What does product/market fit really look like?

To consider a marker a market it must have the following three characteristics:

1. 1.     Will buy same product
2. 2.     Similar sales process (persona, value prop, DMU, DMP)
3. 3.     Word of Mouth (WOM) exists

These are few main aspects of a market you must take into consideration when defining which market  the startup is going to pursue. 

Economically Attractive:  Is the target end user well-funded or someone who wants access to her well-funded and would pay for access to that target end user?  There has to be some willingness to pay by someone to start.  If this is true then you should prioritize based on the quality of the funding.  Is the funding readily accessible?  What is the risk of getting it?  How well funded is the economic buyer?  Is the economic buyer have a complicated purchasing process?  Is the economic buyer part of a cyclic industry (like oil and gas) where the purchasing can vary greatly based in the price of their product?  Other factors you deem appropriate with regard to the funding.  When we win this market we would like to be cash flow positive from this market so we can much more control our own destiny.  

Accessible to Our Sales Force:  You want to deal directly with the end user and economic buyer in general but especially when you first start because you will be learning enormous amounts in these interactions which will dictate how you refine your product and everything associated with it.  You want to avoid going through third parties as there will be significant information loss.  No one will be nearly as motivated as you to honestly understand the customer’s experience with this problem and you need to obtain this information unfiltered and control your own destiny by selling directly.

Strong Value Proposition: How compelling a reason to buy is there for your product as opposed to the current state or other alternatives.  Is you solution really substantially better than how they are operating today because it needs to be.  No one likes change and there has to be a real good reason to change.

Complete Product:  Can you, with the help of partners that you can control or count on, deliver the full solution to your customer?  The kind of customer we want are focus on value and benefits and not features and functions.  These value customers don’t want to buy pieces of technology or modules of a solution and then assemble it themselves.

Competition:  Is there real or perceived competition, from the perspective of the customer and not your view) that could will make it difficult for you to convert the market segment to your product?  This could be in the form of a similar product but it might also be from another vendor to your target customer who will be threatened by your product.

Strategic Value:  if you win this beachhead market segment, will it give you capabilities and/or assets that will give you significant competitive advantage when entering adjacent markets? 

Personal Alignment with Team:  The passions and assets of the team. You must do something you can be excited about and that plays off your strengths.  

1. The product is good enough for the market you are reaching and you are converting a lot of sales from the prospect contacts you make, but the over all size of the market you are reaching is too small to achieve sustainability. (Market Saturation without sustainability => Right product, wrong market(s)). Try expanding into other nearby markets
2. The market you are reaching is large enough to sustain the company, if you converted a higher percentage of customer prospects you make into sales, but your conversion rate is too low to achieve sustainability. (Low penetration rate => Right market, wrong product). Try a different product in the market you are reaching well, or seek a different large market where the product may be better appreciated.