Optimizing the route to market strategy

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Optimizing the route to market strategy

Introduction to the route to market strategy

The route to market approach is a crucial piece of the strategic puzzle of any company. For companies that have a wide range of products and services, it’s essential to understand how the firm will sell each product. This is especially true if the company can sell a product or service through multiple channels, such as online or by phone.

The route-to-market strategy is the process that determines how a business sells its products and services. The route-to-market strategy can include everything from the marketing methods to reach customers to the sales channel used for selling these products or services.

What is the route to market?

The route-to-market strategy is planning how you will sell your product or service. We can break it down into several stages, of which two are vital:

  • Product Commercial development – This is the first stage of the route to market, where you determine what type of product or service you want to offer. Any wine producer will have different products/bundles to target independent bars, restaurants, supermarkets, and chain businesses. The San Pellegrino format many enjoy in the on-premise channel is – on purpose – different from the one they can buy in a supermarket.
  • Sales and distribution – this stage is about defining the value chain for your product based on your commercial plan. If a company manufactures food and beverages, they have to decide whether they want to directly target the outlets they choose in the first stage or through third parties. For example, Apple has a retail network in most key countries. They appoint third-party importers and distributors in countries that are not a priority but want them to have a direct retail model.

Why is this a critical step? Because even for categories with multiple channels, each channel will imply different margin structures, volume expectations, and a different type of promotional work. Hence the route to market is a fundamental component of the strategic puzzle of a company. Furthermore, specific channels are more scalable than others: D2C brands leverage technology, whereas most fashion luxury brands opt for a vertically integrated retail approach, which requires more physical stores. Most consumer brands use a modern trade channel approach, which is costly to maintain but often needed to reach scale.

What are the key objectives of the route to market?

Companies face several challenges when determining their route to market strategy. When you’re deciding on the approach that’s right for your business, it’s essential to consider the following objectives:

  • Should a company focus on the largest or the most profitable markets? While it might sound like a silly question, it plays a pivotal role. Most food and beverage brands cannot afford modern trade: they need the brand-building powerhouse to construct a national franchise, which is usually a prerequisite for national retail chains. Initially, they also lack the industrial and logistical requirements to deliver to those customers. So they leverage specialty channels, which are more fertile for brand building but have limited reach.
  • Gain the most efficient route to market. As a rule, companies want their products sold at a high volume but low cost per unit to maximize profits on each transaction. For example, if you operate an online store selling luxury goods such as jewelry or handbags, then being able to deliver goods across all continents will likely be essential for success since this allows you access not only local customers but also those outside your immediate location who might otherwise be unable access them easily due geographic constraints.

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How do you define your ideal route to market?

As a result of these factors, you should define your ideal route to market (RTM) with the following:

  • Target market. Who are you targeting? Your target market will differ depending on the product and service you offer. In most cases, it’s best to focus on one target customer group at a time. For example, if you have an app for children that teaches them about science, it would be beneficial for you to focus on parents who want their kids to learn more about science through fun activities. This focus will allow you to take advantage of specific niches within this niche and grow from there. Many craft brands in spirits and soft drinks (e.g., the tonics behind the premiumization of Gin Tonic) have been targeting bartenders and mixologists to build a premium category that was otherwise very commoditized. They initially did not target consumers in a bar of shoppers in a supermarket. Only when they reach critical mass, do they shift their focus.
  • Customer journey. What does the ideal customer experience look like? This includes everything from identifying potential customers to closing sales with them—and everything between those two points! By creating this process during strategic planning stages before launching any campaigns or projects, businesses can create experiences that meet user needs while maintaining their goals and company objectives throughout each step. More importantly, it will define where the target learns about your offering first. For example, few successful vegetable protein-based milk alternatives have worked in gyms and sports centers to meet their targets and have the time to discuss the issue of lactose-based proteins. Trendy Barbershops chains are becoming brand-building opportunities for premium liquor brands. The Metaverse is also emerging as a platform for luxury brands to engage with future customers years before the first purchase.
  • Ideal sales process. The final part of defining an effective RTM outlines precisely how the transaction happens. It outlines an end-to-end funnel: will it be because of a doctor or bartender’s recommendation? Or as an impulse purchase just in front of a supermarket cashier?

Continually rethink your go-to-market strategy.

Monitor and measure your RTM, and don’t be shy and rethink your go-to-market strategy often. That does not mean you need to change it frequently, but the market offers clues on whether a plan is winning. But new and emerging models (e.g., D2C in recent years) could better suit your brand’s capabilities and objectives. Companies often need to focus less on the product and more on the customer and their journey. The most critical step in creating a successful go-to-market strategy is to define who you are selling to, what channels will help you reach them, what marketing mix works best for your target audience and how you can use this journey to create a unique selling proposition, something that is different from other brands in the marketplace. Consumers need products, but they choose and buy brands.

The roadmap for Route to Market excellence.

The roadmap is a strategic plan that outlines how you will achieve your business goals. It will help you to achieve them most efficiently and profitably.

There are four main steps in the route-to-market strategy:

  • Developing a niche market for your product or service
  • Creating an effective marketing strategy for reaching your target market(s)
  • Implementing this strategy with tactics such as advertising, trade shows, media coverage, or public relations efforts (PR)
  • Measuring results so that you can adjust future efforts. This is often the most challenging aspect and requires an honest approach. In specific markets, 95% of sales happen in modern trade, and companies that cannot afford it will focus on the 5%. That only represents a problem if our objectives are consistent with the 95% side of the business!

Identifying how to capture the largest and most profitable markets and gain the most efficient market route can take time and effort for many businesses.

Identifying how to capture the largest and most profitable markets and gain the most efficient market route can take time and effort for many businesses.

A critical factor in determining your market strategy is identifying which customer segment will be most profitable for your company. The size of the market is also essential; if you have identified that there are millions of customers in a particular geographic area, but they don’t buy much from you, it would be unwise to dedicate resources toward reaching this group of customers when there are other more lucrative segments available.

In addition to identifying where customers live or work, another thing to consider when choosing a market is how easy it will be for them to find out about your product or service after the purchase. Try using multiple advertising methods so users can reach you no matter what technology they use (iPad vs. Android vs. desktop computer).

Conclusion

We’re here to help make this process easier by providing the tools and know-how needed to develop your unique approach. By applying our expertise in sales operations, we can ensure that your business has a clear strategy for success.

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