Traffic building



Traffic Building

Definition: A Traffic Building strategy is used to draw consumers into the store, aisle, and / or category. This is typically achieved by creating an advertised promotional price with a large enough difference from the everyday / regular price to attract attention and draw traffic into the category. Most suitable for a traffic building strategy are items that are frequently purchased, frequently promoted, have higher sales levels in the category, higher market share, generate a high sales lift when promoted, and have high turns.

Scorecard Objectives: Traffic Builders are usually required in the Stratogram when the following are priority scorecard measures: Market share; Household penetration; Purchase frequency; Sales growth; Customer count.

Product Characteristics: The following characteristics are more commonly associated with Traffic Building items: High price awareness / sensitivity; High household penetration / broad appeal; Frequently purchased; High sales volume; High planned purchase; Strong national brand; Frequently promoted (features especially) and displayed; High inventory turns; Higher sales growth rate; High lifts on promotion

Turf Protecting

Definition: A Turf Protecting strategy defends the category sales and market share against a defined competitor through competitive based pricing. Turf Protecting is only deployed when absolutely necessary because it is usually a very expensive strategy in terms of profit impact. Turf Protecting is, therefore, typically employed on a few, highly visible, frequently purchased, high-ring items where target customers are likely to know competitive pricing levels. Candidates for Turf Protection include items that are under intense pressure from a rival retailer’s aggressive pricing actions, or used as a proactive strategy to deter a competitor from taking an aggressive action. Turf protecting should be used as sparingly as needed, because of the necessary margin investment. However, appropriate deployment of a Turf Protecting strategy can assist the retailer in creating a positive overall price image. A Turf Protection strategy requires that, if the market or a price target competitor reduces the price on the Turf Protecting items, the retailer will follow with price reductions to maintain the Turf Protection strategy. A Turf Protecting strategy is sometimes referred to as a “Super Traffic Building” strategy.

Scorecard Objectives: Turf Protectors are typically required in the Stratogram when the following are priority scorecard measures: Increase or maintain market share; Increase or maintain sales; percentage of customers purchasing category.

Product Characteristics: The following characteristics are more commonly associated with Turf Protectors: Appeals to a broad consumer base (high household penetration); Generally a planned purchase; Items frequently purchased by target customer; Usually a non-discretionary purchase; High price sensitive items; Frequently promoted items; High sales lifts when promoted.

Transaction Building

Definition: This strategy increases the sales of the category and / or the average market basket size (total register ring per customer) through increases in related category sales. This is typically achieved by emphasizing larger sizes, items with trade-up options, multi packs, aggressively pricing and promoting higher ring items, and emphasizing items with a high degree of impulse purchase.

Scorecard Objectives: Transaction Builders are typically required in the Stratogram when the following are priority scorecard measures: Increased gross margin; Increased gross profit; Increased average ring and average market basket; Higher rate of purchase incidence.

Product Characteristics: The following characteristics are more commonly associated with Transaction Building items: High impulse purchase rates; Expandable consumption; Multiple unit pricing; (e.g. 3 for $1.99); Less price sensitive items; Items that move well off displays; High percentage sold on promotion; Stimulate related category or item products; Higher average price; Larger sizes; Items that complement customer’s planned purchase items.

Profit Generating

Definition: This strategy is used to achieve increased category profits while keeping prices within competitive ranges. This strategy results in an increase in the gross margin and gross profit dollars generated by the category. Lower sales volume, less price sensitive items with higher than category average gross margins are commonly used Profit Generators. Private label items are also often used as profit generators

Scorecard Objectives: Profit Generators are typically required in the Stratogram when the following are priority scorecard measures: Increased gross margin; Increased gross profit dollars; Increased ROA.

Product Characteristics: The following characteristics are more commonly associated with Profit Generators: Higher than category average gross margin or gross profits per unit; Higher loyalty; higher average retail price; higher average ring per purchase; Items associated with higher-profit cross-purchase; Items frequently purchased with items in other, usually lower-margin, categories; Less price sensitive items; Impulse purchases; Low percentage sold on feature / display.

Cash Generating

Definition: A Cash Generating strategy is used to maximize the amount of cash flow generated by a category. It is used by the retailer to ensure a balanced cash flow across the categories in a store to meet operating cash needs. This strategy is most suitable for high turn, larger sales volume items in a category, and items with favorable payment terms.

Scorecard Objectives: Cash Generators are typically required in the Stratogram when the following are priority scorecard measures: Increased cash based earnings (EBITDA); Increased GMROI / ROA; Increased inventory turns; Reduced category operating costs (Activity Based Costs).

Product Characteristics: The following characteristics are more commonly associated with Cash Generators: High turns; Large percentage of category dollar sales; Frequently purchased; Frequently promoted; High sales lifts on promotion; Favorable payment terms; items provided by most efficient suppliers.

Excitement Creating

Definition: Employing Excitement Creating strategies brings excitement to the category by communicating a sense of urgency or opportunity to the customer. Unique product offerings, special, limited time items, seasonal items, new items, promotions that create a sense of urgency or opportunity, and items with a high incidence of impulse purchasing typically lend themselves to this strategy.

Scorecard Objectives: Excitement Creators are typically required in the Stratogram when the following are priority scorecard measures: High customer satisfaction; Sales growth; High purchase incidence.

Product Characteristics: The following characteristics are more commonly associated with Excitement Creators: Highly consumable (generally consumed / used close to time of purchase); Generally a discretionary purchase (vs. planned); New items; Seasonal / limited availability items; Rapidly growing segments or items; Impulse purchase items; Highly sensitive display items.

Image Enhancing

Definition: This strategy is used to reinforce the retailer’s overall desired image to their target consumer. Potential images can be price, variety, service, quality, or value. An example is the use of wine stewards and a wide assortment of 750-ML wines to reinforce an upscale image to customers. Live fish tanks, high levels of customer service, exclusive product offerings, expansive product assortment, competitive pricing, and meal solution suggestions are examples of Image Enhancing strategies.

Scorecard Objectives: Image Enhancers are typically required in the Stratogram when the following are priority scorecard measures: Customer satisfaction; Image ratings; Average transaction.

Product Characteristics: The following characteristics are more commonly associated with Image Enhancers: Items with characteristics that are compatible with desired image (e.g. price – value pack pricing; variety - market leading assortment, exclusive offerings; quality – premium level private label); Items with high enough sales volumes and consumer penetration levels to be noticeable by target customer; Frequently purchased items; Good sales lifts when promoted.

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