What is market fit?
Let's start with what market fit actually means. The product is part of the software that solves a certain problem for potential customers. This can be interpreted in different ways, but I like the following definition:
Market fit is the degree to which a product meets market demand and determines the level of matching to the needs of potential consumers.
If you are interested in the startup market, you will know very well how often the term “market fit” is mentioned. No wonder, because without market fit there is no chance for a startup to succeed. You can invest massive funds and your time and hire the best employees, but this will be useless if your potential customers do not want to use the product or simply do not need it.
During one of the startup conferences I attended, I heard that startups that achieve success draw inspiration from the problems that their founders have had to deal with in the past. This is a very interesting approach. They create a product they would like to use themselves and that actually adds value. This is just such a short anecdote, but it aptly illustrates the way you can create attractive products. In any case, when searching for a market fit for your product, you must answer three short questions:
- What do you sell?
- Who do you target with your product?
- How do you want to sell it effectively?
Sounds a bit banal, right? And yet at this early stage, many people make mistakes. From my own experience, I know that there are several key factors that should be answered in the process of searching for a market fit for a product.
How can you find a market fit?
This is a short list I always use when working with startups.
- Find a perfect customer. You need to know whom your product is for. Conduct deep analysis of your buyer’s persona. Learn about their behavior, preferences and the way you can effectively reach them with your product. Remember that the product must solve some problem of your target group because without that there will be no value. This analysis should end with the creation of “user personas”.
- Market size. It is important that you know the size of your audience so you can better estimate the chances of reaching the target group. In this way, you will find out what profits you can hope for based on the potential of the market. In addition, remember that the entire market size will probably not use your product.
- Competitors. Take into account factors such as competition or difficulties in convincing users to your product. You must develop an effective strategy that will make your product the first choice for potential customers in your market. Think about how you can best present the value of your product – how it stands out from the rest. If you can make your target group aware of this, you will increase your chance of success.
Specify and create your MVP. When searching for a market fit for your product, the ideal method is by MVP. Do not waste the whole budget on building functionalities that you do not know will be of interest for your target group. Create a product based on basic functionalities, show its most important features, test and collect customer feedback. This is the most effective method of development and MVP will help you with this.
Key performance indicators. Another important aspect is the methods you will use to measure the value of your product. Think about what indicators will give you answers to questions such as:
- Has your product found a market fit?
- Do you reach your target group effectively?
- Are the operating profits of the product optimized?
- Do you achieve satisfactory results?
I am convinced that following these pointers will help you effectively search for market fit for your product. It doesn't matter what type of startup you are developing - without a market fit you will only lose your budget and not achieve success. Therefore, once again, do not forget about research, analysis, planning, MVP, learning, testing and defining indicators that will show that you are heading in the right direction.