DPD Distribution

DPD Distribution

Routes to market control access. Without the right routes to market, you simply won’t reach your target market. Coca-Cola’s burning desire throughout the 1990s was to make it easier and easier to buy a Coca-Cola. Just look at the result – there is virtually nowhere in the world where you are more than a few minutes from being able to buy a Coke at any time of the day or night. Many industrial companies are still struggling with access, unable to find the channels that will (note ‘will’, not ‘can’) take their products to market. Building access can be expensive, requiring extensive internal systems and infrastructure to be able to sense market demand, gather and evaluate sales forecasts, deploy marketing programmes and promotions, plan and execute complex logistics. It is a tough balancing act to increase access to the market while ensuring your network is profitable and capable of handling the growth you want. You may look to your distribution channels to generate demand for your products and services as well as fulfil it. Classically the local agent appointed in foreign markets is charged with exactly this responsibility, with compensation closely tied to the achievement of sales targets with only back office support from the supplier. Alternatively, you may want the channel to fulfil demand you have generated or even generate demand for you to fulfil. Your market access depends on understanding the role you want your channels to play and the cost and investment that are commensurate with the return generated.

Routes to market control brand. How can you deliver and fulfil your brand promise, unless you manage your routes to market properly and control your distribution? If your brand is built on quality attributes, you need your channels of distribution to execute on those attributes. Not only at the point of purchase, but also if the product goes wrong or when the customer needs ongoing service and support. How well you incentivize and reward your channels will have a big impact on the ultimate customer experience and your brand. And if your brand is built on low price, you need your channels to be aligned in eliminating every unnecessary activity that incurs cost.

Often, routes to market control product differentiation. You want your product or offering to be different from your competitors’. Routes to market play a vital role in enabling this. Often, the channel you use is the sole way of demonstrating that your product is different from your competitors’. Dell in the computer industry was a good example of this, selling a product that was over 95 per cent the same as all its competitors (with the chips and operating software coming from standard suppliers Intel and Microsoft). Its channel – online direct – was its primary differentiator, offering price and flexibility advantages over its competition which, at that time, went to market through retail and dealer channels.

And all the time, your chief finance officer wants more for less. Never before have the costs and benefits of marketing and distribution come under such close scrutiny. With a combination of significant costs, complexity, dependencies on external partners and variety by market, it is now critical to understand and manage your distribution business model.

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