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PLANOGRAM 101

WHAT IS A PLANOGRAM?

A planogram is an illustration or blueprint usually in the form of a photographic quality picture, depicting where products should be placed on fixtures (shelves, pegboards, and palettes, etc.), in a retail store. It shows where the products are placed and how many products wide, high and deep are required.

WHY PLANOGRAM?

The consumer packaged goods market has become a complex and competitive environment. Consumer lifestyles have become increasingly fragmented, media and advertising opportunities have proliferated and retailers have both consolidated and expanded to meet competitive needs. Combined, these trends have created a complicated business and marketing landscape.

As consumers become active in more and more activities, they have less and less time available to shop in stores. Seizing the opportunity to create one-stop shopping environments to facilitate this experience, Retailers reacted by increasing store size to increase product assortments and categories. Super Centers, Mass Merchandisers and larger grocery and drug outlets resulted.

With larger product assortments, additional categories and more space for consumers to navigate, it is vital for retailers and vendors to direct and influence consumers’ purchases. Focused planogramming is the primary vehicle to accomplish this.

PLANOGRAM BENEFITS:

Providing a computer-generated, scaled version of how a section should look:

  • Reduces the time it takes to build the set in-store
  • Improves customer satisfaction by making it easier to shop shelves that are organized and visually appealing
  • Makes it easier for store personal to replenish product by providing a blueprint to follow
  • Enables better management of inventory by allocating shelf space and facings based on movement, which in turn reduces of out-of-stocks
  • Influences customer behavior like trade-up and impulse purchases, which result increased purchases and higher register rings
PLANOGRAM MERCHANDISING PRINCIPLES AND GUIDELINES:

Proper planogram design will influence 5 major in-store shopping decisions:

  1. Planned Category: When a consumer knows they need a product, but has not considered product variation, e.g. bottled water is the requirement, but the size, quantity, and flavor may not be decided until the consumer is in front of the section
  2. Impulse: A consumer does not plan on buying an item, but selects it on impulse after seeing it displayed
  3. Substitution: A consumer intended to purchase Brand A, but smart planogramming directed the consumer to Brand B, which is presented as a better value A properly merchandised planogram can influence trade-up or trade-down purchases.
  4. Triggered: Shoppers on the go often arrive at a store knowing they have to purchase things, they just don’t have a targeted list. A “triggered” purchase occurs when they see an item on the shelf that serves as a reminder.
  5. Incremental: An incremental purchase is one that is made as a result of purchasing another product, e.g. a consumer purchases paint and a the properly arranged planogram reminds them of the need for a brush, tape, and other items necessary to perform the task. Ensuring categories adjacencies through proper planogramming are correct, will lead to larger transactions and happier consumers.
PLANOGRAM DESIGN OBJECTIVES:

When building a planogram it is highly recommended to allocate space based on item performance or unit movement. The cardinal rule of planogramming is to ensure there are enough products on the shelf to meet the consumer’s demand.

Basic Considerations:

Location Where in the store, what adjacencies, secondary placement?
Category Space How much space will be allocated to the category you are planogramming?
Product Space How will product space be allocated: sales, movement, mandates, inventory thresholds etc..?
Layout How will the planogram be organized: price, brand blocks, and manufacturers…?
Signage/POP Would the category or section benefit from signage or point of purchase materials?

What drivers will determine space and assortment? Will they be qualitative or quantitative in nature?

Qualitative Drivers:
Subjective and intangible"
Sales this week were great"

Variety vs. Duplication
Influence Shopper Behavior
Improve the shopping experience
Customer Feedback
Quantitative Drivers:
Can be measured using data/numbers
"Sales are up 22% over last year"

Sales to Space
Inventory turns
Case pack mins/max
Days of supply

Efficient and Effective Product Assortment:

Determine the optimum item assortment while minimizing duplication and maximizing variety.

Efficient = Supply Side

  • Reduce Operating Cost
  • Reduce Inventory
  • Reduce O-O-S (Out Of Stock)
  • Increase Sales and Profits

Effective = Demand Side

  • Increase Margin
  • Optimize Variety
  • Increase Volume and Traffic
  • Improve the shopping experience

A Consumer Decision Tree, showing how consumers logically shop a category should be developed to serve as a blueprint from which your planogram will flow. Does the consumer shop for the brand, segment, size or price first? If you don’t have an existing decision tree, one should be created based on your experience and knowledge of the category.

If you require assistance with this aspect of development, please contact us at info@ezpog.com. Our parent company, SMSB Consulting Group, offers a service that will perform the research necessary to create and effective Consumer Decision Tree.

A consumer decision tree:

  • Aligns you shelf-set with customer needs
  • Servers as the blueprint or map for your planogram
  • Identifies the framework for variety without duplication
Planogram consumer decision tree

Established guidelines can also be used to augment or used in place of a consumer decision tree:

Planogram guidelines

 

PLANOGRAM VERNACULAR:

Section: The entire length of a planogram. Sections can be one side or a portion of an aisle.

Planogram Section

Segment: Vertically divided portions of the POG

Planogram Segment

Fixture: Shelves, pegboards, notch bars, etc on the planogram

Planogram Fixture

Product: A unique item usually represented by a UPC or ID number. Attributes normally include, name, manufacturer, category, height width and depth – see diagram how to measure product.

Planogram Product

Position: A Product once it is place on the shelf

Product Placement: This determines how the product is place on a shelf. For example a 6 pack of cola can sit on a shelf with 3 bottles facing you or two. See diagram below for position examples. Note each example can be rotated ie: front, front 90, and front 180.

Planogram Position

Section: Defines the overall height, width and depth of the gondola that will display your product. The height is measured from the floor to the top of the backboard. The width is from left to right and the depth is measured from front to back. If your section includes a base or kick plate at the bottom, its height will be deducted from the overall height of the section leaving you your merchandisable space.

Shelf: This is your standard open shelf fixture that will hold your product. Measured by height, width and depth. The height or thickness is measured from the bottom of the shelf to the top; typically an inch to an inch and a half. The width is measure from left to right and the depth is from front to back.

Pegboard: An ezPog fixture that is used to hold peggable product. Its measurements include height, width and depth along with the definition of peghole spacing. The height is measured from the bottom of the peggable area to the top of the peggable are. The width, measured from left to right also includes only the peggable area. The depth, typically a half-inch, is the thickness (front to back) of the pegboard. The peghole spacing defines how close pegs can be placed typically the measurement is either a half inch or an inch for both vertical and horizontal spacing.

Pallet: An EZPOG fixture that is most commonly used to merchandise bulk product. Its measurements are much like that of our Shelf with its height or thickness being larger than that of a shelf.