Route to Market
Route To Market Process Flow
Having the right Route to Market approach is a critical element for success in all businesses, large and small. Yet many companies have never systematically assessed the options and choices for getting their products or services into the hands of consumers and most of those that have do not review their approach on a regular basis. As the market place in most industries is highly dynamic, we believe that this needs to be done at least every two years.
Our approach to helping clients to review and recalibrate their Route to Market starts with an external perspective, looking at the market in which they do and/or could compete, before turning the spotlight onto the internal view, looking at the company and its capabilities. It is important to begin with the external picture (particularly of consumer trends and customer developments) but this is a step many companies fail to take. This can lead to missed opportunities as the consequence of taking a largely “internal” view is often to define the options in terms of the company’s own limited perspective.
The first output of a RTM review should be a Channel Strategy which identifies the priority areas of focus for the company. Even if a company wishes to compete in all appropriate trade channels, there will be certain ones which will present a bigger opportunity. This could be based on obvious factors such as the $ value of the channel but could also depend on the company’s particular product portfolio or the degree of competition within the channel. The Channel Strategy should define the level of intervention in each channel in terms of both financial and human resources.
Once the Channel Strategy is decided, the next step is to look at all possible Route to Market options which can deliver the strategy. Is an in-house or outsourced Sales function better? If the latter, how many third party partners is the optimal number and how should territories be demarcated? What is the role of wholesalers and sub-distributors if any? This analysis will eventually identify a preferred option.
The choice of RTM at the Sales/Commercial level will require the company to review its Supply Logistics approach and determine if the present system is the best to deliver the plans (in our experience it rarely is!) For most companies the main focus of an RTM review is on driving Effectiveness (better sales and market share) as opposed to Efficiency (cost savings). However, properly implemented, the renewed Supply approach can help deliver the key growth objectives and achieve cost savings since most company’s supply operations are less than efficient.
Having defined the RTM from a Commercial and Supply perspective, the next step is to create the right conditions for the plans to be a success. It is likely that there will be some third party involvement in either the Sales or Supply areas (or both) and it is critical to develop a way of working with these partners which motivates them to perform and rewards them for doing so. We recommend doing this by creating a partner relationship framework which defines clearly what is expected of both the partner and the company and develops this into what we call the “Offer”, the terms by which the collaboration will function.
The final piece of work in the development stage is to see what demands the new RTM will place on the company organisation. Changing the RTM usually necessitates some fairly significant changes in terms of roles and responsibilities, particularly in the Sales and Commercial area.
If creating an optimised RTM is seen as important, implementing the changes in a structured and planned way is critical. Not only is it important to choose the right value chain partners, it is also vital that any risks associated with the proposed changes are identified early on and a mitigation plan drawn up to understand the potential consequences. Risks can include the threat of legal action from terminated partners, disruption to the Sales effort during the transition and lack of buy-in from employees.
