The Product-Market Fit explained 101
I have been recently leading different workshops with different startups. The “ Product-Market Fit ” was one of the most discussed topics in the workshop. From what I have discussed with different teams, I have realized that most people don’t understand the PMF (Product- Market Fit).
If you are a Product Manager, a startup founder, or if you plan to become one in the future, the “PMF” is something that you have to understand because I believe it’s the first main step to make or the first challenge to face if you want to be successful in the tech industry. I also have to mention that it is not easy to find the “PMF” because it takes a lot of work and attention to so many details. Now before we dive deep into different areas to be taken care of to find the Product - Market Fit, let’s understand where that term came from and understand the basics about it.
The Product-Market Fit
What makes this topic more interesting and challenging, is that it has 2 critical parts which are the “Product” and the “Market”. When you are going to build a digital product, you have either the problem you want to solve or an opportunity to seize it. Whether it’s a problem or an opportunity, there are people whom you are targeting and there is a product that you think will help you achieve your goal, now the challenge is to make sure they are fit.
Does the product that I have fit the market that I am targeting? What product can we build for this particular market? These are the questions that have to be answered by the team or the leaders. They depend on the status. Some products are built from scratch and the challenge is to first identify the market and then build the product that you think will suit that market better. Others already have the product, maybe they are expanding it to a new market, where the challenge is to identify a market that will fit with the available product.
This means you can’t succeed without the Product-Market Fit. Now after understanding what the Product-Market fit is, let’s discuss areas or steps you need to make to find it. We will use Dan Olsen’s pyramid to explain the steps.
1. Target customer
The first step in achieving or finding the Product-Market Fit is to identify your market. You have an idea or you are even new to the market but you already have a product, However, you need to understand that because the product worked somewhere doesn’t necessarily mean that it will work in other markets too. The first step will always be to learn the market, identify your clients and understand them.
When you analyze your market and target customers, you understand their problems and pain points. This is also the opportunity to learn about your competition and how they are doing in the market. This means at this step you do the customer segmentation, market analysis, competition analysis, and other learnings that can help you understand the field better.
2. Underserved needs
After thoroughly learning the market, competition and everything that is related to the market we are targeting the next step is to identify the “Underserved needs”. When you have identified the segment of people that you want to target, you learn and analyze the problems/needs they have and their main pain points. After analyzing that, you learn the competition, what does the competition do to solve the problems? What are the needs that are being addressed and the ones that are being neglected?
Now if you want to find the Product-Market Fit, you better focus on those needs that are not being addressed well. Those needs are the ones that we call “Underserved needs”.
3. Value proposition
Now that you know your target customer and understand their underserved needs, the next right step is to define your value proposition. Your value proposition is defined around those needs that are not being addressed by the competition. That’s why they are called value, it becomes valuable because it’s something that they have been lacking.
Most people find themselves in the trap of not providing value because they are not willing to do the dirty work of going to the field, talking to customers, and learning about their lives and challenges, that’s where product teams learn what their value proposition would be. If you skip the first steps, I am sure your value proposition won’t be strong.
4. Feature set
With the value proposition in place, the next step is to define features that will be able to offer that value. This is also an important step towards the PMF because I have seen many teams that had a great value proposition, but they messed up the whole process when they were defining features. And when the product fails, most people blame the idea, but also the features you chose to represent that value might be the reason. Defining features is the process that is done around the value proposition.
5. User Experience (UX)
This is another important part of achieving the PMF but yet also the most ignored by product teams. You have successfully identified your customers, you know their underserved needs and you are providing value through a certain set of features, but how do you think your customers will connect with your product? You might be offering real value but your customers fail to connect or access that value. The user experience is a very important aspect or step to Product-Market Fit. You have to make sure that your users/customers will be able to use your product easily and that they will be able to understand the role of every feature. If they can’t access or use it, the other previous steps also become useless.
Summary: The road to achieving the Product-Market Fit is very challenging and takes a lot of work, however, if you are willing to put in the work and follow the steps, it is something doable and I have worked and experienced multiple teams that achieved that. The purpose of today’s article was to explain the basics of PMF. In the next articles, we will go deep into each step to see how it’s done.