Although product design requires artistry and creativity, products made by businesses can’t really be considered art because art is not dictated by market forces. Products must, especially if you’re in the business of selling them at a profit, survive and thrive in the marketplace.
The great dictator of a product’s success is something called product-market fit. If there’s a fit, then there’s demand, and the whole enterprise has a green light to move forward with planning its product.
What is Product-Market Fit?
You can thank Marc Andreessen, the American entrepreneur, investor and software engineer, for the hyphenated phrase. He said, “Product-market fit means being in a good market with a product that can satisfy that market.”
In other words, if there’s a demand for the product, the product will sell. Before there is a product, there must be a demand: it must fit in the marketplace. That’s the first step of smart product development. The idea of moving forward without thought to the end-user gets us back in the realm of art, which is not where we belong for this topic.
The term was popularized by entrepreneur, angel investor and startup adviser, Sean Ellis. He said that a product-market fit was necessary for a company to scale its marketing. This is especially relevant for the startup world.
Dan Olsen, an expert in product management and author of The Lean Product Playbook, has emphasized product-market fit as critical to the success of a start-up. “This means that your product meets real customer needs and does so in a way that is better than the alternatives,” he said.
How to Find Product-Market Fit
The idea of a product-market fit is straightforward and even simple to define, but hard to achieve. There are stories of product-market fit successes that have become almost mythology. The obvious one is the Apple iPhone, a device that wasn’t unique but captured the imagination of customers so effectively that it’s hard to believe it was only introduced in 2007.
So, how can you discern what the market demand is, and the product customers want, even if they don’t know it yet? Back to Olsen, who has created a process to establish a product-market fit. He has developed a six-step framework, which he called the Lead Product Process.
1. Know Your Target Customer
A good way to determine your target customer is by first taking the temperature of the marketplace and seeing what’s hot. There is likely a group of people who want something badly that is not available. Their needs are not being met by the current market.
By using market segmentation, which is breaking the larger market into smaller parts that are collected around similar customer needs, the customer you’ll want to target becomes clearer. When you start to define these customers and their attributes, it’s called persona archetypes. This helps everyone on the product team understand the target audience. Start broad and revise to finer, which further defines your product over various iterations.
Related: A Quick Guide to User Story Mapping
2. Find Underserved Customer Needs
You’ve got your target, now what are their needs that are not being met? There are sure to be definite needs that are going to lead to market opportunity. The needs of the customer that are not being presently met in the marketplace are potential of great value if you can serve them by responding to it.
3. Identify the Value Proposition
When you know the value proposition, you have the seed from which to grow a successful product strategy. This is the lodestar that you follow when developing a plan for how a product can meet the needs of the customer in ways that the market has yet to exploit. The value proposition explains the value your product can offer the customer and the ways in which it is original and alone in that offering, or at least better than the alternatives already available. The value proposition should go hand-in-hand with your mission statement.
4. Determine Minimum Viable Product Feature Set
You know the value proposition, and now you must make sure the product itself has what it needs to achieve that value proposition for the customer. But you don’t want to go overboard with too many features. It can be costly, but it might also obscure the real value of the product. Be elegant in your design and only add what your customer wants, just enough and not more. Your product manager and their team can iterate until they’ve reached that perfect balance.
5. Make Minimum Viable Product Prototype
You have the features, now to see if they work. That involves building the thing, of course. A prototype is a product before you make the actual product, which will be mass-produced. It allows you to test the prototype and get feedback to finetune the product. Look into software and other tools that can further enhance the user experience to reflect the actual product when it’s finalized. It’s worth the investment in order to integrate feedback into the final product.
6. Test Minimum Viable Product with Customers
Take the prototype and test it with the target customer in the market. Get detailed feedback by surveying the customers. Use your market research to guide you or the team you have in place to do the survey. But go deeper and do one-on-one interviews with each customer who has tested the product.
These testing sessions give you an opportunity to observe the target customers as they use the product prototype. Don’t be shy, ask questions that open up the conversation and provide further data to take back to the team. After testing, analyze the data and identify patterns to further refine your product.
Product-Market Fit & Marketing Plans
The use of a product-market fit is clear. It lays the foundation on which your product roadmap rests. It shows that there is in fact a destination and all the time, work and money will not leave you stranded in some market desert. The product-market fit is an important part of any marketing plan. It gives birth to your marketing strategy by showing that the product is viable; there are consumers out there who are underserved.
Know that a product-market fit is different than a problem-solution fit when looking at a company’s customer base. For success, the target audience must want a product, not merely a solution to a problem. Targeting an audience who are looking for a solution, not a product, can set you off on a fruitless endeavor.
That said, it’s worth the risk to know you’re building a product that snaps into a market need that customers are going to respond vigorously to. The due diligence your marketing team puts in will pay off in sales.
From market research to surveying target customers to building the product itself, product-market fit requires a multilevel management approach, one that requires a robust tool to control. ProjectManager is cloud-based project management software with features to visualize workflows (kanban boards), schedule tasks with deadlines (online Gantt charts) and report on progress as it happens (real-time dashboards). Try it today with this free 30-day trial.