Most business managers will have heard of the 4 P’s (Product, Price, People, and Place). But there are yet another two more Ps when it comes to startups. They are product-market fit and problem-solution fit.
With product-market fit, you have successfully identified what your product should be. You have tested the market with a minimal viable product (MVP), and it looks promising. While with the problem-solution fit, you have assessed whether your product solves a problem (or is the product of a problem) that is big enough to warrant its creation.
For example, some people will have a product idea for an app that helps people with their exercise routine. Having tried it out, they have found that it made them more motivated in their workout, and this was the product they wanted to sell on to potential customers.
That’s why this process can be so challenging. However, there are key differences between a product fit and a market fit. Let’s see in this article what these two are in detail.
What is Problem Solution Fit?
Problem-Solution Fit (PSF) can solve a real problem and align it to a viable market. PSF is ‘the fusion of intellectual and hard skills’ required for startups to solve problems that can be monetized.
It is about understanding the market and identifying the problem you are trying to solve; what your team needs is a person with both ideas on how to change things. PSF is not only about the product or service you are trying to deliver, but it’s about having a solution to a problem.
If the existing solution to the problem is not working or you have a new way of solving it, which is important to the bottom line, it is the PSF. The problem-solution fit canvas has 3 main areas to focus on: be clear, build and test.
Do you need an example? It’s good if you have tried out something and found out that it was not what you thought it would be. If you had an idea of the solution that could solve your problems, this is PSF.
How confident are you in solving a real problem? What is the challenge you have faced? If there has been nothing major in your life where you had to solve a problem and find a way to do so, this is PSF.
Sometimes, the solution to a problem is not what we initially see. Sometimes, this process is not as easy or quick as we initially thought. So, working through it, identifying problems, and coming up with different options is PSF.
What is Product-Market Fit?
The Product Market Fit Pyramid is more so about the product or service itself. It is not about solving a problem, but rather, it’s about identifying the potential of your product once you have a product to market.
Product Market Fit (PMF) is a very important indicator to determine if you have the right product to market at the right time. This is not an easy process, it’s quite difficult to have a product in front of customers, but pf can be done successfully.
It’s about understanding the potential of your product and what it can do for your target customer. It’s about validating a great product that solves genuine problems. Getting rid of the ‘idea of the product’ is important because it is all about solving a real problem that customers are facing and being confident in doing so.
The lean startup methodology helps you get into the PMF phase before you even have a product in the market. Product Market Fit as a startup founder or an entrepreneur has got to be confident in solving problems so that you have got to be confident in creating value for your customer.
It’s a lot of things, and the product has got to be quality and can solve problems that people are facing. If a few customers try out your product and find it to be IOU, the product is not Product-Market Fit.
It’s always about validating what you are doing to ensure that you will solve real problems. This is very important for the product to become valuable for your customer.
Do you need help with both problem solution fit and product market fit?
What Are The Differences Between Problem Solution Fit and Product Market Fit?
There is a lot of difference between Problem-Solution Fit (PSF) and Product Market Fit (PMF). Let us take a look at the differences between the two.
Duration
Problem solution fit is something you do once you have identified a problem. In your life, this could be as small as picking up garbage from the streets, but it can also be a lot more than that. It could be something big such as finding a job or starting a business. At the same time, the product-market fit is something you do every day until you achieve the minimum viable product (MVP).
The target customer
The second key difference between PSF and PMF is the target customer. In Problem Solution Fit, your customers are generally people who are already in your target market. The purpose of this is to find out if it would be possible to solve a problem for people who are already in your target market.
On the other hand, product-market fit is about finding customers for your product. Your target customer is the one who will make purchasing decisions for your product.
Market Research and validation
PSF is about testing ideas and validating them, while PMF is about market research and validation. Because you want to be sure that your customers will buy your product before you spend money on it, PSF can be used by startups to decide if they should build a product or not, while PMF can be used to validate a market.
Value vs. Price
PSF is more focused on value than price, while PMF is more focused on price. But in the end, the price of your product has got to be competitive so that you can attract customers because pricing is a vital part of marketing strategy.
Customer Acquisition vs. Customer Development Process
One of the major differences between PSF and PMF is customer development and acquisition. In PSF, you only look at how you can acquire customers, while in PMF, you look at developing the business.
A good way of explaining this is when you’re developing. You generally look into your business processes like sales, marketing, human resources, and accounting. In contrast, you are looking at different stages of customer acquisition in PMF, including finding potential customers, creating the product, and attracting customers. The customer segment will generally determine the stage of customer acquisition.
Value proposition vs. fit
The last key difference between PSF and PMF is the value proposition and fit. In PSF, you are looking at how you can fit your product into an existing market, while in PMF, you are looking at a product’s value proposition. This means that the focus is on marketing, pricing, packaging, and different customer acquisition tactics.
Now is the time to get PMF (Product Market Fit) for your business!
What Are The Similarities Between Product Market Fit And Product Solution Fit?
Now that we have learned the differences let’s find out if there are also some similarities between the two.
Both test a business idea that could potentially be a product.
Both PSF and PMF can be used in early-stage projects to test an idea that might turn out to be a product. Like if someone wants to test a startup idea. If a product is created, PMF can be used to find out if it will be profitable and what the customer behavior is like. If you have any alternative solutions, then PMF will help you test them and determine whether they are good enough for a market.
Both are about finding the right business model, customers, and technology.
Both PSF and PMF helps to find the right business model, customers, and technology needed for a new business. This helps startups, entrepreneurs, and companies with this step because it also allows them to develop their idea of what will make it possible for their startup or company to succeed commercially.
Both help with validating an idea or solving a problem.
Knowing whether you have solved your customer’s problem is vital before you spend money on an idea or product because if you haven’t, then it will be worth very little when you do decide to put money into it because stopgap solutions are dangerous in the long run as these tend not to work very well in practice and often result in high loss of capital so startups often
Both are about finding a solution for a problem but at different times.
PSF and PMF solve problems like finding out if the customer wants what you are selling. PMF is about finding out whether your product is viable and worth creating for a customer. PSF is when you have started creating the product idea.
Both are customer development stages.
PSF and PMF are both useful in the product development process. Especially in the early stages, it’s important to understand what the user wants and needs by testing on a small scale or by some early adopters before embarking on a more expensive venture that takes much longer to develop, especially if you only have one or two resources.
If a product is determined to be viable, it may be easier to create it from scratch if you have the resources and know-how to design it properly.
Final Words on Problem Solution Fit vs. Product Market Fit
So how do you think problem-solution fit and product-market fit overlap? As you can see, PMF and PSF overlap in finding out the problem but have different goals.
So now that you’re familiar with the problem-solution fit and product-market fit, you should be able to understand the concept of product development maturity. If you want to explore PMF further, you could also look into the Superhuman product-market fit process.
And remember, it’s not just about how much money you have, but how much time and effort you are willing to put into making the product or service your customer wants.
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