How do you decide the target audience for your product?

My philosophy is to start niche with a plan to widen. The more niche you are the more exact you can be in your communication, the more spearheaded your marketing can be, and the more precise can your solution be to actually solve a pain point for your audience. You really don't want to end up launching something that is a patchwork of nice-to-have features. Much better to have one must-have. This strategy also plays well in risk mitigation and validation. It is usually quicker to build one thing for a niche user, than trying to satisfy a lot of different use-cases. Once you get traction in your niche audience, you get more knowledge and reduce the number of assumptions in your product strategy, and can gradually expand to a wider target audience.

It can be one of the hardest parts when you're launching a product. We've been told to "do things that don't scale" at first and I think it's better to start with a niche (to better understand their pain points and offer them a proper MVP) and then widen your net to get a broader audience. Your target persona will naturally come to mind as you speak with many more people to validate the hypotheses you've drawn from your early discussions. I also find that speaking with your niche/audience on 1:1 is extremely valuable (recording your calls is the best, if possible). No matter the route you take, user discovery interviews are very important!

The struggle is whether we should (1) pick a niche and focus for a period first or should we (2) aim for a wider base first and narrow down as we get more insights from users?

It's pretty simple. Conduct thorough market research and analyze demographic, psychographic, and behavioral factors to identify the most receptive and relevant audience for our product.

Easier to gain relevance when you identify the problems of a smaller audience. Then you can find new ways how a larger audience can benefit from your solution and grow from that point. You also spare the struggles of being everything to everyone, you'll have to focus on similar user demands instead of varying expectations.

Identify pain points, analyze competitors, survey potential users, and examine market trends.

We dive into market research to understand the pain points, needs, and desires of potential users. We also create detailed personas that represent our ideal users and we look at competitors' audiences. Are there gaps or underserved segments that we can tap into?