United States that operated from 1957 to 1996. At its peak, the company operated 243 outlets in Canada and 217 in the United States, including stores in every province in Canada and in the states of New Hampshire, Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, Maryland, California and Nevada.

Service Merchandise was a retail chain of catalog showrooms carrying jewelry, toys, sporting goods and electronics. The company, which first began in 1934 as a five-and-dime store, was in existence for 68 years before ceasing operations in 2002.

<span class="mw-page-title-main">Closeout (sale)</span>

A closeout or clearance sale is a discount sale of inventory either by retail or wholesale. It may be that a product is not selling well, or that the retailer is closing because of relocation, a fire, over-ordering, or especially because of bankruptcy. In the latter case, it is usually known as a going-out-of-business sale or liquidation sale, and is part of the process of liquidation. A hail sale is a closeout at a car dealership after hail damage.

A catalog merchant is a form of retailing. The typical merchant sells a wide variety of household and personal products, with many emphasizing jewelry. Unlike a self-serve retail store, most of the items are not displayed; customers select the products from printed catalogs in the store and fill out an order form. The order is brought to the sales counter, where a clerk retrieves the items from the warehouse area to a payment and checkout station.

<span class="mw-page-title-main">Retail marketing</span>

Once the strategic plan is in place, retail managers turn to the more managerial aspects of planning. A retail mix is devised for the purpose of coordinating day-to-day tactical decisions. The retail marketing mix typically consists of six broad decision layers including product decisions, place decisions, promotion, price, personnel and presentation. The retail mix is loosely based on the marketing mix, but has been expanded and modified in line with the unique needs of the retail context. A number of scholars have argued for an expanded marketing, mix with the inclusion of two new Ps, namely, Personnel and Presentation since these contribute to the customer's unique retail experience and are the principal basis for retail differentiation. Yet other scholars argue that the Retail Format should be included. The modified retail marketing mix that is most commonly cited in textbooks is often called the 6 Ps of retailing.

<span class="mw-page-title-main">Visual merchandising</span> Marketing technique emphasizing 3D model displays

Visual merchandising is the practice in the retail industry of optimizing the presentation of products and services to better highlight their features and benefits. The purpose of such visual merchandising is to attract, engage, and motivate the customer towards making a purchase.

A marketing channel consists of the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption. It is the way products get to the end-user, the consumer; and is also known as a distribution channel. A marketing channel is a useful tool for management, and is crucial to creating an effective and well-planned marketing strategy.

<span class="mw-page-title-main">Buyer (fashion)</span> Individual who selects what items are stocked

In the retail industry, a buyer is an individual who selects what items are stocked and their key responsibility is dealing with all the products that come into the store. Buyers usually work closely with designers and their designated sales representatives and attend trade fairs, wholesale showrooms and fashion shows to observe trends. They are employed by large department stores, chain stores or smaller boutiques. For smaller independent stores, a buyer may participate in sales as well as promotion, whereas in a major fashion store there may be different levels of seniority such as trainee buyers, assistant buyers, senior buyers and buying managers, and buying directors. Decisions about what to stock can greatly affect fashion businesses.

'Shopper marketing' is "a discipline that focuses on the customer experience and the customer journey."It focuses on the consumer's path to purchasing a product, from first being aware of the product, to consideration and through to the purchase of it. It separates itself from retail marketing which focuses on engaging the customer in-store only.

Fashion merchandising can be defined as the planning and promotion of sales by presenting a product to the right market at the proper time, by carrying out organized, skillful advertising, using attractive displays, etc. Merchandising, within fashion retail, refers specifically to the stock planning, management, and control process. Fashion Merchandising is a job that is done world- wide. This position requires well-developed quantitative skills, and natural ability to discover trends, meaning relationships and interrelationships among standard sales and stock figures. In the fashion industry, there are two different merchandising teams: the visual merchandising team, and the fashion merchandising team.

In business and marketing, “trade” refers to the relationship between manufacturers and retailers. Trade Promotion refers to marketing activities that are executed in retail between these two partners. Trade Promotion is a marketing technique aimed at increasing demand for products in retail stores based on special pricing, display fixtures, demonstrations, value-added bonuses, no-obligation gifts, and more.

<span class="mw-page-title-main">Shelf-ready packaging</span> Form of product packaging

Shelf-ready packaging (SRP) and retail-ready packaging (RRP) refers to the packaging of a product so that it is delivered to a retailer in packaging which is optimized for efficient stocking and sale.

The retail format influences the consumer's store choice and addresses the consumer's expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services are exchanged. In some parts of the world, the retail sector is still dominated by small family-run stores, but large retail chains are increasingly dominating the sector, because they can exert considerable buying power and pass on the savings in the form of lower prices. Many of these large retail chains also produce their own private labels which compete alongside manufacturer brands. Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains.

References

  1. ↑ Li, Krista J.; Li, Xi (2022). "Advance Selling in Marketing Channels". Journal of Marketing Research. 60 (2): 371–387. doi:10.1177/00222437221112644. ISSN   0022-2437. S2CID   257154273. Archived from the original on 2023-03-28. Retrieved 2023-04-01.
  2. ↑ Kamleitner, Bernadette; Marckhgott, Eva (2021-10-03). "Silent persuasion. Incidental use of promotional merchandise benefits unfamiliar brands". International Journal of Advertising. 40 (7): 1135–1159. doi: 10.1080/02650487.2020.1855823 . ISSN   0265-0487. S2CID   234258933.
  3. ↑ Solem, Birgit Andrine Apenes; Fredriksen, Jan Ivar; Sørebø, Øystein (2023-01-02). "Dynamic capabilities in the realisation of omnichannel retailing". International Journal of Retail & Distribution Management. 51 (1): 21–38. doi:10.1108/IJRDM-12-2021-0599. ISSN   0959-0552. S2CID   251420060. Archived from the original on 2023-03-28. Retrieved 2023-04-01.
  4. ↑ Schrotenboer, Dana; Constantinides, Efthymios; Herrando, Carolina; de Vries, Sjoerd (2022-03-24). "The Effects of Omni-Channel Retailing on Promotional Strategy". Journal of Theoretical and Applied Electronic Commerce Research. 17 (2): 360–374. doi: 10.3390/jtaer17020019 . ISSN   0718-1876.
  5. ↑ Jai, Tun-Min (Catherine); Fang, Dan; Bao, Forrest S.; James, Russell N.; Chen, Tianwen; Cai, Weidong (2021). "Seeing It Is Like Touching It: Unraveling the Effective Product Presentations on Online Apparel Purchase Decisions and Brain Activity (An fMRI Study)". Journal of Interactive Marketing. 53: 66–79. doi: 10.1016/j.intmar.2020.04.005 . S2CID   224961703. Archived from the original on 2023-03-28. Retrieved 2023-04-01.
  6. ↑ ABC News: Coffins bearing baseball team logos. Archived 2009-03-30 at the Wayback Machine (accessed 2007-01-06)
  7. 1 2 "Peter Rabbit blazed a trail still well trod". The Times. Archived from the original on 6 October 2022. Retrieved 6 October 2022.
  8. 1 2 "How Beatrix Potter Invented Character Merchandising". Smithsonian. Archived from the original on 6 October 2022. Retrieved 6 October 2022.
  9. ↑ ""Marge and Lulu: The Art of the Deal," Hogan's Alley #15, 2009". Archived from the original on 2013-05-01. Retrieved 2013-03-22.
  10. 1 2 Daniel Black (31 August 2012). Patrick W. Galbraith; Jason G. Karlin (eds.). Idols and Celebrity in Japanese Media Culture. Palgrave Macmillan. p. 216. ISBN   978-0-230-29830-9.
  11. ↑ Patrick W. Galbraith (31 August 2012). Patrick W. Galbraith; Jason G. Karlin (eds.). Idols and Celebrity in Japanese Media Culture. Palgrave Macmillan. p. 197. ISBN   978-0-230-29830-9.
  12. ↑ McVeigh, Brian J. (2006). "Reviewed work: Islands of Eight Million Smiles: Idol Performance and Symbolic Production in Contemporary Japan, Hiroshi Aoyagi". Journal of Japanese Studies. 32 (2): 462–467. JSTOR   25064662.
  13. ↑ McVeigh, Brian J. (2006). "Reviewed Work: Islands of Eight Million Smiles: Idol Performance and Symbolic Production in Contemporary Japan by Hiroshi Aoyagi". The Journal of Japanese Studies. 32 (2): 462–467. doi:10.1353/jjs.2006.0055. JSTOR   25064662. S2CID   145544468.
  14. ↑ "Beckham-mania in China on Real Madrid's 2003 Asia tour". Marca. Archived from the original on 3 October 2021. Retrieved 3 October 2021.
  15. ↑ "The Rolling Stones Roll Into Rock And Retail". Forbes. Archived from the original on 28 September 2021. Retrieved 28 September 2021.

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