Point of Purchase (POP): Definition, How It Works, and Example

What Is a Point of Purchase (POP)?

A point of purchase (POP) is a term used by marketers and retailers when planning the placement of consumer products, such as product displays strategically placed in a grocery store aisle or advertised in a weekly flyer. Similar to this term is the point of sale (POS), which is the point at which a customer purchases and pays for products, such as on a website or at a store checkout. The POP is the area that surrounds the POS, where customers often encounter promotional activities or other products.

Understanding Point of Purchase

In recent years, the point of purchase for products and services has been an area of focus for marketers. POPs may be real, as in the case of a brick and mortar store, or virtual, as in the case of an electronic retailer that sells goods and services online. In both cases, marketers and retailers must determine the best way to showcase their products and services.

At the point of sale, the merchant typically creates an invoice or sales order. After receiving payment, the seller generates a receipt for the customer. Merchants traditionally printed receipts; however, now many are delivered electronically.

POS Systems

Part of the point of purchase takes into account POS systems and experiences as well. POS systems frequently use hardware or software tailored to a particular industry or business. Although some small retailers use off-the-shelf cash registers to calculate payment amounts and issue receipts, most POS systems are computer-based, digital, and incorporate other devices or peripherals such as printers, bar code scanners, scales, and touch screens. In some cases, customers perform the duties that were previously performed only by checkout clerks such as scanning bar codes, weighing items that are sold by weight, operating POS terminals by tapping their fingers against touch screens and making payments by swiping their credit cards or inserting cash into machines.

Also, retailers use POS software for accounting, warehousing, and management functions such as to track inventory and revenue. The software may be used to manage inventory, alerting warehouses when shelves run low, or create purchase orders and automatically send them to suppliers. POS software may assist management in deterring theft and employee fraud. It may be integrated with a business's accounting system to enter the day's sales directly into the company's books.

POS Innovation

Modern POS systems are commonly programmable or allow enhancement with third-party software programs. These systems can be tailored to meet specific needs. For example, many retailers use POS systems to manage membership programs that award points to frequent buyers and issue discounts on future purchases.

Cloud-based POS systems are increasingly in use, particularly for large online merchants, to track and process numerous purchases. Cloud-based systems can greatly reduce the upfront costs of implementing a POS system for many businesses. 

Customers can also interact directly with POS systems, particularly in the hospitality industry. Often referred to as location-based technology, these systems can process transactions at customer locations. For example, at many restaurants, customers can view menus and place orders on terminals located at their table. In hotels, customers use similar terminals to place orders for room service or to pay hotel bills.

Real-World Example

According to the Global Point of Purchase (POP) Displays Markets Report, the global point of purchase displays market is expected to expand at a compound annual growth rate (CAGR) of 5.9% from 2018 to 2026. Although online shopping appears to be a popular shopping option, customer preference for in-store shopping remains strong.

To stay competitive and aid brand owners in promoting their products, POP display manufacturers are focused on improving aesthetics, as well as creating innovative product designs. Also, the intensifying competition in the retail industry and resulting use of POP displays for enticing customers to purchase products have encouraged retailers to demand different custom-made displays capable of serving specific needs across different retail facilities. Customization offered in terms of aesthetics, capacity, and mobility can greatly impact a company's brand identification.