Product market fit has become a cliche in the business world for any activity related to product/service development. Among its proponents are industry leaders, think tanks and business experts from various domains. Aside from declaring it as a necessary prerequisite, they go so far as to state that product-market fit is the sole reason behind companies’ rise and fall. Andy Rachleff, CEO of Wealthfront exemplifies that belief in his bold statement:
“Once a company has achieved product-market fit, it is extremely difficult to dislodge it, even with a better or less expensive product.”
Based on that, one might imagine that product-market-fit is something of an elixir with answers to all the business problems. Alas! If only the fortunes of businesses relied upon one simple metric alone. The purpose of this blog is to educate the reader about myths related to product market fit. Moving on, they will learn about other more reliable approaches to follow and whether businesses should aim for disruption or find their own place in a given market.
While an ideal product-market-fit might give you a great start, it can’t guarantee perpetual immunity. So, don’t go out seeking immunity instead focus on staying competitive and for that businesses need to be vigilant about the changes taking place in their industry and react accordingly.
For instance, today your company’s target audience might comprise of mostly small to medium-sized businesses, whose requirements you’re able to meet sufficiently. But once these businesses grow out and start demanding more services that you neither have the resources nor the competence to deliver, your company will find itself in an unfavorable situation. Consequently, your hard-earned clients will start looking at your competitors to find solutions for their problems. No business would wish to find out how that feels.
User acquisition is a laborious affair and a slight complacency in keeping tabs on the changing demands of the customers can cost you dearly. This is a pattern that’s repeated in the demise of many large businesses. A chink in the armory appears and an upstart innovator exploits it serenely to cause an upheaval in the industry.
Nokia in their heyday would never have imagined they would be toppled one day in an abrupt fashion. It’s must, therefore, to continually conduct customer surveys to understand their pain points and service satisfaction levels.
There’s enough evidence to prove that product-market-fit isn’t a flawless approach as it’s purported to be. Usually what happens is you build a product and then start tweaking or modifying it to meet the prevailing market conditions and design a Go-to-Market (GTM) strategy.
Attaining a market-fit, validated through substantial favorable response from a large section of the market, is a long and tedious process. One iteration follows another until in hope of attaining that eureka moment. And therein lies the flaw. Product development is thought of as an exigency while market-demand a mere afterthought.
Hence, an approach that factors in market-demand prior to product development is more sensible. That’s right, the converse of product market fit – market-product-fit. Here you’re basically working from scratch, prying deep into a target market to look for anomalies and customer’s pain-points.
Validating demand for a given problem is the key in market product fit and that is accomplished either through surveys or by offering consultation to businesses in your area of expertise. Once their concerns have become crystal clear, product development can be undertaken. The resulting product needs no tweaking as the key market demand was identified prior to product development.
Having cleared the air about the right approach to product/solution launch. It’s time to consider a still more important issue at hand. Should you be a disrupter or make your own market? At first glance, two might sound like one and the same thing. But there’s a difference.
Disruptions are rare occurrences but with far-reaching and often seismic consequences. Think of Steve Jobs introducing Apple iPhone back in 2007. A spark of innovation and the whole mobile phone industry was revolutionized.
Then we have Tesla, the archetype of a true disrupter. The auto industry has seen its fair share of changes but for a new player to come and altogether guide it in its own proposed path requires genius. Tesla made it happen with its luxurious electric cars. It has sold more cars than BMW, Audi, Acura and Mercedes in the USA.
Another famous disrupter is Netflix that changed how people would go on to consume digital media. In fact, there’s a nice backstory to the birth of Netflix. Turns out, its would-be-creator at the time, Reed Hastings, was fined $40 late fee for a movie. Every Netflix user today can thank that movie-rental service for eliciting that powerful response from Hastings.
Caveat – As inspiring as these disruptors and their respective disruptions might appear, the fact remains you have higher chances of failing in trying to disrupt a market as opposed to finding your own place in it. The success rate of attempted disruptions is a mere 6 percent.
Which brings us to Market-making. It’s an approach where businesses identify demand in an existing market and contrive a way to establish that their product will be used by the masses. Uber and Amazon are the prime examples of that.
Internet usage was already proliferating by the start of the 21st century. These businesses identified scope to offer their services, already present in real-world, through the use of the internet. Simply put, they created a market in an existing larger market.
In comparison to disruption, market making proves to be a less risky proposition carrying a 28% success rate.
Following are a few tips to help you market your product successfully and consolidate your position thereon.
That’s the exact order you need to follow to stay ahead of the curve. First comes the market. By knowing how your market is behaving and what changes might be lurking on the horizon you can formulate your plans and strategies that give you the best chance to succeed. Next, are the people. You want to know how content they are with your products/services and look to address their complaints and expectations in a swift and effective manner. Finally, you can spare a thought or two about your product itself. How good it is, how it stacks up against its key competitors and where it has room for improvement.
That looks to be a simple enough guideline but time and again we see businesses struggle in its application. Their natural tendency to focus first on their products and then its users followed by the market just sets them up for failure in the successive stages.
Once your product is launched, you should start focusing on creating a well-organized ecosystem to cater to the various needs of your target audience. Apple is a prime example of implementing this strategy. Since the beginning, they had this vision of building an ecosystem so their customers wouldn’t have to look outside Apple for their different needs.
We see this realized through an impressive line of products/services such as iPhone, iMac, MacBook, iWatch, ApplePay all seamlessly dovetailed with one another. This way a new user doesn’t simply buy into a single product/service, he/she buys into the whole ecosystem. This is a smart approach and becoming widely popular in tech spheres.
The greater part of innovation still takes place in the Western world and unsurprisingly that’s where the majority of the multi-national behemoths are concentrated. The moment they sense an opportunity for growth in new startups, they’re ready to devour them as quickly as possible. If nascent businesses anywhere in the world wish to guard against this familiar fate and carve out their own path, they need to keep global expansion a primary mission from the beginning. This way they won’t stay limited to their local market, waiting for a bigger player to come and acquire them one day but instead, be watchful of the global trends and tap into a growth opportunity as soon as it materializes.
Through the course of this blog, it’s become clear that product launch is a long and complex process that demands meticulous care for a successful outcome. It’s best to do your own research than adopt popular and sometimes anachronistic approach wholesome. By following the aforementioned methods and tips, you would stand in good stead to launch your product like a pro.
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