APPENDIX 2
Merchandising
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Introduction
Merchandising is not a substitute for Advertising to be switched
on when advertising in no longer possible. It is a marketing tool co mple -
mentary to advertising and other marketing tools and is usable at almost
any time in any market. However. some merchandising activities
are likely to become more important in the event of restrictions on
advertising. These activities will only be successful if they are properly
understood and have been developed. Understanding and development
takes time and effort. This paper on "derchandising is to assist In
obtaining understanding.
In Part I "Guidelines for Merchandising" the main areas of activity
have been highlighted. It does not pretend to be a complete explanation
of merchandising.
In Part II "Likely Restrictions on Merchandising" some possible
restrictions have been examined. As merchandixing activities are
so diverse, and some are comparatively new to the tobacco business,
it is not possible to, give other than an Wormed guess on the restric-
tions which might be imposed.
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PART I
Guidelines for Merchandisine
Advertising series to influence consumers to buy and remain loyal
to a given oroduct, but this function is restricted if t@e product is un-
available or lacks orominence at point-of-sale. This is eso'ecially true
of high volume, quick turnover products such as cigarettes. It is nec-
essary, therefore, particularly in large impersonal outlets such as
Supermarkets, to ensure that merchandising operates effectively through
correct siting of products and by the creation at poinc-of-sale of induce-
ments or incentives which will encourage the customer to purchase.
Sufficient spac --'or product display should be obtained in ideal
store positions, but such is the competition for space that a product's
capability of earning its position by helping the retailer to crease the
overall Drofit3 of the store must be demonstrable. Computer use has
enabled many chain stores to calculate the minimum -irofic realisable
per square foot oi space and should a product fall below expected ,,)er -
formance. it will lose its claim to prime positioning
U.K. stud.-es have shown that the average Supermarket shopper
passes by products at the rate of 300 per minute and in this time is
exposed to at least 75 promotions plus a far larger 71, of pieces
of P.O. S. material. The instant recognition of prod--ct and of message
is, therefore, oi the utmost importance.
Thus in many sophisticated markets, the salesr.--=, who formerly
concerned himself -rarely with seUing-in, must todav assist ir. selling
out, ie. he must become a merchandiser. But not the least of his
problems is the 'selling' of merchandising schemes :o retailers in
competition with those proposed by other manufacturers' representatives
which may conflict with the retailer's own ideas as to how his store should
be arranged.
The importance of merchandising is demonstrated by the fact that
in the U.K. and U.S.A. the ratio of advertising to merchandising in the
Larger stores has changed from 4: 1 five years ago to 1: I today. The
tobacco industry too has followed the trend but is still some way behind
many other high-volume products in recognising its true importance.
This developing profession has become one of saecialised techniques
and skills, many of which can be applied to small as well as to large
outlets. Even in less sophisticated markets, outlets are increasing in
size and there is a movement towards more aggressive and systematic
forms of retailing. Considerable scope for development in merchandising,
therefore, can be expected in such markets from no- on.
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In the context of t;-ese important trends, the following notes sum-
marise the aDvi-ications oi merchandising functions to the marketing
of tobacco products.
1. In Store Product Siting - Presentation
(a) Sir;niz .within Store
In manv U K. sumermarkets, 28% of the total cash -4'ow is
derived from to .oacco products and it has been found that :-.e average
cigarette shopper spends 5016 more in the store than other types of
shopper. In view of the importance of tobacco products !o the super-
market's total trade, t-e4r siting in the store should be such -.11at
customers are -jrovide-i with the best opportunity to purchase.
However, -tobacco -3roduc:s tend commonly to be displayed in
separate departments away from the main customer flow. In such cases
it is often possible to arrange an exchange of site with a :ess Productive
but better situa:ed product group. In addition, improvements to existing
sites can be made bv the use of special display material azid by directional
arrows. The development of secondary selling points should also be
explored, such as till-toDs, check-out3, gondolas and the olac-ing of
tobacco goods near associated products so as to give the consurner a
number of opportunities of seeing and purchasing our produces.
Where tobacco departments contain. as they often do. co,--fectionery,
newspapers, szationerv or drinks, advice can be given, de-jending on
the size and type of store, on how these pyoducts should 'De mixed or
whether tobacco goods would be best displayed on their own.
Needless to say, merchandisers must be experienced in all. aspects
of their art if they are to attempt re-sitings. All facts pertinent to
the store's trade and traffic flow must be understood and -he merchandiser
must be prepared to produce complete layouts of his plans. Or. the
basis of these and other arguments, he should su gest ways of improving
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the flow of customers and of total store profitability.
(b) Position within the Site
Tobacco-products must be positioned so that they will. be easily
visible, readily accessible to shop assistants and displayed in such a
way as to generate a strong impulse to buy. This means considering
the entire site from the standpoint of Customer movement and behaviour.
For example, eve and chest level @ositions are usually best and study
should be made of whether customers buy mostly at the beginning,
middle or end of a product line
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The merits of locat4ng brands next to others need consideration; C7
a brand placed next to a market leader, for instance, will :end to
BATCo document for Province of British Columbia 14 April 1999

benefit. The company salesman should also ask hi whether
cigarettes on the shelf would be best lo by type, pack, size,
price category or by manufacturer, etc. and whether his brand stands
out on the she" or merges into the background of pack colours around
it. Many of these decisions will depend on :he national brand sales
situation or the situation in a particular store but correct layout will
increase overall product turnover and contribute to greater 'store profit.
It will also increase the retailer, resipec'. --Or, and confidence in. the
skills of the merchandiser
A special 41.11- store promotion w-_ll be moat effective if it is pos-
itioned so than ;t can be seen bv the custorner before he actually reaches
it. It may be placed next to a regular consumer draw not normally
assoc.ated w-:h. cigarettes or nex: -o related items such as cigars, brandy
or next to a product that suggests a 1. break' such as coffee or snacks.
(c) Fac-ines
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In markets where we are brand leaders, we should aim for a
number of fac-;Z.g commensurate wi-..i market share. Correct facing
is 'sold' to the trade on the basis that -t reduces the shelf out -of -stock
levels. thus reducing the labour involved in constantly refilling shelves.
Only when a product produces, or is expected to increase, profit does
it justify extra facings.
In situations oi low brand s.-are, a different approach is required.
Here an analysis must be made of brand potential and a presentation
made on what achievements could be expec:ed if the facings were
altered. Consumer buying habits must be studied to take advantage of
any cpportunitv missed by the competition. Consumers may. for
instance. be in the habit of mak:ng multi purchases. If so, a
sole facing of one 60s pack and one 200s carton may give one an
advantage over the competition.
(d) Impact of Facings
Maximum impact should always be made with available space.
For example, if the competition are only showing the pack ends of
their ZOOS cartons, we should arrange to show ours lengthwise. It is
best also to show facings of the same product together rather than split
them up along the shelf. Obviously one must know whether particular
facings are normally achieved by the front or by the ends of the pack.
By adjusting shelf-heights and by 'lie use ol shelf-extenders, shelf-
talkers, arrows, etc. , it is possible -,a make facings stand out to give
additional impact.
(e) Maintenance of Facings
It must be decided what frequency of call by the representative is
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is necessary for proper maintenance and to what extent the education
and motivating of store mersonnel in this task might be helpful. An
alternative method is -he employment of an independent or part-time
merchandising force.
Simple aids such as space-reservers in the form of branded
tape, or continuous face strips to attach to the backs of shelves can
act as silent instruction to the staff resoonsible for filling them.
2. In Store Dismlavs
(a) Functional Dis-iiav Material
Retail selling of tobacco still depends very much on assistant
service, whereas with other high volume products, self-service has
become of primary importance. In the case of self-service stores,
therefore, it is likely :hat our business would benefit if tobacco
products could be displayed and sold on a self-service basis. Exper-
iments are now being carried out or various permanent P. 0. S. displays
situated on the counter under the eye of the tobacco assistant. Commonly
these displays carry about 6 brands on a small amount of counter
space and customers serve themselves under supervision. Results
are encouraging and the next stage will be to move the display further
from the assistant's scrutiny to a point where the tobacco products
can be integrated Into the normal body of the shop. This entails
studying new pac.-aging and selling fixtures to establish their suit-
ability for particular outlet locations.
Costs of materials whether thev are advertising signs, simple
counter dispensers or full kiosks, must be measured against expected
returns. often one can contract with the store (which partly meets
the cost) for fixtures which guarantee not only display space but the
number and location of brand facings. Kiosks which stock all brands
have been shown to sell up to 1596 more cigarettes than would be
normal for their market share. Obviously material must be flexible
Sao that frequent display change will keep interest alive.
(b) Tornoorarv P. 0. S. Material
Directional arrows. day-glow m aterial, flashes, stars and similar
eye-catching methods can be used to attract the attention of Specific
brands or to temporary offers. Dump-bins and blank cards can also
be used to e-,mloic local promotional opportunity. With these and other
aids, the trained merchandiser can bring an additional attraction quickly
and cheaply to his product situated in a market stall, vending machine
or in the tobacco department of a large supermarket.
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(c) Theme Material
(i) Advertising Themes
Where it is desired -o extend an advertising campaign into
the retail outlets, it shox:ld be designed for the job and not, for example,
simply transcribed fror.- a newspaper advert onto a showcard. Pictures
and slogans should be ke it to a rnmirnum and be placed near. the product
but designed so as to be clearly visible at the distance from which the
customers will norm. all,.- view it.
(ii) Merchandising Thennes
In general, merchandisers should be alert to the Possibilities
of exploiting national, regional and store events and focus them on the
promotion oi particular brands or a range of products.
For examole, sponsorships, local sporting events, elections as
well as seasonal and national events such as Christmas, Easter,
Mother's Day can be used to create merchandising opportunities.
Jersey, for example, has used :he general theme "Over 50,76 of! UK
prices" across the brand range during tourist seasons.
In a book3eUer/tobacconist's store, it may be oossible to arrange
a promotion an the "Book oi the Month" by arranging to have the book-
stand adorned with a brand slogan Similarly in newsagents. racks
can be adorned with slogans such as "BENSON & HEDGES always in
the news". Many of the larger chains run a special Topical Week
or a National Week. These too offer merchandising opportunities and
during British Weeks windows can be dressed with British tobacco
products.
3. Sales Promotions
It is probably as well at this stage to highlight the difference
between advertising and promotion, where often confusion arises.
(a) Advertising
In the main tends, gradually. to create or change attitudes of mind
towards products but may also form Quickly and effectively.
(b) Promotions
Essentially quick acting, introducing added incentive to purchase or
repurchase. a-
The following is a brief resurne of the key points on promotions.
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i) Promotiona-' Objectives
These are listed and examples are given on how they may be
achieved.
a) Trial Purchase - Incentives can be created in order to encourage
initial purchases, eg. a saving of say 25/- on a wanted item 'offered as
a Self Liquidator is worth a 5/- investment on the product.
b) Revea: '_.'--urchase - e. g a --nonev off next buy" coupon given
with the initial nurchase can encourage a second purchase.
c) Brand Switchine - an effec-_ive scheme, whatever it maybe, can
change a consumer from his exisn' Mg brand providing products are
comparable.
d) Sales Farce Enthusiasm - --lost salesmen selling the same
products and services, call after call, welcome new and varied sales
pitches. These help to generate the salesman's enthusiasm and
effectiveness in his job
e) Trade Stockinz- - promotions such as Extra Discounts, Dealer
Competitions, Dealer Gifts (Loaders) or promotions which give In-
store excitement and promise higher product of--take, act as an
inducement to tl-e trade to "stock up". They should be related to
specific targets and objectives
f) Display - an attractive promotion can win extra display space
for a product. ?rime sites and larger than normal shelf areas are
often read.-ly given to the creative merchandiser for his promotion.
g) Counteract Competitive Activity - it is possible to launch
many types of prornotion at short notice These can direct attention
from and decrease the impact of competition brand launches and adver-
tising and merchandising campaigns
ii) Cost of Failure
a) Money - the mounting of a promotion costs money in terms of
management ti=e and materials. The results must be evaluated and
weighed against costs.
b) Reputation - repeated prornotional failures can damage a
Company's image with the trade. This could lead to reluctance to co-
operate with future schemes or new brands.
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c) Morale - all employees whether adrnin or field like to be part C@
of a successful -.eam. The effect on morale of too many fiLilures should ON
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not be under it ts surely better to eliminate in advance the
risk of failure as far as possible by experimental or trial runs of prom-
otions.
d) Missed Opporrunity - although later promotions may be success-
ful, Time, Monev and Proilts lost on a failure can never be regained.
Once an opportr-iity is rn@s sed the same opportunity never presents itself
again.
iii: Reasons for Failure
a) Offers .%-ith no consumer appeal - an oife chosen by an indivi-
dual's personal oreference may not meet the general consumer's
wants. An offer which aooeals to the Promoting Company's Management
but is unattractive to the public is doomed to failure. Ignore purely
subjective selection.
b) Offers pre-ernoted by competition - an oifer which appears
attractive to the public at its conception may be made comparatively
unattractive by external activity, eg. a 13 lighter offered at 30/ -
may have appeal but if another product oiXe the same lighter at the
sarne time with its produc: - the offer is then unattractive by comparison.
c) Inaccurate Redemption Estimate - a redemption of, say, 10,000
ar- ic le may make a promotion viable. However. if only 1, 000 are
redeemed the Company is left with 9. 000 to scrap. The cost of these
may represent the increase in profit arising frorn the prornotio n. On
the other hand, an underestimate may lead to car sume dissatisfaction
if their redemption is not handled promptly.
d) Inaccurate esti.-.na:e oi increased sales - U the pre-set sales
targets for any promotion are not hit then profits must be lower than
envisaged. If additional finances have been invested in the promotion
against expectations of higher profits, then any inaccuracies in fore-
casting can lead to a loss situation.
e) Poor Distribution and Merchandising - however good a promotional
idea, lack of availability at point-of-sale can lead to a general failure of
the promotion.
iv) Need for Testing
a) Gives Facts for Decisions - facts on offtake, acceptability, rate
of sale, trade reaction etc. , can give a firm indication of likelihood of
success or throw up warning signals.
b) Helps Elirninate Subjective Views - sooner or later someone
has to say "Yes" or "No" to the launch. Comprehensive test figures
make decision-making easier and less fallible.
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c) Builds Experience - "ex-jerlence is a good teacher but a poor
master". . Failures can be valuable if we can learn from there and
not repeat the mistakes.
d) Accumulated Bank of Ideas - a promotion may fail in test
market because, for example, the timing is wrong or similar pro-
motions are on offer at the same time. It is always worth keeping
"failures" on ice until circumstances change.
e) Assess Potential - testing can either prove or disprove estimates
of sales, redemptions etc. with a --air degree of accuracy-
!) '.Reduces Chance o-- Failure - a thoroughly tested promotion stands
a much better chance of success than the hastily conceived shot in the
dark.
We have dealt at some length with the question of promotional
failures and the need for testing. This is not to say that we have
no coafidence in promotions - exactly the reverse is true: However.
we must be certain of our objectives, be sure that a promotion meets
them and then consider all the implications. The time spent on testing
will undoubtedly prove to hive been worthwhile.
v) Some Ty
pes of Prornotion
Promotions can be classified under two headings: Incentive and
non-incentive.
Incentives - any additional value offered to the consurne or trade,
normally linked to purchase or movernent of the product.
Ty-yes Examples
Free Gifts Free Steak Knife with 200 du VLkURIER
(Middle East)
Free mail-in Send in part of ZOO* ctn. for selection
of -Free Books - PALL MALL S.A. S.
Coupon offer Sixpence off next purchase coupon -
ALBANY - U. K.
Competitions and Lotteries Collect winning Poker Hands
SWEET CAPORAL - Canada.
Price cuts Sel.f explanatory
Self Liquidators Offer 7 / 6d, Lighter for 2/6d. with
200 PLAYERS - Jersey. C)
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On Pack Offers Bar Chocolate 200 PALL NEALL
Norway
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Banded Of.-e-s 3 packs banded at reduced price -
Sweden
Stamps,'Couppoms Collect Bonus Starnms redeem for
cash - PLENTY - S weden
For merchandise - FLALZIGH.- USA
Dealer Loaders Personal Coat of A r.-.n for dealer
with purchase of 50 :%i B&H - Germany
Nom - In - where appeal is usually interesting or emotive
rather than oi_-er_@-g additional value.
Types Examnles
Theme s: a. Seasonal Christmas Display
b'- Snecial in - Store Anniversary, Travel Week etc.
c' Na:ional Event World Cut)
d@ T ocal Event Local Gyi;nkhana
Multi Packs Duty Free Allowance
Sponsorships Link with Sport
Free Samples
More than one of the above promotional types may be combined to
meet avecific ob:ectives.
vi) Trade Buvinz
Trade buvirz can be an extremely effective pro mo tool and
is quite often the easiest and quickest type of promotion -.hat can be
mounted to cornbat specific competitive activity. The trade can be
offered a bonus in the form of cash, invoice discounts, oroduct or
gifts. Below are detailed some of the types of trade bor-using.
a) Introductory Bonus
A new brand launch may carry an introductory bonus in order to
ensure that the retailer takes the new brand and buys in sufficient
stocks to meet the anticipated demand, and provide adequate product
display. This bonus usually takes the form of a discount or free
product. Ideally the retailer would be encouraged to pass on any saving
to the consumer.
b) Stock -Material Bonus
In order to encourage a retailer to display and seU product this
bonus is paid only on stock sold between calls:
c) Display Bonus
Verv often used in conjunction with a promotion, this bonus is paid
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i! the retailer agrees to display 'he product at an agreed site for an
agreed period of time.
d) Volume Bonus
The retailer would be set a sales target for a brand or group
of brands and all sales above this threshold would qualify for retro-
spective bonuses. This type of bonus can be worked over a fairly
lengthy period oi time (eg. 3 or 6 months).
Trade bonusing, however. should be used very selectively since
if the trade is bonused too often, they tend to regard the normal
invoice price as rather artificial. A lso it must be expected that
continued bonusing will, sooner or later. be met by competition with
.he inherent danger oi both parties losing oroii:s with no appreciable
rise in volume.
4. Planned Selling
With today's rising costs and the sales force representing a very
high cost centre, it is obviously desirable that this area of activity is
planned with a view to maximising efficiency. Today's sophisticated
salesman should plan every call and every interview down to the last
detail including the anticipation of any objections which may arise.
This is a very complex subject a-id cannot adequately be covered here.
However, an attempt has been made to highlight some of the
major areas which are of prime importance to a sales force of the
7019. This is split into two parts.
A) Management ResDonsibilitv which highlights the areas of
direct concern to Sales and Marketing Managers.
B) Salesman's Responsibility which shows some of the points
a trained salesman should be actively considering.
A. Management Responsibility
i) Sales Force Structure
a) Correct No. of salesmen to ensure maximum coverage
at optimum Cost.
b) Correct allocation oi territories.
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c) Best men on highest potential areas.
d) Area Managers - are they deployed effectively?
Are they leading their .eams towards increased
sales or being used simply as administrators?
e) Key A/c Salesmen - does the market have Specialists
to handle its major accounts?
ii) Target Setting
Each account handled bv the salesman should have a target, both
in ter=s of volume sales and also secondary targets which are
concerned with the siting of the product, number of facings, training
of store assistants, etc. .
iii) Key Accounts
These should be isolated aad be handled by a Specialist Salesman
since the selling techniques are generally different. In Key Account
planning one oiten-has to take into account the problems of selling
to a buying committee rather than an individual.
iv) Training Programme
Is every salesman trained in Sales/Merchandising techniques
Is his Product and Company knowledge 100%? Who trains him?
Himself - his Area Manager - his S/Manager? "The Company" -
how often - with what objectives'
v) Development of Men
Vfl--o is to fill tomorrows's needs ? Do the know their future - are
they being groomed? How do you train them?
vi) Motivation
Different things motivate different people. Salesmen are individuals
and by the very nature of their job are more influenced by incentives
and direct motivation than other professions. This is probably due to
the fact that they are working in an area usually geographically removed
from the Head Office team. They are free to start and finish at will
to a large degree and are in effect "lone wolves" and need to be
assured that they are a vital part of the team.
vii) Distribution
Management should continually review channels of distribution
many marks ts have experienced the change from traditional tobacconists
to supermarkets or even vending machines Changes should be anti-
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c.:Pated and evaluated and ;n some cases we should assist in speeding
up progress in -.-'-;s direction if it is to our advantage.
viii) Trade Education
Much can be a by Trade Conferences and Seminars. These
need to educate t-he trade in all pertinent aspects of tobacco business
environment in which the market operates - for example. subjects
such as change -'- di patterns - stock and credit control
systems - effec:ive overall store merchandising as well as product
knowledge of our brands.
B. Salesman's Resoonsibilities
i) Pre aoproac-_
Th@ is carried out by the salesman nor really at home. and covers
planning the interview in detail from the opening statement through
to its satisfacto-r-. conclusion. Full weigh is given to the personality
of the buyer and @Ii3 responsibility in decision making.
ii) Journey Plannmq
With today's ?arking problems, specialised buying days, distances
between major buying points, etc. , each day and each month's journey
needs to be planned in detail. It is also important that accounts know
exactly when they can expect a recall from the salesman.
iii) Utilisation of Time
The total salesmiam's day needs to be planned so that the bulk
of his time is szent on attempting to realist the bulk of the potential
business. One f nds
- In many circumstances a great deal of a salesman's
time is spent on -wnimportant details and too little on "face to face"
selling.
iv) Stock Control
Each sale sr.-. an should aim to introduce a stock control level for
each of his customers. If this can be achieved, then the normal order
is taken automatically with the dealer's agreement, thus saving time.
v) Comnany Irnage
The salesman should be quite clear in his mind the image the
Company wishes :0 promote, at all times realising he is not simply
selling a brand of cigarettes but he is the representative of his Company
in that Store.
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vi) Sales Secuence
Each selling point made should be made in a logical sequence, leading
up to the close of the sale. Confirmation is required from the buyer, and
at the end of each major point. that he is clear and in agreement with
the point made. Sales presenters or visual aids should always work
through a logical sequence, culminating in an order or an agreement to
the objective.
vii) Answeriniz Objections
The major objections from any tobacco buyer can be anticipated in
advance and convincing answers to these objections formulated. One
of the easiest ways to close a sale is by a convincing answer to any
objection.
viii) Closing the Order
The close of the sale should be planned in detail, with alternative
closes should the first fail to product the required results. Many sales-
men fear the close. Training can increase confidence.
ix) Objective of Call
Each call should have a clear objective even if this is not an immed-
iate order in the book.
x) Next Call
Whatever the tone of the in.,erview, the door should always be left
open for the next call.
xi) Record Cards
The Record Card is one of the most invaluable pieces of equipment
for a salesman. Used correctly the buyer can be shown exactly how his
Sales are progressing in relation to the total market.
xii) Sales Tools
These are many and varied and range from complete campaigns at
one end of the scale down to the correct use of a pencil to pin-point
attention on an important point or figure. Salesman should be aware
how to make these tools work to maximum effect.
xiii) In Store Activity
A salesman should be aware of all activity of his customers and keep C)
Management advised of any important developments. These should
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include:
New Branch openings
Competitive activity
Mergers iTake-overs
Credit Risks
Interest-Mg Promotion3
New forms of trading (Cash and Carry etc.
5. Merchandising, Research
Although it is known that thert has been, and is much ad hoc
research into merchandising problems, comparatively little is reported
in the professional and trade journals about the subject. Consequently,
there have been few attempts to svstematise research findings and to
draw general conclusions from them.
However, as a branch of marketing research the same kinds of
consideration as to problem defini:ions, types of techniques and methods,
the stages oi the operation at whic'-- the studies should be carried out,
are as relevant to merchandising as to the problems in other branches
of Marketing.
Research into merchandising -.Droblems may be carried out at
three points in time.
O Prior to the operation fPre-testiniz)
In order to find out how to do -.:, whether it will produce the desired
results and to provide base figures against which to measure the degree
of success or failure.
ii) During the operation
To find out how well it is working; whether changes can be made
to improve it or whether it should be stopped in order to avoid waste
of further resources.
iii) After the overation
In order to find out whether it has in fact succeeded and to 'What
extent or the reasons for its non-sv.ccess.
The methods may be qualitative (group discussions, unstructured or
semi-structured interviews among potential buyers or users or members
of the trade) or quantitative (sizeable representative samples of pot- C1*1
ential buyers or ol' outlets).
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Examples of the kinds of information which may be obtained from
these -nethods at each stage of the merchandising opt -a c- on are as
follows: -
P-e-te3tinz
a) Attitudes of ouyers (and retailers) towards the prizes ol-E-ered.
b) Preference -:or one type of promotion against another :,yrpe.
c) The extent to which the communication describing the -promotion
is understood (corripetitior. rules are often cr;ticised --'Or their
complexity ard obscurity)
d) The value. utility or desirability of the prize in relation to the
perceived chances of winning
e) The congruity of the promotional proposition with the brand
proposition o r image.
f) The likely level of "take-up".
Research after the out ration
Measurements of the success will usuallv be an extension of those
used pre and during the merchandising activities. They will often be
employed in the context of a "test market" operation and this may vary
in size from a 9-.ngle outlet to a large geographical region. In addition
to comparing post-activity results with pre- or during acti-,rity results.
it will often be desirable or essential to use control groups of outlets
or customers which have been carefully matched against those in the
experimental groups.
Whatever the nature of the problem it is essential that achievement
targets should be carefully and precisely set if -meaningful results are to
be obtained.
Examples of the parameters against which numerical values must
be placed in order to derive targets are:
Awareness
Trial
Brand usage/purchase/re-purchase
Believability
Comprehension
Interest
Attitudes
Over-the-counter sales.
Because of the lack of generalised data on the subject and the
creative element of the promotion and competition aspects of the subject,
merchandising research calls for imaginative thinking. innovation and 4::-
flexibility of approach. A "desire to experiment" is just as important and C@
perhaps even more important in this field of marketing activity as in others.
-4
BATCo document for Province of British Columbia 14 April 1999

- xvii
Conclusions
It is appreciated that many Companies are already involved in
merchandising activities, some to a sophisticated level, other to a much
lesser extent. However, the foregoing may give leads to merchandising
opportunities which have hitherto not been exploited to the full.
Merchandising can be used to good effect in the developing market
as well as in the more sophisticated areas - only the techniques and
application vary - the basic principles still apply.
It can be readily seen that even if promotions are banned completely.
there is still a wide area of activity which can be productive providing
we are utilising our resources in this direction to the full. Although
one may argue on the merits or demerits of any form of consumer incen-
tive or promotion, it will be generally accepted that if the goods are in
the right place at the right time in the right quantity and that the trade
has 100% Confidence in us we shall be in a very healthy position with
which to fight any competition and withstand the worst effects of any
Government restriction.
C:1
C"
N:
BATCo document for Province of British Columbia 14 April 1999

- xviii -
PART II
Likelv Restrictions on -Merchandising
Of the five basic rnerchandising activities which we have discussed
in Part I, we feel it most unlikely that any restrictions will affect to
any great extent the following: -
In-store product siting/promotion
Planned organised selling
Merchandising research
We will, therefore, discuss the possible implication of any restric-
tio n s on: -
In-store display
Sales Promotion
in-Store Di
It is possible that, in due course, displays featuring an advertising
theme or supporting a promotion will be subject to restrictions.
However, it is extremely unlikely that simple functional material
such as dispensers and kiosks will be affected. For example, simple
signs which show a brand name or a price, if they are usee to identify
the location of the product in the store, can be effective and should
survive any restrictions since they are part of the average retailer dis-
play equipment.
Sales Promotion
Of all the merchandising activities discussed, Sales Promotion is
the most likely activity to come under the spotlight and be subject to
re strictions.
i) Incentive Promotions
This range of promotions offers a reward to the consumer directly
related to the purchase of cigarettes. Therefore, the anti-smoking lobby
will argue that incentive promotions give direct encouragement to the
consumers to smoke.
The types of incentive promotion most likely to be affected by res-
trictions are those of a permanent nature such as coupons.
Unless there is a general ban the least likely type of promotion to be X@-
restricted is the small localised promotion. This type of promotion.
tailor-made to a local situation, can be very effective.
X_
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- Xix -
If a total ban is known to be imminent the use of incentive promotions
prior to the ban becoming effective must be considered. As a general
rule where the Company holds a major share of the market it is probably
unwise to embark on a heavyweight promotional programme. However,
if the Company has a very low brand share, consideration should be given
to mounting a heavyweight programme in order to take advantage of this
marketing tool whilst the opportunity exists.
ii) Non-Incentive Promotion
Since this range of activities covers such a wide field from multi-
packs to sponsorships, it is not possible to anticipate the effect of any
likely restr.ctions in this area. Any problems arising from restrictions
Must be dealt with on an ad hoc basis.
Jt:*
BATCo document for Province of British Columbia 14 April 1999