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How to design a solid Go To Market strategy?

Hombre distribuyendo productos
Estrategia Go to Market

The main questions we must answer to build a Go to Market (GTM) strategy are:

  • How does your company interrelate with your intermediate and final customers?

  • How do you deliver distinctive value to your target customers, consumers and shoppers?

  • How do you ensure appropriate service levels for each customer segment?

  • How do you go from the initial connection with a potential customer to the fulfillment of your brand promise?

We can define the GTM strategy as the design of sales and distribution channels that companies require to sell, dispatch their products and serve their intermediary customers to reach, retain and develop their multiple segments of end customers, consumers and/or shoppers.

Starting from the premise that our products and/or services have already been clearly defined and/or are already established in the market (they have a clear positioning and target markets, marketing mix, etc.), we must develop or adjust the strategy of GTM to reach our end customers in the most effective and efficient way, be they other companies (B2B) or end consumers (B2C).

Benefits of a strong GTM strategy

A robust GTM strategy offers a host of benefits:

  • Define clear service levels by customer segment and channel

  • Reduce time to market

  • Increases the ability to adapt to change

  • Increases product availability and visibility

  • Improves launch management of challenging products

  • Reduce costs associated with failed launches

  • Ensures the effective experience of the client, consumer or shopper

  • Ensure regulatory compliance

  • Set the path for growth

  • Clarifies the plan and direction for all

Considerations for the Go To Market Strategy

There are some initial considerations to take into account in the design process of our strategy:

Market Potential and Accessibility Barriers

The first analysis in the design of the GTM strategy is to determine both the potential of a market (sales projection), and the ease (or difficulty) of accessing the different customer segments.

For example, how complicated and expensive it can be to distribute our products in the traditional mass consumer market or to penetrate the large accounts of the modern market. These elements will be of vital importance in defining the sales channels.

Channel Development and Competitive Strength

The current level of development of the channels, for example, concentrated markets (normally in more developed countries) vs. fragmented markets (less developed countries), will have a significant impact on the possibilities of sales channels to use.

As we wrote in our post Why are complex Go to Market models required to win in emerging markets? In emerging countries, we have to understand the diversity of what we have grouped as the Traditional Market, where there is a wide variety of formats and types of business with characteristics, possibilities, and limitations of each one.

On the other hand, our competitive strength (measurable by the strength of our brands or how active or passive they are in terms of distribution) will have an important impact on the possible models to use.

Service Levels Required by the Channel

To the extent that intermediate customers (retailers, distributors), as well as consumers and shoppers, become more demanding, they are generating more pressure on manufacturers in terms of service levels required in order to compete.

Services are costs, so understanding these demands in each customer segment will be of vital importance for our value proposition to be competitive, but at the same time profitable.

Corporate and commercial strategy:

The Go To Market strategy cannot exist by itself. It is the means to implement Channel, Category, and Brand strategies. That is, to put the GTM strategy in context, other trading strategies must be considered. Obviously, all these strategies that feed GTM derive largely from the corporate strategy itself.

Identify Go To Market Options:

The next step in the process is to identify the options available or to be developed to reach a market in general or only target customer segments.

The markets, apart from the aforementioned level of development, have different characteristics (geographical, technological, tax, regulatory, etc.) that limit or boost the possibilities of reaching our target audience.

An accurate identification of options allows us to evaluate the pros and cons and the costs of each of these options. Generally, a strong Go To Market strategy will involve using different options for different market segments.

The final objective is to have the correct combination of two fundamental variables: Sales and Distribution. And the decision of who does the Selling and who does the Distribution is based on two important criteria: accessibility and sales potential of the client.

Clients with difficult accessibility and low sales potential will tend to be served indirectly, while clients with high sales potential and greater accessibility will be served directly. For intermediate clients, we will have combinations as we can see in the following table:

Cost to Serve Analysis

Each identified option has a cost and we must understand its magnitudes in the two relevant variables.

  • Commercial terms

  • Logistics cost

Quoting Phillip Kotler

“we can say that a physical distribution system is efficient when no logistical reorganization of factors can reduce costs while maintaining existing service levels”.

In other words, our GTM model must seek the greatest efficiency (the lowest possible cost with the required service levels) for each channel or customer segment.

Model Characterization

The next step is the characterization of the model. Among some of the topics that we must develop here are the following:

  • Vision and medium-long term objectives of the model.

  • Service levels by customer segment. Value offer.

  • Desired levels of standardization.

  • Commercial conditions (margins, credit, counterparties, etc.).

  • Operational and logistical requirements for the distribution of the category/products.

  • General profile and financial requirements of Distributors and/or Logistics Operators.

  • Contractual and tax guidelines and considerations.

  • Information systems.

The Commercial Organization

Finally, with the definition of the GTM model, we must define the organization that we require to be able to operate it. Any review of the GTM strategy requires an organizational review. In other words, the way we have decided to reach our target customers will have an impact on our organization; organizational structures, job profiles and skills, work processes, and training.

In conclusion…

As we saw at the beginning of the post, the GTM strategy is of vital importance for any organization, since it gives an answer to how we reach end customers in the most efficient way and how we serve our intermediate customers.

Markets are changing faster and faster (clients, consumers, shoppers, competition, etc.) and in this sense, the review of the GTM strategy must be done more frequently than in the past to remain competitive and relevant.

If you are interested in discussing some opportunities in this regard for your business, do not hesitate to contact us.

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