What is 'market segmentation'?

Market segmentation refers to the process of dividing a broad consumer or business market into smaller sub-groups that share similar characteristics. This can include demographics, psychographics, geographic location, or behavioral patterns. By identifying these sub-groups, companies can tailor their marketing strategies and product offerings to meet the specific needs and preferences of different segments, leading to more effective communication and increased customer satisfaction. This targeted approach allows businesses to allocate their resources more efficiently and improve their overall marketing effectiveness.

The other options do not accurately define market segmentation. Marketing a single product to all consumers overlooks the diversity of needs among different market segments. While increasing overall sales may be a goal of effective market segmentation, it is not a definition. Similarly, product placement in stores is a separate marketing strategy that does not encompass the concept of dividing markets into sub-groups.