What is market segmentation?

Market segmentation refers to the process of dividing a broader market into smaller, distinct groups of consumers who share similar characteristics, needs, or behaviors. This technique allows businesses to tailor their marketing strategies and product offerings to meet the specific preferences and requirements of these sub-groups, thereby enhancing the effectiveness of their marketing efforts.

By understanding and identifying the unique segments within a market, companies can develop targeted marketing campaigns that resonate more deeply with each audience. For instance, a company may segment its market based on demographics, such as age, gender, or income level, as well as psychographics, such as lifestyle, values, or buying behaviors.

This targeted approach often leads to more efficient use of resources, improved customer satisfaction, and increased sales, as products and services are more closely aligned with consumer needs. In contrast, the other concepts mentioned do not capture the essence of market segmentation, as they either focus on different strategies or aspects of marketing rather than the critical practice of identifying distinct groups within a market.