Monday, December 21, 2009

Visual Equity

Professor Pierre Chandon of INSEAD writes that unless a brand has the immediate eye-catching recognition of a Coca-Cola, "it's important to be visible on the shelves."

One item facing outward on the shelf (with extra stock lined up behind it) is a single facing. Two identical items displayed next to each other = two facings. A higher number of facings means more visual equity, leading to an increase in the product being noticed, and a higher likelihood that it will be purchased.

As basic as this sounds, it's even more challenging today, when retailers like Walmart are trying to lower inventory costs by stocking only the most popular items instead of every variety of every brand in every category. As a result, a very popular product might get more facings but less-popular items would get fewer facings or even be deleted from the merchandise mix.

According to Prof. Chandon, doubling shelf facings increases the percentage of people who notice the product by about 28 percent and increases the possibility that the product will be put into the shopping cart by about 10 percent. More facings will have an even more dramatic effect on purchases of low-market-share brands.

Slotting fees are one way to get more facings, but such fees (paid to retailers to get a product into a prime shelf location) are controversial. The ideal situation, of course, is for customers to be so eager for your product that retailers want to give it a prime position, without any additional payment for the added visual equity.

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