A minimum viable product (MVP is the simplest version of a product on the market. The MVP has just enough features to be usable to customers and thus viable on the market. You can use minimum viable products to collect validated learning about customers. The purpose is to gain the most insights with the lowest possible investment.
A typical MVP is the most basic version of any new product capable of delivering value to the target audience. The target audience normally consists of early adopters capable of providing validated insights. So, it exists simply to test the fundamental assumptions of a product idea.
Lean startup methodology
The MVP concept originally came from lean startup methodology. This school of thought dictates that learning and scalability must be the first considerations when launching new products.
Under the lean startup logic:
- The first step should be an MVP
- Your MVP should present only minimal risk to your budget
- You should be able and ready to test your assumptions and correct them over time
To achieve the desired outcomes, lean startup methodology uses the “build-measure-learn” feedback cycle:
- Build: Figure out what the focus of the development cycle will be. Build a minimum viable product on that focal point.
- Measure: Determine how you will measure the success of your product development. Conduct testing in a way that gathers your metrics of success.
- Learn: Decide what to do next.
The third step is often the most complex and difficult. Results are not meant to be optimal at this point. But you will need to quickly decide how to pivot your design. Alternatively, your team may determine that it’s best to carry on and move on to the next cycle.
In any case, the “minimum viable product” is the very first step in the build-measure-learn cycle. It’s the simple and easy way test hypotheses about customer needs and market performance.
Focus on learning
Your MVP is crucial to your product development processes. It enables your team to collect the maximum amount of crucial product feedback during the earliest stages of development. At this stage, you’ve invested only minimal resources and left yourself room to iterate and make informed decisions about the future of your product’s development.
This learning-centered approach:
- Minimizes the risks of product development
- Ensures that your team has the resources to efficiently develop real value
- Directs resources into the most important areas of development
Your minimum viable product should therefore be seen as a learning tool. Its sole purpose is to gather actionable insights about:
- Customer behavior
- Customer preferences
- Your product’s perceived value
After launching your MVP, start collecting detailed feedback as well. Focus on encouraging honest feedback above advertising or marketing goals. You can use the detailed feedback you get to:
- Measure the results of your minimalist product
- Iterate and improve on the original product
- Add or remove features
- Refine the product idea
- Ensure your product aligns with customer expectations and market demands
- Minimize waste long-term
What role do early adopters play in the success of an MVP?
Another key aspect of minimum viable product launches is your early adopters. Early adopters are crucial to long-term product design success by providing validated learning about customers. They are typically more open to trying novel products and providing more honest and thorough feedback. Early adopters are also more willing to deal with shortcomings to be one of the first people to use a product.
Of course, early adopter feedback is also invaluable for its timing alone. The early stages of product development are the ones where you need the most honest insights into customer preferences and pain points. In some cases, they’re also an early source of word-of-mouth marketing for you.
Be sure to take the MVP phase as an opportunity to engage more closely with early adopters. Use their feedback to act quickly on the product improvements you need.
Minimum Viable Product key focuses
The main goal of MVPs is testing value propositions and price sensitivities on the open market. After understanding the customer’s perceived values and willingness to pay, you can focus on core functionality. When you have your first MVP iteration, launching it is a process of validating the product. The focus is on:
- See how your product responds to customer values, pain points, and needs.
- Test how much customers are willing to pay for your MVP.
- Collect in-depth feedback on customer thoughts about experiencing your MVP.
At Simon-Kucher, we help organizations thoroughly understand customer value and willingness to pay through robust market research and customer interviews.
We use techniques like conjoint analysis and value-based pricing studies to identify the features that customers value the most. We test their corresponding willingness to pay for these features. This provides businesses with the data they need to make the most profitable possible decisions.
Price sensitivity and market potential
In terms of pricing, the MVP phase is about testing customers:
- Price sensitivities
- Willingness to pay the set price
- Responses to different pricing strategies
This also implies testing different pricing strategies.
You cannot disconnect pricing strategy from your minimum viable product. Pricing strategies are attached to the MVP development process. As you test customer reactions and gain feedback, your pricing strategy tests will need to be made in conjunction with your product feature changes.
You may end up deciding to change core features and shift your product’s focus. If this happens, you need to include new pricing strategy experiments at the same time. The optimal pricing strategy for a new product iteration could be very different!
How to test pricing strategy
Simon-Kucher can design and implement pricing experiments as part of the MVP development process. We generally lean towards value-based pricing models with the potential to maximize your profits.
We can assist in creating various pricing models, including freemium, subscription, and tiered pricing options. We also help in testing these models with target customers. We can determine the optimal pricing strategy that maximizes revenue and market penetration.
Maximizing value with less effort
Working smarter is better than working harder. It’s important to balance your development cost with the value you deliver. That means maximizing your minimum viable product’s perceived value while minimizing your expended resources.
In practice this means:
- Focusing disproportionate effort on the highest-impact features
- Spending most of your effort on directly addressing customer needs
- Creating a compelling value proposition that customers can’t find in existing alternatives.
This is another area where we can help you. We help companies prioritize high-impact features and make MVP adjustments through:
- Customer research
- Feature prioritization matrices
- Cost-benefit analysis
These steps reveal the highest-value decisions you can make with the least development effort.
Strategic product positioning
The other arm of minimum viable product pricing is product positioning. It’s important to understand your product’s positioning from the start. This means:
- Defining your target market
- Understanding competitive dynamics
- Understanding buyer needs, desires, and value drivers
Then, you can differentiate your MVP from your competitors and position your product in a way that maximizes success. Good product positioning enhances the perceived value of your product. It enables you to:
- Charge higher prices that customers will accept
- Maximize value-based pricing strategies
- Increase your MVP’s chance of success on the market
How Simon-Kucher can help
At Simon Kucher, we help organizations position their MVP strategically, highlighting unique value propositions and differentiators. More broadly, we also assist companies with:
- Clearly defining their target market
- Competitive analysis, research and dynamics
- Competitive benchmarking
- Comprehensive market analysis
- Channel research
Ready to take your business strategy to the next level? Contact Simon-Kucher today and discover how we can help you unlock your true potential.
