Understanding Route-to-Market (RTM)

Route-to-market is about defining how to serve the right customers, in the right markets, through the right channels with the right products and value propositions. Objective is to recruit, retain and loyalize customers while driving sales and growing market share at the lowest possible cost.

In other words, based on the outcomes of Brand, Channel and Customer strategies we need to understand where do we want our commercial structure and Field Sales Force to focus.

The first step will be to define a Channel Strategy. The sales department will have to analyze the trend of our revenue and EBIT evolution, the degree of freedom to execute activities and the opportunity to influence.

For example, let’s say the Petrol Station channel has high priority to focus service, but current coverage is very low. To what extend do we need to increase our services in this channel to grow our revenue and profitability? What you do in the Petrol Station Channel, is however influenced by the situation in other channels. For instance, it is possible that in channels like Hard Discount the Field Sales people are not allowed to execute any activities – take an order, merchandise the shelves, negotiate an extra displays, product placement, product listing, etc. So, in this case sending the Field Sales to the Hard Discount channel will mean a cost, but no Return on Investment, or even negative profitability, as this channel can be very fast growing and high in terms of revenue, but very low in terms of profitability. With zero degree of freedom to execute activites at the POP, the capacity of Field Sales becomes irrelevant.

Outcome of the Channel Strategy is therefore defining the level of intervention in each channel.

Second step will be defining the different RTM options that can deliver the strategy. For instance, do we outsorce our sales function or do we do it in-house, or combined?

How should we distribute the portfolio in terms of responsibility within the sales team? How should the territories and channels be spiltted? What will be the role of wholesalers and subdistributors?

Finally, we will need to evaluate the supply chain implications and the overall impact on the organization. Most of the times, current logistics in place are geared towards efficiency (cost savings), rather than effectiviness (sales and Market share growth). Finding the optimal balance will be the challenge at this point. This will imply reworking the relationships with some of our distribution partners, but also new roles and responsibilities within the sales and Field sales teams.



Posted by Ignacio Molins