A go-to-market strategy represents how companies market their new products to reach target customers in a scalable and repeatable way. It starts with how new products/services get developed to how these organizations target potential customers (via sales and marketing models) to enable their value proposition to be delivered to create a competitive advantage.
What do you take into account in a go-to-market strategy?
When launching new products successfully there are a few elements to take into account:
In today’s digital landscape, when it comes to digital products or physical products that have digital components, built-in growth features enable a successful go-to-market strategy.
Marketing, segmentation, and pricing
Other elements like market segmentation (where do we start? who do we target?), and pricing can be critical elements to build up momentum. For instance, Facebook started from specific niches, at selected campuses across the US, before opening up to anyone else.
Market context and distribution
A great product without proper distribution won’t go far, or too far. Distribution can be built in several ways. And based on the kind of product, you will structure your organization’s go-to-market strategy.
For instance, for the kind of product type and whether the market is ready or not for that, do you need a sales force able to deal with large enterprise customers? Or rather marketing power to push through a larger number of people?
For that, it will be extremely important to understand the market context:
And from there elaborate a growth/launch strategy:
In most cases, the market entry strategy can vary based on how crowded is the market, whether customers are used to the kind of product you’re offering, and perhaps if you’re offering something wholly new, either because its a whole new product or it has never been done in that geographic market.
Business model innovation, therefore, becomes a function of a much better product, or the ability to cut out fragmented intermediaries that extract value from the market. Or yet, by redesigning the whole customer value chain.
As new companies enter existing markets or create new ones, they tend to master a mixture of product, distribution and value innovation as a competitive advantage.
Zoom Multipronged go-to-market strategy
Zoom defines its go-to-market as a “multipronged go-to-market strategy for optimal efficiency.” It starts with “viral enthusiasm” triggered by users as they join the platform for free.
The good experience is channeled by sales efforts to identify customers opportunities, such to transform a non-paying user into an enterprise customer.
For instance, as pointed out by Zoom in its 2019, 10K “back in 2019, 55% of the 344 customers that contributed more than $100,000 of revenue started with at least one free host prior to subscribing.”
Therefore, the sales model combines the viral demand generation from the free Zoom Meeting plan with direct sales looking for potential customer opportunities.
The Zoom direct sales force includes:
- Inside sales
- Field sales
Those are organized by customer employee count and vertical.
In short, Zoom the workflow looks like he following:
- Free accounts are channeled through the right sales representative.
- SMBs opportunities will be assigned to an inside sales team member for the acquisition of the paid account.
- Larger SMBs accounts or potential enterprise accounts are assigned to field sales.
This sort of go-to-market is skewed toward product and distribution.
OYO octopus go-to-market strategy
The process of standardization of the experience starts with what OYO claims to be a 150 point checklist that goes from the booking experience to the support center and the on-ground Cluster Managers, ready to solve any problem it might arise during the experience of guests.
Thus the go-to-market (expansion) strategy looks like the following:
- Identification of the next opportunity/area/vertical to tackle.
- Acquisition via a growth representative expert in building up partnerships.
- The expansion team will apply the 150 point checklist to make the property in line with the OYO standard.
- Support and assistance provided by ad hoc OYO’s representatives.
- The expansion process ends when the company is able to properly manage the end-to-end customer experience.
This sort of go-to-market is skewed toward distribution.
Partnerships as a go-to-market strategy
In some other cases, a successful go-to-market strategy can be primarily about finding the platform or the partner that can help your product to gain the right amount of traction.
Tesla’s sports’ car go-to-market strategy
From Tesla’s mission, it’s clear that the company wants to become in the long-run a mass-adopted car company. Yet, when it launched, it was all but a mass-market organization. An outside looker might have had the impression that Tesla was just a sports car company, coming up with a great electric alternative.
However, that was just a go-to-market strategy used by Tesla to enter an extremely competitive market, which required massive capital to survive in the first place. Tesla, instead of going for a model that would compete with all the other sedan car companies in the middle and lower segment of the market.
The company opted for a go-to-market strategy that was the only feasible at the time. It built a sport’s car, that was interesting only to a relatively small audience, and yet it was competitive.
Sport’s cars have much higher prices compared to other models (like sedan), and perhaps the person buying that type of car might be less sensitive to price itself. That is how Tesla slowly built up its strategy to cover larger spaces within the car industry.
And while Tesla is still a smaller player in terms of volume of car produced, as of 2020, compared to companies like Ford and GM, it is rolling out its strategy to become a mass-market electric car company. As this is a complete market change, it will still require a few years for this strategy to roll out successfully.
Netflix DVD-rental go-to-market strategy
When Netflix started its operations, it did that in the most feasible way at the time, as a DVD-rental company.
That was the most viable way to start a business that could compete with existing players like Blockbuster. Netflix could have tried to play it bigger. Netflix had known for years that being a competitive player in the DVD-rental space, was “just the beginning of something else.”
Yet the first time “streaming” was announced on Netflix plan was in the 2007 annual report, presented in 2008, and by 2009 annual report the term “streaming” would be mentioned 88 times (FourWeekMBA analysis). That is when things started to pick up and Netflix moved away from its go-to-market strategy.
It took over a decade from its foundation, for Netflix, to see its strategy to roll out fully!
Airbnb, OPN go-to-market strategy
As the story goes, in 2007, Brian Chesky and Joe Gebbia couldn’t afford the rent on their San Francisco apartment that is why they decided to transform their loft in a lodging space.
Yet instead of relying on Craiglist, they built their site, which they called Airbed & Breakfast and leveraged on Craigslist to drive users back to their website,
To be sure, Airbnb didn’t just gain visibility on Craigslist. Instead, it surfed the site to push its platform. A platform business model to take off run into the so-called chicken and egg problem.
In short, a platform differently from a linear business, to gain initial traction has to kick off its operations on often different sides. For instance, for Airbnb, it was critical to enhance the listings available on the platform to make it valuable for users, and vice versa.
The more users joined, the more it would attract listings. Where to start? Back in 2010, Airbnb figured a mechanism and automation that enabled listings on the platform to be reposted on Craigslist, thus generating substantial traffic.
In addition, those who searched for listings on Airbnb were users looking for alternatives to Hotels, so a great target. By using this initial strategy Airbnb managed to solve its initial growth phase.
Coca-Cola, franchained go-to-market strategy
In a FourWeekMBA analysis to dissect the Coca-Cola system, the company uses a template wherein the short term its new operations are controlled and the company keeps a controlling equity stake in the new venture.
As soon as it takes off, the operation goes back from chain to the franchise. Thus the company divests its controlling stakes and in the long-run that becomes a franchising agreement.
From there, the concept of “franchained.” This go-to-market strategy has worked pretty well for Coca-Cola since 2003, to enter new markets by leveraging on its scale, by controlling the new venture, and after that leaving it independent, by tied to Coca-Cola with a franchising agreement.
DuckDuckGo, differentiating the value proposition to gain traction over the dominating giant
As I explained in privacy as business model, DuckDuckGo used a clearly differentiated value proposition compared to Google. Therefore, even if it entered the search industry quite late, over the years it kept growing.
I like to call it privacy as a business model, because privacy built into the company value proposition influences the whole business.
- It affects product engineering, as a privacy based business model has to make sure that it collects the minimum amount of data necessary to make the service work well, while throwing it on the fly.
- It changes the monetization strategy: as also the way the platform makes money, even if hidden, it has to be context-based, not behavioral-based.
- It lowers switching costs as the sole fact that the product offers privacy as value proposition, it makes the user pass through the initial friction to switching up.
- It is a different type of marketing, what we can call contrarian marketing, as it offers an alternative to the current, dominant players, by dismantling their core assumptions.
- Direct Sales: Selling products or services directly to customers through sales teams or online platforms. This approach is common for high-touch or complex solutions.
- Indirect Sales: Utilizing channel partners, such as distributors, resellers, or retailers, to reach a wider audience and leverage their existing customer relationships.
- Online Sales: Leveraging e-commerce platforms to sell products directly to consumers. This strategy often includes digital marketing, SEO, and social media advertising.
- Content Marketing: Creating valuable content (blogs, videos, ebooks) to educate and engage the target audience. Content can position the company as an industry thought leader.
- Influencer Marketing: Collaborating with influencers in the industry to promote products or services. Influencers can have a significant impact on their followers’ purchasing decisions.
- Product-Led Growth: Offering a free or freemium product or service with the expectation that users will upgrade to premium features or purchase related products.
- Partnerships and Alliances: Forming strategic partnerships with complementary businesses to co-market or bundle products and services.
- Event Marketing: Participating in trade shows, conferences, or hosting webinars and workshops to showcase products and connect with potential customers.
- Social Media Marketing: Leveraging social media platforms to engage with customers, build brand awareness, and promote products or services.
- Channel Expansion: Expanding into new geographic regions or target markets to reach untapped customer segments.
- Customer Referral Programs: Encouraging existing customers to refer new customers in exchange for incentives, discounts, or rewards.
- Inbound Marketing: Creating valuable and relevant content to attract and engage potential customers, leveraging SEO, blogs, and email marketing.
- Outbound Marketing: Proactively reaching out to potential customers through methods like cold calling, email marketing, and direct mail.
- Product Differentiation: Emphasizing unique features or benefits to distinguish the product from competitors in the market.
- Pricing Strategies: Implementing competitive pricing, value-based pricing, or dynamic pricing based on market conditions.
- Consumer Research: Conducting market research to understand customer needs, preferences, and pain points, and tailoring strategies accordingly.
- Product Launch Campaigns: Creating buzz and anticipation around a new product or service through marketing campaigns and promotions.
- Customer Success Programs: Focusing on post-sale customer support and success to drive retention and upselling opportunities.
- Vertical Integration: Controlling various stages of the supply chain, from production to distribution, to optimize costs and quality.
- Channel Marketing: Coordinating marketing efforts with channel partners to ensure consistent messaging and branding.
- International Expansion: Expanding into international markets to tap into new customer bases and revenue streams.
- Customer Feedback Loops: Establishing mechanisms to gather feedback and continuously improve products or services based on customer input.
- Segmentation and Targeting: Dividing the market into specific segments and tailoring marketing strategies to address the unique needs of each segment.
- Customer Education: Providing resources, training, or certification programs to educate customers on how to use products effectively.
- Sustainable and Ethical Practices: Emphasizing sustainability, ethical sourcing, or social responsibility as a key selling point.
- Definition: A go-to-market strategy outlines how a company markets its new products or services to reach target customers in a scalable and repeatable way. It covers various aspects from product development to marketing, segmentation, pricing, and distribution.
- Product Development: Digital products or physical products with digital components can benefit from growth features that enable a successful go-to-market strategy. Frameworks like growth hacking, data analysis, and marketing come together for a successful product launch.
- Marketing, Segmentation, and Pricing: Market segmentation and pricing are critical elements to build momentum. Starting with specific niches and gradually expanding can be an effective approach, as seen with Facebook’s strategy.
- Market Context and Distribution: Proper distribution is essential for a successful product launch. Understanding the market context, including existing market size and potential for growth, helps to formulate an effective growth/launch strategy.
- Examples of Go-to-Market Strategies:
- Zoom: Utilizes a multipronged go-to-market strategy with viral enthusiasm from free accounts channeled through direct sales to identify enterprise customers.
- OYO: Implements an expansion strategy by identifying new opportunities, acquiring partnerships, and applying a checklist to standardize experiences.
- Partnerships: Collaboration between companies for mutual marketing campaigns to reach shared business goals.
- Tesla: Adopted a sports car go-to-market strategy initially, targeting a smaller audience, and gradually expanded to become a mass-market electric car company.
- Airbnb: Leveraged other people’s networks (OPN) to gain initial traction and used Craigslist to push its platform.
- Coca-Cola: Followed a franchained go-to-market strategy, initially controlling new ventures and then transitioning to franchising agreements.
- DuckDuckGo: Differentiated its value proposition based on privacy, offering an alternative to dominant search engines.
Related Market Development Frameworks
Connected business strategy frameworks
FourWeekMBA Business Toolbox
- What Is Business Model Innovation
- Growth Strategies To Expand, Extend, Or Reinvent Your Business Model
- What Is a Business Model
- What Is Business Strategy
- What is Blitzscaling
- What Is Market Segmentation
- What Is a Marketing Strategy
- What is Growth Hacking
- Speed-Reversibility Matrix
- Ansoff Matrix
- Innovation Matrix
- Digital Growth Matrix