What is the market entry strategy and how can it be developed? A go-to-market strategy (GTM) is a program that helps you define your ideal customers, coordinate your messages, and prepare your product for launch. A go-to-market strategy keeps key business units on the same page, allowing you to meet market demand and effectively iterate your product.
Who needs a market entry strategy?
Anyone who finds themselves in the following 3 situations needs a go-to-market strategy:
- Release of a new product in the existing market
- Releasing an existing product to a new market
- New product market testing for growth
This is essential for both individuals and companies in the B2B space.
Why do you need a market entry strategy?
Market entry strategies provide the information companies need to effectively position themselves against competitors, create scalable entry and exit models, and use the right tactics to achieve their goals.
Startups usually fail when businesses assume a market need for a product and invest in its development without gathering this information.
What is the purpose of the market entry strategy?
When a go-to-market strategy is effectively executed, it aligns all stakeholders and creates a timeline to ensure each stakeholder is aware of defined milestones and outcomes, creating an accessible path to market success.
In general, market entry strategies are used to create the following benefits in the organization:
- A clear plan and direction for all stakeholders
- Reduce time to market products and services
- Increasing the chances of a successful product or service launch
- Reducing the possibility of additional costs due to the unsuccessful launch of the product or service
- Increasing the ability to react to customer changes and demands
- Improving the management of challenges
- Setting the path for growth
- Ensuring an effective customer experience
- Ensuring regulatory compliance
While go-to-market strategies are often associated with product launches, they can also be used to describe the specific steps a company must take to drive customer interactions for established products.
To create an effective go-to-market strategy, organizations must have a solid understanding of the target market and business environment. New and existing workflows should be clearly defined and a system established to manage the go-to-market strategy.
What are the main components of the market entry strategy?
A go-to-market strategy often includes five main components:
- Market definition: Which markets will be targeted for selling the product or service?
- Customers: Who are the target audiences in these markets?
- Distribution model: How is the product or service delivered to the customer?
- Product messaging and positioning: What is being sold and what is its unique value or the key difference compared to other products or services on the market?
- Price: How much should the product or service cost for each customer group?
The market definition identifies specific markets or groups of people who are able and willing to pay for a specific product or service. Markets must be defined and clearly defined, but must also include a large audience to meet the revenue and profit objectives of the product or service. If multiple markets are targeted, one should be prioritized over the others, and this primary goal should be clearly stated.
The customer component takes the information and research gathered to define the market and uses it to determine the target audience for the product or service. The company must decide whether it has existing customers who may be sales prospects or whether it needs to look for an entirely new set of target customers. A company developing a go-to-market strategy and improving its customer acquisition process must also focus on the buyer. For example, in a business-to-business (B2B) go-to-market strategy, the buyer could be an IT manager, a line-of-business (LOB) manager, or a member of senior management.
Customer segmentation is a common practice used to divide a customer base into groups of people who are similar in certain marketing-related ways, such as age, gender, interests, and spending habits. Buyer personas should also be created to help the company understand how to market and sell to these different customer segments and identify the most suitable customers for the product or service.
The distribution model defines the channels or paths the product or service takes to reach the end customer. Indirect channels often become part of a product seller’s sales plan. An indirect channel of distribution involves passing the product through additional steps between the producer and the customer. For example, a product in an indirect channel may be sent from the manufacturer to the distributor and then the wholesaler before reaching the retail store.
Some questions to ask when defining a channel include:
- How will customers purchase the product or service?
- How and where is the product or service distributed?
- If it is a physical product that is distributed in a store, how does it get there?
- If the product is software, how does the customer download it?
- Is the product or service on the organization’s e-commerce site or is it sold online through a third party?
Product messaging and positioning include defining the product or service, what it does, how the target customer will become aware of the product, and how leads will be generated, both from the current customer base and in defined markets. The product message should answer how the offering addresses a specific need in the market and why customers should believe this need is met. A value proposition should be created that shows how customers will get more from the product or service than the monetary value paid for it and any additional costs. Also, the product or service must be differentiated from other products in the market to ensure that it offers unique value.
Conclusion
A go-to-market strategy (GTM) is a plan that details how an organization interacts with customers to persuade them to buy a product or service and gain a competitive advantage. GTM strategy includes tactics related to pricing, sales, channels, buyer journey, new product or service launch, product name change, or product introduction to a new market.
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