Product/Market Fit Analysis: What is it and how can it be applied to you?

What do we mean by product/market fit analysis?

A product/market fit analysis is a form of product discovery that complements your continuous activities, such as customer interviews and data analysis, and feeds into your risk assessment processes.

While a lighter version of this should always be at the forefront of your mind, this deep dive is recommended to take place at key inflection points during the product life cycle. Conducting a product/market fit analysis twice a year allows for shifts to occur, but still allows you to ‘keep up’ with the broader trends playing out in your target market.

Why is a product/market fit analysis important?

The pace of technological change has meant it’s never been easier for new entrants to disrupt established markets. A product/market fit analysis helps to address key questions such as:

• Is our positioning hitting the mark with our target audience?
• How are our competitors pushing their user experience in ways which will fundamentally alter consumer expectations in the near future?
• What shifting societal attitudes risk the relevance of our product in the future?

Shifts are happening everywhere and everyday. Uncovering the answers to these questions on a regular basis, and utilising them to your advantage, will help you to achieve and maintain a greater level of product/market fit - the ultimate goal for product teams.

This is an important practice, among others, and is highlighted in our earlier blog post: Prevent market-fit erosion with effective product discovery practices.

Understanding it through the pinch felt by rapid food delivery platforms

Through the pandemic and successive lockdowns, grocery delivery services like Zapp, Gorilla or Weezy put a new spin on what ‘home delivery’ means: we suddenly didn’t simply expect to get anything delivered to our door, we expected it to arrive within minutes.

This was a remarkable shift that had a ripple effect on delivery services and supermarket brands. Some brands competing on convenience engaged in this race to the bottom and tried to bridge the ‘speed’ gap, like Co-op with its 2-hour delivery promise.

Others stuck to their core product values to differentiate in another way: Abel & Cole continued to deliver to each area on the same day each week to minimise carbon emissions and food miles. Customers don’t have the option to pick a delivery slot in order to ensure fewer vans are on the road and keep the delivery charge low.

A few months have passed and since people have been able to go out safely, the need for on-demand grocery has receded. With already low profit margins and lower demand, several of the rapid grocery delivery firms have had to cut their workforce and pull out of large cities in the UK.

Tracking the signals that indicate where your market is headed and what new threats are emerging is essential; However ensuring you have a thought-through strategy that leans into the needs of your core audience of advocates is key to enduring product/market fit.

How we applied it with Just Eat

When we started working with Just Eat, the business was aware that after enjoying market leadership for over a decade, their product-market fit had substantially eroded over time. Their internal product teams were undertaking continuous product discovery. To complement their work, we carried out competitive audits on the Just Eat consumer app and the staff-facing ‘orderpad’ every 6 months.

We scanned trends and sector developments and took inspiration from other geographies to illustrate a set of potential new products and business models to test safely. That led to new solutions that helped gain back market share from competitors.

Applying a product/market fit lens to the discovery work we did with Just Eat helped to ensure we were giving equal consideration to customer expectations, competitors and the societal and tech trends active in the sector. It helped to identify the biggest threats, and articulate better strategic answers, faster, and realise the company’s vision to serve 500 million food occasions to 50 million loyal customers by 2021.

How we’d apply it to you

Our team at Beyond would start by probing your current product/market fit through an initial survey we run with your customers and with your close competitors’ customers.

We conduct the survey externally working with recruitment partners to reach a cross section of existing customers. It enables us to establish a PMF score and a clear benchmark for your product today.

We go deeper on the most compelling insights and develop a point of view on the factors that might erode your connection to the market in the future.

Finally we consolidate all insights to present a detailed report on the key risk areas that can threaten enduring market fit. This puts you in a position to challenge what is holding the product back and optimise for enduring product/market fit.

The outcome of a product/market fit analysis with Beyond

The outcome of the assessment is twofold:

• We define a product/market fit score as an instant measure to communicate easily and improve upon.
• We quickly uncover the risks of eroding market fit for your product and benchmark that against your competition. We do this with no engagement with your team to make it an external, objective assessment