Updated: Feb 8, 2022
Are you about to start your new business or to enter a new market with your products?
Choosing “the right” Route-To-Market model must be one of the key focus points of your overall business strategy.
Be aware that there exist multiple business models, which you can consider for your business. From Fully Direct RTM, where you are 100% directly controlling all the RTM activities; to Fully Indirect RTM, where you totally outsource RTM execution to third party players (e.g. distributors, wholesalers, logistic providers, etc.). There are also various Hybrid RTM models, where RTM roles and responsibilities are split between you, as a producer, and other third parties.
The choice of (an) effective and efficient Route-To-Market model(s) is not easy and is bound to many internal and external factors. You also might have to decide on multiple RTM models for different trade channels and / or geographic areas in the market.
There are 7 major factors you need to consider when choosing / setting up your RTM model to drive the best possible business performance:
1. MARKET ENVIRONMENT AND REGULATION
What are the possibilities and limitations for my RTM choices, driven by business, legal, political, and cultural norms and regulations in the market? What is the competitive landscape in the market? Is there any competitor regulated differently from the others (e.g. monopolies, duopolies, etc.)?
2. CUSTOMER LANDSCAPE
Who are your target customers? What are the different customer segments? What is your target customer coverage (current vs future)? Is there customer dominances in the market that can limit your RTM choices?
3. RTM PLAYERS LANDSCAPE
What are available RTM players in the market (e.g. distributors, wholesalers, logistic providers, outsourced sales / telesales / merchandising, etc.)? Is there geographic exclusivity among RTM players? Is there producer exclusivity among RTM players?
4. BALANCE OF POWER AMONG RTM PLAYERS
What is the balance of power among RTM players? Is the market producer, distributor, customer, or consumer driven? How does the balance of RTM power evolve? Are there RTM “intruders” that reshape the balance of power in the existing RTM? Are your RTM partnership strong and sustainable?
5. RTM VALUE CHAIN
How are margins split among RTM players? Who earns more in the RTM value chain and why? How the existing trade terms can be altered or influenced? How can you (co-)drive profitability in the chosen RTM model?
6. RTM CAPABILITIES AND SPLIT OF ROLES / ACTIVITIES
Which RTM activities do you have to control directly and which ones should you outsource? What are your internal capabilities to manage RTM models and execute direct RTM activities? What are your requirements on RTM capabilities of RTM partners? How can you assess the level of existing capabilities of potential RTM partners in execution of indirect RTM activities?
7. EXIT PLAN AND RTM ALTERNATIVES
What is your exit strategy from the chosen RTM model in case things go wrong? Do you actually have (an) alternative RTM model(s)? How can you compare different RTM alternatives?
I will be happy to support you in finding answers to the questions above, in assessing your existing and / or in setting new Route-To-Market model(s) for your business.
SM STRATEGY d.o.o.