Forget Product–Have You Achieved Model-Market Fit?

Aug 12, 2019

You have developed a new technology that you feel can drastically change the lives of your customers for the better. Given that belief, you are confident that this new technology has a lot of value to offer your customers. However, technology alone does not create customer value. What this technology initially does is help define your business strategy. Once you have a solid strategy, you can then choose the most appropriate business model–what truly creates value for your customers.

Think of it this way: your product can have great potential but will provide zero value if it cannot be effectively delivered to and used by customers in the way to which it was intended.

Take Blockbuster for an example. Everyone loves watching movies and binging TV series. However, when Blockbuster refused to adjust their business model to the evolving digital marketplace with the introduction of Netflix, OnDemand, Hulu, etc., they quickly declined (or suffered) and went out of business. Great product, poor model-market fit.

Value is Relative

In order to be successful, your offering needs to be of value to the customer you are targeting. To better explain this, we turn to Alexander Osterwalder’s Value Proposition Canvas in which they outline the value proposition of an offering alongside the profile of the customer segment they are targeting to then determine whether a fit exists or whether adjustments must be made to achieve said fit.

Mapping what you have to offer while identifying what your customers actually need and desire can better inform your product development and delivery strategy.

As we mentioned, value does not lie in the product alone but in the way the product is delivered–the whole package.

A major part of any business model is the way in which customers consume and pay for the product. Much of a consumer’s habits and preferences are shaped by the world in which they live, so an additional layer to this analysis is the study of the overall environment.

Shifting Values

We live in a digital world. Products and services across industries can be accessed via mobile apps. A wealth of information on product features, customer reviews, prices, etc. is available in seconds and is driving purchasing decisions. The combination of greater availability of information and the rise of social media has cultivated a new era of what has been deemed “the Experience or Sharing Economy”.

This movement has brought about changes in what people see as valuable. So, what do people value now?

With a greater weight on experiences, consumers would rather own less if it means they can consume more — a trend known as the ‘Rise of the Sharing Economy.’

A Minute on Payment Design

All of these changes have altered the way people consume products and services. Thoughtful payment design–a key component of your business model–can influence a customer’s consumption & perception of your product— leading to overall loyalty to your company. When outlining your target customer segment, you can gain key insights for your pricing strategy by asking yourself the following questions:


Products alone cannot create value for customers. Identify a winning product and business model combination by outlining your value proposition as well as the profile of your target customer segment and ensuring that the two are aligned. Payment structure is a component of your business model that can play a key role in customer satisfaction and retention–design it wisely.

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