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A Unique go to Market Strategy Can Differentiate your Start-up Company’s Product Offering and Provide Long-Term Success in the Market

Entrepreneurs often forget or don’t realize that a unique go to market strategy may be all they need to differentiate their product offering and provide them with success in the market. Conversely, these same entrepreneurs are generally preoccupied with the development of their technology, product or service offering.  Putting all the hope and future success of their start-up company on the features, functions and capabilities of their product offering, they often lack the foresight necessary to consider a unique go to market strategy for their product offering. Whether your product is clearly differentiated or a “me-too” product, you need to develop a go to market strategy that will make your product offering successful in the market.  Therefore, focusing on a unique go to market strategy may be just the ticket to both differentiate your product offering and at the same time enhance the success of your start-up company in the market. This article addresses the need for all start-up companies to have a unique go to market strategy.  It also provides an example of a successful start-up company that took essentially a “me-too” product offering and created new, unique and successful market position by focusing on developing a differentiated, technology-based go to market strategy.  As presented, doing this will allow you to delineate to your investors how you are going to secure customers, gain market traction and ultimately be successful in the market.

Traditional Go to Market Strategies – Necessary, but not Sufficient

As the entrepreneur of a start-up company you are developing a technology, product or service offering to sell into the market. Therefore, you need to determine who your customers are and how you are going to gain access to these same customers is a cost effective, timely and efficient manner.  To do this, you must develop a go to market strategy to address the customers for the targeted markets of interest. To fully employ a go to market strategy, you need to determine what sales channels make sense for your customer base, will be cost effective, and at the same time provide you with a competitive advantage in the market.  Historically, there have been three types of traditional sales channels, including:

  • Direct Sales: This go to market approach requires the hiring of your own sales force to sell your product line into the identified markets of interest. This sales force can be divided geographically, by product line, etc. This direct sales approach, while very effective, is generally considered the most expensive approach to marketing and selling your start-up company’s product offering to your target customer base.
  • Indirect Sales:  This go to market approach uses independent sales agents and/or value added resellers to market and sell your start-up company’s product offering to market.  This more cost effective approach has its pluses and minuses, but is generally considered a good approach for start-up companies to establish their presence in the market.  Later, when your product is established, these indirect sales agents can be supplemented or replaced with your own direct sales force. 
  • Strategic Partnerships:  This go to market approach uses large established players as strategic partners to gain access to customers and end-markets.  This approach can provide a start-up company immediate access to large potential markets.  It can also be very cost effective and given the partner’s market position can be the best solution to establish an immediate market presence.  This approach will generally reduce your product offering gross margins, but this trade-off may be well worth it given the ability to establish your start-up company’s market presence in a timely manner.  Also, developing a channel relationship, with a well established strategic partner, necessarily provides your start-up company with immediate credibility in the market.

Developing one or more of these three traditional sales channels may be a necessary part of your start-up company’s go to market strategy.  But, in today’s market, with existence of the many different ubiquitous technologies (e.g., Internet, wireless, etc.), these traditional approaches may not be sufficient or the most cost effective or efficient sales channels to provide your start-up company success in the market. 

Using Technology to Develop a Unique go to Market Strategy can Enhance Your Competitive Position in the Market

A unique go to market strategy can differentiate your start-up company from its competitors and in some cases can be used to uniquely position your start-up company and its product offering in the market. Historically many very successful start-up companies have focused on developing a unique go to market strategy to differentiate an otherwise similar product offering in the market.  Many of these same companies have used a “disruptive” or new technology to uniquely position their “me too” product offerings in the market. These same companies understood the value of taking advantage of technology to uniquely position their product offering by addressing an unmet customer needs in the market, including the following:

  • Substantially lowering the cost of their product offering to their end customers,
  • Providing a level of product customization not available in the market, and
  • Providing customers with more accessibility, convenience and flexibility.

Therefore, through the access of technology and the development of a unique product offering, you as the entrepreneur of a start-up company, can better service your end customer through the development of a unique and differentiated go to market strategy.

Differentiate Your Product Offering by Using the Internet in Your go to Market Strategy

Today, many start-up companies use the Internet to promote their technology, product or service offering.  With the ubiquitous aspects of this technology, it is both a natural fit, as well as a necessary part of any start-up company’s go to market strategy.  But, very few of these same start-up companies use the Internet as an integral part of their product offering — creating a long-term, differentiated position in the market. Below, is an example of a start-up company that used the Internet as an integral part of its product offering – developing a unique go to market strategy and ultimately creating a unique and differentiated product offering for what is essentially a “me-too” product. At the same time, this market focused company has created a leading market position, as well as a long-term competitive advantage in its market.

NetFlix – A Clearly Differentiated Channel Strategy

Netflix clearly understood the needs of their target customers and the competitive advantage that a unique go to market strategy would offer them with their customer base.  So, Netflix went out to develop a whole new go to market strategy for the home video rental industry.  Recognizing the fact that customers who rent movies do not like the requirement of taking their movies back to the store or making late payments for turning in their rented movies a day or two late, Netflix developed go to market strategy that addressed these inconveniences. By using the Internet as a unique go to market channel for the home video rental industry, Netflix began to offer its customers a mail-in-based, monthly subscription service to rent multiple movies at a time with an unlimited number per month. There were no late fees and no requirement to go to the store to pick-up or drop-off the movie. Netflix’s Internet-based go to market strategy has been a disruptive force that has changed the competitive dynamics of the home movie rental industry, and to date has gained substantial market share by using the Internet to cater to the market demands. Now many of the large competitors in the home movie rental market have implemented the Netflix Internet-based channel model as part of their product offerings. To stay ahead of the competition, Netflix continues to innovate and provide leading, direct-to-home, Internet-based video-based products, content and services to the market.

Entrepreneurs often forget or don’t realize that a unique go to market strategy may be all they need to differentiate their product offering and provide them with success in the market. Many of these same individuals only focus on the traditional market channels.  These channels do not, by definition, allow for any unique differentiation in your start-up company’s product offering. By taking advantage of technology and making it an integral part of your start-up company’s  differentiated product offering, you can uniquely position your start-up company in the market and at the same time create a long-term competitive advantage. With this approach to developing a go unique go to market strategy, you can set your start-up company on its road to success in the market.

This information was taken from Robert’s new book: “Business Planning, Business Plans and Venture Funding – A Definitive Reference Guide for Start-up Companies”.  Available at www.amazon.com.  For more information on the book go to www.carlsbadpublishing.com.

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August 17, 2009 - Posted by | go to market strategy, Market Traction, Venture Capital, venture finance, Venture Funding

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