“Well, yea,” the founder remembered, “we launched everywhere, nationwide, all at once. We targeted everyone.” He shook his head. “And we blew through our advertising budget in just a few days.” He paused. “Worse than that, everyone—and I mean everyone—saw all our mistakes. God, that was expensive. I wish we had launched more narrowly. We should have chosen a beachhead market.”
First, a Couple Definitions
From Kotler & Armstrong, Principles of Marketing:
- A market segment is “a group of customers who respond in a similar way to a given set of marketing efforts.”
- Market segmentation is the process of “dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs.”
The Beachhead Market
The concept of a beachhead market comes from military strategy. It’s where an attacking force concentrates its attack, survives, and establishes a beachhead from which it then penetrates farther into enemy land. Doing so successfully requires planning, secrecy, concentrating troops and supplies, training, tenacity, and an absence of bad luck.
For an analogy, consider the WWII Allied invasion of Normandy. Knowing they faced a determined enemy, the Allies needed to decide where, when, and how to next attack Europe. They narrowed their decision to France, but with approximately 5,500 km (3,400 miles) of French coastline, they couldn’t possibly attack it all at once—they had to focus their attack and establish a beachhead. Spoiler: By the end of the day, after intense fighting and many lives lost, the Allies secured their beachhead—a stretch of beach approximately 80 km (50 miles) wide!
As the founder, entrepreneur, and leader of your venture, you must plan your goals, strategies, objectives, and tactics, gather your resources, and execute your product launch successfully. You will likely lack the resources or time to launch your product into too big a market. You must focus, surprise, hit hard, and adjust and reinforce where necessary. You must establish your beachhead. From there, regroup, reinforce, plan your next objectives, and move inland to win adjacent markets.
But keep this in mind: once your competition learns of your “attack,” their goal will be to throw you back into the water—to defeat you. And believe me, they will use all available tools and tactics, some of which may be unethical or illegal. Be prepared, marshal your resources carefully, communicate well, encourage everyone, and have a backup plan.
A Real Example
A team Eben coached developed a technology that prevented people from using cell phones while operating equipment. The technology was good enough that only people sitting in the operator’s seat would be restricted. Wow. The market for such a product was, and is, huge. They segmented the market and focused on customers who drive cars. Fine, but that market was still way too big for a beachhead.
“Okay, team,” I said. “Let’s identify your beachhead market by getting very specific. Let’s identify your first market. This will be your beachhead market. Segment your bigger market and identify a customer persona in a much smaller market niche—one you can manage, one you can afford, and one you can win. Let’s identify the best small market, one where customers have BIG wants, will pay a ton, and will buy your product again and again. Remember, securing your beachhead will be expensive.” I raised my fist to the ceiling. “Go for it.”
“Insurance companies?” a teammate offered.
“Good start, but not yet. Insurance companies are bureaucracies. You can’t afford to get sucked into them. And, by the way, remember that a ‘company’ is not a customer. Instead, name a person—someone with a particular responsibility, who cares deeply, who has money, who’s willing to try your new product, who will use it or have someone they know use it, and who will buy it repeatedly or, at the very least, purchase a lot of them. Remember your three key marketing questions.”
“Car owners?”
“Yes,” I said. “Getting warmer. Go deeper.”
“Parents?”
“Yes, and why?”
“They don’t want their kids using cell phones while driving.”
“Exactly,” I said. “Parents need to keep their children safe. They want solutions. You got it.”
The team smiled and relaxed. They shared high-fives.
“But you’re not done,” I added. “Not deep enough. ‘Parents,’ collectively, still represents too big a market. Deeper.”
The team sat back. “Deeper?”
“Yep. Segment ‘parents.’ Who, among all parents, will you target for your beachhead? To whom will you launch first? On whom will you spend your early, limited resources? What kind of parent? What do they do? Where do they live? Who’s going to pay you the most?”
“Rich parents?”
“Yes. And where do they live?”
“L.A.?”
“Yes!” They were getting it. “But why not New York City?”
“Because,” a different teammate offered, “fewer kids drive cars in New York?”
“Exactly. Keep going.”
The team was excited, and after more work, they finally chose their beachhead market. What they learned blew them away. What was their beachhead market?
Answer: The team’s beachhead market was the set of super-wealthy L.A. fathers (lawyers, actors, athletes, agents, etc.) who had bought, or were about to buy, their princess daughters brand-new 3-Series BMW convertibles. Following the team’s interviews, they discovered how much their target market valued the team’s solution for keeping their precious children safe. With vigor in their voices, the fathers said that they’d pay thousands of dollars per unit, buy one for each of their cars, and upon reflection, some added that they’d not let their children ride with friends unless those cars were similarly equipped. Finally, the team was delighted that several fathers called back to ask for updates. A few suggested they might invest. Well done, team.
Recap: A Beachhead Market
A beachhead market is the first market into which a venture will sell its first product. It’s one where first customers (innovators) will hunger for the product and can afford it, it’s small enough to be served by the venture’s early team, it’s small enough that they can afford to advertise to it, and it will help them learn and correct their mistakes before they invest in roll-outs to adjacent markets and beyond.
Figuring one’s beachhead market is tough work. The questions to address are deep and challenging; one must have the resources (time, money, skills, tools, and support) to answer them honestly and thoroughly. A test of a founder’s, a team’s, and an investor’s worth is how well they work together to answer these questions and choose the right beachhead market.
Please click contact, if you want help answering these or similar questions. Finally, please leave a comment or send me a note if there is a particular subject or topic you’d like me to address.
Colorado Technology Ventures coaches and mentors founders and their startups.