Go-to-market strategy
A go-to-market strategy, or GTM strategy,[1] is the plan of an organization, utilizing their outside resources (e.g., sales force and distributors), to deliver their unique value proposition to customers ("go-to-market") and to achieve a competitive advantage.[2][3] The goal is to enhance the overall customer experience by not only offering a superior product and/or more competitive pricing, but also creating a clear framework and plan to penetrate a defined market and/or target audience.[1]
Development
[edit]
In the earliest stages of developing a go-to-market strategy for a new product or service, the company has to initially define the target market. The company then must determine whether they already have prospective customers within their customer base but who are using different services.[1]
After defining the target market, the product or service is researched until a final decision is made on the value proposition. Then the company determines its pricing strategy. It is very challenging to decide what pricing strategy to follow as it differs from one product or service to another, or even when the product or service remains the same but the strategy changes, such as switching to subscription-based pricing (an example of this is Adobe's major shift from selling its Creative Suite software as a single purchase, which included all Adobe's products such as Photoshop and Illustrator, to a $50-per-month Creative Cloud and various other subscription plans).[4]
Moreover, choosing the right distribution and marketing channels, followed by promotion, are vital steps in a go-to-market strategy. A company has to decide which distribution model to choose, what kind of support and services are required, and address the possibility of creating a competitive advantage.[5] Afterwards, the company decides how it is going to promote its product or services and what kind of marketing campaigns are most influential to follow.[1]
Driving factors
[edit]When considering developing a go-to-market strategy, there are 3 essential factors to focus on:[5]
Customers
[edit]Delivering exceptional customer experiences leads to loyalty and advocacy of the customer. Consequently, that triggers increased product purchase, customer retention and low service cost.[6]
These people may or may not even know you exist, and who you'd like to do business with. From a marketing standpoint, you have to figure out how to attract these people and get them to engage with your brand in some way such as visiting your website, attending a webinar, responding to an email, and more.
The first conversion point is the marketing-qualified lead (MQL), a potential customer whose interest, such as a Contact Us form or a demo request, has been reviewed by the company's marketing team.[7]
If this rate grows over time, you are doing a better job targeting your customer base and converting them to be interested in engaging. If you have 1000 people on your email list, and 10-30 of them become leads every month, you can measure how good you are at engaging them via email.[8]
Company
[edit]Considering the company's mission and vision is a key determining factor when performing a go-to-market strategy. Motivating employees to perform well is a decisive factor to include. Thus, defining a company's vision and the impact it is trying to create is essential in the earliest stages of a go-to-market strategy.[9][10]
Competition
[edit]Understanding the competition is crucial in deciding what product or service to offer. Gathering information about how competitors are performing in the market, what customers think of the different products available, and what is missing in the market through conducting research using different methods such as SWOT and PEST analyses.[11]
Market segmentation
[edit]Market segmentation is the process by which one divides prospective customers into different groups (segments) that have common needs and the same expected reaction to a marketing action. This approach enables companies to offer customers full value proposition of their products or services.[12]
These are some of the common factors that are considered when performing a market segmentation in a go-to-market strategy:[13]
- Industry: The industry in which the customer is involved
- Customer size and sales potential of the customer
- Customer behavior: Studying the customer's behavior related to the product or service such as the customer buying from a competitor or examining the responsiveness to selling effort
- Geography: Geographical locations of prospective buyers
- Application and use of the product or service by the customer
- Benefits earned by the customer due to buying the product or service
- Information that is required to be provided by the company to the customer
- Usage situation: When and where the product or service is used
- Profitability of selling to a certain customer
Compared to marketing strategy
[edit]Marketing strategy includes every marketing activity that helps an organization target the market after conducting market research.[14]
The go-to-market strategy usually develops during the introduction of new products or services.[citation needed] Marketing strategy covers:[15]
- the products or services of a business
- market share and position of those products and services
- identification of clients and competitors
- basics of a marketing plan
Example
[edit]An example of using a go-to-market strategy could be observed in the automobile insurance industry. Initially, a company has to choose the right segment of the market (market segmentation). If the customers are considered individual households, then the company works on creating interest in their prospective customers using different forms of media, such as TV advertisements, social media, and billboards. Once the customers are persuaded to proceed, they are offered to purchase the service through different channels such as the Internet (the company's website) or agents, both of which act as entities responsible for customer service.
In the case of customers being corporate accounts during the market segmentation, interest creation and purchase are done through direct sales, agents, or the Internet. Tele-service and direct-service representatives serve as contacts after the purchase.[13]
See also
[edit]References
[edit]- ^ a b c d "What is go-to-market strategy (GTM strategy)? - Definition from WhatIs.com". SearchITChannel. Retrieved 2015-11-01.
- ^ Friedman, Lawrence (2002). Go-To-Market Strategy. Oxford: Butterworth-Heinemann.
- ^ Zoltners, Andris; Sinha, Prabha; Lorimer, Sally (2004). Sales Force Design For Strategic Advantage. New York: Palgrave Macmillan.
- ^ "Adobe kills Creative Suite, goes subscription-only - CNET". CNET. Retrieved 2015-11-01.
- ^ a b "AIPMM's What is a go-to-market strategy and how to create one". 4 September 2013. Retrieved November 1, 2015.
- ^ "Creating an adaptive go-to-market system - Bain & Company". www.bain.com. 17 January 2012. Retrieved 2015-11-01.
- ^ Gartner Glossary, Marketing-Qualified Lead (MQL), accessed 24 December 2023
- ^ "Natalie Luneva: Growth and Team Performance Coaching for Bootstrapped SaaS Founders". www.natalieluneva.com. 11 August 2020. Retrieved 2020-08-11.
- ^ "Create Market System". Retrieved 19 February 2017.
- ^ Kenny, Graham (3 September 2014). "Your Company's Purpose Is Not Its Vision, Mission, or Values". Harvard Business Review. Retrieved 2015-11-01.
- ^ Caan, James (13 March 2013). "Knowing your market and competition is crucial when starting up". The Guardian. Retrieved 2015-11-01.
- ^ "Market Segmentation Definition | Investopedia". Investopedia. Retrieved 2015-11-01.
- ^ a b Zoltners, Andirs; Sinha, Prabhakanat; Zoltners, Greggor (2001). The Complete Guide To Accelerating Sales Force Performance. New York: AMACOM.
- ^ "What is marketing strategy? definition and meaning". 180komunika.es. Retrieved 2015-11-02.
- ^ "Develop a marketing strategy". www.business.qld.gov.au. Retrieved 2015-11-01.