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Implementation of RCM (Retail Classification Methodology) 
concept in the distribution system 

 
Teaching assistant Ioana Barin – Olariu, University “Vasile Alecsandri” of Bacau  

 
 

Abstract 
 
RCM is a methodology through which are described the details of identification and clustering 
(classification) the outlets, and the customers who visit them. Classification is based on various 
criteria, which concern both the seller and the buyer. The information resulted from 
classification makes possible the clustering of different locations which help improve planning 
and resource allocation, organize the activities and evaluation decisions. This article’s purpose 
is to provide clear information as regards: outletsr classification methodology, the importance 
of implementation, basic information vs. value-added information, data accuracy and 
maintainance of information The role of this methodology is to provide clear methods for 
classification and grouping the locations, based on the identification of clients and 
retailers.values/ similar needs. 
 
Keywords 
 
Retailers classification, basic information, value-added information, implementation system. 
 
 
1. What is the retailers classification methodology (RCM)  
 
1.1. The present situation 
Romania currently uses a classification system (RCS) on which were added elements 
of methodology (RCM). RCS (Retail Classification System) only describes how to 
collect information, while RCM (Retail classification methodology) also describe 
how the collected information can be used to improve business performance. In the 
past, RCS was regarded as a data collection activity and possibly as an 
implementation system. RCM focuses on using information and ensuring alignment 
with strategy and plans, making possible these two things. The focus is on optimizing 
the data to maximize performance at the situation in which the information was 
collected just in case that will ever be used. 
1.2. The advantages of using the classification  
Once complete the classification of outlets, the benefits are: 

- Consumer needs are better identified and satisfied; 
- Activities which are to implement could be better planned and designed; 
- Efficient allocation of resources and investments; 
- People trained for each type of channel (petrol stations, hypermarkets, 

wholesale, etc.) that would offer to the tradesman competent advice; 
- The representative becomes specialized on channel that operates. 

1.3. The importance of implementing RCM 
The classification becomes possible with collecting a minimal amount of information 
about outlets, and makes it possible to prioritize and ensure that: 

- Resources are allocated to outlets that efficiently count; 
- The activities are aligned and integrated between brand team and sales 

force. 

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An essential aspect of RCM is that it makes possible the alignment within the 
organization, by providing a common basis of locations wich both marketing team 
and sales force work with. Additionally, it ensures a common understanding of some 
key elements (authority, volume, quality, channel / segment). 
It is needed to decide whether held information is out of date, containing relevant 
details and whether the approach to classification is still in line with strategic and 
operational plans. Even though different methodologies and new processes were 
introduced, the need of suitable information on retail to support core business 
processes (trade coverage planning, territory management, activities prioritizing, etc.) 
always existed. 
However, RCM is focused on optimizing the available information and is useful 
regardless of what data or systems exist. 
A key difference is that the RCM was designed to provide a high degree of flexibility. 
This has great importance in adapting to local needs, but at the same time it offers a 
level of global consistency in terms of certain key issues such as channels definition, 
volume classification, etc. Flexibility also refers to the option to collect over time 
additional information from the outlets, and then be added into the database without 
creating disturbances. 
 
2. Basic information 
 
RCM offers two levels of data collection. The first step involves providing 
information that is considered essential / basic and to be collected from as many 
locations: 

- Customer data (static); 
- Required basic classifications data. 

Basic information is used for: 
- Outlets classification; 
- Fundamental processes of marketing. 

The real value of RCM comes from the efficient interpretation of collected data but 
also of how other processes influence. The RCM implementation planning must take 
into account the existing needs and how information in addressing these needs will be 
used. 
Basic information is used in making key decisions on resource allocation: 

- What locations will be covered? 
- Who will cover these outlets? 
- What activities will be implemented and in what locations? What are the 

main locations for investment? 
- What brand is present and in what location? 
- What brand activities will be implemented and in what locations? 

The answers to these questions underpin the elaboration of strategic and operational 
plan. 
There are several options to collect information: 

- TMR (Trade Marketing Representative); 
- DR (Distribution Representative); 
- MR (Merchandising Representative); 
- External staff: research agencies. 

Considering the simplistic nature of basic information, they can be collected from any 
of the above staff. However, information with higher value added must be collected 
by the companies staff, preferably TMR. Much of the basic data (at least those on the 
dealer) may already be available in the system or may be obtained from: 

- Public institutions: Chamber of Commerce, etc.; 
- Other companies: purchase database; 

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- Research agencies: Nielsen may have a list of outlets. 
Basic information are: 
2.1. Information about the customer 
It refers to basic information about the outlet (eg name, address, phone, etc.). This 
information is used to establish the territories to be visited addition who visit them. 
2.2. Information for basic classification  
It refers to data required for outlets classification. It includes 2 sets of data: 

- Elementary classification (minimal information); 
- Additional information. 

The information required to be collected is related to volume, channel, type of outlet, 
authority, consumers age, etc. It is possible to collect additional information to 
facilitate the planning, classification process. 
2.3. Channel and subchannel 
Defining different types of channels is based on consumer behavior and on the 
methods by which it can interact with them. In current terms of market dynamics, 
categories profile constantly change, the boundary between different types of 
channels becoming thinner. Ex: Convenience - Gas Stations which have inside cafe + 
a small outlet also. Under this interpenetration circumstances, each place with 
separate management is separately classified 
2.4. Authority 
Another important information refers to the power of decision of the location person 
of contact on distribution, merchandising, price and order. Authority intervenes in the 
establishment of: 

- Who will visit the outlet? Eg if decisions are taken in the outlet, it can be 
send a TMR to positively influence the decisions, over an account where 
decisions are taken centrally 

- What will the frequency of visiting? Eg: how often to visit an outlet on 
which decisions can’t be influenced. 

- What types of activities need to be made? Eg: if the person can decide on 
the order, a visit of a DR is required to take it. 

Information about the authority is included in: 
- Objectives planning; 
- Developing marketing activities that are appropriate for each type of 

authority; 
- Appropriate reports. 

2.5. Information about outlets location  
Location: This information provides clues about area’s features where the 

location is situated. 
Proximity: Represents those locations that are situated in residential areas, 

whose clients are mostly the same. The business potential comes from the fact that the 
seller knows the majority of customers, knows their preferences and his 
recommendation may influence a lot the buying decision. 
2.6. Additional information that are necessary to the classification 
Depending on the features of a market, it can collect other information, if they help in 
classification process. All such information, in each market, will provide additional 
data that will result in advanced planning, implementation and evaluation. 
Examples include: 

- Contracts; 
- Supply sources; it is recommended that this type of information to be 

collected, because it will facilitate the analysis of product flow in the 
secondary distribution chain; 

- The economic environment in which the outlet is located. 

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3. Value-added information 
 
After the basic information is collected, a basic classification is done, which indicates 
the priority locations in which it is useful to collect value-added information. 
Types of value-added information: 

- Data about the consumer; 
- Data about segments of consumers; 
- Data about consumer behavior; 
- Criteria on merchant; 
- Data about communication; 
- Data about employees; 
- Other criteria. 

3.1. Data about the consumer  
It is information about the consumers, which helps planning / prioritization, it may 
include: 

- Share of women/men; 
- Income and / or education. 

3.2. Data about segments of consumers  
It is information about the segments of consumers who visit a location; can help 
identify and prioritize: 

- Products like: clothes, drinks, accessories, etc..; 
- Social group who visit the location. 

3.3. Data about consumer behavior 
The decision on which such information will be collected are taken centrally, based 
on consumers research. If locally there is some information about consumer behavior 
that bring aid in planning, implementing and evaluation, they will be mentioned. 
3.4. Merchant criteria  
It is possible that additional information about the merchant to prove useful, 
especially for Horeca, where staff can be used as a "brand ambassador".  
Information can include: 

- Age; 
- Domain experience; 
- The ability to influence the.consumers 

3.5. Data about the communication 
A key example of this category is the percentage of shelves exposure - "Facing 
share", which offers the possibility of measure the exposure rate of outlet.  Improving 
of this indicator may be a key aspect of operational plans. 
3.6. Data about employees 
This data may be collected, especially if there are plans to use the employees as 
"brand ambassadors" or in other programs in which they are involved. It may collect 
information about: 

- Number of employees and the staff turnover; 
- Motivation and ability to influence; 
- Attitude towards the FMCG field. 

3.7. Other criteria 
In large part, it refers to HoReCa, because of its different specificity from retail, so is 
required typical data collection of this channel, taking into account the 
recommendations of the research team: 

- Existing contracts; 
- The kind of music; 
- The prices; 
- Various restrictions. 

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3.8. Additional information to those used in the classification 
As part of the collection of data, it may be decided raising additional information 
which will not be used for classification: 

- Dealer contact – eg: email, name, favourite visit day.; 
- Merchandising data - POP / POS materials existing in outlets; 
- Contract data - details of existing contracts; 
- Financial data – eg: credit period, credit limit, etc.; 
- Competition data. 

Collecting such data is a component of the implementation process, especially if this 
information was not available previously.  

RCM should be treated as a method to obtain an approximation of outlets. 
Although the accuracy of collected data is a priority, should not be lost of sight the 
cost and complexity resulting from the effort of errors minimizing. 
 
4. Data maintenance 
 
Once collected the information, it should be updated continuously. It is necessary to 
set the person responsible for this activity (in principle, the person who visits the 
outlets). 
For the outlets viewed more than one representative, it is necessary to set each area of 
responsibility. The recommendation is that DR (Distribution Representative) should 
handle basic and financial information, while TMR (Trade Marketing Representative) 
should handle the value-added and ratings. 
 
 
Bibliography  
 
1. Dwyer, F.R.; Tanner, J.F., (2006), Business Marketing, McGrew-Hill, New-York,  3rd 

edition 
2. Gattorna, J.L., (1999), Managementul logisticii si distributiei, Publishing House Teora, 

Bucuresti 
3. Peter, J.P.; Olson, J.C., (2008), Consumer Behavior and Marketing Strategy, McGrew-

Hill, New-York,  8th edition 
4. Weitz, B.A.; Castleberry, S.B., (2007), Selling – building partnerships, McGrew-Hill, 

New-York,  6th edition 
5. www.magazinulprogresiv.ro 

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