What Are The Main Routes To Market?

The top question we tend to be asked by business startups is ‘What are the main routes to market?’. Truth is, there are lots of different routes to market, some of which are well-established and others that are constantly emerging.  

In this blog, we will go over direct, indirect, and hybrid routes to market. If you’re a business startup or looking to diversify, then continue reading.  

Defining Routes To Market & The Importance 

A business’ route to market determines the channels it uses to bring its product to target customers.  

To accelerate growth in a specific market, a business must understand how to capitalise on trends. Target customers will be more receptive to different route-to-market strategies. For example, you’d expect a wholesaler’s target audience to be other businesses. If not, it’s likely something has gone very wrong.  

One business can have multiple channels, making them more accessible. Ultimately, the important factor in route to market strategy is that it’s customer-centric.  

The main routes to market require different levels of investment from businesses. The costs and time associated with one channel may be greater than another, yet the ROI may be more solid. Ultimately, you need to balance target customer needs with profitability.  

Direct Routes To Market 

1. Direct Sales- Involves selling straight to customers, usually via a dedicated sales force or company-owned channels- for example, physical stores or direct mail.  

Advantages for direct sales- 

• Easy to control in-house, including variables such as sales process, pricing, and buyer relationships 

• Allows for greater profit margins by eliminating intermediaries 

• Direct line of communication with customers allows companies to act instantaneously on feedback to improve their product or service 

Possible setbacks for direct sales- 

• Setting up and maintaining a strong sales force can be costly  

• Audience reach is highly dependent on resources  

2. E-commerce– Products sold online, through a company website or an online marketplace.  

Advantages of e-commerce- 

• Opportunity to reach customers on a global scale 

• Typically leads to fewer overheads, as there’s no need for physical retail space 

• Highly convenient for customers, who can purchase products at any time 

Possible setbacks for e-commerce- 

• Highly competitive route to market 

• Must have a strong digital marketing strategy to support the platform 

• E-commerce businesses require the capacity to manage returns and deliveries 

• The customer service platform must be attentive and well-managed, which can be costly 

3. Direct Marketing- Approaching customers via direct channels such as email campaigns or telemarketing.  

Advantages for direct marketing- 

• Businesses can tailor how they interact and communicate with individual customers 

• A campaign’s performance is easily tracked, making its effectiveness easy to measure 

Possible setbacks for direct marketing-  

• Most direct marketing campaigns have low engagement and require high volumes of outreach, which can be time-consuming 

• The success of these campaigns highly relies on accurate customer data 

Indirect Routes To Market  

1. Distributors- Involves bulk purchasing a product to then sell on to retailers or end-of-the-line users. 

Advantages for distributors- 

• Gives businesses easy access to new markets 

• By handling logistics in-house, it reduces the company’s distribution costs 

Possible setbacks for distributors- 

• Distributors have less control over marketing and product selling 

• Lower profit margins 

2. Retailers- Products are sold via third-party retail stores, either physical or online (or both). 

Advantages for retailers-  

• Retailers are accredited for having an established customer base 

• As a route to market, retail is highly convenient, as they can manage transactions, inventory, and customer services all in-house 

Possible setbacks for retailers-  

• Set up for retailers usually requires a mark-up, which can reduce margins 

• Some brands lose control of brand representation when moved to retail 

3. Wholesalers– Purchase large quantities of products and then sell them to retailers in smaller amounts.  

Advantages for wholesalers-  

• Retailers must buy in bulk, generating a high volume of sales 

• Product distribution across various regions 

Possible setbacks for wholesalers- 

• Limitations to brand control and product distribution 

• Wholesale prices tend to be deals for businesses, affecting profit margins 

Hybrid Routes To Market  

1. Franchising- In exchange for fees and royalties, a business allows other businesses to operate under their brand.  

Advantages of franchising-  

• Companies that opt for the franchising route can penetrate the market faster with lower capital investment 

• By gathering local market knowledge and expertise, franchisees can adapt to local market preferences 

Possible setbacks for franchising-  

• Establishing brand consistency across multiple franchises can be difficult 

• Managing partnerships can be time-consuming and comes with complications at times 

2. Strategic Alliances- Partnerships formed with other companies to leverage each other’s assets and strengths for enhanced market entry or expansion. 

Advantages for strategic alliances- 

• An alliance allows companies to share their resources, giving a greater advantage 

• Partners with a shared goal can help each other enter the market in innovative ways 

Possible setbacks for strategic alliances-  

• The success of partnerships depends on mutual reliability and performance 

• Conflicts may occur over differences in management styles 

Factors To Consider When Choosing A Route To Market  

Based on the advantages and setbacks listed above, there are many factors to consider when choosing from the main routes to market.  

The control you have over your brand, customer experience, and geographic reach will be established by the channel you choose.  

When choosing from the main routes to market, you must consider your target customer’s preference. It’s a route that must very much work both ways, driving you towards them, and them towards you.  

Your product will also determine a viable route to market. The nature of the product, its shelf life and perishability will affect the channel(s) you’re able to take. Some products must be shifted quicker, meaning a direct route to market is required.  

The main routes to market are associated with varied costs, in relation to marketing, distribution, and logistics. Doing a cost analysis will decide the margins and route to market your business can afford to take.  

Choosing A Strategic Route To Market With GrowTraffic 

We hope that after reading this blog you are more familiar with the main routes to market. 

If you are not sure what the right channel is for your business, don’t worry. We can help.  

With decades of experience in marketing, GrowTraffic has assisted business start-ups, as well as businesses looking to excel in their brand. You can read our successful case studies here.  

We are here to support businesses with tailored guidance and support, whether that be in SEO, marketing training, or social media strategy. If you in any way feel stilted when it comes to growing your business or think our services could benefit you, contact us today.