Nine out of ten of the most popular shoes among today’s NBA players are made by Nike. The athletic company has an 86% share of the performance basketball market. But that wasn’t always the case. In the 1980s, Adidas was the powerhouse athletic shoe brand, holding 70% of the market share before Nike launched its game-changing product: the Air Jordan.
Before launching the Air Jordan sneaker, Nike generated massive amounts of buzz about the new shoe. Despite the shoes being non-compliant with NBA uniform rules, NBA superstar Michael Jordan wore them in every game, generating a $5,000 fine each time.
With a go-to-market strategy that involved attracting as much publicity as possible, Nike happily paid the fine and featured the non-compliant shoes in multiple commercials. This strategy led the Air Jordan sneaker to earn more than $100 million in sales during its first year.
Business leaders can look to marketing giants like Nike to see what a successful product launch looks like. While a thorough go-to-market strategy is essential for a successful product launch, many business leaders fail to plan one properly.
Every aspect of the product launch is critical for the new product’s success, from the value proposition to the distribution method. In this article, learn how to create a go-to-market plan that addresses each critical piece of the puzzle so you can feel confident that your new product or service will be a hit.
- When launching a new product, you need a strong go-to-market strategy that clarifies your reasons for launching the product and outlines the methods you’ll use to reach your target customer.
- A go-to-market plan includes a description of your target market, value proposition, pricing strategy, and distribution channels.
- Your marketing strategy should move buyers through the customer journey.
What Is a Go-to-Market Strategy?
A go-to-market (GTM) strategy is a plan for launching a new product to an existing market or an existing product to a new market. A good GTM strategy should clarify the reason for launching the product and outline the methods to reach the target audience, including pricing, distribution, promotion, and customer service. A go-to-market strategy aims to maximize the product’s potential and increase sales.
Why Is a Go-to-Market Strategy Important
Research from Global Consulting firm McKinsey & Company found 50% of new products fail to hit business targets. These failures can be detrimental to a company’s success, as the same study found that an average of 25% of total revenue and profits come from launching new products.
In 2015, Pizza Hut experienced the downsides of a failed product launch when introducing a new product line called “Flavors of Now,” which included premium ingredients and lower-calorie options. Unfortunately, the product launch led to a 3.5% decline in sales for the quarter.
Jim Schwartz, president and CEO of NPC, the largest Pizza Hut franchisee, said, “It is clear we need to increase the awareness of the positioning and the related consumer benefits in the marketplace, especially with our core user, in order to achieve the desired result of increased market share and organic sales growth.”
A thorough go-to-market plan is critical because it allows companies to:
- Understand customers and their needs
- Optimally position the new product
- Evaluate product-market fit
- Develop or hire for skills that will be needed to carry out the product launch successfully
- Ensure each member of your team understands the big picture and how their role plays a part in the outcome of the product launch
7 Steps to Develop and Implement a Go-to-Market Strategy
These eight steps can act as a go-to-market strategy template for you as you plan your next product launch. Here’s how to get started:
1. Define Your Target Audience
To define a target audience, identify who your product is intended for and what characteristics they have in common. Consider age, gender, location, interests, family life, income, and needs of the people you want to reach.
To help visualize the target audience, many business leaders create buyer personas. A buyer persona is a fictional person that represents your target customer.
Imagine your target audience includes middle-aged men who love to cycle on weekends. Here’s what your buyer persona might look like:
Name: Fitness Frank
Family life: Married with kids
Hobbies: Cycling and occasional hiking, running, walking, or weightlifting
Location: Lives in the suburbs in the Mountain West region
Description: Fitness Frank wants to stay healthy as he ages. He likes to destress from work on weekends through his fitness hobbies. While Frank has some disposable income, he also cares about finding good deals on fitness equipment because he supports his family. Additionally, he’s considered himself an athlete for much of his life and likes achieving new fitness goals.
With Fitness Frank as your buyer persona, each time you and your team have a question about a customer, they can ask themselves, “What would Frank think about this?”
2. Create a Value Proposition
The value proposition is a key pillar of the go-to-market strategy. Your value proposition should explain the full mix of benefits your product will deliver to customers. To create your value proposition, first, identify the problem you’re solving for your target customer.
The late Harvard Business School professor Clayton Christensen said, “When we buy a product, we essentially ‘hire’ something to get a job done. If it does the job well, when we are confronted with the same job, we hire that same product again. And if the product does a crummy job, we ‘fire’ it and look around for something else we might hire to solve the problem.”
While creating your value proposition, it’s critical to understand what your customer is “hiring” your product for. Once you’ve identified the problem you’re solving, think about why your product solves the problem for the customer better than any other product.
Here’s a formula for a simple value proposition. Fill in the blanks to get your value proposition:
My product solves [Problem X] for [Customer X] by [solutions X, Y, Z].
3. Perform Market Research to Determine Product Market Fit
Successful businesses never attempt to launch products without research to guide them. You don’t want to enter a market blindly. The market research stage is where you’ll measure product market fit. Product market fit is a scenario where your product meets a gap in the market. It’s essential to determine product market fit before launching your product.
There are many methods for researching your customer needs and gaps in the market, but here are some of the most common and effective:
Surveys are easy to create, distribute, and analyze. If you’re new to using surveys for market research, some easy-to-use beginner platforms with free options include Google Forms and Survey Monkey. Marketers use surveys to find out more about the needs of large groups of potential customers.
If you’re looking for more depth in your customer insights, try conducting interviews with people who match the characteristics of your target audience. Though an interview won’t give you as much information about a broad group of people as surveys, it can provide you a more full understanding of your customers. You may want to consider using surveys and interviews in conjunction with each other.
When Clayton Christensen conducted his famous “Jobs to Be Done” research, observation was his primary research tool. He spent 18 hours observing McDonald’s customers to gain insight into why people were buying milkshakes. His observations revealed a trend that showed most milkshake customers visited the McDonald’s drive-through before 8:30 a.m. This led Christensen to the insight that milkshake customers were looking to meet their need for a convenient food item during the morning commute.
Interviewees and survey participants don’t always realize which aspects of their behavior are relevant to you as a business leader. Observational research can help you fill those gaps and gain insights into the trends that will help you best launch your new product.
Gather Info Online
Combing the internet is often a simple step in the market research process, but it is critical not to skip it. Many industries publish annual data on consumer trends, demand for certain types of products, and the size of the market. A quick internet search can also help you learn what products are already available and how satisfied customers are with those products.
4. Price It Right
Choosing a price for your product can make or break your go-to-market strategy. The price of your new product can impact profit, market share, positioning, and reception. Here are a few common methods for pricing a new product:
- Cost-plus pricing: This method sets a product’s price at the cost of production plus a certain percentage. For example, if it costs $10 to produce each unit, and your goal is to produce a 25% profit, you’d price your product at $12.50. This is the most simple pricing strategy. However, it’s important to determine if the price you set with a cost-plus strategy is competitive with other products on the market and if customers will be willing to pay.
- Value-based pricing: The value-based pricing strategy sets the price based on what customers are willing to pay, which is often determined through market research on customer behavior. Many high-end brands use value-based pricing because customers are willing to pay a higher price for the brand name.
- Competitive pricing: Competitive pricing involves setting your price relative to the price of other similar products on the market.
- Penetration pricing: Some companies choose to set their prices far below the price of other products on the market to gain market share, and sometimes below the price that is necessary to be profitable. This is called penetration pricing. Companies that choose this strategy must have enough cash reserves to stay afloat until they’ve gained market share. Typically, after gaining enough market share, the price rises to a more profitable level.
5. Pick Your Distribution Channels
The distribution channel is the network your product passes through until it reaches the end customer. Every distribution channel varies, but the most common elements of a distribution channel include:
- Producer: The producer sources materials and manufactures the product.
- Retailer: The retailer is the person or business that sells the product to the end consumer. The retailer could be a brick-and-mortar store, an online platform like Amazon, or your own company’s website.
- End consumer: The end consumer is your final customer who takes the product home.
Many companies also work with intermediaries like wholesalers, brokers, and agents to move their products through the distribution channel. In some industries, these intermediaries are necessary. Often, they can make your job much easier. But remember, each intermediary your product passes through will take a portion of the profit. Cutting intermediaries out of the distribution channel has allowed many brands to offer products at lower prices and gain larger portions of market share.
Warby Parker shook up the traditional distribution channel for eyeglasses when it created a platform for customers to enter their prescriptions online and buy glasses directly from their website. Until Warby Parker came around, eyeglasses brands sold their products to optometrists and retail stores. Customers had to visit these stores to purchase a new pair of glasses. Warby Parker cut the middleman out of the distribution channel by becoming its own retailer.
6. Make a Plan for Moving Customers Through the Customer Journey
The customer journey is a series of experiences a consumer has as they interact with a brand. It begins with the consumer first becoming aware of the brand and, ideally, ends with the consumer being a loyal customer and an advocate for the brand. Your marketing and sales strategy will be pivotal in moving your customers along the customer journey. Your go-to-market plan should include a detailed plan for each level of the customer journey.
These are the five stages of the customer journey:
Before a consumer will consider buying your product, they must become aware of it. How will you get the word out about your new product? Some common methods include:
- Social media marketing
- Mail advertisements
- TV ads
- Web page ads
- Influencer marketing
- Sales calls
Remember, when raising awareness of your product, be sure to use marketing channels that align with your target customers. For example, when developing a social media strategy, keep in mind, 60% of Snapchat’s users are under 25, while 78% of Facebook users are over 25.
Additionally, in the past, commercials during live sporting events were a great way to raise awareness of new products across numerous demographics. But these days, only 28% of Gen Z watches live sports through broadcast or cable TV, compared to 47% of all U.S. adults. Brands hoping to raise awareness of their product among younger audiences may want to avoid live TV and Facebook and instead focus on a platform like Snapchat.
Once your target customer is aware of your product, they’ve entered the consideration stage. During this stage, they’ll think about how much value your product will bring them, if it offers good value for the money, whether it beats alternative options, and other questions that factor into their decision-making process.
During the consideration stage, you should highlight the benefits of your product. Often, you’ll use the same marketing plan and channels to highlight these benefits that you used to bring awareness to your product. Some brands run ads emphasizing the product’s price compared to competitor prices or the many uses you can get from the product. Other brands employ a sales team to follow up with potential customers to answer questions during this stage.
Every business hopes their customer will travel through the first two stages of the customer journey to eventually reach the “Purchase” stage. After considering the pros and cons of buying your product, the customer has made the decision to buy.
To ensure your customer completes the “Purchase” stage, you want to reduce “friction” as much as possible. During the purchase process, friction is anything that slows down the customer’s purchase or increases their chances of getting distracted or changing their mind before completing the purchase.
Here are a few strategies for reducing friction:
- Shorten the checkout process: Many e-commerce websites require tediously clicking through multiple pages and filling out lengthy forms with credit card and personal information. Reduce the time it takes for customers to complete the process by shortening the checkout process to one page so users don’t have to wait for each page to load.
- Partner with payment apps: E-commerce brands can allow users to checkout with Google Pay, Paypal, Apple Pay, or other online payment options that store users’ credit card information. This means they don’t have to type in their credit card info every time they make a purchase.
- Have customer service reps available: If your customer has a simple question, they may decide to abandon their purchase and come back later when they’ve found the answer. Unfortunately, many customers may forget to come back, and you’ve lost their business. Instead, e-commerce brands should allow customer service reps or chatbots to speak directly with customers while checking out so their simple questions can be answered and the purchase can be completed.
If you think the customer journey ends with the purchase, you risk losing tons of future business. It’s critical to retain your customers after the initial purchase, so they will become a consistent source of revenue.
Retention is all about supporting your customers while they learn how to use your product. Make sure it’s easy for customers to reach customer service if they have questions or issues. If a customer receives a faulty product, make sure you have a simple process for reporting the issue and trading the bad product for a new one.
Eventually, you want your customer to become an advocate for the brand by recommending your company to friends and family. If you can nurture customers all the way through the customer journey to the final “Advocacy” stage, your product launch will be a guaranteed success.
7. Set Goals and Identify Key Metrics That Indicate Success
Finally, your go-to-market strategy should include specific goals and metrics. You should know exactly what success looks like before you begin your product launch. While developing your go-to-market plan, ask yourself, “What needs to happen for this product to be considered a success?” Choose the most important metrics to track.
Here’s a list of some of the most critical things to track during a product launch:
- Revenue: How much income is this product generating?
- Profit: Is the revenue covering the cost of production to produce the type of profit you are looking for?
- Growth: How many new customers do you expect to gain each month? Each year? A good product will likely gain traction as time goes on, so you’ll want to set goals for growth over time.
- Customer Acquisition Costs: How much are you spending on average for advertising, marketing, and sales before a customer makes a purchase? While the number may be high early in the product launch, ideally, you’ll be able to bring this number down over time.
- Customer Satisfaction: Be sure to collect customer feedback, so you understand whether your customers are happy with your product.
Use the SMART Goals Framework
While setting goals for each metric, use the SMART goals framework to ensure your goals are specific, measurable, achievable, relevant, and time-sensitive.
Here’s what that looks like:
- Specific: State the exact number you’re aiming for.
- Measurable: Your goals should be quantifiable and possible to track.
- Achievable: While it’s okay to set lofty goals, make sure your goals are possible.
- Relevant: Does your goal align with your overall mission for the product and the company?
- Time-sensitive: Set a deadline for meeting your goal.
Imagine your company set the following SMART goal: Achieve 25% growth in revenue by the end of the second quarter.
This goal has a specific number (25%) that is quantifiable and easy to measure. It’s achievable based on sales forecasts and aligns with the company’s goals for growth. The goal includes a time-sensitive deadline (the end of the second quarter), making it a certifiable SMART goal.
What You Need to Start Building a Go-to-Market Strategy Now
A successful product launch doesn’t happen overnight. Developing a go-to-market strategy requires patience, hard work, and tons of strategic thinking, but it will pay off when your product starts bringing in the profit you want to see.
If this is your first product launch or you’ve had previous product launches fail, it’s critical to nail down the planning stage. The more you know, the higher your chances of success will be. Read up on everything you can.
For more useful tips that will help you successfully launch a new product, check out these articles:
- 3 Overlooked Factors to a Product Differentiation Strategy
- StoryBrand Increases the Effectiveness of Your Marketing
- What Innovation Strategy Looks Like in Practice
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