Product Market Fit: What Is It Really?

Ever heard of the term product market fit but never really understood what the term really means or how the process works? This article will be your go-to guide to understanding what product market fit really is and how it can help your business and marketing strategies.

What Is Product Market Fit

Product market fit describes a scenario in which a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability. A definition from Marc Andreesen, who originally coined ‘Product/Market Fit’ in his post “The Only Thing That Matters”:

"Product/market fit means being in a good market with a product that can satisfy that market"

product market fit
What Is Product Market Fit

So, why is achieving it so important? Why do many venture capitalists demand evidence of product-market fit before investing in a company? Why does Andreesen, in fact, believe in the division of every startup’s life into two key stages: before product-market fit (BPMF) and after product-market fit (APMF)?

It's because before you develop a product that you confirm enough people are willing to pay for, your team cannot afford to focus on other important strategic objectives such as growth or upselling existing users. Those initiatives could even be counterproductive, in fact, if you haven’t first determined that your product has enough of a market to sustain itself and generate a profit.

How Is It Measured?

The founder of the concept, Marc Andreesen has quite a few notable quotations on how to figure out if your product market fit is working or not and how it should be measured.

"You can always feel when product market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close".

"And you can always feel the product market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it".

There is no perfect or solid method to measure product market fit, however, there are a few methods and advice that can be used to assess whether your technique is being successful or not.

  • Are your customers recommending you to others? Is your word-of-mouth being successful? This can be assessed using the Net Promoter Score (NPS). This is a straightforward survey that asks customers to rate from 1-10, on how likely they are to promote your products and/or services to other people.
  • When surveying potential customers or allowing them to test your product, does some segment indicate they will switch to your product?
  • Are some users who have rejected similar products on the market willing to try yours?
  • When user testing, do people group your product accurately with the right competitive offerings?
  • Do users demonstrate an understanding of your product’s differentiators or unique value proposition?
  • How do your underlying metrics (such as retention rates of users) measure up against those of your competitors?

Steps To Product Market Fit

  • Anchor. Anchor your products in a way so they are widely required by the market or are a great addition to an already existing product and/or concept. For example, Uber. Uber was able to find product market fit by anchoring its product to the existing luxury black car service industry. Once they proved the product fit within the smaller market for high-end black car services, they were able to enter the larger market as an alternative to taxi services.
  • Prototype. Build a test a very basic solution to the problem you are trying to solve with the creation of your product. One of the most effective strategies for quickly determining the product market fit is to prototype. By building a prototype and testing on a small scale, you’re able to limit your investment and exposure.

    Testing the same prototype within multiple industries could reveal an opportunity for your product to do well within an unforeseen market.

    Keep in mind that no prototype has ever survived the first contact with customers and remained unchanged. Prototypes are meant to be broken and improved upon. The next strategy is a continuation of this thought process: iteration.
product market fit
  • Iterate. Learn from your prototyping and continue to implement your observations and customer feedback. If companies like Apple and Amazon had never iterated their products and business models. Apple would still be selling computer kits to hobbyists and Amazon would be a mere online book store.

    Don’t forget that markets can evolve as much as products do. If the dynamics of your market begin to shift, you may need to redefine your product market fit. You need to constantly evolve and innovate with the changing environment to keep up.

Below is a video to help you understand 10 significant steps to achieving accurate product market fit.

How To Achieve Product Market Fit

Simply said, product-market fit occurs when your solution satisfactorily answers the problem of your target customers, and there are many more customers where they came from. There’s isn’t a reliable and predictable route to achieving PMF, but there are many ways to get there. Here are the top approaches:

  1. Focus on Market, Product, or Business Model. Is it better to build the product first and then look for a market? Should you first discover a market segment with an issue before developing a product? Or perhaps focus on the business model before developing the product or determining the market?

    The most crucial of these three factors to concentrate on during the early stages of product development. If your target market has a true need for your product and is increasing steadily, you're well on your way to achieving product-market fit. After that, you can adjust your business model to account for sales growth. However, if you spend too much time improving your product, your competitors may beat you to the punch. The time spent improving your product can deplete valuable investor funds, increasing the pressure to scale.
  2. Finding Your Niche. Taking the example of a SaaS product you are developing, identify a hyper-specific niche that it will solve the problem for, and adapt it to fit that market. “Getting to product-market fit with a SaaS product is getting increasingly tough these days,” says Nicholas Hopper, founder of Crozdesk. Most key verticals (CRM, accounting, supply chain management, project management, and so on) are saturated, with a few category leaders dominating the market and large marketing budgets to fight the competition.

    It's a lot easier to establish ‘your fit' and spread like wildfire in your niche if you focus on fixing an issue for a specific market segment.
  3. Validate Through Marketing. Inbound marketing can be a great way to validate product, market, and business model assumptions. You must define verticals to target, problems to solve, and personas to attract as part of a solid marketing strategy. It will compel you to address challenging issues and make decisions. If you can use inbound marketing to generate awareness, interest, and eventually sales, you've achieved product-market fit.

Examples of Product Market Fit

According to MailChimp Insights, the entertainment media company first gained traction in the early 2000s. Movie watchers were starting to get tired of paying late fees from brick-and-mortar DVD rental stores. So Netflix sent them DVDs by mail as part of a subscription service, letting people keep a disc as long as they wanted.

But if Netflix had remained a DVD-by-mail operation, it would have faded out when DVD players did. Instead, Netflix positioned itself as the easier, cheaper alternative to whatever currently dominates the entertainment market: brick-and-mortar rentals, DVDs, or traditional television. Netflix alters its product every time the market need changes, maintaining its fit. Netflix’s success is a great reminder to stay flexible in changing markets and keep an eye on the future.

Secondly, another example would be that of Google. In the early days, Google competed with lots of other search engines for market share. Like the other players in its market, they made money by offering ad spots next to search results. But in 2003, they jumped ahead of the competition when they introduced a new concept, AdSense.

Google’s leaders realized that businesses would pay to display their ads beyond the search page, and they developed AdSense to meet that demand. AdSense used new technology to scan webpages and automatically display relevant ads. For example, if you had a business that sold suitcases, you could pay for AdSense to automatically display your ads on travel websites.

By 2017, AdSense's 11 million users were paying Google $95 billion a year. Google identified a need no other search engine was meeting, and they met it.


The process of reaching product market fit can seem daunting and you will have to fight the urge to scale before you have validated and measured your product market fit. Don't start growing until you're certain you've arrived at your business objectives.

Be methodical in your approach. Patience is required. Remember that product market fit isn't the goal. Rather, it's a never-ending search for the right fit and expanding your business model to new heights.


Product Market Fit

How To Measure Product Market Fit

What Product Market Fit Really Means

More Knowledge For You

How useful was this post?

Click on a star to rate it!

Average rating 4.8 / 5. Vote count: 10

No votes so far! Be the first to rate this post.

Subscribe To Our Startup Insights
Featured Video:
New Entrepreneur Meets Ex-Entrepreneur
More videos on the NEXEA channel
The Entrepreneurs Programme
Join 100+ tech Startup founders doing $2 billion+ in yearly transactions in Malaysia to network, learn & grow together. 
NEXEA LogoSubscribe & Get Startup Insights!
Join Malaysia’s Top Startup Investors & Corporate Innovation Event
Register for DisruptInvest Summit Now!