What Makes Merchandising Effective?
Effective merchandising management is so necessary to any jewelry business that it cannot be addressed independent of marketing and sales. Look at many of today’s large jewelry companies and you are as likely to find a chief merchandising officer as you might find a chief marketing officer. It will be the ongoing objective of this column to identify how the functions of merchandising and marketing and sales can all be integrated to create a synergistic effect to drive improved business performance.
In 1927, Paul Mazur defined merchandising as “the planning involved in marketing the right merchandise at the right place, at the right time, in the right quantities, at the right price.” Some eighty years later we are still struggling to perfect the art of managing a merchandise inventory. Over two decades ago R. C. Kean addressed the changing nature of merchandising management activities to include analysis and response to the transformations and processes occurring in planning, negotiation, acquisition, and selling of products inclusively to targeted customers; from “inception to reception” (Grace Kunz), or from “mine to mistress” (Chaim Even-Zohar). Modern approaches to merchandising management address issues of assortment planning and product presentation based on defined market preferences. Knowing what loyal store customers are most likely to purchase is valuable market intelligence.
What does merchandising mean to jewelry companies today? For some companies it simply means buying and selling merchandise . . . and that is unfortunate. To others it has evolved from a focus on retail selling to include product planning, pricing strategy, assortment planning, product styling and timing of an offering. Merchandising has evolved from being a sub-function of marketing to become a separate business function responsible for creating a prestigious business environment based on emotionally driven shopper experiences and meaningful symbolic associations. Does your jewelry store environment make people “want to buy” and does your inventory assortment “compel shoppers” to try on merchandise and does your in-store marketing and sales “create a feeling" where shoppers become confident buyers?
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Old School |
New Approach |
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Merchandising definition- buy and sell product |
Merchandising definition- integrated approach to inventory assortment offerings, marketing communications and selling |
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Selection- based on personal preference and emotion |
Selection-based on historic sales and planned sales promotions |
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Buying plan-I have x amount of dollars to spend |
Buying plan-meets stated objectives for gross margin return on investment forecasting customer desires |
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Relies on personal selling to sell whatever is purchased |
Leverages experiential marketing and consultive selling |
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Prices based on mark up |
Initial pricing is managed to deliver a maintained margin in the final selling price
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Marketing communications-advertising |
Marketing communications-integrated approach to all communicated messages from signage to in-store marketing to the internet |
Tim Malone commented:
In marketing . . . perception is reality. What the customer
perceives to be real . . . is in fact real for that customer. As
ethical merchandisers it is important to make sure that customers
have an accurate understanding of the merchandise quality.
Perceived customer value is very important as it is the filtered
view each of us develop for a product or service. Some customers
will pay more money for a branded product because they perceive the
value to be greater. A recognized brand does offer more perceived
value for some customers.
Sandra Cooke-Locken commented:
What makes merchandising effective? One thing comes to mind, and
that is merchandising is effective when it enhances the perceived
value of the jewellery items (and services) we offer our customers.
As our products do not fulfill basic needs (i.e. food, shelter, et
cetera)we have to remember that we always need to be using visual
merchandising and marketing to build value for our customers - and
that our stores ROI is dependant on the perceived value we can
build for the customer! In this day and age with the current
economic situation, as well as so many avenues for our (potential)
clients to purchase from, we have to ensure that our visual
merchandising and marketing mix enhance the perceived value of our
products and thus, our clients shopping experience with us.
Tim Malone commented:
Hi Wade Nice to have someone merchandising jewelry TV join the
discussion. You are totally correct when you refer to the cost of
doing business. Just like a TV jewelery company must evaluate their
sales based on air time and production costs, more traditional
jewelers need to understand the cost of printing and mailing a
brochure or placing print ad and both MUST be able to set
objectives for return on investment BEFORE committing to the
expenditure. Knowing costs of doing business are much more than
taking a break even approach and today require jewelry marketers to
know the cost of creating new sales. Our most recent holidays saw
traffic counts to be down in many online and brick and mortar
stores. Knowing how to entice traffic and do so with a desired
return on investment might be a new short term marketing objective
for more and more jewelry companies.
Wade Clar, Jr. commented:
(...cont) Kris’s post (What is “value”?) I would
like to add being able to fulfill an order purchased on T.V. A
customer purchasing a loose gemstone and a semi-mount on T.V. want
to know they are getting a product that is the correct size, and
exceeds expectations. Doing this will differentiate a company.
Wade Clar, Jr. commented:
Customer's view a business a specific way and are personally
identified when the mode of marketing communication fits their
lifestyle. People who are computer savvy may be targeted through
blogs, vlogs, flogs, and email blasts to identify a few. Hectic
lifestyles for Monday through Friday people may be targeted through
direct mail, magazines, and radio. Direct response television? How
many times have you fell asleep and woke up to an infomercial, or
are flipping through the channels and see coins or jewelry being
sold? It is important to understand costs when doing business on
air, it will make you think about just how much you need every bit
of ROI. In response to Kris’
Kris Tsang commented:
Hi Jenny, I think we should not only change the jewelers' approach
but also change the consumers' mind (LOL). Consumers feel like king
and tend to expect merchants to offer everything at the lowest
price, both for everyday FMCG basic goods and for luxury goods. I
agree with your view of limiting the categories, and be more
specialized. Profits should go to the pockets of those who can
offer differentiations. :)
Kris Tsang commented:
(.../cont'd) right mix of products for their customers. As to the
materials used, well, if you sell fine jewelry, you don't have much
choice but to stick to precious metals. But when gold and platinum
prices are skyhight, silver can be an excellenet alternative.
Anyway, we have to offer what Dr. Maline put up as "value-priced
merchandise". What is "value"? I think we have to view it in a
holistic approach. It should be a much-wanted jewelry design, a
reasonable price corresponding to the materials and craftmanship
employed, a welcoming instore environment, a warm and understanding
service - and, thanks to the technology, a post-sales care/follow
up email - all contribute to give the customers a very pleasant
shopping experience and invite them to come back again and again.
This relationship building exercise will definitely give more clue
to make the future assortment highly targeted and focused with less
chance to fail. It is about survival in the downtimes, and it is
about sustainable growth in the good times. Afterall, having
customers on top of mind is key.
Kris Tsang commented:
In response to Dr. Malone's reply on Jenny's comment, I personally
feel that there is no fixed formula as to whether merchandiers
should keep or change the design and style assortment or the
materials used. As to designs and styles, it all depends on
consumers' demand and this is ever dynamic than ever. As Dr. Malone
mentioned earlier, jewelry is in the fashion business - like it or
not. It is important to look into the future, not the past although
I feel that historical sales data are somehow still useful in
understanding customers' preference. Constant observation (that's
why we conduct mystery shopping), survey and forecasting can help
predict the demand. Reports from certain trend-forecasting bureaus
can be useful especially to jeweler who develop their own designs.
By knowing the trends ahead, one can create the "
Tim Malone commented:
Hi Jenny Thanks for your posting. You are the second person in two
days to mention the word "survival" in your posting. Who could
argue with you that "people need to change their approach in order
to survive?" However, knowing that you need to change and knowing
how to change are very different. My question is . . . what sort of
changes do jewelers need to make right now in their approach to
merchandising to increase their odds of survival? Should
merchandisers adjust their assortment with the same designs and
style of jewelry pieces, and offer the same mix of products using
less expensive materials? Or should they look to change their
assortments by introducing new and different and less expensive
designs and styles that reflect a more value priced merchandise?
Anyone reading this posting please feel free to join in.
Tim Malone commented:
Hi Kris Great question "What can be done to encourage them to
believe in the advantages of adopting the carefully-planned
integrated approach of merchandising management?" First think of
integration as the means that connects marketing and sales.
Advertising must tie to merchandise sales. Advertising dollars
invested today must show a positive return on investment. Knowing
how to project and measure and monitor ROI is critical today
because jewelers need to create more traffic from buying shoppers.
Knowing what results advertising investments are producing is very
important. Otherwise, jewelers are just guessing and hoping they
are doing the right things with their liimited marketing funds. No
a good thing to do-especially now. In New York a couple years ago I
gave a presentation on how retail jewelers can define their return
on investment on advertising. With thousands of people in
attendance at the show, there were maybe thirty in the workshop.
LOL But that was during a different economy than what we are facing
today, so maybe more people are now interested in considering how
to operate more effectively. As a means to check the pulse of
readers of this blog I will offer to send anyone who sends me an
email similar information to what I presented at the Jewelers of
America presentation. So anyone that would like to get my
suggestions on how to measure your return on advertising
investments just send me an email to homerun2009@gmail.com Notice
my positive spin on my expectations for this year? LOL
Tim Malone commented:
Hi Kris Your point of drawing a distinction between marketing
communications and advertising is excellent. Advertising only
covers paid marketing messages where marketing communications is
much more inclusive and covers all forms of communication. Jewelers
only think of messages to customers when they are planning
advertising are antiquated in their approach. Why? Because their
direct and indirect competition are all working on developing new
channels of communication. Social networking and email marketing
and mobility marketing are only three examples are already well
proven marketing communication tools for luxury retailers.
Jenny Seligmann commented:
I agree with a lot of the concerns raised by Kris. I feel that in
the changing market place people need to change their approach in
order to survive. It may take the "
Kris Tsang commented:
Dr. Malone, it's so good to see the Old School and New Approach
compared side-by-side. I am particularly concerned about "marketing
communications-advertising". Today, still quite a lot of people can
only think of "advertising" as the alternative word for marketing
communications or even marketing; and to many of them (who are so
"determined" (not stubborn, LOL)), marketing equals "sales" (!!).
It is really hard to change the behavior, and, it is harder to
change the thoughts. The Old School is not wrong, but as time
evolves, I believe we need to move on too, right? For those have a
more open mind, they accept the modern approach but they may feel
scared to change their approach. What can be done to encourage them
to believe in the advantages of adopting the carefully-planned
integrated approach of merchandising management? At the end of the
day, I think that any owners (in jewelry industry or not) just want
to be sure they make their desired profits and the business goes
on.
