A market is a place where we can find and buy something that we need. In one way or other, we all are connected to the marketplace with our unending desires and needs for consumer goods and products. But from the point of view of a business entrepreneur, what makes them feel their product is well needed? How can they be so sure about the product-market fit? It is a question that must have a clear answer before taking the first step towards a start-up if you have many dreams about your business fortune.
We can simplify that your product fits into the market where there is a need for it results in business growth. More specifically, if 40% of your consumers say that they will get very disappointed if they cannot access your product any longer, then you can say that your product is a 'must have' and it fits into the market. But the most challenging part in this is making a selection about the business move. When you invest money in products that nobody wants to buy, it is a waste of time and money. It does affect both yourself and society.
Let us discuss finding the best strategies to make your product perfect for the market by determining product market fit.
Determining Product Market Fit
It does not necessarily happen the product-market fit on the first try. Adjusting your product or services for value proposition, customer base, and distribution might be necessary several times to make it right to fit in. It does not bring you success no matter how excellent you are with the execution. In general, when making a product strategy, you must primarily try to find the answers to these questions,
- What are we going to sell?
- Who do we sell it to?
- How do can we know about the success of the selling?
For getting the right answers to these questions, you must follow some strategies that may lead you to success in business.
Targeting The Right Customers
Market segmentation is a fine method to identify these needed customers by which you can partition the whole market into segments consisting of potential customers with similar needs. Starting from a high-level persona archetype of consumers, which is a common term referred to the attributes of various users, you can continuously revise it and sort it to the group that can bring you maximum business conversion. Digital marketing services can have better methods to target the right audience if you wish to focus online, which is a must nowadays. A process known as iterating that refining, learning, and tweaking the features of your products is also preferred to identify the correct group of consumers in time.
Understanding Consumer Needs
Chief revenue officer of Wonder, Guy Cohen says that he likes to provide pain killers rather than a vitamin. In his words- “Vitamins are nice-to-haves, but people can not live without painkillers”. Vitamin is preferred by doctors and health experts but it does not mean that people actually 'need' it. What they terribly need is a pain killer. In emerging markets where there are no direct competitors, you must take a deep analysis of different ways the problem that you target is solved.
If you win to target the right group of consumers, the next step is to identify the underserved needs of the market. Good research and market knowledge are essential to developing an outlook on this. No textbooks, but the market experience are the most valuable lesson for understanding it. Concentrating on the areas through which you can overperform your competitors can help you win the market by delighting your customers.
Defining Value Proposition
But what plays the most vital role is assigning a value to your product that can find affordable by the consumer. In other words, a value proposition is a promise that you make about your product. It offers a change that will bring on the lives of consumers. Remember, overpromising won't do any good. It still must realistically depict the brand new world with your product. If the consumers find some other products that are much more affordable attractive in their value proposition than yours, there is a chance for them to overcome you in competition.
A value proposition is a product strategy. It outlines a plan for how a product will meet customer needs better than the alternatives, and developing this is vital in attracting the consumers towards your product. The value proposition of Spotify, by offering complete access over ownership of music documents and providing personalized experience can be a perfect example.
Developing Minimum Viable Product Prototype
Testing your value proposition is vital to ensure that it agrees with consumer's needs and provides absolute satisfaction. It is aimed at building only what is needed to create enough value for your target customer. It enables you to validate that your product is headed in the right direction. This process iterates until you have a minimum viable product that customers agree is viable. Showing customers, a version of the product and getting feedbacks, maintaining customer interactions, collecting suggestions, and so on can help you to ensure that the value proposition you have developed is perfect. Modern techniques like artificial intelligence development can become helpful for this because it provides more efficiency in iterating operations reducing human interference.
Test The Product Market Fit
Identify your total addressable market (TAM) that indicates the total number of people who get the benefits of your product or service. It can become a good strategy. A software development company focusing on updated techniques for calculating TAM can find help with this. Calculating the average revenue per user (ARPU) is also vital in monitoring the performance of your product. Determining the factors like customer lifetime value, bounce rate, Net Promoter Score(NPS), etc can also become beneficial.
The smartest thing is to find that not taking too much time to identify that your product does not have a product-market fit. You just need to be flexible enough to act very quickly and wisely. Remember that Facebook is not the first online platform that has become popular among the mass. Their continuous iteration made them conquer the online media. When 90% of start-ups fail to move forward after 4-5 years, we can say that the problem lies with identifying a product-market fit. It takes hard work, dedication, the right strategy, and of course, sometimes you need some luck too.
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