November 14th, 2018 | By: The Startups Team
A “go to market strategy” outlines how your startup plans to deliver your product to your customer. While similar to a business plan, a go to market strategy is narrower in scope. A business plan covers everything about the business, while go to market strategy zeros in on exactly how your startup will deliver a product or service to your customer.
This one might seem painfully obvious, but you have to know what you’re selling before you can sell it. With that in mind, take a little time to clearly define your product before you dive into the rest of your go to market strategy. You need to be able to say exactly what the product is as well as what it does.
Granted, much of the information you uncover as you develop your go-to-market strategy will speak to this. But your research will be more useful if you’re starting with a solid understanding of what, exactly, it is you’re selling.
There are a few important elements to consider when you’re defining the market for your startup.
The target market section is where you determine and lay out exactly who your product is for. Be specific. A target market description should include the market size, demographics, income, geography, etc. It’s the macro-level view of who is going to be buying your product.
The total addressable market (TAM) explains just how much potential for growth your startup has. Investors want to know you’re solving a painful problem in a giant market. They want to invest in good companies that can have huge outcomes to make up for all the bad investments they might have made. They’re thinking to themselves, “If this startup isn’t going after a big enough market, it won’t be able to create an exponential outcome for me.”
TAM addresses the question “How many people could potentially use this product?” It doesn’t mean how many people will use your product. This is the question you’ll get asked the most, and the answers are often the most wrong.
The problem starts when people don’t realize they are using different terms interchangeably. Are you being asked how many people could potentially use your product or how many people will use your product? Nearly every person on the planet may have the ability to watch Netflix, but that doesn’t mean the TAM for Netflix is the entire population of Earth!
Market need is about determining the drivers of demand for your product. Why do your potential customers need your product? What will drive them to spend their money on it? In this section, you’re going to look at the current behaviors of your target market and outline how those behaviors prove that they’ll be interested in spending money on your product.
Market need is not your competitive analysis, but it does help to look at your competition in order to determine how people are already behaving. It also helps because you can find gaps in the market — need that aren’t currently being filled that your company can fulfill.
If you’ve been able to conduct market tests — or if you have access to market test results that have been conducted by someone else — you should write them up in the market test results section. What conclusions did you come to after running your tests or doing your research? How did you get to those conclusions? Do you have any experts who can back you up?
Here are some questions about your market that you should be able to answer by the time you’ve finished this section:
✓ How big is your market?
✓ Where is it located?
✓ What are some demographic facts about your market?
✓ Why do your potential customers need your product?
✓ What are they already spending money on?
✓ Is your target market growing, declining, or staying stable?
This is where you get specific about the person who is going to buy your product. The user persona is a character created by you and your team to personify the typical customer of your startup. Using the data you gathered in the market section, you should be able to create a person who represents your greater market.
✓ What’s your user’s name?
✓ How old are they?
✓ Where do they live?
✓ Do they live in a house or an apartment?
✓ Do they own or rent?
✓ What do they do for work?
✓ Do they have children?
✓ Are the married? Single? Divorced?
✓ What level of education have they achieved?
✓ What’s their income?
Continue with questions along those lines until you have a fully fleshed-out persona. The specifics will help you narrow down exactly who you’re targeting and will help you outline more general demographics for your target market.
If you’re going to sell your product, the number one thing you have to ask yourself is: How does this benefit my customer? What problem am I solving for them? Without knowing what the problem is, you can’t present your product or service as the solution.
There’s a good chance that your product solves multiple problems, and that’s wonderful. Right now, however, it’s time to lead with just one of them – the biggest problem you solve. If your biggest problem isn’t compelling, it stands to reason that the second biggest problem you tackle isn’t going to save you. You don’t win on the number of problems you solve; you win on how well you solve a particular problem.
This doesn’t mean we will ignore the other problems. We can certainly cite those as well, but we want to tighten our focus initially so that we can talk about this problem first, build a story around it, and then dig into related problems to solve later.
Not all problems are created equal. The value of a problem is proportionate to how painful that problem is. The more painful the problem, the more powerful the solution.
You don’t have to be addressing a life-threatening problem to make it powerful. You need to focus on the detail of the pain in your problem. Even “convenience” can be presented very differently if it isn’t given enough character.
Here are some questions you should be able to answer by the end of this section:
✓ What problem is my product solving?
✓ Is it my customer’s biggest problem?
✓ How does this benefit my customer?
The value proposition is one or two sentences that spell out exactly why customers should buy your product instead of a competitor’s. What value does your product bring to your user’s life? Why will they want to spend money on the thing you’re offering?
A good place to start when determining the value proposition of your startup is by determining the problem facing your customer. Once you’ve established the problem, it’s time to show how your product solves that problem. Make a list of the benefits and value your product brings to your customers. You can also research the competition in order to determine what makes you stand out from everyone else.
“Stripe is the best software platform for running an internet business. We handle billions of dollars every year for forward-thinking businesses around the world.” — Stripe
“Free music. Millions of songs. Play on any device. No credit card needed.”
“Software to fuel your growth and build deeper relationships, from first hello to happy customer and beyond.”
How much are you going to charge for your product? Determining your pricing strategy is more involved than just picking a number out of thin air and slapping it on your website. You have to truly know your market, know your customer, and know your product.
It’s a complicated process that involves clear and deep knowledge of your product and the marketplace. What are your competitors charging? How much does it charge you to make, ship, or store your product? These are all factors to take into consideration when you’re figuring out your pricing strategy.
Your investors are going to want to know what your plan is for marketing and promotion.
Remember: This is your go to market strategy. And what’s more focused on going to your market than your marketing and promotion plans?
You don’t have to know every single step of your marketing plan at this point, but you should be able to answer the question: What’s your promotion strategy?
You should also do some research into the marketing strategies of your competitors for this one.
Here are some questions you should ask yourself as you’re developing your marketing and promotion plans:
✓ Where are my competitors advertising?
✓ Does it seem to be working?
✓ Where aren’t they advertising?
✓ Am I going to focus on digital marketing? Content marketing? Social media? Billboards? Advertisements in print magazines? Why? Why not?
✓ What’s the cost of this advertising method?
✓ Where does my target customer/user persona spend the most time?
✓ Where do they spend the least time?
A go to market strategy is important for investment, but it’s also important for acquiring customers. (That’s the real end goal, after all.) So once you’ve figured out who your customer is, where they are, and how they buy things — go get them! Put that go to market strategy to work!