Product Market Fit
Our series of articles on a startup journey continue. The challenging step is here. Product Market Fit (PMF) is the initial phase of a startup which needs to be successful for an effective launching of a product.
Let’s define it first.
According to Marc Andreesen it means to be in a market with a product which can satisfy the market. Another way to look at it is to observe in a survey circulated in the target audience to measure viability of a product for that certain market in a quantitative manner.
This stage in the product development is crucial because it is necessary for sustainable business development eventually. It also helps in devising a strategy for not only marketing, but production of the product as well in accordance with customer needs. And Minimum viable product (MVP) will make it possible for you to make all the calculations related to steady growth, customer-satisfaction, and minimizing risks.
MVP is a method in a product development which helps in presenting the initial product to be made available in the market for targeted customer. Any more modifications in the product are depended upon the feedback of users. Any new technology does not immediately diffuse in the market. Diffusion of an innovation technology based on these 5 steps:
- Early adopters
- Early majority
- Late majority
- Laggards (a group of people who adopt new technology at the very end due to their economic and social conditions)
Not every technology is for everyone. You have targeted customer in the market and your product must met his needs to keep the production of product going and growth scale upward.
Guide to Product Market Fit (PMF)
Dan Olsen is a well-known expert in this field and has published a book The Lean Product Playbook where he elucidates the step by step process of reaching at a conclusive stage for PMF. We ‘ll discuss it briefly.
- Identification of target customer: No matter how much time you spend here, it would be valuable. Approaching the right customer is the core of the product you are devising. After market research, segment your audience in terms of different personal archetypes which can be understandable for all the team members involved in the process.
- Measurement of customer under-served needs: In the second step, you got to measure the unmet need of a customer. As per him, there are two spaces from which to operate while thinking about launching a product in market. Problem space and solution space. Problem space talks about the issues of a customer needed to be taken care of by product. And solution space is regarded to implementation of it. Spending definite amount of time in problem space will aid in approaching customer effectively.
- Have your Value preposition ready: This is significant because here you will make a point about the distinctive features of your product. How they will be satisfying the needs of customer. You ‘ll mention some of the key differences from the competitions. For example, some company is providing a service of providing water to different offices in a building and thus, to compete with this company you have to provide some distinctiveness to standout in the competition.
- Making MVP featured set: For validating the direction of project, we required this. This is mainly about the functional values of the product. Your aim here is to see what the product would be offering is in line with the target customer needs or not.
- Creation of MVP prototype: This prototype is real enough so that your customers get a taste of the product before you actually finalize it. This should be able to give you feedback on this archetype from customers to make valuable amendments, changes, and modifications.
- Testing it with the customer: This is the final loop where your product provides enough level of interactivity and engagement with the product that customer can easily provide feedback. This is a continuous process where feedback helps in further refinement of the product and thus, making it more desirable for consumers and potential customers too.
Well, there is a pyramid mode of thinking to clarify this stage.
Following questions are needed to be answered from bottom to top.
- Who are my target customers?
- What are their unmet needs?
- What is our value preposition for it?
- What is our MVP feature and prototype?
- How is our UX experience to be? (This feedback from customers is valuable affecting the product directly in its modifications)
There are certain indicators which also help you determining the direction you are heading with your product.
The first one is, if your product hit at the right mark in meeting target customers need, they will start marketing of the product on their own. In all the marketing techniques, a word-of-mouth phenomenon is still powerful and very influential. It leads to group think which forms further networks to spread the word real-fast.
Secondly, if demand of your product is overwhelming then you must have achieved an ideal stage of market-fit for your product. There is also an iteration factor which plays decisive role as an indicator. It means if target customer consumes your product, repeatedly, then there are more chances of increment in growth factor. Churn rate which is the number of customers who are not satisfied with your service should be minimum for gradual growth of your company.
Moreover, risk factors linked with technological, financial, and internal team crisis if not managed properly can weaken this process of engagement with customer and can drastically change the dynamics of product –market fit. Because in top 20 reasons of startups failure, “no market need” was at the number one position.
There are some popular myths about product-market-fit which can haunt you if you overlook them.
- PMF is a big event: Many people think they would know about market-fit about their product in a day. That’s not going to happen. It took a lot of missteps, turns, and even rewriting of project to reach the product-fit.
- Not super obvious when PMF is achieved: Some faithful minds can think that it is patently clear when they ‘ll acquire product-market-fit. However, that’s not the case. Apple was able to sale its first million units of iPod after 91 weeks of shipment.
- Once PMF achieved can’t be lost: It’s not some magical key you have found. Though one can lose that too. Anyways, PMF can be snatched by your competition or maybe you fail to update your product as per needs of customers. Nokia is the modern example of this case.
- Once PMF is achieved, forget about competition: This is the major delusional thought which can penetrate the minds of those who think they are indispensable. Again, I think Nokia is the best example to remember. They fail to update with the system and thus thrown out of competition.
To set the momentum of customers in successful motion that accelerates the growth path for your company you need to painstakingly work on market need which guarantees customer satisfaction and then developing and updating your product in accordance with it.