Route to market

From CEOpedia | Management online

Route to market describes set of activities (road-map) which need to be performed by the company to get new product to market success[1]. It involves following basic steps:

  • Selecting proper market - this is based on the fact that the target market should be chosen to obtain the optimal result and result with appropriate marketing expenses. It will give us the opportunity to achieve higher profits and gain a better position on the market. The company should focus on the activity on the target market and locate its activities there. The basis for the selection of target markets is market segmentation. It is the division of the market according to specific criteria into relatively homogeneous groups of consumers. These groups are called segments, they determine the area where the company focuses its operations and constitute a reference point for formulating a marketing strategy that the company will use to promote the product and its brand. Segmentation is used due to the fact that it is not able to meet the needs of all potential customers (there are too many of them, they are dispersed in the field and differentiated according to expectations). Therefore, the organization should identify the most attractive segments and focus their attention on them instead of competing in the whole market. This increases your chances of success and achieving maximum profits[2].
  • Identifying customer's needs - needs consists in getting to know the information about his needs, preferences, interests and habits. Thanks to the identification, we can learn the differences between individual needs in order to match the offer to the customer's needs in accordance with its previous recommendations.
  • Setting realistic goals - correctly formulated goals should be detailed, accurate, attractive, possible to meet, and should specify the time of their implementation and the stages in which they will be implemented. Included in them should be what we want to achieve them, why we want to implement them and the method that we will achieve the given goal.
  • Selecting proper distribution channels - a distribution channel is a group of all clients through which one or more streams associated with marketing flow.
  • Establishing monitoring systems
  • Building competent sales team with high selling skills
  • Building good relationships with distributors
  • Execute transactions
  • Provide after sale service - provide after-sales service which is the last element of the product sales process. The company should ensure that the customer is fully satisfied with the purchase. Thanks to this, the chances for the next transaction will increase and the satisfied customer will share a positive opinion among his friends and thus the number of clients will grow. You need to take care of each client because every customer is valuable. All cooperation and relationship will be affected when the client is dissatisfied.

Selection of distribution channels

The company has three options for choosing a channel:

  1. Creating a new distribution channel - this is associated with cooperation with other companies that implement the tasks of subsequent entities in the course of product distribution.
  2. Adaptation of distribution channels that already exist - entities without any changes perform tasks that involve distribution.
  3. Changing existing distribution channels - this is connected with a change in the functioning of the channel for which the company has decided.

Examples of Route to market

  1. Identifying Target Market: The first step is to identify the target market for the product. This includes identifying the customers who would be interested in the product, the regions where the product would be successful, and the channels that should be used to reach the target customers.
  2. Designing the Product: The next step is to design the product to meet the needs of the target market. This may include researching the market to determine the features and benefits of the product, selecting the right materials and components, and establishing the right production and distribution processes.
  3. Testing the Product: Once the product is designed, it is important to test it to make sure it meets the desired performance standards. This includes conducting market research to understand customer preferences, performing laboratory tests to check product performance, and running field tests to assess customer feedback and response to the product.
  4. Developing the Marketing Plan: The marketing plan should be developed to ensure that the product is launched in the right manner and is able to reach the target customers. This includes creating a pricing strategy, developing a promotional plan, and defining the channels for distribution.
  5. Launching the Product: The product should be launched in the right manner to ensure that it is successful in the market. This may involve running a pilot program, launching the product in a few target markets, or launching the product in a phased manner.
  6. Monitoring Results: After the product is launched, it is important to monitor the results and adjust the strategy accordingly. This includes tracking the sales and customer feedback, identifying any issues that may arise, and making changes to the product or marketing plan if needed.

Advantages of Route to market

  • Route to market provides an effective way to analyze the market, understand customer needs and develop the right marketing mix for a product. It helps to create an effective and efficient marketing strategy that maximizes the return on investment.
  • Route to market helps in identifying the target market and developing the right distribution channels. It ensures that products reach the right customers at the right time and at the right cost.
  • Route to market also helps in understanding the competition and developing effective pricing strategies. It helps in tracking and evaluating the performance of the product in the market.
  • Route to market also helps in identifying potential areas for improvement and in developing strategies for increasing sales and profits. It helps to build and maintain relationships with partners, distributors and customers.
  • Route to market also helps in developing promotional strategies and creating brand awareness. It helps in building customer loyalty and creating a long-term relationship with customers.

Limitations of Route to market

The Route to Market process involves a number of steps in order to successfully get a new product to market. However, there are several limitations that can impede the success of the process. These include:

  • Determining the right target market: Choosing the wrong target market for the product can be a costly mistake and limit the potential success of the product.
  • Lack of resources: Having insufficient resources can limit the ability to effectively reach potential customers and make the route to market process more difficult.
  • Poorly executed strategies: If the strategies used to get the product to market are not well-thought out, it can lead to a failure of the product launch.
  • Unfavorable market conditions: If the market conditions are unfavorable it can limit the overall success of the product launch.
  • Unclear objectives: Not having clear objectives can lead to confusion and difficulty in achieving the desired outcomes.

Other approaches related to Route to market

Route to market is a set of activities that companies undertake in order to bring new products to the market. In addition to the basic steps mentioned, there are other approaches to consider when crafting a successful route to market. These include:

  • Utilizing a Direct-to-Consumer (DTC) model: The direct-to-consumer (DTC) model is an online-only sales approach that allows businesses to reach out to their customers directly, without the need for an intermediary or retail partner. This model offers brands an efficient way to rapidly reach the market, increase customer loyalty and optimize customer engagement.
  • Leveraging e-commerce channels: E-commerce channels are the online stores or marketplaces where customers can purchase products. This approach allows companies to expand their reach and provide customers with a more convenient shopping experience. It also allows them to target a larger global audience and provides them with access to valuable customer data.
  • Partnering with influencers: Influencer marketing is a form of digital marketing that involves partnering with influencers to promote products and services. This approach can help companies build credibility, increase reach and drive sales.
  • Utilizing digital advertising: Digital advertising is the use of digital channels to advertise products and services. This approach allows companies to target their audiences more effectively and generate leads and conversions more efficiently.

In conclusion, there are a variety of approaches that companies can use when creating a route to market for their products. These approaches include utilizing a direct-to-consumer model, leveraging e-commerce channels, partnering with influencers and utilizing digital advertising.

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  1. Krattenmaker, T. G., & Salop, S. C. (1986)
  2. Klepper S., J.(1996)

Author: Izabela Palonek