How To Enter a Startup Market With High Entry Barriers

By Fernando Berrocal

When selling a new product or service in an essentially saturated business market, you're placed in a very challenging business situation. You might be developing a search engine or a streaming service–both of which are quite popular–in between the other endeavors you might be pursuing. 

Specific Startup Market

You'll need to charm potential consumers away from the established, bigger rivals in your market(s), such as Spotify (streaming music), Disney+ (streaming video), or Google (search engine). Thus, the question in these particular cases is: How can you break down the entry barriers in such a competitive business market?

Keep in mind: you must begin by contemplating (on a modest scale) when and where your business rivalry is most fierce. You must focus primarily on snatching up a small portion of the market, and selling to the customers who will be most passionate about your product and/or service. Then, start by launching that product or service in a small, localized, or specialized market.  Simultaneously, work hard on your business’ outreach and marketing–its future–to generate as much anticipation as you possibly can.

Instead of attempting to reach everyone at once, you might be able to find a few devoted final consumers that will help you out more at the beginning of your efforts.  Loyal, early customers will assist you in refining your marketing strategies–and identifying areas where your product or service needs to be enhanced. After that, once you're preparing to expand far and beyond your expectations, they'll also assist you in enticing investors.

Venture Capital

Startup publications often offer guidance on growing from the first 20-200 customers. Transitioning from 0 to 20 receives far less attention, and there are several things you can do at the outset to position yourself for long-term success. Your strategy for acquiring and retaining initial clients will have a significant impact on how quickly you can expand. In reality, our approach to entering a highly competitive sector is based on a concentration on the small scale. Then there is "market penetration", which refers to the idea that if you focus all of your energy on a tiny spot, it will be considerably simpler to break through a barrier. The same idea remains true when introducing your product. Avoid trying to cover as much ground as possible. Instead, attempt to focus more narrowly and dive in before expanding.

  1. Choose your ideal client.

Answering this question (in as much detail as you can) is the first stage in your market penetration plan. Create a profile of the customer who will be most enthusiastic about your offering. Find out information like their name, age, and university. Discover their earnings and the sources of their earnings. Make the most of your marketing budget, which is probably not large at this point. This will be possible if you put laser focus on a certain target. This does not imply that your goods will only be purchased by your ideal clientele. Additionally, it doesn't exclude future revisions to this profile. However, the entrance barrier to your market will be broken down by your ideal customers.

  1. Lay the foundation.

Now that you are aware of who they are, make every effort to contact your top clients before launch. The more hype you can create before beginning order fulfillment, shelf stocking, or user onboarding, the better. You might be able to get people to join up for your newsletter, or invite beta testers to try out your app. Offering special discounts to customers who sign up in advance is a fantastic choice for business-to-business (B2B) services. Before the business launch, do everything you can to add people to your network, especially those you anticipate would be enthusiastic about your firm. This enables you to get started quickly, assists the process of  gathering feedback, and allows you to update your ideal client profile.

How to Enter a Specific Startup Market with a High Entry Barrier

  1. Start locally.

Don't begin by launching across the nation. Choose a single, preferably small area where your target market is well-represented. A limited release is more expensive than the above scenario. That should be a huge issue unless you have millions of dollars in seed funding. A regional launch gives you more time and resources to devote to testing and improving your product in response to the input from your devoted early consumers. Since it is hard to tell in advance what the ideal version of your organization will look like, pivoting is a topic that is frequently discussed. Start by doing the test on a modest scale. When customers truly rave about your product, you know you're ready to go mainstream.

  1. Follow the money.

It costs a great deal of money to penetrate a large market. Therefore, to expand outside a smaller market that you've already completely penetrated, you'll require substantial investment in monetary resources. An established success is far simpler to engage investors in than a pipe fantasy. Therefore, the optimal time to look for a large capital round is after you've identified your target client, worked to generate interest, and prove your idea with a successful small-scale launch. At that moment, you may present investors with a distinct picture of how your firm might flourish and expand.

The bottom line? As a newbie, you must maximize your utilization of your limited resources to gain exposure and integrate into a mature market.  Try to create a clear picture of your final target client(s), then work hard to get them excited about your products.  Last (but not least), start small. Then, proceed with your business expansion. Any form of barrier can be broken through with a laser-focused force–markets are no different.

Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.

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