What is Planogram? Definition of Planogram, Planogram Meaning and Concept

The planogram is an important tool in the field of marketing. Its main function is to give rise to graphic representations of product distribution in certain commercial facilities.


This graphic allows companies to design their exhibitions of goods for sale in order to give said distributions a more attractive character from the point of view of the potential public and, in this way, increase their impact in terms of message arrival.


Simultaneously, the purpose of this type of commercial and advertising actions is the final increase in the level of sales and profits of the companies that launch them.


The preparation of a planogram can be applied to large surfaces, larger or smaller lines of shelves, displays and other surfaces that can be used in companies within graphic advertising campaigns, product design or in the firm's own daily activity.


Within marketing studies, the creation of planograms has established itself as an important tool when it comes to implementing a good marketing mix, especially in marketing strategies focused on sectors such as commercial, food, etc.


On the other hand, the rapid advance in recent years of design software and programs applied to companies have favored the proliferation of specific programs for this task, making it easier for companies to use and improve them.


Layout of a planogram


A good marketing planogram should not only show the physical and visual aspects of the surface to which it is applied. It is also necessary that it reflects important data such as the number of assets it contains, in detail, along with exhaustive descriptions of their distributions, exact measurements and location.


With the aforementioned evolution of technological tools, new possibilities have been accessed, especially towards 3D images that facilitate the complex and more elaborate design of displays and surfaces.


Characteristics of a planogram

Characteristics of a planogram include:

  • Their design often responds to the need to regroup the items on display according to their brand, nature, launch date or exit priority for the company.
  • It must allow the establishment to efficiently manage its space, taking into account its corporate image and the design of its furniture. At the same time, your application must be an advantage for customers, so as to improve their experience in the consumption or purchase of the particular good or service.
  • It must be manageable in a simple way, adapting its use to the frequent changes and renewals of the product range.
  • It is especially important when providing information to the company regarding the status of the stock of its products and its easy access.

 

Tips for creating planograms that improve store performance

To create and implement planograms with fruitful results and avoid some mistakes that are often made along the way, we offer you some interesting tips.

Study your customers.

Today's shoppers want a product they can touch, feel and interact with. For some stores, the correct technique is less merchandise on display with more interaction.

Making a planogram involves finding a balance between logical organization and consumer psychology , in order to increase sales and customer satisfaction.

So it makes sense for products in the same category to be grouped together, but you also need to take advantage of shopper behavior to expose them to new or highly profitable products and increase sales through the use of cross-selling or impulse products.

For example, in a supermarket, products similar to bread are placed in the same aisle but, often, products that are usually consumed at the same time , such as butter or jam, are also placed, thus preventing the buyer from forgetting to buy them.

Products placed at eye level sell better than those on the lower shelves, however, we must not forget that the lower shelves are at the height of children's eyes, therefore it will be a good place for the range of products focused on them.

As you can see, it is necessary to study the customers in the store to predict the areas with the highest traffic, where they stop, how they circulate through the store and where they spend the most time.

Using this data to decide how to strategically place merchandise means avoiding missteps and undermining sales.

Analyzing the thought processes that a customer follows when buying from your business is the best way to guarantee their satisfaction.

If you don't understand their expectations, how are you going to meet their needs?

This understanding will help you develop planograms that better reach buyers and avoid driving strategies based on assumptions.

Make sure you have the correct assortment.

Having the correct variety of products can be a difficult task, but it is essential to avoid a stock that does not sell as expected.

The most attractive and profitable products should be optimally positioned, with sufficient space allocation.

A customer-centric approach will help you develop strategies that better meet their needs, such as having product groups that make sense to the consumer, rather than just catering to the margin or brand.

An effective planogram has a good variety of products, a friendly design and attractive packaging , but also good signage, marketing messages and the necessary elements so that the customer can touch, try and feel the product.

Contact providers.

Retailers need suppliers and suppliers need retailers.

Without communication and participation from both parties, it will be difficult to plan a strategy that corresponds to the buyer's expectations.

Integrate your marketing strategies into the planogram.

Make sure your merchandising principles are correct to ensure products are placed in the right areas.

For example, including a minimum amount on display for the fastest moving products, placing higher margin products at eye level, or positioning store brands next to best sellers.

It's about placing products on display in a visually appealing, logical, and cost-effective way.

The marketing strategy determines the distribution of space.

If you want to increase your gross profit, it will make sense to place higher margin products at eye level and give them extra space or place them next to the market leading brand to encourage impulse buying, offering the consumer an alternative to the leader.

If you're looking to attract more premium customers, it makes sense to choose a range of unique quality products for shoppers who like something different.

If you want to create an image of value, the price range and the value that your products bring to the market is key, so the best space should be covered by very specific products.

If you're looking to maximize your rate of sales , you could allocate more space to the fastest moving referrals and reserve enough space for promotional products that generate more purchases.

As you can see, the objectives can be different and, depending on them, the strategies change. In any case, a balanced and customer-centric approach always works best for all parties.

Cross-selling and up-selling.

Manufacturers spend a great deal of time, research and money on branding and packaging, in order for the consumer to identify with the brands they know, generating the maximum possible impact.

These types of products act like magnets and you should use them to attract consumers and place other products that fit your planogram strategy next to them, to generate more impulse sales.

Create meaningful reports.

The planogram is not just a pretty picture but a strategic tool. Therefore, it is necessary to analyze the space before, during and after the process.

First you will have to understand what space and what type of accessories you have, this will determine the maximum number of references that you can show.

The more space, the product range can increase, which can satisfy more consumers, but too much product range can also lead to confusion and paralysis when choosing, so a balanced approach of premium brand, mid-range and value brand, might be more appropriate.

You'll need to report how the space is used before optimization to have a baseline.

When implementing the new planogram, the impact of the changes will need to be monitored.

Once implemented, you will have to reinforce the correct measures, correct those that fail and attend to the opportunities that you have detected.

Commit to the process.

As we have seen, space optimization is a process, not a task that begins and ends.

Different events can change your planogram, as well as new products or those that are discontinued or decided to withdraw.

Therefore, to get the most out of it and learn to interpret your space in relation to your clients, you have to be aware that it is a job that never ends, although generally, you will only make minor adjustments during the year, you will have to analyze the data of sales to confirm that the planogram continues to meet the buyer's needs. 

In any case, the results of implementing planograms successfully are worth the resources invested.


Planogram examples.

The best way to understand a planogram is to look at different examples to get an idea of ​​how they work.

Start with something simple , think about the main objective you want to achieve, collect the exact dimensions of the space and the products, define the placement strategy and carry out the design and implementation at the point of sale. Finally, it analyzes the results and makes the necessary corrections.

Why is the planogram important?

You have to agree with us on the following: a document that offers guidelines and guides the exhibition makes a big difference to the success of your brand.

The planogram is the result of a complete analysis of the situation of the categories and is made by developing an ad hoc algorithm for each retailer that allows weighing sales, rotation and profitability at the SKU level, also considering the consumer's purchase decision tree, their tastes and preferences, their ethnographic characteristics, the commercial and operational strategies of the retailers, the physical restrictions, infrastructure and the number of references that make up the assortment. The resulting or output is a downloadable, printable and easy-to-read report that indicates at the SKU level basic information such as position, quantity, supplier, product brand and reference codes (EAN), among others, intended to implement,

The planogram facilitates the realization of the purchase as a result of the proper organization of the products, and incidentally, increases the level of customer satisfaction, as well as improving the visual appeal of the shelves and facilitating the replenishment of the products. It also helps determine the sales potential of each exhibitor space.

For the brand, the planogram is a performance facilitator, since it has a direct impact on the purchase impulse. That's what Iderlam Nascimento, Agile Promoter Success Consultant, suggests. After ten years of dedication to trade marketing agency strategies, he suggests that the planogram should be a reflection of how the company wants to display its product in the POS:

It means that your brand follows standards. And it is those standards that guide the shopper. The planogram directly impacts the visual part of the purchase impulse by the shopper.

Where should your brand be at the point of sale? Is the transmission of the strategy to your team efficient? A well-designed planogram can answer all of these questions.

Planogram: What is it and what benefits do you get by implementing it

The basic definition states that the Planogram is a visual representation of product placement within a store to maximize sales and minimize wasted space. It is created by a store manager or a member of the advertising/marketing/sales team.

Prior to the creation of a planogram, a thorough investigation of the buyer should be done. CPG companies take care of categorizing their products and analyzing current market trends. Understanding how shoppers shop in that category is vital to creating an effective planogram.

Marketing or market research teams must be attentive to every detail. A small mishap can incur substantial losses.

Take the example of "Project Impact," a 2009 Walmart project. The main objective of the project was to increase the space in the superstores and improve the overall shopping experience. To achieve this goal, Walmart recalled 10% of SKUs, approximately 15,000 SKUs, from select superstores in prime locations.

Products such as jams and jellies, which they discovered were the reason for the clutter in the stores, were part of this elimination.

As the Walmart research team predicted, the change positively affected the experience for shoppers. The management was happy with the change, and the project was considered a success.

However, they paid no attention to the slow decline in sales. A decision that soon turned into a disaster. Over the next two years, sales dropped sharply at these superstores.

By the time Walmart management realized their blunder, the losses had piled up to $2 billion. A huge loss compared to its competitors, which brought "Project Impact" to an end.

Upon investigation, they found that Walmart's research team neglected the exclusive nature of these products. Yes, it was just Jam and Jelly, but many buyers came to these stores to buy them. By removing these products, shoppers' frustration levels increased as they had to go to other stores just to buy jelly.

So instead of traveling for a product, they started shopping at Walmart's competitor supermarkets. This shopper behavior resulted in poor sales of other SKUs and an overall loss for the store.

Benefits of implementing a planogram

The Cambridge dictionary defines 'Compliance' as: "the act of obeying an order, rule or request".

The term "Planogram Compliance" refers to the store's execution of pre-defined store/product planogram layouts. The main objective is to ensure that each retail store is optimized to sell the products offered.

Retailers and shoppers can easily find products when stores comply with the plan.

With that said, let's look at the 3 key benefits of planogram compliance:

Avoid out of stock:

Inventory depletion, commonly known as Out of Stock (OOS), is caused by inconsistent replenishment of shelves.

Research from America's grocery manufacturers attributes 70-90% of stockouts to poor shelf replenishment practices.

An empty shelf does not necessarily mean a lack of inventory in the store. To negate this situation, retail operations must include automated software that detects non-compliance with planograms.

This change allows retailers to guide their store and field representatives to the appropriate shelves.

Revenue increase:

50% of the planogram design belongs to successful brands/SKUs and the remaining space to new or low margin products. Most of the time, compliant stores make it easy for auditors to assess the performance of a brand/SKU.

After analyzing the impact of product placement and shelf optimization on shopper behavior, merchandise owners can deduce strategies to capitalize on sales opportunities.

Maximize space:

Regardless of the retail space and corresponding rental costs, maximizing the use of space leads to an efficient and profitable business. Planograms help merchandisers stay organized and understand the purpose of the store space. Additionally, planograms support effective inventory management.

How to use a planogram in your store

A planogram will help you plan your space usage and collect the data you need to make smarter visual merchandising decisions that drive sales in your store.

With the help of planograms, you will be able to determine precisely when and where to place your products for the best financial results.

In addition, planograms make it easy to market products in the right place at the right time, giving the customer a better shopping experience and leading to increased upsells.

Effective use of physical space in a store is critical to the success of any retailer. It is clear that space costs money and products take up space.

However, planning how to use retail space is not always easy.

For this reason, a tool like the planogram, which can help improve sales, should be part of the strategic management of your business.

Spatial management has changed a lot in the last 20 years as a result of technological advances that lead to an increase in data sources. Still, there are many things that remain the same in space management.

More than 60% of the customer's purchasing decisions occur in the store, which shows that the visibility, presentation and rotation of products is vital to encourage sales, and all these decisions are made through a planogram.

An effective planogram generates an impact on the customer that leads him to buy. Its main objective is to increase sales by determining the optimal location for each product.

How to use a planogram in your store

The complexity of the planogram can vary depending on the size of the store and the needs of the retailer.

While extremely detailed planograms can be useful for some types of stores, for smaller stores, using the strategies behind the planogram to plan store layout and product display may be sufficient.

One way to start using a planogram is through a planogram software, you can find a large number of both free and paid options.

Another way would be the old school style, drawing the space to scale with pencil and paper, using templates, or creating one in a drawing tool. Smartdraw.com has several examples that you can edit and use as a starting point for your own planogram.

Benefits of a planogram.

Using planograms offers many benefits when planning your store layout. Let's see some:

Using the planogram in your visual planning process allows you to collect data on how certain locations influence product sales.

Product placement affects buying behavior and therefore you need to figure out which strategies increase sales opportunities.

If you can compare the sales histories with the planograms used, you will know which items sold the most and where they were located, as well as which were the slowest moving merchandise. Placing them together will increase the sale of stock that is becoming obsolete.

Sales history is a convenient source of information, however, it ignores the fact that the store's performance last year may not be equivalent to this year's.

For this reason, you can opt for forecast data, instead of historical data, which takes into account the expected future behavior, based on different causes such as seasonality, price sensitivity or certain events.

You will also identify the highest converting locations in your store to place the products you want to prioritize.

The planogram allows at the same time, the strategic placement of products from the point of view of cross-selling, by placing complementary products near the main one or by placing basic products at the back of the store to make the buyer go through the entire space and increase impulse sales. With a planogram, it is easier to define these routes.

How to create a retail planogram

A planogram is a visual merchandising tool, a visual representation of the product's location on the shelf or within the store, to maximize sales and minimize wasted space.

Manufacturers also use it to suggest optimal display of their products in stores.

In short, they are detailed drawings of the store design with special attention to product placement.

They are especially useful for large retailers but also for stores that offer many products and categories, such as grocery stores, pharmacies, hardware stores or fashion and accessories stores.

For stores with fewer products, a planogram is also useful, although it will be less complex.

The main objective of the planogram is to convey your visual merchandising strategy to the customer, by having the right product, in the right quantity and in the right location, where customers can easily find it, contributing to the shopping experience that drives sales growth. sales.

In addition, it helps to detect unproductive products that take up space but do not generate sales.

Analysis of the planogram facilitates assortment decision making and enables quick and effective changes.

It even allows you to take into account different demographic data, consumption habits and purchase cycles, to adapt to each situation.

By analyzing past and current sales patterns, we can figure out where a product should fit within the display, determine the correct height on the shelf, or which products should surround it.

Planograms act as maps and action plans that can help you grow your business by:

1. Attract the consumer's attention through an attractive design.

2. Create incentives for higher margin items.

3. Emphasize best sellers by placement.

4. Allow successes and failures to be tracked to implement improvements.

5. Monitor inventory and reduce excess or unavailable products.

Benefits of a planogram

Optimize space.

Retail space costs money , so optimizing the use of that space will help you run your business efficiently and profitably.

The planogram helps you keep the space organized and assign a purpose to each area of ​​the store.

A good retailer knows that one of the keys to increasing sales is through proper visual merchandising, and following the principles of the planogram is one of the best ways to present the product to the customer.

But it's not just about increasing sales, there are also other practical reasons why retailers turn to planograms.

Reduces out of stock.

Planograms allow for more effective inventory management . Greater organization will help you avoid out-of-stocks and keep inventory under control, as there is a place for everything and everything should be in its place, making ordering easier and replenishing easier.

In addition, it is a good antidote against theft because it is easier to know when you have lost something.

When stocks run out, the consumer has the feeling that the store is not well organized and unable to meet their needs, which, in some cases, can lead them into the arms of a competitor.

Understand space performance.

It is important to understand the performance of a product based on the space it occupies when deciding where to assign it.

How to create a retail planogram.

When creating a planogram, the best practices could be summarized as follows:

keep it simple

Large retailers often hire teams of visual merchandising specialists to research the best ways to promote sales through product placement, d├ęcor, and displays. They may even have a full-time planogrammer.

They also generally opt for specific business software to create planograms.

Smaller retailers will have to forego all of this and create their own templates.

If it is a very complicated process, it will be very difficult for you to repeat it from time to time because your time is limited and valuable.

Measure your plan.

Track monthly sales reports related to the planogram.

Train your employees.

Spend some time training your employees on how to use a planogram so they can effectively follow your guidelines.

How to Make a Grocery Store Planogram

The organization and arrangement at a point of sale, in this case in a grocery store, is essential to promote sales and provide customers with a positive experience that contributes to their loyalty. One of the strategies to achieve this is to have a planogram, but before we talk about tips, let's start by explaining what a planogram is.

Planogram Definition

A planogram, as its name indicates, is a plan that helps you plan the space you have for your business, the furniture and displays for the products, as well as the correct arrangement of the products to boost sales.

In the case of a retailer, such as someone who has a small store on the corner, the correct use of space translates into profits. In addition, that the client prefers to go to your business before going elsewhere when he needs something. That is why a planogram is an essential part of business strategy.

The planogram is a diagram that, in a visual way, can help you determine the best location for the shelves and the products that you should place on them. With this, you minimize wasted space and that the customer can find and choose the products appropriately.

In addition, in this arrangement of products, it is possible and convenient to promote those items with a higher profit margin. It also helps to emphasize the products that are the best sellers/wanted by placing them on the shelves.

With a planogram you will be able to keep track of the successes and errors in the strategies implemented in the accommodation of space and products. Not to mention that you will be able to determine which products you have in excess in your inventory to give a balance, or those that are no longer available and you need to restock.

How to Make a Grocery Store Planogram

Now that you know what a planogram is, you can start working on the correct use of space as a sales strategy. Here are some tips that may be useful for you to get down to work.

Even if your business does not have a very large space, you have to identify which are the best-selling products and consider assigning them a considerable space that is at the customer's hand and easily accessible.

What products you should place in those spaces, how many products and at what height, are decisions that you must make based on the rotation of the products, that is, how much they sell.

Consider the different products that you offer in your store so that you can accommodate them according to their classification. For example, there is a way to classify them according to the type of sale. Here you will find the hook products that are always sold and you must have (milk, sugar, soft drink or bread). Impulse products that are not necessary, but the customer decides to buy when he sees them (gum or candy). Emergency products (medicines); seasonal and even differentiated products such as extra services offered to customers.

In the same way, they can be classified by product family, that is, products that are related to each other. For example, groceries, cold meats, dairy products and sweets. This is a way of arranging products that encourages impulse buying.

Compare the sales histories with the planograms that you have used to determine the relationship of the products that have sold the most and where they were located.

So, as we mentioned before, some of the advantages of using the planogram is that it facilitates the correct location of the product, both for the one who stocks the shelves and for the customer.

Remember that knowing what a planogram is and how to implement it will allow you to maintain a constant level of inventory and investment in the store.

Planograms: Why are they important to your brand?

Learn why having well-executed planograms is key to the success of your brand, as well as how to plan them correctly, making them a tool to increase your sales.

Why can planograms represent the success of execution at the point of sale? A planogram is an instrument that describes through a diagram the location of the products at the point of sale. It is crucial to ensure the Share of Shelf of your brand since it defines the quantity, number of fronts, height and depth of the product on the shelf.

Shopper Marketing strategies also depend on a well-executed planogram to achieve success, as it is known that more than 70% of purchase decisions are made at the point of sale .

The location is decisive, an example is that sales can increase by 80% by moving a product from the lowest level to the level of sight on the shelf.

What are some essential criteria to define a planogram?

The elements to determine the space that will be attributed to a product on the shelf can be of two types:

Quantitative:

Sales per square meter
Rotation Coefficient
Container Size
Replenishment windows

Qualitative:

Variety vs. Duplicity
Influencing Buyer Behavior
Improve the Shopping Experience
Consumer Reaction

A properly executed planogram according to the planned point of sale strategies has important benefits for the brand such as:

1. Determine the sales potential of each space available for the exhibition

2. Optimize the shopping experience by ensuring visually attractive shelves for customers where they can easily find what they are looking for

3. Accurately control the health of inventories by assigning shelves and fronts based on rotation, reducing stock outages.

4. Ensures product availability by providing field staff with a guide to follow

5. Influence consumer behavior by encouraging incentive or impulse purchases through good strategic planning

Make sure that the planograms of your product are executed correctly and aligned to your Marketing strategy. It is crucial that you can monitor how shoppers actually see your product in the different displays in all your points of sale.

A tool that provides you with real-time evidence with photos and measurement data and planogram validation will help you increase your percentage of sales and gain Share of Shelf from your competitors.

What is a planogram in marketing?

Planogram strategies come into play when retailers organize related products that are within range of one another. In these cases, the planogram design serves as an in-store marketing tool to encourage shoppers to inadvertently purchase multiple related items at once. Product vendors pay close attention to planograms because they know that product placement affects sales.

Function

A planogram is a diagram that shows retailers where to place products on shelves, racks, and other store equipment. According to "Retail Merchandiser" magazine, on average store displays hold shoppers' attention for five to six seconds. A well-executed planogram can be the key to making a sale in those few seconds. For example, if customers shopping for toothpaste see mouthwash next to them, they may remember that they need mouthwash too.

Product placement

Retailers refer to planograms to determine shelf heights and the number of products to be fronted. Shelf heights partly depend on the size of the products, but they also adjust to keep items within reach of shoppers. Retailers call a row of products a front, so three rows of items equals three fronts. The number of fronts is important because the best-selling and most profitable products generally receive the greatest number of fronts. These products are also usually at eye level to make it easier for shoppers.

Product providers

Product vendors use planograms to indicate the amount of space they want retailers to allocate to various brands based on product popularity and sales. Planograms are also made to point out new ideas on how to present the products. These charts also play a role in inventory control because they help retailers determine how much inventory they should have on hand to replenish shelves based on the shelf space provided for each product.

Shopping habits

According to "Retail Merchandiser" magazine, consumers make many of their purchasing decisions while they are shopping, and an effective planogram can influence many of them. For example, a shopper who can't find his or her favorite brand in a store might purchase a similar product that is a better value rather than forgo a purchase, because a good planogram places competing products close to each other in a display of value. Products. Additional sales can be generated with compelling display planograms that move shoppers to make unplanned purchases when they like the way the displayed items look, smell, or function.

Planogram: what you need to know to optimize space

Many of the actions carried out at the point of sale (POS) are established by criteria that have been worked on strategically with the creation of a planogram, this together with reliable information sources, adequate human resources and sufficient technology give as result renewed assortments, attractive and eye-catching for the customer.

What is a planogram?

It is a space management tool that allows us to design, manage and analyze the linear. This scheme used by retailers at points of sale is important to distribute the merchandise on a shelf, taking into account which brands will occupy which space, the height at which they must be, the amount of each one that must be placed. Its elaboration should not be taken lightly and, beyond generating "visually beautiful shelves", profitable and efficient shelves should be generated.

Be careful with the data:

A Planogram Audit exercise conducted by Storecheck in the second quarter of 2015 for two categories of personal hygiene and grocery groceries, found that the level of execution of the planograms was between 86% and 60% respectively, only 26% of stores are at levels of 85% (acceptable range of execution).

How to define the objectives of a planogram

For the elaboration of a scheme like this, two basic criteria must be taken into account so that it can respond to the commercial objectives of retail.

At a quantitative level:

Sales per square meter
Rotation Coefficient
Container Size
Replenishment windows

At a qualitative level:

Variety vs. Duplicity
Influencing Buyer Behavior
Improve the Shopping Experience
Consumer Reaction

It is absolutely key to monitor how the buyer really sees your product in the different exhibitions that take place at the POS. In addition, it is important that evidence is produced in real time, such as the use of photographs, measurement data, and planogram validation. All these points will help you increase the % of sales and gain Share of Shelf from your competition.

Aspects to take into account for the elaboration of a planogram

Several studies have proven that placing products at eye level will result in higher sales volume, so visual communication is vital. Furthermore, it has been shown that if an item is lowered from eye level to the hands, sales will drop by as much as 20% and worse yet, if merchandise is lowered to ground level, then sales will drop by 40%. The most important criteria for drawing up a planogram are:

Convenience and agility for the consumer
visibility
Incentive to purchase
Positive brand image

From these guidelines you will have the inputs to create a planogram according to the objective of your brand.

In short, these are 10 keys to making a planogram.

It is important that you take these 10 points into consideration when preparing your work plan for the point of sale, since it will allow you to achieve the objectives adequately.