What is meant by market segmentation?

Market segmentation refers to the process of dividing a larger market into smaller, distinct groups of consumers who have similar needs, preferences, or characteristics. This allows businesses to tailor their marketing strategies and product offerings more effectively to meet the specific desires of each segment. By understanding the various segments within a market, companies can create targeted campaigns, enhance customer satisfaction, and allocate resources more efficiently.

This approach recognizes that consumers are not a homogeneous group and that different segments may respond differently to various marketing techniques. For example, a company might target young adults with a different product promotion than it would for families, as their preferences and purchasing behaviors may vary significantly. This strategic segmentation ultimately helps businesses improve their competitive advantage and increase their overall market effectiveness.