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Product Market Fit


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Product Market Fit

Product Market fit is considered the holy grail of product building, as you build a product directly for the market, and iterate the solution until you get it right.

Validate & Launch
 Min read
Last updated on
November 29, 2022

What is product-market fit?

Product market fit means a rundown where a company's target customer purchases, utilizes, embraces, and recommends a product to others. In this way, the company's product grows and starts gaining a naturally occurring customer base, which results in validation and gross profit.

In other words, obtaining a level of product-market fit refers to finding and validating an ongoing sense check to conclude if the market needs your product and how you should tweak it to make it more useful for your target audience.

Lack of product-market fit is one of the most common killer

s of companies. If a company cannot obtain any meaningful levels of product-market fit for its product, it will often see itself being forced to either close or pivot.

34% of companies end up closing due to lack of product market fit

A product with clearly defined qualitative and quantitative metrics is often better suited for satisfying the target market and customers and obtaining a level of product market fit as a result.

Product market fit is how well your solution addresses the market demand.

Product market fit is essential to any company as it's an indicator of potential, risk, and instability, as it determines how well your product fits into the market demand.

This approach ignores strategic objectives such as upselling existing users, growth, and reducing costs. The main focus relies on realizing that a product has a potential target market demand and will generate a good profit if we capture more of its segment.

How is product market fit defined?

Product market fit is often a moving target and is not calculated. It's determined with a sliding judgment across a range of factors to overall reach a level of 3 key factors:

  • Desirability
  • Viability
  • Feasibility

Achieving product market fit is a crucial step for any company. It is a pivotal factor in constructing a successful business, and many startups take around a year to locate their early indications of market fit. Most never, sadly.

In the current era, every firm is so focused on achieving product market fit that they have little benchmark about a good and a lousy market fit. Let me help you understand the difference between them. So,

The process of achieving product market fit goes through 6 main stages
Good market fit
  • In it, your customers are happier to share reviews about your product with their friends and community at different companies. Different segments look forward to your item, and company advocates or evangelicals might happen organically. In this way, through word of mouth, your product grows without any forced effort.
  • ROI is comprehensive, and potential customers who are willing to pay for an item without a second thought or extensive price negotiation.
  • A good product market fit can rapidly elaborate and evolve its product roadmap toward client demand.
  • General marketing initiatives tend to work better than expected without much effort.
  • Your customers are more likely to trust your company as an authority in its niche, as your product solves their underserved needs better than any other alternative.
Bad Market fit
  • Wrong product-market fit means you are selling a product that is not worthy or capable enough for the target customers to consider or prioritize it when comparing it to alternatives.
  • Acquiring customers and generating revenue can be difficult or even impossible.
  • Companies may find it hard to increase product awareness or acquire customers.
  • Companies see low user engagement.
  • Getting customers to adopt your product seems difficult or impossible, and customers tend to churn quickly.
  • General marketing initiatives such as ads, loyalty programs, and discounts tend not to work as expected.
  • Customers are leaving bad reviews or not speaking out about dissatisfaction at all. Remember -- nine other customers are not speaking out for every one bad review.
  • Customers are finding that your product is not solving their needs.
  • Your product does not have sufficient adoption or support to be helpful to the masses.
  • Customers struggle with feeling value for money and will lose faith that the product is worth the money and time invested.
  • The USPs are unclear, and your target audience fails to clearly understand the benefits of utilizing your product. 
  • After trying out the product or subscribing to a free trial, users might still not see the benefit.
  • No matter how much time has passed, the user is not returning and repurchasing.
  • The intended market keeps saying they need this product, but orders never arrive.
  • Most customers are buying and using your item as a personal favor to you as a founder.

Why is product-market fit important?

The small nuances between having some PMF or nothing at all can be game-changing. Without it, businesses risk wasting valuable resources and time trying to market products into black holes with no demand. This is especially true if validation is not established before a product launch.

Examples of companies with excellent product market fit

Some of the top successful companies with better product-market fit are:


With over 248 million active users, Spotify is the world's most popular music streaming service. They offer several unique features that set them apart from their competitors, such as personalized playlists, podcasts, and real-time tracking of listening trends. By understanding its users and offering a product tailored to their needs, Spotify has successfully achieved massive product-market fit through a solid set of USPs.


Netflix has become the world's leading video streaming service, with over 193 million subscribers. They leverage product market fit by offering their users personalized recommendations, an ever-expanding library of movies and TV shows, and an intuitive user interface. Netflix found ways to increase the user's consumption of streaming content and fit nicely into their business model, this level of product market fit, has not allowed them to become a competitor to Hollywood itself.


Uber is the world's leading ride-hailing service, with over 99 million monthly active riders. They have achieved product market fit by offering affordable rides, reliable service, and a user-friendly mobile app. Uber has achieved PMF by understanding their customers' needs to find a suitable rider with a budget-friendly cost through an intuitive app while delivering excellent service simultaneously. With this level of PMF, Uber has proved that passengers are ready to consume more rides if they are packaged in a convenient experience.

Examples of failed companies due to a lack of product-market fit

Conversely, companies with poor PMF struggle to gain traction and generate revenue. Here are some examples of known companies that eventually had to close due to terrible PMF:


This company sold a $400 juicer designed to work only with proprietary juice pouches. Customers were disappointed with the limited selection of flavors and the price tag, and the product was not solving any issues. And as with that, the $120m invested venture capital went up in flames.

Google Glasses

This wearable technology was met with negative reviews, mainly due to its lack of practical applications. People found it to be distracting, costly, and uncomfortable. Google failed to address any value proposition or product market fit. As such, the project was shelved.

Amazon Fire Phone

This smartphone failed to gain traction due to its limited features and lack of apps. Despite the incorporation of 3D technology, the phone could not impress consumers, and amazon kept pressing forward away from customer needs and feedback in their desperation to innovate. In the end, it turned out that they had 'innovated' away from product market fit, and as such, the product died a silent death.


Microsoft's attempt to compete with Apple's iPod failed miserably. The lack of music selection, complicated user interface, and poor design made it a flop in the marketplace. Microsoft succeeded in achieving product market fit and making customers consume music better, which ultimately led the product to the product graveyard.


This astronomical $1.75b VC-funded video streaming service was marketed as a way to watch short-form content on the go but failed to attract a large customer base. The lack of original content and high subscription fees were two key reasons for its failure. Quibi did not achieve product-market fit of any sort despite its insane pre-launch VC injection, and the market quickly applied its judgment over its approach to video consumption.

What to do to initiate and improve product-market fit

To achieve product-market fit, you must gather and check various metrics and deploy product-related tactics and strategies. These measured metrics help you take action on urgent events, driving your product roadmap toward a better solution for your target customer. You can start up by making a checklist and looking out for the answers to the questions like:

  1. When you are surveying your target customer and asking him to check your item, is there any customer feedback indicating that he will divert toward your product?
  2. Are there segments that previously rejected similar solutions in the market with a product but are interested in yours?
  3. Do users reveal an understanding of the unique value proposition of your product?
  4. Are people sharing their correct opinion about the product?
  5. Or do we have reason to believe that opinions are affected by bias?
  6. How many underlying matrices did you achieve against your competitors?
  7. Which features are your customers requesting that you don't cover today?
  8. And which ones should you include, discard or postpone? And in what order?

Immediate product-related measures may include:

  • Determining your target customer and ideal customer profile.
  • Identify underserved customers and try to fulfill them to evaluate if they prefer your solution.
  • Try explaining your value proposition in spoken words and text and evaluate if it's easily understood and piques interest.
  • Create an MVP of your product.
  • Test your MVP with real users, hiring sales and customers or investors.
  • Survey customers on an ongoing basis to find out what they like and dislike about your product and try to improve it. 

To measure product market fit, whether the testing is about qualitative or quantitative factors. You need to check for both factors as both of these are equally important. Like:

For Quantitative:

Check out the factors:

  • Churn rate.
  • Growth rate.
  • Market share.
  • NPS score.

For qualitative: 

Word of mouth:

An ideal customer profile will be enough to spread good things about your product and help your item to be scaled in the market.

Industry Analyst:

Call out for media or analysts to check your launched product and the coverage of your product. As well as research what kind of media attention similar products have been receiving. There's always a lot to learn from past product performances.

All these measures help you out in achieving a good product market fit. Also, you have an idea of whether you are in the right direction or not - on an ongoing basis. 

What are MVPs and product-market fit?

MVP (Minimum Viable Product) is a product development strategy that focuses on quickly creating a bare-bone version of your product with minimal features to test for indications of product-market fit. A product is considered an MVP when it has just enough features to pique the interest of investors or satisfy very early customers and provide feedback for a product development cycle.

To reach product-market fit, businesses must continue to iterate their MVP on the product until it meets the needs of the customer demand. You need to provide a product that can satisfy customer lifetime. Only when we have sufficient validation and indications of product market fit can an actual full-fledged version of your product start being conceptualized. We now know there is a demand, and we're solving a real-world issue outside of theory.

This approach allows us to determine whether our product impacts our target customers the way we want before investing a lot of time and money in product development.

With an MVP, businesses can quickly identify glimpses of product-market fit, make product improvements, and launch the product in the right direction.

The Best Way To Test Your Way to Determine Product Market Fit Through MVPs:

  • Start by researching the target market with your intended MVP in mind.
  • This research should provide insights into customer needs and wants, product features on demand, value, and positioning.
  • Once the research is complete, the business should create and conceptualize an MVP that meets the customer's needs and wants to be based on our research.
  • This product should have just enough features to satisfy early customers and provide feedback for product development.
  • Once an MVP is created, businesses should launch the product to a small group of target customers and create a feedback loop.
  • Based on feedback and response, the company should enhance the supply and improvement of the product while trying to clear the feedback of any bias.

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