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Libey Incorporated
Economic Outlook
Secrets of the Catalog Master
Vol. MMVI No. 5
September-October 2006
DMA Annual Conference Issue
Cherry Hill, New Jersey
Des Moines, Iowa
Donald R.
Libey, Editor
Re-merchandising
by Donald R. Libey
What is merchandising, anyway?
The Merriam Webster Collegiate Dictionary assigns meanings to the Middle English and Latin prefix re- of “back, again” and even “backward.” It is an interesting prefix, re-. It denotes freshness and newness, a renewal, rebirth or revisiting, if you will. The word merchandise, used as a transitive verb, comes from Middle English and Old French and has the primary meaning “the occupation of a merchant” as in “to merchandise” and a secondary meaning “commodities or goods bought and sold in business” as in “stuff.” The noun merchandising was first referenced in 1932 and means “sales promotion as a comprehensive function including market research, development of new products, coordination of manufacture and marketing, and effective advertisement and selling.” And the related noun merchant means “a buyer and seller of commodities for profit” or a trader, as well as “the operator of a retail business” or a storekeeper.
As we can see, during the scant seventy-two years since the term merchandising was first coined (no pun intended . . . well, actually, yes, pun intended), we merchants of old have progressed only a short distance from the local market town fairs of Britain and Europe and the bazaars of the Silk Road. (I have always used the term peddler or peddlar to describe what it is that we do, which broadly equates to “one with wares for sale,” a not too-far-off-the-mark nomen dubium for the modern-day cataloger and, certainly, a bit more refined term than the 1713 French, back-formation, transitive verb hawk or “to offer for sale by crying out”).
And so, as we journey from the Middle Ages to the zenith of the Sears, Roebuck and Company age when the term merchandising first acquired its meaning the year after Sears, Roebuck and Company’s retail sales topped its mail order sales for the very first time (1931, at the height of the Great Depression), and thence to the present-day multichannel festival, where we are all still trying to figure out what merchandising is, let alone the meaning of re-merchandising.
Perhaps the best that can be said for merchandising is, “I really don’t know what it is, but I when I see it done well, I know it’s good” And the good examples of merchandising are easy to spot because there are so few of them that they pop up and jump out from the flat, one-dimensional drabness of the collective yawn that ninety-five percent of the modern merchants produce. After all, we have only been talking about, experimenting and testing merchandising approaches and principles for a little over seventy-five years, a veritable blink on the vast continuum of commercial time. The spice merchants of the 10th Century knew more about the basics of merchandising than we can ever hope to understand (and they had no deciles, RFM or square-inch analytics, focus groups, or multivariate regression analyses; they only had a bad-smelling, nasty camel).
The “Re-Merchandising” buzz
Regardless of how we got to where we are, we’re here. And most of us have never had a course in merchandising, and it’s something we think we know how to do intuitively, and—after all—we hire people to do that, anyway. So, we have VPs of Merchandising, product merchandisers, product managers, copywriters, and we’re managing and supervising all that activity, and our basis for excellence is, “I really don’t know what it is, but I when I see it done well, I know it’s good.” Suddenly, the buzzword in business-to-business catalog and online marketing is re-merchandise. It’s being sounded as a clarion call by company after company frantically trying to find margin, growth, earnings and new market share; the Holy Grail has been deemed to be hidden in the Land of Re-Merchandising. Maybe we should try to get a little better handle on this thing.
Your existence as a cataloger is a constant state of re-merchandising. At no time is the merchandising ever done or stable; it is always in a state of reflux, redux, and re-bloviation. When you stop re-merchandising your products, you ossify. The customer is moving on down the road, and you are sitting on a bench in the park, enjoying the Mary Poppins-like tranquility of “practically perfect products in every way.” No such thing exists. There is no Emerald City, there is no Oz; in fact, there is no park.
It starts with positioning
By now, I hope you have read Chapter 7: Position in the book Christopher Pickering and I wrote last October, Libey and Pickering on RFM and Beyond, available from MeritDirect Press (www.ForBetterBooks.com), 338 pages, hard cover, $59 + S&H (pay attention, this is merchandising) in which we discuss the principles of positioning as the first step to knowing how and why to sell products. This is the chapter where merchandising begins.
Before you re-merchandise, you have to have a total understanding on what you are merchandising to begin with. Based on the outcomes of many of my forensic consulting reviews, I have to believe that many, if not most, of our catalog companies have not nailed this basic down. Yes, they know all about their products, but they don’t understand what the customer knows and thinks about their products. Most owners and CEOs are merchandising their baby, the hallowed and sacred product they built the company with. Everything is merchandised through the owner’s eyes and beliefs, not through the customers’ experiences, desires, wants and needs. And when you are a worm in the horseradish, everything looks and smells to you like horseradish.
The position blockage
The primary merchandising blockage that I commonly encounter in consulting is the misguided belief that everyone understands everything that you understand about your product. Stated another way, this is what I call The Merchant’s Fallacy. Isolated in the vacuum of your own product development and merchandising vision, you are excluding every other possible application, interpretation and product understanding that exists in the vast realm of potential buyers. As an example, I once unsuccessfully merchandised business-to-business holiday cards for their beauty, gold foil embossing and up-market elegance; in other words, all the elements of card creation that I found attractive. It wasn’t until I asked the question, “Why do you send holiday cards in December?” that I began to understand how this product needed to be re-merchandised. It had nothing to do with beauty, elegance or up-market embellishments; it had everything to do with ‘top-of-mind’ memory, appreciation for that year’s business and the protection of next year’s customer retention. The motivation (that is, the merchandising reason) was greed. Send a card, make a buck. While not, perhaps, the “vision of sugar plumbs” that we hope would pervade the holiday spirit, the appeal to greed did sell a bunch of cards. I just had to re-think my positioning for my product.
Consider this common merchandising cause and effect. It is an outdoor art fair and there are painters and watercolorists and photographers, all with their displays and walk-in booths. Generally, the artist is sitting in a director’s chair or a lawn chair, quite often painting or reading, but almost never customer engaged with other than a cursory interest. In other words, the artist is merchandising by conveying, “Here is my work. It is self-explanatory. If you wish to buy something, I’ll sell it to you, but—otherwise—don’t bother me.” The merchandising approach here assumes that I understand exactly what the artist understands, and that only one out of every one or two hundred people will have a positive connection and actually buy something (a merchandising practice, I might add, not unlike most cataloging).
But, what if the artist walked over and asked, “What kind of space would you like to enhance in your home with artwork?” The positioning and the point-of-view now have shifted from the artist to the buyer. If the buyer says, “Great room,” the artist says, “What do you have there now?” The buyer says, “Landscapes,” and the artist says, “Here is a lovely gardenscape that would bring focus from the distant landscapes to a more intimate conversation area or, perhaps, a smaller, unadorned focal wall.” Suddenly, the seller and the buyer are involved in planning and selection; or what is known in merchandising as intellectual product involvement. The next step is closure. How much better is that for sales than sitting and cleaving to the starving artist’s innate and stubborn sense of product merchandising omniscience?
How is it that so many merchants know that they know everything there is to know about their products? That is a conundrum that has haunted me since my first week in direct marketing.
When to re-merchandise
Re-merchandising is not a process that allows flopping about in the marketplace to see what you can get. It is a deliberate, planned and carefully researched approach to changing your product position to obtain market share in a defined and identified market niche or sub-niche. For example, let’s say you sell tools for amateur woodworking and you want to move into industrial tools for professional woodworking. The whole point-of-view, applications, pricing, service, product lines, durability, shipping and installation concerns, and a thousand other elements are different. In fact, the only commonality is that these are woodworking tools. Yes . . . this is a new business.
But, let’s say that, at Christmas, the spouses of woodworkers are looking to purchase gifts. Now, the point-of-view changes for a season and it may prove fruitful to re-merchandise the products for gift-givers for just that season. This might include bundles, expansions to existing products, suggestive selling, consultive selling, price incentives, or any number of other re-merchandised product approaches. The merchandising could also be combined with circulation tactics and targeted specifically to spouses . . . or . . . directly to the woodworker with a special merchandising appeal to, “Circle what you really want this year, leave this catalog where your spouse will find it, and we’ll do the rest!”
The moment of merchandising truth
The Master Merchandisers are able to Roto-Rooter their way through the blockages. They can create a merchandising approach for as many niche markets as the product will support, and all from a different merchandising or positioning point-of-view. The slavish handcuffing to one merchandising point-of-view for all-time and all-buyers simply assures that only a fraction of the total market ever purchases the product. The Master Merchandiser is a chameleon, able to blend with a hundred micro-markets for any given product or line of products. You may understand your product, but when you understand your product through the mind of dozens of different buyers—that is the moment you begin to achieve mastery of merchandising; that is the moment of truth in merchandising execution.
One of my primary tests of a merchandising candidate is to show the person a product and give them all the information necessary and then to ask them to create for me at least five thumbnail merchandising approaches for that product for five separate markets—in an hour. I am looking for imaginative people who can think on their feet and innovate quickly and skillfully and who are not bound by rigid preconceptions and imaginary merchandising rules.
The hierarchy of re-merchandising
The greatest opportunity-laden potential for re-merchandising is to create new applications for new potential buyers. If you are selling olive oil, remember, it can be used to easily and cheaply remove the residue of adhesive labels. Arm & Hammer have found hundreds and hundreds of applications for soda bicarbonate and have expanded the market for their flagship product exponentially.
The next exciting potential after applications in the existing market is to re-merchandise to reach new markets, or my “concentric tree-ring” approach. If you are doing products to hog farmers, think about products to chicken farmers.
The third potential for re-merchandising is to create a merchandising presence based on a position other than the one you are known for. If you are the selection leader, add the service leader. If you have the fastest fulfillment, add the slowest. If you are full service, create a limited service alternative. All of these re-merchandising, re-positioning approaches may have different price points or shipping and handling costs.
The fourth potential is often the trickiest: price. If you are the price leader (most expensive), create a mirror of the business that is the low price, strip-down market player. This re-merchandising approach usually attempts to getting a piece of the market at all prices. The resulting ‘brands’ often have different, totally unrelated names, locations, and creative, sometimes different channel emphases. For example, the high price catalog may feature similar products in a low-price, web only channel strategy.
Of course, one of the most ambitious re-merchandising approaches is international expansion. What works in the U.S. may or may not work in Portugal, depending on the product, the application, the position, the price, the service demands and the market nuances. Often, very different merchandising creative work must be accomplished. The U.S. style of copywriting is not a universal standard, nor are the layout and design elements.
Summary
Re-merchandising is a constant evolution and must be ongoing to assure validity of product relevance and positioning. Merchandising demands an expanded point-of-view, not the mono-vision of the product originator, which all too often results in the straight-jacket of “more of the same.”
Re-merchandising—as well as initial merchandising—begins with a solid, intentional understanding of positioning. What do you want to be to the market and the customer, and what is it that the market and the customer want you to be? Any other beginning point must be seen as arrogance leading to The Merchant’s Fallacy.
All re-merchandising is deliberate and based on knowledge and analytics. Floundering in search of a direction is best left to the invertebrates.
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