The Journey to Product-Market Fit

Getting started

In many cases, a new product in a market with shifting needs gains a product-to-market fit without being backed by a lot of research.

However, in many other cases, well-researched products do not fit in the market or are beaten by competitors’ offerings.

Challenges of achieving a product-market fit.

While huge organizations have the resources to invest in market research and experiment with new product ideas, startups have limited resources. Therefore, for them, achieving a product-to-market fit the first time is critical. They must create products that people are willing to buy. Many times, startups introduce new concepts and products too early in the market.

Friendster is the grandfather of all social media networks. It launched 5 years before Facebook and one year before MySpace. It had all the features that Facebook had when it was first launched.

Why did it fail?

But launched too early, this innovative concept couldn’t attain a market fit and was shut down in 2015. On the other hand, Orkut was one of the most popular social media networks but failed because it couldn’t keep up with the changing market.

Today, Facebook and other new social media platforms dominate the market. Even though other social media platforms came into the industry and even had a first-mover advantage, the lack of a product-market fit caused them to fail.

How do you determine that a product fits in the market?

To determine that a product fits in the market, here are three key criteria:

• Is the product growing organically?
• Is your product creating a word-of-mouth buzz?
• Are people willing to spend money on your product?

This was a brief introduction to the product-market fit. In this guide, you will learn what product-market fit is and how startups can attain this fit to succeed.

What is product-market fit?

A product-market fit simply means that your product meets the needs of the customers. While this is the simple definition, a product-market fit means that a business has a product that can satisfy the customers’ current needs and evolve to meet the customer’s future needs.

Definition

The product market fit definition also encompasses the concept of sustainability. If the product is not sustainable enough to meet the needs of its recurring customers, it will soon fail because the product will meet the customer’s one-time demand, and over time, it will run out of new customers.

So, if a business finds its competitive niche, attains a solid customer base, and grows organically, the product is said to have achieved product-market fit.

Product-market fit is a journey

Product-market fit is usually achieved when a business attains a deep understanding of its customers. However, this is not just an arrow that hits the target. A product-market fit is a journey. The product fits into the market when it gains organic, word-of-mouth promotions and serves as the best solution to the target market’s problem.

Because product-market fit is a journey, companies like Orkut and Kodak ran out of business.

Why?

Kodak, from having achieved the perfect product market fit with the film camera, became a misfit when the consumer’s needs changed and the next best product – the digital camera – met the consumer’s needs more appropriately.

The idea is to find a good product-market fit initially and take it as a first step to constantly evolve with the consumer’s evolving needs. In the process, it is nice that the business re-evaluates the customer’s needs, gains more knowledge, and invests in technology to retain that product-market fit.

Why is product-market fit important?

To stay profitable:

In simple terms, the product-market fit is crucial for companies to stay profitable. If the product does not meet the needs of the customers, it means the customers are not willing to pay for the product. When the product does not have a demand and does not sell, it will not be profitable.

Another issue with the product market fit is the demand levels. If the product has a small consumer base and it isn’t profitable for the company to keep manufacturing and selling it, the product is not said to have achieved the right fit.

To achieve an edge:

Many companies focus on reducing their time to market with new products to get an edge over the competitors. However, if the product does not fit the market and the competitor launches late, but with a product that completely meets the audience’s demand, it will likely fail. This business won’t be able to cash on the first mover’s advantage because of a wrong product fit.

So, it is essential to ask the right questions about the product market fit before the launch to better position it in front of the target audience. So, the research should be focused on the needs of the target market rather than a financial investment on a whim.

Measuring product-to-market fit

The market product fit is a qualitative concept that cannot be measured using KPIs or statistical figures. But even though statistical tools and formulae cannot determine the product-market fit, there are a few ways to measure it.

1.      Surveys

One of the most common ways to measure whether a product has achieved a product-market fit is by conducting a survey. This survey could have questions about the use of the product in the customers’ lives and what they would do if the product was gone.

However, it is important to understand the persona of the customer as well. This way, the business can figure out which persona the product appeals to and direct their marketing efforts towards that audience group.

2.      Interviews

While surveys are structured, semi-structured interviews can help better understand how to achieve product-market fit.

The interviews should be structured enough to keep it related to the product and its use in the customer’s life, but not restricting that it does not yield useful information.

3.      Use Kickstarter

Nowadays, many startups use crowdfunding platforms like Kickstarter to prove the concept’s fit with the market and gauge the market demand. These crowdfunding platforms are full of people who are already looking for new products. These platforms, therefore, lower the barrier to entry for startups.

Many products on Kickstarter and other crowdfunding platforms don’t gain the intended audience numbers. However, it helps these startups to reassess the idea and improve it to appeal to a larger audience base or simply change their product’s positioning to improve its appeal.

4.      Use organic marketing

Sponsored marketing could get your product the push it needs to get the initial sales numbers. However, this isn’t proof that your product will do well in the market. A product that achieves a great product-market fit gains organic reach because the product is catering to an existing demand.

So, when a business launches a product, it is best to rely on organic marketing first to gauge the demand, then roll out the product to a wider audience and invest money on sponsored advertisements on social media platforms.

5.      Proper positioning

Just as we’ve mentioned above, achieving the product market fit is not like an arrow hitting a target. It is an ongoing journey. It means that even the wrong positioning of the product or a wrong audience group will not get the product the success it deserves.

In this case, customer feedback is crucial to figuring out the right marketing messaging.

Many times, the product is focused on its features more than its benefits/ solution to the customers. Here are some ways to assess the marketing message for achieving the best product-market fit:

Meet prospects in person: If your product is for farmers, go to farmer markets, fairs, and trade shows to get an idea about what the customer is searching for.

Use social media channels: In today’s era, presence on social media channels is a great (and FREE) way to assess your positioning and customer’s demands.

A/B testing on paid channels: even though organic reach helps you gauge the fit, you need your product to be visible to the right people. You can get this by combining both organic and paid marketing. Use A/B testing on paid marketing channels to figure out which message resonates with your audience.

Product-market fit examples

Examples are a great way to explain a concept that seems complex theoretically. Here are some product market fit examples that you can use to understand the concept better:

Zoom during the pandemic

Zoom’s use during the pandemic is evidence of product-market fit. Before the pandemic, Zoom was used in office settings, but not as predominantly as it was used during the pandemic. So, while the product was there, it achieved a great fit during the pandemic.

This shows how a good product idea can only achieve a market fit when there is a need.

Kodak Films

Kodak Films was one of the blue-chip companies on the stock exchange. It had the lion’s share in the film camera market and was so adamant to keep reaping the benefits of film cameras that it didn’t see that the customers’ needs were changing and digital cameras better catered to the pain points of the customers that used the film camera.

This example shows why the fit is critical throughout the product’s lifecycle and not just at the beginning.

Play-Doh

Play-Doh is now a well-known, global brand in children’s toys. However, this product was not meant for children at all! Its inventor, Joseph McVicker, created Play-Doh for adults as a wallpaper cleaner!

It was founded in 1930 and found its purpose as a moldable children’s toy in 1955 when it was supplied to a school in Cincinnati. It was the audience with which Play-Doh found a more than perfect product-market fit.

This example shows how essential customer feedback is. You never know which customer personas demand and use your product without reaching out to the customer.

How do you find product market fit?

Many startups invest a lot of money but still fail because their product doesn’t achieve the right product-market fit. Finding a product market fit increases a startup’s chances of success.

Here are five steps startups can follow to achieve a product market fit:

Step #1: Performing research

The first step to take, even before product development, is research. Conducting market research is crucial to a startup because it can help them identify the customer’s pain points and create buyer personas.

Step #2: Identify what the customer actually wants

Customer needs are a major part of the product-market fit definition. Even though the research phase will have identified the customer needs, it is essential to seek insights into these needs and identify exactly what the customer needs.

When cars were not invented, customers did not know that they needed a car. They just knew that they needed a ‘faster horse’. It was Ford who then brought the concept of this ‘faster horse’ to reality with cars.

Step #3: Determine your focus

Startups don’t have a lot of resources. It means that creating a product that caters to everyone’s needs and selling multiple products that cater to different needs is not possible. It is wise to first start with a narrow focus – one customer persona and one product.

Step #4: Specify the value proposition.

The fourth step is specifying the value proposition. At times, this demands creating a document where the value proposition of the product, including the customer needs that it is trying to cater to, is written.

This written value proposition will come in handy to make sure that the product doesn’t vary from its focus – even when catering to newfound customer problems since one product cannot be fit to meet multiple problems.

Step #5: Measure the product-market fit.

Even if the product achieves a market fit at first, it is crucial to keep re-evaluating the customer’s needs and how your product fits in the formula. If the competitor has launched a better product for the customer’s needs, it might be time to rethink the product and make sure your core customer benefits from it.

Pimberly’s AI-powered PIM System for a product-market fit

For a business to remain profitable, a product-market fit is critical. However, no business can achieve a product-market fit without product data. Pimberly makes data management easy, so you can focus on how the product fits with your intended audience.

With Pimberly AI…

Your marketing team will not be busy manually entering data over multiple platforms and writing product descriptions with SEO keywords.

Bottom Line

Pimberly AI does it all for your team so your product reaches your intended audience at the right time. Your employees can instead spend time analyzing sales and marketing figures to reach the audience where the product can fit.

Find out how Pimberly fits your business by getting a product demo for Pimberly’s PIM system from our team today!