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Measuring Merchandising Effectiveness

Measuring Merchandising Effectiveness. ACNielsen Romania October 2005. Agenda. Defining the merchandising standards How can we determine the impact of merchandising on sales? Location types – examples POPM types - examples Merchandising criteria – examples The best mix.

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Measuring Merchandising Effectiveness

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  1. Measuring Merchandising Effectiveness ACNielsen Romania October 2005

  2. Agenda • Defining the merchandising standards • How can we determine the impact of merchandising on sales? • Location types – examples • POPM types - examples • Merchandising criteria – examples • The best mix

  3. Defining Merchandising Standards How do I want my products to look like in the stores? In standards definition/fine-tuning, several main areas should be covered: • In which area of the store do I want my products to be present? • In Category Section • In Main Traffic • End of Isle • At Check-Out • Secondary Placement • What do I place? • Products • Products aided by POPM • Other aids • How do we place? • Merchandising criteria And most important.......WITH WHAT RESULTS?.......or...... WHAT IS THE MOST EFFECTIVE MERCHANDISING MIX FOR MY PORTFOLIO ?

  4. Within the multitude of messages in a store, the shopping experience is not always easy … Through merchandising we can help our customers decide easier and better…. And hopefully to select OUR brand 

  5. A successful merchandising program is a synergy of several factors • The Impact of the merchandising activities on the sales depends on a lot of factors: • Category type • Store type • The brand • Quality of the aids • Competitive activity • Implementation quality • Permanent review • Other factors • The impact can be determined through: • Past evaluation • In store tests of new concepts

  6. How can we determine the impact of merchandising on sales? How we analyse: 1) First we analyse individual activities in terms of scope and impact on sales: • We compare the sales of the stores where a specific activity is present with the average of all stores or with the stores not having that activity • We have to bear in mind that the merchandising activities are generally placed in the “good” shops. Thus the results per-se show higher impact due to the fact that these shops are by definition preferred stores for that brand. Example: • Product in Main Traffic Flow - 5% contribution • Floor Display in category section - 6% Contribution 2) Then we analyse the interactions between these activities, resulting in a joined impact : - Main Traffic Flow + Standing Display in category section - 5.5% contribution This shows that adding up of the activities is not necessarily an additive process but a multiplicative process. 3) Finally we determine the combination of activities that delivers the highest impact (sales, share or impact on competition).

  7. Locations Types • Category section: where most products of a specific category are placed • In main traffic: on (one of) the main route(s) from entry to exit • End of Isle/end of gondola • At Check-out • Secondary placement: any other location in the store except of the above • …….

  8. POPM Types Most frequent POPM encountered in the stores: • Floor Display • Shelf Display • Poster • Sticker • Wobblers • Shelf stopper • Section marker • Hanger • Stripes • Shelf display • Shelf liner • Shelf tray • Shelf talkers • Header board • Counter display • Window display • Pyramid • Money tray • Leaflet tray • ........

  9. Location and POPM ScopeIn how many stores my brand and its main competitor are in Location Y and have POPM Z?

  10. What Activity has the highest impact ? How am I performing when...Eg. I have Shelf liners in the store and I am at Check-out ? Other correlations: My total company share when I have... My sales per shop when... (how important are these shops) My competitor share when I have….

  11. How many POPMs should I place to obtain maximum impact but not waste money?

  12. How does my POPM impact my competitor brand ?

  13. What is the combined impact of activities (for me and my competitors)?

  14. Merchandising Criteria Most frequent criteria encountered in the stores: • Facings • Brand block • Beginning/end of section • Eye level/ shelf no X • Near product Y (own or competitor’s) • Within segment Z • Near category W • Exclusive location • At hand level • Product order • Coupons • Coupon/promo/demo ladies • Product sampling • Long term appearance in the leaflet • ...

  15. What Criterion has the highest impact ?How am I performing when...Eg. My products are displayed in Brand Block in channel ABC?

  16. What Criterion/Level of criterion has the highest impact ?How am I performing when...Eg. I have less than 7 facings in channel ABC?

  17. At the end of the analysis, the most effective standard for a specific channel is determined (based on past record) For example, Brand X • In Hyper/supers the optimal merchandising mix includes: • In Category section: • Floor Display (2 stands) • Shelf Liner • min 10 facings placed in brand block at eye level and next to key competitor, • price communicated • paired with a Second Placement in Main Traffic. • The impact range is: 8.9% to 18.9% more volumes, depending on the store size and competitive activity • On main competitor the impact is – 5% to – 8.9% less volumes

  18. Thank you for your attention!

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