Product-market fit looks different for every product or business because every product has its own unique market. So, achieving product-market fit is not a linear process. 

Dan Oslen’s Product-Market Fit Pyramid is the most recommended and widely used method to do market fit for B2B and B2C. This hierarchical model helps determine target markets, target audiences, and how to get there.

The pyramid has six different stages. The process of finding product-market fit starts from the base of the pyramid and moves your way up towards user experience.

Define Your Target Customers

The very first step is to define the group of consumers who will be interested in your product. The target audience is characterized by behaviour and specific demographics, such as age, location, hobbies, employment, and income. 

Then, do market and competitor research using surveys and questionnaires. Summarize your findings and share them with your individual executives, contributors, and board.

Since 1930s companies have used market research through focus groups. However, there are some issues with the traditional market research. Extroverts and loudmouth could overpower opinions, response to questions etc. Additionally, people behave differently when they are in a focus group part of consumer research.

On the other hand, modern techniques involve responses to a digital ad — clicks, likes, email sign-ups — are more reliable indicators of purchase intent because they reflect how consumers behave when nobody’s watching. Testing via advertising captures real-life data about how customers respond to new product concepts, rebrands, and other big strategic moves. Advertisement platforms such as Facebook, LinkedIn, Instagram, Twitter have instant access to millions of consumers and thus provide businesses with multivariate testing.

These findings will help you understand your customers’ needs and the solutions they are looking for, as well as how your product can benefit them.

Now, use market segments to define your ideal customer and develop buyer personas for those customers. This will help clearly understand whom the product is building toward.

Targeting a specific audience helps businesses must reach the right consumers who will relate most to your products.

Define Your Customers’ Needs

It’s not viable to create a product for an existing solution in the market. So, once you have defined your target customers, the next step is to determine their most significant or underserved needs and pain points. 

For this purpose, you can seek insights from your sales and marketing teams. You can conduct online surveys, questionnaires, and rating scales.

But there is no better way to learn about your customers’ needs than by hearing directly from them. Having face-to-face conversations with potential consumers often provides feedback that online methods will not.

Read reviews on similar competitor products on the market to identify recurring complaints and negative reviews. This will help understand neglected and underserved needs of customers and achieve the right product market fit.

Specify Your Value Proposition

Defining a value proposition means specifying which specific pain point or needs your product will address. You have to identify unique selling points that give people strong reasons to buy your product and make it stand out from the competition.

Ask the following question to define your value proposition:

• What are the biggest pain points of your target audience?
• What are the features and benefits of your product?
• What are the unique features of your products that other products offering the same solution don’t have?
• Which features of your product address the identified pain points or needs effectively?
• Why should your customers choose you over your competitors?

This is the essence of doing an ideal product-market fit.

Build Your Minimum Viable Product (MVP)

Now is the time to transform your value proposition into something tangible, i.e., your MVP. 

You do not want to spend too much time and resources only to find out later that customers don’t like your product. An MVP is the first version of your product with only the basic functionality. It is a way to validate that you are building the right product with enough value in the eyes of your target customers.

Here is how an MVP can benefit:

• Test core features before launching the full version, gather feedback and improve your product accordingly. This will speed up your product development journey.
• Identify and prioritize features that resonate with customers.
• Make product decisions informed by real customer feedback rather than guesswork.

So, an MVP serves as proof of concern and gets you closer to achieving product-market fit.

Test Your MVP

Once your MVP prototype is ready, the next step is to test it with real users. Launch your MVP to a small group of your customers in your target market. Focusing on your target market is important; otherwise, you may end up receiving feedback that can send you in the wrong direction.

Then, collect feedback through surveys, interviews, feedback widgets, or product experience insights tools. 

Using your MVP, you can test your value proposition by asking customers to share their opinions about the product. This will help identify weak points and make necessary improvements before launching the final product in the market.

Important Note:  We encourage you to conduct MVP user testing in batches of five to eight users each. Once done, you can look at feedback, both positive and negative. You will be able to identify similar feedback from multiple customers and prioritize concerns.

Iterate Your MVP to Improve Product-Market Fit

Doing product market fit is an iterative process until you find the right fit product for your target customers. If findings from MVP testing show that you need to make changes to your product, you have to go back to the earliest step and revise your product from there.

From one iteration to the next, you should be able to see an increase in positive feedback and a decrease in negative reviews. At the point when there is no negative feedback for your products, you have designed a product with solid product market fit. Now, you can confidently invest in the product and launch the final version in the market.

Remember that your customers’ needs keep changing over time. So, you need to keep re-evaluating these changing needs and market conditions to continue fulfilling customers’ demands. This means doing product-market fit is a continuous process.