A go-to-market (GTM) strategy is a comprehensive plan businesses use to bring a new product or service to market. Designed to mitigate the risk inherent in the introduction of a new product, a typical GTM strategy includes target market profiles, a marketing plan, and a concrete sales and distribution strategy.
Creating a go-to-market strategy is as important for established companies as it is for brand new entrepreneurial endeavors. In this article, you will learn more about the purpose of GTM strategies, encounter examples of them in action, and find out how to create one yourself.
Businesses prepare GTM strategies to minimize risk and optimize potential success when introducing a new product to market.
There are many risks when entering a new marketplace or launching a new product. The late advertising executive and consultant Jack Trout, for instance, once famously noted that American families have 85 percent of their needs covered by the same 150 items they purchase over and over again . Whether that statistic is true or not doesn’t matter as much as the truth it highlights: entering the average consumer’s rotation of products is challenging and competition is high.
Go-to-market strategies anticipate the challenges of this competitive space by thoroughly identifying the target market, articulating the product’s value proposition, crafting a marketing plan, and developing a strategy for its sales and distribution channels. Some of the most common benefits of compiling an effective GTM strategy include:
Gaining a comprehensive understanding of the marketplace, the target market, and the proposed product’s place in it.
Keeping marketing costs down by identifying promotional channels with the highest return on investment (ROI).
Troubleshooting product positioning and messaging before going to market.
Concretely defining the logistics of distribution and sales channels before launch to ensure maximum market impact.
Although they have similarities, a go-to-market strategy, marketing strategy, and marketing plan are not the same thing.
A marketing strategy is a long-term strategy (often many years in the future) that outlines a business’s overall marketing objectives.
A marketing plan, meanwhile, is an action plan outlining the concrete steps required to undertake a marketing campaign.
A go-to-market strategy, finally, is a strategic outline of the concrete steps and considerations required to bring a new product to the marketplace.
While a GTM can include a marketing plan and be directed by a marketing strategy, neither a marketing plan nor a marketing strategy includes a concrete GTM strategy.
A go-to-market strategy compiles several other strategies and marketing methods to ensure a product enters the market with the best possible chance of success.
To help you better understand what goes into compiling a GTM, the following guide includes key elements you should develop throughout the process.
The customer is the centerpiece of any marketing strategy.
As a result, whether you are bringing a new product to market or refreshing an existing one, it is imperative that you first research and identify the target market that will be most interested in purchasing it.
A target market is a group of individuals who have a shared set of features, such as demographic or psychographic similarities. The process of identifying the shared similarities between groups is called segmentation and involves researching the kinds of individuals or organizations that would be most likely to purchase your product.
As you identify your target market, answer these questions:
Is your product being sold to everyday consumers (B2C) or to other businesses (B2B)?
Will you use demographic, psychographic, or other types of segmentation to define your target market?
What are the pain points of your target market? What problem are you solving with your product?
A product’s value proposition is the benefit it provides consumers and the problems it solves. In other words, your product’s value proposition articulates why the target market should purchase the product.
As you are preparing your go-to-market strategy, you should have a clear understanding of the value proposition that your product provides in order to direct your marketing efforts.
The value proposition that you identify should be as much about the target market you are selling to as the product itself. For example, while some products position themselves as a cheaper alternative to another product, others position themselves as the solution to a particular problem that currently has no market solution.
The exact value proposition that your product or service will provide is dependent on what it is and who its target market is. To define your product's value proposition, answer the following:
What pain points does your product remedy?
How does your product stand out from your competitors?
What unique features or experience does your product or service provide potential customers?
Price is an important factor for any product. You don’t want to sell a product for too much or too little. If you do, you’ll risk either not moving enough product or eating too much into your profit margin.
Now that you have an understanding of your target market and the value that your product offers, you have a better understanding of what price a consumer might be willing to pay for your product.
As you consider your pricing strategy, some questions you might ask yourself include:
How much does it cost to manufacture your product or service?
What price do you need to meet in order to make a profit?
How much do your competitors charge for a similar product or service?
What is your target marketing willing to pay for your product?
Will you use a subscription or transactional model?
A good price is one that fits your business objectives, matches your customer profile, and makes you competitive in the marketplace.
Your promotion strategy is your action plan to promote your product to your target customers. Here, you should craft a marketing plan that outlines the exact steps you will take to reach your customer base.
The techniques you use to promote your product will depend entirely on the product or service you are selling. For instance, while one business might use a sales team to pitch their product to other businesses, another might instead focus on social media marketing to raise brand awareness and draw in potential customers organically.
As you craft your promotion strategy, some questions to consider include:
What is the best channel to reach your target audience? Online or offline?
Does your customer respond better to outbound marketing methods, such as phone calls or radio advertisements, or inbound marketing efforts like SEO?
Where does your target audience spend most of their time? What marketing channels penetrate that space?
What marketing methods can you realistically implement now considering your current budget?
Sales channels are where consumers can purchase your product, while distribution channels are the ways that your product actually gets to your customer.
Often, sales channels and distribution channels can be the same, such as when a consumer buys directly from a manufacturer. In other instances, distribution channels can be much more complex, such as when a producer sells to a wholesaler, who in turn sells to a retailer who then finally sells their product to a consumer.
Whether you decide to sell your product in-person or online, directly to a consumer or to a wholesaler, or some other variation, depends on the unique needs of your product. Whatever you pick, the buyer’s journey should be as seamless as possible to reduce friction and increase sales.
Some points to consider when choosing sales and distribution channels include:
What is the nature of your product and does it have any specific sales and distribution requirements?
What are the manufacturing needs of your product and how does that impact its sale and distribution?
Where does your target market shop or buy products?
How can you make the sale of your product as seamless as possible?
The success of your go-to-market strategy is completely dependent on the goals that you set. In setting these goals, you are also identifying the metrics you will use to measure your success.
As your GTM strategy goes from idea to reality, it is important to keep track of your metrics and to make any necessary adjustments as you go along. For example, if it turns out that you are paying more to acquire customers than they are paying for your product, then you will need to adjust your strategy to reach a better customer acquisition cost.
Some common metrics of measuring the success of a go-to-market strategy include:
Customer acquisition cost (CAC)
Cost per dollar of sales expense
Closing/ conversion rate
Length of the sales cycle
Businesses can create go-to-market strategies for virtually any product launch, whether it is a completely new product, a new iteration of an old one, or simply a rebranding of one that has already been on the market. Whatever the purpose, a business’s GTM strategy can make or break a product launch.
One example of a successful GTM strategy is Apple’s 1998 launch of the iMac G3, which effectively saved the company from financial ruin. Apple targeted three primary consumers: first-time computer buyers, loyal Apple users, and PC owners (which were 85 percent of the market) . In order to reach their goals, Apple needed to convey that the company was now stable, that their product offered an experience unlike their competitors, and to create excitement around the product launch.
Their strategy began with a presentation revealing the product, in which then interim-CEO Steve Jobs took time at the start to emphasize that leadership was strong, finances were stabilizing, and employees were hard at work . In doing so, Jobs began the company’s strategy of changing the public perception of Apple as a failing company.
Later, Jobs described the unique value that the iMac G3 could bring consumers by citing its differences from competitors. Unlike other devices, which were slow, had bad displays, and often required a lengthy process to connect online, Jobs noted that the iMac had a much faster 3G chip, possessed a 15-inch display, and had a built-in internet port for a fast connection online.
Afterward, he revealed the physical iMac G3 body itself, which had a unique egg-shaped design, a transparent case that could become illuminated, and featured an eye-catching blue called “Bondi blue.” The design was a stark contrast to the grey-boxes that consumers had been used to and Job’s presentation emphasized that fact.
“This is incredible compared to anything else out there. It looks like it’s from another planet – and a good planet. A planet with better designers,” Jobs joked to the audience of journalists, who responded with a chorus of laughter .
The presentation was a success and set off a $100 million dollar marketing blitz that reinforced Jobs’ talking points. While large inflatable Macs went up over select stores so customers knew where to buy them, television commercials were rolled out during prime-time shows to attract consumers who weren’t already techies. To reinforce the point that this was a new kind of computer, billboards and print ads read, “Chic. Not geek. ”
The strategy was a huge success and ultimately saved the company from imminent failure. Apple’s success hinged on a go-to-market strategy that thoroughly understood their target market, clearly articulated their computer’s value proposition, featured a detailed marketing plan, and highlighted where consumers could purchase their products.
A great go-to-market strategy begins with insightful research into your customers’ needs. As you prepare to get your product market-ready, you might consider taking a flexible online course to help you meet your own educational needs.
The University of Illinois Urbana-Champaign’s Innovation: From Creativity to Entrepreneurship specialization demonstrates how course takers can make innovative value propositions and discover new market positions to create sustained competitive advantage.
Michigan State University’s How to Start Your Own Business specialization, meanwhile, provides a comprehensive guide on the mindset, ideation, planning, action, and strategy required to create your own business.
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1. Harvard Business Review. “Why Most Product Launches Fail, https://hbr.org/2011/04/why-most-product-launches-fail.” Accessed February 2, 2022.
2. MBA Knowledge Base. “Case Study: Apple iMac Ad Campaign, https://www.mbaknol.com/marketing-management/case-study-apple-imac-ad-campaign/.” Accessed February 3, 2022.
3. Apple Insider. “How Apple went from bust to five million colorful iMacs sold, https://appleinsider.com/articles/20/04/19/how-apple-went-from-bust-to-five-million-colorful-imacs-sold.” Accessed February 3, 2022.
4. YouTube [pi1.com]. “Steve Jobs introduces the iMac -1998, https://www.youtube.com/watch?v=BiWd8ujtK5k.” Accessed February 4, 2022.
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