Unlike often claimed, good products don’t simply sell themselves. That’s way successful companies not only develop innovative products, but also effective go-to-market strategies that allow them to deliver new products to the right customers quickly and profitably. Due to shortened innovation cycles, the rising number and complexity of sales and marketing channels, and the increased competition for access to these channels, go-to-market strategies are now more important than ever.
Four Step Process
A successful go-to-market strategy needs to answer four key questions:
- Who do we sell to?
Systematic alignment of all business processes with customer needs has become essential in order to survive in today's highly competitive and globalized market environment. Therefore, the first step of a go-to-market strategy is always the identification of the most attractive customer segments and a comprehensive analysis of their needs. What is their buying behavior (before, during, and after the purchase)? What are their buying motives? Who makes and who influences the purchasing decisions? What are their preferred purchasing and communication channels? How often do they buy (purchasing frequency)? When do they buy? What are their attitudes, values, and beliefs? What prices are they willing to pay?
- What do we sell?
The next step is to develop a value proposition that is tailored to the particular wants and needs of the target customers and superior to the one of the competition. This requires a comprehensive market and competitor analysis as well as an analysis of the organization’s own strengths and weaknesses. The aim is to offer the customers in a unique way exactly what they want. Not less, but also not more than that.
- At which price do we sell?
Once the value proposition is defined, the next step is to determine the sales price. Again, the pricing strategy will depend on the chosen customer segment. Depending on the customers’ willingness to pay, companies may position themselves as low, medium, or high price providers. In addition, they may choose to offer the product at a standard price (single pricing strategy) or to charge different prices for the same or similar product (price differentiation strategy). Differentiation may be based on geography, time (skimming vs. penetration strategy), or perceived customer value. Developing new pricing and payment models that are tailored to the specific customer needs can be a source of competitive advantage.
- How do we sell?
Finally, companies need to find the best way how to connect with their customers. Based on the customer analysis in the first step and depending on the product and its value proposition, the appropriate sales and marketing channels need to be selected and a communication strategy developed. This requires careful planning, including training of sales, marketing, and customer service staff and the development of attractive incentive systems. Given the large number of available distribution channels—direct and indirect, online and offline—businesses are spoiled for choice in this regard. But there are also companies that come up with new ideas how to connect with their customers setting themselves apart from the competition. The automotive industry, for instance, has been quite innovative recently when it comes to using new distribution channels. Instead of classical car dealerships in peripheral and suburban locations, carmakers like Daimler have started opening flagship stores with café-like character in exclusive city center locations that provide an interactive brand and product experience.
To be most successful, go-to-market strategies should be managed as an integrative process. All functions within the organization that are involved in the development and delivery of the value proposition, such as consumer insight, sales, marketing, brand management, pricing, and customer service should be closely coordinated and aligned to prevent silo thinking and to accelerate decision making. An open, software-supported exchange of information as well as clearly defined responsibilities, targets, and deadlines are crucial here. Moreover, short and rapid customer feedback loops are key to continuously enhancing customer experience.
A well-structured, integrative process can help reduce time and costs to market, minimize sales and reputational risks, ensure compliance, increase agility, and improve customer experience.