Determining a product-market fit
Determining a product-market fit is the way to a lucrative start-up. It is the indication that there is a market demand for your product and that there is a will to pay for it.
A product-market fit has multiple aspects to it. Your product must be better than the other close alternatives already in the market. An ideal product-market fit is a situation when the demand for the product is high enough to sustain profits.
When you approach investors to ask them to put money in your start-up, chances are they will ask how you find your product to be a market fit. The reason is simple: There is no point in pumping money into something for which there is no market demand.
So here is what you should keep in mind while determining your product-market fit:
Who are your target consumers?
The beginning of this process is to identify a customer base that needs your product and will buy it. Understanding your target customer is the key to designing the product.
This can be done by bifurcating the market based on need and behavior. Bifurcation will help you create a consumer persona which helps in realizing who you are building this product for.
Identify your competition
In determining your product-market fit, if you identify a large customer base, chances are there already exists competition in the market. An insight into your competition is a significant step towards a product-market fit.
Find the competition and study it as much as you can. You can also distinguish your idea from that of your competition, and see how your product can be a better answer to the market demand.
Understanding customer needs
Today, there is no dearth of choices for all products and services in the market. A good example of a product-market fit is when your product is the answer to the unanswered consumer needs.
Appreciating and incorporating consumer needs while designing the product is one sure shot way to make customers choose your product over the easily available alternatives. The idea is to make a product that customers value and appreciate.
Prototyping your product
After you have identified the aforementioned elements the next step of determining the product-market fit is to prototype your product and show your consumers how your product will be the answer to their underserved demands.
The question to be answered is How does your product add value to user experience?
With a clear answer to this, create a Minimum Viable Product (MVP) which specifies only the basic functions that can make or break your case to the customers. At this juncture, there is no need to spend time on the details. The MVP approach is to let the customers know the potential of your product.
Response to your product
A survey of your product prototype is a good way to understand your customer's response. Ascertaining the proportion of users who consider your product to be a must-have is the focal point of conducting any such survey.
Other than this, it is also to collect general opinions and desires of your customers regarding your product.
The response to the product is also dependent on how much your customer base is likely to recommend your product to their peers. The likelihood of their recommendation is directly proportional to their satisfaction with your product.
Other than surveying, the response can also be determined indirectly for example the frequency of visits to your website or the number of times a product has been bought again.
The fluidity of the product
Developing a product-market fit is a long process that will require rebuilding and redesigning at many stages. Even after you find your product-market fit and launch it, the customer's needs and wants are bound to keep changing.
To keep up with this dynamic nature of the market, it is necessary for your product to be fluid. The adaptability to the changing market needs is a vital feature of a product-market fit.
The common signs of a successful product-market fit are:
- Your product sells at the same speed you develop it
- The product sells with little to no marketing
- Website traffic and clicks are increasing by the day
- Repeat customers
Determining a product-market fit is just the first step of a successful business. Once you have achieved your product-market fit, the next step is to expand the customer base to increase sales.
While customer feedback forms are an essential part of this process, remember that you will never always have a 100% satisfied customer base. Aligning your start-up to your customer needs is still subject to the vision of your start-up which must not be lost.
Frequently asked questions
1. How do you determine the market fit for a product?
Following is a six-step process to find your product-market fit:
- Have a vision for your product
- Have a hypothesis for your product
- Identify the competition and customer base
- Create a prototype of the product
- Get feedback on the prototype
- Incorporate the findings of your survey
2. What happens after finding a product-market fit?
- Once you determine your product-market fit, it is time to get the product to the entire market and achieve dominance. The aim is to reach all potential customers and get conversions and recommendations in favor of your product.
3. What is a product market?
- A product market is defined as a market in which a particular product is sold or traded. Many commodities, goods, and services have specific markets such as the market of automobiles, smartphones, pharmaceuticals or consultant market, and banking services market.
4. How long does it take to find a product-market fit?
- Determining a product-market fit is a long process that can take up to 1 year or more, but it is recommended to finish the process in less than 2 years as the analysis and surveys may lose their significance in longer periods of time.
5. Why is product-market fit important?
- Determining a product-market fit is important as it ensures that the product you are building has a large enough customer base for your business to generate substantial revenues.