What is a Product-Market Fit?
Finding the product-market fit is one of the biggest challenges, especially now, when the world is filled with various products and it seems like everything has been already invented.
Just the same as a few years ago, when nobody would think that there is any way to compete with traditional banking. They’ve been covering all the potential customer’s needs – providing regular and digital banking accounts, saving accounts, investment opportunities, money transfers and full customer services in the bank branches all around the world.
But it became clear that not everybody needs access to the branch or wants to create a regular banking account, to, f.e. transfer the money abroad.
And that’s what companies like Wise realized. They discovered, that by fulfilling only one need – easy and cheap money transfer, they can reach a group of customers and build a well-functioning, successful business.
This was a great call! By covering only one client’s requirement, they could totally focus on it and provide much better conditions than regular banks that are focused on delivering multiple financial services at the same time.
In other words, you don’t have to provide a 360 solution and compete with the biggest players to find your place in the market.
And this is what the product-market fit is all about – uncovering the market needs to arrive with the perfect product or service that will fulfil it.
It may seem obvious at first, but there were so many businesses that decided to reach the market without the proper preparation and without investigating the customer needs, that we find talking about it super important before we actually head to the app development process.
Product-market fit in the world of mobile apps
When you look at the mobile apps world you quickly realize that the demand is huge:
- 21% of Millenials open an app 50+ times per day,
- the average smartphone owner uses 10 apps per day.
But the competition is massive as well – only on Google Play Store, there are over 2.87 mln apps available.
So how to find a niche here? And how to define a product-market fit in such a crowded place?
One of the most effective ways is to build an MVP and share it with customers, so they can rate it and share their opinions.
With the MVP you can reach the market with the most fundamental features and check if there’s a need for your app. And in time, develop it further to reach a broader audience.
But let’s start with some basics to make sure we get the context right.
Why Should you fit the market?
Before we go any further, remember that fitting the market is not a one-time thing.
The world is changing all the time and so are the users’ requirements, preferences and the way they interact with the product.
I suppose we all have heard about BlackBerry and their phones that shined like stars in the digital heaven, but only till the competition appeared.
Product-market fit by BlackBerry (and how it failed)
By reaching the internal market with their first product, which was nothing more than a pager that had the ability to not only receive but also send messages, Blackberry fulfilled the new need of the market that arose when the emails became popular.
And even though the first version was far from ideal and had many limitations, it became clear that the need for a product like this is much bigger than anyone expected. Once it was developed inside the company, employees started to use it constantly, no matter where they were and what they were doing. And that was the final proof that this solution had a big value – and that was a product-[internal]market fit!
But the company knew that what fit their internal market was not enough for the mass production – there were so many shortcomings that the average customer would not be interested in it.
To fulfil the needs of the broader market, they started developing the prototype into a full-fledged product by refining the device, implementing new technology for sending and receiving emails and making several other improvements.
At the same time, they did research about the customer’s needs and found their niche – entrepreneurs and managers whose work mostly relied on email. They wanted to get the answers faster and increase the work efficiency, so they were buying the Blackberries for the subordinates.
BlackBerry’s success was huge because they were prepared perfectly. They found the niche, discovered the problem, built the MVP, tested it, and then adjusted it accordingly to the customer’s needs.
But the victory lasted only till the competition appeared on the marker. When the first iPhone was presented on the market, BlackBerry’s position in the consumer market was hit hard.
They still were very strong in the corporate segment, because of the strong encryption, long-term contracts and direct relationships. But unfortunately, it doesn’t last long. With every iPhone and Android update, the BlackBerry market-fit weakened, and in time – completely disappeared.
They completely lost their vision of the product and once the competitors appeared, they started to work on the four pillars of their previous success: strong battery life, conservative use of the carrier’s spectrum, high-level security and ease of typing, but didn’t conduct the market needs research before doing so – and that’s where they failed. Apple proved, that especially in the consumer market, those weren’t the goals anymore.
“Apple reset what the expectations were. Conversations didn’t matter. Battery life didn’t matter. The cost didn’t matter. That’s their genius. We had to respond in a way that was completely different than what people expected,” (Mike Lazaridis speaking with hindsight in “Losing the Signal” p.168).
The BlackBerry history showed bluntly that you have to adjust to the market with your product, and not believe in one-time bulls’ eyeshot, as it won’t last forever.
How to achieve the product-market fit with the MVP?
To achieve the product-market fit you have to involve the customers, gain the feedback and deploy it in your product. And what’s the easiest way to gain it? Of course by showing them the initial product, so they can tell you exactly how they feel about it.
Building the MVP (Minimum Viable Product) is the best way to evaluate your mobile app idea. We recommend it to our customers, and among many benefits, it lets you hit the market fast, and gain feedback on how you can improve it.
Dan Olsen, product management trainer, consultant and author of the book: The Lean Product Playbook, created a Lean Product Process that defines how to fit the market with the MVP.
Below you can see a “Product-Market Fit Pyramid”, which describes product-market fit with 5 key components (spread into two categories: Market and Product), that are strictly related to each other.
Product-market fit pyramid
The hypotheses you make in one layer affect all layers above it. Once you’ve locked in your hypotheses for these layers, they are like a set of interconnected tectonic plates. If you move one of them after you’ve already built your product, much of the product you’ve built will no longer be relevant—like an earthquake that reduces a building to rubble.
The top three layers: Value Proposition, Feature Set and UX are the components of the initial product – Minimal Viable Product. They are then validated with customer interviews and surveys to meet all the user’s needs.
The Lean Product Process starts at the bottom of the pyramid and moves upward requiring the below actions:
- Determine your target customers
- Identify the underlying needs
- Value proposition
- Specify the MVP feature set
- Create the MVP
- Test the MVP
Determine your target customers
There are no doubts you have to start with defining a potential target group. The target group represents the potential users that would likely benefit from your app. Try with market segmentation and creating buyer personas, to easier explain to your team who will be using your product.
Why should you do this? Because you want the customers to head towards your product. A product or service that is great in your opinion, can not be sufficient or appropriate for your customers. And to create the perfect product for your audience, you have to know who they are.
Identify underserved customer needs
Once you define your target audience, try to understand their needs – especially those underserved. You can do this by speaking to them, finding their posts on forums or Facebook groups or even reading some testimonials at App/Google Store under the apps that provide similar services.
You have to consider everything you read and hear, and limit believing in what you think the users need, just take a look at the story below:
Underserved needs example: Dreyfuss’ cinema
In 1925, Henry Dreyfuss, a design pioneer, was employed by the owners of the new cinema in Iowa, who struggled to get the customers. Even though they had a luxury interior, red carpet in front of the building and were showing the newest movies in much higher quality, all the customers were choosing the old cinema.
Both Dreyfuss and the owners couldn’t understand what was going on, as they found their cinema much more comfortable and eye pleasant than any other. They lowered the prices and started offering free snacks, but it didn’t change a thing.
One night, Dreyfuss decided to visit the old cinema and listen to the customers. Surprisingly, it became clear that they were avoiding the new cinema, as they weren’t comfortable with such a luxury design. Most of them were farmers, and they felt like they don’t fit in, and most importantly were afraid to leave stains on the beautiful, new carpet.
The problem was defined – the designer reached for the newest trends but didn’t think about the customers that weren’t used to such a luxurious interior. The next day Dreyfuss changed the carpet for the much simpler floor mat, and guess what – after a few days the cinema was full of happy visitors. All the tickets were sold. And that’s only because one person listened to customers.
WANT TO FIT THE MARKET WITH YOUR PRODUCT?
The value proposition describes how your app will differ from all of the similar apps already available on the market. The thing is that your customers will compare you to the alternatives and if you won’t provide a good solution, they will simply abandon your app, without giving it a thought.
So once more: know your market – check your competitors’ apps, and read the reviews. Think about your idea – as Steve Jobs said, focusing doesn’t mean saying yes to all the good ideas. Focus means to say no to the hundred good ideas only because they don’t fit the market.
Specify your MVP main features
To evaluate your idea, you don’t have to develop all the features you plan to contain into the final product. Instead, it means defining those most important ones that will provide enough value in the eyes of your users to validate if you’re heading in the right direction. The goal is to iterate until you have an MVP that the users find it valuable. .
When one of our customers – Veygo reached us, they had an idea for the mobile app that was about to help learner drivers with learning to drive by giving them a flexible way to practice, outside of formal lessons, in a parent/family member’s car whilst protecting the owner’s insurance.
They wanted to reach the market in just 6 weeks to quickly validate the idea, so we had to focus on the main functional requirements, that aimed to evaluate the product-market fit:
- Track each customer event to understand which features they engage with most and least
- Analyse the use of educational materials uploaded to the platform
- Capture customer data as they tell us more about their learning to drive journey and store it in places such as Mailchimp (for customer email)
- Record of notification settings chosen (at user level) that we can access and see
Read more about the Veygo MVP app here:
Build the MVP
Creating the MVP may vary depending on the app features, time, budget and of course your target market. The usual process of building the MVP with Pagepro consists of 4 phases:
- Market/competitor research (we do this separately and then compare to your research)
- Validating business/monetization models
- Deciding the technology stack
- Building scalability roadmap
For your app MVP, we usually consider three options:
- Platform-specific native apps – These are coded for either iOS or Android.
- Cross-platform apps – Mentioned already before, these use Shared Development Kits, but can still run natively.
- Hybrid apps – a hybrid app is compatible with both iOS and Android. With this approach, you don’t need to write different codebases for each platform.
And most of the time, the best option is to build a cross-platform app.
|Native Development||PWA||Cross-Platform (with React Native)|
– Great user experience
– Uses full potential of platforms
|– Easy to build|
– The most cost-efficient
– Works on any device
– Doesn’t require installation
|– Faster time to market|
– Work on both Android and iOS
– Works on any device
– Easy to scale
– Easier updates and maintenance
|Cons||– Most expensive approach|
– Development takes much time
– Hard to update and maintain
– Requires different skills
|– Not really a mobile app|
– Often weak on performance
– Doesn’t support all mobile features
– No push notifications on iOS
|– Sometimes need native skills|
– Not always native-like
|Verdict||Since the MVP doesn’t require, nor contain any heavy functionalities the cost of hiring native developer ( or two to appear on both platforms) and future cost of maintaining, as well as speed of implementing new features – the native approach is mismatched.||Because of lacking core features like push notifications a PWA approach was also a mismatch.||The MVP is a perfect use case for React Native.|
Thanks to React Native we could achieve all current and future project objectives in a shorter time, as well as it appeared to be much more cost-efficient choice.
2. MVP UX and UI design
- Mapping/Creating user journeys
- Wireframing & prototyping
- Creating graphical/branding elements
- Setting usability tests/metrics
Look at the visual components we’ve created for the Novus Bank while building an MVP app for them:
3. MVP Development
- Meeting with the development team
- Building the framework/core logic
- Powerful & flexible backend
- Setting up the databases
- Ensuring enterprise-grade security
4. Release and Support
Once the MVP is up and ready, we’re running all the tests to make sure it doesn’t have any bugs before the launching.
Want to learn more about building the MVP? Check out our video:
Why MVP for app prototyping?
There are many other ways to validate the idea, but we find MVP as the most reliable for mobile apps, because of:
- Possibility to validate the idea with the end-user
- Better time-to-market – instead of trying to build an ideal app, you can reach the users with the basic working features, without a need of risky investments.
- Cost efficiency and cost control – affordable initial investment (you don’t need to start big). On top of that, each further investment is based on real market needs and better thought-out. Check out how did we cut the development costs in half with the MVP for one of our customers: Just in Case Estates
- Risk management – it is safer to invest gradually in features that users consider useful
- Loss aversion – it’s much easier to abandon a bad idea if you didn’t invest too much in it
Many startups and companies tend to keep investing in bad ideas just because they have already made a huge financial engagement
- Fund acquisition – It’s easier to enrol investors if you have a working product with a reasonable plan of growth
POV vs MVP vs Prototype
|Proof of Concept||Prototype||Minium Viable Product|
|Goal:||Gives information on whether the idea is feasible||Visualises how a product will be built||Adapt the product based on feedback straight from the users|
|Time:||From days to months||Weeks||Months|
|Audience:||Researches & developers||Stakeholders, developer groups||End-users|
|Intended use:||In order to analyze the possibility of building the idea and its potential||To attract investors by the presentation of how the product will look and be used.||In order to find a product-market fit based on real end-user feedback.|
What would you prefer to use to validate your idea?
Standard tactics to conduct a product-market fit for the mobile app
The standard tactics to conduct a product-market fit in the mobile app market include
Keyword Search Volume
Both Apple Store and Google Play stores track data, which is very valuable for business owners. The keyword Search Volume is the list of the most popular words searched in the app store, which lets you understand the needs even better. You should check it before launching the app and make sure you will answer those needs.
When the MVP app is up and running, you should track the conversion metrics, that are related to the number of users the app is gaining, costs of acquisition, revenue and customer lifetime value. This data allows you to further optimize the app for app stores and increase the conversion rate.
Retention and KPIs
The retention rate shows the percentage of users to still using the app after a set period of time. Since the mobile app environment is super-saturated, retaining gained users should be the main priority, as hitting a certain number of retained users is crucial for the app’s success.
Launching a successful mobile app is the long run, but with the MVP you can save both money and time, gain customer feedback and decide if the whole idea is worth implementing.
If you want to learn more about the MVP, check out our other articles:
WANT TO FIT THE MARKET WITH YOUR PRODUCT?