To position the product, you must first have clarity on the addressable market and its breakdown in terms of different industries or user communities (let’s call both of them as ‘verticals’ for simplicity). Then analyze which of them can benefit the most from your product, where your maximum contacts are, and which has the least competition.
You can accordingly initiate preliminary sales efforts with well-known contacts in verticals that appear to have the best potential. Initial sales in a start-up are opportunistic—you take the business that you get. Yet, over time, you can only gain by firming up your target client base and tailoring your product to them.
Product positioning and sales strategy must be approached the way an army fights a war. It may not be easily apparent which verticals to focus on. In similar situations, armies launch probing attacks to detect weak lines of defence, before deciding on the exact battle plan. Founders can test the market with different customers, who would help them to develop insight into which industries, user communities or geographies have the best potential.
Once weak links are identified, choose initial battles to be on your terms. In the 1971 war, the Indian army avoided enemy troops that were concentrated in cities in East Bengal. They quickly captured the countryside, surrounded the towns, until the enemy surrendered. Similarly, a start-up must spend its limited sales budget to target the right customers.
Positioning and sales are influenced by different factors, some of which are listed below:
Target Market
- Your product may have the potential to solve similar set of problems for different verticals. However, limited finances will stop you from ad- dressing all of them. Focusing on one or two verticals can result in a more specific solution, thereby increasing total value delivered by the product. This improves the probability of converting opportunities to sales.
- The best target segments are not necessarily the obvious ones. For example, a vertical may be large but should be ruled out if it has entrenched competitors, less appetite for IT products, remote location etc.
- Conduct some research by talking to potential clients in various verti- cals, industry experts and reviewing market surveys.
- Sometimes, you may simply stumble on the right vertical. Initial clients provide the momentum and knowledge base related to a particular industry segment.
Delivery Model
- Sales strategy depends on the kind of product: enterprise software for companies, consumer software, web downloads, hosted solution (SaaS) with subscription fee, or an ad-based ‘free’ web portal.
- Your product may support more than one delivery model. Thus, vendors may target big companies with full-blown enterprise software, while providing a SaaS version for SMBs. Many companies offer a free downloadable ‘lite’ version of the product, which can be upgraded to a paid full version. A free website may charge a subscription fee for advanced capabilities or special content.
Initial Support
- Does your product work out of the box with almost no support? Or does it need some customization and training? Is the product serving an obvious need, or does it require substantial education before a client decides to buy the product? The answers will influence the sales model.
Geography
- Is your product specific to India or global in scope? Even if global, do you plan to sell in India first? Does your city and region have sufficient opportunities to sell the product?
- Except with SaaS, targeting and supporting customers outside India can be very expensive. It is best to follow an ‘expanding universe’ model, where initial focus is in your immediate area, followed by proximate locations, and then a global market.
Product positioning is closely tied to licensing model and pricing. We will consider each one individually.
