This is a term that was first used to refer to engineering management, where a product needs to be built to respond to a specific need of the market. Later growth hackers will repurpose it to review the ability of a product or service to represent the right solution for a highly targeted audience group. The fact that the audience group is targeted doesn't mean it is small. It simply means that your product or your service provides an effective solution to the real problem(s) of your audience.
Through the history of successes, you will find that the ability of big brands to identify exactly a common problem has led them to the billion dollars turnover companies they are now. Facebook aimed at helping you to get in touch with your friends online. AirBnB focused on providing simple, cost-effective and trust-worthy alternatives to hotels. Great product/market fit concepts create a real engagement and that makes them easier to market.
Embrace the cynical customer.
We know what you're thinking right now. It's working for your competitors therefore it should for you. There is some truth in this statement yet you need to consider carefully. A study of the market competition will very certainly reveal some of the best practices and some of the preferred products or services. However it's likely that very similar solutions in a competitive market will make the task of marketing your company even more difficult. Of course you could use an USP, Unique Selling Proposition, to differentiate yourself.
'We're offer the same than our competitors but it's 10% cheaper.'
'We're not like our competitors, we're the only real experts in the market. The others are frauds.'
'We are available 1 extra hour every working day, compared to our competitors.'
'We can deliver up to 150% ROI.'
Guess what. This doesn't work anymore. Customers are cynical, they can read through the marketing speech. That's why you need a real brand story that shows your understanding of their challenges. Look at the Kissmetrics blurb for inspiration: it's direct to the point and it echoes with the pain of experience.
Don't be dependent.
We're under pressure every single working day of the week. There will always be difficult days. Relying on monitoring your competition to keep up with the market trends is not a viable solution and is definitely the fastest way to your very own burnout syndrome.
Let's rely on the fact that you can't be innovative or reactive every single day. This is why your activities need to be dictated by your business plan. You will naturally keep in touch with the technological trends, with the progresses in user accessibility and experience. But we all know that big digital transformations don't happen overnight. It's always easier to respond to a market trend than to a competitor's marketing strategy. Your customers know the difference.
The best example of competition dependency will be seen with market aggregators, such as Confused.com, Moneysupermarket, Comparethemarket.com, or even Gocompare. This is starting to look like an entertainment war at best, combining musicality, recurring characters, dance moves, celebrities, and other inspired elements. Who started it is now long forgotten, but what remains is highlighted by threats found on social media and forum platforms. Redditors even stated they punched the radio before the ads were too annoying. Two aggregators were even voted for the most annoying adverts of the past 15 years.