Tuesday, May 12, 2015

Product Replacement Strategy

Retailing is a competitive business, and product placement strategy is an important focus. Stores will not keep products on the shelf unless customers buy them, so manufacturers must be able to negotiate the best available placement to ensure sales.


Retailers dedicate time and resources to maximize every square inch of their locations. Spend time in various stores to learn about layouts. Note the packaging and displays of best-selling items. Study their placement in relation to less-popular products. Most importantly, speak knowledgeably about product placement in buyer meetings.


Shelves


Shelves in a store are similar to real estate. Most products reside on aisle shelves. A limited amount of products are placed on end caps (the area at the end of aisles) or center-aisle displays. Like ocean-view property, these are the most desirable locations. But even within aisles there are better locations than others. Retailers know that eye-level shelves are coveted. Oftentimes, retailers will require manufacturers to pay fees for this space, much like an insurance policy. Understand all costs and obligations before agreeing to them.


Aisles


Store aisles are marked with headings to identify products. Each aisle consists of rows of shelving, which usually span to 6 feet high. Well-branded, popular products are most likely found on mid-level shelves, with off-brands and generics above and below. To secure an ideal location, be prepared to prove aggressive product advertising plans. It is also important to offer appealing packaging that entices the customer to buy. Use colors, descriptions and designs to create packaging that will fit well in mid-level shelves.


Key Terms


Retailers speak their own language, and it is necessary to know what they are saying to negotiate the best product placement. Two terms are important to know. A "plan-o-gram" is the store's map. The plan-o-gram is a diagram of each product in the store and shows where new products will be placed. Review plan-o-grams with buyers, and offer suggested product locations for optimal exposure. "Slotting fees" refer to fees paid by the manufacturer to the retailer in exchange for a place on the shelf. Slotting fees are often negotiable and temporary. Once a product has positive sales data, renegotiate these fees. Becoming familiar with retail terms and their applications is the best tool for successful product placement.

Tags: product placement, mid-level shelves, negotiate best, packaging that, Slotting fees