Fitting Square Pegs in Round Holes: The Joy of finding Product-Market Fit
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Somewhere in India, 2018
The journey from an idea to achieving sales is a daunting task and for many, the first 100 days are rife with rejection from potential clients.
Many entrepreneurs suffer from this chronic failure to sell in their early days and the get varied rejections reasons which range from the price is too high, it is not the right time, or the market is slow -It could very well be the apocalypse.
It was the summer of 2016 and a frantic team meeting was underway to brainstorm and compare the sales of a new company versus its major rivals, let’s call them Company XYZ.
Now XYZ has a product in every category, held awesome product launches and presumably had everything going for them.
And, when you want something, all the universe conspires in helping you to achieve it.” ― Paulo Coelho, The Alchemist
The approach to solving this problem is via data analysis– Through numbers and surveys early stage ventures can analyze and ask the market one single question - “Why them”?
The result of these surveys is sector agnostic and often lead down a path of self-discovery and answers that we already know:
The Price is determined by the market.
Quality/Price Ratios are a source of Value sales.
Discounts are not necessarily Value Generators.
Be a category leader- Price, Value or Quality Leader.
Lesson 1: Don’t be Piggy in The Middle
In this three-person game” Piggy in the Middle” – the participant in the middle is supposed to catch a ball that the other two pass between themselves. Anyone who has played this game knows that the middle player spends a lot of time and resources chasing shadows without any real reward.
Similarly, in any industry, if a venture is not the leader in their value proposition (price or quality), its top line and bottom line will be affected. The price leader in the industry will capture the market focused on price and the quality leader will gain market share of customers looking for higher-end products.
Lesson 2: Highlight Product Value via Targeted Marketing
No matter what value you offer to clients whether price or quality, be focused in your approach. Choose the sales channels that incentivize this approach and push resources into these channels to magnify gains.
Marketing and highlighting a value proposition are key in gaining consumer confidence, which is very important especially for early-stage ventures in nascent industries.
An FMCG product is never sold on the high street and Designer bags are not sold in the neighbourhood mom and pop shops. FMCG segment has a different value proposition and their sales channels are incentivized appropriately to push this product, whereas a designer handbag will be an odd fit in a neighbourhood store. This is a classic example of fitting square pegs in round holes.
Most entrepreneurs read a lot of case studies and industry analysis before starting a venture, but very often under the pressure of a flagging top line or because of confirmation bias that founders seek, companies are found hammering square pegs in round holes. This results in the following:
Bad Cash Flow Management
High Stress and a few frayed tempers
“Fitting” a product into the market by rounding of the edges doesn’t offer a platform for sustainable growth and leaves room for attack from rivals nor does it give the “stickiness” to maximize “lifetime customer value”.
Most traditional distribution models don’t have the luxury of double-digit growth figures but it does tell us that “Elegant Solutions” are possible and brute force can’t always work.