Securing shelf space and merchandising support from dealers is another important aspect of dealer management. By enlisting the willing cooperation of the dealers in the merchandising effort, the firm derives multiple benefits. Effective merchandising accelerates the buying process as it serves as an on-the-spot reminder to the consumer to buy. A quick glance at the way in which the dealer aids/point of purchase promotion materials supplied by a firm are used in a retail shop, can help one judge the firmâ€™s dealer management.
In the contemporary Indian context, getting shelf space and merchandising and display support from the retail outlets is of special significance as competition among brands is fast building up at the retail level. For example, in color TVs since a number of firms compete for the limited shelf space available at the retail shops, the ones who score in this matter enjoy an overall edge in marketing.
Even big firms and major brands have to fight for shelf space: With the growing competition and the explosion in branded FMCG products, the premium on shelf space has been going up steadily. The competition for grabbing shelf space usually becomes more intense during stagnant market conditions. Even big firms and well-known brands have to earn their shelf space and display the hard way; they are not in a position to demand it as a matter of right from the retailers. For example, some time back, even a firm like HLL was not in a position to demand from its retailersâ€™ shelf space and display arrangement for its internationally acclaimed brand Denim, by merely citing that it was a Lever product and an international brand. Nor could it get it by touting its bazaar power of a million retail outlets. The dealers wanted to be convinced about the consumer preference for the brand before he considered it shelf space and display. After all, he now has the choice of a whole host of products/brands with international affiliations and he could pick and choose the products/brands to which he would allot shelf space.
Many companies are now running special communication programs with a view to acquainting retailers with their products and brands, and convincing them of the benefit that would accrue to them if they patronized them. Companies are also now forced to meet a major part of the expenses involved in display in the shops. In fact, they are even expected to meet the expenses of general decoration of the shops. ITC, for example, has been earmarking a substantial portion of its promotional budget to the decoration of retail outlets. The company now sets up at its cost special counters, which add considerable glamour to the shop and serve as point advertising.
Today, in most companies, merchandising accounts for more than 15% of the total marketing spend. Many companies are also devising their own quality control checks on merchandising fronts. Kellogg has about 20 staffers doing the rounds of the outlets once every fortnight. And, at Pepsi, the merchandising teams stir out every two or three months and, even more frequently during the peak season, carrying with them scissors, cello-tapes, dusters, nails, board pins, hammers, thread and, of course, the usual POP material. They clean the bottles, dist the racks, put new posters and rearrange the bottles so that the brand faces the customer.