For every crazy idea, there is a market somewhere for it. You can find at least one person out there who is willing to pay for your product. With that said, the criteria for launching a successful business revolves around how big the market for your product is. Is your idea inside a $1Billion market or is it a $10 a year business? The difference in your market size affects how you approach your strategies, operations, positioning, and much more. So we need to figure out the product-market fit for your idea so we know how to properly market your business.
What is Product-Market Fit?
Product-Market Fit is identifying and knowing who the buyers of your products or services are. With every market you can never really know how large it is, however, we do have some estimated margins based on how well you’re selling.
For any business to flourish, three pillars are very important- people, markets, and products. The balance of product and market fit’s success is more important than the people or teams working for the company. In short, you need to make sure your product works in the market you're advertising to or at the minimum, that there is a need for it.
To have complete success, all three components are necessary. Think of them like puzzle pieces, all working together to make one big picture. It should be noted, however, that more attention should be given to the most important component mentioned above, product and market fit.
Finding the Market For the Product:
You have to find the right market for your product to ensure that your business has a good product-market fit. You’re not going to be selling food products in a market for clothing, and you need to be looking at the proper distinctions to decide which market you want to sell to. This far along, you should already have an idea of who your buyers are, based on who’s been responding positively to your product. This is where you use the information found in your TAM, SAM, and SOM. When calculating these three, you found a very distinct audience you were selling to. Remember the hairstylists who made over $100,000?
Using the example from the previous chapter, you have come up with a running shoe you want to sell. You aren’t going to be marketing your product to clients who are looking for high-end dress shoes. That is the distinction in the market. Advertising athletic shoes in a market of formal shoes is a very poor market fit. However, selling you shoes in a market that consists of lets say athletic gear, has a higher market fit. Seeing how well your product does with the specific demographic (athletes) that your market (athletic gear) sells to, determines if you have good PMF or not.
When Your Market is Failing:
It’s easy to know when the product-market fit isn’t happening. Things you can look out for are:
-your sales cycle taking too long
-low customer enthusiasm and satisfaction
-customers avoiding your product
The issue doesn't involve an attempt to increase your product sales or awareness. Instead, you have to look at your market and see if you are selling to the right people. PMF is crucial for long term wins and profits. You need to find consumers that vibe with your products and resonate well with them.
With your current unsatisfied audience, you need to figure out what's going wrong. You have a good product that was initially popular, but maybe there's something about it that doesn’t suit your current clientele?
No matter how hard you try, you’re never really going to be able to sell to the wrong audience. You have to be sure that your product is practical in the market you are broadcasting your business to. If it’s a wrong fit, your idea will only get lost in the rumble of other businesses that have better PMF, and will ultimately take your clients.
To provide you with the same example from earlier, running shoes will never be successful in a market of dress shoes. You might be able to sell a few to some customers who are not sure what they’re looking for, but ultimately your sales will be very low.
Let’s say however that you are completely unaware of PMF, and have noticed that your sales have been poor. You ask around and find out that the style of your shoe (running/fitness shoes) isn’t what your customer base is looking for. Although your product is good and sturdy and had good reviews when you initially pitched it, they are looking for something a little more casual. You take a look at your shoe and market base and realize that you’ve been advertising your product to a market of women, aged 40-50, looking for nice dress shoes. No wonder you’re not selling! Okay, that analogy is a bit of a stretch, but a lot of people overlook the importance of their product in the market that they’re selling to. This can make or break a business, so you have to make sure you're finding yourself in the right market, and that your product is needed there.
Finding a better PMF is as simple as slightly tweaking your market demographic. You just have to put in the time to figure out what exactly is throwing your customer base off. Once again I want to hone in on the idea Ask Don’t Guess.
The answers are all easily available to you so long as you're willing to put in the time to communicate with your clients.
Once you ensure the right PMF, you can bring together other components like the right target audience, messaging, and channels. Just because you worked enough on the PMF, you cannot go light on messaging or market channels. It is important to remember that all steps require equal efforts. It’s a loop- but the loop starts at the PMF.
For every crazy, innovative, ordinary, or unusual idea there is a market for it somewhere. There is at least one person out there in the world that will pay for your idea. You just have to go out and find them.
Comments