Product Market Machine
by Dan Walsh
After 6 years of launching over a dozen sites and more than 100 products, I’ve realized a successful business can be distilled into three key areas: product, market, and machine. The success of a new business hinges on getting these three areas just right.
The product is the item, service, or idea that will be exchanged for money. The features and benefits of a given product partially determine which market it will serve. For example, the Basis health watch is an $200, early-version electronic gadget that tracks multiple health stats. It’s great for early adopters, health enthusiasts, and data junkies. It’s not so great for anyone with no disposable income, doesn’t care about their health, or can’t do math. Knowing who can benefit from a product is vital to finding the correct market, and creating usable machine.
The market is the size, location, and demographic (or psychographic) that will exchange money for a product. As mentioned above, not everyone will desire every product. The market for a product will grow or shrink depending on what benefits the product offers. A product with a common use case and a low price will have the largest potential market. A 99 cent loaf of bread has a gigantic potential market. A $4 slice of artisanal toast has a much smaller potential market. A $200 health watch has an even tighter market. Changes to the product will drive changes in the potential market, and changes in the market can require changes to the product.
The machine is the term I use for everything that gets the product into the market. This includes advertising, landing pages, packaging, stores, sales copy, media buying plans, etc. The product and market are often discussed in terms of finding the “product market fit,” but the machine is rarely discussed. I think this is a shame because the product and market can have a perfect fit, but without the correct machine to drive awareness, the market will never know about the product. An efficient machine can enable a product to hit new markets, or even sell for a higher price. Apple has a great machine. They have the advertising, sales experience, and hype to charge double what other companies charge for similar products. They also have great products, but that’s besides the point.
Product Market Machine Harmony
Each of these three areas is a moving target. If one changes, the other two need to adapt. Especially when starting a new business, it is almost impossible to know which of the three are working, and which should be adjusted. A firm decision on any one of these three areas can create a constraint – a foundation – from which to adjust and develop the other three. Deciding to only focus on a given market, like high tech early adopters, can provide a compass bearing for product tweaks and marketing copy. Constraints can seem limiting at first, but they will drastically increase the speed with which product market machine harmony, and ultimately success, can be reached.
Thanks to Tito Jankowski for helping me formalize these ideas.