Many product managers define customer segments too broadly, weakening product-market fit, increasing churn, and wasting resources. Begin with a large, plausible segment and then iteratively narrow to a precisely defined beachhead segment that enables focused hypothesis testing for product and business model assumptions. Avoid the total available market (TAM) trap driven by revenue anxieties, investor pressure, or overgeneralized assumptions of universal demand. A tight beachhead informs initial product, positioning, and go-to-market choices, clarifies what not to pursue, and creates measurable learnings. Real-world progressions commonly move from exclusive or high-end niches toward broader markets as the product and operations scale.
When it comes to customer segments, many PMs make the mistake of defining them too broadly, resulting in weaker product-market fit, higher churn, and wasted resources. To avoid falling into that trap, you should follow a systematic approach that starts with a broad customer segment and then gradually narrows down into a very specific "beachhead segment" that enables you to test your product and business model hypotheses.
You'd probably take this approach for one of the following reasons: You believe if your customer segment is small, you won't make enough money to survive A large customer segment means you'll make A LOT of money You believe that everyone in that segment will want your product or service Investors won't invest in your company unless your customer segment is large
Rather than taking the TAM approach, let's explore some reasons why you shouldn't take that approach. Your customer segment defines your initial product and GTM strategy Strategy is more about what you're NOT going to do than what you're going to do. Yes, eventually you'll want everyone using your product but the initial problem is that you need to get some
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