What should be the first step in market segmentation?

Defining broad product-markets is essential as the initial step in market segmentation because it sets the foundation for understanding the overall landscape in which a business operates. By identifying the larger categories that encompass various consumer needs, companies can establish a clear framework to segment the market more effectively. This broader definition acts as a guide to pinpoint specific submarkets and target audiences later in the segmentation process.

Once broad product-markets are defined, other steps, such as conducting market surveys or analyzing customer preferences, can be more effectively executed because they will be focused on specific segments within those identified markets. Understanding the general characteristics of a market empowers companies to gather relevant data that will inform their segmentation strategy, ultimately leading to better-targeted marketing efforts.