Route-to-market for profitable growth and market share

RESULTS

Complete redesign of the route-to-market model
(RTM), making the client more effective and efficient. The changes improved
their competitive advantage in the market, generating EBIT growth of 404% and
volume growth of 43%.

 

THE 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 throughout
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 salesforce, 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 its own salesforce,
and built a more reliable and manageable distribution network.