In this article, I will be delving into the ways in which consumer behavior can have a profound impact on your FMCG Route to Market Model.
Recently, I shared a post titled When Should We Review our FMCG Route to Market Model? The focus of the post revolved around the pivotal trigger factors that necessitate a comprehensive review of our RtM model.
In light of the numerous comments and inquiries received, I feel compelled to delve deeper into Trigger #6, which discusses "Significant Changes in Consumer Behaviour."
Essentially, when substantial shifts occur in consumer behaviour within a given market, it serves as a clear indication that it's time to question and reassess our RtM approach. These significant behavioural changes can potentially disrupt the channel structure and priority, alter the current geographic approaches, and challenge the existing RtM portfolio strategy.
Consequently, it becomes imperative for us to revisit and recalibrate our RtM model accordingly.
Let's explore some concrete examples of these transformative changes:
Significant Changes in Consumer Behaviour
1) Transition from out-of-home to in-home consumption:
Consider the impact of this shift on products such as coffee, beer, ice cream, and chocolate. Understanding the distinction between out-of-home and in-home consumption is crucial. A significant surge in in-home consumption for these items, for instance, would necessitate a revised RtM model that prioritizes distributors or wholesalers catering to hypermarkets, supermarkets, grocery stores, or large general stores - establishments that cater to the growing demand for in-home consumption.
However, we can only comprehend and adapt to this shift by thoroughly examining consumer buying patterns through a comprehensive RtM model review.
2) Transition from Traditional Trade to Modern Trade Consumption:
This particular shift may be driven, for instance, by the evolving habits of a young population, which could change the channel priority, approach and/or portfolio assortment.
Take the Indian FMCG market as a prime example, where Traditional Trade currently accounts for approximately 90%, leaving the remaining 10% for Organized or Modern Trade. If there is a shift in consumer buying patterns happening, from Traditional to Modern, it is crucial that FMCG Producers swiftly recognise and act upon this change. Delaying action until sales figures indicate a shift or change would be perilous, as the complex RtM landscape may have already undergone a substantial transformation. Failing to proactively respond could result in forfeiting any potential early mover advantage.
3) A Global Pandemic
In the midst of our collective reluctance to discuss COVID, it is essential to shift our attention towards the valuable lessons it has taught us. The global pandemic served as a powerful illustration of a profound transformation in consumer behaviour, warranting our careful examination. Among the myriad of changes that unfolded, perhaps one of the most significant was the notable shift in consumer purchasing and consumption patterns. The conventional focal points of urban centres and offices relinquished their prominence, in part giving way to a new focus on residential areas - a consequence of remote work arrangements and travel limitations.
In this scenario, an RtM Model Review needs to be completed and must include a review of Retail Outlet or Store Segmentation.
By recognizing these significant changes in consumer behaviour and promptly reviewing our RtM model, we equip ourselves with the knowledge and agility necessary to adapt and thrive in a rapidly evolving market landscape.
If you would like some guidance on a Step by Step RtM Model Review, please click here.
What should you do now?
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- As we always say, NOW is the time to review, build, and/or transform your RtM Strategy and Execution to reap the rewards. Do not wait. Feel free to use our 20 Steps to Route to Market Excellence Implementation Guide to help you