Have you ever wondered how a product or service sells to the consumer? Some products are successful and memorable to the consumers while some are not. This is all because of the power of merchandising. To define it in its purest sense, merchandising is the way products are being promoted to the people. A product can be promoted in several ways. Merchandising also deals with product displays, store layouts, and other activities to make buying experience more pleasurable to the consumers.
If you have created a logo, product or anything that could sell to the people, you still need a merchandising agreement. It is a written document that gives you the license for using an intellectual property and trademarked image on products that the merchandise sells. It also outlines the duties and responsibilities of both parties in the agreement.
A merchandising agreement is important to protect you from the legal disputes that may arise. It also covers what you can do and what you get in return. Before writing one, you must search for a sample format. Merchandising agreements are written once and can be used multiple times. You also have to consider consulting an attorney to guide the legal aspects while writing the agreement.
While writing a merchandising agreement, you must follow these steps.
1. Make an Outline
This is a very basic rule to any kind of writing. Make an outline of how you are going to draft the agreement so you would know what to write later on. It might change as you write along the way but at least you would be guided from then on.
2. Write the Introduction.
The introduction includes the identified parties of the agreement, the date the agreement was entered and the date the document was written. Give names to the identified parties as these will be how they are referred throughout the whole argument.
3. Determine the Intellectual Property
After the introduction comes the intellectual property. This should be determined in the contract. Intellectual property includes the trademarks of the product and its registration. Do not go into so much detail while describing the intellectual property. This might put you at risk.
4. Describe the Product
The product being licensed should be described in the agreement. Attach images to give context to the description. This part also tells what the merchandiser can do with the product being licensed. You may provide an exclusivity for the use of the product, or have it used in other ways as well.
5. Put Geographic Boundaries
This part states the locations the product can be distributed through certain channels. State in the agreement if the product can be distributed outside the area of its origin or not. Usually, merchandisers pay more when they propose of distributing the product beyond the geographical boundaries stated in the agreement.
6. State the Granted Rights
Granted rights are the things the merchandisers can do with the agreement. Rights can be exclusive and non-exclusive. A non-exclusive right means the merchandiser can enter into other agreements and make and sell similar products. Sometimes, the rights are granted to alter the design of the intellectual property being licensed in making other products.
7. Determine the Duration of the Contract
One of the most basic parts of a contract is how long it is good for. Some contracts can last up to a year or beyond that. It is up to you on how long you want the contract to be effective for. No matter how long it is, both parties should abide by the rules stated in the agreement.
8. State Payment Agreements
Merchandising involves money. State it properly on when the payment should be given and how much. The common structure follows the percentage of profits on the sales of the licensed merchandise given to the intellectual property owners. Include an audit team to ensure that the payments are correct and just.
9. List Warranties and Assignments
This is the part where the parties assure that they both have the power to enter into the agreement. It also outlines their promises to perform their duties and responsibilities in the contract.
10. Specify Consequences in Case of Contract Breach
Contract breaches happen and it can’t be stopped. State the steps on what needs to be done if the other party breaches the contract. Include the penalties for the breaching party and the compensation for the party being breached. There must also be remedies after the contract is breached and the order that the breaching party should pay for the damages.
Merchandising is indeed helpful in bringing a product to its full potential. It has some advantages and disadvantages. Despite all this, merchandising is still an important tool for products and stores to succeed.
1. Draw Customers in
One part of merchandising is arranging the current lineup of the store to give it a fresher look. It also makes the store more noticeable to the customers. With a new appearance, customers are curious and interested in what the store has to offer. The products are arranged neatly and the staff is accommodating. This aspect of merchandising increases the success rate of the store and its products.
2. More Sales
A store with a well-arranged and diverse set of products increases the sales. It also includes the packaging of the product and its price. It all matters on how the products are merchandised. It boils down to good merchandising and improving the shopping experience of the customers. When customers connect your merchandising with the product you sell, it will affect how frequently they shop at your store.
In merchandising, products have to be arranged and rearranged to give more space and make the store look more attractive. This gives the staff more room to move around and guide the customers to the product they want to buy. It gives an element of flexibility to the staff when the rearrangements happen.
4. Costly Fees
You really have to spend a lot when you want to merchandise a product well. This means you have to allocate money for purchasing new equipment, build new signage and create new products. You have to keep up with the standards and give the customers the best shopping experience. It increases sales and profit, but costs time, money and effort in the long run.
5. More Work
As more customers come into your store, your staff has to work double time to make operations smooth, safe and sound. You need to increase their payroll and hire more staff. The more bodies working in the store, the better. However, it might hurt you financially if the profit does not meet your expectations.
Merchandising is a boost to any product that needs to be known to the world. While it lends to some disadvantages, with proper handling and managing, any store would be able to pull through and fight the stiff competition in their respective markets.