What is market segmentation?

Market segmentation is the process of dividing a broad consumer or business market into sub-groups of consumers who share similar characteristics. This can include demographics (age, gender, income), psychographics (lifestyle, values), geographic (location), or behavioral traits (purchasing habits). By breaking the market into smaller segments, businesses can target specific groups more effectively, tailoring their marketing strategies and product offerings to meet the unique needs and preferences of each segment.

This targeted approach helps companies optimize their marketing efforts, enhance customer satisfaction, and ultimately drive sales, as the products and services are better aligned with the desires of specific consumer groups. Understanding market segmentation is crucial for businesses looking to effectively position themselves in a competitive marketplace, ensuring their offerings resonate with the intended audience.

The other options presented do not accurately define market segmentation. Identifying profitable customers focuses on customer profitability rather than grouping based on shared characteristics, while expanding a product’s market reach internationally pertains to market development strategies rather than segmentation. Altering product features to attract a wider audience relates to product development rather than the segmentation process itself.