In his book, Disciplined Entrepreneurship: 24 Steps to a Successful Startup, Bill Aulet, Managing Director of the Martin Trust Center for MIT Entrepreneurship, stresses the importance of searching for the holy grail of specificity: market opportunities where the target customer will meet, buy, and adopt your product or service. In the first post in this series on successful start-ups, we stressed the importance of the discovery stage—time spent brainstorming about product and service ideas, defining potential customers, and identifying industry matches. In the second post in this series we focused on finding the start-up sweet spot where your product or service meets not only a potential customer, but a targeted end user—the customer who will buy your product or service and become a loyal brand ambassador, persuading others to buy it, as well.
The third critical component of the planning phase of a start-up is what Aulet refers to as “finding the primary beachhead market.” The beachhead market is the most important place from which to launch your invasion of the market, because it’s where the paying customers are found.
The beachhead market is named after the WWII battle of Normandy where Allied soldiers stormed the beachheads of Normandy enabling them to dominate one of the most important battles of WWII; without this win, the war may have ended in German victory. Finding your beachhead market is one of the most important strategic moves you make in setting up the foundation of your business.
“A beachhead market is the place where, once you gain a dominant market share, you will have the strength to attack adjacent markets with different opportunities, building a larger company with each new following,” says Aulet.
The three conditions that define a beachhead market:
- The customers within the market all buy similar products.
- The customers within the market have a similar sales cycle and expect products to provide value in similar ways.
- Word of mouth communication exists between customers in the market. For example, existing customers serve as high-value references for potential customers. In fact, they may belong to the same professional organizations or operate in the same region.
A good example of the search for a beachhead market is Smart Skin Care. Smart Skin Care was the product of one of Aulet’s PhD students, Pedro Valencia. Valencia patented a new technology used to synthesize nanoparticles more quickly for medical uses, with one particular application being a polymer that binds to skin while slowly releasing medication over a twenty-four hour period. Valencia and his team spent weeks researching potential markets, working with hospitals, outpatient services, and cancer treatment centers. During their search they discovered that one powerful application of their new technology was sunscreen—using time-release technology to slowly release sun-blocking chemicals over a period of time. The sunscreen market was favorable because it required less time and resources than medical markets monitored by the FDA. But the sunscreen market was still too large and diverse for the Smart Skin Care team, so they continued to sub-segment to find their beachhead market. Finally they discovered one of their sub-segments—extreme athletes in their thirties who do triathlons—had the interest, need, and disposable income to spend on an upgraded sunscreen. After approaching their new beachhead market with success, Valencia and his team learned that if the extreme athletes bought their product, it would be that much easier to launch their product in other markets.
The key for new entrepreneurs, says Aulet, is to “seek specificity but not get caught up in analysis paralysis. Because there are so many market opportunities, ultimately there is more than one path to success … ‘getting started by doing’ is key to creating the momentum all entrepreneurs need to succeed.”
Bill Aulet is a Senior Lecturer at MIT Sloan and the Managing Director of The Martin Trust Center for MIT Entrepreneurship. He teaches in the Entrepreneurship Development Program and the Regional Entrepreneurship Acceleration Program at MIT Sloan Executive Education.