A product may not be part of a product line but is well advertised and is only a
bit above average in price for a higher-priced product type. A merchandiser
may choose to mix it on the shelf with the medium-priced products.
The brand name and advertising exposure may make the product noticeable
on the shelf among the medium-priced products. Consumers often will pay
slightly more for the product because of the image created by the
advertising.The price range of the product doesn't necessarily dictate the placement on the
shelf.
The gross margin (GM) generated by the product is equally important.
You may have products that are not in a high-priced range and do not
generate as much gross margin as products in a lower-priced category.Sometimes merchandisers are restricted in the price point of the product
because of national advertising by suppliers—they can't deviate from nationally
advertised prices.
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A product selling for $20.00 may cost $15.00; therefore, the GM is $5.00
or 25%
A product selling for $17.00 may cost $11.00; therefore, the GM is $6.00
or 35%
A product selling for $14.00 may cost $8.50; therefore, the GM is $5.50
or 39%
This situation is a common occurrence. Smart merchandisers don't just
load products on shelves. They arrange them to achieve the greatest
product movement possible at various price levels and, as a result,
generate more profit for the company.