CASE STUDY: The Merchandise Mart

For the first time in one of my case studies, I am going to name the business that I will be discussing and how they can make MORE money if they wanted to.  The reason I am naming them is because that this company is a fairly large company, and I am sure they make a decent income already.  However, having visited this company, I can honestly say that they are missing the potential of increasing their profits by  approximately $1 million a year, if not more.

The company in question…

TIVOLI WORLD in Benalmadena, Spain (near Malaga)

A Quickie Description: As you can see by the picture above, Tivoli world is a theme-park type business.  To be more specific, this place would be a glorified Fair (in the American sense of the word) where customers pay a small entrance fee.(approximately 7 Euros / $10 USD), and then pay a “Per Ride” fee for individual tickets, or buy a bracelet that gives them “Unlimited Rides.”  Rides at this park are your basic carousels, ferris wheels, kiddie rides, and even a Dinosaur Themed Castle.  They have bumper cars and bumper boats, race cars for big kids and tots, and your typical unhealthy food.

PROS: There are many things this company is doing right.  For one, they offer a bonus to their patrons for buying park entrance (at least during their slower seasons).  Included with the 7 Euro ticket price, patrons can get a free hot dog and coke, which is an added draw during slow times.  Also, they have a lot of free activities going on in the park meant to entertain the patrons during downtime, like the Spanish Dancers from local dance schools.

Not only does allowing the Spanish Dancers to perform guarantee free entertainment for the majority of the attraction’s visitors, but the parents that wish to see their kids perform must also pay the entrance fee, and the dancers must pay for their own rides.  It’s a great way to generate extra income without actually “coming out of pocket.”

Finally, the park is smart about business days.  They are open every day during the summer, when the tourist season is in full swing, but during the winter, they only open on the weekends, and those weeks in which they know the kids are out of school.  Obviously, this attraction recognizes that their main demographic – kids – have other commitments during the years, and they plan accordingly.

CONS: While there are many pros to the way this business runs, there are just as many cons, if not more.  To name a few, the majority of the attractions are at the back of the park, which means patrons must walk about a quarter of a mile up hill to get to the first level of rides.  They have a train that could take patrons up the hill, but they either charge for the ride, or they only run the train once or twice an hour.

Second, the park allows patrons to enter at 11AM, but then does not open any rides or restaurants until 1PM.  That is two hours of lost income where patrons would be spending their money, if only they had something to spend it on.  While this may seem minor, take the fact that you have a captive audience of at least 1,000 people per day who are wondering around doing nothing for two hours.  With the average meal around $10 per person, they are losing a potential of $10,000 per day during that downtime.  MASSIVE Mistake!

Finally, the park has plenty of buildings for shops, but they all remain closed during downtime.  The one shop that they do open is not on the park’s main thoroughfare, but instead, out of the way.  The average shopper has to know it’s there, or the shop makes no sales.  Thus, instead of making their own sales, they allow average business owners to come in and set up tables BEFORE you hit the first level of rides, which gives the park a “Flea Market” feel.  These business owners sell things like pancake mix and light bulbs, or summer dresses (during the winter).  Not a single one of them sells Season Appropriate gear or items that a Patron might need during their visit THAT DAY.  To fix that, the park could let these business owners rent out the space, and then provide a list of things they KNOW their patrons ask for during visits.

Which brings me to the lesson of the day…

This business has no Merchandise Mart (ie, any type of shop or market that sells the park's promotional merchandise).

CREATE MERCHANDISE!!!

In every business, no matter how big or small, that business has a chance to make additional sales outside of their normal inventory by creating merchandise.  Tivoli World does NOT have merchandise for sale that advertises their park.  That is a HUGE loss of potential income every single day, especially for tourist-parents like me who are surprised when the weather takes a turn for the worse, and there are no children’s jackets to buy “spur of the moment.”

To make my point…when I was a mere office manager at a structural steel company, we had an amazing vendor that went above and beyond the call of most businesses nowadays.  Not only did they send in a travelling salesman a couple times a month, but they had the BEST catchphrase and t-shirts.  They were a company that sold gas for welders in those scuba-diving tanks, and their catch phrase was “Got Gas?”  On their shirts, they had a cartoon man holding those two scuba-diving tanks, and the name of their company.  And as soon as I saw that shirt, I WANTED IT!  I asked if he sold them, but the vendor merely gave it to me for free – along with several other people in our office.  While funny or clever t-shirts are a great way to get people to advertise for you (after all, we constantly wore those shirts around town), we would have bought the t-shirts.  That vendor lost a potential $100 in t-shirt sales to our office alone.  Now multiply that by the countless offices that travelling salesman visited.

The Key is to make your merchandise reflect your business, but ALSO be funny or attractive – something that people WANT to own.

The Point

At this point, you should be thinking about merchandising for your business.  Merchandising is really nothing more than “Promotional Products for Sale.”  They advertise your business, while also providing a customer with something they might like or need.  So, if you’re not thinking merchandising is for your business, or you think it’s too “expensive”, think again.  Seriously.  Think about how much money Star Wars would have lost if they skipped merchandising…or if Starbucks didn’t sell Starbucks mugs.

And if that doesn’t sell you, think about me, toting two kids around Tivoli World in giant adult-sized sweaters because Tivoli World didn’t sell kid-sized clothes for cold days…only adult clothing.

Merchandising on a Dime

Here are some ways to create business merchandise on a dime:

1. IPrint.com:  I like IPrint.com because you can upload any jpegs you have to this site and instantly create merchandise exactly as you want.  This includes mugs, pens, magnets, bumper stickers, golf balls, watches, etc.  You can buy them one at a time, and then order more as people order them.  Simply order ONE as your display, and then let your customers know you have these items for sale.  This will saves you tons of money on carrying an inventory, shipping, and even storage.
2. CafePress.com:  CafePress is a great place to get custom t-shirts.  You simply upload your design, and then CafePress can do the selling for you (making you 10%), or you can create a CafePress “Shop” for free and promote your own shirts.  The cost was – last time I checked – $5 for the shirt, and you can charge any price you want.
3. Local Promotional Vendors:  If you don’t like either of these sites, or you wish to spend a whole lot LESS on your “Per Item” merchandise, call up a merchandising company in your area and ask them for a catalog.  Or, you can look online for websites that offer promotional products.
4. Office Supply Store:  Believe it or not, your local Office Depot now offers customized Promotional Products for a price.  And if they are doing it, the other office stores usually fall in line as well.  While Office Depot would be my LAST choice for buying promotional products (because they are expensive), it is a reputable company that you know won’t cheat you, and will deliver when they say they will.

So there you go.  Four easy ways to create merchandising.  What do you really have to lose by trying?  A few bucks for buying the Display?

On the other hand, think about the money you could gain.  Merchandise advertises your business, increases your bottom line, brands your company, and gives your customers something that will remind them about your business every time they see it.  The Pros definitely outweigh the cons.