Business Tip 14
Clarifying Business Objectives with "Source of Volume"

One of the prerequisites to Consumer Centric Marketing (or any marketing for that matter) is a clear set of goals. To that end, the basic building block for setting a strategy to effect change in consumer behavior is understanding the source of total volume in a given market.

The problem
It is relatively easy to benchmark product sales based on syndicated, POS or internal data. However, looking at sales volume alone can be unenlightening and even deceptive. The simple fact that two brands or two markets exhibit the same total sales volume actually tells you very little about how they compare to each other. Instinct would probably tell you that something is very wrong if you saw the same sales volume for a particular brand in Manhattan that you saw in Bismarck, ND. Getting to the root of the problem requires a bit more knowledge - how many people are buying the product, and how much does each person buy?

What's the solution?
You may have seen some of the issues mentioned above relayed as metrics such as market penetration, frequency, buying rate, etc. At the end of the day, the concept of "source of volume" simply comes down to the number of transactions that occur, and how many items move per transaction. A basic view of that equation looks like this:

Total Volume = Number of Transactions X Volume per Transaction

Visually, the equation is much more compelling:

In the example above, the bubble size represents total volume. In this view, it is easy to see why Value Plus is the sales leader. It shows a high number of transactions, coupled with an above-average volume per transaction. If you were the brand manager of Mega Brand's, you now have clear marching orders to try to get to the number one spot - increase volume per transaction!

Making it happen...
In practice, performing analyses like "Source of Total Volume" should be one of the basic building blocks of a successful Consumer Centric Marketing Program. Platforms like XP3, from Interactive Edge make this (and many other) functions turn-key, allowing your organization to focus on the appropriate strategic response to insights instead of crunching the numbers.

The data, products and accounts depicted in this example are fictitious. Any resemblance to actual data, products or accounts is purely coincidental.