- What is product market fit
Product-market fit refers to a situation where a company's intended customers are actively purchasing, utilizing, and spreading the word about the company's product in significant quantities, ensuring the sustained growth and profitability of the product. As per the renowned entrepreneur and investor Marc Andreesen, who is widely recognized for introducing this concept, product-market fit entails identifying a suitable market and offering a product that effectively meets the needs of that market.
In addition, determining the product-market fit of product prior to launching is crucial in order to effectively position it in front of potential customers.
Examples for product market fit
- In the early 2000s, the entertainment media company made its mark by addressing the growing dissatisfaction among movie watchers who were tired of paying late fees at physical DVD rental stores. Netflix revolutionized the industry by introducing a subscription service that allowed customers to receive DVDs by mail and keep them for as long as they desired. Netflix adapted to market changes by transitioning from a DVD-by-mail service to a streaming platform, ensuring its relevance in the ever-evolving entertainment industry.
- During its early days, Google faced fierce competition from numerous search engines in the quest for market dominance. Similar to its counterparts, Google generated revenue by providing advertising spaces alongside search results. However, in 2003, they surged ahead of the competition by introducing a groundbreaking concept known as AdSense. Google's executives recognized the potential for businesses to advertise beyond the search page, leading them to create AdSense. This innovative platform utilized cutting-edge technology to scan webpages and present targeted advertisements. As an illustration, if individual owned a suitcase business, could utilize AdSense to effortlessly showcase ads on travel websites. In addition, In 2017, Google was earning a staggering $95 billion annually from its 11 million AdSense users. Google recognized a unique demand that no other search engine was addressing, and successfully fulfilled it. Business owners can also implement Google's AdSense strategy in own business. To distinguish from competitors, invest time in identifying areas where competitors are lacking and adapt accordingly to fulfill unmet customer needs.