What Is A Go-To-Market Strategy?
A go-to-market strategy is the plan that a business follows to achieve maximum market penetration and profitability. It consists of the entire life of a product, including its:
- distribution strategy
- introduction into the market
- client service
Note: it is important to stress that a go-to-market strategy is not a a product launch; rather, the product launch is simply the introduction of the product into the market, a step in the process of a go-to-market plan.
A Go-To-Market Strategy Answers 4 Questions
What Are You Selling?
Sometimes this is simply a question of “should my business sell ice cream or water ice?” Other times, it’s quite more complicated.
A go-to-market strategy will analyze the opportunities, costs, and potential risks involved with different products, then help the organization to determine what product it should offer. The business will often perform market research and develop a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) that will help it to make a decision.
Part of this research is the identification of a unique value proposition. A unique value proposition offers a unique value to customers that differentiates it from other available options. Points of differentiation can involve many aspects of a product, such as its price (ex. it’s the most expensive on the market and conveys prestige when I own it), its ability to be customized (ex. getting a birthday cake from a bakery vs. a convenience store), or its performance (ex. it’s the biggest, fastest, smoothest, etc.)
“Jobs to Be Done”
It is important to note that identifying what you are selling is often not so obvious. In one well-known example, McDonald’s ran into roadblocks when trying to increase sales of its milkshakes. After spending time and resources refining the texture and flavor without seeing any increases in sales, it looked deeper into why its customers actually purchased the milkshakes.
It came to learn that the company sold a large percentage of its milkshake sales to morning commuters. Upon further research, it learned that the commuters bought the milkshakes because it held them over until lunch and it alleviated the stress of their morning commute.
In this case, McDonald’s wasn’t selling breakfast; it was helping people to handle the stress of their morning commute. By understanding the underlying value that it delivered to customers, it could then move forward in developing products to sell to other commuters or even upsell its milkshake customers. This theory, proposed by Harvard professor Clayton Christensen, is known as the “Jobs to be Done” theory.
By understanding the “job to be done” by the product that you’re selling, you will be more likely to recognize opportunities that you would otherwise have not seen. Marketers readily understand that “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”, but the truth is that they don’t want quarter-inch holes either. They want access to something, or they want to affix something to another object, or they want to let something out of another object. In other words, if a drill bit manufacturer learns that people primarily buy a certain bit just for gardening, maybe it should create a standalone product for that market segment.
To Whom Are You Selling Your Product or Service?
Identifying a target customer segment is a key step in a go-to-market strategy. This will impact your distribution, sales, and promotional strategies significantly.
Depending on whom you decide to sell your product to, you will have to map out that customer segment’s buyer’s journey. Who is the gatekeeper? Who is the decisionmaker? What about the influencers? How do they make a decision? Do they deliberate and research? Are they amenable to cold calls? Would an inbound strategy make more sense?
Let’s take the example of a web design company that is deciding whether to offer its services to law firms or small colleges. The buyer’s journey of each of these differs tremendously: for example, a law firm is likely to contact the agency directly in response to advertising, while the college likely has an RFP process that would not be at all impacted by ads. The web design agency will take measure of its ability to reach decision makers in each market. It will consider the profitability of each market segment. It will review its abilities to fulfill the needs of each segment and how it could potentially differentiate itself in the eyes of decision makers. Finally, it will decide to target one vs. the other, a decision that will guide its distribution and promotion strategies.
How Are You Going To Get It To Customers?
A go-to-market strategy will also answer the question of how to deliver a product or service to customers. This is referred to as a distribution strategy.
A well-researched distribution strategy will identify the most profitable channels to sell a product. There are dozens, if not hundreds, of distribution channels that a business can consider and choosing the wrong strategy can potentially spell doom for a product that otherwise would have been successful.
The go-to-market strategy will answer questions such as:
- Are you going to sell through retailers?
- Will your product sit on store shelves? Is is something that will require installation? Who will perform the installation?
- Will you sell through wholesalers?
- Will you sell directly to consumers? If so, how will you reach them?
- Are you going to focus on trade shows?
- Will you build an ecommerce site?
- Does multi-level marketing make sense for your business?
- Will you use door-to-door salespeople that will deliver the product on the spot?
How And Where Will You Promote Your Product?
The “promotion” part of a go-to-market strategy is the first thing that comes to mind when people think of marketing. There are thousands of different ways that one can promote a product, most of which are dependent on the distribution strategy.
An axiom of advertising is that a brand must “deliver the right message, to the right person, at the right time.” What do we mean by this?
- A Super Bowl commercial would be cost-ineffective for a company that employs door-to-door sales to promote a product.
- SEO would benefit a local car dealership more than it would benefit a local gas station
- Promoting a local law firm by going door-to-door around dinner time would likely do more harm than good for the firm
A Go-To-Market Strategy Can Make Or Break A Product
There are so many things that a business can get right or wrong when developing a product. It’s likely that a business will find itself choosing to offer the wrong service, trying to sell it to the wrong consumer, distributing it through the wrong channel, or promoting it in the wrong way.
The traditional way of minimizing this risk is through extensive market research. This often comes at a cost of time and money, which can potentially give a competitor a head start that will result in a constant game of catch-up, but could also help a business avoid a disaster. The early bird often does get the worm, but the second mouse gets the cheese.
The Lean Startup
In recent years, a movement called the Lean Startup has gained momentum. The idea of the lean startup is to put out a Minimum Viable Product, or MVP, which will allow a business to test the four questions answered by traditional market research. By doing this, the company will be able to test distribution, product promotion, and other unknowns without pouring large amounts of capital and time into efforts with uncertain outcomes.
This methodology is used by companies to deliver product/market fit through the scientific method rather than surveying a market and taking an educated guess at what will work. Detractors of the Lean Startup, such as Peter Thiel, believe that it limits the possibilities of a product, writing that the method is “code for unplanned” and believes that it is nothing more than “making small changes to things that already exist.”