An important element for your small business success is smooth product-market fit. An inappropriate or insufficient product-market fit leads to gaps in sales and consequent drops in customer loyalty, brand identity, and the overall profitability of your business. Be aware of the fact that low sales figures often occur when your products are misaligned with the market. There are a number of signs that your product-market fit is a bit off, and it is definitely to your advantage to be able to spot these signs and know how to promptly fix your fit.
First coined in a 2007 article by Marc Andreesen, the term “product-market fit” refers to a product, or a service, that satisfies a specific need or needs, and is sold in a market that addresses meeting this need. Essentially, it means the product you’re selling is appropriately fitting in its current marketplace because it has the ability to satisfy market needs.
The general consensus among business owners is you can usually “feel” when your product isn’t properly fitting in the current market. The lack of fit is clear and evidenced by customers not getting exactly what they want, and their dissatisfaction prevents them from talking with others about it. This leads to a decrease in usage and reviews of the product, both personal and professional. Ultimately, sales drop and the cycle of selling the product lengthens, and you may end up with a substantial amount of excess inventory or leftover product.
There are three common reasons why product-market fit misses the mark. The first, common to startups and new businesses, is a business owner entering the market with a product but lacking any clear plan for penetrating the marketplace and obtaining market share. Another common cause for poor product-market fit is lack of a firm brand identity. A lack of unique characteristics usually leaves you with a product or brand that can’t penetrate the market because it doesn’t sufficiently stand out enough to induce consumers to preferentially purchase it. A third reason for product-market misalignment is failure to incorporate customer feedback and adjust to changing marketplace conditions. It is one thing if your small business simply can’t afford a substantial retooling and product overhaul, but it is another thing altogether to refuse to make product adjustments solely out of lethargy or stubbornness.
Fixing the Fit
Correcting product-market fit can be achieved, in large part, by simply addressing the three issues noted above. Before launching a product, conduct market research and craft a plan for penetrating the market. Market share is more easily acquired for a product with at least one or two unique qualities, characteristics that distinguish it from the competition and can be carefully woven into a strong, positive brand image. Achieving and maintaining good product-market fit also requires engaging with your customers and establishing customer relationships that enable you to know what is important to them and make sure the product you’re offering meets their needs and wants. If sales begin falling short, listen to your customers to learn why.