Testing Product/Service Ideas via Go-to-Market Strategy Funnel
- M. Onder Pembe
- 26 Şub 2023
- 5 dakikada okunur
Güncelleme tarihi: 4 Eyl 2023
The Go-to-Market Strategy Funnel is a systematic tool developed by me to test product/service ideas. All ideas pass through several filters along the funnel and feasible ones come out the end of the funnel. It is a kind of litmus test that can be used to determine which products/services should go to the market.
The funnel consists of 5 stages which function as filters:
(1) Customer Segments > (2) Customer Insights > (3) Competition > (4) Go-to-Market > (5) Economic Viability
You can download the Go-to-Market Strategy Funnel template in MS Excel format as follows:
You can download the Go-to-Market Strategy process in PDF format as follows:
1ST STAGE IDENTIFYING THE POTENTIAL CUSTOMER SEGMENTS
The first stage of the funnel is about identifying customer segments (or personas) and analyzing their potentials. This is a starting point for a strategist or an innovator to determine which specific segments/personas should be focused. To determine them, answers to the following questions should be sought:
Who are our potential target customer segments?
What are the population demographics of those segments? Population size, distribution of age, gender, education and occupation, birth rate, participation in business life etc.
How is the overall economic situation in the target geographies? GDP, disposable income, annual household income per capita, distribution of socioeconomic status (SES) groups etc.
2ND STAGE EXPLORING CUSTOMER INSIGHTS (JOBS-TO-BE-DONE)
In the second stage, value propositions/value elements to be offered for each customer segment are determined by Jobs-to-be-Done technique. By this qualitative research study, the following components are obtained for each segment:
contexts
jobs-to-be-done
pains and gains
pain relievers and gain creators
product/service ideas
JTBD, pains and gains usually have different levels of importance in the eyes of customers. Each element is scored on a scale of 0-10.
 | Click to learn more about Jobs-to-be-Done (JTBD) |
3RD STAGE CONSIDERING THE COMPETITION AS A WHOLE
Many leaders are unaware of their companies' positions in the competition area and perceive the competition with only one dimension of it: Competitor-based competition. Key point in this stage is to try to consider the dynamics of competition as a whole and analyze what extent the competition satisfies every value proposition/value element defined in the former stage.
There are three dimensions of competition:
1. Market Competition (External Competition)
This dimension of competition is competitor-based competition within a particular industry (for example competition among retailers in Apparel industry).
Market competition can be analyzed by asking the following questions:
What value propositions/value elements do the market players try to meet with what products/services?
What extent are the market players successful in meeting these value propositions?
Are there any value expectations of customers, which are not met or fully met by the players? Possibilities:
Existing products/services do not meet them
Existing products/services partially meet them
Existing products/services cause several complications/side effects
Analyzing the dynamics of competition is a natural part of the 2nd stage where JTBD are explored. The pains of customer segments are caused by unmet jobs by the competitiors. What the players cannot effectively meet indicates the pains. Also we need to understand how competitive the competitiors' value propositions are.
Value propositions which are both important for customer segments and unmet by the market players indicate market opportunities:
Market segments not yet filled or not fully filled
Blue oceans
JTBD of low-population customer segments, which are important but very specific and unmet or met by a limited number of players may reach us the ideas of niche products/services.
The following tool (Competitive Position Matrix) visually articulates the competitive position of the market players:
The players on the matrix, which are positioned close to each others and around the same value propositions/value elements, have the similar value characteristics and compete in a specific market segment. The density of competition may indicate a possible Red Ocean.
Positioning within the matrix provides significant inputs to the strategic decision-making process by answering those questions:
Which market segments should we not enter?
Which market segments give us opportunity to grow by differentiating from others?
Is there an opportunity in the market to create a Blue Ocean?
2. Competition between Your Industry and Others (External Competition)
Sometimes competition arises from other industries and it may become disruptive. Foreseeing this type of competitition requires a mindset freed from the predefined industry boundaries (industry definitions). If value elements offered by another industry match with one or more JTBDs of our target customer segments, this means that this industry competes with us.
Sometimes they point to disruptive business models, and sometimes market spaces and blue oceans. New value curves can be obtained by synthesizing our value elements with the value elements offered by other industries.
3. Competition inside the Organization (Internal Competition)
Sometimes competition arises from other business units within the organization. Products or services which meet the same or similar jobs-to-be-done of the same target customer segments may create a cannibalization effect. In order to prevent a possible cannibalization, answers to the following questions should be sought:
Are there any value proposition already offered by some business units for the same or similar JTBD?
Is there a risk of cannibalization for business units which offer same or similar value propositions?
4TH STAGE GOING-TO-MARKET (BUILD > SUPPLY > SELL)
It is not enough to have a good and competitive idea which will be able to work in the market. Main point is to execute it successfully. In the fourth stage, it is analyzed in depth how this product/service can be built, supplied and sold. This is a kind of feasibility analysis.
The main question related to building product/service is that how long will it take to develop the product/service and be ready for the market (R&D cycle). In Building step, engineering approach of the product/service must be determined and a prototype or model must be designed.
To analyze supplying capabilities, that question should be sought: Will this product meet the required supply conditions such as capacity, quality, price, lead time, minimum order quantity, innovation-R&D capability, tariff?
In order to analyze the ways and channels to sell the product/service, answers to the following questions should be sought:
Through which sales channels can the product/service be sold? B2C, wholesale etc.
How can a customer journey be designed?
5TH STAGE ANALYZING ECONOMIC VIABILITY
In the last stage, the economic viability is analyzed for each product/service idea.
Economic Viability Analysis is based on 4 main parts:
Cost Structure
Unit product cost is determined during analyzing supplying capabilities (in the fourth stage). Supply volume which is derived from inventory amount forecast, is an important parameter in terms of economies of scale, minimum order quantity etc. COGS can only be calculated after the estimated sales volume has been determined.
Pricing
Initial price level is determined for the product based on the unit cost and margin target. After conducting Price Elasticity research on target customer segments, it is determined what maximum price levels customers can accept, and then the initial price is updated as the final price.
Sales Forecast
Sales volume and sales amount forecasts are based on the ambition of the top management and potential of the market. The potential is formulated using the parameters such as purchase frequency, wallet share, household penetration and size of population intending to purchase.
Gross Profit Forecast
The gross profit and gross margin of the product are calculated based on sales forecast and COGS.
Product/service ideas which survive through the funnel become precursors to market entry.
You can download Baby Wet Wipes Business Case explaning the end-to-end Go-to-Market process as follows:
