How to find a product market fit? There are two approaches.
Classic approach – develop a product and take it to market:
1. Step: Develop product with the best possible features
2. Step: Calculate price based on costs
3. Step: Estimate obtainable market
Reverse approach is slightly different. It starts with market understanding; product development is the last step:
1. Step: Understand needs of your targeted customer group
2. Step: Determine customers’ willingness to pay
3. Step: Develop product based on customers’ needs and willingness to pay
I came across the reverse approach for the first time in the book of Lee Iacocca. He is famous for changing the automobile industry in the 1960s by creating the phenomenal Ford Mustang. How did he do it?
1. Customer research showed that a target customer wanted to have a second car for a weekend drive
2. 2500$ was a price, that customers were willing to pay in 1960s
3. Ford Mustang was developed on the old platform of Ford Falcon to save costs
The result? More than 400 000 sold cars in the first year.
What is your experience with a product design? Do you have another approach?
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