Depending on your current business model, there are many ways to approach your Go-To-Market (GTM) strategy. If you do not have an established business or infrastructure in place, you will probably approach the strategy with a more conservative view, but there are many ways you can reduce your risk. The less you pay up front means the less you are risking, so using a process like the Lean Start Up method is a great way to get feedback from the market and pivot when necessary, without all the usual upfront product costs.

Defining your market

I will stress the importance of producing products and or services for a defined market. One of the worst approaches is to create a product and then go out and find customers. First you must determine what you customers want now and anticipate what they will want in the future. Technology and business modelling is changing so quickly, in order to deliver ahead of the market you need to have a really good understanding of what your customers do want and will want, before your competitors take their business.

1. Define the customer need (solving the customer problem)

Put simply, what do your customers need that they aren’t currently getting? What is their problem that is not being solved in the best possible way? For example, Netflix determined people would want television and movie streaming services before we even knew it was possible. They saw the future customer demand, and they entered the market in its infancy. It’s important to note they were already an established business selling DVDs through mail order, effectively disrupting the video store model. Unfortunately, Blockbuster, with all their brand value, didn’t quite grasp the changing customer need.

2.  find gaps in delivery

This is about looking at the current customer landscape. There is nothing saying you can’t enter a crowded market, but you must find a gap that no other competitor is filling, or at least anticipate the changing landscape that no competitor is addressing. One of the Founders of Netflix, Reed Hastings, has often said that he started the company because he was charged a $40 late fee from Blockbuster. Apparently isn’t true, but his anecdote helped to sell the story of their business model.

3. Fill the gap and address the need

Knowing there is a gap is not the same as being able to deliver what the customer is wanting. There may be myriad reasons why the gap hasn’t been filled due to cost of delivery or geographic reach. In the Netflix example, they understood the opportunity with a streaming service but they had to wait until the mid-2000s for data speeds and bandwidth costs to become viable options for consumers. They also scrapped plans to sell hardware at the last minute after seeing the popularity of YouTube.

4. Define the value proposition

Your value proposition is the promise of value you are delivering to your customer. It defines your offer and your intent of delivery. Having a strong value proposition means your potential customers are likely to want to hear more about your products or services. If you cannot define the value in your offer, you are unlikely to have the opportunity to explain it to your customers, because they will have gone to a provider who can.

Netflix offered a flat rate service to customers with an easy opt in, opt out opportunity. “Watch Anywhere. Cancel Anytime”, perfectly sums it up, and for customers, it simplifies their purchasing decision. It’s simple and compelling.

5. estimate the Time to get to market

Established large businesses can usually beat their smaller competitors to market, but that doesn’t mean their product will be better or better received. You need to determine how long it will take and whether you can afford to keep the lights on in the interim. You also need to ensure that when you do reach the market, your competitors haven’t made it there before you and captured a large market share. Although it is possible to pull back market share, if that means a long sales lead time, it may make it difficult to keep afloat while you try.

Netflix is very aware of the changing viewing habits of their customers. People want to binge watch and therefore Netflix now produces in-house content quickly and efficiently. Content is king in the streaming world and people won’t stay with a service if they are searching with nothing suitable to watch.

6. Determine the size of the market – potential revenue

You can’t be all things to all people and in the product world and that means you can’t provide all features to all customers. You have to segment the market based on what you are intending to deliver and then go after that segment. It is far cheaper to target one kind of customer because you can save sales, packaging, messaging, distribution and delivery costs using economies of scale. If that segment is not going to provide you with enough revenue opportunity, you may have to increase your target by location or by industry.

Netflix started in the US and when they moved to streaming services they offered about 1% of their catalogue free to their members. As they increased their customer base, they added more titles which meant a staged approach, with fewer upfront costs and an ever increasing market.

7. Evaluate your costs – R&D, packaging, distribution, marketing, legal, sales, trademarks

This is one of the most important parts of your project and it is important to consider all on-costs. How much does it cost to keep the lights on? How much will it cost for further development, distribution, packaging and any other legal, sales and marketing fees. If you don’t properly cost out your products, you’ll struggle to grow as a business.
Netflix takes into account the viewing and rating of all their original content and are known to be pretty brutal when they are reviewing a television series. If they don’t think they have an audience for a show, or if it is too costly to produce, they will cancel the show, no matter how much it is loved. They keep their eye firmly on the bottom line in order to maintain their growth objectives.

8. develop your Pricing strategy

There are many ways to price a product and you can only determine the right price through modelling. Do you want to sell your product outright, or charge for service as you go? Do you want to offer flat rates or offer a tiered package? Do you want to price in line with your competitors or does your value proposition allow for a higher cost? Delivering what you’ve promised is always an important part of a business, and especially so if you are charging more than your competitors.
I don’t believe you should ever sell on price, but in some markets, customers will buy based on price alone. You must decide if you want to be operating in those markets and if not, you’ll need to have a strong enough value proposition that will overcome pricing differences and consider on-costs. Netflix charges a flat rate no matter how much content you are streaming but customers need to ensure their home data pack is suitable for streaming, because otherwise they can cop additional costs from their internet provider.

9. Select your sales strategy – B2B, B2C, distribution through partners, defining target customers

You need to determine how you are going to sell your product. If you are set up as a B2B but you have a product that is suitable for B2B2C, you may want to on-board a distribution partner. They can help you to reach a much larger market without the additional costs associated with retail. You may wish to sell online, but then you’ll need an ecommerce website and you’ll probably need warehousing and delivery services. No matter what you choose, you’ll need to consider your customer’s requirements, costs and the infrastructure and resources involved. Netflix offers their product direct to customers, but their app can be accessed through online stores.

10. Calculate your profit margins

Depending on your business model, you may initially be concerned with potential sales and or revenue, as profit isn’t always the only objective. However, at some stage, your shareholders and or owners are going to want to get their money back, and that likely means selling profitable products and services. Without profit now or in the foreseeable future, whether it be through listing, selling the business or growing the business value it may be difficult to raise further capital.

Netflix turned its first profit five years after it was launched, but it’s important to note it had some very wealthy backers from day one. Netflix is now a listed company and its shares have grown significantly, especially over the past five years.

Rhonda Locke is a highly experienced marketer, a customer, product and brand champion, and is the Founder and Director of Unlocke Creative.