Choosing the right way to sell products is really important for business to succeed. A great route-to-market strategy can help company grow and make more money. This guide will help you understand how to choose the best ways to get your products or services to customers.
But first, What is a route to market? It’s the way a company gets its products or services to customers. The route-to-market definition includes all the steps and methods a company uses to reach its customers. Understanding the routes to market meaning is key to making sure your products or services reach the right people in the most effective way.
Considering RTM Options
When you’re planning how to market products, think about all the different routes to customers. Your route-to-market strategy should match your business goals and customers’ needs. You can help your business grow and succeed by choosing the right route-to-market (RTM). Here are some important points to consider when planning a route-to-market strategy:
- Who are you selling to: regular consumers, other businesses, or the government?
- What are you selling: is it something you can hold or a service?
How do people buy your product: do they need to see it in person first?- How much does it cost: is it expensive, medium-priced, or cheap?
- Where are you selling: is it just in your town, your country, or all over the world?
- Does your product need to be set up: do you need to go to the customer to install it?
These things will help you figure out how to sell the product. For example, if you’re selling a physical product, it might be easier to sell in stores. But if you’re offering a service, you might need to sell it directly to customers.
Start by Understanding the Market and Customers
It’s really important to learn about the market you are targeting and customers when deciding on the best RTMs. Knowing what the customers are like and how they shop will help you find the best ways to sell to them. Try these steps:
Step 1: Understanding Customers
The foundation of a successful market analysis begins with a deep understanding of your customers. Knowing who your customers are, what they want, and how they prefer to shop is crucial for choosing the right RTMs. This insight helps logistics companies optimize distribution strategies and improve customer satisfaction. Here are some effective methods to understand customers:
- Conduct Focus Groups: Engage with groups of potential customers in a controlled setting to gain insights into their preferences, needs, and purchasing behaviors. These discussions can provide valuable qualitative data, revealing what customers value most and what influences their purchasing decisions.
- Distribute Surveys: Use surveys to gather quantitative data from a larger audience. This method helps identify trends and patterns in customer behavior, such as preferred shopping methods, frequency of purchases, and factors that influence their choice of delivery services.
- Test Your Product with Potential Buyers: Conduct a pilot test with a selected group of potential customers before fully launching a new product or service. This allows you to gather feedback on their experience and adjust your logistics strategies before a full-scale rollout.
- Analyze Competitor Strategies: Understanding how your competitors sell and distribute their products can provide insights into effective market strategies. By analyzing their strengths and weaknesses, you can identify opportunities for differentiation and improvement in logistics approach.
- Gather Feedback from Current Customers: Regularly seeking feedback from existing customers can provide insights into how well your current logistics strategies are working. This feedback helps identify areas for improvement and reinforces successful tactics.
Talking directly to the people you want to sell to will help you learn a lot about how they prefer to buy things. This could be through online stores, real shops, or salespeople.
Step 2: Collecting Data on the Region
Once you have a clear understanding of the customer base, the next step is to collect data on the specific region where you plan to operate. This involves gathering information on various factors that could impact logistics strategies, such as:
- Demographics: Understanding the age, income levels, education, and occupation of the population in the region can help predict purchasing behavior and preferences.
- Geography: Analyzing the physical terrain, transportation infrastructure, and accessibility of different regional areas is crucial for planning efficient delivery routes.
- Economic Factors: Assessing the region’s financial stability, consumer spending power, and local market conditions will help determine the potential demand for your products or services.
- Regulatory Environment: Awareness of local laws and regulations that could affect your logistics operations, such as import/export restrictions, labor laws, and environmental regulations, is essential for compliance and risk management.
Step 3: Analyzing the Collected Data
The next step is to analyze the data collected to identify patterns, trends, and opportunities. This analysis will inform your logistics strategy and help you make data-driven decisions. Here’s how to effectively analyze the data:
- Segment the Market: Divide the market into segments based on customer demographics, buying behavior, and regional characteristics. This segmentation allows you to tailor logistics strategies to meet the specific needs of each segment.
- Identify Key Trends and Insights: Look for patterns in the data that reveal key market trends, such as a growing demand for e-commerce delivery services or a preference for sustainable logistics solutions. These insights can help businesses stay ahead of the competition by adapting to changing market conditions.
- Evaluate Competitor Performance: Analyze competitor data to understand their strengths and weaknesses. This can provide valuable insights into what is working well in the market and where there are opportunities for differentiation.
- Forecast Future Demand: Use the collected data to forecast future regional demand. This will help companies anticipate changes in the market and adjust logistics strategies accordingly.
Step 4: Implementing and Monitoring Your Strategy
After analyzing the market situation, the final step is implementing a logistics strategy based on the insights gained. Monitoring the strategy’s performance and adjusting as needed continuously is important. Here are some key points to consider:
- Set Clear Objectives: Define what you want to achieve with logistics strategy, such as reducing delivery times, increasing customer satisfaction, or expanding market share.
- Monitor Key Performance Indicators (KPIs): To measure the success of the strategy, regularly track KPIs such as delivery times, customer satisfaction scores, and cost efficiency.
- Adjust and Adapt: Be prepared to adjust the strategy based on performance data and changes in the market environment. Flexibility is key to staying competitive in the dynamic logistics industry.
By following these steps, logistics companies can conduct a thorough market situation analysis, better understand their customers, and develop effective logistics strategies that drive business success.
The Common Routes to Market
Understanding different ways to sell products is important when making a route-to-market strategy. Each option has good points and challenges and works better for different types of businesses and customers:
1. Selling online
E-commerce platforms let people buy anytime and can make businesses more money per sale. A study by Statista shows that people are expected to spend $6.4 trillion shopping online by 2024, which shows how important online selling is becoming. They work well for digital products, niche items, and businesses that have global reach. However, they might not be good for products people need to see or touch before buying.
2. Retail shops
Physical stores allow for personal interaction and immediate product satisfaction. They’re effective for impulse purchases and products that benefit from tactile experiences. However, they come with higher overhead costs and limited geographical reach.
3. Trade shows and exhibitions
These events are great for meeting people and work well for showing complex products or services that need explaining in person. They’re good for businesses that sell to other businesses (B2B) or are trying to sell in new markets.
4. Pop-up shops
Temporary retail spaces offer a low-risk way to test markets and create buzz around your brand. They’re ideal for seasonal products, limited-time promotions, or gauging interest in new locations.
5. Wholesalers and distributors
These middlemen can help businesses reach more customers quickly by using their networks and delivery systems. While they reduce how much money companies make per sale, they can help sell a lot more overall.
6. Direct sales
This means selling straight to customers through salespeople or parties. It works well for products that must be shown or explained in person.
7. Partnerships and affiliates
Working with other businesses or influencers can help businesses reach new customers. This can be a cheap way to sell and can help both businesses.
8. Subscription models
Offering products or services that customers pay for regularly can give businesses steady income and make customers loyal. This works well for things people use up, online content, and some services.
Things to Consider When Choosing a Route to Market
Choosing the best route to market takes some careful thinking. Route-to-market strategy can really affect how well a business does, so it’s important to think about these things:
Keep an Eye on Sales
After a company starts using different selling methods, make sure to check how well they’re doing. Look at the number of sales and questions you get from each method to figure out which ones are worth putting more effort into. Also, try to work out how much money you’re making compared to what you’re spending on each route-to-market.
Businesses might want to use a mix of methods that make a lot of money per sale and methods that sell a lot of products. For example, you could use email to reach lots of people cheaply, along with other methods that might cost more but work well.
Don’t Just Look at the Biggest Profits
Making more money on each sale doesn’t always mean you’ll make more money overall. Here’s an example:
- If a business sells £1 million of the product and keeps 60% of the money, they make £600,000.
- If a company sells £3 million to retailers and keeps 30% of the money, they make £900,000.
In this case, you make more money selling through retailers, even though you keep less of each sale. When you’re looking at routes to market, it’s important to consider both how much you keep from each sale and how much you sell overall.
Try New Routes to Market
Don’t be afraid to try something different. Some businesses have done well by selling things people know about in new ways. For example, Tupperware and Ann Summers did well by selling at parties in people’s homes, which was a new idea then.
Loctite, a company that makes glue, tried something new when choosing who to work with. They revealed, “We increasingly look for ‘company fit’ — a partner with a culture and a strategy we feel comfortable with. In many cases, this leads us to partners without experience in our market. This felt risky the first couple of times, but our success with some of these partnerships has made us bolder in choosing distributors.”
Setup Multiple and Complementary Routes
Diversify distribution channels to reach different kinds of customers and to be safe if one way doesn’t work well. For example, businesses could sell in stores and on their own website. This lets businesses try different things and helps protect the investment if one way of selling doesn’t do well.
Charles Hunt, a businessman who started over after his business had problems, learned this the hard way. He said, “We had all our eggs in one basket. We were only using catalogs sent by mail, so one problem ruined the business.” His new business, Duvet and Pillow Warehouse, now uses multiple routes to market and has achieved a turnover of £5 million.
Final thoughts
Choosing the correct route-to-market strategy is an ongoing process that demands continuous evaluation and adaptation. You can develop a robust strategy that propels your business forward by carefully considering factors such as sales performance, profit margins, innovative distribution methods, and multi-channel approaches. Remember, the key lies in understanding your unique product offerings, target audience, and market dynamics.
Partner with Weitnauer, experts at creating and implementing effective route-to-market strategies. Operating for 159 years now, Weitnauer Group has successfully represented brands across various categories, from perfumes and cosmetics, beverages and spirits, fashion & accessories, tobacco & reduced-risk products, food & confectionery to watches & jewellery.
Weitnauer Group can open up new opportunities for your brand. Here are some facts about what we’ve accomplished:
- Supplying 200+ trade-mark owners
- Operating through 21 offices and 27 warehouses worldwide
- Delivering 26,000+ SKUs to over 21,000 customers
- Representing 565 brands across diverse markets
- Managing 472 dedicated full-time employees
Get in touch with us to learn how our knowledge about routes-to-market can help your business grow, leveraging our extensive network and local market knowledge to optimize your distribution strategy.