Market Fit - a Fundamental re-alignment

Market Fit in Startup Ecosystem

Marketing needs innovation and some out of box thinkers. As
marketers, we always invent, think and execute new things where we try to
establish our products at the retail front-end. During our academic hours in
management institutes, we were taught that a permanent journey plan (PJP) of a
product passes through retailers or intermediaries being an important channel
in the ecosystem, and when space is available to us for placing a product then
we assume that we made our product-market fit. Further, we get ourselves ready
for scale and expand to other areas. Things change with time, so it is happening
in current market practices, Many terminologies were used which over time
changed. I am sure many marketers seldom heard about following words 10 years
back.

     
Hyperlocal, Last-mile connectivity, Omni-Channel, Retail
Ecosystem, eB2B, Social Commerce, Otif, Disruption, Angel, Bootstrap, Burning,
Minimum Viable Products (MVP), Shadow WHR, Dark warehouse, Hubs, CM-1 &
CM-2, Supply chain Aggregator, Many more in technology

Things are not new to us but there is a big gap now as
things changed differently as an approach comparing things with ground
realities.  New thoughts bring new
changes in the business ecosystems but they can not change the inherent
fundamental of any business. Same way when we talk about market fit, in the
current scenario we should not limit it to focus on the market or territory.
Now, it is all about product, team, distribution, and market. Mainly in the
startup ecosystem Market fit has more relevance than a corporate or emerging
corporate so there we should evolve many things simultaneously.

Supply Chain terminology like hyperlocal and last mile is
also, a part of market fit today. these all words emerged from a way of doing
and it is " Disruption". Disruption is business or can we placed it
as market fit. Yes, it is that's why we often talk about new things, ideas and
concepts then find someone who believes in it. The startup is all about
innovation. Some brilliant people say it "make it start and scale it
fast" but it is something different and can not be easily spelled.

Market fit is covering all major aspects of marketing
i.e. Product, Market, distribution and Team, and many more things are there but
in the current scenario, I am adding few things to it:

• KYM:
  Know your Market


• KYC:
  Know your customer


• KYT:
  Know your Team


• KYD:
  Know your Distributor or Distribution System

KYM: Know your Market first

For Market fit, first, we need to understand the market
that's why it is called focus market. We all do this exercise, yet, we have to
dig more to understand the market well that's why first know your market. It
should cover complete demography, geography, and also a deep working of a
competitive analysis is required so that one can project their revenue for the
market share in coming months or years. Before starting a business or at the
ideation stage one should do deep study otherwise chances of failures are there
always. A deep understanding of the market comes from various resources, maybe
you are coming from that background or your cofounder has such exposure, and if
not then market survey agencies are there in the market. But I will suggest
that you should visit the market areas, should meet the channels first and then
should meet customers. In retail ecosystems, customers are Retailers,
semi-wholesale, wholesalers, Mandi traders, cash & carry, etc. The market is
the real teacher who teaches us very well that's why KYM is a must before
moving with products.

“Understanding
ground realities is the first foremost stage of Market Fit”

Know Your Customer - KYC

KYC is the first task before entering the market but in
Market fit, I take it second after KYM. KYM is macro working for clicking a
panorama view so here before we go for solving the large problems of our
customers we should understand them well and within time. Before that, you need
to know - Who is Your Customer? if your customer is B2B, things will go differently
and if your customer is the end consumer then it will have different aspects.
here I am talking about B2B aspects so that accordingly write-up go in that
direction.

Knowing your customer is a behavior trait. Many things
vary from market to market like Customer buying habits, demography, Regional language,
size of business, Population and density, Competition, and Trade of Terms. For
ease of understanding, I am taking the example of Kirana Retailers. Kirana The retailer in Rajasthan more or less selling 50% common products as customer
preferences are more or less the same compare to retailer in Delhi where 80%
consumers come from different-2 regions and cultures so a hyperlocal assortment
of one area is different from the adjoining area. change in the ratio of
hyperlocal assortment is 80 % in Delhi. Mumbai has 70%, Bangalore has 60% and
so on but in the Eastern part of India we will find it more favorable as less
deviation has been seen in taste and culture. for our market fit we should know
our customer well then only it will help us make strong business plan and
projections. The current scenario is a little bit noisy as many minds are
working on disrupting the ecosystem via funding and so here one should always
be vigilant on every side of strategy. This will also help you to understand
that how much a customer can buy your products per month and how many customers
are there in the market who are buying such category products from competitors.
This is a must so that your revenue projects should not go wrong. A wrong
projection can lead to a blunder in the production and distribution systems
which is ultimately a financial loss. i.e. example of average per month buying
from Cash & Carry or organize distributor is appx 7K. For a single brand
like HUL they have more depth but other brands like Bajaj, Dabur, Reckitt has
per retailer average below Rs. 5000 per month. Here competitor analysis
matters.

Understanding customer is one of the first work to do:
Here you need to get certain data about them: Strength, Category, size, average
monthly business, and the overall ratio of potential customers in the focus
market. for example, you can expect a certain amount of buying from all the
customers as each customer has their priorities and way of working so always
take an ideal average which you can suggest to your distributors and sales team.
Based on your such micro-level working your sales team can produce great
results.

“Customer
preferences are the foremost Important Aspect of marketing where you sit in
their stomach for a shorter period but Desire go longer”

KYT: Know your Team

In the startup ecosystem, the Team is one of the main
ingredients which play an important role, they ensure that execution goes
smooth in the stream. It comes from top to bottom. First of all, the founder has
to be aligned with the vision and should have proper synchronization of thought
processes among them. The same wavelength of thought process should flow from promoters
to Peon, and it should be visible in the ecosystem. Certain measurements are
there to implement like corporate ethics from the very beginning. If the team
is not aligned with the vision and they do not mend according to the business
ecosystem then things will not move as desired. Knowing your team is the
foremost task that every founder has to take care of. Few things need to be
taken care of while recruiting department heads and middle management level
manpower.

ü 
Functional level: 
Always recruit industry-specific and experienced manpower, like in
Sales, Sourcing & Warehousing & Logistics always enroll from the same
industry with relevant experience. At HOD level must have min 5-year experience.
Remember – your organisation is not an institute so always recruit industry
veterans.

ü 
Business Development: 
Business development in any business always has few dynamics which anyone
can apt. So, here you have to recruit people who either worked in Telecom or beverages
segment. They are fundamentally strong enough to drive any type of business
development so they will help a better uplift in a shorter period.

ü 
For supporting department like Finance & Accounts,
compliance, IT, HR, marketing only academic and somehow relevant experience is
required because kind of work they do need pre-defined formulas and a mix of
working culture

 

Build a great team because they will do special things for you and help you
built a ship in a shorter period for further sailing in the market of great
opportunities.

 

“When a
great team meets a Great market, something

special
happens”

KYD: Know your Distributor or Distribution
System

Distribution is a key driver of your overall
profitability. The distribution system is the foremost and integral part of any
business stream, without a perfect distribution channel no product reaches the
consumers.  It is a series of businesses,
sellers, and other intermediaries through your products to reach end consumers.

A good distributor is the first person who takes
initiative, employed workforce and logistics, risks his financials in the market, and works day and night for brands. He is the person who connects channels and
changes the mindset of retailers and ensures the placement of goods in the
frontend.  Brand building journey starts
from him. Without a strong and eco-friendly distribution system, we can not
think about market fit.  Selection of A distribution channel is a rigid and lengthy process but the current ecosystem
is making it easier, however, it remains a low-cost and owner-driven business
so everyone has to struggle a little bit. Since margin is thin in the retail
segment so most of the mid-level channels are driven by small
entrepreneurs.  To make your
product-market fit one has to work smartly.

Before we go for selecting the right distribution channel
we must know good about :

• Ø 
  Products
• Ø 
  Market
• Ø 
  Middlemen

Being an important task you need to go smartly and should
know about :

• Ø 
  Competitors in the market
• Ø 
  Evaluate Cost and Benefits
• Ø 
  Priorities the option
• Ø 
  Growth plan.

The best way to find a Distribution channel is to start
your survey from retailers i.e. the last mile, 
they know them very well, also area wise penetration and SWOT will help
you to understand more.  No doubt, it is
a time-consuming task but reliable. The second option is to enquire with
existing C&F, CFA, and market
leaders. If you have the right business development guy, then 50% of the task
will be done by them being experienced in the ecosystem that’s why it is always
recommended to enroll industry-specific manpower.

Establishing a reliable distribution
network can therefore be a strong competitive advantage and
help your business stay competitive. Some of the
main benefits of a distribution network are reduced costs,
more transparency and collaboration, wider customer reach, and faster
growth  (source:  https://www.mixmove.io/blog/what-is-a-distribution-network)

Making a product-market fit is a challenging task for
every organization but without it, no one can think about building a
brand.  It is advisable to align first
focus market, focus consumer, your team & distribution Channels. 

---Writer: Balwant Sg Rana

2020, Jaipur India