THE RTMA
WHY ROUTES TO MARKET WILL BE SO IMPORTANT OVER THE NEXT DECADE
Routes to market remains an unknown discipline, one which doesn’t even receive board level representation in most companies. Yet, paradoxically, over the next few years, it will determine to a quite extraordinary extent the future of most large companies. Here is why.
Author: Julian Dent | CEO VIA International
Email: jdent@viaint.com

Firstly, let’s accept that marketing is becoming ever harder. Consumers are fragmenting as trends in consumer and business demographics  create additional and more distinct customer segments. To make matters worse, product and service innovations are multiplying the options available.

Simultaneously, tried and tested marketing formulae, whether centred around brand creation, advertising or direct marketing, are becoming less and less effective. Media has exploded into a host of conflicting formats.

Meanwhile, your chief finance office wants more for less. Never before have aspects of marketing come under such close scrutiny.

Secondly, consider the importance of routes to market in solving all this.

Routes to market control access. Without the right routes to market, you simply won’t reach your target market. Coca-Cola's burning desire throughout the 1990s was to make it easier and easier to buy a Coca-Cola. Just look at the pay off. Many industrial companies are still struggling with access. Often brands could achieve far more with the right sales network.

Routes to market control brand.  How can you deliver and fulfil your brand promise, unless you manage your routes to market properly?  Yet how few companies measure or even consider how well the brand they have spent millions building is delivered to the customer?

Often, routes to market control product differentiation. You want your product or offering to be different from your competitors’. Routes to market play a vital role in enabling this. Often, the channel you use is the sole way of demonstrating that your product is different from your competitors’.

Certainly, there is a lot at stake here. Financially, routes to market – delivery, marketing, pricing – make up 30% to 50% of the costs of most businesses. Typically, this is the proportion of costs which is least well-controlled, least well-understood. Very few companies can tell you what it costs to sell through a particular route to market whether that be a retailer or a consultancy. Fewer still can inform you of the profitability of specific intermediaries.

The truth is this is an emerging profession. Consider the dramatic changes we have seen in supply chain management over the last decade. The way costs have been sliced out, the way inventory levels have been slashed. My prediction is that the next decade will see a similar, scientific approach brought to bear on the selection, management and control of routes to market.

And this approach has to start with the consumer. Companies need to understand that routes to market do not simply concern where a product is purchased.  Customers often turn to one route to market – a consultant, a website, a shop assistant – to select a product, before buying it somewhere else. To understand how to get the best out of the new product they may well turn to a third provider before ultimately disposing of it through yet another.

Most companies are still not very good at understanding customers or intermediaries, be they private individuals or multinationals. Typically, their internal structure is based around their own product divisions.  Routes to market professionals are often in floating staff management positions, exerting little real power and, all too often, seen as a cost rather than an asset. 

Companies need to understand and embrace this complexity if they are to make marketing work again.


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