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October 23, 2020 | 18:10

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Product-market fit is defined as a company producing a targeted product for customers to buy, use, and advise other users to buy the product so as to keep sustainable growth in profit. 

Marc Andreesen is often credited for the development of the concept, in short, product-market fit is simply finding out the product that is capable to satisfy the market. This concept might seem very obvious but the important point to make is to be sure there are enough people who will need this business offer. Product market-fit is vital for all companies introducing a product to the market. Reading this article shall answer the prominent questions on the topic. 

Understanding the concept

The concept is quite straightforward in finding a product that will fit the market thus satisfying the customers and the whole market. This is easier than measured through. The product-market fit should be thoroughly tracked and measured, this mainly induces the indication of startup growth. Having an established company doesn’t mean the product-market fit isn’t considered. You have to be constantly vigilant with the products and services you provide from the perspective of product-market fit. Ask yourself if your customers still need or will still need your product-service. This is the principal question you should always bear in mind to perceive the permanent growth of your business.

Why is it Important?

According to the VP of Facebook Alex Schultz, the most tremendous issue he faced while advising companies is that they didn’t have the appropriate product-market fit when they thought they did. So the question of why is achieving this very important? Why do many investors ask for evidence of product-market fit before getting into the venture with the company?

According to Andreesen, the process can be divided into 2 in all respectful start-ups i.e. before product-market fit (BPMF) and after product-market fit (APMF). 

Getting through these two different points is simple: before developing a product you must be assured enough that people will be willing to pay for this service or this product, this is because your team cannot afford to focus on other important strategies such as upselling or growth for users. Such initiatives may be counterproductive. Factually if you haven’t determined a proper market for your product and produce more profit 

Who is Responsible for Product-Market Fit?

The concept is generally associated with product management and marketing. But in reality, it involves all sensible targeted departments of a company such as sales, finance, business development, support, and all sensible departments that can influence the product-market.

How is Product-Market Fit Measured?

There is no single magical spell when it comes to achieving product-market fit. A capitalist venture, Andrew Chen, offered some signals that a startup is heading in the right path with its offers, so Here are some questions that must be answered.

  • Make a survey and ask yourself, when surveying potential clients or getting the clients to test your product, do some segments indicate they will prefer your product?
  • While testing your product do users group up your products accurately with the perfect competitive offerings?
  • Are certain clients who have refused or rejected similar products on the market willing to turn to yours?
  • Do clients demonstrate and understand your product’s unique proposition?
  • How do the metrics of the retention rate of users behave against those of competitors?
  • Chen’s indicates a representation merges both quantitative and qualitative metrics. All these metrics depend on the visions of your developing team that will contribute to the success of the project. For instance:

    Qualitatively:

  • Calls from industry analysts or the media to come in frequently and cover your company and product increase.
  • The word of mouth i.e. recommendations of satisfied clients to others willing to try the product. According to Andreesen, the person recommending your product becomes automatically a sales rep. So it is better to treat every customer as a potential sales rep.
  • Quantitatively: 

    We have got different metrics as follows: 

  • NPS Score
  • Growth rate
  • Churn rate
  • Market share
  • Measures To Follow To Achieve It For Your Product 

    Measuring the product-market fit differs for each start-up or company, there is no single recipe or path to achieve it. Dan Olsen in his book entitled The Lean Product Playbook, he  highlights the best methods that can help a team start the adventure:                                                 

  • Determination of your target customers
  • Identification of the needs in the market
  • Define your value proposition
  • Specification of your minimum variable product feature set i.e MVP
  • Evolve your MVP
  • Test your MVP with clients Based on the survey collected from the test, use the metrics in your favor to determine if you are heading in the right direction
  • How to achieve Product-Market Fit?

    Creating a product-market fit can be done in several ways, you may get your product adapted to the new competitive market, repurpose, reorganize or reassemble old ideas, get to the market or maybe create a whole new venture. 

    There are no similarities from one business to another, however, there are some established concepts you may follow to achieve this venture. 

    1. Identification of your potential targeted customer: Here you will need to find for whom this product will be, how it will meet the client’s needs. Knowing the exact clients for your product may not be obvious, so market research must be done. Using the data collected from this research to create customer personas, these are fictional people you may imagine thereby creating stuff for them.

    2. Identification of underserved customer needs. Selling a product can be quite challenging in a world where there are so many available products and services in full potential. The best way to get into the market is by understanding what your potential customers are unhappy with. This point is mainly the correction of mistakes from your future competitors.

    3. Define your value proposition. This answers the question of how well a product satisfies the client more than any other alternative competitive product. The features you will propose, a more affordable package or maybe simply a new service. 

    4. Specify your MVP feature set. Identify a minimum viable product feature you will introduce in your first rollout. Keep your product easy to use and simple in a feature.

    5. Create a prototype MVP. Don’t be scared about creating a full product the best thing with the MVP is to get better with time by satisfying your audience. Get the maximum feedback to ameliorate the quality of your product. 

    6. Test our MVP with customers. Showing your product to a selected panel of potential clients. Let them learn more about it and try out. Collect their feedback and their personal impressions. Collect data on suggestions for the improvement of your product. Keep your mind open to feedback so as to maintain the perpetual satisfaction of the client with your product.

    Collecting information from these 6 points may lead you to have a perfect idea of how your product will impact the market. Make sure to implement all the appropriate customer feedback. 

    Other important aspects can be: 

  • How quickly do clients make up their mind about making a purchase?
  • Are reporters or reviewers mentioning your product to social media thus sharing with family or friends?
  • What is the client retention rate?
  • Are clients interested or satisfied with our marketing policies?
  • Who is unsatisfied? How many clients have unsubscribed to your services?
  • All this data must be collected to indicate how the product performs and presume how it will perform in the future. More principally this information could be used to adapt or improve the product to the market.

    Achieving product-market fit may be really challenging as the only goal, rethinking your current product may help you as well. As your business grows be sure to make your survey thus collecting the feedback for amelioration and satisfying the market demands

    MARYNA STEPANENKO, FOUNDER OF THE BRAND SOCKSOPHONE 

    An ambitious entrepreneur was interviewed on the subject.

    Socksophone is a Minneapolis socks company founded in 2018 by Ukrainian Entrepreneur Maryna Stepanenko. Committed to her brand she said if there is a zombie outbreak you can’t go out without socks. She strongly believes that socks can become a future currency. Outstanding and unique design with a distinct concept, the appearance of your outfit is the way you want people to perceive you.    

    1. What made you start the project? – One day I found out that colorful pattern socks don’t exist for adults, that was so depressing till I came with my proper design I would like to wear. The first designs brought me to hope to make the world brighter and more colorful.  

    2. How did you make your survey? – Surveys are great helpers in identifying the needs and interests of your target audience. We used surveys to ask for our website socksophone.com.ua feedback via chat and it could recognize any negative experience our customers may have faced. And also did not forget about social networks, they were created so that it would be easy for buyers to contact us and leave us reviews. We are not just a socks shop, we are a brand and work primarily on building trust with our customers, our main goal is to make them happier, so without regular surveys, this is not possible. 

    3. What were the impressions of the production? – We sell our socks in our online store socksophone.com.ua and some marketplaces in the USA. People love our socks and buy it. The good news is that people may need socks many times a year, wear them, they can lose them or even damage them, they can give them to someone. Socks are a wonderful gift. Selling socks online is not as difficult as finding the right size is easy. The specificity of our business is that our customers become loyal, as they always need socks. The main thing is to meet the expectations of buyers. Honest product description, clear photo, high product quality will lead you to success. Be open and honest with your customers. 

    4. What were the impressions with the release of the first draft? – We don’t have many sock designs and this is our killer feature. You can buy socks from us that you will not find anywhere else, as we design and manufacture them ourselves. We are very demanding and our designs pass many rounds of review. Take a life hack from me: use your product in daily life and test it constantly. So you will find out that your product solves the problems of your target audience.  We wear our socks since the first bulk was released and they keep their brightness and colors even after many cycles of machine washing.  At the same time, we are constantly working on new designs and our new collection will be released very soon. What about the first draft, I still remember how we did it.  We hit our audience the first time, but we still needed advertising. You can have the best and highest quality product, but you are nobody without advertising. Nobody knows about you. It’s not enough to be good, you have to be recognizable. So you need regular surveys, targeted advertising, and high-quality products.

    Examples of product-market fit

    Apart from socks’ phones so many companies have done such an exemplary job on the field thus creating a product fit a market, their success may serve as models to other businesses.

    Slack

    Slack is an interesting instantly messaging platform used mostly at workplaces for communication, It started out as a distinctly different business concept. Initiators or founders were in the process of developing a role-playing video game platform. Slack was an internal idea that was quickly hacked together as an internal communication tool for the team. It came into effect directly but with time the team came to realize that the market had many role-playing video games so slack was a tool they had hacked quickly together as an internal community communication tool for the team.

    The team then saw an unexploited business field they could develop, this realization brought a hint to the head of the developers leading to the development of the platform rather than developing the game. Slack was unique and today Slack has 10 million subscribers that use their product as a whole. 

    Slack’s experience came around as proof that changing the trajectory or changing your focus to produce something unique can be worth your time, so don’t be afraid to move to a better and original idea when you see a better opportunity. 

    Netflix

    The very popular Media streaming platform gained attention in the early 2000s. The movie and series watchers started to get tired of paying late fees from brick and mortar DVDs rental stores. Netflix started sending DVDs by mail as a subscription plan in the services they offered. Thus letting the clients keep the DVDs as long as they wanted.

    If the company had stayed on DVD-by-mail service operation, it would have got faded out with DVD players did, instead of that Netflix stayed in position as the easiest and cheapest alternative to the domination in the market of brick-and-mortar rentals or traditional Television programming. Netflix alters its products depending on the changes in the market and in the needs of customers thereby having a deep blueprint in the industry of media. Now Netflix is known as the number one entertainment streaming content platform in the world.   

    Google

    Earlier Google competed with a lot of other search engines in the market share. Like other players in the market, they made money from advertisements next to their page and spots next to results. The company took a step forward and even further in the competition scene when they introduced their service AdSense in 2003. Google’s leading team came to the realization that businesses would pay to display their Advertisements beyond their searching page, so they developed AdSense to meet the demand and lead the competition. AdSense utilizes new technologies to scan web pages and display relevant advertisements. For instance, if you had a business selling cars, you may pay AdSense to automatically display your advertisement on entertainment websites.

    In 2017, Adsense had around 11 million subscribers paying google 95 Billion dollars a year. Google quickly realized that no other search engine could meet the competition.

    You may apply the Google AdSense approach to your business model. To set yourself higher in the competition thus feeling the adequate needs.

    Don’t be afraid to move away from your original idea when you see a better opportunity.

    Tags

    #Product-market fit#Startups
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