Product Positioning-Large or Small customer focus

I can only share what I've learned (the hard way), as I'm in the process of working on a product that is applicable to both large and small as well.

The first thing I would ask is, have you validated your assumptions of its applicability to both by asking potential customers from each?

If so, are there fundamental features/functionality that you can distill out and put into your product that both would use?

I went into interviews with customers (small and large) with assumptions that needed to be tweaked ultimately based on the resources available to each. In other words, larger organizations may have more money, but not the flexibility (sometimes) to buy/use your product whereas small businesses don't necessarily have time/money to spare, or the technical aptitude, but are more flexible to having their problems solved. Taking those items into consideration I was able to come out with something that appealed to both.

From there I turned to marketing. As a single founder (for now), I was driving myself insane trying to figure out how I would market to both groups, slicing and dicing all sorts of information. It wasn't beneficial and I finally had to draw a line and go after small groups to start. This provided to be better, quicker wins...you are typically dealing directly with the decision maker. And I can turn easily these folks into advocates for my product by providing exceptional customer service. Something that may be hard to do with a bigger organization.

Once I have traction here, and additional resources I plan to go after larger organizations.

Its easy to get excited at the thought of tackling both at once, but along the way focus will be lost somewhere. It really comes down to the resources you have available and where you think you can gain the quickest traction. From there, you can then work on scaling.

Hope this helps. All the best.

If you're just launching (or haven't even launched), then I'd recommend to target wide until you find out from which target market your early adopters will come from. So figure out a broad position statement, one that focuses on the actual problem you solve instead of whose problem you can solve. But once you've figured that out, I recommend putting all your initial resources, including your positioning, into the most receptive target market. And then, later on, once you're cruising and you have traction, you can expand into new markets.

Instead of just wondering WHO is your initial customer, I'd also spend time think about HOW you're going to reach your potential customers: inside sales / outside sales / PR / advertising / partnering .... I think figuring out your initial distribution channel could be more challenging than figuring out your target market because the distribution channel involves higher costs and leaves less room for errors, especially if initially you have limited resources.

Good luck.

Personally I'd suggest going for smaller companies.

Larger companies have more money, and if you get one install there then it can make it much easier to get other installs, so they seem more valuable as clients. But this means that lots of people are trying to sell to them, and so they have complex processes in place for purchasing, which are a real pain to navigate -- even if you have contacts there who think they can help. You may find that you've found someone who recognises the value of your solution and knows it will fix real problems for them, but they just can't get the deal to work with management/purchasing/etc. This is why large software companies have expensive sales people -- a big part of their job is to navigate the complexities of large client companies' purchasing bureaucracies. It's made worse by the fact that those purchasing bureaucracies often try to avoid buying anything from small companies because they worry that the small companies might go bust. (Ironic in the current economic climate, but there you go.)

Smaller companies are more agile and willing to experiment. If you find someone at a small company who recognises the value of your solution then they're much more likely to be able to move from interest to purchasing because there are just fewer people whose job is to stop their company from spending money.

Of course, once you're established with a good set of smaller clients, you can move up the ladder and pay someone to take large-company purchasing people golfing :-)

(Semi-relevantly, there's a lot about this kind of thing in Joel Spolsky's excellent "Camels and Rubber Duckies" post, which is mostly about product pricing but has some great points about selling to large corporations.)