Leveraging Beachhead Markets for Product Success

Often startups and new product teams tackle enormous sized markets that might look attractive and cause founders to have unicorns dancing in their heads. But this approach can torpedo a new product before it ever gets traction. This “boil the ocean” approach is tough even if you have a nearly unlimited budget, and even the biggest brands often struggle with entering big, mainstream markets. For smaller companies and startups, it can be very treacherous.

An often more effective tactic is to look for a beachhead market as an entry point for your new product. A beachhead market is a smaller subset of a mainstream market that you can clearly define and allows you to fly under the radar and secure a foothold in the market.

In combat, a beachhead is a defensible position that you can use to attack from. In business, it’s essentially the same thing. A good beachhead gives you a far more attainable goal that you can leverage later to attack other, and maybe bigger markets.

Examples of a Beachhead Strategy

A great example of how a beachhead market strategy is Facebook. At that time, social networks like MySpace and Friendster were the big players in the social media space with many millions of active users. Instead of going after these entrenched brands directly, Facebook created a beachhead strategy that focused on universities, with Harvard being the first. Once established there, they added other universities and colleges systematically and kept growing, then opening up to the general public, and eventually dominating the social network space.

Amazon is another example of a brilliant beachhead strategy. Jeff Bezos’ plan was to focus on books, which was a winnable market, and allowed him to build his infrastructure and delivery mechanisms. From there he branched out into other market segments like media and electronics, and eventually they became the juggernaut we know today. And, BTW, this was Bezos strategy from the beginning. He didn’t just luck into this model.

The Benefits to a Beachhead Market Strategy

But you might ask: Isn’t a beachhead just a niche market? Yes and no. Yes, in the sense that you are looking for a subset – a niche – that you can go after. But the difference is this – finding a single good niche might be a great way to build a “lifestyle” business that will be profitable and sustainable, but it will, by its very nature, be limited. If that’s all you are looking for, that’s fine.

A beachhead market strategy is different in that it’s purpose is to use that niche as an entryway into additional adjacent markets. You use that initial market foray to refine your product through iteration, validate your solution, build your infrastructure, and use the revenue from that to fuel your entry into additional submarkets.

To build a beachhead strategy, look for market segments that might be underserved and therefore ripe for the picking. These will be submarkets that have similar customer profiles, with a unifying problem or pain point that isn’t being solved well with the existing solutions.

This is where good customer research is critical. You need to be talking to potential customers to uncover your submarket opportunities. Gather this data and information and create a list of potential submarkets that look like good candidates. The goal is to find not just your initial beachhead submarket target, but to also find other submarkets and niches that you can target later.

Picking Your Beachhead

Let’s say you have identified 8 niche submarkets that are candidates for your beachhead market. Which one do you pick? It’s not always an obvious decision. There are a bunch of factors that you can use to help whittle it down including:

Let’s dive into the competitive landscape a bit more, because this is where we often see new product teams underestimate their competitors. While existing competitors often ignore underserved markets, that doesn’t mean that a new product that addresses their specific unsolved problems and pain points will be a slam dunk success.

For example, strong network effects where products become more valuable as the number of users increase can present moats that are difficult to overcome. Each additional user that your competitor acquires presents a more difficult environment for a new product to enter successfully. Building a better Facebook might look good in your pitch deck, but in practice it’s almost certainly bound to fail.

Another competitive problem you need to be aware of is that once existing competitors learn about you, they might be able to pick off your solution easily and crush your traction. The bigger your competitors are, the less likely this is to happen simply because they might not believe you are a threat and ignore your niche solution. Sometimes they think those segments are too small to directly serve, or they miss an emerging trend that can be exploited by new entrants into the market.

On the other hand, finding submarkets with underserved customers can be a great way to build a strong and loyal following. Neglected customers who are given a new product that meets their needs can be extremely attractive for them, and you can build a following very effectively. Consumers love nothing more than when brands find solutions that speak to their needs and problems, and that loyalty can be a powerful defensible moat for your product and brand.

Summary

Entering large, mainstream markets is a tough proposition for new product teams and startups. A beachhead market strategy can be an effective way to enter a market through a niche and build a scalable product that you can leverage to tackle other adjacent submarkets and niches.