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Route to Market & Supply Chain Blog

The A-B-C of Route to Market: A Simple Guide to Finding & Engaging New Distributors

Posted by Michael Thompson on Thu, Jun 13, 2024

In my last Post & Article I presented a new Route to Market (RtM) model, the aim of which was to bring together our RtM work in the last 5 years or so.

This is the A-B-C of Route to Market.

As a reminder, my aim is to simplify the world of RtM into a series of three steps that any RtM practitioner can execute.  I would like the message to be actionable by all professionals be they small business owners trying to find new export markets, commercial heads of large multinationals or RtM management consultants.

Since then I have been asked about how this simple method applies to the identification, selection and engagement of new distributors.

This is the subject I address here.

For example for market entry, a typical scenario is that an organisation, sometimes a multinational, sometimes a SME want to enter a new market.  This is where many companies make a fundamental error. They go straight to distributor selection.  This often results in choosing the wrong distributor partner and the market entry fails to meet expectations.

Using the A-B-C to Route to Market offers the recipe for success.

Let’s now look at the three phases of Assessment, Blueprint and Catalyst as it applies to new Distributor selection and engagement.

Assessment (Where to Play):

  • External Perspective: Analyse the target market, understand customer preferences, competitor strategies, and regulatory requirements.  Consider your target channels and geography and where you are able to compete effectively. This is critical. Where do you have a right to play?  It is not always in the largest segment, where the competition can be strong.
  • Internal Perspective: Evaluate your resources, technology infrastructure, and supply chain readiness to support new distributors.  Consider your product, packaging and pricing of course.
  • Trade Partners: Assess potential distributors' capabilities, market reach, reliability, and alignment with your brand values.  The key here is to define your ‘Model Distributor’.  Do they have good coverage in your chosen channels and geography, for example?  What size should your ideal distributor be is an important consideration.  Draw up a short list of potential distributor partners.  Decide your selection criteria and weighting. Conduct a ‘Macro Assessment’ of each.

Blueprint (How to Play):

  • External Perspective: Adjust your RtM Strategy as needed, based on the results of the assessment you have undertaken. Define new distributor roles, and create or modify your market / market entry plan integrating new distributors into your distribution network.
  • Internal Perspective: Align internal teams, set sales targets, performance metrics, and develop risk mitigation plans as appropriate.  Consider your Team’s training and development needs to execute your new RtM Plans.
  • Trade Partners: Implement your selection process based on the Macro Assessment undertaken.  Complete negotiations with selected partners. Carefully consider the Cost to Serve of your RtM as this can often drive improved margins with your distributors. Upon agreement, start with and agree Heads of Terms before entering into full contractual discussions.  Agree Joint Business Plans (JBPs) and / or Service Level Agreements (SLAs) with your new distributors.  Design incentive programmes, and develop training interventions for distributors, especially their Sales Reps.

Catalyst (How to Win)

  • External Perspective: Execute your RtM strategy in your chosen channels through new selected distributors.  Execute your demand pull processes such as marketing campaigns.  Engage with customers and collect feedback.
  • Internal Perspective: Monitor distributor performance through KPIs, and optimise logistics and supply chain operations that should integrate with your Route to Market.
  • Trade Partners: Establish in week 1, a weekly monitoring and review process through Joint Action Plans (JAPs) with your new Key Distributor Partners.  Monitor KPIs on a weekly basis, especially coverage – net and weighted distribution. Use these as the basis for feedback loops with your new trade partners to make tactical adjustments and improvements.

As before, you will have noticed that within each of the three phases of Assessment, Blueprint and Catalyst, we consider three further aspects – the External Environment, Internal Perspective and finally our Trade Partners.  It is important that each of these three aspects are considered in each phase as your RtM Strategy is developed and then executed.

By following these steps in Assessment, Blueprint, and Catalyst phases, you can effectively select and integrate new distributors into your Route to Market strategy, ensuring successful market growth.

What we do at Enchange Supply Chain & RtM Consultancy

  • Deliver sales growth for our clients
  • Work globally, with ourlocal experts
  • We are Route to Market & Supply Chain experts

At Enchange our passion is helping companies improve their route to market and supply chain so they can sell more, at a higher margin and lower cost.

Tags: Route to Market, Michael Thompson, RtM Strategy, The ABC of RtM

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