Page 184 - DMGT554_RETAIL_BUYING

Unit 12: Merchandise Pricing

2. Vertical product placement: A different stream with its follower is the vertical product Notes
placement. Here one product is placed on more than one shelf level to achieve 15–30 cm
placement space.
3. Block placement: Products which have something in common are placed in a block (brands).
This can be done side by side, on top of each other, centred, magnetised.

!
Caution One can see the varieties of planogram results by simply visiting a local
supermarket. Standing in front of say, a frozen pizza section featuring the products of a
single manufacturer, one can see how the variety of products is displayed and how related
products (such as pizza rolls) are treated in the overall product display for a particular
pizza manufacturer. Similarly, one can visit the boxed cold cereal aisle, which comprises
the various planogram strategies by the different cereal manufacturers. The ultimate
effectiveness of the planogram of course is always measured by sales volume.
Next to the visual placement the commercial placement is the other important pillar of a
planogram. Here, the question has to be answered which products should be placed. Two factors
for the decision-making process can be differentiated.
Market share placement – Margin placement

Market share placement means the placement of turnover bringers. Different market research
institutes like Nielsen, IMS are collecting turnover data of all kind of products and calculate
from this data the market share of a certain product in its market segment. With the help of this
data products can be selected which should appear in a shelving unit in a “A” location. A simple
calculation of turnover data from a single store is better than nothing for this purpose however
it would be better to use data from a group of stores.

Did u know? The margin placement is influenced from the margin a product brings. The
higher the margin is of a product the better the location should be where it is placed.

Derivative Targets

1. To communicate how to set the merchandise.
2. To ensure sufficient inventory levels on the shelf or display.
3. To use space effectively whether floor, page or virtual.
4. To facilitate communication of retailer’s brand identity.

5. To assist in the process of mapping a store mapping

12.1.3 Implementation

The planogram originated with K-Mart. Planograms are created with the help of planograming
software and most applications were produced in the last 15 years. Due to hardware and software
limitations at that time the software was based on a manual painting of shelving units. This
required a high level of human intervention to create the planograms for stores.

Planograming software has greatly evolved and the retail industry utilizes the automated
software with the goal of ensuring the right products are in the right place in the right quantities
at the right time – on a store-by-store basis. As the retail industry grows increasingly competitive,
retailers are turning to planogram software to reflect each store’s unique customer desires and

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