How to find Product-Market Fit for Product Managers
Problems are all around us and developing the product that solves the problems is very essential for the success of the business.
But how do you know if your product solves the problem and can satisfy the market needs?
Product/market fit has been identified as a first step to building a successful product in which the company can scale it to a large set of customers and satisfies strong market demand.
What is Product-Market Fit?
According to entrepreneur and investor Marc Andreesen, who is often credited with developing the concept, product-market fit means finding a good market with a product capable of satisfying that market.
For example, you develop a product that solves a problem for a market segment. So what your product has to do is
· Solving a problem
· For a defined market
· For customers who are willing to pay for solving it
· And selling to them is repeatable
· Finding a model that is cost-effective to acquire customers
· Gain customers for less than what they pay you
How to Achieve Product-Market Fit?
To achieve product-market fit, we need a model to understand it. Dan Olsen’s Product-Market Fit Pyramid consists of five layers. It all starts with your target customer, which is the base of the pyramid. The layer above that is their underserved needs. These two bottom layers are the market. The top three layers pertain to your product. The first product layer is your value proposition: which customer needs are you going to address and how are you going to do so in a way that’s better than other products? The next layer above that is your feature set, which is the functionality that addresses the need for your customer. Finally, at the top layer of the pyramid, we have user experience (UX), which is what your customer interacts with to use the functionality.
Given this framework, product-market fit can be seen as how well the assumptions and decisions you make in the top three product layers resonate with the market (the bottom two layers).
To achieve product-market fit, your hypotheses and execution across all 5 layers must be solid. So you can view the Product-Market Fit Pyramid as a way to document the key hypotheses that you need to get right.
Determine Your Target Customer
For mapping the Product-Market Fit, the first and foremost objective is to identify your target customer segment. Build your buyer personas to help you to understand customer needs, wants, his behaviour and jobs to be done by your product. Identifying that target customer gives you valuable data as to how to structure your product so that it can meet their needs.
You can segment the customers concerning demographics, Behavioral, Psychographic etc. Because there are various cases when personalization is needed within the product so that it can interact more with the end-user to fulfil their required needs.
You can identify your target customers by starting from high-level research and then narrowing down to the least possible persona so that you are completely mindful about the product specifics and marketing strategy.
Identify Underserved Customer Needs
The next step while achieving the Product-Market Fit is identifying the underserved customer needs. This is the phase which can help you figure out the problem of your intended customers. To go into further details, divide this phase into two sections i.e. the “problem space” vs the “solution space”.
The problem space will help you figure out the customers’ problems, what are the things they are lacking and in which segment is lacking. This gives you a clear idea about what features you will need to add in your product to address those issues.
Meanwhile, the solution space gives you ideas on how to address your customers’ problems. It identifies those key points which your product should have to stand out in the market. It tells you about the true competition in the market and how your product can win within it.
Hence, identifying the underserved customer needs with these points is quite simple and necessary, as it lays out the objectives your business model should attain, in the manner a user wants.
Define the Value Proposition
Determining the value proposition of your product is the next step, once you are done with the identification of customer problems and their solution(s). You should find out how to add value to your product so that it differentiates from the other competitors in the market.
A lot of companies don’t go through this process and start building the model which is already in service or have no significant importance in the market. Defining the key points as to how your product adds value to the customer problem helps make you stand out and win the competition in the market.
The exercise also gives you a clear picture of whether your product addresses the real problem and what benefits it can add to different segments, as described in the target customer phase.
Building the MVP Feature Set
The next phase in achieving the Product-Market Fit is specifying the feature set of your Minimal Viable Product (MVP). These are the core features your product should have in order to achieve maximum growth in the market. This MVP feature set is ideally divided into four sections i.e. functionality, reliability, usability, and delightfulness.
Your product should comply with these four feature set if it wants to get intended Return-on-investment (ROI) in the market. You should not be spending extra time to think whether your customers will like your product or not, as this MVP feature set will help you ensure that your product builds maximum value in the eyes of target customers. Make sure it is functional, problem-oriented and time-saving so that it can provide maximum benefits to the customers for their desired intentions.
Create your MVP Prototype and Test to Iterate
Now, based on the feature set defined above, it’s time to create a prototype of your minimum viable product (MVP). Building a prototype of the product will help you to gather critical feedback regarding it from the potential customers. Whether it fits their needs, provides them with the required solution or have any room for more improvement.
Building an MVP prototype allows you to test it with what your competitors are offering. You can always find improvement prospects in UX design, functional attributes, error-logging features and more.
Whereas your MVP prototype can also vary infidelity, which means you can decide what features and details you can demonstrate to your customers in the trial version. In short, it’s a simple, reliable and effective way to know about the product’s market feedback before releasing its final version.
Conclusion
Once you find the fit, even at this early stage, continue to do more of what works, but sprinkle in an element of experimentation. Your goal is to figure out how to scale your learning. Refine the product and business models that can scale.
