Ever bought a product and wondered what its function is? Or perhaps you’ve bought a product and found out that it doesn’t function as it should or isn’t completely helpful in solving an issue. Well, this is why businesses need to implement a product market fit. 

What is Product Market Fit?

Product market fit is a business condition that entails a satisfying relationship between a product and a market. It can be summarised as observing a market and the prevailing conditions or the challenges in that market, and then providing a product that completely addresses and resolves these challenges. 

The steps below will help you understand the requirements for a product-market fit. 

How To Achieve Product Market Fit

Determine Your Target Audience

The basic aim of developing any product or service is to satisfy customer needs. To go about this, you’ll need to understand your customers. This becomes the first step in the process of achieving product-market fit. 

Who are your potential customers? Who or what influences their decisions? What strong preferences do they have? How does their strong preferences impact them? Questions like these help bring your customers to scope. 

Figure Out Customer Needs

Once you know your target audience, the next question you should ask is “what challenge is peculiar to everyone of them?” Finding a problem or challenge they all have will tell what they need. This is what forms the basis for a market-fitting product. 

Let’s take a look at a service like Uber. The company would have analyzed big cities or and their residents while starting their product-market fit journey. They found that transportation is a common challenge. On investigating this challenge, Uber realized that residents struggle to find taxis and when they do, they sometimes meet cab drivers who aren’t willing to drive all the way to their exact destination or even go their direction. 

The stand-out fact here is that residents suffer long waiting time. Also, there is no way for them to know which cab driver would be comfortable driving their direction or even driving the long/short distances to their destination. 

Another difficulty for residents in these big cities is that they don’t have any foreknowledge about a driver’s fees. These last two situations typically increases waiting time, worsening transportation and mobility experiences. 

Itemizing these challenges prompts businesses to take the next step in achieving product-market fit which is estimating their product or service’s value. 

Estimate Your Product or Service’s Value

Imagine that product A meets a customer’s specific needs by about 50% and product B meets the same specific need by about 70%. These two products are available in a market but they do not offer the same value. 

Product valuation, therefore, helps a business accurately estimate the extent to which a product or service will satisfy a customer. This could easily reveal whether a product will be accepted in a market or not. 

If a product or service does not appear acceptable due to a poor valuation, businesses can stop and make adjustments. They could either improve the product or service to increase its value, present the product in a market where it is accepted at its current value, or totally do away with the offering. 

Determine the Specifications of Your Minimum Viable Product (MVP)

A minimum viable product or an MVP, is the least-practical concept of any product. In other words, it is the simplest and most basic version of a business’s product or service. MVPs are developed for experimental purposes. They test if a specific kind of product (originating from the MVP) will thrive in a specific market. 

For example, by looking at how many units are sold, how quickly a purchase is made, the extent to which the product is used, and the feedback or response from users. 

The experimental nature of a minimum viable product makes it necessary for businesses to pay attention to its specification. If MVPs are to successfully provide critical market data, they must be designed with precision.  

The ride-hailing service Uber which we mentioned above, considered the mobility situation in many cities and came up with its million dollar solution. What was this solution? Using “developing technology that connects drivers and riders on demand.” 

This idea worked simultaneously as its product specifications. By implication, the company was stating that its product would employ technology and also function in bringing riders and drivers together. 

Develop a Minimum Viable Product 

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This is the point where a business actually manufactures its MVP. It is a critical phase in achieving product-market fit as the product must be made to align with cut out specifications. Let’s go back to talking about Uber. 

With its own specifications, Uber developed a minimum viable product. It was a simple mobile application called Ubercab. The design of the MVP  answered the question, “what if you could request a ride from your phone?” 

The single-feature MVP app only allowed users to book a ride. Today’s version of the Uber app has far more features. However, this booking feature was all it needed in the MVP. 

Users of the first Uber app booked a ride by either specifying their location on a map or by sending a text message. Once the location information had been received, the company moved to dispatch drivers to pick up the users at their set locations.  

Launch and Observe Your Minimum Viable Product 

The final stage of achieving a product-market fit is launching your MVP and observing its performance. What will follow after this is reiterating to optimise the product for a chosen market. 

Uber launched its MVP sometime in 2009. Since it was only an experimental version, the company employed a small group of product testers. Observing its MVP proved to the ride-hailing company that its idea was viable and would likely be successful on a large scale. 

How Do You Know If You Have Product Market Fit?

There are many questions you may want to ask, especially if you’re performing product market fit for the first time. One of such questions is “how do you know if you have product market fit?” 

The answer is that you have a product market fit when you’ve created a product that successfully functions in a chosen market. All together, you should have:

1. a well identified market or audience 
2. a well identified challenge within such market
3. a fully functional product 
4. a product that resolves the identified challenge
5. a product that is affordable, accessible by and available to the target market.

Final Note

Thirteen years after launching its MVP, Uber has a largely successful ride-hailing business. The company currently offers its services in 10,000+ cities. Additionally, the Uber app has grown to include features such as in-app payments, ride reviews, and trip sharing which allows users to share their route, driver or ride details to friends and family. 

These positive stats are the undeniably results of a solid product-market fit. So, if you desire to develop a product that equally thrives, you should take note of the steps we provided. We look forward to seeing your products and hearing your success story.