In the fast-paced consumer industry, strategic business planning is essential for survival and growth. Two critical components of these strategic frameworks are Go to Market (GTM) and Route to Market (RTM) strategies. While they may appear similar, their functions and impacts on business are clearly different. This article aims to explain the differences and how they interact to drive business success.
What is Go to Market (GTM)?
A Go to Market (GTM) strategy is essentially a plan that defines how a company will reach and deliver value to its customer segments. This strategy covers all aspects of the marketing and commercialization processes, from knowledge of the consumer and their needs, identification of the target market, positioning and communication strategy of the brands to the promotion, distribution and sale of the products.
For example, a beverage company might use a GTM strategy to decide whether to focus on a premium product line for upscale restaurants or an economy line for supermarkets. The GTM strategy is crucial as it sets the direction and tactics of how the product will be introduced and sold in the market.
GTM is essentially the roadmap that guides a company from the conception of a product to its launch.
What is Route to Market (RTM)?
Route to Market (RTM), on the other hand, focuses specifically on the distribution strategy and supply chain needed to get products from the manufacturer to the end consumer.
RTM addresses fundamental questions such as how to physically reach the market, what distribution and marketing channels and delivery models to use, and how to efficiently manage logistics and inventory. This strategy deals with optimizing distribution channels, improving logistics efficiency and building strong partnerships with retailers or distributors. For example, a cosmetics company's RTM might focus on whether to distribute its products through salons, retail stores, or direct online sales. The RTM strategy ensures that once a customer decides to purchase, the product is available in the right place at the right time.
It is the operational infrastructure that allows the GTM strategy to be carried out successfully. For a consumer company, Trade Marketing actions or initiatives or success photos (assortment, merchandising, display or sales drive, etc.) are fundamental aspects of RTM.
Key differences between GTM and RTM:
While both strategies aim to improve market reach and profitability, they focus on different stages of customer engagement. The GTM strategy consists of defining what will be offered to the market, to whom and how. In contrast, RTM strategy deals with execution, ensuring that once the market strategy is defined, logistics are aligned to meet those objectives efficiently. For example, a technology company may have a GTM strategy that focuses on selling through online platforms, while the RTM strategy would ensure logistics setup for express delivery services like Amazon or drop shipping.
Specifically, we can see the following differences:
Strategic Focus : GTM focuses on overall marketing strategy, including market segmentation, product positioning, pricing, and promotion. On the other hand, RTM focuses on the practical execution of that strategy, ensuring that the Products reach customers through the appropriate distribution channels efficiently and profitably.
Scope: GTM covers a broader range of activities, from market research and product development to advertising and sales. RTM is mainly limited to supply chain management and physical distribution of products.
Flexibility: GTM is more flexible and strategic as it can adapt to different markets, customer segments and competitive conditions. On the other hand, RTM tends to be more structured and operational, as it focuses on the practical implementation of the distribution strategy.
Relevance for FMCG companies: In the context of FMCG companies, both GTM and RTM are critical to business success. A strong GTM strategy allows the company to identify market opportunities, differentiate its products, and effectively reach target customers. On the other hand, an efficient RTM strategy ensures that products are available in the right places, at the right time and in the right quantities to meet market demand.
How GTM and RTM complement each other
Despite their differences, GTM and RTM strategies are far from isolated; They are interdependent and must be aligned for effective market penetration. A well-designed GTM strategy will fall short without an equally strong RTM strategy that ensures products are accessible and deliverable as promised. For example, Apple's launch of a new iPhone benefits greatly from a synchronized GTM and RTM strategy, in which the hype is aligned with global availability in stores and online, ensuring that customers can buy the device as soon as it is launched.
We are going to use two practical examples to illustrate the differences between Go-to-Market (GTM) and Route-to-Market (RTM) strategies, focusing on a consumer electronics company and a snack brand. These examples will help clarify how each strategy plays a different role in a company's market strategy.
Example 1: Consumer electronics company
GTM Strategy:
GTM's strategy focuses on how the smartwatch is presented and perceived to potential customers, with the goal of creating demand through targeted marketing and clear value communication.
Product: A new smart watch with advanced health monitoring functions.
Target Audience: Health-conscious consumers ages 25-40 who already use or are interested in fitness technology.
Value Proposition: Offers unique features such as blood pressure monitoring, sleep quality analysis, and integration with multiple fitness apps.
Sales and Marketing Plan: The launch campaign includes online ads targeting fitness forums and social media, collaborations with health influencers, and demos in tech stores.
RTM Strategy:
The RTM strategy ensures that, once demand is created, the product is readily available and accessible to consumers, handling the practical aspects of product distribution and availability.
Distribution channels: Mainly sold through online platforms such as Amazon, the company's own website, and large electronics retailers.
Logistics: Partner with a logistics company to manage inventory and ensure next-day delivery capabilities, improving customer satisfaction.
Retail Partnerships: Enter into agreements with major electronics retailers to provide space for product demonstrations, staff training to explain product features effectively, and promotional displays during the launch period.
Example 2: Snack brand
In this example, the GTM strategy is to communicate the benefits and unique selling points of organic potato chips to spark interest and create demand in the market:
Product: A new line of organic gluten-free potato chips.
Target Audience: Health-conscious snackers and consumers with gluten intolerance.
Value Proposition: A tasty and healthier alternative to traditional snacks, made with all-natural and non-GMO ingredients.
Sales and marketing plan: Use point-of-sale promotions, free samples at grocery stores, and social media campaigns focused on health and wellness lifestyle.
The RTM strategy ensures that these chips are physically available where your target customers shop, focusing on the best ways to physically get the product to these customers and maintain quality and freshness:
Distribution channels: Available in organic food stores, conventional supermarkets and online grocery platforms.
Logistics: Develop partnerships with distributors who specialize in organic products to ensure wide availability and maintain product freshness.
Retail Partnerships: Secure prime shelf space in high-traffic areas of stores, particularly those known for a larger selection of health-focused foods.
Conclusion
These examples show that, while the GTM strategy consists of defining and communicating the product's market proposition to generate demand, the RTM strategy focuses on the operational and logistical aspects necessary to satisfy this demand efficiently.
Both strategies must be well coordinated to ensure successful market entry and sustainable sales performance.
Understanding the nuances between marketing and route-to-market strategies is key to the success of any company in the consumer industry.
Both Go to Market (GTM) and Route to Market (RTM) are critical components of a consumer goods company's marketing and distribution strategy. While GTM sets the overall strategic direction, RTM provides the operational infrastructure necessary to bring that strategy to reality. Understanding the differences between these two concepts is essential to designing a comprehensive strategy that maximizes success in a competitive and constantly evolving market.
The TMC Consultores team can help you evaluate and/or redesign your company's Route to Market, to guarantee the success and long-term sustainability of the business.