Understanding Product-Market Fit: A Guide for New Product Managers
A lot of information and knowledge comes your way when you’re a new Product Manager. It can be a little overwhelming! But one of the major concepts you absolutely need to get your head around is Product-Market Fit.
If you don’t do your research, and understand how your product fits into the market (see what we did there?) it’s almost certainly doomed to fail.
So let’s dive in.
What Exactly is Product-Market Fit?
Product-Market Fit, in simple terms, is whether or not your product is needed.
When making products, you always have to be solving a problem, making something easier, or making something better. It’s fine if other products do the same thing as yours, if you’re bringing something unique to the table.
If no one really needs your product, or they can get the exact same experience from someone else, then you don’t have a product-market fit.
Rafael Mkrtchyan said it best in UX Planet;
“It doesn’t matter how sophisticated your idea is or how good you think your product is. It’s about whether anyone needs it and whether anyone is eager to pay for it.”
How Do I Know if I Have No Product-Market Fit?
There are some warning signs:
- Reduced market size
- Low response from customer base
- Negative press reviews (or no interest from the press)
- Weakening word of mouth
- High visibility, but no engagement
Products That Couldn’t Find Their Fit
We love the schadenfreude of looking at failed products! Here are some of the main products which failed because…no one really wanted them.
The Amazon Fire Phone (2014)
In the early to mid-2010s, it seemed like Amazon really were on fire with their tech offering. Naturally, a smartphone was on the way.
When Jeff Bezos announced the Amazon Fire Phone in 2014, it didn’t spark as much joy as the company hoped. For £400 in the UK, the price didn’t match the specs. Users would also be pretty limited to Amazon’s services.
The aesthetic also didn’t do much to inspire shoppers to buy. Reviews were brutal, causing the company to lose a speculated $170 million. They haven’t made a phone since.
So what went wrong? The phone was a very clear case of jumping on the bandwagon, and pandering to fans. Amazon enjoyed a lot of success with its tablets — why wouldn’t people want a phone from them too?
Clearly, Amazon didn’t properly research to find their product-market fit. People buy tablets because they enjoy accessing content they buy on Amazon seamlessly, such as movies, music, Prime content, and eBooks.
However, to be able to access their email accounts, app store, and YouTube account, it makes much more sense to connect with Google services. The Fire was compatible with Google…kind of. But why would users want a phone which kind of connected with their Google accounts, when they could get…an Android/Google phone?
One of the stand out features of the phone was the 3D element. It was the first phone with ‘dynamic perspective.’ It used 4 front-facing cameras to track a user’s face with an accelerometer and gyroscope. With this it ‘shifted’ what was on screen to create an immersive experience.
As the main headlining feature, it fell a little flat. Some thought it was innovative and exciting, but it screamed ‘gimmick’ to most. Perhaps what went wrong here is that people thought the feature was cool, but wasn’t worth spending $650 on.
In short, Fire OS solved no problems, and offered little value compared to other devices on the market.
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New Coke (1985)
Yes, it’s not always tech which flops!
New Coke is perhaps the most famous market research fail of all time. In fairness to Coca-Cola, they did do more due diligence than others that could easily make their way onto this list. They performed 200,000 taste tests which showed that New Coke outperformed both OG Coke and Pepsi almost every time.
They were so confident, that they halted production of the original recipe altogether and jumped head first into the age of New Coke.
What happened?
People hated it.
The new launch caused 400,000 angry phone calls and letters. The new product was on the shelves for 3 months before the old Coke replaced it. ‘
There were a few things which Coca-Cola hadn’t taken into account.
- Nobody had asked for a new kind of Coke. The product was wildly successful and beloved by many. There were very few calls for it to change.
- Nostalgia matters. People wanted to drink what they’d been enjoying for decades.
- There was no opt-out. The only thing worse than giving people what they don’t want, is forcing it on them whether they like it or not.
Microsoft Zune (2006)
Healthy competition between companies can be great. It leads to more choices for consumers and more motivation for companies to innovate.
However, if you find yourself creating an inferior product (not necessarily bad, just inferior) for the sake of competing, there’s no motivation for consumers to choose you.
That’s the exact problem Microsoft encountered when it launched the Zune in 2006.
By the time the Zune was released, Apple was already dominating the market. Owning an iPod became a status symbol that many identified with and aspired to. Microsoft just couldn’t compete.
In terms of market share, the iPod took three-quarters of global music player sales. Zune never made it out the single-digits.
It was a pretty desperate attempt to catch up with Apple, and the world saw through it.
Robbie Bach, former lead of Microsoft’s home entertainment business said it best. “We just weren’t brave enough, honestly, and we ended up chasing Apple with a product that actually wasn’t a bad product, but it was still a chasing product, and there wasn’t a reason for somebody to say, oh, I have to go out and get that thing.”
You might also be interested in: Implementing Product Sense with fmr Microsoft Lead PM
Questions Product Managers Need to Ask
Product Management is all about finding the answers to questions. To make sure your product won’t completely fail in the market, there are some key questions you have to ask.
- Does anyone want this product?
- Would they be willing to spend money on it?
- Does it solve a real problem, or add real value?
- Does it offer something different to our competitors?
These are the questions you need to ask yourself, but the most important questions are the ones you need to ask your customers!
When surveying, don’t just ask them to rate a product out of 10, or ask if they like it or not. Come up with questions that will give you more informative answers, such as:
- Would you be disappointed if you couldn’t use this product anymore?
- What are the deciding factors for using this product over other options?
- Does anything make this product special? What do you love about it?
- What could improve the product for you?
Which other products failed because they didn’t find their product-market fit? We want to know! Tell us what you think on Twitter, @ProductSchool.
I’m Carlos González, CEO at Product School, and I enjoy sharing weekly tips for Product leaders!
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This article was also published on The Product Management Blog.
