Marketers and entrepreneurs often use the term “product market fit” to decide if the product or service is ready for market. Product market fit is the magic formula that every business is looking for to figure out to determine if they’re genuinely solving a problem for a real audience or not.
It’s the moment when the right product, at the right price, is in front of the right customer. And once they decide to purchase, you’ve got them, and with the right product market fit, you can scale. But, figuring it out can be a challenging process.
In this article, I will share the definition of product market fit and walk you through a step-by-step process to help you determine whether or not your product is marketable.
Product market fit means being in a market with a product that can satisfy that market.
When a marketer or entrepreneur identifies a need in the market and builds a solution that customers want to buy, that’s product-market fit.
If your product is solving a problem for a customer, they’re probably going to buy it. You don’t have to make an expensive investment to determine whether you have the right idea or business model.
A good start is to answer these questions: What would a customer be willing to pay for a product, service, or experience that helps them reach their goals or satisfy their needs?
As much as creative ideas and a great team can matter in the success of a business, the most crucial factor of all is product market fit.
And it’s critical to take into consideration when you’re building the product.
Product market fit is a simple way of looking at whether your product meets its market’s needs and whether you’re going to make money.
This is tricky, but it’s important to measure it before investing too much money in your idea if you’re starting.
If you’re not measuring product market fit, then you can easily get caught up in the excitement of a new product and ignore the data that should be informing your decision-making process.
The biggest problem with this is that it could lead to overspending on features or spending too much time and effort on something that won’t convert.
There are several indicators that you should pay attention to before launching a new product.
How often do people search for products or services related to your idea? This is an excellent indicator of whether there’s a need for a solution to a problem and whether or not it is solving it.
It also helps you see if there’s already a market for it. If demand exists, this is a good indicator that a need exists and that potential customers maybe buy your product.
You can use Ahrefs, Semrush, or Google Keyword Planner tools to do this.
Is this a big enough market to support your idea? The market size will also help you determine if the solution will be viable and if the product will be successful.
To find out the size of the market and growth rate, you can use web services such as Statista or similar.
It is always an excellent idea to find out what the competition is doing to stay ahead.
Are there any related products in the market right now? If you can answer “No”, you have an advantage over the competition.
It can help you make your product more compelling and different from the rest. If you answer “Yes”, it’s essential to tell what’s different about your product and what makes it better than the others.
To determine if your product fits the market, you can use this product market fit framework. There are specific questions that you need to consider:
You need to know what the product is about to understand it better. If you don’t know what the product is, you will not explain it to your customers.
So, you need to know what the product is about and what it can do for your business.
If you don’t know who your target audience is, you won’t make a product that suits them. If you are looking to sell a product to men, you need to understand that they are different from women.
So, you need to know who your target audience is and what they want.
The first thing that you need to consider is your product’s image. If you don’t have any positive idea about your product, it won’t attract customers.
The idea of your product should be attractive and eye-catching. It should make people interested in buying your product.
People buy products that they don’t find anywhere else. So, if you want to sell your product in the marketplace, you need to be unique. It would be best to offer something that no one else could offer. It would help if you created a demand for your product.
People buy products that they can use in their daily life. If your product doesn’t positively impact people’s lives, it won’t attract them.
If you don’t offer anything that people are looking for, your product won’t attract customers. You need to have a product that people are looking for, and that is why you need to create a demand for your product.
When you sell a product or service, you need to have good demand. If you have low demand, your product will not survive in the market.
Knowing how the customer will benefit from using the product is vital. Because if you don’t understand how the customer will benefit from using the product, you won’t convince them to buy it.
So, it would be best if you found out how the customer will benefit from using the product.
You need to understand what your competitors are doing. If you don’t know what your competitors are doing, you will not compete.
So, it would help if you found out what they are selling and how they promote their product.
If you don’t know whether the customers have any barriers, you won’t convince them to buy your product. So, you need to know whether the customers have any borders.
Market size is one of the most critical questions you need to ask yourself. You need to know how big the market is for your product or service.
If you don’t know how big the market is for your product, you won’t sell it to the customers. So, you need to know how big the market is for your product.
You can use the Product Market Fit Pyramid framework for understanding how a new product or service can achieve market success.
It is an idea to help companies identify what they should be doing to reach market success. The first step is to decide which customers are the most important to you and how many of them.
Then, it would help if you determined what products and services you want to develop. You should also decide what type of people you want to market the product or service.
After that, you should focus on reaching those customers and selling the product to them. You can use this product market fit pyramid to determine if your product will fit the market and make more money.
I can point out the essential aspects of product-market fit that you need to study and calculate before launching your product.
- Market Size
- Target Customers
- Solving customer problems and needs
- Value proposition
- Product Features
- Product Price
- UX/UI Design
- Marketing and User Acquisition
The first aspect of the product market fit is the demand for your product. To find out the demand, you need to calculate the market size.
It means the number of people who will be buying the product in the future. To calculate the market size, you need to use some statistics.
This is an efficient and easy way to determine the market size. Also, you can use your knowledge of the industry or any relevant data to help you with the calculation.
If you don’t have the relevant data, you can use online market research tools like Google Trends. But if it turns out that there is no demand for your future product, this complicates the situation.
You will have to create demand with the help of paid advertising tools.
Next is to find out your target customers. This is very important because you will be selling your product to people, and it is crucial to know who they are.
You need to know what kind of customers you want to target. You can ask the people who are your customers of other products now what their needs are.
You can choose your customer profile (ICP) when you target customers. The ideal customer profile (ICP) is a fictional character representing an ideal customer type for your business.
ICPs should include consistent traits with your product and with whom you will want to do deals. The kind of audience you will be target can also be based on gender, age, race, occupation, and others.
You can use a specific demographic like men or women between 25–45 years old. You also should include their work, income, education level, location, needs, hobbies, interests, desires, and others.
This information will help you in targeting each customer in the future.
A product or service can only be successful if it solves the problems and needs of the people. When you know your customer’s problems and needs, you can create a product that meets their needs.
So, it would help if you found out what problem your customers have and how your product or service can solve them. You can find out what your future buyers need by asking them directly.
The purpose of this step is to recognize if there’s a problem worth solving before building out a product. And if you solve an existing customer problem, you will make money.
The next aspect of the product market fit is your customer’s value proposition.
It is the answers to the questions:
- What is the value of your product?
- What does a customer want?
- What are they looking for in a product?
Once you figure out the answers, you can easily calculate the demand for your product.
Determine which customer needs you can best address with your product or service.
If you don’t provide value to the customers, they won’t buy your product. Your value proposition is your plan for how your product will meet customer needs better than the alternatives.
It would be best to find out what your product’s value is.
The next step is to start testing the MVP Prototype. Before you begin doing this, be sure that you know what you are doing.
You don’t want to start working on something and have a big problem later on. The last thing you want is to spend a lot of money and time on something that won’t work.
The key to success is to start small and then expand as you grow. The best way to do this is first to test the MVP Prototype.
Use it to test the product for a short period. The minimum viable product feature set is what you should specify.
Make a list of the minimum features you want to include in your product launch. It’s doable if you keep it uncomplicated and straightforward.
If you find that it works, you can decide to continue using it. If you find that it doesn’t work, you can change it until it works.
Ask your focus group what they think about it and what they do not like. After you get the first feedback, you can keep going with that.
If you stay open and flexible to feedback, you will revise your idea to fit your customers. Don’t worry about creating your whole concept. Just create a first draft of your product.
Benefits of using the MVP model:
- An MVP has fewer features than the full-blown product you’re pitching, so you can test and prove your idea faster.
- An MVP makes it easier to create real value and gain traction with your idea.
- An MVP is free, so you have no risk of losing.
- An MVP is often smaller than the full-fledged product you want to create, so you can try out lots of different ideas quickly without blowing up your budget.
- An MVP may be very simple, but it’s not dumb.
The next aspect is your product features. These are the features of your product which help you in solving customer problems and needs.
You can offer more than one feature if you want. It is always good to have more features because it means your product is better than competitors.
But having many features, you should ensure that each feature is useful and valuable for your customers.
When you know what features your product has, you will know how to sell it. Also, this will make your customers come back and purchase again.
The next aspect of the product market fit is the price of your product. You can decide the price of your product based on your customers’ needs and wants.
When it comes to price, you need to ensure that you are not too high or too low.
There is always a fine line between high and low prices, so make sure that you are neither at the top nor bottom.
If you have a low-cost product, you can target customers with lower incomes. If you have a high-cost product, you can target customers who have higher incomes.
It would be best to find out what you can offer for the price your customers are willing to pay.
You should find the price of a similar product on the market because the product is already available in the market.
The cost also will depend on the features of your product and input costs. You also have to consider the cost of promoting the product on the market before setting the final price.
The next step is to create a good user experience and user interface design for your product. It is important to make a good UI (user interface) design that attracts the customers to your product.
When it proceeds to design the UI, you need to be sure that it is beautiful and functional. When you can attract your customers with a good UI design, you can easily sell to them.
Good UI design will help you to create a good brand identity and make your product look unique.
The next aspect is marketing and user acquisition strategy.
You can market your product in different ways. You can promote with Search Ads, Display Ads, SEO optimization, Email marketing, and others.
The strategy depends on the type of product you are developing. You can choose the best strategy for your product by considering the needs and wants of your customers.
You can make sure that the plan is effective by conducting A/B testing. You can also use Google Analytics and other tools to make sure that your strategy is working.
You can measure the performance of your strategy based on its ROI (return on investment).
In addition to that, you can also use other metrics like the Cost of Customer Acquisition (CoCA) to know how well your strategy is performing.
The next aspect is the sales funnel. A good funnel will make your audience purchase your product. The sales funnel attracts new customers, builds relationships, and converts them into paying customers.
This aspect of a sales funnel is where the magic happens. So the idea is that you start with people interested in what you do, and then you move them through a series of steps until they buy from you.
It would be best if you started thinking about a sales funnel because it can significantly improve the efficiency of your sales process. A good sales funnel will help you to improve customer conversion rates.
You can have a good sales funnel if you understand the buying behaviors of your target customers and what they need to buy.
Most companies who use sales funnels are not only able to sell more of their products, but they also get a lot more repeat sales because they are closing more leads at each step in the sales funnel.
And the final step of the pyramid – it’s After-sales support. It’s no secret that many companies struggle with customer service. In the era of social media and online review sites, customers can complain about bad experiences almost immediately.
As a result, you must be ready to deal with customers’ complaints before and after purchasing from you. It’s not always possible to solve a problem instantly, but your company should plan to handle unhappy customers when they first contact you.
When a potential client complains about an issue or negative experience, how will you react? Is the complaint valid? If it isn’t, what will you do?
If it is valid, you should know what steps you’ll take to correct the situation.
In conclusion, to drive traffic to your product, you need to create a solution that solves a problem. You’ve got to figure out the problem and then figure out what your product can do to solve it.
Once you know how your product will benefit the customer, you’ll have to determine whether there’s a market for it. When you’ve decided that your product is worth pursuing, it’s time to move from an idea to a prototype.
From there, you need to test your prototype to make sure that people will use it. And when you’re confident that the product is ready, it’s time to talk to customers.
Now, don’t expect your first customers to be super-excited about your product. You might be the only one who’s excited about it! That’s OK. You’re not done yet. Before you launch, you’ve got to make sure that you have a product market fit.