Marketing and sales management level II

Learning guide
Unit of Competence: Merchandise Products
TTLM Code : LSA MSM 2 06 1221
Unit Descriptor: - This unit describes the performance outcomes, skills and
knowledge required to merchandise products within a retail store. It involves the consistent
application of store policies and procedures in regard to displaying, merchandising, and
ticketing, labeling, pricing and storing stock. It also includes the application of correct
manual handling, storage and display techniques according to stock characteristics,
industry codes of practice, and relevant legislation

Learning outcomes:-At the end of this unit of competency the trainees will be able to:-
LO 1: Place and arrange merchandise
Lo2: Prepare and apply labels and tickets
Lo3: Maintain displays
Lo4: Protect merchandise
UC: Merchandise Products
 Is the term used for any product that you can sell or buy
 Any good for sale is merchandise, some examples include groceries in a supermarket, clothes in a retail store, or
raw materials in a manufacturing warehouse
 goods that are offered for sale,
LO1: Place and arrange merchandise
 merchandise
 merchandise refers to a product that is bought or sold
 merchandise the commodities or goods that are bought and sold in business
 It can refer to any consumer goods that are bought or sold in a transaction between a business and its customer.
 Merchandise refers to any type of goods, including personal or commercial products, as well as commodities
that are sold to members of the public
 Merchandising: refers to the process of influencing a customer to purchase a product.
 the activity of making people aware of your products and increasing sales through advertising, special events
 Is a crucial aspect of the retail industry, as it involves the process of promoting, displaying, and selling products
to consumers
 It plays a vital role in driving sales, increasing customer satisfaction, and maximizing the profitability of a
business.
 Merchandising means the buying and selling of goods with a motive to ear n profit
 is the practice of promoting a product through the use of advertising
Process of merchandising
1. Market Research (Understanding consumer needs
 It involves gathering and analyzing data about consumer preferences, market trends, competitor analysis, and
other relevant information.
 This research helps retailers understand their target market and make informed decisions regarding product
selection and positioning.
 merchandiser may find that there are various ways in which the need is being satisfied
2. Product Selection(Identifying right merchandise
 This step involves identifying the types of products that will resonate with the target market based on their
needs, preferences, and purchasing behavior.
 Retailers consider factors such as quality, price point, brand reputation, and product availability during the
selection process.
 The merchandiser based on the study of consumer feedback would like to know, which one is most in
demand, or will help the retailer to serve the consumer needs.
3. Planning the right assortment
 the merchandiser has to decide on the different sub-categorization, the sub-categorization can be made,
based on the consumer need
 Assortment planning focuses on determining the variety and quantity of products to be offered to customers.
 Retailers need to strike a balance between offering enough choices to meet customer demand while avoiding
excessive inventory levels that can lead to increased costs
 Assortment planning also involves considering factors like seasonality, fashion trends, and regional
preferences.
4. Providing right quantities
 The goods further needs to be sent to each of the outlets in the region.
5. Deciding the price
 The merchandiser needs to decide on the pricing of each of the products/items.
 Pricing plays a crucial role in merchandising as it directly impacts sales volume and profitability
 Retailers need to set prices that are competitive yet profitable. Factors such as production costs, competitor
pricing, and desired profit margins are taken into account when determining the optimal price for each product
6. Promotion (Communicating offerings to target consumers)
 Promotion involves creating awareness and stimulating customer interest in the products being offered.
 This step includes developing marketing campaigns, advertising strategies, sales promotions, discounts, loyalty
programs, and other promotional activities.
 There could be advertisements in print media , TV or radio
7. Sales analysis (Taking/understanding feedback of consumers)
 The feedback acts as a guideline for improving sourcing and assortment, so as to provide maximum
satisfaction to consumers.
  Objectives of Merchandising
A. Maintaining and making the growth of the business profitable
B. displaying products so that customers will be to buy them
C. is to attract customers
D. Buy the products that are needed by the customers
 Merchandise may includes
 type  customer needs
 brand  color
 size  price
Difference between Merchandise, merchant and Merchandising
i. Merchandise: - refers to the products that are bought and sold by retailers.
 It encompasses all tangible items that are available for purchase, including clothing, electronics,
furniture, food, and more.
 products that are intended for sale to consumers
 Merchandise is the physical inventory that is stocked and offered for sale in a retail
establishment.
ii. Merchant: - is a person or a company that sells goods or services.
 Is anyone who is involved in business or trade
 Is a person or firm whose profit is obtained from buying and selling goods to others.
 An individual or a group of people that sell goods created by other people or provides services to
the customers.
 A person whose business is buying and selling goods for profit
 They play a crucial role in the economy by facilitating the exchange of products between
producers and consumers.
Types of Merchant
1. Wholesalers :- are merchants who purchase goods in large quantities from manufacturers or
producers and then sell them to retailers or other businesses at a lower price
 They typically operate on a business-to-business (B2B) basis and often deal with bulk orders.
 is a person or a business who sells large quantities of goods to retailers
 are the merchant middlemen who sell mainly to retailers, other merchants, and commercial,
industrial, or institutional users
2. Retailers: business-to-consumer” (B2C).
o Are merchants who sell goods directly to consumers
o Involves selling products directly to consumers at a retail price.
o is the one who sells goods directly to consumers for their personal or non-business use
o Retailers typically don't manufacture their own items.
o They purchase goods from a manufacturer or a wholesaler and sell these goods to consumers in
small quantities.
3. E-commerce Merchants: are businesses that operate in the online marketplace, selling products to
customers through electronic means.
 Operate through online platforms, allowing customers to purchase goods electronically.
4. Service Merchants: are businesses that provide various services to customers, rather than selling
physical products.
 These businesses can be found in a wide range of industries, such as healthcare, education,
consultants, Recreational Services, and professional services such as lawyers, architects, and
accountants,
iii. Merchandising: - refers to the activities and strategies employed by retailers to promote and sell their
merchandise effectively.
 It encompasses a range of techniques aimed at maximizing sales
 Merchandising practices to attract customers, create visually appealing displays, highlight
product features and benefits, optimize inventory levels, and ultimately drive sales.
 it involves various aspects of retail operations, including product selection, pricing, promotion,
presentation, and placement
 Is a set of practices aimed at optimizing the sale and presentation of merchandise
 Types of merchandising
1. Product merchandising
 Both in-store and online stores use promotional activities to increase products sales
 This method could involve correctly packaging the product or featuring product photographs on the
website
 It deals with presenting physical or digital products in a way that customers will spend money on
them.
2. Retail merchandising
 It refers to displaying products within a retail store, arranging them orderly is crucial besides the
behavior of salespersons
 It involved in managing the product assortment and placement within a retail store.
 It refers to all promotional and marketing activities that in some way contribute to selling products
to customer in a physical retail store
3. Visual merchandising
o focuses on creating an appealing and visually stimulating environment within a retail space
o It involves the strategic placement of products, displays, lighting, and decorations to attract
attention and encourage purchasing.
o Is a strategic approach used by retailers to effectively display and arrange their products in a way
that appeals to customers, enhances the shopping experience, and ultimately drives sales
o Stores display the product, such as pricing and discount, to encourage consumers to buy the items
o Is a marketing practice that uses color, lighting, displays, technology, and other elements to
attract customer attention

 Effective visual merchandising uses a range of physical components to reflect a brand's image,
including:
 Color: Different colors reflect different moods. Choose a color scheme that matches your
company's image.
 Lighting: Lighting can help set a mood in your space and draw attention to specific products or
areas of your store.
 Product Presentation: The actual presentation of products is a key component of visual
merchandising. Retailers should consider factors such as the size, shape, and arrangement of
products on shelves
4. Digital merchandising
o It involves all promotional activities used to sell products online.
o This referred to as e commerce or online merchandising
o Online retailers focus on the performance of their website and put the necessary information on
display alongside products.
o is a digital display of products that customers can purchase directly from a website
5. Omni channel merchandising
 Refers to an organization's presence across multiple channels. These channels can include websites,
apps, social media, and email, in addition to offline channels, such as Television Advertising, Radio
Advertising, and Print Advertising.
 is a reference to the many ways customers might interact with a company

Types of Merchandise:
Some of the most common types of merchandise include:
 Consumer Goods: These are products that are purchased by individuals for personal use.
 Consumer goods can be further divided into two categories: durable and non-durable goods.
Durable Goods: These are items that have a long life and are expected to last for more than three years.
Examples include furniture, TV, automobiles and others
 They are often purchased less frequently than non-durable goods and are typically more expensive.
 Are items that have a relatively long life and are not consumed or depleted quickly
 These goods are typically used for a considerable period, and they maintain their utility value for an extended
time.
 Durable goods can be tangible items or products that have a high value, and they are often used in various
aspects of life, including personal use, commercial use, and industrial use
Non-Durable Goods: These are items that are consumed quickly and are not expected to last for more than
three years.
 Non-durable goods are products that have a relatively short lifespan and are consumed or used up quickly.
 These goods are typically low in cost and are not meant to last for a long time.
 Non-durable goods can be found in various sectors, including food, beverages and personal care products.
Types of consumer products
1. Convenience goods
 Are products that consumers purchase frequently, are easily available, and are usually non-durable
 These goods are often impulse purchases and are essential for everyday life.
 Are typically low-cost items that can be purchased quickly and easily
 Examples of convenience goods include everyday items like milk, bread goods
 One of the key characteristics of convenience goods is that they are purchased frequently
 Convenience goods can be divided in to :-
A. Staple:
o Are items that consumers buy frequently and in large quantities
o These are everyday items that people buy for personal use.
o These are necessaries of life that are used every day. E.g. Food, Clothing, Stationery, Cosmetics
o The items that are regularly purchased displayed and sold by the retailers.
B. Impulse:
 are items that consumers purchase without planning
 Examples of impulse convenience goods include candy, gum, magazines, and lottery tickets.
2. Shopping goods
 Consumer goods that the customer typically compares for suitability, quality, price, features, etc. before
selection and purchase.
 Shopping goods are those items bought less frequently.
 furniture, electronics, clothing, and phones are all examples of shopping products
3. specialty product
 Good with unique attributes distinguishable from other products of similar type. Due to their uniqueness,
specialty products are high-priced and rare in the market
 Is a specific consumer good that is available for consumer purchase at limited retail locations with a limited
supply, Examples luxury cars
 Industrial Goods: These are products that are used by businesses in the production of other goods or services.
 Industrial goods can be divided into two categories: capital goods and intermediate goods.
 Capital Goods: These are products that are used to produce other goods or services and have a relatively
long life; Examples include machinery, tools, and industrial equipment.
 Intermediate Goods: These are products that are used as inputs in the production of other goods or services
but are not consumed by the final customer.
o Examples include raw materials, components, and semi-finished goods.
 Seasonal goods :
 Goods that are demand in particular seasons.
 A line of goods sold in a specific season or period, e.g. summer, winter, Christmas and Easter.
 Based on weather features, we can classify seasons as Monsoon, Summer, Winter accordingly specific
products like, Umbrella, Sweaters, Cool Goggles, soft drinks, Ice creams etc., are demanded accordingly
the product is to be stored.
 Similarly season of festivals, marriages have its own demand for sweets, Jewelry, Clothing, etc.

Principles of Merchandising
 Merchandising is delivery of right product at right place and right time to the targeted customer.
 Successful operation of merchandising is dependent on following principles.
 1. Offer What Customer Wants
 Retailer should store and offer in his store what the customer wants or desire
 Products must be select for each class of customer and for each age group like rich, ladies,
men and kids.
2. Prepare merchandising plan
 Is a strategic document that outlines the objectives, strategies, and tactics for a company or
retailer to optimize the sales and profitability of their products
 It involves the selection, pricing, promotion, and placement of products in a store or online
platform to maximize customer appeal and drive sales.
 Micro details like types of products, brands, price category etc., have to be planned.
3. Selection of sources of supply
 Merchandiser has to select vendors and suppliers who meet his requirements in terms of
price, quality, reliability and delivery
 He has to search the list of suppliers available locally or at regional or international level
depending on his need
 Merchandiser has to negotiate with the vendor the terms of buying price, terms of delivery,
payment base.
4. Consistency and Change
o There should be consistency in merchandise assortment
o Retailers should capable of offering regularly as to what his customer’s wants.
5. Present right assortment
 Products must be presented category wise offering convenience and comfort to the
customer in selection of product.
 Retailers have to present right assortments of merchandise, i.e., types of product, brand,
price, range and other features that the regular customers expect
6. Customer relationship management
 is a marketing approach providing satisfaction of customer needs at every point of
interaction between the customer
 refers to the principles, practices, and guidelines that an organization follows when
interacting with its customers
 Benefits of Customer relationship management
 Enhanced Customer Relationships
 More Effective Customer Communication
 More Efficient Sales Process.
 More Customer Satisfaction.
 Competitive Advantage

 Concept of E- Merchandising
 Displaying products or offers on a website with the goal of increasing sales.
 Is the practice of displaying products strategically on a website to increase find ability,
conversions, and revenue
 can also help businesses achieve their strategic business goals
  e-merchant, a good digital marketing strategy
 Benefits of E- merchandising
 creating attractive product listings and marketing campaigns to increase sales
 Faster buying process.
 Increased brand recognition.
 businesses to reach a global audience,
 increasing their potential customer base
 E-commerce
 Is a method of buying and selling goods and services online
 Use ecommerce channels such as your own website, an established selling website like social
media to drive online sales.
 is the activity of electronically buying or selling of products on online services or over the
Internet
Challenges of e- marketing in Ethiopia
 high rates of illiteracy of customers,  lack of trust,
 High cost of Internet,  Lack of Internet infrastructure
 security risk
 The difference between traditional vs E-Commerce Merchandising
 Traditional needs a physical store, whereas e-Commerce needs websites and apps
 Traditional merchandising requires stuff like shelves, hangers, banners, etc, to present the
products
 Traditional merchandising is restricted to the local area of the physical store
 Traditional retailers use things like lighting, paint colors, and music to represent their brand
E-Commerce requires high-quality photographs and videos of the products.
Is the way in which products are organized and displayed in an online store
E-commerce merchandising takes place on digital platforms, like websites and mobile apps,
E-commerce sites cater to a global audience, allowing businesses to expand their customer base
without geographical limitations

 Stock rotation
 Refers to the practice of organizing and managing inventory in a way that ensures older
stock is sold before newer stock.
 This method is crucial in various industries, particularly in retail and food services, where
perishable goods are involved.
  The primary goal of stock rotation is to minimize waste and ensure that products are sold
while they are still fresh and within their shelf life.
 Is a system used especially in food stores and to reduce wastage, in which the oldest
stock is moved to the front of shelves and new stock is added at the back
 is moving older stock to the front of the shelf or display and placing newer stock,
 to arrange the oldest units in inventory so they are sold before the newer units
 is a way of minimizing potential stock loss due to expiration
Example of Rotate Stock
 A grocery store restocks its shelves by moving the oldest products to the front of the
shelves and places the newest products in the back of the shelves
Types of Stock rotation options
1. First In, First Out (FIFO)
o This method involves selling the oldest inventory (products) first.
o It is commonly used in grocery stores where perishable goods are sold.
FIFO is widely used across various sectors including:
 Food and Beverage Industry: To prevent spoilage and waste by ensuring that
perishable items are sold before they expire.
 Pharmaceuticals and Cosmetics: To manage products with expiration dates
effectively.
 Electronics Industries: Where trends change rapidly and older stock needs to be
cleared out quickly.
2. Last In, First Out (LIFO)
 less common in retail settings involving perishables
Purpose of stock rotating
 to reduce wastage
 Maintaining Quality
 ensures that all food is sold or used before its expiration,
 to reduce the potential for product loss
Stock rotation implementation Strategies
To effectively implement stock rotation, businesses can adopt several strategies:
1. Labelling and Organization: Clearly labelling shelves with expiration dates or receiving
dates can help staff easily identify which products need to be sold first.
2. Regular Audits: Conducting regular checks on inventory can help identify slow-moving
items that may require special promotions or discounts to encourage sales before they
expire.
3. Training Staff: Ensuring that employees understand the importance of stock rotation and
how it impacts both customer satisfaction and business profitability is crucial for successful
implementation.

LO2: Prepare and apply labels and tickets

 Labels are prepared for window, wall or floor displays according to store policy.
Overview of Label
 A label is an item attached to a product to inform consumers with a variety of information
about the product
 Labeling is any written, electronic, or graphic communications on the packaging
  The label may be a simple tag attached to the product or an elaborately designed graphic that is
part of the package
 The label might carry only the brand name or a great deal of information.
 Label is part of a package that carries verbal information about the product of the seller
 A label may be part of a package, or it may be a tag attached directly to the product.
Functions of label
 It identifies the product (through name/brand)
 Providing information required by Law
 Help in Promotion of Products
 Describe the Product and Specify its Contents
 to provide essential, often required, information about the product and its use
 Purposes of Labeling
 Brand Identification : It enables customers to clearly know what particular product they are
buying by rightly adding product information
 Is the visible element of a brand, such as color, design, and logo that identify and distinguish
the brand in consumers' minds
 Product Grading: the process of judging the quality of a product
 visual assessment of qualities
 The grade is a measure of the relative value of different products or services.
 the procedure of categorization of products into dissimilar groups, on the source of some of
its significant characteristics such as quality,
 Product Description: is a form of marketing copy used to describe and explain the benefits of
your product.
 It provides all the information and details of your product on your ecommerce site.
 is a piece of writing that conveys the features and benefits of a product, ranging from basic
facts to stories that make a product
 is a written copy that provides essential information about a product or service being sold
online
 Product Promotion: is the process of marketing a new or featured item or service to consumers.
 Is a form of marketing to create interest in a product or service
 Is the process of explaining the value of a product to potential and existing customers to
educate, generate interest, and spur purchase
 refers to the set of activities focused on spreading information about products among
prospective buyers in market
Labeling describes
o Brand Name o Safety Hazards
o Features and Benefits o Nutritional Labeling (in case of Food
o Instructions for Use Products)
o Statement of Contents

 illegible or incorrect labels and tickets are identified and corrective action is taken
False labeling
 Refers to the practice of misrepresenting a product’s contents, characteristics, origin, or
utility through inaccurate or misleading labels.
 Any party that sells or distributes any product which falsely characterizes or mislabels the
content, character, origin or utility of the product
 Country of origin claims, chemicals and other contents
 to create a false impression in consumers as to the price, value or quality of goods or
services on offer
Types of False Labelling
 Food Mislabelling: This occurs when food packaging does not accurately reflect its
contents (e.g., a vegetarian dish containing meat).
 Nutritional mislabelling: When nutritional information is inaccurate (e.g., claiming low fat
but containing high sugar).
 Country-of-Origin mislabelling: Products labelled as being from one country but actually
manufactured elsewhere.
 Health Claims mislabelling: Products claiming health benefits without scientific backing
are considered misbranded.
What is Ticket?
o Is a slip of paper or card that serves as evidence that the holder has paid for a fare or
admission to an event, such as a movie theater, museum, or airplane.
o A ticket, in a support helpdesk, is any issue raised by a customer that the company has to
take care of.
Types of tickets
1. Paper based tickets
 Are physical documents that grant access to events, services, or transportation
 They are typically printed on paper and contain essential information such as the event
name, date, time, location, and a unique ticket number.
2. Electronic (e- ticket )
Electronic ticket (e-ticket)
 Is a digital representation of a traditional paper ticket
 It serves as a paperless document that confirms a reservation for services such as
flights, train journeys, concerts, and other events.
 The unique barcode or QR code on the e-ticket allows staff to scan it for verification.
 This process eliminates the need for physical tickets while providing proof of
purchase.
Advantages of E-Tickets over Paper Tickets
1) E-tickets can be easily accessed on smartphones or computers without needing to carry
physical tickets.
2) They reduce the risk of loss or theft associated with paper tickets.
3) Reducing paper usage,
4) Organizers to gather valuable data about ticket buyers and attendees.

LO3: Maintaining displays

 Maintaining displays is essential for businesses to attract and retain customers.
 Identify unsuitable or out-of-date displays
 With a well-designed display, you can easily highlight your product's most notable features and
catch your customers' attention.
 Retail product displays are the fixtures in your store that hold or promote your products.
The purpose of display products
o Can influence their buying decision and increase the sales of particular products
o Is to engage customers through visual merchandising.
o Is to highlight certain products by increasing their visibility
o Show case details about a specific product.
 o Persuading customers to buy something in a store.
o To inform and attract attention for users
 Purposes of in-store displays are to draw customers’ attention to specific products or promotions.
 The purpose of a display is to highlight certain products by increasing their visibility.
 A display does not need to show all the items in a product line – focusing on three to five products
makes a display less cluttered and more appealing to the eye.
 The purpose of display merchandise encompasses attracting customers, boosting sales, enhancing
product presentation, increasing customer engagement,
Best Practices for Maintaining Displays
 Regular Cleaning
 Inspecting for Damage
 Training Staff: Providing training to employees on the importance of maintaining displays and the
specific protocols to follow
 Replenishing Stock: Ensuring that products are adequately stocked and arranged in an organized
manner.
 Supervisor is assisted in selection of merchandise for display
 The supervisor's overall role is to communicate organizational needs, oversee employees'
performance, provide guidance, support, identify development needs,
 managing the workflow and training new hires on how they can best serve customers
Functions of a supervisor
 Managing workflow
 Training new hires.
 Evaluating performance and providing feedback
 create marketing campaigns,
 Delegate tasks to their team members to ensure the achievement of the marketing goals.
The five key supervisory roles:-
 Educator  Counselor and
 Sponsor  Director.
 Coach

 Arranging merchandise
 People can then easily identify each brand when making their selections.
 Retailers and wholesalers show their products on shelves in certain ways.

 Grouping your merchandise into neat categories or departments is a great strategy

 Correct pricing and information on merchandise are maintained
 The right pricing approach is essential to remain competitive.
 Effective pricing strategy
 used to establish the best price for a product or service
 is one that accurately connects the value your service provides with your target customer's
willingness to pay
 It influences consumer perception,
 Helps maximize revenue and profitability.
The main goals in pricing may be classified as follows
o Prevent Competition • Resource Mobilization
o Profit Maximization • Customers’ Ability to Pay
Types of pricing strategies
1. Penetration pricing
 Is a strategy used by businesses to attract customers to a new product or service by offering a lower
price initially
 It's difficult for a business to enter a new market and immediately capture market share, but
penetration pricing can help
 The lower price helps a new product or service penetrate the market and attract customers away
from competitors.
 Involves offering a new product or service at a low initial price to gain customers' attention.
Advantages of Penetration pricing
 Market leadership
 Increased brand loyalty
 you'll attract customers
 Win customers from competitors.
 Limit competition
2. .Skimming pricing
 Is a product pricing strategy by which a firm charges the highest initial price that customers will
pay and then lowers it over time.
 Is the opposite of penetration pricing, which prices newly launched products low to build a big
customer base at the outset.
 Is a pricing strategy that sets new product prices high and subsequently lowers them as competitors
enter the market
3. Premium pricing
 involves setting higher prices than your competitors to create a perception of superior value and
quality
 Is the practice of setting a high price to give the impression that a product must have unusually high
quality
4. Psychological pricing
 Is a pricing strategy based on the psychological impact of certain prices
 Is a strategy that uses pricing to influence a customer's spending or shopping habits to make more
or higher value sales
 An example of psychological pricing is an item priced at 399 is conveyed by the consumer as 300
birr and not 400 birr, treating 399 birr as a much lower price than 400 birr
5. Competitive pricing
 Is a marketing strategy whereby businesses set prices based on their competitors' prices
 It is also known as competitor-based pricing, this strategy can be used in online and offline
markets and is often used to attract more customers and increase market share.
6. Cost-plus pricing
 is a pricing strategy by which the selling price of a product is determined by adding a specific
fixed percentage
 Calculate your costs and add a mark-up.
 It's a pricing method where a fixed percentage is added on top of the cost it takes to produce one
unit of a product (unit cost).
 Is a pricing strategy that is based on the total cost of producing and delivering a product or service
Four major market factors that affect price
 Costs  Consumer Perceptions.
 Supply and Demand.  Competition.
 Benefits of pricing strategies
 To increase sales
 help you attract more consumers,
 can help a company increase its profits
 compete with competitors

LO4: Protecting merchandise

 Identifying and applying correct handling storage
 Merchandise that is on shelves, or on display, needs to be protected to make sure that it always
remains at its best
 Should be a priority for all retailers because their merchandise is the key investment and source
of revenue.
 Protecting deals with ways in which you can handle store and display goods so that they do not
get damaged or broken in any way.
 protects your item from total loss due to accidental and damage
Handling techniques may include
 stock characteristics
 store policy
 legislative requirements
 industry codes of practice
 Display techniques are applied according to stock characteristics
Basic merchandising techniques include displaying related merchandise together, simple and clean
displays