THE SALES AND MARKETING CONSULTING GROUP

Discussion Paper

SALES & MARKETING SERIES

THE IMPORTANCE OF REALLY UNDERSTANDING YOUR ROUTE TO MARKET

The lessons from Best Practice Implementation

Synopsis

Many Managers believe that they understand their route to market. Research however shows that many make assumptions which may not be valid .

THE SALES AND MARKETING CONSULTING GROUP

The Sales and Marketing Consulting Group is a leading global firm of market practitioners that exists to support corporations across a wide range of route to market, sales and marketing issues. Projects range from the medium term strategic and global to the immediate and local.

Much of the work of the Group is grounded in established best practice processes covering a broad variety of sales and marketing issues. These best practice processes have been built up over a number of years and continue to evolve as new learning is developed.

In order to share some of the learning with senior managers, we published a number of articles. Each article focuses on one core issue and aims to summarise a few of the core aspects.

The Importance of Really Understanding Your Route to Market

Introduction

A recent survey by The Sales & Marketing Consulting Group showed that while many line managers had been taught how to conduct a route to market analysis, few actually did so on a regular basis.

On the other hand when managers were required to produce an up to date analysis of their routes to market, more than half of them said that the exercise was one which offered ‘high value’, ‘very high value’ or which caused a strategic shift.

The route to market analysis is concerned with:

§ Understanding where and how the company fits into the market place

§ Understanding the ‘route to market ‘, the main points of influence and the company’s position within the route to market

§ Identifying the customer segments

§ Understanding the dynamics of the channels within the route to market

§ Understanding the opportunities for each customer segment

§ Understanding the importance of the company’s products for each customer segment

§ Identifying the potential changes to the market and their impact

Summary

Mapping the route to market – why bother?

When we plan a journey, most of will use a map. It makes no sense just to set off and just see how we get on. We will probably get to our destination in the end but will spend a lot of unnecessary time and effort doing so. Even for journeys with which we are familiar and make frequently, we benefit from having a map available so that from time to time we can make detours to avoid problems as they inevitably crop up. We do not expect to look at the map every day but will need it as changes occur; and of course it is good to keep the map up to date so that it gives us an accurate picture of the impact of those inevitable changes. We just cannot expect to keep everything in our heads.

In the same way that we expect to use a road map when we are driving, we should also have a market map when we are managing a route to market.

Just as we would use the road map, we use the market map to identify the best routes, identify potential problems and their solutions as well as to get an overall view of the whole market.

The map also gives you an opportunity to take a mental step back from the day to day running of the business to consider the fundamental direction and questions.

This article considers developing the map or refining the map that you already have, although don’t be surprised if you do not have one right now. The studies showed that few managers have taken the time to map their market and most simply assume that they know what is happening. Almost every manager has been surprised about the amount of additional information they gained from the map that caused them to change in some way their current approach. In other words there is a direct commercial benefit in having the map – it is not just something that is nice to have.

To make the point look at this graph that summarises managers’ views about the level of additional meaningful insight that they gained as a result of producing a market map. By ‘meaningful’ I mean something that caused the manager to amend or change a part of the operation for the better; something that put the manager, the department and the company into a stronger commercial position; something that resulted in tangible gain in the form of more business, more efficiency, better customer perception and so on.

One of the most frequently sited benefits is that the map helps the manager take more strategic view of the business. Most of us spend most of the time thinking about the tactical issues since they tend to be urgent and important. The business strategy is also important but often not urgent.

The lesson for Best Practice is that if you want to go anywhere you need a good map.

Mapping the market – avoiding the common mistakes

This analysis is concerned with the core market structure fundamentals that drive the sales and marketing strategy. We are interested in having a clear view of the market.

The mistake that some managers make here is to get embroiled in lengthy, seemingly endless analysis; the dreaded ‘analysis paralysis’ syndrome so beloved of certain corporate planners we have met. Contrary to the expectations of many managers, we find that the Best Practice company will undertake rather less overall analysis but will focus on the most critical issues. As you progress thorough the Best Practice Model you will discover that the Pareto effect applies very frequently; the bulk of the value is obtained from a minority of the work. The trick is to recognise what constitutes the ‘minority’ or the ‘20%’ that drives the majority or ‘80%’ and that is what much of this project is all about; making sure that of all the many things you could do you actually do the few things that you should do.

The other common mistake we discovered at this point is assuming that the market is static and that the things that brought success yesterday will still hold today. We found a number of managers clinging to ideas that had become obsolete simply as a result of the changing market environment. The point is of course that markets are dynamic and are ever changing. Managers come and go. Customers change, as do competitors. New approaches and new technology bring new opportunities and new threats. The Best Practice company will not only have a clear understanding of all of these issues but will review them on a regular basis to ensure that the most recent changes have been incorporated and will take an objective view of its own likely performance.

Hopefully you recognise the benefits of the route to market map.

Recognising the rapid changes that impact most markets, now might be a good time to take a step back and look at your route to market with a fresh eye.

Richard Ilsley is a Director with the Sales and Marketing Consulting Group and i s the author of Best Practice Implementation – The Manager’s Guide. This article is based upon original research and may be used with permission. Contact