Assignment 7: Go To Market Section (Sales, Marketing, Pricing—Version 1.0)
So far you have determined the target customer, the value proposition, the market opportunity, the product and the competitive advantage. We are now ready to start to determine and finalize your business model to capture value and also your marketing and sales strategy. Specifically we will focus on determining the Life Time Value of an Acquired Customer (LTV) and then the Cost of Customer Acquisition (COCA) so as to determine the fundamental profitability of this business.
Here are the guidelines for the Business Model, Pricing and LTV part of the "Go to Market Section":
- Did the student team present a well-researched and credible DMU and DMP?
- Was this used as the foundation for the rest of the analysis that followed?
- Did the student team creatively think about a business model that fit well with the interests of their customer, themselves and their partners before they settled on their initial business model?
- Were the competitors considered in this process too?
- Was the student team business model to capture value clear? Was it appropriate? Will the customer accept it?
- Was the pricing of the product clear and well-thought through?
- Were the initial programs/discounts needed to acquire the first strategic customers considered?
- Did the team build a convincing source for recurring revenue if possible?
- Was all of this done in alignment and consideration of optimizing the COCA vs. LTV ratio?
- Did the team include an analysis of the customer retention rate? Is it reasonable?
- Was the profitability of the different revenue streams considered? Over time?
- Are all of the assumptions in the LTV clear?
- Was a proper calculation of LTV done that is comprehensive? (e.g., it only includes NPV of the profit and not revenue, reasonable assumption made on life time of customer, retention rates, etc.)
- Did the team show how LTV would evolve over time and why?
Guidelines for Marketing, Sales and COCA part of the "Go to Market" Section:
- Again, did the student team have a clear understanding of the target customer's DMU and DMP?
- Was this validated by demonstrated primary market research?
- Did everything else done in this section build of this foundation and that of the persona?
- Did the team clearly state how it intended to generate leads? Was inbound marketing considered?
- Did the team clearly state how it intended to close the leads and the reasons the sales model was chosen? (i.e., sales model options - direct, indirect, online, Avon model, etc.)
- Was there a map of the sales process with the different parties involved and their roles from lead generation to collection of money?
- Was there a realistic timeline presented for the full sales cycle? (thru to collection)
- Did the team clearly state its assumptions on closure rates as prospects move through the sales funnel?
- Did the team do a credible analysis of the full costs along the sales cycle?
- Was there a COCA calculation done? Was it comprehensive? (e.g. includes only Marketing and Sales costs and not COGS & Fixed Costs, makes reasonable assumptions on sales closure rates, etc.)
- Did it include the costs of customers who were not closed as well? (full allocation of M&S costs)
- Did the team take into consideration the power of Word of Mouth (WOM)?
- Did the team show how COCA would evolve over time?
To help you answer these specific questions you also might think of your "Go to Market" strategy at a higher level as well with considerations such as:
Overall Marketing Strategy
- Describe the specific marketing philosophy of the company, given the value chain and channels of distribution in the market niches you are pursuing.
- Describe which geographic areas you will initially target, how will you expand geographically, and why this makes sense.
- Describe any seasonality to your business and what can be done to promote sales off-season.
- Discuss pricing strategy vs. competition.
- Analyze gross margin per product sale and show that you can cover other expenses to reach your desired profit margin on a cost accounting basis.
- Justify the difference in price between you and the competition.
- Describe the method (direct, distributors, sales representatives, etc.) that will be used to make sales and distribute the product or service and both the initial plans and longer-range plans for the sales force. Include any special requirements (e.g. refrigeration).
- Discuss the value chain and resulting margins to be given to retailers, distributors, wholesalers, and salespeople.
- Describe special policies, e.g. discounts, regional exclusivity, etc.
- Describe how your sales force and sales efforts will grow and scale over time and how you will shape its growth.
Include a sales schedule with a budget including sales, advertising and service expenses. Include what you expect the volume of each salesperson/distributor to be and how that will grow. This schedule will help you calculate customer acquisition cost (COCA).
Advertising and Promotion
- Describe appropriate methods you will employ to drive customers toward your product. Consider different tactics depending on whether you are selling through channels, direct sales, OEMs. Are you going to buy "keywords"? If so, what is your budget? How will you measure success? Failure?
- Describe methods and channels of distribution you will use.
- Describe shipping costs if applicable.