Creating Winning Culture

In this rapidly changing world, companies need to be proactive while dealing with emerging challenges arising from changing habits and expectations. In our first article in the series on RTM, we covered certain fundamental elements of an effective ‘route to market’ module. In the last few decades, we have witnessed changing habits of shoppers and customers that has resulted in the emergence of new retail formats. Making the product available to end consumers by engaging chains of other customers/third parties has become really challenging, hence developing a robust and cost effective ‘route to market’ has become an absolute necessity if the firm wants to compete in the prevailing challenging environment. 

CREATING FLEXIBILITY THROUGH RTM: 

Companies with reasonably large product portfolios struggle to achieve apparently conflicting goals: wider product availability, minimal cost, effective distribution system, excellent customer service, exemplary customer satisfaction and the like. Most of these goals seem to be conflicting, particularly when companies vie to make their large product assortment available to diversified consumer base and maintain product quality in line with expectations of customers and consumers. A conventional method of pushing the products towards consumers cannot provide the desired results which a robust RTM is capable of doing. A comprehensive ‘route to market’ ensures effective distribution at least cost and yields high customer satisfaction. Such a well-designed RTM model provides flexibility to companies, particularly to Consumer Packaged Goods (CPG) companies, whereby apparently conflicting goals can be achieved.

END OBJECTIVES OF RTM: 

As we have seen in our last article, companies do not go for effective RTM just for namesake; they know that it would help them achieve multiple objectives. Some of such objectives seem so basic but, in reality they form the core of any business and hence, pose real challenges for any corporate entity. The ultimate objective of an effective RTM approach is to have the right product, at the right place, at the right time, for the right occasion and at the right price. Let’s analyze it in more detail. 

Every business strives to have the right product; a robust and effective RTM approach ensures that it develops and produces the right product which is needed by the market. Since RTM connects business to its market, the seller is well aware of market demands. In addition to the right product, CPG companies develop an effective distribution network in order to ensure that the ‘right product’ is actually delivered to ‘right place’. Another ‘right’ is the price; an effective RTM ensures that ‘right product’ having ‘right price’ is delivered at the ‘right place’. Pricing decisions are very complex in nature since it may directly impact the buying decision of the shoppers/buyers at the marketplace. It is pertinent to mention here that selection of trade channels is critical as it directly impacts the route to market. Segmentation of markets is itself a broad subject which we intend to cover in our future article in the same series.

IMPORTANCE OF ‘RIGHT OCCASION’: 

An effective RTM not only achieves the target of having the right product at the right price at the right place, it also ensures that product is delivered for the right occasion. Companies take all possible steps to ensure, for example, that goods are made available at the outlets well before Christmas so that consumer products find their place at supermarket shelves for pre-Christmas shopping. In Muslim countries, the occasions of both Eids generate demand for various types of goods (and services) designed for the festival. During my long association with the beverage industry, I had not seen any single Eid where meeting market demand for soft drink prior to festival day was not a challenge. In addition to ‘recognized’ occasions, the marketers do create occasions for consumption of products. Coca-Cola, for instance, created the occasion of ‘meal’ which was linked with consumption of its multi-serve (MS) product. An effective RTM ensures that the right product at the right price is delivered at the right place at the right occasion. It would be a real catastrophe if ships carrying Bangladeshi garments intended for Christmas reach the USA after the festival. An effective RTM ensures that such a situation does not arise where the product is not available on the occasion.

RTM – AN HOLISTIC APPROACH: 

One may wonder how comprehensive the concept of ‘route to market’ is. Yes, indeed, it is; it is as vast as the field of business is. We have already seen elements like product, price, place and occasion which are so critical for any effective RTM. Ordering and delivery modes are therefore important ingredients of RTM. Other elements of the commercialization process are also part of RTM without which the concept cannot be understood. Important KPIs for monitoring RTM implementation have been developed; drop size, productive calls, unique productive outlets, just to name a few. We have already touched upon the importance of segmentation of markets at large, trade and outlets. The 360-degree concept of RTM is not complete without activities associated with account development, business building and key account management.

RESULT ORIENTED CULTURE: 

We should not assume RTM as mere methodology; it is, in fact, a mindset which leads to development of result-oriented culture in commercial entities. Obvious benefits include growth in sales volume, meeting market needs, customer loyalty, improved profitability, optimal utilization of resources and expansion of customer base. This culture is conducive for general growth of business at an accelerated rate while employing available resources. It is pertinent to mention here that a comprehensive ‘route to market’ creates a culture whereby apparently conflicting operational and financial goals are met in unison. Such a winning mindset helps achieve functional goals as well as overall corporate targets. 

ROLE OF CAPABILITY BUILDING: 

If you want to embark on the RTM journey, then mere good intent and positive mindset won’t suffice. In order to build capability, one has to identify the gaps in different spheres of business activities covering overall operations. In our endeavor to gain excellence in various facets of business, we remain focused on end-results and do not give required attention to capability gaps which exist in nearly all commercial and other organizations. End results cannot be achieved unless we have robust SOPs, competent and dedicated human resources, technology-based business solutions and continuous market research. In one research paper by McKinsey titled ‘Four top-team imperatives for capability building’ (2012), it is mentioned that organizations that expressly develop the capabilities required to meet their aspirations are seven times more likely to succeed than those that do not. The said paper further stated that when senior leaders set the agenda, it is more often explicitly linked to immediate business goals than when others take the lead. In setting the agenda, high-level leadership often designs a targeted, comprehensive, and effective program that develops the skills needed to meet strategic goals. 

THE FINAL WORDS: 

As discussed above, the designing of an effective ‘route to market’ is no longer a ‘nice to have’ thing; it is a ‘must to have’ thing now. This route to market is not simply a set of rules and SOPs which help achieve the predetermined goals. It is the overall mindset setting the direction for the business. Other elements of segmentation, incentives and sales funnel are also critical in RTM methodology which will be discussed in later issues of this magazine.