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Unit 12: Merchandise Pricing

Notes
Engagement and Cost Savings Bring Holiday Cheer
To measure the impact of the holiday merchandise promotion, Maritz established a control
group that did not receive a catalog. The results showed a striking impact on both
redemption and member engagement in the group receiving the catalog:

1. Average impact of the holiday catalog was a 159 percent increase in merchandise
redemption for catalog recipients in comparison with the control group’s increase
of 74 percent during the holiday period.

2. Catalog recipients redeemed for merchandise that was featured in the catalog at a
significantly higher rate than other merchandise items.
3. The client realized a reduction in cost per point due to the increase in merchandise
redemption.
4. Traffic to the rewards website increased following the catalog mailing, and first
time web visits also increased.
5. By leveraging the peak holiday shopping season, the client was able to optimize
member engagement via merchandise redemption.
Source: http://www.maritzmotivation.com/~/media/Files/MaritzMotivationSolutions/Case-Studies/
Case-Study-Holiday-Merchandise-Promotion-Boosts-Member-Engagement.pdf

Self Assessment

Fill in the blanks:

1. A ............................... is a detailed and thoroughly thought-through map that determines
where every product in an establishment should be situated.
2. The rules and theories for the creation of a planogram are set under the term of
...............................
3. A different stream with its follower is the ............................... product placement.
4. Market share placement means the placement of ............................... bringers.

5. The ............................... placement is influenced from the margin a product brings.
12.2 New Product Cut-Ins

Where a retailer is involved in putting together a product offer which is unique to its own
company, and where suppliers are not able to provide the required level of input product
innovation, it may be necessary for the retailer to set up a development team for a particular
product area.

Example: Tesco plc has an experimental kitchen whose staffs’ works on new food products.
Many fashion retailers have a team of designers, pattern cutters and sample machinists who
make garment prototypes for their suppliers to copy. Product development is a time consuming
and costly process. It takes approximately nine months for Tesco plc to develop a new product.
However, in a business environment where customers react favourably to new product ideas
product development is essential if a retailer wishes to offer a wide variety of contemporary
products to the customer. In the case of small electronic goods, products can have a lifecycle as
short as 6-9 months; therefore the speed at which product innovations are brought to market is
crucial to the success of both retailer and supplier.

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