I recently launched my book entitled Distributor Management: Winning tools in managing distributors as partners which is available in National Bookstores and PowerBooks. In case you have not bought the book yet, below is an excerpt from a chapter discussing the concept and application of the Route-To-Market strategy in distributor management.

To understand my perspective on distributor management, it is best to   undergo the same journey that I undertook in a lesser time. This journey was built on constantly asking the fundamental questions of this operation. Below are questions that I have asked myself throughout this long journey.  By sharing them with you and with your participation, we can be on the same map on the basics of distributor management. At the same time, answering these questions will give you the same “Aha!” or eureka moments that I have had over the years within a span of a few minutes, thus, imbibing better the strategies given in this chapter.
 
Here are some basic questions to help sharpen your RTM strategy:
 
1.      To Whom do we sell What and How?

a.       How are distribution channels and customers segmented?
b.      Do you have a segmentation criteria yet? 
c.       Who are the primary target channel and customer segments?
d.      What is your company’s unique value proposition for each of the channel and customer segments?
e.       Why will your target customer segments prefer you over your competitors?

 2.      What are our channel options and how do we manage?

a.      How do you cover the target customer segments and effectively provide the unique value proposition?
b.      Does your current distributor have the capabilities to cover your target segments and deliver your value propositions to them?
c.       Is it better for your business if you directly cover the key accounts and let your distributor serve the other balance customer segments?
d.      Are there other selling options available?
 

3.      What Sales Force structure can best execute the sales strategy?

a.       What kind of sales force should be able to support this coverage model?
b.      Would you need channel specialists? Product specialists?
c.       How many people are needed?
d.      What sales policies must be instituted?
 

Why do we need to segment channels and customers? Going back to global issues, there is no living country in this world that’s oozing with resources. All nations have limited resources. They either achieved resources by brute force or diplomacy under the United Nations and the World Trade Organization. Today, countries prefer to trade and express dominance under peaceful treaties and developing or maintaining trade relations. The same is true with corporations that must decide where and what to prioritize to maximize their limited time, money and human capital so that they yield the greatest return. This involves identifying “right-sized” pieces of distribution channels and customers to pursue.
 
The success of your product hinges on the quality of your distribution channels. It becomes an essential core of your product rather than a feature. As a Distributor Manager, you need a clear understanding about how your company segments distribution channels and customers. From this exercise, you will be able to focus on channels that will directly reach your customers and find potential under-served and un-served channels to give you a competitive advantage. In turn, you will be able to direct your distributor to focus on these channels and customers.
 
The term Route-To-Market (RTM) strategy refers to the company's choice of distribution channels which it will use to effectively deliver its unique value proposition to its target customers. Your company has several options in reaching your target channel segments.
 
The first option is called “direct sales” wherein the company directly covers the target distribution channels and customers through its own sales force. This is a good option if your company employs a very selective distribution model that covers only a few channels and customers who are also very particular about servicing and other business supports.
 
Most companies prefer to sell directly through their own salesmen if: it requires a highly-trained technical specialist; it has a remarkable brand image; customers prefer or demand direct service; and there are only few customers to serve.
 
Today, most if not all companies out-source 3rd party distributors to perform various commercial and physical distribution activities for them. There are also non-sales options like selling your products through direct mail, internet, and TV shopping, which is not tackled in this book but also worth considering. As we have learned in this chapter, partnering with a 3rd party distributor is part of the Route-to-Market (RTM) strategy to deliver your unique value propositions to your target customer and channel segments, which you believe is the best route to achieving your short to long-term business objectives.
 


Learn live from Emilio Macasaet III in the 7th Distributor Management Seminar on February 5-6, 2015 and 7th Advance Key Account Management on March 5-6, 2015. To know more about this program, call 584-5858/412-0034, text (+63) 918-81-168-88or email us at info@mansmith.net