Transforming emerging-market route-to-market models
07 October 2015
Human Capital Alliance senior advisor Somboon Prasitjutrakul looks at how some companies are transforming emerging-market route-to-market models.
The best-performing emerging-market consumer products companies are meticulous about distributor segmentation and view account management from a holistic perspective.
A recent McKinsey article “Achieving customer-management excellence in emerging markets” by Cristina Del Molino, Pavlos Exarchos and Felipe Ize explained how a global spirits company in Asia successfully conducted an end-to-end transformation of its route-to-market model.
“Global consumer goods producers often cite unstable supply-chain infrastructures and sourcing conditions as obstacles to providing seamless delivery and high customer service levels. “
Creating better consumer access
The company wanted to capture more middle-class consumers through greater access to a wider selection of whiskies, rums, and vodkas.
“But the company had to contend with outdated road and rail networks and congested seaports, making product deliveries and sales visits difficult.
Sales in the region were inconsistent, promotional displays were often not visible and opportunities for bundling spirits with other beverages were mostly missed,
The company also faced pricing challenges because of individual regional trade regulations and lax retailer compliance.
It’s solution was to refine elements of its route-to-market model.
Replacing one-size, fits-all model
The company was able to extend its coverage to small or hard-to-reach stores by developing a portfolio of route-to-market options.
Its previous one-size-fits-all structure was replaced by a model that encouraged differentiated distribution according to customer needs.
In one situation, the company continued direct store deliveries with large trucks to critical accounts, while organizing “recon” teams with motorized handcarts to visit between 500 and 700 more remote stores per week to validate POS data, inspect promotional displays, and perform price checks as needed.
Refining third party distributor agreements
The company also began systematically analyzing and refining elements of its numerous third-party distributor management agreements.
It began evaluating distributors based on criteria such as warehousing and logistics capabilities, financial strength and infrastructure, and willingness to partner.
The company then ranked distributors on aggregated scores and developed programs in which trade terms were more explicitly linked to the distributor’s performance.
It also narrowed its relationship to a few top distributors and created plans to address capability gaps.
Under this model, partner distributors are managed as an extension of the global spirits company, with standard operating processes, shared sales expertise and incentives, common systems and metrics, and tight performance management.
Using new tools and technologies
McKinsey also noted that many global consumer marketing companies in emerging markets are embracing and incorporating new tools and technologies, (geospatial tools) into their organizations to compensate for poor infrastructure and inadequate mapping.
Geospatial analytics are used to create comprehensive outlet and distribution plans.
With these new technologies, they can streamline sales and distribution processes, train and motivate staffers across the globe, and improve sales results and general performance.
IT also plays a central role to ensure standardization and most importantly rolling out new and faster ways of working.
Sensor and scanning technologies are already helping many companies improve their sales-force effectiveness .
For instance, field representatives use handheld devices to scan coolers in even the most remote outlets, collect data that can be monitored via tablets and smartphones and used to forecast sales, demand, and other relevant metrics.
Corporate gaming apps
To achieve optimal emerging markets sales management performance, many companies use corporate gaming apps that are rolled-out across international locations, even in the most fragmented markets.
Sales representatives are challenged on every call to go on a designated number of “missions”, including the sales route they need to follow, the tasks to be completed at each outlet, and the time frames in which those tasks must be completed.
These apps encourage sales reps to execute tasks that are usually considered uninteresting—for instance, checking competitors’ price lists in certain outlets.
Missions are tracked using common software applications and websites that salespeople can access through laptops, smartphones, tablets, and social media.