“Markets that don’t exist don’t care how smart you are.” – Mark Andreessen
You can be as good and tested as you want, in a tight market you’ll need to really figure out if there is a market for your product or service. The product/market fit is not cast in stone, it’s not going to be the same and last forever. It depends on market conditions, your product, and what customers want and need.
Generally what happens is that companies develop products, refine them, then bring them to market. There are three types of markets and you might want to identify which one you are entering or are already in:
1. Existing market – this is the high end where you need to be faster/better. Ask yourself if the current customers would need the best performance, for example.
Then from the company’s standpoint you’d want to vet if the business model is scalable and defensible. What happens if only a handful of customers will buy what you developed is that you have a very high cost and no profit. The question on competition depends on you being perceived as different – you provide value unlike any other company.
2. Resegmented market – this is where you find a niche play and make it through marketing and branding or go low end to be cheaper.
Test the low end on the price/performance ratio. Can you make money that way? Who else is doing that? Is there enough for all or both of you? Or you could make a niche play – narrow either the type of customer you intend to serve, or the type of service/product and what it does. You might even be able to charge the same or more once you determine that. Can you defend this business model?
3. New market – this never existed before and you want to be cheaper or good enough to crate a new class of both product and customer.
Here you figure out if there is a large enough base of people who need to fulfill a need. What can you help them do that they could not do before your product or service?
Companies are so focused on their products and services that they often forget to test market fit. That could prove lethal in a contracted marketplace.
Most product/market fit situations may be in a combination of one of the above and may change in a terrible market. As Eric Ries writes in his post on customer development, you don’t get a memo that tells you that things have changed. If you did, it would read something like this:
“Dear Eric, thank you for your service to this company. Unfortunately, the job you have been doing is no longer available, and the company you used to work for no longer exists. However, we are pleased to offer you a new job at an entirely new company, that happens to contain all the same people as before. This new job began months ago, and you are already failing at it. Luckily, all the strategies you’ve developed that made you successful at the old company are entirely obsolete. Best of luck!”
You need to build customer conversation right into each interaction.