Route-to-market in emerging markets: Framework and key steps

A Route-to-market or go-to-market is a plan of an organisation using their inside and outside resources, such as a sales force and distributors, to deliver their products to the outlet base and services their customers.

What factors do you need to take into consideration?

To develop a route-to-market plan, you need to take into consideration internal and external factors. In emerging market countries, special attention should be given to key issues such as infrastructure and regulatory environment that could affect your route-to-market design and implementation.  

Four phase approach

The Supply Chain Lab divides the design and roll-out of a route-to-market plan into four phases. Each phase comprises several building blocks, supported by analysis tools and key enablers. 

  1. Analysis

The first phase focuses on the analysis of consumers, channel, competitors, logistics providers, distribution partners, infrastructure, regulatory environment, and external stakeholders. The Supply Chain Lab uses several tools during the analysis phase, and we will discuss a few below. For the complete tool list (18 tools) and route-to-market framework, see our Route-to-Market Presentation, including the purpose of each tool, when to use it, how to use it, and material requirements. 

Route-to-market analysis steps

Product: You need a product that meets the needs of a targeted shopper and at a price that represents value. Cash is still king in most emerging markets, and you must consider the actual amount of money that consumers have in their pocket.

Analysis tool: The ranking values tool studies the value drivers of a product or service and helps an organisation prioritise their goals. The approach is very useful for identifying customers’ real opinion about a product or service. 

Consumer: Study the consumer and determine who your consumers are, when and how they use a product, and how they feel about a brand and product. 

Analysis tool: Consumer insights (CI) research focuses on the attitudes, beliefs, and behaviours that drive buying decisions. It considers when, how, and why consumers engage with a brand and the emotions it awakens. Brand teams work with CI to create the right product message aligned with consumer needs. 

Channel: Understand your customers or channels that will buy your products. They are the core of everything in the distribution model. 

Analysis tool 1: Channel segmentation is the division of channels into separate parts or sections, based on the qualities they have in common, such as products or service, customers, and outlet space. By segmenting channels, you gain a better understanding of their product mix, service requirements, merchandising opportunities, and value drivers.

Analysis tool 2: A customer satisfaction survey or voice of the customer survey (VoC) provides insights into customer satisfaction with you and your competitor’s service. It is important to understand what is important to the customers, and the challenges they are facing in the market. 

Competitors: Study competitors, their products, services, processes and market activities. Understand why they succeed or fail in the market. 

Analysis tool: Benchmarking is the process of comparing your company against other companies using metrics or KPIs. Benchmarking is not limited to KPIs, but you can also compare business processes and practices used in the market, such as distribution models.

Logistics and distribution landscape: Assess the logistic landscape, potential distribution partners and 3PLs. A 3PL is a third-party company that handles your supply chain tasks such as warehousing and last-mile delivery. 

Analysis tool 1: A pricing map assesses the cost and revenue data of a group of people, such as a specific channel, distribution partners, or consumers. The activity helps to determine different mark-ups in the supply chain, and assists with making a business case for a route-to-market model. 

Analysis tool 2: The product flow is the study of product movement through the supply chain, from the manufacturer or brand owner to the distributors, wholesalers and ultimately to outlets and consumers. It also looks at the product returns and product rejections, or reverse flow. It is used to gain an understanding of where outlets and channels purchase specific products or product categories from, and whether they purchase from multiple sources.

Regulatory environment: Understand the regulatory factors that could impact your route-to-market. In emerging markets, often complex bureaucratic processes such as cumbersome customs and clearance procedures, still remain a challenge.

Technology: Assess the technology infrastructure. In some developing countries, poor and unstable internet supply is a common problem, and the high cost of importing technology could be a barrier for companies looking to enter a market.

Infrastructure: Analyse how the country’s infrastructure will impact your operation. Inadequate infrastructure adds significant costs to doing business in many emerging markets, and roads, ports, railways, airports, telecoms and electricity supply help businesses and the economy run efficiently.

External stakeholders: Study how you could collaborate with other external stakeholders in the country and market. Profit and purpose are converging, and companies, government, and non-governmental organisations can collaborate to align development goals. 

2. Design and enablers

Once you have completed your analysis, you need to start the design process. Our design phase is segmented into four major building blocks that include the model, sales, logistics, and execution & measurement.

Distribution model

The distribution model building blocks consider the model type, territory, financials and the need for an outlet survey. 

Key questions could include: 

  • Build your own physical distribution or make use of third parties?
  • Create a distribution system or rely only on passive wholesalers?
  • What is the role of the model? 
  • Are distributors given exclusively within territories and channels?
  • Size of the distribution territory?
  • Do you understand the trade margins and is it inline with your financial assumptions?
  • Do you understand the profitability of each model?
  • How will you support the distribution model?
  • Are there aspects you would like to control such as account development and recruitment of new outlets?
  • How much investment will each model require?
  • Opportunities to share resources and infrastructure with other non-competing companies?
  • Do we have a well-defined outlet survey understanding both the existing and potential outlet base?

Sales

The sales building blocks focus on sales, order management, outlet development, and money collection activities. 

Recruitment: Design the steps to identify and activate a new outlet. Recruitment can be done by adding the responsibilities to a salesperson’s role or creating a dedicated team of outlet activators or recruiters. 

Order management: Develop all activities related to managing customer orders, both manually and electronic, such as ecommerce. Consider documentation and tracking of orders. 

Outlet development : Review the outlet development plan and how to create additional demand, sales, and profits within existing customers. These activities include selling new products, negotiating space for products, and developing close relationships with the customer.

Collection: Map out the receiving of money from the customer. This could be done electronically or by collecting cash in person. It is important to understand when cash is collected. In some informal markets, getting the order and collecting cash are done at separate stages. Sometimes cash is only collected later in the day — when the outlet has sufficient cash to pay for the goods. 

Logistics

Logistics refers to the overall process of managing and transporting inventory from manufacturing to storage, and to the final destination. The final destination could be an outlet — ready to serve a shopper and end consumer. The logistics building blocks focus on warehousing, inventory control, transportation and routing. 

Warehousing & Inventory: Review warehousing and the act of storing goods that will be sold or distributed later. Consider where products are stored, shelving and racking system, inventory control system, material handling equipment, security, and yard management. 

Transportation: Assess the process of physically transporting goods from manufacturing to the customer, and unloading products at the customer location. The actual sale becomes a reality when the delivery team delivers the products —  ensuring the products are available in the outlet. Transportation also needs to take into consideration the optimum fleet and maintenance. 

Routing: Design the service frequency and delivery routes. Routing aims to simplify the work  – ensuring a clear call sequence for the sales and delivery teams, and maximising the daily number of standard calls.

Execution and measurement

The execution and measurement phase focuses on merchandising, equipment management, channel standards, and compliance. 

Merchandising: Assess the activity of promoting the sale of goods in the outlet. Display products at the right time, at the right place in the outlet, in the right quantity, and at the right price to increase sales. Merchandising activities may include product display techniques such as stock rotation, placing equipment, and point-of-sale material.

Equipment management: Identify the need for equipment such as racks and coolers, and the placement plan in visible and high-traffic areas to maximise sales. Ensure equipment is clean and well maintained. 

Channel standards: Set execution standards for the sales team. Determine what success looks like for the organisation when in the market, and identify the brands and SKUs that need to be visible in the outlet, and where you would like your products displayed in the outlet. 

Compliance: Design minimum standards for the sales and distribution teams, and implement an audit system to track compliance. For example, distribution partners could be measured on their minimum inventory levels, warehouse layout, personnel, and delivery process.

Enablers

The final activity of the design phase is to develop the key enablers to support the building blocks.

Key performance indicators: Develop performance measurements which can demonstrate how effective a company is in achieving its key business objectives. KPIs can add value to your business and highlight opportunities for process improvement. 

Process mapping: Map out business processes and all the steps needed to complete a task. Focus on the detail that is required for the project. A process mapping describes the flow of materials, information and documents, and indicates the various tasks contained within a process. It indicates the decisions that need to be made, and demonstrates the essential inter-relationships and interdependence between the process steps. 

Routines: Design routines or actions regularly followed. This could be a sales routine, and the steps a salesman follows to complete an order in an outlet.  

Technology: Consider equipment such as smartphones, mobile applications, and cloud-based software, that are starting to digitise supply chains in emerging markets. Assess how you can simplify operational processes, and create real-time visibility in even the smallest outlet.

Financial support: Determine the financial support required to support retailers and smaller distribution partners. Consider partnering with financial institutions and fintech providers with a focus on SMEs. Financial institutions don’t typically work with small businesses in emerging markets, as they mostly lack a paper trail and credit rating.  

Human resources: Consider the acquisition and retention of skilled staff. Create the right environment for employees to learn and grow, and put the right policies in place.

Remuneration and incentives: Determine the sales compensation, including base salary, commission, and additional monetary incentives. Set incentives based on execution and compliance standards for the sales and distribution team.

Coaching: Develop coaching programmes and equip employees with the tools and knowledge to complete their tasks in the workplace. Basic coaching steps include accessing the current skills, setting clear goals, agreeing on actions, and following up. 

Training: Implement training programmes to increase knowledge and skills of employees. For sales staff this could include product knowledge, merchandising skills, and how to handle objections in the market. 

Collaboration: Identify organisations and businesses that you could collaborate with. Businesses, government and non-profit organisations all have rich networks and can play an important role in facilitating relationships. Collaboration could lead to cost savings, resource pooling, and reduced overheads on projects.

3 & 4 Pilot & scale

The third and fourth phase focus on piloting and scaling your route to market model. 

Pilot

A pilot project or initial small-scale implementation, tests the viability of a route-to-market model. The pilot project enables an organisation to manage the risk of a new model, identify problems, and make changes, before committing substantial resources. 

Scale

The project team can scale the model, once the pilot launch has been completed and the necessary changes have been made to it. During this phase you will also identify the barriers to scaling the model, and identify steps to overcome these barriers. Scale involves expanding the model, increasing sales, servicing more customers, impacting more entrepreneurs, creating more jobs, and selling more brands and products. 

Framework

For a complete framework and steps to design and develop a route-market plan, see our Route-to-Market presentation (220+ slides). It discusses each step in analysing, designing, piloting, and scaling a route-to-market model to service micro-retailers, and includes 18 tools to analyse the market and design processes. The presentation also includes 35 case study snapshots of companies and startups in Africa, Asia and Latin America — employing business models to service customers in emerging markets.

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