7 What is your ‘go to market’ strategy?

Your ‘go to market’ strategy will very much depend on the product or service you are offering. There is no single right way to approach the market and it might be a case of trial and error until you find the model that really works for you.

How will you generate revenue?

Four brown paper parcels wrapped up in string
Figure 5 Distributing or reselling someone else’s product or service can be a viable business option

For many start-ups the natural tendency can be to make and provide your own product or service. Yet there are a number of other approaches worth considering that can help you generate revenue:

  • Acting as a third-party distributor servicing a particular market or territory (e.g. taking on a franchise or licence for an existing business).

  • Buying and reselling someone else’s product (e.g. importing).

  • Buying and transforming someone else’s product or service to provide something new to the market (e.g. assembling a product or service consisting of different parts and reselling it as your own).

It is also worth considering how you might gain valuable business insight through partnering and leveraging the best that various parties have to offer.

Pricing strategies

Some basic approaches to pricing include:

  • Free samples – offering potential customers free samples of your product or service in order to generate interest and sales (e.g. tasting samples offered by cafes or supermarkets).

  • Licensing – while you maintain ownership of your intellectual property, you license other people to re-sell your product or service in a given market and/or for a given period (e.g. a franchise such as Subway).

  • Freemium – a version of your product or service with limited functionality is made available to customers for free, and they have the option of upgrading to a paid service with full or additional functionality (e.g. LinkedIn).

  • Subscription – customers pay you a regular subscription fee in return for the right to use or receive your product or service (e.g. Sky TV).

  • Loss leader – selling a particular product or service at or near a loss in order to entice further sales of other products (e.g. printers are often sold relatively cheaply in order to lock consumers into buying printer cartridges).

These are only examples and the ways in which you can sell your product or service is virtually endless. However you do it, just remember that each approach comes with certain risks that need to be carefully managed.

Activity 4 Your pricing strategy

Timing: Allow approximately 5 minutes to complete this activity

What is your pricing strategy? Review the list of examples given to see if one of these is appropriate for you or if another approach is needed.

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Discussion

The approach you take to pricing your offering will have significant implications for your long-term revenue and profitability levels. This is particularly so if your business model requires you to sign long-term contracts with clients, which can result in you being locked into less than ideal pricing structures.

While you can, of course, change the approach over time, this can actually be quite difficult to achieve, most especially if your customers are reluctant to do things differently or if contracts are in place.

6 Innovating your business model

Summary