When customers are chasing you in eagerness and or you cannot keep up with demand, then you have achieved what is referred to as Product-Market fit.
Product-market fit is often seen as nirvana! And it has eluded many a failed startup, as they burn through cash, trying desperately to achieve this pinnacle.
The phase product-market fit was coined by American entrepreneur, investor and software engineer, Marc Lowell Andresssen (Co-founder of Netscape, Opsware and VC Andreessen Horowitz). Marc defined the term as “being in a good market with a product that can satisfy that market”. It is not to be confused with MVP - Minimum Viable Product, that which addresses and solves a problem or need. Product-market fit has been identified as a first step to building a successful venture, in which the startup meets early adopters, gathers feedback and gauges interest in its products.
In establishing product-market fit, there are four stages a startup must transition through to create a product that offers significant customer value.
They can be broken down into the following:
Establishing your Target Customer:
Understanding the target customers will ultimately decided how well a product meets their need. It can be described as a specific group of customers who are the focus of a company’s advertisement. The startup should ultimately know their customers attributes such as age, gender, earning capacity, educational background, geographic location and socioeconomic background. Once a Startup has identified these characteristics, they can target their marketing specifically to areas, where these types of customers conjugate.
What is your Startups Value proposition:
Your businesses value proposition could be arguably the most important element of your overall marketing message. The value proposition tell prospective customers why they should do business with you, rather than your competitors and makes the benefits of your product or services crystal clear for the outset.
Create your Minimum Viable Product (MVP) / prototype:
Building a MVP can be one of the most challenging processes. In designing the build of an MVP, you should consider the following:
- Figure out what problem you’re solving
- Analyse your competitors
- Define the user flow
- List all necessary features and prioritise them
- Build test and learn
If you follow the above steps and capture the above information, you will be well on your way to creating a usable MVP.
Testing & Feedback:
The complexity of you MVP depends on the type of product you’re building. However if you are follow the below steps, you will be well on your way to understand the pros and cons of your build.
- Customer interviews - essentially this is interviewing customers in a explorative manner to establish what the customer thinks, as well as how the they would rank the product. Interviews can be a goldmine of actionable information and can provide valuable data.
- A/B Tests - is used to test the effectiveness of any changes to your product or marketing. A/B testing allows you to test two version of the page or marketing copy and let the visitor interaction determine which one performs best.
- Explainer videos - a picture is worth a thousand words, so a video demonstrating your product is worth millions. A popular way for startups to validate their product is by having an explainer video, which can be validated by the target market.
- Blogs - are a great way of validating ideas with the right target market in minimal effort.
By progressing through the above, a startup will have a good idea of where they sit in the market with their product, thus ensuring a startup has a chance to succeed and reach Product-Market Fit.