Routes-to-market as a competitive advantage for consumer goods companies

You can have the best product or service in the world, but it won't work if you don't make it available to the right customers. Implementing effective routes-to-maket (RTM) is critical to the success of consumer goods companies. RTM can determine your sales volumes, your ability to deliver the right customer service, your cost efficiency and the guarantee of shelf space at the POS for your products.

Routes-to-market can be defined, from the customer's point of view, as: "the distinct process by which the product/service in question is selected, ordered, purchased and received by the consumer" (Franzier & Shervani, 1992) or, from the point of view from the company's point of view, as “the combination of resources selected by the company to make the product/service in question reach the customer” (Raulerson et al, 2009).

No artigo Getting Routes to Market Right, Booz & Company presents four qualities to achieve efficient and effective routes: Market Orientation; Coherence; Balance and Flexibility.

market orientation

Many companies design their routes from the inside out, that is, they consider internal aspects such as ease of implementation, existing sales and distribution processes and cost of service instead of focusing on the needs and desires of their customers. RTM, however, should be based on qualitative and quantitative characteristics of customers such as: sales volume, profitability, growth potential, explicit and implicit needs, geographic location and reach, etc. For this, it is essential to classify your customers into segments.

Source: ILOS

Coherence

In addition to alignment with customer need, effective RTM models need to be aligned and integrated with the company's overall customer service strategy. It is necessary to ensure that the established routes support the achievement of strategic goals and that they will receive the support they need to achieve success in the operation.

Balancing

An effective RTM platform needs to contemplate balancing competing priorities, which end up generating trade-offs. We can highlight three sets of priorities that need to be considered in the analyses: (1) needs and preferences of the customer, which determine satisfaction and affect growth potential; (two) growth potential, which determine market-share and volume; (3) cost of serving, which determines the economic viability and profitability of the customer and the segment. The balance of these three variables is essential to serve the customer, being cost efficient.

Source: ILOS

Flexibility

To manage the growing variety of customers and routes, flexibility is needed in the design of routes and, once chosen and implemented, there needs to be ways to improve and adapt routes already established.

The construction of routes-to-market leads the company to redistribute its sales and distribution resources to serve the customer in a differential and effective way, controlling costs and complexity. This effort can bring competitive advantages, especially for the consumer goods sector, which is recognized for its intense competition. Benefits include increased revenue, reduced costs, increased customer satisfaction and improved end-user experience.

References

<http://www.strategyand.pwc.com/media/file/Getting_Routes_to_Market_Right.pdf>

Frazier, GL, & Shervani, TA (1992). Multiple channels of distribution and their impact on retailing. In RA Peterson (Ed.), The future of US retailing: An agenda for the 21st century (pp. 217−237). Westport, CT: Quorum Books.

Raulerson P., Malraison JC. and Leboyer, A. (2009) Building Routes to Customers Proven Strategies for Profitable Growth. New York: Springer.