Successful Software Products Start By Solving Problems for Niche Markets

One of the most common mistakes software companies make is pursuing larger markets than they initially should. In the interest of capturing large business opportunities, many companies hop into large markets thinking that they’ll be able to capture a sizeable piece of it. But without first nailing down their product’s positioning, they fail to achieve the traction that would ultimately enable their success.

Pursuing product-market fit without targeting a specific niche is usually a very bad idea.

Without targeting a niche, companies are likely to meet mixed signals that distract them and send their product and marketing strategy off course.

Confused business strategy

Leaders have trouble identifying the right product use cases, product teams get tasked with building bad product features, marketing teams struggle to create persuasive messaging, and the business loses as a whole.

Contrast targeting no niche with targeting a specific niche.

Businesses that target a niche know more about who they’re targeting and why they’d use their product. Understanding why people use your product is the ultimate predictor of long-term success.

Once companies have gained traction within a niche, they can grow their business in one of two ways:

  1. Identify and expand into a larger adjacent market that they can now effectively target and pursuade to become new customers because they first validated shared patterns of user behavior
  2. Improve product monetization by refining their product and features for core use cases into larger connected markets with a shared set of problems. Companies grow into new markets as their products bridge into new use cases

Until companies know why users do what they do, they will struggle to find product-market fit.

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