The following is an
excerpt from a just-released research
report from Kennedy
& Advisory (KCRA).
Channel, Category & Sales
Commercial execution is a component of the
marketing and sales system through which
companies develop and execute their commercial plans. Commercial execution consists of the channel strategy, route-to-market,
merchandising, and sales coverage and engagement model that deliver on these plans
alongside pricing and value capture, customer experience, communications, and relationship management. The objective of commercial execution is to maximize the revenue
realized from commercial plans, while minimizing the selling expenses by adjusting the
where, what, and how of selling.
Companies plan their activities in a cascading
fashion that consists of three distinct processes (Figure 1).
• Strategic planning: making the “where
to play” participation strategy, “how to
win” competitive strategy, and financial
strategy consistent with an overarching
•Commercial planning: developing go-to-market strategies for business units and individual brands that are in line with the participation, competitive, and financial strategies.
•Operational planning: devising sourcing,
manufacturing, and distribution strategies
to deliver the business unit and brand go-to-market strategies.
Commercial planning establishes the conditions that drive a company’s selling expenses,
operational planning its cost of goods sold.
Together with the general expenses they
share, the commercial and operational planning thus drives a company’s overall operating expense position.
Although they usually run these planning
processes separately, companies seek to integrate them through integrated business planning (IBP) processes that establish the parameters of strategy execution for the current
year and typically over a two- to three-year
horizon, and sales and operations planning
(S&OP) processes that coordinate that execution on a monthly basis.
THE MARKETING AND SALES SYSTEM
Companies develop and execute their com-
mercial plans through their marketing and
sales functions. As depicted in Figure 2, these
functions combine to form a system that con-
sists of the following components:
• Insights, segmentation, value proposition,
brand and market positioning: the research
BY NATHAN SIMON AND NAIMA HOQUE
FIGURE 1. The Commercial Execution Context