Beware unprofitable channels

Beware unprofitable channels
Photo by Harlow Borden / Unsplash

Ensure a fair share of the value chain is distributed to the various stakeholders to avoid a standstill when they realise there is not enough meat on the bone, and you will have to transition to another RTM. You might do the sell-in but not the sell-out. Also, pay attention to the profitability in the different channels. The actual channel split might differ from the original assumptions and jeopardise the value chain.

E.g. very often, a brand in a new market struggles with sales. The typical (short-sighted) solution is to perform deep price promotions in off-trade. The channel mix will then be skewed towards off-trade (less profitable due to marketing allocations), and that will create issues with the distributor’s profitability. Think wisely before chasing quick volume in modern off-trade.

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