Route-to-market for profitable growth and market share

  • Africa
  • |
  • Nigeria
  • Route-to-market

Impact

Complete redesign of the route-to-market model, making the client more effective and efficient, improving their competitive advantage, generating EBIT growth of 404% and volume growth of 43%.

Issue

The route-to-market structure was based on a complex distribution network with multiple intermediaries, duplication of activities, and reliance on wholesalers. The margin pool was split along the whole value chain, while client profitability suffered due to continuous discounts in a push for volume. The pre-sale model was underdeveloped and various market segments were treated with the same service level.

Approach

Various techniques were used to assess the existing route-to-market: route-riding with sales force, interviews with distributors, wholesalers, and retailers, etc. We recommended a specialized sales force model with a launch of pre-seller, sales developer, and distributor developer roles; a distributor upgrade to achieve economies of scale; and reduction of sub-distribution via wholesalers to reduce margin transfer outside of the client.
One of the biggest challenges was to map the retailer universe in a highly fragmented and informal market (no invoices, no registration), as well as to execute the distributor upgrade plan. A great effort was made in primary research combined with the creation of extensive control processes.

Outcome

A new RTM model where high-potential informal retailers received superior, organized, and segmented service. The penetration and market share of our customer’s brands grew with the new RTM model, which allowed better coverage, execution, and development of retailers. Distributors, with growing volume and profitability, started to serve retailers rather than transshipping volumes to wholesalers. As a result, the client improved their profitability via reduction of discounts to distributors and wholesalers. In addition, the client increased market knowledge, improved their market position, and strengthened their market intelligence via their own sales force, and built a more reliable and manageable distribution network.