The practice of marketing or displaying products from different categories together in one, with the intention to generate additional revenue, also known as add-on sales, incremental purchase or secondary product placement.
Why do retailers cross merchandise?
A good retailer knows his customers. He also knows that everyone is not loyal to all the products he offers. So, he classifies these products into two types. Type one, products for which consumers have a loyalty to a specific retailer and, almost always, shop at that retailer for these products and type two, those that are not associated with any retailer and are bought at whichever retailer consumers happen to shop when they want to buy the product. Retailers use the concept of cross merchandising to increase sales of the type two product.
How is it done?
Picking a combination is tricky, but a combination that sells takes a lot of observation and research. The subject is ever changing and needs constant restructuring to still be relevant to time.
Here are a few examples of how cross merchandising is carried out in retail stores-
- Showing customers how to use the product- People might not know your product too well, or they probably haven’t even heard of it. It would be easier if you showed them how to use it and let them decide if it’s a yes or a no.
- Associating your merchandise with a memorable experience- You can stimulate favorable responses by associating your products with a positive experience. Offer products that help your customers experience instead of just use! A story or just the display of all the products associated with the experience.
- Saving the shopper time- You are not only saving time, but giving yourself some impulsive buys.
- The unexpected buyer persona cross-merchandising opportunity- Buyer personas are fictional, generalized representations of your ideal customers. The purpose of personas is to create reliable and realistic representations of your key audience segments for reference.
- A combination of field marketing and cross-merchandising.
- Displaying combinations which remind the customer of anything he might have forgotten.