What is merchandising? Definition and examples
Merchandising involves promoting the sales of products in supermarkets and other retail stores. The term, in its broadest sense, refers to any practice that helps boost the sale of goods to consumers in a retail setting.
Do not confuse the term with merchandise, which simply means goods.
When a consumer or prospect is in a store, almost everything you do to try to get a sale involves activities related to merchandising. A prospect is a consumer who you believe could turn into a paying customer – the term is short for prospective customer. Much of it involves presenting goods in an attractive way to encourage consumers to buy.
Cambridge Dictionary describes merchandising as “the activity of making people aware of your products and increasing sales through advertising, special events, etc.”
Merchandising’s concept is fundamentally to present goods:
- at the right time,
- in the best place,
- in the right quantity, and
- at the right price.
The aim, above all, is to sell as much as possible.
Examples of merchandising activities
We include the following activities as part of merchandising:
- Establishing coupons or discounts.
- Creating and implementing marketing strategies in a retail setting.
- Anything to do with the display of goods in a store.
- Deciding where in the store to place the goods.
- Setting prices.
- Determining quantities.
- Offering special deals such as four for the price of three.
Effective merchandising also involves understanding consumer behavior and trends, using this knowledge to adapt store layouts and product placements to maximize visibility and appeal to the target demographic.
According to Investopedia.com:
“More broadly, merchandising may refer to retail sales itself, that is the provision of goods to end-user consumers.”
One size fits all not good enough
‘One size fits all’ is definitely not the best approach in the world of merchandising. Each product sells better in a specific number of settings and types of offers. In the same way, certain types of consumers respond well to one approach and not to another.
Common sense, for example, will tell us not to place toys for four-year-olds, who are much shorter than most other consumers, on the top shelf. Neither would we place articles for individuals older than seventy years of age, who may find it hard to bend down, in the bottom shelf.
What does a merchandiser do?
Somebody who specializes in merchandising is a merchandiser. Next time you walk past a shop and see a sign that says: “Buy four get one free!” you can tell your friends, colleagues, children, or parents that a merchandiser thought up that offer.
In an article published by Repsly.com, Ameyna Jackson writes the following about merchandisers:
“Merchandisers are responsible for everything that happens to a product from the moment it is delivered to the store to the moment a shopper picks it up off the shelf.”
“Depending on the retailer, that may include performing stockouts, organizing the shelf, setting up displays, and setting up price and promotional signs.”
If you are creative, pay attention to detail, have good spoken and written skills, and are good at working under pressure, you should consider a career in merchandising.
Merchandising vs. sales vs. selling
Although the three terms refer to closely related functions, they are not the same.
Selling
Salespeople talk to the consumer or prospect. They try to get them to buy. If you want a career in selling, you must be good at persuading people.
Sales
In accounting, for example, the term sales refers to items that consumers buy, i.e., purchases made. The sales department of a company typically has salespeople in it. These people focus on selling to existing customers and prospects.
Merchandising
This is the process of leading consumers to a product; the aim being to encourage them to buy. Unlike the salesperson, the merchandiser does not meet the prospect. His or her focus is on the product’s display, its setting, where it is, what special offers to include, and how much to sell it for (price).
Merchandising vs. marketing
Merchandising is very different from marketing.
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Marketing
Marketing is all about finding out about the market, what consumers want, how much they are willing to pay, determining where in the market your product sells best, and telling consumers about it.
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Merchandising
Merchandising involves offering the best deals to consumers and prospects (potential customers).
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Test yourself! A marketing or merchandising situation?
Look at these ten situations and decide whether each one is more related to merchandising or marketing. The answers are in brackets below the list of situations:
- Your product sells well in the home market. You want to find out whether it might sell well in another country.
- Your company sells coffee. You offer customers the chance to win a weekend all-expenses-paid vacation for two people in Paris if they purchase 4 jars of your coffee.
- Analyzing social media trends to determine the most popular flavors among young adults for a new line of beverages.
- Redesigning the store layout to place high-demand items at the front and organizing products to encourage impulse purchases.
- Conducting a survey to understand customer satisfaction with your current product range.
- Launching an online advertising campaign to raise awareness about the eco-friendly packaging of your products.
- Introducing a loyalty program where customers earn points for each purchase, redeemable for discounts on future buys.
- Hosting a product launch event to showcase a new line of sports apparel to influencers and media.
- Collaborating with a celebrity to create a limited-edition product line and using their social media presence to promote it.
- Adjusting the in-store music and lighting to create an ambiance that encourages shoppers to spend more time in the store.
(Answers: 1. Marketing, 2. Merchandising, 3. Marketing, 4. Merchandising, 5. Marketing, 6. Marketing, 7. Merchandising, 8. Marketing, 9. Marketing, 10. Merchandising.)
Video – What is Merchandising?
This video presentation, from our sister channel on YouTube – Marketing Business Network, explains what the meaning of ‘Merchandising’ is using simple and easy-to-understand language and examples.