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What is product-market fit?
Product market fit is the match between the product a company offers and the market in which that product is sold. When a product meets the needs and desires of the market, it is said to have achieved product market fit.
The key to achieving product-market fit is to properly understand the needs and concerns of its target audience and create products that satisfy them. A company must test its product and get feedback from the market to determine how well it meets the needs and expectations of its users.
When a company achieves product market fit, it means that its product is successful and in demand in the market. This can lead to higher sales, increased market share and a stronger position for the company in the industry.
When should a company look for product market fit?
Product market fit is a critical moment in the life cycle of any product, especially for start-ups and young companies.
When a company is just starting out and developing its product, its goal is to create value to meet market needs. If the product is not relevant to the market (simply put: the product is not needed), it can lead to failure and serious financial losses for the company.
When a company is already in the market, it must constantly monitor how the product is meeting market needs and take steps to improve it, if necessary. If the product fails to achieve product-market fit, it can lead to lower sales and losses for the company.
Based on the above, companies need product market fit at all stages of development. With this approach, you can quickly improve the product and achieve sustainable growth in the shortest possible time.
How does a company find product market fit?
Finding market fit can be a time-consuming process that requires careful work to understand market needs and create a product that meets those needs. Here are some steps to help you quickly find product market fit.
- Research the market: research your home market to better understand the needs and concerns of your target audience, and find out what products already exist in the market.
- Identify the unique advantage your product has to offer the market. This will help you understand how you can meet the needs of the market.
- Test different product and marketing hypotheses to get feedback from users.
- Analyze the feedback to improve your product.
- Expand the market: this will allow you to attract more users and get more feedback to help improve the product.
- Monetize the product: a company should develop an effective monetization strategy for its product to ensure its sustainability in the market.
In general, a company should constantly work on improving its product and listening to the needs of the market in order to achieve product-market fit and ensure sustained success in the market.
What tools are needed to do this?
There are many products on the market that speed up the search for product market fit and help companies accelerate the collection and processing of the data needed to do so. Here are some of the popular solutions.
- Working with internal data: using analytical tools such as Google Analytics, Mixpanel, or Amplitude can help a company gain insight into user behaviour on a site and understand how they use a product.
- Prototyping tools: Prototyping a product, and experimenting with individual product features can be accelerated by using tools such as Sketch, Figma or InVision. Using them will allow the company to gather feedback from users and improve the product before its final launch.
- A/B Testing: tools like Optimizely, will help companies experiment and compare different versions of a product to determine which features and elements are most desired and get the best performance.
- CRM systems: using a CRM system like Salesforce, HubSpot or Zoho can help a companies
What to do after a product market fit has been found?
Once a company has found a product market fit, it should continue to develop the product and strengthen its market position. The following are some of the actions our clients take after we have helped them find their target market fit:
- Improving the product: by setting up a steady stream of customers who buy the product the business works to improve the service and develop new useful features. This increases customer engagement and therefore increases profits.
- Expand the market: once our clients have found their target audience and identified the key features of the product to meet their needs, they begin to explore new markets.
- Optimize business processes: when communicating with clients is established and the company grows, optimizing processes improves manageability and reduces the cost of maintaining the business. As many as 10% of our clients start optimizing their business processes after we have helped them find a product market fit and set up customer communications.
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We hope this note was useful for you, and that you will use it to expand your influence in your home market or enter new ones. If you need help with devising a product-market fit or implementing it in your processes, our analysts would be delighted to help you. Just choose a convenient time to get in touch via the button below and we'll offer you a solution.
