Point of Purchase – Definition

Cite this article as:"Point of Purchase – Definition," in The Business Professor, updated April 11, 2019, last accessed December 4, 2020, https://thebusinessprofessor.com/lesson/point-of-purchase-definition/.


Point of Purchase (POP) Definition

A point of purchase (POP), also known as Point of Sale (POS), is a spot where a sales transaction between a seller and a buyer is finalized. It is a form of checkout mechanism set up by retailers to facilitate calculation of the total amount payable by the customer, creation of invoices and receipts for the customer and specification of available payment options to the customer. A point of purchase can either be an in-store counter or an online checkout facility.

A Little More on What is Point of Purchase (POP)

A point of purchase (POP) is a location where retail customers can checkout products and services. A POP is denominated from the customer’s perspective, rather than from the merchant’s perspective, in which case it is referred to as a point of sale (POS). A point of purchase can be a tangible entity as part of a brick and mortar store, or a virtual entity as part of an online store. However, regardless of its type, a POP involves the generation of an invoice for the customer. This is followed by offering the customer options regarding mode of payment. Once the seller receives payment, he issues a receipt for the same to the customer. Invoices and receipts can be either be handed out in printed form or generated electronically, or both.

What are Point of Sale Systems?

Point of sale or point of purchase systems are checkout instruments that typically consist of integrated hardware and software subsystems, customised to cater to the requirements of specific businesses. Most POS systems are digital in nature, and incorporate numerous devices and peripherals such as customer pole displays, card readers, barcode scanners, QR code scanners (for contactless payments), printers, digital scales, signature capture devices and monitors or touchscreens. Nonetheless, there are businesses, especially small retailers that still prefer to employ traditional off-the-shelf cash registers and calculators, but their numbers are fast declining.

The use of modern point of sale mechanisms is not restricted to retailers alone – several business entities belonging to sectors as diverse as hospitality, accounting, and warehousing all employ POS mechanisms for various functions such as bookkeeping, tracking sales and managing inventory, labor and payroll. POS systems are also being widely used by businesses as effective deterrents against employee fraud.

Attributes of Modern POS systems

Modern point of sale systems have, in several ways, transformed retail checkout mechanisms. Advancements in POS systems have not only enriched the shopping experiences of billions of consumers across the globe, they have also made jobs of cashiers a lot easier. There are certain attributes common to all POS systems, regardless of the nature of application. They are:

POS system structures are flexible and allow programming modulations including integration with numerous third-party software applications.

POS systems are highly interactive and user-friendly.

Most POS systems support remote operatibility.

POS systems are low cost acquisitions and offer cost effective solutions for day-to-day sales activities.

Besides, the usage of cloud-based POS systems in online retail transactions has greatly reduced the upfront costs typically associated with implementing and maintaining conventional POS systems.

Furthermore,  POS systems used in the hospitality and restaurant businesses are typically customer friendly and allow customers to check in and out of rooms or order food with relative ease.

There are also certain subservient advantages of implementing computerised POS systems, such as:

Digital product displays in POP systems attract customer attention, which often leads to additional sales.

The prospect of a hasslefree shopping experience in a retail outlet equipped with a computerised POS system often attracts more customers to the business.

The presence of state of the art POS systems also increases brand value of the business.

References for Point of Purchase

Academic Research on Point of Purchase (POP)

Presenting consumer technology with POP: a rhetorical and ethnographic exploration of point-of-purchase advertising, Cross, G. A. (2009). Journal of Technical Writing and Communication, 39(2), 141-175. The author highlights the importance of POP advertising in influencing in-store purchase decisions and puts forward the following arguments in favor of exploring such a setup: POP advertising pushes sales of technical consumer products, thus driving the economy. It facilitates our understanding of trends that mold technical and business communication. POP is intermedial in nature, mediating between verbal/written communication, physical structures and marketing campaigns. POP displays inherently theatrical as well as local attributes.

Consumers Prefer a PointOfPurchase (POP) Program to a Classroom-Style Program When Learning about Phytochemicals, Holben, D. H., Korhonen, K. G., & Holcomb, J. P. (1999). Journal of the American Dietetic Association, 99(9), A58. Dietetics professionals seeking to educate consumers about the benefits of phytochemicals designed both a POP educational program as well as a typical classroom-style program for their target audiences. This paper analyzes the outcomes of the two programs and concludes that although both programs promoted learning, participants of the POP program were more willing to apply the information that was imparted to them.

A study on the effectiveness of Point of Purchase (POP) advertisements & displays in the new generation supermarkets and the traditional Kirana stores, Kumar, U. R. The emergence and rise in popularity of supermarkets in India saw a teutonic shift of consumers from traditional family-owned kirana stores to such large establishments. The author explains that this shift happened because supermarkets offered consumers a wide variety of household articles and groceries all under the same roof. From the consumer’s perspective, such a setup both saved their time as well as reduced the risks involved. The study samples 500 retail consumers using the Stratified Random Sampling Method. It concludes that compared to traditional Kirana stores, modern supermarkets are much more successful in communicating their offers to consumers through hoardings, pamphlets and texts.

V/chain, consumers encounter pointofpurchase (POP) signage for some products that indicates the store’s lower price relative to that of a competing grocery …, Barone, M. J., Manning, K. C., & Miniard, P. W. (2004). Journal of Marketing, 68, 37-47. POP signage in certain retail stores include price comparisons indicating that prices in such stores are relatively lower than in competing retail stores. Such signage are intended to influence purchasing decisions of consumers. This paper describes a study by 124 undergraduate students that involved their visits to a grocery retailer called Johnston’s and their subsequent purchase decisions. The study concluded that stores incorporating partial competitive pricing conditions were more likely to convince consumers about their relatively lower prices than stores with non-comparative pricing conditions.

Designing sustainable retail: Environmental design, sustainability and the impact of organisational culture in the UK’s Point of Purchase (POP) industry, Chipps, R., & Wilson, J. (2013). A collaborative research initiative between De Montfort University and a Global Point of Purchase (POP) industrial partner studied the feasibility of an environmental and sustainability charter within the POP design and manufacture industry in the UK. This paper analyzes the industry’s understanding and involvement in environmental design and offers recommendations for achieving design for sustainable retail.

An anchoring and adjustment model of purchase quantity decisions, Wansink, B., Kent, R. J., & Hoch, S. J. (1998). Journal of Marketing Research, 71-81. This study focuses on the psychological processes that drive purchase quantity decisions of consumers. The authors advocate the use of point-of-purchase (POP) promotions to increase sales. The study concludes that purchase quantity decisions of consumers can be manipulated using anchor-based promotions in the form of multiple-unit prices, purchase quantity limits, and suggestive selling.

The effect of nutrition POP signs on consumer attitudes and behavior., Achabal, D. D., McIntyre, S. H., Bell, C. H., & Tucker, N. (1987). Journal of Retailing. This study samples 372 supermarkets to analyze the effects of POP advertising of nutrition products on consumer behavior. Store signs were classified into three types: Signs containing selection advice, calorie content, and key nutrients. Signs containing only selection advice. Signs containing no selection advice, calorie content, or key nutrients. A study of consumer attitudes showed that although POP advertising enhanced store image, it had negligible effect on in-store purchase behavior of customers.

Measuring the value of point-of-purchase marketing with commercial eye-tracking data, Chandon, P., Hutchinson, J., Bradlow, E., & Young, S. H. (2006). This paper highlights the importance of commercial eye-tracking data in measuring memory-based and visual equity of brands displayed on a supermarket shelf. Sampling sales of juices and detergents, the authors deduce than on average, in-store visual awareness doubles the memory-based probability of consideration. Management can also separate memory-based and visual equities to decide which brands are most compatible with POP marketing activities.

Point-of-purchase price and education intervention to reduce consumption of sugary soft drinks, Block, J. P., Chandra, A., McManus, K. D., & Willett, W. C. (2010). American Journal of Public Health, 100(8), 1427-1433. This paper samples sales of sugary soft drinks and investigates whether a price increase, coupled with an educational intervention, would negatively affect sales. The authors implement the following series of interventions in Brigham and Women’s Hospital cafeteria in Boston, Massachusetts: A 35% increase in soft drink prices. A washout, involving reversion of prices to baseline figures. An educational exercise. A combination of price increase and educational campaign. The authors initially reported a 26% drop in soft drink sales following price increase. The combination of price increase and educational campaign resulted in an 18% decrease in sales, compared to the washout period.

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