Ben Horowitz is credited with the line: “The best product doesn’t always win, but the winning product becomes the best product.”
Is the “Top Product” Really the Best Product?
Buyers often state that a product they considered purchasing was the best on the market, but they chose not to move forward with the purchase. To understand what will work for your business, you need to understand explicitly what motivates your customers, not someone else’s. The point is not an ecosystem to sustain pricing under cost, but that commerce depends on multiple factors, any of which might be more important than others to a given set of customers. On that point, Dartmouth professor of strategy Ron Adner wrote in the Harvard Business Review about Amazon competing with Apple.
He explains that when the Kindle Fire – Amazon’s low price Tablet computer – was introduced in 2011, it was pressing forward with a full-fledged ecosystem strategy. It was pairing substantial carryover (the entire range of its e-book activities coupled with current users’ e-book libraries) with substantial investment. Amazon was sacrificing hardware margins to position the Fire as a low-priced tablet and is subsidizing the participation of book publishers and movie studios in order to allow it’s core Amazon Prime customers to access books and videos with the device. Amazon did not try to match Apple in product features and quality. Instead, it had designed a different business model that relied on its ability to use low costs to address the tablet market.
How to Achieve the Product/Market Fit
The “best product” misconception exists in a variety of industries and the product/market fit can mean different things depending on the context. The product/market fit happens when you have successfully identified your target customers and are serving them the right product. The product/market fit relies on the tangible understanding of who your customers are and how to feel about your products. In the early stage of your company, your product will satisfy a small segment of the market. As your business grows, your perception of the problem you are solving will also expand.
Here are three ways businesses can achieve product/market fit in addition to having a high-quality product.
Use Case
First, a business should deliver products that will meet its buyers’ needs. This is achieved when the buyer can use and appreciate all the functionalities of the product. The goal is to design a product that addresses specific use cases as well as the most common use cases of the largest segments in the market.
Pricing
The second way is setting a price that meets the buyer’s innate sense of Return on Investment (ROI). One of the consumer’s priorities is to get the best value for his purchase. Buyers are able to tell the cost behind a product. As a business owner, you should have a clear analysis of the market and establish a value for money ratio. This will allow you to satisfy the demand.
Buying Process
The third and final method businesses can use to ensure they lead the market is to provide a straightforward customer journey. The simplicity of the purchase process and clarity around the pricing terms will make the best product win. Overall, if your buyers feel that you are easy to work with, there will be potential revenue through word of mouth.
Having a great product is particularly important to leading the market. But, great products alone do not guarantee a winning company. How well your product aligns with the buyers’ core use cases, ideal pricing, and buying process will allow you to achieve a product/market fit.
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