When starting as a product manager, you have to deal with a lot of information. Although it can be overwhelming, you need to understand the importance of product-market fit. However, finding product-market fit takes time. This process requires a lot of market research, planning, improvements, and testing.

In this article, you will learn everything you need to know about product-market fit, its importance in product development, and how to create a product that satisfies the demands of today's demanding customers.

What Is Product-Market Fit?

It is a scenario in which a company's target customers buy, use, and spread the word about the product in sufficient numbers to support the product's growth and profitability. In short, it is a means to determine whether or not there is a need for your products. There are so many competing products on the market, it's crucial to have a USP to distinguish oneself.

So, it means that you are in a market where your product satisfies the market needs. Let's understand it better with a pyramid model. 



The pyramid shown above serves as a practical framework for defining product-market fit. There are five essential elements. Each element in this hierarchical model is part of the pyramid. And all these elements are directly related to the levels above and below. The five elements are: 

  • the target customer
  • the customer's underserved needs
  • value proposition
  • your product's feature set
  • the user experience

This pyramid clearly illustrates the need to uncover underserved consumer needs and identify the target market before developing the product. You must outline the product's value proposition before developing the user interface.

It's crucial to look at the Product fit market Pyramid and ensure you understand those tiers before you begin constructing the product.

Importance of Product-Market Fit

Product market fit is essential for the growth of a business, especially startups. It is basically like a make-or-break factor for them. Even if a startup has the best product, it will not be successful if there is no market need for it. When you lack clarity, you keep spending money on projects that won't be profitable. You can overspend by recruiting too soon or making ineffective sales and marketing investments. 

Product market helps you:

  • Find the characteristics or components that your product must have to meet audience expectations or desires.
  • The types of people most likely interested in your goods and why.
  • How to attract potential customers' attention and convince them to purchase a product.
  • The actions you must do to promote growth and win the loyalty of your pleased customers.

Gaining a thorough understanding of each of these elements gives you a significant competitive edge that hasn't been able to find its product-market fit. 

Who Is Responsible for Product-Market Fit?

There is a contrary belief that only the marketing and product management teams are responsible for the product market fit. But, this is not the case; everyone engaged with the product is accountable for ensuring product-market fit.

How Is Product-Market Fit Measured?

To determine the product market fit, follow the below-mentioned steps:

1. Understand the Current Needs of Your Customer and Also Foresee Their Future Needs

It takes time and experience to become familiar with your customer's needs and demands. If you do not understand your target customer, it becomes difficult for you to gain success. So, you can spend time with your customers, analyze the market, attend industry trade shows, etc. By doing this, you can develop priceless contacts and get a realistic understanding of the sector's demands. Understanding your clients' concerns in-depth help, you relate to them better, eventually contributing to the development of credibility and trust.

2. Keep Your Focus on the Value Proposition

It is challenging but very necessary to find the single essential feature. As a result, to identify the key feature, you should look at developing trends and areas where competitors are struggling to find solutions. If your solution solves one of your consumers' most pressing problems, they will be willing to wait for new features to come. 

3. Build Your Credibility

Customers want to understand how your product or service will benefit them, and the simplest way to do this is to incorporate their demands into the story surrounding your brand.

4. Measure TAM

To manage your success, you must evaluate your performance. You have to determine the total addressable market (TAM). You can calculate TAM by dividing the market's total potential customers by your average revenue per user. 

5. Send Surveys

After you have calculated the TAM, it is time to do surveys. Sending surveys to your target market is the most practical way to evaluate your product-market fit and learn how customers feel about your services. These surveys ask customers direct questions such as whether they believe your product is essential and whether they would miss it if the product is discontinued.  

How to Achieve Product-Market Fit?

To see if you have achieved the product market fit, you have to check:

  • If your target audience is willing to pay for it
  • Your products provide solutions to their issues
  • They will refer your products.

When you have found your audience, you will see that they will use your products whenever they have a need. 

Product Market Fit Myths

One of the common misconceptions about product-market fit is that only the product team is responsible for determining it. Finding a product-market fit is a shared objective for all teams interacting with customers. 

Examples of Product-Market Fit


Dropbox came into existence in 2008. Co-founder of Dropbox Drew Houston developed two very efficient techniques to determine their suitability. He first produced and posted a four-minute explanation video. Their beta line grew from 5k to 75k persons overnight. Second, Dropbox introduced a popular referral scheme. In the scheme, the current users get extra storage space, In return for promoting the service via social media, email, or by getting friends to sign up.


Airbnb promoted its services as a networking alternative for people when hotels were fully booked to cash in on the popularity. Airbnb introduced a unique Craigslist link. Customers had the option of simultaneously listing their homes on Craigslist and Airbnb. Using Craigslist's massive user base, Airbnb could reach its full market potential.

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Our Learners Also Asked:

1. What is the meaning of product-market fit?

Product-market fit refers to having a product that can satisfy and be in a good market.

2. What is a product/market fit example?

Spotify is one of the best examples of product/market fit. Spotify created a fantastic infrastructure for streaming music. They believed the customers would be willing to pay a small sum to own the music. They were correct, and now it has over 270 million users.

3. How do you determine the market fit for a product?

There are three steps that you have to consider. First, you have to recognize your customers' current and upcoming demands, then concentrate on a single fundamental value proposition. And after that, work on increasing credibility

4. Why is product/market fit so important?

Product-market fit is crucial because businesses need to know whether their product will find a market before moving forward with the production stage.

5. What is the product/market fit pyramid?

The product/market fit pyramid is a structure that helps you comprehend and achieve Product market fit. There are four levels in total, each of which represents a different phase of the customers' journey.

6. What is after product/market fit?

After achieving product/market fit, you have to shift your focus to the market. You have to figure out how to distribute the product across the whole market and how to gain a dominant market share.

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When designing a product, it's critical to consider whether it will solve any issue your consumers have or if there is a further need to get to customer satisfaction. To achieve product-market fit, you must remember that you still need to concentrate on customer service, enhance existing features, respond to customer feedback, and provide new reasons to remain customers.

This SAFe Product Owner/Product Manager (POPM) Certification Training is ideal for you if you wish to play a vital role in creating new products. The POPM training covers several important mechanics, processes, and program management tools. 

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